MEETING THE
CHALLENGE
Annual Report 2020
HOW WE MET THE
CHALLENGE IN 2020
19
Armenia – Demonstrating resilience
22
Rwanda – Providing vital support
40
Togo – Focusing on the
health of our teams
49
Peru – Performing in a
challenging lockdown
54
Senegal – Working with our
communities
61
Brazil – Focusing on the people around us
73
Spain – Embracing continuous improvement
HOW WE MET THE
CHALLENGE IN 2020
ENERGY FOR LIFE
ContourGlobal develops, acquires, owns and operates power generation
assets around the world, producing reliable energy responsibly.
ContourGlobal operates 105 thermal and
renewable power generation assets in 18 countries
across Europe, Latin America and Africa, with a
total installed capacity of over 4.8 GW. A recent
North American acquisition in early 2021 expanded
our operations to 117 power plants, over 20
countries, totalling 6.3 GW installed capacity.
We create additional value through best-in-class
operations both in our existing portfolio and in
the new assets we develop or acquire.
Highest health and safety, environmental and
social standards are implemented wherever we
operate. The reliable energy our plants generate
has a positive impact – powering towns and cities,
providing heat and light, and enabling modern life
to take place around the clock.
As we grow, we invest in improving the places
where we live and work. We are proud of the
difference we make in the communities and
countries in which we operate.
2020
2021 (Q1)
2020
2021 (Q1)
105
Conventional & innovative
power plants
117
Plants further to
Western Generation
Portfolio acquisition
4,804
Megawatts capacity
6,306
Megawatts capacity further
to Western Generation
Portfolio acquisition
Overview
1
Financial and operational highlights
40
41
Togo: Focusing on the health of our teams
110
Report of the Remuneration Committee
COVID-19 response
113
Remuneration at a glance
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Strategic report
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6
8
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An introduction from our Chairman and CEO
2020 Highlights
At a glance
Where we operate
Chairman’s statement
Business model
CEO review
Armenia: Demonstrating resilience
20 Market review
22
23
Rwanda: Providing vital support
Engaging with our stakeholders
30 Our KPIs
32 Our strategy in action
34
38
Business review
Sustainability
42
Health and safety
46 Our people
128 Annual Report on Remuneration
141
Directors’ report
Peru: Performing in a challenging lockdown
145 Statement of Directors’ responsibilities
49
50
52
54
Environment
Communities
Senegal: Working with our communities
55
CFO review
61
Brazil: Focusing on the people around us
in respect of the financial statements
Financial statements
146
Independent auditors’ report to
the members of ContourGlobal plc
157 Consolidated statement of income
and other comprehensive income
62 Managing our principal risks
158 Consolidated statement of financial position
73
Spain: Embracing continuous improvement
159 Consolidated statement of changes in equity
Governance
74
76
80
96
Non-Financial Information Statement
Board of Directors
Corporate governance report
Report of the Nomination Committee
160 Consolidated statement of cash flows
179 Notes to the consolidated financial statements
222 Company balance sheet
222 Company statement of changes in equity
223 Notes to the Company financial statements
101
Report of the Audit & Risk Committee
228 Shareholder information
1
19
22
Armenia – Demonstrating resilience
Rwanda – Providing vital support
40
49
54
Togo – Focusing on the
health of our teams
Peru – Performing in a
challenging lockdown
Senegal – Working with our
communities
61
73
Brazil – Focusing on the people around us
Spain – Embracing continuous improvement
An introduction from our Chairman and CEO
Joseph C. Brandt,
President and Chief Executive Officer
TThhiis
This report tells ContourGlobal’s story
f
of an extraordinary year through the
eyes of our people around the world,
who faced unprecedented challenges
to meet the world’s electricity needs.
In this Q&A, we share the perspectives
of our Chairman, Craig Huff, and Chief
Executive Officer, Joseph Brandt.
MEETING THE
CHALLENGE
OF 2020
Q: WHAT WERE THE BIGGEST CHALLENGES
IN 2020 AND HOW DID THE BUSINESS
OVERCOME THEM?
JB: We entered the year with meticulous plans but, of course,
many of those changed once the pandemic struck. We had
essential assets to run but, with some economies in total
lockdown, being able to continue generating electricity
looked pretty challenging in some parts of the world.
However, looking back, it feels as though ContourGlobal
was designed to cope during a pandemic. We had a
culture of working from anywhere; we were technologically
sophisticated and connected; we had reliable business
continuity plans at all our plants; and we had invested in
great people. As a result, we were totally resilient, we met
the main objectives we had set for ourselves at the start of
the year – and we kept the lights on wherever we operated
around the globe.
CH: Like every Board on the planet, we had to switch to
‘governance by Zoom’. That would have been much harder
had it not been for the social capital we had built up in the
Board – working with the same group of people over the
last two years, we all knew each other, making for excellent
group dynamics. On top of that, management got ahead of
the pandemic from early on and the regular reports they
produced kept the Board fully informed throughout.
A more recent, specific concern was about whether
management would be able to conduct due diligence on
our acquisition closed in February 2021 in the United States
and Trinidad & Tobago, with all the limits on travel. However,
combining video calls with some well-timed plant visits
enabled the whole process to run pretty seamlessly.
Finally, it was hard to interact with our stakeholders, investors
and the market in the way we normally would. I am looking
forward to doing a lot more of that next year, as soon as
conditions permit.
Q: HOW DID THE PANDEMIC CHANGE THE WAY
YOU MANAGED THE BUSINESS?
JB: We had to close our offices, but the technology we had
in place made it easy to switch to remote working. As an
essential service, our plants were able to continue operating,
but with massive changes to our operational and health and
safety procedures. To give us a good understanding of the
impact of coronavirus on our operations, myself and a small
group of senior management held calls with every single shift
in every single plant. Through video calls, we were able to
see and talk to people at all levels of our business even more
2
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
An introduction from our Chairman and CEO
President and Chief Executive Officer
Joseph C. Brandt,
This report tells ContourGlobal’s story
TThhiis
of an extraordinary year through the
f
eyes of our people around the world,
who faced unprecedented challenges
to meet the world’s electricity needs.
In this Q&A, we share the perspectives
of our Chairman, Craig Huff, and Chief
Executive Officer, Joseph Brandt.
MEETING THE
CHALLENGE
OF 2020
Q: WHAT WERE THE BIGGEST CHALLENGES
IN 2020 AND HOW DID THE BUSINESS
OVERCOME THEM?
the pandemic from early on and the regular reports they
produced kept the Board fully informed throughout.
A more recent, specific concern was about whether
management would be able to conduct due diligence on
JB: We entered the year with meticulous plans but, of course,
our acquisition closed in February 2021 in the United States
many of those changed once the pandemic struck. We had
and Trinidad & Tobago, with all the limits on travel. However,
essential assets to run but, with some economies in total
combining video calls with some well-timed plant visits
lockdown, being able to continue generating electricity
enabled the whole process to run pretty seamlessly.
looked pretty challenging in some parts of the world.
However, looking back, it feels as though ContourGlobal
was designed to cope during a pandemic. We had a
culture of working from anywhere; we were technologically
sophisticated and connected; we had reliable business
continuity plans at all our plants; and we had invested in
great people. As a result, we were totally resilient, we met
the main objectives we had set for ourselves at the start of
the year – and we kept the lights on wherever we operated
around the globe.
CH: Like every Board on the planet, we had to switch to
‘governance by Zoom’. That would have been much harder
had it not been for the social capital we had built up in the
Board – working with the same group of people over the
last two years, we all knew each other, making for excellent
group dynamics. On top of that, management got ahead of
2
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Finally, it was hard to interact with our stakeholders, investors
and the market in the way we normally would. I am looking
forward to doing a lot more of that next year, as soon as
conditions permit.
Q: HOW DID THE PANDEMIC CHANGE THE WAY
YOU MANAGED THE BUSINESS?
JB: We had to close our offices, but the technology we had
in place made it easy to switch to remote working. As an
essential service, our plants were able to continue operating,
but with massive changes to our operational and health and
safety procedures. To give us a good understanding of the
impact of coronavirus on our operations, myself and a small
group of senior management held calls with every single shift
in every single plant. Through video calls, we were able to
see and talk to people at all levels of our business even more
than we usually would and, because we had visited plants
on many occasions in the past and built good relationships,
it made it easy to have candid conversations about what
was going on. In Peru, for example, where the lockdown
was particularly stringent, we were able to get a good insight
from our Health and Safety Manager, who we knew well, to
find out how people were being affected. We then put in
place psychological support to help them cope with the
isolation and lack of communication they were experiencing.
CH: At a macro level, the market was uncertain about our
prospects at the beginning of the crisis, but as soon as we
showed we were able to continue operating and paying
quarterly dividends, confidence was restored.
Q: HOW HAS THE PAST YEAR AFFECTED
CONTOURGLOBAL’S VIEWS ON ENVIRONMENTAL
SUSTAINABILITY?
JB: The increasing emphasis on this around the world
vindicates the stance we took before the pandemic, when
we committed not to invest in any new coal-fired plants.
We see our future in renewable energy and low-carbon
thermal production.
CH: Our commitment to ESG principles is the same as ever,
it is vitally important to the way we do business. In 2020, our
membership in the FTSE4Good Index was renewed and our
rating was upgraded, which I feel is a strong endorsement to
our approach.
Q: HOW HAS 2020 CHANGED YOUR GOALS AND
PLANS FOR 2021 AND BEYOND?
JB: It has reinforced how important it is to focus on the
few things that matter and to be technologically fluent and
agile. So, we’ll concentrate on a relatively small number of
key issues and accelerate our investment in technology to
remain nimble.
CH: We will use hybrid methods for future engagement, travel
less and be more efficient. We’ve learned that more routine
matters can be executed by video, just as well as in person.
But getting closer to our employees, meeting our local teams
and seeing how the business operates through plant visits,
will always be worth the trip.
Q: WHAT ARE YOU MOST PROUD OF ABOUT THE
COMPANY IN 2020?
JB: I am proud that we put people first. We kept people
safe and were able to execute all our objectives. Early in
the pandemic, we were able to source COVID-19 tests and
Personal Protective Equipment before many governments,
and were able to ship them to our employees, contractors,
and communities. In turn, our people were committed and
fearless and I’m hugely in awe of their dedication.
CH: COVID-19 proved the strength of our business model.
Management got ahead of the pandemic better than some
governments. They met our targets for reliability of supply
and, most importantly, focused on the safety of our people.
Craig A. Huff,
Chairman
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Employees engaged and motivated
to reach their full potential
18,882
Training hours to develop
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2020 highlights
2020 IN NUMBERS
Capacity split
by source
Capacity split
by energy type
Capacity split
by geographic region
Breakdown1
Capacity
Breakdown1
Capacity
Breakdown1
Capacity
Thermal
Renewable
High Efficiency
Cogen
49%
38%
13%
Europe
Latin America
Africa
North America
55%
39%
5%
1%
Natural gas
Coal
Wind
23%
22%
18%
High Efficiency Cogen 13%
Hydro
Solar
Liquid fuels
Biogas
12%
8%
3%
1%
1. Capacity splits based on installed MWs in 2020, excluding Western Generation Portfolio acquisition, closed in February 2021.
RELIABILITY AND EFFICIENCY
Thermal Fleet availability
factor (%)
Renewable Fleet availability
factor (%)
94.4%
96.0%
Against a benchmark of 92.7%
Against a benchmark of 98.1%
90.2
92.8
94.4
92.7
120
100
80
60
40
20
0
120
100
80
60
40
20
0
96.8
96.3
96.0
98.1
2018
2018
2019
2019
2020
2020
2018
2018
2019
2019
2020
2020
4
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Lost Time
Incident
Rate
0.07
Net efficiency*
63
63 60 63
73
72 69
40 42 42 42
41
41
42
2014
2015
2016
2017
2018
2019
2020
Total Solutions portfolio efficiency
Total Thermal portfolio efficiency
* Net energy produced by the
plants / energy consumed
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2020 highlights
2020 IN NUMBERS
Capacity split
by source
Capacity split
by energy type
Capacity split
by geographic region
Breakdown1
Capacity
Breakdown1
Capacity
Breakdown1
Capacity
Thermal
Renewable
High Efficiency
Cogen
49%
38%
13%
Europe
Latin America
Africa
North America
55%
39%
5%
1%
High Efficiency Cogen 13%
Natural gas
Coal
Wind
Hydro
Solar
Liquid fuels
Biogas
23%
22%
18%
12%
8%
3%
1%
RELIABILITY AND EFFICIENCY
1. Capacity splits based on installed MWs in 2020, excluding Western Generation Portfolio acquisition, closed in February 2021.
Thermal Fleet availability
Renewable Fleet availability
factor (%)
factor (%)
94.4%
96.0%
Against a benchmark of 92.7%
Against a benchmark of 98.1%
Lost Time
Incident
Rate
0.07
Net efficiency*
63
63 60 63
73
72 69
90.2
92.8
94.4
92.7
96.8
96.3
96.0
98.1
120
100
80
60
40
20
0
120
100
80
60
40
20
0
2018
2018
2019
2019
2020
2020
2018
2018
2019
2019
2020
2020
40 42 42 42
41
41
42
2014
2015
2016
2017
2018
2019
2020
Total Solutions portfolio efficiency
Total Thermal portfolio efficiency
* Net energy produced by the
plants / energy consumed
FINANCIAL AND OPERATIONAL HIGHLIGHTS
Revenue
($m)
1,410.7
2020 change: 6%
Income from
Operations ($m)
307.9
2020 change: 5%
1,330
1,410.7
1,253
1,500
1,200
900
600
300
0
292
307.9
262
350
300
250
200
150
100
50
0
Adjusted EBTDA1
($m)
722.0
2020 change: 3%
703
722
610
800
700
600
500
400
300
200
100
0
2018
2019
2020
2018
2019
2020
2018
2019
2020
Proportionate Adjusted
EBITDA1 ($m)
Funds from
Operations1 ($m)
568.7
2020 change: 1%
379.6
2020 change: 12%
Installed Capacity
(MW)
4,8042
2020 change: -1%
536
562
569
600
500
400
300
200
100
0
380
338
302
400
350
300
250
200
150
100
50
0
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
4,846
4,8043
4,316
2018
2019
2020
2018
2019
2020
2018
2019
2020
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ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
5
1. See pages 30 and 31 for definitions.
2. Excluding Western Generation Portfolio acquisition closed in February 2021.
3. Capuava plant transferred to customer and Guadeloupe plant dismantled further to Power Purchase Agreements expiry in 2020.
At a glance
WHO WE ARE
ContourGlobal develops, acquires, and operates thermal and
renewable power plants to generate electricity.
ContourGlobal is a power generation company committed
to new growth in low and no-carbon technologies. Since our
inception in 2005, we have grown to be an internationally
recognized company with technologically diverse assets
and best-in-class operations.
ContourGlobal supplies electricity principally in the wholesale
market, selling it under contract and regulated tariffs to those
who then transmit or distribute it or sell it on to households,
businesses, and others in the retail market. Our customers
include national grids and utilities that supply these grids,
as well as commercial and industrial customers that receive
electricity, steam, water, or CO2 directly from on-site facilities.
Since the vast majority of our revenues are derived from
long-term contracts or long-term regulated tariffs with
creditworthy counterparties, cash flows are predictable,
and risk is relatively low. Over 79% of revenues, not
considering the Western Generation Portfolio revenues,
are contracted over the next five years.
Our portfolio is diversified across different technologies,
geographies, and stages of development. At the end of
2020, we owned and operated 105 thermal and renewable
power generation assets in Europe, Latin America, North
America and Africa, with a total installed capacity of 4.8 GW.
Further to an investment opportunity initiated in 2020 and
closed in Q1 2021, our portfolio has subsequently grown
by 31%, to 117 plants and 6.3 GW.
Our strategy to invest in low and no-carbon technologies
includes innovative approaches to energy storage and
fuel sources.
ContourGlobal aims to create economic and social value
through high-quality operations, and to support the
communities where we work.
The Company’s five values and four sustainability principles
underpin everything we do.
Our thermal fleet uses conventional fossil fuels:
• natural gas
• biogas
• coal
• liquid fuels
Our renewable fleet uses sustainable resources:
• wind
• photovoltaic solar
• concentrated solar
• hydropower
6
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
At a glance
WHO WE ARE
ContourGlobal develops, acquires, and operates thermal and
renewable power plants to generate electricity.
ContourGlobal is a power generation company committed
Our portfolio is diversified across different technologies,
to new growth in low and no-carbon technologies. Since our
geographies, and stages of development. At the end of
inception in 2005, we have grown to be an internationally
2020, we owned and operated 105 thermal and renewable
recognized company with technologically diverse assets
power generation assets in Europe, Latin America, North
and best-in-class operations.
ContourGlobal supplies electricity principally in the wholesale
market, selling it under contract and regulated tariffs to those
who then transmit or distribute it or sell it on to households,
America and Africa, with a total installed capacity of 4.8 GW.
Further to an investment opportunity initiated in 2020 and
closed in Q1 2021, our portfolio has subsequently grown
by 31%, to 117 plants and 6.3 GW.
businesses, and others in the retail market. Our customers
Our strategy to invest in low and no-carbon technologies
include national grids and utilities that supply these grids,
includes innovative approaches to energy storage and
as well as commercial and industrial customers that receive
fuel sources.
electricity, steam, water, or CO2 directly from on-site facilities.
Since the vast majority of our revenues are derived from
through high-quality operations, and to support the
long-term contracts or long-term regulated tariffs with
communities where we work.
ContourGlobal aims to create economic and social value
creditworthy counterparties, cash flows are predictable,
and risk is relatively low. Over 79% of revenues, not
considering the Western Generation Portfolio revenues,
are contracted over the next five years.
The Company’s five values and four sustainability principles
underpin everything we do.
Our thermal fleet uses conventional fossil fuels:
Our renewable fleet uses sustainable resources:
• natural gas
• biogas
• coal
• liquid fuels
• wind
• photovoltaic solar
• concentrated solar
• hydropower
OUR FOUR SUSTAINABLE
BUSINESS PRINCIPLES
Operate safely
and efficiently
and minimize
environmental impacts
Safe and efficient operations are
critical to meeting energy demand,
reducing environmental emissions,
and using resources responsibly.
Grow well
By growing well we can contribute to
the development of a clean energy
model which can help meet energy
needs while reducing the impact on
the climate. Further, we can promote
energy and economic security and
increase energy access, creating
economic wealth for investors,
our employees, and, indirectly,
our communities.
Manage our business
responsibly
Managing responsibly - through
governance, a commitment to
our people, and transparent
communication - is a fundamental
part of our commitment to pioneering
sustainable power generation around
the world.
Enhance our
operating
environment
Promoting energy solutions is critical
to enhancing the electricity sector,
including solutions to address
intermittency of renewable resources
and low-carbon alternatives to maintain
price stability. Strengthening capacity
in the sector, and in the supply chain,
promotes transparent processes and
new pools of sector expertise and is
achieved with the community
engagement and investment.
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OUR VALUES
1
2
3
4
5
We care about our people’s health,
safety, wellbeing, and development
We expect, embrace, and enable
excellence and continuous learning
through humility and the knowledge that
we will fail – but when we do, we will learn
We act transparently and with
moral integrity
We honor the commitments of those
who have placed their trust in us
We work hard and without boundaries
as a multinational, integrated team
6
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
7
Where we operate
OUR GLOBAL ASSETS
Our business is international with a concentration in three
primary regions: Europe, the Americas and sub-Saharan Africa.
Our seven largest assets
1
2
3
908 MW
Maritsa, Bulgaria
800 MW
Arrubal, Spain
604 MW
Hobbs, United States
15
518 MW
Mexico CHP, Mexico
26
27
33
438 MW
Chapada I, II & III, Brazil
24
25
404 MW
Vorotan, Armenia
250 MW
CSP, Spain
117power generation assets,
including Western Portfolio
Acquisition initiated in 2020
and closed in February 2021.
20thermal plants
+12thermal plants including
Western Generation
Portfolio acquired
in February 2021
85renewable plants
1.
2.
3.
4.
5.
6.
7.
8.
9.
Maritsa, BULGARIA
Arrubal, SPAIN
Hobbs, UNITED STATES
TermoemCali, COLOMBIA
Five Brothers, UNITED STATES (5)
Trinity, TRINIDAD & TOBAGO
Sochagota, COLOMBIA
Three Sisters, UNITED STATES (3)
Togo, TOGO
10.
Cap des Biches I & II, SENEGAL
11. Waterside, UNITED STATES
12.
13.
14.
Bonaire Engines, DUTCH ANTILLES
KivuWatt, RWANDA
Saint Martin, FRENCH TERRITORY
24. Vorotan complex, ARMENIA
25. CSP, SPAIN (5)
26. Chapada I, BRAZIL
27. Chapada II, BRAZIL
28. Hydro Brazil, BRAZIL (9)
29. Asa Branca, BRAZIL
30. Austria Wind, AUSTRIA (10)
8
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
coal
natural gas
natural gas
natural gas
natural gas
natural gas
coal
natural gas
natural gas
liquid fuels
liquid fuels
liquid fuels
biogas
liquid fuels
hydro
solar
wind
wind
hydro
wind
wind
908 MW
800 MW
604 MW
240 MW
230 MW
225 MW
165 MW
141 MW
100 MW
86 MW
72 MW
27 MW
26 MW
14 MW
404 MW
250 MW
205 MW
172 MW
168 MW
160 MW
148 MW
Where we operate
Our seven largest assets
1
2
3
908 MW
Maritsa, Bulgaria
800 MW
Arrubal, Spain
604 MW
Hobbs, United States
15
518 MW
Mexico CHP, Mexico
20thermal plants
+12thermal plants including
Western Generation
Portfolio acquired
in February 2021
85renewable plants
OUR GLOBAL ASSETS
Our business is international with a concentration in three
primary regions: Europe, the Americas and sub-Saharan Africa.
438 MW
Chapada I, II & III, Brazil
27
33
26
24
25
404 MW
Vorotan, Armenia
250 MW
CSP, Spain
117power generation assets,
including Western Portfolio
Acquisition initiated in 2020
and closed in February 2021.
Maritsa, BULGARIA
Arrubal, SPAIN
Hobbs, UNITED STATES
TermoemCali, COLOMBIA
Five Brothers, UNITED STATES (5)
Trinity, TRINIDAD & TOBAGO
Sochagota, COLOMBIA
Three Sisters, UNITED STATES (3)
Togo, TOGO
10.
Cap des Biches I & II, SENEGAL
11. Waterside, UNITED STATES
Bonaire Engines, DUTCH ANTILLES
KivuWatt, RWANDA
Saint Martin, FRENCH TERRITORY
1.
2.
3.
4.
5.
6.
7.
8.
9.
12.
13.
14.
24. Vorotan complex, ARMENIA
25. CSP, SPAIN (5)
26. Chapada I, BRAZIL
27. Chapada II, BRAZIL
28. Hydro Brazil, BRAZIL (9)
29. Asa Branca, BRAZIL
30. Austria Wind, AUSTRIA (10)
coal
natural gas
natural gas
natural gas
natural gas
natural gas
coal
natural gas
natural gas
liquid fuels
liquid fuels
liquid fuels
biogas
liquid fuels
hydro
solar
wind
wind
hydro
wind
wind
908 MW
800 MW
604 MW
240 MW
230 MW
225 MW
165 MW
141 MW
100 MW
86 MW
72 MW
27 MW
26 MW
14 MW
404 MW
250 MW
205 MW
172 MW
168 MW
160 MW
148 MW
11
35 14
6
12
7
4
31
266 27
266 27
33
29
28
17
8
55
1
16
3
15
thermal plants
high efficiency
cogen plants
renewable plants
highlighted assets in
this map form part of
the Western Portfolio
Acquisition, initiated
in 2020 and closed
in Q1 2021
Thermal: High Efficiency Cogeneration
15. Mexico CHP, MEXICO (2)
16.
17.
18.
19.
Borger, UNITED STATES
Solutions Brazil, BRAZIL (3)
Knockmore Hill, NORTHERN IRELAND
Solutions Benin, NIGERIA
20. Solutions Nogara, ITALY
21.
Solutions Ikeja, NIGERIA
22. Ploiesti, ROMANIA
23. Solutions Oricola, ITALY
31.
Inka, PERU
32. Solar Italy, ITALY (48)
33. Chapada III, BRAZIL
34.
Solar Slovakia, SLOVAKIA (3)
35. Bonaire Wind, DUTCH ANTILLES
36. Solar Romania, ROMANIA
37.
Italy Biogas, ITALY (2)
natural gas
natural gas
natural gas
natural gas
natural gas
natural gas
natural gas
natural gas
natural gas
wind
solar
wind
solar
wind
solar
biogas
518 MW
230 MW
59 MW
15 MW
10 MW
9 MW
7 MW
6 MW
3 MW
114 MW
77 MW
59 MW
35 MW
11 MW
7 MW
2 MW
18
2
25
30 34
36
2
22
23323
202020
37337
32
1
24
10
9
21
19
13
Gross Capacity (MW)
2,992
+1,502
Gross Capacity (MW) of the
Western Generation Portfolio
acquired in February 2021
1,812
Gross Capacity (MW)
8
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
9
Chairman’s statement
MEETING THE CHALLENGE
Despite the terrible toll that
COVID-19 exerted on the
world, I am proud to report
that ContourGlobal turned in
a superb performance in 2020.
We met our operational and
financial targets, while keeping
our people safe. This is a real
tribute to management and to
everyone who works in the
business, and I thank them all.
Resilience
The pandemic showed the strength and resilience of
our business model, and the unwavering dedication of our
people. The fact that we had already invested in advanced
technology meant we were able to operate our power plants
remotely and switch from working in offices to working from
home with relative ease. Secondly, our strategy of working
only with high-caliber counterparties meant that the vast
majority of our contracts were honored throughout the
pandemic, providing financial resilience and strong cashflow.
Electricity generation has been regarded as an essential
service in the pandemic, and all our plants were able to
continue operating.
Community support
Our business principle of social investing in the communities
we serve also helped sustain us and the people on whom
we rely during the pandemic. We focused the majority of
our social investment budget on COVID-19 relief, supplying
PCR tests, personal protective equipment, oxygen, and
other medical supplies to clinics and hospitals, sometimes
stepping in before governments were able to. We are
pleased also to have provided essential food to the
communities we serve that were hardest hit.
“THE PANDEMIC SHOWED
THE STRENGTH AND
RESILIENCE OF OUR
BUSINESS MODEL,
AND THE UNWAVERING
DEDICATION OF
OUR PEOPLE.”
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Chairman’s statement
MEETING THE CHALLENGE
Despite the terrible toll that
COVID-19 exerted on the
world, I am proud to report
that ContourGlobal turned in
a superb performance in 2020.
We met our operational and
financial targets, while keeping
our people safe. This is a real
tribute to management and to
everyone who works in the
business, and I thank them all.
Resilience
The pandemic showed the strength and resilience of
our business model, and the unwavering dedication of our
people. The fact that we had already invested in advanced
technology meant we were able to operate our power plants
remotely and switch from working in offices to working from
home with relative ease. Secondly, our strategy of working
only with high-caliber counterparties meant that the vast
majority of our contracts were honored throughout the
pandemic, providing financial resilience and strong cashflow.
Electricity generation has been regarded as an essential
service in the pandemic, and all our plants were able to
continue operating.
Community support
Our business principle of social investing in the communities
we serve also helped sustain us and the people on whom
we rely during the pandemic. We focused the majority of
our social investment budget on COVID-19 relief, supplying
PCR tests, personal protective equipment, oxygen, and
other medical supplies to clinics and hospitals, sometimes
stepping in before governments were able to. We are
pleased also to have provided essential food to the
communities we serve that were hardest hit.
Health and safety
For our own staff, we not only provided the necessary
infection control measures but also psychological support,
particularly where teams found themselves isolated from
their families for weeks on end. Besides the effects of the
pandemic, we continued our focus on health and safety,
which we see as a critical underlying business principle.
We remain one of the safest power generation companies
in the world and continue to have a Target Zero for lost
time incidents (LTIs). However, after 294 days without
any LTIs, we experienced two towards the end of the year.
We take these very seriously and have conducted full
investigations to understand the causes and how any
repetition can be avoided.
Net zero
Having pledged in 2019 not to invest in new coal-fired
power plants, we continue our commitment to reducing
the CO2 intensity of our energy production, aiming to
achieve net zero carbon by 2050.
Dividends
The strength of our earnings and predictable cashflow
enabled us to continue our policy of growing ordinary
dividends per share at 10% annually. Dividend cover is
strong and stable. The total dividend payable for the full
year of 2020 is $107.5 million. The fourth quarter dividend of
$4.0591 cents per share, equivalent to $26.6 million, will be
paid on 19th April 2021. The dividend receivable in pounds
sterling will be based on the exchange rate on the applicable
announcement date. Further information on dividends can be
found on page 60.
The Company’s share price recovered after the dip at the
start of the pandemic but does not at all reflect the intrinsic
value of the business.
ACQUISITION
In late 2020 we announced the major
acquisition of a portfolio of assets in the
United States and Trinidad & Tobago, with
the transaction negotiated on a bilateral basis,
without an auction. This is another demonstration
of our business model being successfully applied.
In keeping with our objectives, this portfolio of
renewable and low carbon thermal plants
represents an opportunity where we can
leverage our operational excellence to improve
performance. Having expertise and experience
in the Caribbean allowed us to take on this
geographical mix of assets and take advantage
of our economies of scale. We will also be able
to consider financial optimization of the assets
acquired, which have the potential for sell-downs
to minority partners at attractive valuations.
People
There were no Board changes in 2020. Whilst we are
looking to appoint an additional female Non-Executive
Director in 2021, the cohesion of the Board contributed
to good decision-making at a time of economic shock,
and I would like to thank all my Board colleagues for their
contribution during this trying, but ultimately successful year.
Let me also use this opportunity to reiterate my thanks and
appreciation to all our people for their amazing dedication
and selflessness – without them we would never have been
able to rise so effectively to the unprecedented challenge
that 2020 represented.
Craig A. Huff,
Chairman
“THE PANDEMIC SHOWED
THE STRENGTH AND
RESILIENCE OF OUR
BUSINESS MODEL,
AND THE UNWAVERING
DEDICATION OF
OUR PEOPLE.”
10
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
11
Business model
CREATING VALUE
OUR INPUTS
Renewable
Solar
Photovoltaic solar power is generated using solar
cells to convert energy from the sun into a flow of
electrons. The cells produce a direct current which
can be used to power equipment. Concentrated
solar power generates power by concentrating
sunlight onto a small area using mirrors or lenses.
Electricity is generated when this is converted to
heat, which produces steam for a turbo-generator.
Wind
Wind turbines harness the kinetic energy of the
wind and redirect it to a generator to convert it
to electrical power.
Hydro
Hydropower is produced by moving water spinning
turbines at speed, which in turn are attached to
electrical generators.
OUR WAY OF CREATING VALUE
Utilizing resources, ContourGlobal creates energy to supply
electricity to utilities and corporations that is ultimately used
to power businesses and homes. Our value creation comes
from focusing on our three core strategic principles:
Operational excellence, High growth, and Financial
strength, and also from the ContourGlobal Way of working:
operating our power plants safely and efficiently, adhering
to the highest standards of corporate governance and
business ethics, upholding human rights and labor principles
within the Company and in the supply chain, providing
excellent customer service, paying our fair share of taxes,
promoting sector development, and utilizing technology and
innovation to lower emissions. The end result is safe, reliable,
accessible electricity.
Natural resources
Gas, solar power, wind,
water, liquid fuel, coal.
Human
Capable, committed,
driven.
Capital
Equity investment, debt
financing.
Community
Land, infrastructure.
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Business model
CREATING VALUE
OUR INPUTS
Renewable
Solar
Natural resources
Gas, solar power, wind,
water, liquid fuel, coal.
Human
driven.
Capable, committed,
Capital
financing.
Equity investment, debt
Community
Land, infrastructure.
Photovoltaic solar power is generated using solar
cells to convert energy from the sun into a flow of
electrons. The cells produce a direct current which
can be used to power equipment. Concentrated
solar power generates power by concentrating
sunlight onto a small area using mirrors or lenses.
Electricity is generated when this is converted to
heat, which produces steam for a turbo-generator.
Wind turbines harness the kinetic energy of the
wind and redirect it to a generator to convert it
Wind
to electrical power.
Hydro
Hydropower is produced by moving water spinning
turbines at speed, which in turn are attached to
electrical generators.
Thermal
Natural gas and biogas
Natural gas consists mainly of methane and is created
as a result of underground decomposition. Biogas
can be produced from many biological raw materials.
The gas is used as fuel for different technologies to
produce electricity.
High Efficiency Cogen
Cogeneration is the simultaneous production of
electricity and useful heat. In a regular power plant,
the waste heat produced in the generation of
electricity is lost, but in a cogeneration plant it
is recovered, thus increasing efficiency.
Liquid fuels
Liquid fuels are used in reciprocating engines to
produce electricity.
Coal
Coal is burned in a furnace to produce heat.
This produces steam which is then piped to a
turbo-generator. While we have coal plants in our
portfolio currently, we will not be adding new coal
capacity in the future.
OUR WAY OF CREATING VALUE
Utilizing resources, ContourGlobal creates energy to supply
electricity to utilities and corporations that is ultimately used
to power businesses and homes. Our value creation comes
from focusing on our three core strategic principles:
Operational excellence, High growth, and Financial
strength, and also from the ContourGlobal Way of working:
operating our power plants safely and efficiently, adhering
to the highest standards of corporate governance and
business ethics, upholding human rights and labor principles
within the Company and in the supply chain, providing
excellent customer service, paying our fair share of taxes,
promoting sector development, and utilizing technology and
innovation to lower emissions. The end result is safe, reliable,
accessible electricity.
Linking to our three core strategic principles
The icons below highlight how our business links to our
strategy and four principles; they can be found throughout
the report:
Operational
excellence
High
growth
Financial
strength
OUR POSITIVE IMPACT
We create a positive impact for…
…talented people
1,381
Employees engaged and motivated
to reach their full potential.
…knowledge
18,882
Training hours to develop our
employees, an average of 14 hours
per employee.
…shareholders
$105.7m
Dividends paid in 2020, in line with our
10% annual dividend increase target.
…assets
4.8 GW
Installed capacity across 107 sites in
18 countries.
…community
46,778
Hours devoted to community
education activities (only taking
into account education, and not
engagement activities). This number
of hours is significantly reduced
compared to 2019 (~300k hours)
due to social distancing measures
and redirection of our social projects
toward COVID-19 related needs.
…environment
-12%
% reduction in CO2 intensity of energy
production from our 2019 base year
intensity of 0.51 to our 2020 intensity
of 0.45 (where intensity is Net CO2
emissions in tonnes/total energy
production in MWh).
.
12
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
13
CEO review
A YEAR LIKE NO OTHER
“THE STORIES ABOUT
THESE INCREDIBLE
EFFORTS BY
CONTOURGLOBAL’S
PEOPLE WILL BE THE
HIGHLIGHT OF OUR
2020 ANNUAL REPORT.”
forbade certain business activity. But to be able to work is
one thing. To actually do it is another. Our crews sacrificed
for their communities, their countries and ContourGlobal. In
the early days of the pandemic it was hard for many of our
people to leave their homes. It was scary. Our people worried
that they would become infected commuting and working
and then bring the virus back to their families.
While that worry never went away, other challenges made
work in 2020 much harder than before. Workers in high-risk
categories isolated at home. This meant fewer workers on
each shift which meant more work and longer hours. At work,
everything was more complicated. We continuously changed
work routines, PPE requirements, testing and staffing. This
made the day longer and more challenging and therefore
riskier. Our operations team led by Karl Schnadt and Quinto
Di Ferdinando did an excellent job designing new ways of
working—we conducted inspections, health and safety
audits and performed major maintenance remotely using
smart glasses that let us bring expertise virtually into the
plants when travel was restricted. We innovated in other
ways, for example investing in technology such as UV-C
to keep the virus at bay in closed spaces and obtaining
2020 put the accent on “Health” in our “Health and Safety”
value and performance. Until last year, most of us in the
power industry viewed health as the result of safe working.
As an industrial company operating in an inherently risky
environment, our daily focus is on the risks that we find in
our power plants, not the risks that we might bring through
the front door. 2020 changed that. As with nearly every other
organization on planet earth, we spent a large part of the year
trying to outwit a virus--in our case to keep it out of our power
plants, enabling us to keep the lights on. The stories about
these incredible efforts by ContourGlobal’s people are the
highlight of our 2020 annual report. They are stories of
courage and dedication, incredible sacrifice, commitment
and caring while working under unbelievably challenging
conditions. I encourage you to read this witness from a few
of these extraordinary people in Peru, Armenia, Spain, Togo
and other locations. They are helpfully indexed on the inside
front cover of our report for easy navigation.
In the early days of the pandemic it took courage to walk
out the front door and go to work each day.
ContourGlobal’s front-line workers work in power plants.
They can’t work from home. We were fortunate to have been
declared an essential business in every country where we
operated. Many, many fine businesses were not so fortunate
and suffered severely as governments the world over
14
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CEO review
A YEAR LIKE NO OTHER
“THE STORIES ABOUT
THESE INCREDIBLE
EFFORTS BY
CONTOURGLOBAL’S
PEOPLE WILL BE THE
HIGHLIGHT OF OUR
2020 ANNUAL REPORT.”
2020 put the accent on “Health” in our “Health and Safety”
forbade certain business activity. But to be able to work is
value and performance. Until last year, most of us in the
one thing. To actually do it is another. Our crews sacrificed
power industry viewed health as the result of safe working.
for their communities, their countries and ContourGlobal. In
As an industrial company operating in an inherently risky
the early days of the pandemic it was hard for many of our
environment, our daily focus is on the risks that we find in
people to leave their homes. It was scary. Our people worried
our power plants, not the risks that we might bring through
that they would become infected commuting and working
the front door. 2020 changed that. As with nearly every other
and then bring the virus back to their families.
organization on planet earth, we spent a large part of the year
trying to outwit a virus--in our case to keep it out of our power
plants, enabling us to keep the lights on. The stories about
these incredible efforts by ContourGlobal’s people are the
highlight of our 2020 annual report. They are stories of
courage and dedication, incredible sacrifice, commitment
and caring while working under unbelievably challenging
conditions. I encourage you to read this witness from a few
of these extraordinary people in Peru, Armenia, Spain, Togo
and other locations. They are helpfully indexed on the inside
front cover of our report for easy navigation.
out the front door and go to work each day.
ContourGlobal’s front-line workers work in power plants.
They can’t work from home. We were fortunate to have been
declared an essential business in every country where we
operated. Many, many fine businesses were not so fortunate
and suffered severely as governments the world over
14
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
While that worry never went away, other challenges made
work in 2020 much harder than before. Workers in high-risk
categories isolated at home. This meant fewer workers on
each shift which meant more work and longer hours. At work,
everything was more complicated. We continuously changed
work routines, PPE requirements, testing and staffing. This
made the day longer and more challenging and therefore
riskier. Our operations team led by Karl Schnadt and Quinto
Di Ferdinando did an excellent job designing new ways of
working—we conducted inspections, health and safety
audits and performed major maintenance remotely using
plants when travel was restricted. We innovated in other
ways, for example investing in technology such as UV-C
to keep the virus at bay in closed spaces and obtaining
In the early days of the pandemic it took courage to walk
smart glasses that let us bring expertise virtually into the
independent third-party review of our work practices in
Spain where we received COVID-19 certification from AENOR.
Faced with uncertainty as to when and whether travel would
be possible, within three months we configured every power
plant so that it could be operated remotely or largely so.
We also rejiggered our outage schedules to push our
major maintenance outages to later in the year given the
unpredictability of emerging lockdown policies. Karl and
Quinto did a masterful job wedging our major outages in
Europe and Africa into the mostly quiet summer period
which proved the calm between the two COVID storm
surges of 2020.
Our corporate service teams, all working remotely following
our closure of offices in February, reoriented their work to first
support our power plant teams. The reinvigoration of purpose
and service of our remote teams was vital to our efforts to
remain available and operational. Very early in the pandemic
we realized that COVID-19 testing capabilities could keep
the virus out of our facilities. We also perceived that waiting
for national governments to obtain tests would lead to
unacceptable delays. Our procurement team in Bulgaria, led
by Bilyana Aleksieva, acquired hundreds of thousands of PCR
tests by April and distributed them throughout the world, first
to our businesses in Armenia, Bulgaria, Mexico, Peru and
Togo and shortly after in Austria, Brazil, Rwanda and Spain,
working in an unprecedented way with local laboratories
and health authorities. In many of our countries of operation
we introduced some of their first tests and in all countries,
we offered donations of testing platforms and the tests
themselves to make testing more available. We also
procured a global COVID-19 specific insurance policy to
provide everyone in the company with income protection
in the event they were hospitalized because of the virus.
These new ways of working required new types of expertise.
Early in the pandemic we were literally “dialing for doctors”
to obtain advice about infection, mitigation and testing. Later
we were able to bring in more structured advice and support
by partnering with Columbia University’s School of Public
Health’s ICAP program for input into our testing protocols
and work policies.
”Heroic” is fair characterization of ContourGlobal’s front-line
workers in 2020. But for some even more was asked. As Ara
Hovsepyan, who leads our business in Armenia, relates on
page 19 of our report, when the pandemic hit, our Vorotan
hydroelectric project was undergoing a multiyear major
rehabilitation project with numerous suppliers and contractors
sourced from abroad. Convincing these teams to continue
to stay and work on site was no small task and involved
procuring tests very early in the pandemic and adopting
Isolation Work Mode. Somehow Ara, our plant manager
Aram, Yolyan and the team managed to keep the work going
and maintain most of the contractors on site. Then came war:
8 km from our plant terrible fighting broke out between
Azerbaijan and Armenia causing the inevitable requisitioning,
mobilization, and temporary loss of a third of our workforce,
along with the repatriation of our foreign workers.
Vorotan’s challenges were reminiscent of those which the
Kramatorsk Heat and Electricity company faced in 2013
when war broke out in Ukraine’s eastern region. At the end
of the year we awarded the team a special award for heroism,
commitment and courage—for keeping the lights and heating
on in this eastern Ukrainian town despite it being at the
epicenter of the war in Ukraine’s Donetsk region. We sold
KTE in 2017, but the Kramatorsk Award lives on, granted as
merited. Vorotan joins KivuWatt as the third recipient of the
Kramatorsk Award and it was an easy decision to make.
Todor Kolev received an award for heroic commitment
and dedication, just the second time we have granted an
award named after one of our early leaders, Dag Adolfsson.
Dag was a “go anywhere, do anything” guy whose early
travels with us took him from western Minnesota to the
Brazilian interior and the shores of Togo. Todor’s incredible
commitment honors Dag—over the past several years he has
spent 600 days abroad supporting our power plants with his
technical expertise and was critical to our commissioning
efforts in Mexico in 2019.
Our ability to operate well and keep our teams safe from
COVID-19 in 2020 unfortunately didn’t extend to Target Zero
and we experienced a setback with two Lost Time Incidents,
the most since 2016. Moreover both were very serious. One
in Vorotan could easily have resulted in the death of one of
our employees and one in Mexico was but a step away from
serious burns. It is tempting to conclude that the incredible
reorientation to protect health caused us to take our eye off
of safety but we need to do better in 2021 and finally achieve
Target Zero.
ISOLATION WORK MODE
To add a bit of backstory to one of these
COVID-19 memories, Koete’s explanation of
“isolation work mode” on page 40. “Isolation
Work Mode” was a term the operating teams
coined to describe a way or working during
the early stages of the pandemic when an entire
shift would test for COVID-19 and then literally
live in the plant for 3-6 weeks, living and working
together and eliminating all physical contact with
the outside world. Being self sufficient meant,
cooking meals on site with food brought in at
the beginning of the stay. We asked Koete at a
company event late last year what he would do
differently were his team to enter isolation mode
again. His quick reply— “organize our meals as
well as the second shift did! We didn’t have any
time and they had four weeks. They planned their
meals, froze seafood, and even convinced a chef
to isolate with them. We didn’t have the time to do
that, so we ate everything out of a can or a box.
Next time, we go second!”
15
CEO review (continued)
Despite these challenges we had a very strong operating
year in 2020, building upon last year’s successes. Equivalent
Availability Factors (“EAF”) were excellent across the entire
thermal fleet including at the newly commissioned CGA
CCGT (Combined Cycle Gas Turbine) in Mexico in its first
full year of operations. Total thermal division EAF was 94.4%
compared to 92.8% in 2019, both excellent results. EAF for
our CCGT, Engine and coal plant clusters was better than last
year with only the Solutions cluster lower, reflecting planned
outages in the first full year of operations at CGA in Mexico.
Cost control and capex management were also excellent in
2020 and better than plan in all but one asset cluster. Our
operating teams did an amazing job managing fixed costs
and capex in 2020 even with increased costs associated
with COVID-19 mitigation and testing measures with fixed
costs 9% below their 2020 plan. Similarly, capex was also
9% below budget.
Operating performance in the renewable fleet was similarly
strong with EAF within 0.30% of last year’s achievement at
96.0%. Each of Spanish CSP, Italian and Slovakian solar,
and wind (Brazil, Peru and Austria) were at or better than last
year’s results. Only hydro was lower, reflecting an extended
forced outage at one of our plants in Brazil. All of our wind
assets including our large complex in Brazil performed better
than in 2019.
Renewable resource performance in 2020 was generally
good and highlighted once again the benefit of having a
diverse portfolio of assets. Production was approximately
8% below budget with most of the variance the result of
disruptions in Armenia. Solar was virtually on budget, and
wind was approximately 5% below plan with an extraordinary
wind year in Peru being offset by lower resource in Brazil and
Austria. Overall, the deviation in resource-related production
resulted in a 4% reduction in renewable EBITDA vs plan, with
a mere 1% impact on global consolidated adjusted EBITDA
from 2019. Fixed cost control in the renewable fleet was
excellent and 17% below plan, non-fuel Operation &
Maintenance per unit of energy delivered was likewise
excellent and on plan. Similarly, capital expenditures
were well managed --approximately 12% below plan.
Cash distributions to the parent company--the entity that pays
dividends, interest and provides capital for new investment—
known in the covenants of our bonds as Cash Flow Available
for Debt Service (CFADS)—is a key financial measure for the
company as it reflects all of the cash received at the parent
company which is then allocated according to our strategy.
We also believe that the ratio of those distributions to the
recourse debt that is held there, is the best measure of our
financial leverage, given that nearly all of our additional debt
is non-recourse project financing that sits at the asset level.
CFADS in 2020 was $274 million, approximately 10% higher
than in 2019, reflecting the continued strength and resilience
of our business model.
Growth, Capital and Market Outlook
At year end, literally one day after we announced a major
acquisition in the United States and the Caribbean, we
entered the bond market to proactively refinance an existing
tranche of debt, successfully extending tenor by five and
seven years and locking in the lowest ever interest rates
since first entering the bond market in 2014. The five and
seven-year notes were priced at 2.75% and 3.125%
respectively and were significantly over subscribed. Our
performance in the fixed-income market over the past
seven years is important for our growth story given the
capital-intensive nature of our business. Continued
performance and credibility in this market is critical
to executing our ambitious growth program.
December saw us announce a significant acquisition in
the United States and the Caribbean, in Trinidad & Tobago,
of 1,502 MW of contracted, flexible gas-fired generation
anchored by three large assets in New Mexico, Trinidad and
Texas, the latter of which is a large combined heat and power
asset joining our Solutions fleet. This is our second largest
acquisition to date, besting by $150 million our acquisition in
Mexico in 2019 and represents our third Class I transaction in
three years. We see significant opportunities for continued
acquisition and greenfield growth in the dynamic US market.
This acquisition increases our installed capacity by nearly
30% and provides opportunities to further expand our
presence in these key markets, markets which are adjacent
to or in geographies where we already operate. It adds two
substantial assets in the Southwest Power Pool (Texas and
New Mexico) and two clusters of flexible generation assets in
California. The assets are either the newest and most efficient
assets in their respective markets or integral resources for
ensuring reliability and supporting the transition to renewable
grids. In all the markets the assets are expected to maintain
their competitive positions given the lack of currently
contemplated new build baseload capacity in each region.
Outlook
We closed the acquisition in mid-February of this year and
operations have been excellent even at the two major assets
in Texas and New Mexico during the record setting cold snap
that created havoc in the Electricity Reliability Council of
Texas (“ERCOT”) market.1 Both were fully available during
the week of record cold and this despite abnormally low
temperatures. Importantly, the terms of our contracts do not
require us to supply replacement power in the event of
outages which is the source of the financial carnage that we
have seen throughout the generation sector in ERCOT. The
absence of replacement power obligation is consistent with
the approach we have taken throughout the portfolio and is
rooted in our intentional approach to the risks that we are
willing to take in our contracts, of which replacement power
is not one of them.
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1. Neither of these assets is located within ERCOT, but rather the South
Western Power Pool (SPP)
CEO review (continued)
Despite these challenges we had a very strong operating
year in 2020, building upon last year’s successes. Equivalent
Availability Factors (“EAF”) were excellent across the entire
thermal fleet including at the newly commissioned CGA
CCGT (Combined Cycle Gas Turbine) in Mexico in its first
full year of operations. Total thermal division EAF was 94.4%
compared to 92.8% in 2019, both excellent results. EAF for
our CCGT, Engine and coal plant clusters was better than last
year with only the Solutions cluster lower, reflecting planned
outages in the first full year of operations at CGA in Mexico.
Cost control and capex management were also excellent in
2020 and better than plan in all but one asset cluster. Our
operating teams did an amazing job managing fixed costs
and capex in 2020 even with increased costs associated
with COVID-19 mitigation and testing measures with fixed
costs 9% below their 2020 plan. Similarly, capex was also
9% below budget.
Operating performance in the renewable fleet was similarly
strong with EAF within 0.30% of last year’s achievement at
96.0%. Each of Spanish CSP, Italian and Slovakian solar,
and wind (Brazil, Peru and Austria) were at or better than last
year’s results. Only hydro was lower, reflecting an extended
forced outage at one of our plants in Brazil. All of our wind
assets including our large complex in Brazil performed better
than in 2019.
Renewable resource performance in 2020 was generally
good and highlighted once again the benefit of having a
diverse portfolio of assets. Production was approximately
8% below budget with most of the variance the result of
disruptions in Armenia. Solar was virtually on budget, and
wind was approximately 5% below plan with an extraordinary
wind year in Peru being offset by lower resource in Brazil and
Austria. Overall, the deviation in resource-related production
resulted in a 4% reduction in renewable EBITDA vs plan, with
a mere 1% impact on global consolidated adjusted EBITDA
from 2019. Fixed cost control in the renewable fleet was
excellent and 17% below plan, non-fuel Operation &
Maintenance per unit of energy delivered was likewise
excellent and on plan. Similarly, capital expenditures
were well managed --approximately 12% below plan.
Cash distributions to the parent company--the entity that pays
dividends, interest and provides capital for new investment—
known in the covenants of our bonds as Cash Flow Available
for Debt Service (CFADS)—is a key financial measure for the
company as it reflects all of the cash received at the parent
company which is then allocated according to our strategy.
We also believe that the ratio of those distributions to the
recourse debt that is held there, is the best measure of our
financial leverage, given that nearly all of our additional debt
is non-recourse project financing that sits at the asset level.
CFADS in 2020 was $274 million, approximately 10% higher
than in 2019, reflecting the continued strength and resilience
of our business model.
Growth, Capital and Market Outlook
At year end, literally one day after we announced a major
acquisition in the United States and the Caribbean, we
entered the bond market to proactively refinance an existing
tranche of debt, successfully extending tenor by five and
seven years and locking in the lowest ever interest rates
since first entering the bond market in 2014. The five and
seven-year notes were priced at 2.75% and 3.125%
respectively and were significantly over subscribed. Our
performance in the fixed-income market over the past
seven years is important for our growth story given the
capital-intensive nature of our business. Continued
performance and credibility in this market is critical
to executing our ambitious growth program.
December saw us announce a significant acquisition in
the United States and the Caribbean, in Trinidad & Tobago,
of 1,502 MW of contracted, flexible gas-fired generation
anchored by three large assets in New Mexico, Trinidad and
Texas, the latter of which is a large combined heat and power
asset joining our Solutions fleet. This is our second largest
acquisition to date, besting by $150 million our acquisition in
Mexico in 2019 and represents our third Class I transaction in
three years. We see significant opportunities for continued
acquisition and greenfield growth in the dynamic US market.
This acquisition increases our installed capacity by nearly
30% and provides opportunities to further expand our
presence in these key markets, markets which are adjacent
to or in geographies where we already operate. It adds two
substantial assets in the Southwest Power Pool (Texas and
New Mexico) and two clusters of flexible generation assets in
California. The assets are either the newest and most efficient
assets in their respective markets or integral resources for
ensuring reliability and supporting the transition to renewable
grids. In all the markets the assets are expected to maintain
their competitive positions given the lack of currently
contemplated new build baseload capacity in each region.
Outlook
We closed the acquisition in mid-February of this year and
operations have been excellent even at the two major assets
in Texas and New Mexico during the record setting cold snap
that created havoc in the Electricity Reliability Council of
Texas (“ERCOT”) market.1 Both were fully available during
the week of record cold and this despite abnormally low
temperatures. Importantly, the terms of our contracts do not
require us to supply replacement power in the event of
outages which is the source of the financial carnage that we
have seen throughout the generation sector in ERCOT. The
absence of replacement power obligation is consistent with
the approach we have taken throughout the portfolio and is
rooted in our intentional approach to the risks that we are
willing to take in our contracts, of which replacement power
is not one of them.
1. Neither of these assets is located within ERCOT, but rather the South
Western Power Pool (SPP)
THE CG WAY
The CG Way is both the way we work and a
leadership training program now in its seventh
iteration. Not surprisingly, in 2020 CG Way VII
was held virtually. Somewhat surprisingly given
the remote nature of the event, over 500
employees attended facilitated by simultaneous
interpreting into seven languages, and received
very positive reviews with 99% of attendees
stating in a follow-up survey that they were
“extremely satisfied” (45%) or “satisfied” (54%)
and with similarly high marks for the content
and experience.
We expect to quickly expand our business further in the
United States, primarily through natural gas fired generation
and combined heat and power. Events in Texas and
California over the past several years highlight that absent a
technological breakthrough in the energy storage space, the
energy transition will be a long one, and under-investment in
reliable base load and mid-merit generation is a significant
challenge for grid stability and the ability of power systems
to incorporate increasing amounts of renewable generation
sources. We view this as an opportunity and one which
is meaningfully more remunerative than investing only in
renewables, a sector that has seen internal rates of return
drop to mid and even low single digits in the world’s
developed economies. Such rates of return coupled
with under-appreciated risks, such as replacement power
obligations from renewable generation power purchase
agreements, do not properly compensate for the risk involved
in developing and operating renewable assets. These assets
are not as straight-forward as commercial real estate or
investing and holding bonds to maturity, particularly given
that most renewable power purchase agreements are not
inflation indexed.
We do continue to see selective opportunities in the
renewable energy space, specifically in those technologies
and in those regions where we are active. We will invest
when we can obtain rates of return which reflect the risk
inherent in developing and operating power plants, and
will find those by leveraging our time-tested development
and operating capability and bringing in low cost of capital
partners looking for world class operators who can manage
their investment in power plants. In the past year we have
added renewable MW (Megawatt) to our businesses in
Bonaire, Austria and Armenia, for example, and continue
to see opportunities where we can leverage our operating
platform including in the newly acquired assets in the United
States and the Caribbean. We also see that our renewable
assets have meaningfully appreciated in value when viewed
through the prism of market comparables. These values
magnify the valuation discrepancy in the public market and
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we remain committed to unlock this value. In Brazil, as noted
last year, we believe that our sizable renewable portfolio will
be valued much higher by Brazilian-based investors in either
the private or public market and despite the interruption of
our divestiture process due to COVID-19, we will continue to
seek transactions that will place these assets in local hands.
In connection with the approval and publication of our most
recent Sustainability Report in October 2020, our Board of
Directors approved a new sustainability strategy. Building
upon our earlier announcement that we would no longer
invest in coal, we committed to new climate targets, including
reducing our Scope 1 CO2 emissions intensity by 40% by
2030 and achieving Net Carbon Zero by 2050. We
undertook limited assurance of our Scope 1 CO2 emissions
and reported to the CDP (formerly Carbon Disclosure Project)
for the first time. Coincident with the discontinuation of the
Kosovo lignite project, this new strategic commitment
highlights a meaningful reduction in CO2 emissions and the
reality that our portfolio of 117 power plants includes only
1.5 coal fired plants, representing 13% of adjusted EBITDA.
Elsewhere, changes to our sustainability strategy were
modest, reflecting that our existing four principles—to operate
safely and efficiently and minimize environmental impacts,
to grow well, to manage our business responsibly and to
enhance our operating environment—continue to capture
our group strategy, and its sustainability components.
Importantly, it reflects that our sustainability commitments
are central and integrated into our strategy and operations, a
living set of commitments that ContourGlobal’s people see as
part of the CG Way, not something that lives only in an ESG or
sustainability silo.
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ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
17
For all of us, 2020 was a year like no other. ContourGlobal
was privileged to continue operating but delivering this
extraordinary set of results in a year of unprecedented
challenge was due to our people. The performance of
ContourGlobal under the enormous pressure of this
global pandemic bodes well for its future.
Joseph C. Brandt.
Chief Executive Officer
18th March 2021
CEO review (continued)
As noted last year, we believe we will see meaningful
opportunities in the CO2 capture and storage space, an area
where we have been first movers incorporating capture and
storage into power plants. Our first project was in Romania
in 2010 at one of Coca Cola Hellenic’s bottling facilities where
we integrated carbon capture into our combined heat, power
and chilled water plant. We have subsequently successfully
implemented 5 projects in Europe and Africa, producing food
grade quality CO2 and demonstrating superb and long-lived
operating performance. We see this opportunity growing
and with larger projects, reflecting the realization that
achieving the ambitious goals of the Paris Accord will
require multiple approaches and mechanisms to
reducing global CO2 emissions.
We have for years been a leader in hiring, promoting
and retaining women in senior leadership positions, an
achievement recognized this year in the final Hampton-
Alexander Review which ranked ContourGlobal fifth out of the
FTSE 250 companies when it comes to woman in executive
management and one level down. While we are rightly proud
of this achievement, we have struggled to achieve similar
success in the diversity of our power plant management
where we only have three female power plant managers in
our group. We have launched a new initiative to replicate our
success at the top of the organization to the top of the power
plants and expand female leadership in this traditionally male
dominated sector.
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ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
CEO review (continued)
As noted last year, we believe we will see meaningful
For all of us, 2020 was a year like no other. ContourGlobal
opportunities in the CO2 capture and storage space, an area
was privileged to continue operating but delivering this
where we have been first movers incorporating capture and
extraordinary set of results in a year of unprecedented
storage into power plants. Our first project was in Romania
challenge was due to our people. The performance of
in 2010 at one of Coca Cola Hellenic’s bottling facilities where
ContourGlobal under the enormous pressure of this
we integrated carbon capture into our combined heat, power
global pandemic bodes well for its future.
Joseph C. Brandt.
Chief Executive Officer
18th March 2021
and chilled water plant. We have subsequently successfully
implemented 5 projects in Europe and Africa, producing food
grade quality CO2 and demonstrating superb and long-lived
operating performance. We see this opportunity growing
and with larger projects, reflecting the realization that
achieving the ambitious goals of the Paris Accord will
require multiple approaches and mechanisms to
reducing global CO2 emissions.
We have for years been a leader in hiring, promoting
and retaining women in senior leadership positions, an
achievement recognized this year in the final Hampton-
Alexander Review which ranked ContourGlobal fifth out of the
FTSE 250 companies when it comes to woman in executive
management and one level down. While we are rightly proud
of this achievement, we have struggled to achieve similar
success in the diversity of our power plant management
where we only have three female power plant managers in
our group. We have launched a new initiative to replicate our
success at the top of the organization to the top of the power
plants and expand female leadership in this traditionally male
dominated sector.
Ara Hovsepyan,
General Manager based in Yerevan
(Vorotan Complex), Armenia
ARMENIA
DEMONSTRATING RESILIENCE
The resilience of ContourGlobal and its people is nowhere
better demonstrated than in our Vorotan hydroelectric
business in Armenia. General Manager Ara Hovsepyan
tells the story:
“We had to contend with not just one but three crises
in 2020. Not only did we, like the rest of the world, face
COVID-19, but we also had a conflict on our doorstep
and a major downfall of available water resources due to
unfavorable snowfall and melting. Yet we were successful
in continuing operations and maintaining our plants against
all the odds, showing a high level of availability (97.8% in
2020, compared to 97.3% in 2019).
“As far as the pandemic is concerned, all three of our hydro
power plants were in lockdown between March and June.
We had a team of about 30 people whom we had to support
through isolation throughout that period.
“But on top of that, we found ourselves near the front line
of a conflict that was being fought on our borders – only
8km away – for 44 days between September and November.
It was so close that we could hear gunfire and feel the
vibrations of tanks and heavy artillery. 30 of our staff were
mobilized. Thank goodness, they did not see direct action.
However, this depleted our staffing by about 25%, putting
more strain on the team that was left. In view of the military
threat, we upgraded security at all our plants and improved
our communication systems. We supported the families of
employees unable to work and even donated life-saving
equipment to nearby medical clinics.
“As if that were not enough, low rainfall and snow melt
in 2019 meant that water levels in the rivers that feed our
plants were at a 20-year low. We were planning a major
electromechanical refurbishment of our generators, but
the conflict and pandemic combined meant that suppliers
delayed delivery of the necessary parts and labor, claiming
‘force majeure’.
“The team put a lot of effort into continuing to improve on
our H&S performance record, scoring highly on all leading
indicators. However, we had an LTI in September that left
one of the reservoir personnel injured, who has now fully
recovered. The team has drawn conclusions from the failure
and re-affirmed its commitment to achieving Target Zero LTI
performance from now on.
“The fact that we got through all this, maintaining electricity
supply, is a real tribute to our people. Their commitment is
remarkable and I am really proud of them!”
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19
Market review
CHANGING DYNAMICS
The COVID-19 pandemic highlighted the importance
of the Social aspect of Environmental, Social and
Governance considerations.
ContourGlobal has had a deep commitment towards
sustainability from inception. Since 2010, we have been
signatories to the UN Global Compact that supports
businesses in aligning their strategies and operations
with Ten Principles on human rights, labour, environment
and anti-corruption, and in taking strategic actions to
advance broader societal goals, such as the UN Sustainable
Development Goals, with an emphasis on collaboration and
innovation. In support of the UNGC environmental principles
and the Sustainable Development Goal on climate, we have
reduced our carbon intensity over the past five years. We are
committed to further reducing our intensity by 40% by 2030
and to be net carbon zero by 2050.
Recent times have seen an acceleration of the existing
trend of Environmental, Social and Governance (ESG)
considerations being front and center in investment
decisions. The recent COVID-19 crisis has focused minds
on the importance of resilience and sustainability, pushing
decarbonization up the agenda, but also highlighting the
importance of the ‘S’ in the ESG framework.
COVID-19 has had both a short- and long-term effect on
carbon dioxide (CO2) emissions. The pandemic-induced
global economic slowdown in 2020 reduced greenhouse
gas (GHG) emissions – but this is likely to only be temporary.
Ahead of the 2021 UN Climate Change Conference (COP 26)
there remains continued focus on achieving the emissions
targets of the Paris Agreement, and ContourGlobal's targets
are aligned with the Agreement.
The spotlight the pandemic threw on resilience has made
populations, governments and – significantly – investors
around the world more conscious of the threats to public
health. Companies that demonstrated resilience to external
shocks were increasingly seen as safer.
Recognizing the relatively challenging economic and social
conditions that populations face around some of our plants,
ContourGlobal has made it its mission to invest for social
good in the communities where we operate. In 2020, we
focused most of our social investments on providing food
where it was scarce and on donating important medical
supplies, such as personal protective equipment, PCR
tests and other clinical products.
KEY POWER MARKET TRENDS
• Growing emphasis on climate change –
trillions of dollars forecast to be invested
in green energy
• Battery manufacturing capacity growing
rapidly – but still small relative to overall
demand
• Thermal power continuing to be essential,
especially as a source of reliable base
load and back-up
• Carbon capture increasing as a means of
containing CO2 emissions, aside from the
rising cost of CO2 quotas
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Market review
CHANGING DYNAMICS
The COVID-19 pandemic highlighted the importance
of the Social aspect of Environmental, Social and
Governance considerations.
KEY POWER MARKET TRENDS
• Growing emphasis on climate change –
trillions of dollars forecast to be invested
in green energy
• Battery manufacturing capacity growing
rapidly – but still small relative to overall
demand
• Thermal power continuing to be essential,
especially as a source of reliable base
load and back-up
• Carbon capture increasing as a means of
containing CO2 emissions, aside from the
rising cost of CO2 quotas
ContourGlobal has had a deep commitment towards
sustainability from inception. Since 2010, we have been
signatories to the UN Global Compact that supports
businesses in aligning their strategies and operations
with Ten Principles on human rights, labour, environment
and anti-corruption, and in taking strategic actions to
advance broader societal goals, such as the UN Sustainable
Development Goals, with an emphasis on collaboration and
innovation. In support of the UNGC environmental principles
and the Sustainable Development Goal on climate, we have
reduced our carbon intensity over the past five years. We are
committed to further reducing our intensity by 40% by 2030
and to be net carbon zero by 2050.
Recent times have seen an acceleration of the existing
trend of Environmental, Social and Governance (ESG)
considerations being front and center in investment
decisions. The recent COVID-19 crisis has focused minds
on the importance of resilience and sustainability, pushing
decarbonization up the agenda, but also highlighting the
importance of the ‘S’ in the ESG framework.
COVID-19 has had both a short- and long-term effect on
carbon dioxide (CO2) emissions. The pandemic-induced
global economic slowdown in 2020 reduced greenhouse
gas (GHG) emissions – but this is likely to only be temporary.
Ahead of the 2021 UN Climate Change Conference (COP 26)
there remains continued focus on achieving the emissions
targets of the Paris Agreement, and ContourGlobal's targets
are aligned with the Agreement.
The spotlight the pandemic threw on resilience has made
populations, governments and – significantly – investors
around the world more conscious of the threats to public
health. Companies that demonstrated resilience to external
shocks were increasingly seen as safer.
Recognizing the relatively challenging economic and social
conditions that populations face around some of our plants,
ContourGlobal has made it its mission to invest for social
good in the communities where we operate. In 2020, we
focused most of our social investments on providing food
where it was scarce and on donating important medical
supplies, such as personal protective equipment, PCR
tests and other clinical products.
20
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
As a result of the COVID-19 crisis, governments around the
world have increased their emphasis on investment in clean
energy, both to improve environmental sustainability and
to boost job growth. US President Biden, for example,
has pledged to transform energy production and achieve
‘environmental justice’, with a plan committing $2 trillion
for clean energy and infrastructure investment1.
Our global investment strategy is the driver behind achieving
our carbon impact targets, starting with our commitment
not to develop or acquire coal power plants in the future.
Investing in no- and low-carbon generation, combined
with deploying carbon technology and energy storage,
is a critical part of our strategy as demonstrated by our
recent acquisitions.
We have also begun the process to enable us to raise capital
specifically for projects that will promote our investment
strategy and mitigate risks associated with climate change:
our Green Bond Framework was verified this year and in
2020 we were able to finance our growth activities at
record-low interest rates of 2.75% and 3.125% for our
respective 6 and 8 year €710m senior secured notes
issued in December.
The contribution of wind and solar to power supply is
expected to reach 25% of global power output by 2040. In
the US, the Energy Information Administration predicts that
solar power generation will rise tenfold by 2050, giving
renewables more than one-third of the market2. Given
ContourGlobal’s expertise and experience in wind, solar,
hydro and other green energy sources, we are well placed
to contribute to and capitalize on this relative growth in
demand for renewables.
Battery storage
Storage solutions work well over a timeframe of hours –
storing solar power to use in the evening, for example. But
longer-term storage poses a greater challenge. Nevertheless,
$60 billion is expected to be invested in battery storage in
the next five years, with average duration estimated to double
from around two hours in 2018 to around four hours in 2024.
Wood Mackenzie estimates that battery manufacturing
capacity will reach 1,341GWh in 2030, a fourfold increase
compared to 2019 levels3. Storage costs are also expected
to continue to fall. In the US – the largest market – research
group BloombergNEF forecasts that battery capacity will
surpass 32 GW by 2025, up from less than 5 GW in 20204.
Nevertheless, this still represents only a fraction of the more
than 1,000 GW electricity generating capacity in the US4.
Batteries play an important part in our electricity generation
on the Caribbean island of Bonaire, where we operate a
hybrid plant utilizing wind turbines and diesel engine back-up.
We employ three sets of batteries that can sustain up to 6MW
for one hour. This allows us to switch smoothly from
1. https://www.ey.com/en_gl/government-public-sector/can-we-warm-a-
cooling-economy-by-cooling-a-warming-planet.
2. Quoted in Financial Times, in February 2020.
3. Power and Renewables Insight, Wood Mackenzie, August 2020.
4. Quoted in Financial Times, in February 2020.
5. BP Statistical Review of World Energy, 2019, quoted in https://www.
brookings.edu/essay/why-are-fossil-fuels-so-hard-to-quit/.
6. https://www.iea.org/fuels-and-technologies/carbon-capture-utilisation-and-
storage.
renewable to diesel when the wind falls, without any loss of
power to the island grid. We aim at expanding this technology
and similar projects in the region.
Reliable energy supply
While renewables will undoubtedly grow as a share of overall
energy sources, they continue to be exposed to variable
reliability caused by their dependence on the elements
and still-immature battery technologies. Thermal energy
will therefore continue to play a key role in the energy mix,
not least as a reliable source of base load. In 2018, fossil
fuels accounted for almost two thirds (64.2%) of electricity
generation worldwide5. Thermal energy excluding Solutions
and high efficiency cogeneration accounted for 33% of
ContourGlobal’s production in 2020 and we plan to reduce
this progressively so that we can meet our medium- and
long-term targets for decarbonization. In this perspective,
when thermal is the most relevant solution for a region, we
foster investment in high-efficiency cogen plants and natural
gas fired-plants, representing respectively a 748 MW and
1,200 MW growth in Mexico, United States and Trinidad &
Tobago in 2019-2020 (including Western Generation Portfolio
growth initiated in 2020 and closed in 2021).
Carbon capture
One way to minimize carbon emissions even when burning
fossil fuels is to capture the carbon generated. The CO2 can
either be transported and stored deep underground or the
CO2 can be utilized for a variety of industrial purposes –
such as the production of synthetic fuel or in the food and
beverage industry. According to the International Energy
Agency6, carbon capture technology is expected to grow
rapidly in the coming years. ContourGlobal's expertise in
carbon capture at our Solutions "quad-gen" plants in Europe
will prove invaluable as we continue to deploy this
technology across our fleet.
“OUR PIONEER SPIRIT LED
US TO EXPLORE INNOVATIVE
POWERING SOLUTIONS, IN
RWANDA, BONAIRE OR IN
OUR SOLUTIONS FLEET, AND
PLACES US WELL TO MEET
TOMORROW’S POWER
SECTOR CHALLENGES”
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Priysham Nundah,
Chief Operations Officer, Africa and
KivuWatt Director of Operations
RWANDA
PROVIDING VITAL SUPPORT
Our KivuWatt business supplies more than one third of
Rwanda’s electricity, generating power from the methane
in Lake Kivu, despite constituting only 10% of the installed
capacity. So its business continuity plan became paramount
when the pandemic struck, says Chief Operations Officer,
Africa and KivuWatt Director of Operations, Priysham Nundah:
“There were two sides to business continuity: planning
operations and maintenance while keeping everyone
safe, and keeping people’s spirits up in very challenging
circumstances. On the former, I reviewed our office and
plant teams’ pattern and structure, creating COVID-19-secure
‘bubbles’ to avoid cross infection. We switched to paperless
processing and smart monitoring wherever possible, and
rescheduled planned maintenance.
“On the people side, I held several awareness campaigns on
how to implement social distancing and sanitizing measures
– particularly important as we were dealing with 13 different
nationalities in our workforce and a strong local culture of
hugging and shaking hands on greeting. We supported
employees and their families by providing masks, hand
sanitizers, access to PCR testing and a medical support
hotline. I held weekly briefings with all staff, partly to update
them on our latest risk assessments and control measures
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and partly to give them psychological reassurance. It was
tough for people to work remotely and without seeing their
families for long periods. To improve morale for those locked
down, we organized social events like FitBit competitions and
a cocktail hour on Friday afternoons.
“The biggest challenge we faced with borders shut was
availability of food and drink. We built an on-site stock of
food to last three months, buying what we could at the local
market, and even imported emergency survival rations. We
drew water from Lake Kivu and treated it, making us self-
sufficient in drinking water.
“Recognizing our responsibility to the community,
we distributed food to over 3,000 local inhabitants,
many of whom had lost their jobs due to the pandemic.
For employees, we provided accommodation and
internet connectivity, so that they could stay in touch
with their families.
“I am proud that we completed the year with an average
availability of 93% and a capacity factor of 91%. But the
most heart-warming moment for me came during an all-staff
meeting, when someone said that our plant in Kibuye was
like a home away from home and the team all one big family.”
Engaging with our stakeholders
WORKING IN PARTNERSHIP
As responsible leaders in power generation, and in accordance
with our Section 172 obligations described below, we engage
closely with our key stakeholders in line with our commitment to
make a positive long-term impact around the world. In 2020,
the Board engaged closely with our response to the pandemic
and approved our new sustainability strategy.
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Priysham Nundah,
Chief Operations Officer, Africa and
KivuWatt Director of Operations
RWANDA
PROVIDING VITAL SUPPORT
Our KivuWatt business supplies more than one third of
and partly to give them psychological reassurance. It was
Rwanda’s electricity, generating power from the methane
tough for people to work remotely and without seeing their
in Lake Kivu, despite constituting only 10% of the installed
families for long periods. To improve morale for those locked
capacity. So its business continuity plan became paramount
down, we organized social events like FitBit competitions and
when the pandemic struck, says Chief Operations Officer,
a cocktail hour on Friday afternoons.
Africa and KivuWatt Director of Operations, Priysham Nundah:
“The biggest challenge we faced with borders shut was
“There were two sides to business continuity: planning
availability of food and drink. We built an on-site stock of
operations and maintenance while keeping everyone
food to last three months, buying what we could at the local
safe, and keeping people’s spirits up in very challenging
market, and even imported emergency survival rations. We
circumstances. On the former, I reviewed our office and
drew water from Lake Kivu and treated it, making us self-
plant teams’ pattern and structure, creating COVID-19-secure
sufficient in drinking water.
‘bubbles’ to avoid cross infection. We switched to paperless
processing and smart monitoring wherever possible, and
rescheduled planned maintenance.
“Recognizing our responsibility to the community,
we distributed food to over 3,000 local inhabitants,
many of whom had lost their jobs due to the pandemic.
“On the people side, I held several awareness campaigns on
For employees, we provided accommodation and
how to implement social distancing and sanitizing measures
internet connectivity, so that they could stay in touch
– particularly important as we were dealing with 13 different
with their families.
nationalities in our workforce and a strong local culture of
hugging and shaking hands on greeting. We supported
employees and their families by providing masks, hand
sanitizers, access to PCR testing and a medical support
hotline. I held weekly briefings with all staff, partly to update
them on our latest risk assessments and control measures
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ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
“I am proud that we completed the year with an average
availability of 93% and a capacity factor of 91%. But the
most heart-warming moment for me came during an all-staff
meeting, when someone said that our plant in Kibuye was
like a home away from home and the team all one big family.”
Our principal stakeholders are:
• Shareholders, investors and lenders – critical partners
in the long-term success of our business
• Customers and clients – these range from governments
to industrial businesses and multinationals
• Employees – our outstanding people are at the heart
of ContourGlobal
• Government and regulators – including energy, finance,
and infrastructure ministries; environmental authorities;
Health and Safety agencies; and governmental labor
bodies
• Communities – we are deeply committed to making a
positive long-term improvement wherever we operate
Our key stakeholders
Employees
Communities
Shareholders,
investors
and lenders
Governments
and regulators
Customers
and clients
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Engaging with our stakeholders (continued)
During the year, the Board considered the provisions of the
UK Corporate Governance Code in respect of stakeholder
engagement, and the duties of each Director to take the
Company’s stakeholders and the long-term interest of the
Company into account in accordance with section 172 of
the Companies Act 2006 (“s172”).
The role of the Board is to promote the long-term sustainable
success of the Company, generating long-term value for
shareholders and contributing to wider society. The Board
recognizes the importance of ensuring that the interests of
all parties that have a stake in our Company are factored
into our decision-making process, both as a general principle
and as part of each Director’s s172 duty under the Companies
Act 2006. Our Board decisions can have a significant impact
on one or a number of our stakeholder groups, and it is
therefore essential that we engage with those groups in
a way that helps and supports our understanding of the
potential wider, long-term impact of those decisions.
We communicate with our stakeholders through a range
of channels and we have a number of ways in which the
Board is informed of these engagement activities and the
key themes arising from such engagement. We set this
out in more detail in the table below. We are also keen
to continue to develop ways of encouraging direct Board
engagement with stakeholder groups – one example being
that one or more Director can often be involved directly with
a shareholder, employee or other investor networking forum.
In each case, it is important for all members of the Board to
gain sufficient understanding of the issues relating to each
of our key stakeholder groups. Board members are invited to
provide updates during Board meetings on any engagement
that they have had with our stakeholders and Chairs of the
Committees are given a standing agenda item to update the
Board on the views and recommendations made by the
relevant Committee.
We continue to develop our stakeholder engagement
program to ensure that the Board has had regard to its duties
under s172. As explained in the Governance Report on pages
88 and 89, the Board considered that it has complied with its
duties under s172 of the Companies Act 2006 through its
active engagement with stakeholders. The table below sets
out more information about our stakeholder engagement
activities over the year, and the Board’s consideration toward
our stakeholder groups throughout the year, including the
ways in which we have factored each group into our
response to the COVID-19 pandemic.
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Engaging with our stakeholders (continued)
During the year, the Board considered the provisions of the
In each case, it is important for all members of the Board to
UK Corporate Governance Code in respect of stakeholder
gain sufficient understanding of the issues relating to each
engagement, and the duties of each Director to take the
of our key stakeholder groups. Board members are invited to
Company’s stakeholders and the long-term interest of the
provide updates during Board meetings on any engagement
Company into account in accordance with section 172 of
that they have had with our stakeholders and Chairs of the
the Companies Act 2006 (“s172”).
Committees are given a standing agenda item to update the
Board on the views and recommendations made by the
The role of the Board is to promote the long-term sustainable
success of the Company, generating long-term value for
relevant Committee.
shareholders and contributing to wider society. The Board
We continue to develop our stakeholder engagement
recognizes the importance of ensuring that the interests of
program to ensure that the Board has had regard to its duties
all parties that have a stake in our Company are factored
under s172. As explained in the Governance Report on pages
into our decision-making process, both as a general principle
88 and 89, the Board considered that it has complied with its
and as part of each Director’s s172 duty under the Companies
duties under s172 of the Companies Act 2006 through its
Act 2006. Our Board decisions can have a significant impact
active engagement with stakeholders. The table below sets
on one or a number of our stakeholder groups, and it is
out more information about our stakeholder engagement
therefore essential that we engage with those groups in
activities over the year, and the Board’s consideration toward
a way that helps and supports our understanding of the
our stakeholder groups throughout the year, including the
potential wider, long-term impact of those decisions.
ways in which we have factored each group into our
response to the COVID-19 pandemic.
We communicate with our stakeholders through a range
of channels and we have a number of ways in which the
Board is informed of these engagement activities and the
key themes arising from such engagement. We set this
out in more detail in the table below. We are also keen
to continue to develop ways of encouraging direct Board
engagement with stakeholder groups – one example being
that one or more Director can often be involved directly with
a shareholder, employee or other investor networking forum.
Shareholders, investors and lenders
How we engage
During the course of the year senior
management met regularly with our investors,
bond holders and lenders through many
channels, including our AGM, roadshows,
conferences and regular calls, events for
socially responsible investors (SRIs), meetings
with various investors to discuss environment,
social and governance matters, and other fora.
Key themes
• Economic
performance
• Growth
• Value creation
• Economic, social
and governance
(ESG) issues
The Board receives regular reports from
our Investor Relations department. These
reports provide clarity on the investor
landscape and help to update Directors
on our investors’ views.
Senior Management increased the frequency
of updates to investors during COVID-19
regarding steps being taken to protect our
employees and to promote the long-term
success of the Company.
Our corporate website provides a dedicated
investor section which contains all London
Stock Exchange regulatory announcements
and a copy of all of our Annual Reports.
Webcasts of our results and other
investor presentations are also
available to shareholders.
In terms of lenders’ engagement, the Board
reviewed and approved Bond and corporate
debt refinancing transactions.
Outcomes
Following meetings with investors and a
presentation from external advisors, the
Board reviewed the Sustainability Strategy
and agreed to produce a Sustainability Report
for its stakeholders. This has also resulted in
the FTSE4Good rating of 3.3 being achieved.
Daniel Camus, Chair of the Remuneration
Committee, wrote to our largest institutional
investors to provide an update on the work of
the Remuneration Committee. This included a
proposal to make changes to the Remuneration
Policy which will be subject to shareholder
approval at the AGM in May 2021. The
proposed changes can be seen on page 117.
The Committee has considered the feedback it
received in its discussions.
When approving the transaction to acquire
the portfolio of natural gas-fired and Combined
Heat and Power assets totalling 1,502 MW
located in the United States and Trinidad &
Tobago from Western Generation Partners LLC,
the Board considered the long-term success of
the Company in conjunction with the benefits
to its key stakeholders. The Board concluded
that the acquisition would result in the increase
of low-carbon assets, the further enhancement
and diversification of the Company’s cashflows
and further support dividend growth of 10%
per year.
A share buy back program has been put into
place, which is in the interests of all shareholders.
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25
Engaging with our stakeholders (continued)
Customers and clients
How we engage
We constantly interact with our customers
throughout the course of long-term contracts
to ensure that we deliver energy in full
accordance with our contractual commitments
and adapt to needs that may evolve throughout
the life of the contract.
Key engagement activities include the
following matters all discussed in depth,
reviewed and sanctioned by the Board:
• A Task Force was created which met every
day during the peaks of the COVID-19
pandemic to assess the delivery of
operational performance and to ensure
operations continued with limited disruption.
The Board was provided with reports from
the Task Force on a weekly basis.
• Site visits had taken place at the beginning
of the year. Due to COVID-19 unfortunately
the number of visits was limited due to
restrictions on travel.
• At each Board meeting performance
of the operations is reviewed.
Employees
Key themes
• Top-tier availability
of our power plants
giving full
satisfaction of our
customers’ needs
• Competitive pricing
• Health and Safety
• Compliance and
anti-corruption
• Procurement
practices
Outcomes
A number of operational changes were
introduced to protect our customers at our
plants during the COVID-19 outbreak. Health
and Safety of employees was considered daily
by our Task Force and protective measures
were put into place to protect the workforce
and provide for minimum disruption to services.
Employees were extremely vigilant and
resilient during the pandemic, which led to
minimal disruption to operational delivery
for our customers.
How we engage
We engage closely with our employees around
the world to ensure we have communication
and clarity around their careers and aspirations,
health and safety, diversity, learning and
development, remuneration and rewards
and other key issues.
Key themes
• Health and Safety
• Support during the
pandemic
• Grievance
mechanisms
• Labor and human
Key engagement/activities in 2020:
• Fortnightly town halls being held with
the CEO on COVID-19 matters.
• All employees being offered 30 minutes’
one-to-one time with the CEO.
• COVID-19 health and safety measures being
introduced for plant and office employees.
• Talent development being considered by
the Nomination Committee.
rights
• Training and
education
• Freedom of
association
and collective
bargaining
• Career
development
Unfortunately, due to the constraints arising
as a result of the COVID-19 pandemic, the
majority of scheduled site visits could not be
undertaken this year. Alternative measures
will be put in place for 2021 whilst restrictions
remain in place.
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Outcomes
The Board was sent weekly updates from the
Task Force regarding the health and safety of
employees and updates were provided at each
Board meeting.
The health and safety of employees was a
key priority and the Company has implemented
a regular, detailed communication process with
all employees, including in particular, our
power plant-based employees. Detailed
guidelines and the continuation of the internal
Health and Safety audits were carried out using
remote technology.
Measures to protect the workforce that were
introduced at the plants included visitor online
preregistration, isolated operation of some
plants and staggered shifts to enhance
social distancing. All major maintenance was
postponed to minimize outages. The testing
of employees was introduced at an early stage
to ensure appropriate measures were put into
place when necessary.
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Customers and clients
How we engage
Key themes
Outcomes
We constantly interact with our customers
• Top-tier availability
A number of operational changes were
throughout the course of long-term contracts
of our power plants
introduced to protect our customers at our
to ensure that we deliver energy in full
giving full
accordance with our contractual commitments
and adapt to needs that may evolve throughout
satisfaction of our
customers’ needs
the life of the contract.
• Competitive pricing
• Health and Safety
• Compliance and
anti-corruption
• Procurement
plants during the COVID-19 outbreak. Health
and Safety of employees was considered daily
by our Task Force and protective measures
were put into place to protect the workforce
and provide for minimum disruption to services.
Employees were extremely vigilant and
resilient during the pandemic, which led to
minimal disruption to operational delivery
for our customers.
• A Task Force was created which met every
practices
Engaging with our stakeholders (continued)
Key engagement activities include the
following matters all discussed in depth,
reviewed and sanctioned by the Board:
day during the peaks of the COVID-19
pandemic to assess the delivery of
operational performance and to ensure
operations continued with limited disruption.
The Board was provided with reports from
the Task Force on a weekly basis.
• Site visits had taken place at the beginning
of the year. Due to COVID-19 unfortunately
the number of visits was limited due to
restrictions on travel.
• At each Board meeting performance
of the operations is reviewed.
Employees
How we engage
We engage closely with our employees around
• Health and Safety
The Board was sent weekly updates from the
Key themes
Outcomes
the world to ensure we have communication
and clarity around their careers and aspirations,
health and safety, diversity, learning and
development, remuneration and rewards
and other key issues.
• Support during the
pandemic
• Grievance
mechanisms
• Labor and human
Key engagement/activities in 2020:
• Fortnightly town halls being held with
the CEO on COVID-19 matters.
• All employees being offered 30 minutes’
one-to-one time with the CEO.
rights
• Training and
education
• Freedom of
association
and collective
bargaining
• COVID-19 health and safety measures being
introduced for plant and office employees.
• Career
• Talent development being considered by
development
the Nomination Committee.
Unfortunately, due to the constraints arising
as a result of the COVID-19 pandemic, the
majority of scheduled site visits could not be
undertaken this year. Alternative measures
will be put in place for 2021 whilst restrictions
remain in place.
Task Force regarding the health and safety of
employees and updates were provided at each
Board meeting.
The health and safety of employees was a
key priority and the Company has implemented
a regular, detailed communication process with
all employees, including in particular, our
power plant-based employees. Detailed
guidelines and the continuation of the internal
Health and Safety audits were carried out using
remote technology.
Measures to protect the workforce that were
introduced at the plants included visitor online
preregistration, isolated operation of some
plants and staggered shifts to enhance
social distancing. All major maintenance was
postponed to minimize outages. The testing
of employees was introduced at an early stage
to ensure appropriate measures were put into
place when necessary.
Communities
How we engage
As a business we are deeply committed to
making a positive long-term improvement
wherever we operate and we engage
closely with communities around the world.
The following matters have been discussed in
depth, reviewed and sanctioned by the Board:
• The Board reviewed and approved the
budget for the Group’s social investment
program during the year.
• 435 employees involved in social investment.
• $2.3m invested in social projects (0.3% of
Adjusted EBITDA).
• 46,778 hours devoted to community
education activities during 2020.
• The Board reviewed the Sustainability
Strategy and new targets were implemented.
Governments and regulators
How we engage
We promote sector development and laudable
business practices by interacting with
governments and civil society.
• Our plant managers meet regularly with
host government counterparts, including
the ministries of finance, energy and
infrastructure, and regular regulatory
updates are provided and considered
at Board meetings.
• We invite government officials to plant
inaugurations and other public events,
and organize private working events for
visiting officials.
• Active participation in several industry
associations (including ABEEólica, the
Brazilian Association of Wind Power, the
Bulgarian Energy Chamber and international
organizations and the United Nations
Development Program).
Key themes
• Health and Safety
• Emissions and
biodiversity
• Compliance and
anti-corruption
• Grievance
mechanisms
• Labor and human
rights
• Water and waste
Outcomes
• The Board approved the social investment
program budget and executive management
approved 97 social projects for this program.
• Contribution to the Bulgarian United
Against COVID-19 Fund to support
vulnerable groups and assist with
medical and laboratory supplies.
• Reallocation of 2020 social budget for
COVID-19 related activities impacting
local communities.
• Donated PPE to essential emergency
services and hospital personnel in
South America and Africa.
• Food and drinking water distributions to
affected communities currently in progress.
Outcomes
• Bonaire discussions with government on
fuel procurement.
• Continued dialogue in Bulgaria on matters
related to the EC’s Directorate General-
Competition’s preliminary inquiry into
potential state aid.
Key themes
• Health and Safety
• Capacity, reliability
and efficiency
• Emissions and
biodiversity
• Compliance and
anti-corruption
• Labor and
human rights
• Water and waste
• Training and
education
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Our strategy
OUR
STRATEGY
FOR GROWTH
ContourGlobal has a highly
disciplined strategy towards
growth and capital allocation.
We invest primarily on risk-
adjusted returns, as we believe
this is the long-term driver in
value creation. Our growth and
acquisition teams concentrate
on developing projects which fit
within our investment criteria of
long-term contracted projects that
can leverage the expertise we
have built through our operating
platform. These projects are then
competed against each other for
capital before final investment
decisions are made.
Our strategy aligns with our four
sustainable business principles
and our decisions always assess
the positive impact they will
have on people, business and
communities around the world.
See more pages 38 and 39
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1. OPERATIONAL EXCELLENCE
Operational excellence and safety go together and
underlie our culture. By focusing on them, we continue
to create significant value through improvements in
operational performance such as reductions in fixed
costs, and we apply this mentality to our acquisitions
and developments.
The most important component of operating excellence
will always be Health and Safety. We have a sacred
responsibility to ensure that every single employee,
visitor or contractor who visits our sites goes home
safe, every single day. Providing a safe working
environment is one of our core sustainability
principles, as demonstrated by our Target Zero
commitment (see pages 42 and 43).
To improve operational performance continuously, we
benchmark ourselves against top industry performers.
We produce weekly reports about availability factors
and equivalent forced outage rates across our entire
asset base, comparing these with our targets. These
reports are published widely within the organization
as part of a commitment to transparency and sharing
of information. Failure analysis and continuous
improvement is at the core of all world-class operating
organizations. We are focused on ensuring that
commitment to failure review and analysis permeates
all levels, functions and areas of the organization
(see page 45).
We operate under a lean and flat organizational
structure and have made meaningful investments
in digital technology to allow us to collaborate and to
manage our cost structure as the Company continues
to grow.
Businesses, acquisitions and developments are subject
to continuous improvements and operational and
financial performance reviews.
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Our strategy
OUR
STRATEGY
FOR GROWTH
ContourGlobal has a highly
disciplined strategy towards
growth and capital allocation.
We invest primarily on risk-
adjusted returns, as we believe
this is the long-term driver in
value creation. Our growth and
acquisition teams concentrate
on developing projects which fit
within our investment criteria of
long-term contracted projects that
can leverage the expertise we
have built through our operating
platform. These projects are then
competed against each other for
capital before final investment
decisions are made.
Our strategy aligns with our four
sustainable business principles
and our decisions always assess
the positive impact they will
have on people, business and
communities around the world.
See more pages 38 and 39
1. OPERATIONAL EXCELLENCE
2. HIGH GROWTH
3. FINANCIAL STRENGTH
Operational excellence and safety go together and
underlie our culture. By focusing on them, we continue
to create significant value through improvements in
operational performance such as reductions in fixed
costs, and we apply this mentality to our acquisitions
and developments.
The most important component of operating excellence
will always be Health and Safety. We have a sacred
responsibility to ensure that every single employee,
visitor or contractor who visits our sites goes home
safe, every single day. Providing a safe working
environment is one of our core sustainability
principles, as demonstrated by our Target Zero
commitment (see pages 42 and 43).
To improve operational performance continuously, we
benchmark ourselves against top industry performers.
We produce weekly reports about availability factors
and equivalent forced outage rates across our entire
asset base, comparing these with our targets. These
reports are published widely within the organization
as part of a commitment to transparency and sharing
of information. Failure analysis and continuous
improvement is at the core of all world-class operating
organizations. We are focused on ensuring that
commitment to failure review and analysis permeates
all levels, functions and areas of the organization
(see page 45).
We operate under a lean and flat organizational
structure and have made meaningful investments
in digital technology to allow us to collaborate and to
manage our cost structure as the Company continues
to grow.
Businesses, acquisitions and developments are subject
to continuous improvements and operational and
financial performance reviews.
We seek to optimize the cash flow generation from
each of our projects. The Company’s strong and
predictable cash flow generation is the basis for funding
new growth projects such as M&A opportunities and
developments, and also supports our progressive
dividend policy.
We seek to maintain a highly efficient capital structure
to support our business model. Majority non-recourse
project-level debt at each project company and
attractive corporate-level bond debt maximize the
Company’s financial flexibility. An important financial
KPI is net leverage ratio – the ratio of total net
indebtedness to adjusted EBITDA.
Strong operational performance combined with an
efficient capital structure has enabled us to deliver
superior project-level returns. As at 31st December
2020, our weighted average financing cost was
4.0%, in line with 2019 levels.
We enable financial investment partners to make
passive, minority investments in some of our assets
on attractive terms for ContourGlobal. These sell-downs
significantly bolster our project returns and our strategy
is to continue to seek similar opportunities.
Our financial KPIs are detailed on pages 30 and 31.
We adopt four core investment approaches, all focused
on contracted or regulated wholesale power generation
across different technologies and geographies.
1. Greenfield development
Developing a project from the ground up makes sense
when we can take advantage of cyclical under-supply
of capital and create opportunities for higher returns.
2. Strategic acquisitions
We will consider purchasing assets with existing
contracts where we have both: (i) a clear competitive
advantage due to asset size, technology, geographical
presence, asset diversity or complexity of process or
market; and (ii) an ability to improve operations.
3. Development in partnership projects
We may develop projects with customized contracts in
partnership with governments, utilities and corporations
in regions where there is a need for reliable power
infrastructure but insufficient capital and expertise.
4. Platform expansions
Expanding existing projects leverages existing
relationships with governments, offtakers, lenders
and suppliers, replicating the same technology and
structure. Platform expansions are typically low risk and
high return, given the expertise already acquired, and
the synergies and cost reductions that can be achieved.
Integration of new assets is key in successful growth;
transition plans are closely prepared and monitored,
promoting knowledge transfer among assets.
In line with our CO2 intensity reduction commitments,
our investment strategy will foster low- and no-carbon
technologies, focusing on renewable and high-
efficiency cogeneration plants, carbon capture,
as well as plant efficiency improvement.
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Our KPIs
MEASURING PERFORMANCE
We measure our performance against ten financial and non-financial key performance indicators (KPIs).
FINANCIAL KPIS
Income from Operations ($m)
2016
2017
2018
2019
2020
221.8
269.0
261.9
292.1
307.9
Income from Operations (IFO) is derived from
the IFRS consolidated statement of income
and corresponds to the sum of the following
line items: Revenue, Cost of sales, Selling,
general and administrative expenses, Other
operating income, Other operating expenses,
Acquisition-related items.
This is a measure of profitability that includes
depreciation and amortization expenses as
well as development costs. IFO has increased
by 5% mainly thanks to the full year impact of
the acquisition of Mexican CHP assets.
Adjusted EBITDA ($m)
2016
2017
2018
2019
2020
440.4
513.2
610.1
702.7
722.0
Adjusted EBITDA is the profit from continuing
operations before income taxes, net finance costs,
depreciation and amortization, acquisition-related
expenses, plus net cash gain or loss on sell down
transactions (in addition to the entire full year profit
from continuing operations for the business the sell
down transaction relates to) and specific items
which have been identified and material items
where the accounting diverges from the cash flow
and therefore does not reflect the ability of the
assets to generate stable and predictable cash
flows in a given period, less the Group’s share of
profit from non consolidated entities accounted for
on the equity method, plus the Group’s prorata
portion of Adj. EBITDA for such entities. Adjusted
EBITDA grew by 3% compared to last year,
supported by the strong performance of our
generation plants portfolio, and the contribution of
our Mexico CHP assets acquired in 2019, offsetting
negative foreign exchange impact and the 2019
impact of our CSP Spain sell-down.
Proportionate Adjusted EBITDA ($m)
2016
2017
2018
2019
2020
376.6
434.2
Proportionate Adjusted EBITDA is presented using
Adjusted EBITDA calculated on a proportionally
consolidated basis based on ContourGlobal’s
ownership percentage of assets.
minority interest sale relates to reflecting applicable
ownership percentage going forward from the date
of completion of the sale of a minority interest.
536.1
561.6
568.7
The Proportionate Adjusted EBITDA as well
includes the net cash gain or loss on sell down
transactions as well as the underlying profit from
continuing operations for the business in which the
Proportionate Adjusted EBITDA grew by 1% as
compared to 2019, for similar reasons as Adjusted
EBITDA and due to 12-month impact of the CSP
Spain sell-down completed in 2019.
Funds from Operations ($m)
2016
2017
2018
2019
2020
207.9
255.9
302.3
337.9
379.6
Net Leverage ratio (x)
2016
2017
2018
2019
2020
4.8
4.1
4.4
4.42
4.75
Funds from Operations is the cash flow from
operating activities, excluding changes in working
capital, less interest paid, maintenance capital
expenditure1 and distribution to minorities.
This is the key measure of the Company’s
strength of cash flow.
Strong operational performance and
highly contracted cash flows allowed us
to maintain the Group’s high level of FFO.
The growth of 12% compared to 2019 is
mainly driven by the Adjusted EBITDA growth.
The Group net leverage ratio is measured as
total net indebtedness (reported as the difference
between Borrowings and Cash and Cash
Equivalent under the IFRS statement of
financial position) to Adjusted EBITDA.
This is the key credit measure of the Group. The
Net Leverage ratio is in line with 2019, and is slightly
outside of our indicated target range of 4.0-4.5x,
driven by the EUR/USD appreciation at year end.
1. Maintenance capital expenditure is defined on page 57.
2. Pro forma for full year Adjusted EBITDA of CHP Mexico.
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2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
MEASURING PERFORMANCE
We measure our performance against ten financial and non-financial key performance indicators (KPIs).
Beyond the COVID-19 global pandemic, ContourGlobal
continued to deliver very strong financial results in 2020,
supported by its highly robust and resilient business model
generating stable and predictable cash flows from operations.
Our plants operated in 2020 with a high level of availability, in
spite of unprecedented challenges, keeping the lights on
thanks to our people’s commitment. Whilst pursuing our
stretch Target Zero for Lost Time Incidents (LTIs), we were
disappointed to experience two LTIs in 2020, further detailed
on page 42. Pursuant to our ambitious CO2 emissions
reduction targets, CO2 emissions intensity in total energy
dropped by 12% in 2020.
FINANCIAL KPIS
Income from Operations ($m)
221.8
269.0
261.9
292.1
307.9
Income from Operations (IFO) is derived from
the IFRS consolidated statement of income
and corresponds to the sum of the following
line items: Revenue, Cost of sales, Selling,
general and administrative expenses, Other
operating income, Other operating expenses,
Acquisition-related items.
This is a measure of profitability that includes
depreciation and amortization expenses as
well as development costs. IFO has increased
by 5% mainly thanks to the full year impact of
the acquisition of Mexican CHP assets.
Adjusted EBITDA ($m)
440.4
513.2
610.1
702.7
722.0
Adjusted EBITDA is the profit from continuing
flows in a given period, less the Group’s share of
operations before income taxes, net finance costs,
profit from non consolidated entities accounted for
depreciation and amortization, acquisition-related
on the equity method, plus the Group’s prorata
expenses, plus net cash gain or loss on sell down
portion of Adj. EBITDA for such entities. Adjusted
transactions (in addition to the entire full year profit
EBITDA grew by 3% compared to last year,
from continuing operations for the business the sell
supported by the strong performance of our
down transaction relates to) and specific items
which have been identified and material items
generation plants portfolio, and the contribution of
our Mexico CHP assets acquired in 2019, offsetting
where the accounting diverges from the cash flow
negative foreign exchange impact and the 2019
and therefore does not reflect the ability of the
assets to generate stable and predictable cash
impact of our CSP Spain sell-down.
NON-FINANCIAL KPIS
Lost Time Incident Rate
2016
2017
2018
2019
2020
0.03
0.03
0.03
0.06
0.07
Availability Factor (%)
The Lost Time Incident Rate (LTIR) shows
the recordable lost time injuries per 200 000
labor hours so they can be compared across any
industry. The chart presents our performance
over recent years.
This is the key measure for our Health and
Safety performance.
Our LTI rate of 0.07, corresponding to two LTIs.
However, we remain fully committed to Target
Zero in the future.
2016
2017
2018
2019
2020
The Equivalent Availability Factor (EAF) represents
the portion of the production capacity of a power
plant that was available and ready to operate in a
given period of time. It is widely used in the industry
to track the technical performance of power plants
and for benchmarking. We use it as a primary KPI
for our assets.
The increase in the EAF from 94.3% in 2019
to 95.1% in 2020 is linked to the improvement
in the technical performance of the fleet and
the optimization of the scheduled outages
duration across the portfolio triggered by the
COVID-19 pandemic.
93.7
94.4
92.9
94.3
95.0
Proportionate Adjusted EBITDA ($m)
Equivalent Forced Outage Rate (%)
376.6
434.2
536.1
561.6
568.7
Proportionate Adjusted EBITDA is presented using
minority interest sale relates to reflecting applicable
Adjusted EBITDA calculated on a proportionally
ownership percentage going forward from the date
consolidated basis based on ContourGlobal’s
of completion of the sale of a minority interest.
ownership percentage of assets.
The Proportionate Adjusted EBITDA as well
includes the net cash gain or loss on sell down
EBITDA and due to 12-month impact of the CSP
transactions as well as the underlying profit from
Spain sell-down completed in 2019.
continuing operations for the business in which the
Proportionate Adjusted EBITDA grew by 1% as
compared to 2019, for similar reasons as Adjusted
2016
2017
2018
2019
2020
2.0
1.9
1.7
1.5
The Equivalent Forced Outage Rate (EFOR)
represents the production capacity that is lost,
over a given period of time, due to equipment
failure or operational mistake (error).
Like the EAF, the EFOR is widely used in the
industry to measure technical performance.
3.6
Our EFOR for 2020 shows continuous improvement
from previous years as a result of deploying and
improving our predictive maintenance strategy.
207.9
255.9
302.3
337.9
379.6
4.1
4.4
4.42
4.75
Funds from Operations ($m)
Funds from Operations is the cash flow from
Strong operational performance and
operating activities, excluding changes in working
highly contracted cash flows allowed us
capital, less interest paid, maintenance capital
expenditure1 and distribution to minorities.
This is the key measure of the Company’s
strength of cash flow.
to maintain the Group’s high level of FFO.
The growth of 12% compared to 2019 is
mainly driven by the Adjusted EBITDA growth.
CO2 emissions intensity (net CO2 emissions tonnes/MWh)
2016
2017
2018
2019
2020
0.66
0.62
0.56
0.57
0.51
0.57k
0.45
CO2 emissions intensity is our key climate
measurement and we have historically reported
our intensity using MWh from electricity production.
In 2019, we set our targets using MWh from total
energy production to better reflect the impacts
of our cogeneration power plants.
The reporting for 2016 to 2019 reflects our historical
CO2 intensity based on electricity production as
variances to energy production are immaterial.
For 2019 and 2020, we are showing CO2 emissions
intensity for both electricity and energy production.
In future years, we will only report our emissions
intensity based on energy production.
Energy
Electricity
Net Leverage ratio (x)
Gender diversity (total employees)
4.8
The Group net leverage ratio is measured as
This is the key credit measure of the Group. The
total net indebtedness (reported as the difference
Net Leverage ratio is in line with 2019, and is slightly
between Borrowings and Cash and Cash
Equivalent under the IFRS statement of
financial position) to Adjusted EBITDA.
outside of our indicated target range of 4.0-4.5x,
driven by the EUR/USD appreciation at year end.
2016
2017
2018
2019
2020
1,436
387
1,823
1,461
407
1,868
We are committed to building a diverse workforce
ensuring equal opportunities for all in the long term.
Aligned with our sustainability principles, gender
diversity is a key metric.
Women represented 19% of our workforce in 2020
and 50% of senior management.
1,200
289
1,489
1,217
273
1,490
1,120 261
1,381
Male
Female
1. Maintenance capital expenditure is defined on page 57.
2. Pro forma for full year Adjusted EBITDA of CHP Mexico.
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KPIs entering into executive remuneration’s
determination - more details can be found
on page 130
K ContourGlobal PLC engaged KPMG LLP (“KPMG”) to undertake limited
assurance under the assurance standard ISAE (UK) 3000 over this Selected
Information. KPMG’s full assurance statement is included on our website at
https://www.contourglobal.com/reports?its_media_category_id%5B%5D=43.
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Our strategy in action
DRIVING PROGRESS
Our strategy underlies our growth initiatives. We analyze in each
investment opportunity the potential for a high level of operations,
through innovation and improved efficiency, and value creation for
our shareholders.
During the first COVID-19 period in early 2020, part of
the integration team remained in the region to ensure the
completion of the integration activities, showing resilience
to support the new colleagues until the end of the project.
The effectiveness of the integration was finally tested by an
internal Health and Safety audit, and a thorough business
review by the Internal Audit team to assess any gaps and
provide the feedback to improve the integration at the next
acquired business.
MEXICO
Growth in Mexico
In November 2019 ContourGlobal acquired two CHP
plants in Mexico. Integration of the new team operating
and managing the plants started in the second half of 2019
and was completed in the first half of 2020. The integration
was based on our values “To work hard and without
boundaries as a multinational, integrated team” with
personnel coming from several of our plants and offices
worldwide to share experience, best practices and corporate
standards. We used plant managers as well as Health and
Safety professionals, technical experts, corporate functions
leaders and project managers from Spain, Brazil, Peru, United
States, Bulgaria, France, Italy, Rwanda and the Caribbean
region. Everyone has contributed in their area to build an
organization ready to work in the CG way: “To expect,
embrace and enable excellence and continuous learning
through humility, and the knowledge that we will fail but
when we do, we will learn.”
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DRIVING PROGRESS
Our strategy underlies our growth initiatives. We analyze in each
investment opportunity the potential for a high level of operations,
through innovation and improved efficiency, and value creation for
our shareholders.
MEXICO
Growth in Mexico
In November 2019 ContourGlobal acquired two CHP
During the first COVID-19 period in early 2020, part of
plants in Mexico. Integration of the new team operating
the integration team remained in the region to ensure the
and managing the plants started in the second half of 2019
completion of the integration activities, showing resilience
and was completed in the first half of 2020. The integration
to support the new colleagues until the end of the project.
was based on our values “To work hard and without
boundaries as a multinational, integrated team” with
The effectiveness of the integration was finally tested by an
internal Health and Safety audit, and a thorough business
personnel coming from several of our plants and offices
review by the Internal Audit team to assess any gaps and
worldwide to share experience, best practices and corporate
provide the feedback to improve the integration at the next
standards. We used plant managers as well as Health and
acquired business.
Safety professionals, technical experts, corporate functions
leaders and project managers from Spain, Brazil, Peru, United
States, Bulgaria, France, Italy, Rwanda and the Caribbean
region. Everyone has contributed in their area to build an
organization ready to work in the CG way: “To expect,
embrace and enable excellence and continuous learning
through humility, and the knowledge that we will fail but
when we do, we will learn.”
We operate 10 MAN diesel engines with a capacity of 24MW,
3 Cummins back-up engines with a capacity of 3MW, a
12-turbine wind farm with a capacity of 11MW, and a latest-
generation energy management system, incorporating
lithium-ion batteries with a capacity of 6MW and a charge of
6MWh. Our project uses high technology to manage the new
battery to react at any frequency variation in 50ms providing
one of the most stable grids in the Caribbean islands which
won the ‘Best Microgrid Project 2019’ award from the
Caribbean Renewable Energy Forum (CREF).
The battery integrated in the new energy management
system is allowing an expansion of the sustainable production
on Bonaire by adding renewable capacities without risking
the security of supply because of the stable grid. We are
planning to cover the growing demand for electricity on the
island by adding only new solar and wind capacity. This
hybrid combination is allowing the island’s energy needs
to be supplied cost effectively, while at the same time
minimizing carbon emissions.
We are planning to share this experience in the region in
order to grow by implementing similar projects that allow a
larger share of renewable generation, whilst at the same time
minimizing generation costs, and ensuring stable grid for a
high quality of energy supply.
company. This will support our policy of 10% annual dividend
growth and will improve our dividend cover. The risk-adjusted
return for this acquisition, as measured by cash IRR, will be
attractive and is expected to significantly exceed our cost
of capital. When assessing this transaction, the Board
considered all the above aspects and considered that,
overall, the acquisition builds our base of robust, low-risk
assets, which distribute cash to the parent company, allowing
us to redeploy capital, grow our dividend and increase
dividend cover.
BONAIRE
Low carbon intensity in Bonaire
Our operations on the island of Bonaire represent well our
strategy of reducing carbon intensity (total carbon emissions
divided by total production) even as generating capacity
increases. The plant is the sole supplier of electricity to the
island’s 16,500 inhabitants – a population that has doubled
in the last 10 years.
WESTERN GENERATION PORTFOLIO
Acquisition of contracted power plants in
the United States and Trinidad & Tobago
The acquisition of a 1.5 GW portfolio of power plants in the
United States and Trinidad & Tobago that we announced in
December 2020, and completed on 18th February 2021, is
an excellent example of realizing all elements of our strategy.
It is operationally led: we have extensive experience in the
technologies of all the assets acquired – principally low-
carbon, natural gas-fired plants, including a highly efficient
combined heat and power plant similar to those in our
existing Solutions portfolio. We also know their underlying
operating markets well – power pools characterized by
long-term bilateral contracts. This deep expertise will allow us
to improve their operational performance from the get-go and
leverage our track record of operationally led value creation.
It supports our commitment to High growth – the acquisition
grows our global capacity by 31%, from 4.8 GW to 6.3 GW.
The acquired plants are located in or adjacent to areas where
we already have an operating presence and where we see
further strategic growth opportunities. The plants in Trinidad
& Tobago further build our presence in the Caribbean,
alongside our operations in Bonaire and Saint Martin. We will
establish an operational hub in Houston, supporting our new
assets in the United States and Trinidad & Tobago, as well as
our existing assets in Mexico.
The acquisition will also build our financial strength, adding a
high stream of free cash flow. In the first year, it is expected to
generate about $40 million in cash distributions to the parent
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33
Business review
PROGRESS
THROUGHOUT
OUR
BUSINESS
Our plants kept the lights
on in 2020, and achieved
high level of availability,
relying on our committed
people and continuous
investment in innovations.
OUR PERFORMANCE IN NUMBERS
Business performance
Equivalent Availability Factor on the whole portfolio improved in 2020 to 95.1% from 94.3% in 2019, reflecting improvements
in the technical performance of the fleet and optimization of the scheduled outages duration during COVID-19 pandemic
Thermal Fleet
availability factor (%)
94.4%
2019: 92.8%
94.4
92.6
92.8
90.2
100
96
92
88
84
80
Renewable Fleet
availability factor (%)
96.0%
2019: 96.3%
97.6 96.8 96.3
96.0
100
96
92
88
84
80
2017
2018
2019
2020
2017
2018
2019
2020
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Business review
PROGRESS
THROUGHOUT
OUR
BUSINESS
Our plants kept the lights
on in 2020, and achieved
high level of availability,
relying on our committed
people and continuous
investment in innovations.
BRAZIL
Despite COVID-19, our Balsa Nova power plant
in Brazil turned in its best performance for
availability (EAF) and forced outages (EFOR)
since starting operations in 2002. It managed
to perform planned maintenances, in safe
conditions, putting first our value ‘We care
about our people’s health, safety, wellbeing,
and development’. It performed well on all other
measures, except one: Capacity Factor. This was
because, as a cogeneration plant, it dispatches
on demand from its main client – in this case a
business in the food industry. Since the client’s
production fell during the pandemic, the plant
produced less energy and steam.
Three of our four Brazilian co-generation thermal
plants received ContourGlobal awards for safety
for the first time, including the top award for
Brahma Rio: the Everest award (see page 44).
Our target is to repeat this performance next year.
Embracing our principle to ‘Enhance our
operating environment’, the Solutions plants in
Brazil have been very active with communities,
enacting the Board’s decision to re-direct all
social investments toward COVID-19 related
projects. They supported an orphanage that
faced a shortage of food for the children at the
beginning of the pandemic, a charitable entity
that also donates food for poor families and
donated PPE and COVID-19 PCR tests to the
health authorities of Balsa Nova.
RWANDA
Our KivuWatt plant exemplifies our approach to
continuous improvement. Using our objectives-setting
framework, it sets itself increasingly challenging targets
for performance each year.
Embracing our value ‘We expect, embrace, and enable
excellence and continuous learning through humility
and the knowledge that we will fail – but when we do,
we will learn’, KivuWatt conducted in 2019 13 episodes
of failure analysis, using our “5-Whys” approach, a
Continuous Improvement methodology, the use and
insights of which are closely monitored by the Board.
This number grew to 27 in 2020, and in 2021, KivuWatt
team will enhance this to complete at least two 5-Whys
per month and one lesson learnt per quarter.
After a good 2020 performance, with an average
availability of 93% and a capacity factor of 91%, the
plant’s target for 2021 is not only to reach budgeted
operational KPIs for capacity factor (CF), availability
factor (EAF), forced outages (EFOR) and scheduled
outage factor (SOF), but also to achieve next year’s
major planned outages without LTI, on time and on
budget. It will continue to aim for its financial KPIs,
i.e. meeting budgeted EBITDA and fixed costs, while
ensuring cash distributions and debt obligations are
met on time.
On Health and Safety, the plant starts from a high base,
having achieved our top award for three consecutive
years of zero LTIs. It plans in 2021 to emulate this and
to achieve targeted compliance with respect to other
ContourGlobal H&S standards.
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OUR PERFORMANCE IN NUMBERS
Business performance
Equivalent Availability Factor on the whole portfolio improved in 2020 to 95.1% from 94.3% in 2019, reflecting improvements
in the technical performance of the fleet and optimization of the scheduled outages duration during COVID-19 pandemic
Thermal Fleet
availability factor (%)
94.4%
2019: 92.8%
94.4
92.6
92.8
90.2
100
96
92
88
84
80
Renewable Fleet
availability factor (%)
96.0%
2019: 96.3%
97.6 96.8 96.3
96.0
100
96
92
88
84
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2017
2018
2019
2020
2017
2018
2019
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Business review (continued)
SPAIN
We were able to continue operating all our solar plants
as planned during 2020, meeting targets everywhere.
We were in the middle of a major overhaul in one of our
CSP (Palma II) when the COVID-19 outbreak emerged in
Spain, in early March 2020. We rapidly put controls in
place at the entry of the plant and during maintenance
activities, to ensure a safe working environment.
Considering the extensive manpower of subcontractors
required coming from different regions, and despite the
unexpected situation and adverse conditions, we were
able to reduce the duration of the outage by one and
a half days.
In preparation for having to work in isolation mode, we
set up emergency operation control rooms off-site, to
allow for remote working and to perform staff drills.
We also proactively established contingency plans for
essential goods and services, in case of disruption
to the supply chain. Our COVID-19 specific risk
assessments and associated plan for each site
were audited by a third-party consultant to provide
an extra degree of assurance.
In December 2020, after the routine inspection of
one of the steam turbine blades in Majadas CSP, we
discovered very early stage cracks on some blades that
required replacement. An action plan was put in place
to change out the partially damaged rotor with a spare
one that we had available at another CSP warehouse. In
order to minimize the impact, the plan included heavy
load transportation during road traffic restrictions, and
highly skilled manpower allocation in the middle of the
third wave of the COVID pandemic in Spain. The unit
was successfully put back into operation with no other
issues, one week ahead of the preliminary schedule,
in January 2021.
IN SPAIN, WE WERE ABLE TO CONTINUE
OPERATING ALL OUR SOLAR PLANTS AS
PLANNED DURING 2020, MEETING TARGETS
EVERYWHERE.
PERU
Despite the severe lockdown conditions faced in
Peru, it is gratifying to be able to report not only
meeting but exceeding the business’s targets for
availability, forced outages and earnings in 2020.
Even under pandemic conditions, we were able
to achieve the planned replacement of the main
transformer at the Cupisnique site on time and
within budget, whilst adhering to all safety
requirements. This business continuity was made
possible thanks to COVID-19 specific measures
decided by the Board to protect employees.
In line with corporate guidance, the vast majority
of funds set aside for social investment in Peru
was directed towards COVID-19 relief. This
included providing PPE and oxygen supplies
to local hospitals; masks and sanitizers to first
responders; and food parcels to communities
experiencing major shortages.
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DESPITE THE CHALLENGES FACED IN PERU, WE
MANAGED TO EXCEED OUR TARGETS IN 2020.
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SPAIN
We were able to continue operating all our solar plants
as planned during 2020, meeting targets everywhere.
We were in the middle of a major overhaul in one of our
CSP (Palma II) when the COVID-19 outbreak emerged in
Spain, in early March 2020. We rapidly put controls in
place at the entry of the plant and during maintenance
activities, to ensure a safe working environment.
Considering the extensive manpower of subcontractors
required coming from different regions, and despite the
unexpected situation and adverse conditions, we were
able to reduce the duration of the outage by one and
a half days.
In preparation for having to work in isolation mode, we
set up emergency operation control rooms off-site, to
allow for remote working and to perform staff drills.
We also proactively established contingency plans for
essential goods and services, in case of disruption
to the supply chain. Our COVID-19 specific risk
assessments and associated plan for each site
were audited by a third-party consultant to provide
an extra degree of assurance.
In December 2020, after the routine inspection of
one of the steam turbine blades in Majadas CSP, we
discovered very early stage cracks on some blades that
required replacement. An action plan was put in place
to change out the partially damaged rotor with a spare
one that we had available at another CSP warehouse. In
order to minimize the impact, the plan included heavy
load transportation during road traffic restrictions, and
highly skilled manpower allocation in the middle of the
third wave of the COVID pandemic in Spain. The unit
was successfully put back into operation with no other
issues, one week ahead of the preliminary schedule,
in January 2021.
IN SPAIN, WE WERE ABLE TO CONTINUE
OPERATING ALL OUR SOLAR PLANTS AS
PLANNED DURING 2020, MEETING TARGETS
EVERYWHERE.
PERU
Despite the severe lockdown conditions faced in
Peru, it is gratifying to be able to report not only
meeting but exceeding the business’s targets for
availability, forced outages and earnings in 2020.
Even under pandemic conditions, we were able
to achieve the planned replacement of the main
transformer at the Cupisnique site on time and
within budget, whilst adhering to all safety
requirements. This business continuity was made
possible thanks to COVID-19 specific measures
decided by the Board to protect employees.
In line with corporate guidance, the vast majority
of funds set aside for social investment in Peru
was directed towards COVID-19 relief. This
included providing PPE and oxygen supplies
to local hospitals; masks and sanitizers to first
responders; and food parcels to communities
experiencing major shortages.
BULGARIA
Supporting our communities has always been a
mission for us in Bulgaria, and we are pleased to
have been able to continue this work in 2020.
We focus our efforts to contribute towards three
UN Sustainable Development Goals (SDGs):
SDG 3 – Good health and wellbeing
SDG 11 – Sustainable cities and communities
SDG 17 – Partnerships to achieve the Goal
In the first category – to which we directed most
resources in this pandemic year – a large part
of our support went to supply PPE, testing and
specialized medical equipment as well as to
refurbish an oxygen distribution system for local
hospitals. By doing so, we enabled medical staff
to stay safe and deliver better outcomes for their
patients. We also helped a nearby crisis center
to operate safely and supported local schools
and libraries so that they could allow continued
access for children while observing all necessary
infection control measures.
Early in 2020, before the pandemic, we
celebrated the end of a seven-year investment
program designed to support the cultural
traditions and livelihoods of the Aprilovo
community under SDG 11. This was marked
by the blessing of vineyards, attracting
national TV coverage.
Under SDG 17, we worked with partners to
promote the benefits of volunteering and to
thank those who had gone beyond the call
of duty during the pandemic.
As well as donating over $200,000 to these
projects, our employees also gave their own
time, and we thank them all for their contribution.
DESPITE THE CHALLENGES FACED IN PERU, WE
MANAGED TO EXCEED OUR TARGETS IN 2020.
WHILST OPERATING IN ISOLATION MODE FOR
OVER THREE MONTHS, WE STILL MANAGED
TO EXCEED OUR TARGETS FOR AVAILABILITY,
AND FORCED AND PLANNED OUTAGE IN TOGO.
ARMENIA
Our hydro business in Armenia was hit by three
‘force majeure’ events in 2020: a major shortfall
of water into reservoirs owing to historically low
rainfall and snow melt; COVID-19; and a military
conflict only a few miles away across the border
with Azerbaijan.
The last two impacted our ability to undertake
an Electromechanical Refurbishment Project,
originally scheduled for completion by November.
The contractors we rely on to undertake the work
were unable to perform on time, and project
completion has been delayed by several months.
However, thanks to the dedication of our
engineering and operational teams, who worked
24/7 shifts from mid-March to mid-June, the plants
performed to a high level of capacity, especially
given the low water inflow.
Despite these barriers to normal operation,
we were proud to continue contributing to the
welfare of local communities. We worked with
partners to establish a regional training center
at the American University of Armenia in Goris,
and provided funds to help medical clinics in two
nearby towns – Goris and Sissian – to upgrade
their equipment and facilities.
TOGO
Togo went into lockdown twice during 2020. On
the first occasion, when PPE and testing were in
short supply, the plant operated in isolation mode
for three months, with shifts living and working on
site for six weeks at a time. This enabled us to
guarantee the presence of suitably qualified
personnel to deal with any maintenance or
technical issues during a period when external
contractors would be prohibited from entering.
To prepare for supply chain disruption, we
stocked up in advance to ensure we had all
necessary spare parts for engines and auxiliaries.
As a result, the plant performed well against its
KPIs. The outturn for availability was 93.7% against
a target of 92.8%; forced outage was contained
at 0.9% against a maximum of 1.2%; and planned
outage was restricted to only 5.3%, compared
with a target limit of 6.0%.
36
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
37
Sustainability
OUR SUSTAINABLE
BUSINESS PRINCIPLES
FOUR GUIDING PRINCIPLES FOR
SUSTAINABLE BUSINESS
Four sustainable business principles govern
our corporate behavior to ensure everything
we do is sustainable from an environmental,
social and governance point of view. These
principles, which are aligned with the 17
United Nations Sustainable Development
Goals (SDGs), are an integral part of our
business strategy. Reporting related with
these principles is addressing the risks
identified in our materiality matrix, available
in our 2019 Sustainability Report, based
on importance to our stakeholders and
significance of potential impacts.
Operate safely and efficiently and
minimize environmental impacts
Grow well
Manage our business responsibly
Enhance our operating environment
38
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Operate safely and efficiently and
minimize environmental impacts
We care about our people’s health, safety, wellbeing,
and development. Safety is our number one priority. In the
industrial space in which we operate, there are significant
risks to life and health, and it is critical for us that these are
absolutely minimized. By operating well and producing
power according to plan, we can create significant value
and sustainable impact.
Each year, we set ourselves a Target Zero for Lost Time
Incidents (LTIs), i.e. zero harm, zero injuries. This is a tough
stretch target, considering that about six million hours are
worked each year, and since it was adopted in 2016, we
have not quite yet achieved it. We regrettably experienced
two LTIs in 2020; these have been thoroughly investigated
and we have learned lessons from them. We remain fully
committed to Target Zero in the future.
In 2020, we expanded our health and safety policies and
procedures to include precautions related to COVID-19. All
our policies and procedures apply to everyone working on
our site: employees, contractors, and visitors. We make no
exceptions and we apply the same standards in every
business across the globe.
By running a power plant efficiently, we maximize electricity
output, minimize environmental impacts and reduce costs.
We gauge our performance by benchmarking ourselves
against the performance of comparable peers.
In our thermal portfolio, our efficiency KPIs include heat
rate and net efficiency. We have invested in Artificial
Intelligence (AI) and predictive analytic capabilities to monitor
performance and detect technical issues at an early stage
in order to remove these issues before a failure can occur.
In our renewable portfolio we have created a dedicated
Intelligence Center to house experts in renewable operations.
We commit to minimizing environmental impacts – carbon, air,
water, waste, and biodiversity – across all phases of business
operations, while complying with environmental regulations
and global best practices. Our environmental management
is designed to align with UN Sustainable Development Goal
(SDG) 12 for responsible consumption and production.
0.07
104,604
-12%
Lost Time
Incident Rate
Health and Safety
training hours
% reduction in CO2 intensity
of energy production from
our 2019 base year intensity
of 0.51 to our 2020 intensity
of 0.45 (where intensity is Net
CO2 emissions in tonnes/total
energy production in MWh)
Sustainability
OUR SUSTAINABLE
BUSINESS PRINCIPLES
FOUR GUIDING PRINCIPLES FOR
SUSTAINABLE BUSINESS
Four sustainable business principles govern
our corporate behavior to ensure everything
we do is sustainable from an environmental,
social and governance point of view. These
principles, which are aligned with the 17
United Nations Sustainable Development
Goals (SDGs), are an integral part of our
business strategy. Reporting related with
these principles is addressing the risks
identified in our materiality matrix, available
in our 2019 Sustainability Report, based
on importance to our stakeholders and
significance of potential impacts.
Operate safely and efficiently and
minimize environmental impacts
Grow well
Manage our business responsibly
Enhance our operating environment
Operate safely and efficiently and
minimize environmental impacts
We care about our people’s health, safety, wellbeing,
and development. Safety is our number one priority. In the
industrial space in which we operate, there are significant
risks to life and health, and it is critical for us that these are
absolutely minimized. By operating well and producing
power according to plan, we can create significant value
and sustainable impact.
Each year, we set ourselves a Target Zero for Lost Time
Incidents (LTIs), i.e. zero harm, zero injuries. This is a tough
stretch target, considering that about six million hours are
worked each year, and since it was adopted in 2016, we
have not quite yet achieved it. We regrettably experienced
two LTIs in 2020; these have been thoroughly investigated
and we have learned lessons from them. We remain fully
committed to Target Zero in the future.
In 2020, we expanded our health and safety policies and
procedures to include precautions related to COVID-19. All
our policies and procedures apply to everyone working on
our site: employees, contractors, and visitors. We make no
exceptions and we apply the same standards in every
business across the globe.
By running a power plant efficiently, we maximize electricity
output, minimize environmental impacts and reduce costs.
We gauge our performance by benchmarking ourselves
against the performance of comparable peers.
In our thermal portfolio, our efficiency KPIs include heat
rate and net efficiency. We have invested in Artificial
Intelligence (AI) and predictive analytic capabilities to monitor
performance and detect technical issues at an early stage
in order to remove these issues before a failure can occur.
In our renewable portfolio we have created a dedicated
Intelligence Center to house experts in renewable operations.
We commit to minimizing environmental impacts – carbon, air,
water, waste, and biodiversity – across all phases of business
operations, while complying with environmental regulations
and global best practices. Our environmental management
is designed to align with UN Sustainable Development Goal
(SDG) 12 for responsible consumption and production.
0.07
104,604
-12%
Lost Time
Health and Safety
% reduction in CO2 intensity
Incident Rate
training hours
of energy production from
our 2019 base year intensity
of 0.51 to our 2020 intensity
of 0.45 (where intensity is Net
CO2 emissions in tonnes/total
energy production in MWh)
Grow well
Growing well means:
(i) expanding wealth creation opportunities for investors
vestors
and employees
(ii) expanding the supply of reliable and affordable electricity
e electricity
l
(iii) acquiring and developing businesses utilizing low- or
no-carbon technologies
(iv) deploying innovative thermal technologies that are
cleaner than the alternatives, where renewable energy
is insufficient to meet a country’s needs
Achieving these goals allows us to promote energy and
economic security and increase energy access while
reducing environmental impacts and creating economic
wealth for investors, our employees and our communities.
Our investment process has yielded strong growth
throughout the Company’s history.
Growth in MW capacity
Manage our
business responsibly
We are committed to maintaining the highest ethical and legal
standards, including complying with both the letter and the
spirit of all applicable laws and regulations in every country
where we operate. This commitment to transparency and
moral integrity is unwavering, and we apply it equally
to our supply chain. We believe that this organizational
principle cultivates innovation and creativity and honors
the commitments of those who have placed their trust in us.
In 2020, the onset of the pandemic meant we modified all our
business procedures to keep COVID-19 infection out of our
plants and supply chain as far as possible. We worked closely
with the national and local authorities around our plants to
understand and respect all their COVID-19 protocols and
to show leadership in the community.
We believe in creating opportunity for employees to develop
and grow into leaders. This promotes upward and geographic
mobility and enhances knowledge transfer opportunities.
We are committed to attracting women into leadership
positions at our power plants, an area in which women
have traditionally been under-represented. We believe this
is vital to drive innovation and inclusivity. Finally, we commit
to communicating transparently, which helps to cultivate trust,
and encourage ownership and accountability.
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Total
87
1,059
418
W
M
n
i
y
t
i
c
a
p
a
C
8000
7000
6000
5000
4000
3000
2000
1000
0
2 0 0 5
2 0 0 6
2 0 07
2 0 0 8
2 0 0 9
2 010
2 011
2 012
2 013
2 014
2 015
2 016
2 017
2 018
2 019
2 0 2 0
2 0 21
+25%
1,502 MW
3%
Compounded
Annual Growth Rate
in Installed Capacity
from 2006 (including
Western Generation
Portfolio)
Growth initiated in
2020, closed in
Q1 2021
Growth in
Adjusted
EBITDA
in 2020
Number of
employees who
completed the
online conflict
of interest form
in 2020
Number of our
new-hire
employees who
completed our
online anti-
corruption training
course in 2020
(100% of new
hires)
Number of service
providers and
suppliers
submitted to
compliance for
due diligence in
2020, in line with
our Third-Party
Policy
Enhance our operating
environment
Wherever we operate, we aim to share our expertise
and improve quality of life through long-term sustainable
improvement of the electricity sector, civil society, and local
communities. This promotes transparency, builds capacity
in the sector and specifically in energy efficiency, and
improves community health and safety. Further, this principle
encourages partnerships with governments, development
organizations and NGOs to advance the UN Global Compact
principles and drives us to serve as a model international
investor when entering a new market through professionalism
and cultural awareness.
We promote private sector and market-based solutions
to electricity sector challenges, which helps to sustain
the reliability of the electricity system in developed
markets and increase it in developing markets.
We strengthen institutions and partner with NGOs,
governments, suppliers and other stakeholders to
help achieve sustainability objectives.
We engage with and invest in communities, in education,
health and other infrastructure. In 2020, our community
investment focused on mitigating the effects of the pandemic,
and we made major contributions to local and national
healthcare and food supply.
46,778
Hours devoted
to community
education
activities
97
Number of social projects approved in 2020,
all focused on COVID-19 related needs. 2020
saw less projects than 2019 (147), to allow
increased individual projects amount and
maximize impact
$2.2m
$2.3m
COVID-19 Extra
compensation for
front-line workers
in 2020
Investment in social
projects in 2020 (0.3%
of Adjusted EBITDA), in
line with 2019
38
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
39
Koete Nikouegan,
Maintenance Manager based in Togo
TOGO
FOCUSING ON THE HEALTH OF OUR TEAMS
The selflessness of our employees in the pandemic was
extraordinary. Koete Nikouegan, Maintenance Manager
at our Togo business, tells the story:
“We normally have a team of about 50 people running our
100MW engines in Togo, which is the largest power plant
in the country. To avoid COVID-19 putting us out of action,
we decided we had to operate for three months in isolation
mode, which would mean working in two separate shifts of
about 20-25 people each. Our workforce was fantastic and
each team volunteered to be locked in to the plant for six
weeks so as to avoid all contact with the outside world.
I led the way and did this myself.
“We converted offices into bedrooms and tried to allow for
recreation too, but it was tough. One issue was that, although
we had lots of canned food, we had very little that was fresh,
and we couldn’t get it because we didn’t want to risk
contamination. It wasn’t delicious, but we coped!
40
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
“Another issue was not seeing family. However,
ContourGlobal provided communication devices and facilities
to enable us to keep in touch, so I was able for example to
have a Zoom chat with my wife and two children every day.
“The Government provided us with PCR tests free of
charge at the beginning of the pandemic, which was really
appreciated. Later, I was pleased we were able to reciprocate
by delivering 8,000 PCR test kits to them for use by the
general population: this represented one third of all the
test equipment available in the country at that time.
“Being locked in for six weeks was stressful – but
manageable. I’m just glad that we didn’t have to do
it for the full three months.”
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
COVID-19 response
FACING THE PANDEMIC
From the start of the pandemic, we concentrated on preserving
the health of our employees and their families and keeping
them as safe as possible. This was on top of our underlying
commitment to zero harm and zero injuries in a normal year.
In February, we formed a Steering Committee and Task Force
composed of our most senior management which met several
times each day to make decisions about operations and
business continuity and to establish a clear line of
communication to everyone in the Company. This was
supplemented by a range of working groups and another
Steering Committee that met daily to ensure we were able
to respond quickly to the challenges that the Company and
employees were facing. Members of the working groups
dedicated a significant part of their time and effort to protect
all employees’ health and safety.
COVID testing and protection
As early as March, we began conducting PCR testing across
our fleet. Since test packs were in short supply in many
countries where we operate, we procured them centrally and
distributed them around the world. Working with governments
and local authorities, we secured lab facilities so that our
employees could be tested – and we were also often able to
extend this to their families. Where contractors were required
to enter a site, their temperatures were tested before
admission and they were required to sanitize their hands at the
door. Everyone on site was provided with personal protective
equipment (PPE) and was required to wear a face covering.
Emotional support
We trained our managers on how to support their employees
psychologically during this upheaval, as well as in relation
to their physical health. Daily check-ins with staff were put
in place both to update employees on latest developments
and to respond to their questions or concerns. We also made
counseling available to many businesses.
Plant operations during the pandemic
We carried out hygiene and housekeeping risk assessments
at each of our plants. Early in the pandemic, we conducted
lockdown drills at a selection of plants to test how we could
provide business continuity if we were forced to have teams
stay on site in isolation. Employees typically volunteered to
take part in these trials, committing to remain for two days
inside the plant, rather than for the usual 8 to 12-hour shift.
To make this possible, we converted space previously used
for training into kitchens and bathrooms, and equipped living
quarters with beds, bedding and all the other furnishings
necessary. We erected partitions to keep people at a safe
distance from each other and minimize contact. We provided
food and kitchen utensils together with cleaning and personal
hygiene products, a first aid kit and walkie-talkie for communication
with the site Control Room. The trials were successful and
taught us useful lessons about issues to be aware of,
particularly if isolation was required for more than two days.
Recognizing the impact the virus would have on our people’s
personal lives as well as working lives, CEO and COOs held calls
with every one of our plants and with every shift, to understand
how they were impacted and how we could best support them.
Often at the suggestion of the employees themselves, new
shift patterns were established. At three plants – Togo, Cap
des Biches and Vorotan – isolated working became necessary.
Those employees who went to work in isolated conditions took
a PCR test which had to prove negative before they entered the
power plant, and we ensured that nobody from outside came
into contact with these employees during this period. Rather
than working typical shifts, some teams decided to live and work
together inside the plants for periods as long as 3 to 6 weeks. To
make life more bearable in these circumstances, we equipped
facilities with gyms and entertainment options; barbecues were
provided on some weekends to create a sense of variety from
the working week. To look after employees’ families during these
periods, we provided food and medical supplies and ensured
that they were able to communicate by smartphone to their loved
ones; in Rwanda, we provided iPads to the families of our
employees so they could keep in touch.
To avoid too many staff being rotated into and out of plants,
we adopted technology to conduct routine health and safety
inspections and maintenance audits remotely. By equipping
a qualified employee in each plant with special glasses
connected to a camera and sophisticated software, staff
working externally could view exactly what the person walking
around the site could see and inspections could be conducted
with significantly reduced risk. This further step in digitalization
will favorably impact our way of working in the future.
We also equipped most of our power plants with remote
monitoring and operation technologies to be flexible in
case of a shortage of staff as a result of the pandemic. Where
power plants were due for an annual technical overhaul, we
administered PCR tests for all contractors involved because
of the high probability that they would come into contact with
our employees. These tests were repeated on average every
two weeks, depending on the infection risk in that region.
It is a testament to the success of our planning and delivery
that the virus spread was much lower in our plants than in
the communities they serve.
Office Employees
For our office employees, we moved quickly to enable
remote working, ensuring they had the IT equipment or
upgrades wherever necessary to allow good communication.
In São Paulo, for example, we sent chairs and computer
monitors to employees’ homes and improved their internet
access, so that they could work comfortably and effectively.
The Task Force established a special COVID-19 Portal to
distribute information quickly, supported by the disciplined
use of internal social media and a weekly all-staff update
bulletin. This newsletter contained regular advice to people
working from home to support their mental as well as their
physical wellbeing. We ran webinars in multiple languages
to give employees the opportunity to raise questions or
concerns and to share information about best practice. Some
offices were reopened in the summer when it was safe to do
so, with special cleaning and social distancing measures put
in place to protect those employees who came in.
41
Koete Nikouegan,
Maintenance Manager based in Togo
TOGO
FOCUSING ON THE HEALTH OF OUR TEAMS
The selflessness of our employees in the pandemic was
“Another issue was not seeing family. However,
extraordinary. Koete Nikouegan, Maintenance Manager
ContourGlobal provided communication devices and facilities
at our Togo business, tells the story:
“We normally have a team of about 50 people running our
to enable us to keep in touch, so I was able for example to
have a Zoom chat with my wife and two children every day.
100MW engines in Togo, which is the largest power plant
“The Government provided us with PCR tests free of
in the country. To avoid COVID-19 putting us out of action,
charge at the beginning of the pandemic, which was really
we decided we had to operate for three months in isolation
appreciated. Later, I was pleased we were able to reciprocate
mode, which would mean working in two separate shifts of
by delivering 8,000 PCR test kits to them for use by the
about 20-25 people each. Our workforce was fantastic and
general population: this represented one third of all the
each team volunteered to be locked in to the plant for six
test equipment available in the country at that time.
weeks so as to avoid all contact with the outside world.
I led the way and did this myself.
“Being locked in for six weeks was stressful – but
manageable. I’m just glad that we didn’t have to do
“We converted offices into bedrooms and tried to allow for
it for the full three months.”
recreation too, but it was tough. One issue was that, although
we had lots of canned food, we had very little that was fresh,
and we couldn’t get it because we didn’t want to risk
contamination. It wasn’t delicious, but we coped!
40
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Health and safety
FOCUSED ON TARGET ZERO
Training
Our success in health and safety could not be achieved
without our intensive training program. We target investing at
least 2% of our total working hours in safety training. In 2020,
we achieved a training hours rate of 3.2% in our Thermal
plants and 3.1% in our Renewable plants.
Audits and interventions
Despite the pandemic, our program of health and safety
audits continued through the year. One scheduled external
audit, seven scheduled internal audits and one unannounced
internal audit were carried out. No safety interventions were
performed in 2020 due to COVID-19 travel restrictions.
Audits
Audits
Balsa Nova
Termoemcali
Bahia PCH
Italy Biogas
Solar Slovakia
Palma del Rio
Knockmore Hill (non-announced)
Cupisnique (non-announced)
Vorotan (External)
Maritsa (External)
Mogi Guaçu
Arrubal
Asa Bianca
Inka
Ploiesti
Solar Italy
Togo
Rio PCH
Nogara (non-announced)
Cap des Bisches (external)
Chapada
Majadas
Mexican CHP – CGA
Mexican CHP – CELSCA
Bonaire
Total:
2020
2019
1
1
1
1
1
1
1
1
1
9
1
1
1
1
1
1
1
1
1
1
10
Target Zero
Beyond COVID-19, our global Target Zero program remained
at the heart of ContourGlobal’s approach to health and safety,
with the aim of ensuring that ‘everyone goes home safe,
every day, everywhere’. Our target for zero Lost Time
Incidents (LTIs) is always a stretch, but it was disappointing
that we experienced two such incidents in 2020 – one in
November and one in December. In the first, at our Vorotan
business in Armenia, an employee received an electric shock
from a live bar whilst painting in a local electric sub-station.
He experienced serious injuries requiring hospitalization. The
second event, at our CGA plant in Mexico, occurred when an
operator was burnt by hot condensate and steam emanating
from a vent pipe while he was performing an inspection. He
was also hospitalized.
When an accident occurs we always organize an
external investigation. Unfortunately in Armenia,
this was very difficult due to the military situation
and therefore, we assigned an independent team
of experts from within the Company, that led the
investigation into the Vorotan LTI remotely. They
had reviewed the site and corporate standards/
procedures so as to identify and understand the
root causes and what could be done to prevent
recurrence of this incident, ensuring a safe
workplace for our employees.
The root causes led to some invaluable insights
and preventative actions, some of which included
technology, being identified and implemented:
• gaps in Health and Safety procedures and
compliance thereto – relating to performing
lone work in a high-risk environment. This led
to the implementation and use of technology
to contribute towards improving supervision
for identified lone-work areas (e.g. electronic
access systems at the doors of high-risk areas
and video surveillance systems)
• effective and streamlined communication
between employee and supervisor, avoiding
more than one reporting line. This led to review
of organizational charts, job descriptions and
operating instructions to clarify the
responsibilities and segregation of duties
• importance of conducting a Health and Safety
risk assessment prior to commencing a task –
i.e. identifying potential hazards and ensuring
that the correct control measures are available
and implemented. In addition, measures to
address employees’ competencies, and the
reinforcement of behavior-based programs for
site leadership.
42
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
S
t
r
a
t
e
g
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R
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p
o
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t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
Health and safety
FOCUSED ON TARGET ZERO
Target Zero
Training
Beyond COVID-19, our global Target Zero program remained
Our success in health and safety could not be achieved
at the heart of ContourGlobal’s approach to health and safety,
without our intensive training program. We target investing at
with the aim of ensuring that ‘everyone goes home safe,
least 2% of our total working hours in safety training. In 2020,
every day, everywhere’. Our target for zero Lost Time
we achieved a training hours rate of 3.2% in our Thermal
Incidents (LTIs) is always a stretch, but it was disappointing
plants and 3.1% in our Renewable plants.
that we experienced two such incidents in 2020 – one in
November and one in December. In the first, at our Vorotan
business in Armenia, an employee received an electric shock
from a live bar whilst painting in a local electric sub-station.
He experienced serious injuries requiring hospitalization. The
second event, at our CGA plant in Mexico, occurred when an
operator was burnt by hot condensate and steam emanating
from a vent pipe while he was performing an inspection. He
was also hospitalized.
Audits and interventions
Despite the pandemic, our program of health and safety
audits continued through the year. One scheduled external
audit, seven scheduled internal audits and one unannounced
internal audit were carried out. No safety interventions were
performed in 2020 due to COVID-19 travel restrictions.
2020
2019
Audits
Audits
Balsa Nova
Termoemcali
Bahia PCH
Italy Biogas
Solar Slovakia
Palma del Rio
Knockmore Hill (non-announced)
Cupisnique (non-announced)
Vorotan (External)
Maritsa (External)
Mogi Guaçu
Arrubal
Asa Bianca
Inka
Ploiesti
Solar Italy
Togo
Rio PCH
Chapada
Majadas
Bonaire
Total:
Nogara (non-announced)
Cap des Bisches (external)
Mexican CHP – CGA
Mexican CHP – CELSCA
1
1
1
1
1
1
1
1
1
9
1
1
1
1
1
1
1
1
1
1
10
When an accident occurs we always organize an
external investigation. Unfortunately in Armenia,
this was very difficult due to the military situation
and therefore, we assigned an independent team
of experts from within the Company, that led the
investigation into the Vorotan LTI remotely. They
had reviewed the site and corporate standards/
procedures so as to identify and understand the
root causes and what could be done to prevent
recurrence of this incident, ensuring a safe
workplace for our employees.
The root causes led to some invaluable insights
and preventative actions, some of which included
technology, being identified and implemented:
• gaps in Health and Safety procedures and
compliance thereto – relating to performing
lone work in a high-risk environment. This led
to the implementation and use of technology
to contribute towards improving supervision
for identified lone-work areas (e.g. electronic
access systems at the doors of high-risk areas
and video surveillance systems)
• effective and streamlined communication
between employee and supervisor, avoiding
more than one reporting line. This led to review
of organizational charts, job descriptions and
operating instructions to clarify the
responsibilities and segregation of duties
• importance of conducting a Health and Safety
risk assessment prior to commencing a task –
i.e. identifying potential hazards and ensuring
that the correct control measures are available
and implemented. In addition, measures to
address employees’ competencies, and the
reinforcement of behavior-based programs for
site leadership.
Campbell Institute
Our membership of the Campbell
Institute played an important role
in our COVID-19 response. We
participated in the “Campbell
Institute Symposium” and “Work
to Zero Summit”, giving participants the opportunity to
engage actively with peers in the HSE profession about
COVID-19 related issues. Topics we are focusing on with
sub-committees and workgroups include: contractor
management; health and wellbeing; Severe Injury and
Fatalities hazards; and environmental sustainability. Since
the COVID-19 outbreak, the Campbell Institute, jointly with
the NSC, has organized benchmark calls among members
to share best practice. Our own COVID-19 office plans were
developed from this body of expertise.
ICAP Global Health at Columbia University
Our partnership with ICAP, a leader in global public health,
also proved invaluable in the context of COVID-19 as we
proactively protected the health and safety of our employees,
ensured business continuity and sought approaches to
support our communities. ICAP’s global expertise in emerging
transmission trends and technical developments allowed us
to manage the unique needs of our plants in a timely way;
support employees, their families, and the vulnerable
communities in which they work; and identify impactful
opportunities to decrease community transmission in priority
countries and regions.
Total Recordable Incident Rate
0.20
0.20
0.15
0.10
0.10
0.17
0.16
0.16
0.14
0.13
0.11
0.05
0.00
2017
2018
2019
2020
The recordable incidents category gathers the following Health and Safety incidents –
Medical Treatment Incidents, Restricted Workday Case Incidents and Lost Time Incidents.
OUR PERFORMANCE IN NUMBERS
Lost Time Incident Rate
0.07
Target ZERO.
Safety inspection per working hours
(based on headcount)
0.44
(2019: 0.48)
We achieved the target rate of Level 2 Safety
Inspections at all sites.
Hazard Identification Rate –
target exceeded
77%
We achieved a Hazard Identification Rate of 77%,
far exceeding the target of 40%.
Corrective and preventive actions
(CAPA) – target exceeded
CAPA closed
8,074
CAPA opened
8,377
We achieved a CAPA closure rate of 96% against
our target of 85%.
Total near misses
25
Training hours
2.6%
(2019: 2.17%)
42
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
43
Health & safety
SAFETY FOCUS AWARDS
As a tribute to our value “We care about our people’s
health, safety, wellbeing, and development”, ContourGlobal
established an award system, fostering a safe and secure
working environment on sites. Sites achieving high levels
of health and safety performance can be awarded company-
wide recognitions, stepping up as our world’s highest peaks:
Mont Blanc, Denali and Everest, each step requiring
increasing and long-lasting performance. We are proud
of seeing over years more and more of our plants and
teams being recognized by these awards.
Everest
8848m
Denali
6194m
Mont Blanc
4807m
• 3 year without LTI or RI
• 40% headcount of safety
inspections per month (*)
• 3% of Training hours
• 95% closure of CAPA (*)
• 60% Hazard identification
rate
• 90% compliance against
Power for HSE standards &
0 High Non-Conformances
(**)
2020
• Brahma Rio
• Galheiros
& SDII
• Goias Sul
• KivuWatt
• Maritsa
• TermoemCali
• 2 year without LTI or RI
• 30% headcount of safety
inspections per month (*)
• 2.5% of Training hours
• 90% closure of CAPA (*)
• 50% Hazard identification
rate
• 85% compliance against
Power for HSE standards &
0 High Non-Conformances
(**)
2020
• Cupisnique
• Italy Solar
• Knockmore Hill
• Mogi Guaçu
• Rio PCH
• Solar Slovakia
• Talara
• 1 year without LTI or RI
• 25% headcount of safety
inspections per month (*)
• 2% of Training hours
• 85% closure of CAPA (*)
• 40% Hazard identification
rate
• 80% compliance against
Power for HSE standards &
0 High Non-Conformances
(**)
2020
• Arrubal
• Asa Branca
• Austria Wind
• Bahia PCH
• Balsa Nova
• Benin and Ikeja
• CELSA
• Chapada
• Nogara and
Oricola
• Orellana
• Palma del Rio
• Ploiesti
• Romania Solar
2019
• Cap des Biches
• KivuWatt
• Saint Martin
2019
• Brahma Rio
• Galheiros &
SDII
• Goias Sul
• Maritsa
• TermoemCali
2019
• Alvarado
• Cupisnique
• Italy Solar
• Knockmore Hill
• Majadas
• Mogi Guaçu
• Rio PCH
• Solar Slovakia
• Talara
• Togo
(*) over the last 12 months – (**) assessed within the last 12 months – exempt from this requirement are ISO 45001 certified plants
Definitions: LTI = Lost Time Incident; RI = Recordable Incident; CAPA = Corrective & Preventive Action
44
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
S
t
r
a
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R
e
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o
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G
o
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n
a
n
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n
a
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a
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e
n
t
s
Health & safety
Everest
8848m
Denali
6194m
Mont Blanc
4807m
SAFETY FOCUS AWARDS
As a tribute to our value “We care about our people’s
Mont Blanc, Denali and Everest, each step requiring
health, safety, wellbeing, and development”, ContourGlobal
increasing and long-lasting performance. We are proud
established an award system, fostering a safe and secure
of seeing over years more and more of our plants and
working environment on sites. Sites achieving high levels
teams being recognized by these awards.
of health and safety performance can be awarded company-
wide recognitions, stepping up as our world’s highest peaks:
• 3 year without LTI or RI
• 40% headcount of safety
inspections per month (*)
• 3% of Training hours
• 95% closure of CAPA (*)
• 60% Hazard identification
• 90% compliance against
Power for HSE standards &
0 High Non-Conformances
2020
• Brahma Rio
• Galheiros
& SDII
• Goias Sul
• KivuWatt
• Maritsa
• TermoemCali
• 2 year without LTI or RI
• 30% headcount of safety
inspections per month (*)
• 2.5% of Training hours
• 90% closure of CAPA (*)
• 50% Hazard identification
• 85% compliance against
Power for HSE standards &
0 High Non-Conformances
2020
• Cupisnique
• Italy Solar
• Knockmore Hill
• Mogi Guaçu
• Rio PCH
• Solar Slovakia
• Talara
• 1 year without LTI or RI
• 25% headcount of safety
inspections per month (*)
• 2% of Training hours
• 85% closure of CAPA (*)
• 40% Hazard identification
• 80% compliance against
Power for HSE standards &
0 High Non-Conformances
2020
• Arrubal
• Asa Branca
• Austria Wind
• Bahia PCH
• Balsa Nova
• Benin and Ikeja
• CELSA
• Chapada
• Nogara and
Oricola
• Orellana
• Palma del Rio
• Ploiesti
• Romania Solar
rate
(**)
rate
(**)
rate
(**)
2019
• Cap des Biches
• KivuWatt
• Saint Martin
2019
• Brahma Rio
• Galheiros &
SDII
• Goias Sul
• Maritsa
• TermoemCali
2019
• Alvarado
• Cupisnique
• Italy Solar
• Knockmore Hill
• Majadas
• Mogi Guaçu
• Rio PCH
• Solar Slovakia
• Talara
• Togo
CONTINUOUS
IMPROVEMENT CULTURE
Our value “We expect, embrace, and enable excellence and
continuous learning through humility and the knowledge that
we will fail – but when we do, we will learn” is embodied daily
in our Company, in every department and location through a
very powerful methodology: the “5-Whys”.
The “5-Whys” is a technique for performing failure analysis
originally developed by Sikichi Toyoda of ‘Toyota Production
System’ fame. This technique is used in the Analyze phase
of the Six Sigma DMAIC (Define, Measure, Analyze, Improve,
Control) methodology and helps us peel away the layers of
symptoms that can lead to the root cause of a problem. By
asking five times why a failure occurred, team involved in a
failure identifies its root cause and can develop a proportional
response to prevent the failure to occur again.
5-Whys performed are distributed widely in our Company,
sharing experience and best practices. This tool goes
hand-in-hand with another cultural pillar of our Company:
Timely Transparency. ContourGlobal encourages at all levels
of the organization, corporate services or operations teams,
recognition of failure, and willingness to talk about it, learn
from it and share lessons learned from it.
In 2020, 467 5-Whys analysis were performed, and shared
widely in the Company, helping us to become a better
organization.
Failure
event
5 Whys
discussed and
draft created
5 Whys
published
Actions
assigned
Actions
completed
5 Whys
shared
internally
ContourGlobal praises annually employees
embracing our Continuous Improvement culture by
distributing Best 5-Whys awards and communicating
it widely on our intranet.
A Hall of Fame also keeps record of the best
5-Whys performed along the years, promoting failure
analysis respecting conscientiously the methodology
to serve as an example for future 5-Whys.
In 2020, awards for Operations were distributed to:
• Asa Branca: ‘Near miss Control Room Operative Failure’
• Maritsa: ‘Boiler Protection related Forced Outage’
• CSP Spain: ‘Ethernet Failure causing Loss of Availability
and Production’
• CGA Mexico: ‘Grease Ignition’
• Brahma Rio: ‘Generator Synchronization System Failure’
• CELSA Mexico: ‘Operator Fall while Closing Pump’
• KivuWatt: ‘Employee Slippage while Boat Boarding’
• Arrubal: ‘Gas Leakage’
Among the 2020 Best 5-Whys awards, 3 analysis
were named for the Hall of Fame, joining the 13
5-Whys named over the previous years:
• Asa Branca: ‘Near miss Control Room Operative Failure’
• Maritsa: ‘Boiler Protection related Forced Outage’
• CSP Spain: ‘Ethernet Failure causing Loss of Availability
and Production’
(*) over the last 12 months – (**) assessed within the last 12 months – exempt from this requirement are ISO 45001 certified plants
See examples on how we used the “5 Whys” methodology to improve in 2020 on pages 35, 70, 86 and 132.
Definitions: LTI = Lost Time Incident; RI = Recordable Incident; CAPA = Corrective & Preventive Action
44
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
45
Our people
THE HEROES OF OUR
BUSINESS
Despite the unprecedented scale of the crisis, the year of COVID-19
was an amazing testament to the dedication of our people, who
continued to keep our power plants operating against all the odds.
When a system is put under stress, as through the pandemic,
its performance really shows how well the fundamentals
have been designed. Now as we respond and recover
as a Company, our focus is on what we can learn from
the pandemic and how it will affect our clients, our people,
and even wider society in the time ahead.
Recruiting the right people
As a people-led business, we are dependent on the skills
and experience of our 1,381 employees, so we work hard to
recruit the right people who we know will perform well and
thrive with us. We look for individuals who are motivated
self-starters with a strong will to learn and develop. They
have to be experts in their role, team players and capable of
collaborating effectively with a wide range of other functions,
often using different languages and working across different
time zones. We seek out people who take the initiative, have
potential and are a good cultural fit. The pandemic particularly
showed the resilience of our employees, and we are
incredibly proud of them.
Onboarding
We are committed to ensuring all our new hires quickly learn
about our business, our values and how they can flourish.
We share our Essential Information manual with new hires to
read before they start work. Our comprehensive onboarding
program offers recruits formal and informal training on a wide
range of topics, including health and safety, technology,
communication, anti-corruption and human rights, and 87
people went through this in 2020. In a normal year, the
program also offers them the chance to meet colleagues
from across the business in person. In 2020, this was
curtailed as a result of the pandemic, but through
videoconferencing technology our recruits were
able to interact virtually with other employees.
Learning and development
We had already invested considerable resource in online
learning and training before 2020, but this really came into its
own this year as we had to abandon all face-to-face events as
soon as the pandemic started. We replaced scheduled live
courses and conferences with digital equivalents, which
ContourGlobal’s people performing reforestation
activities, embracing our principles ”Enhance our
operating environment” and ”Operate safely and
efficiently and minimize environmental impact”.
Giving our employees challenges, fair rewards and development opportunities.
46
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
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t
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n
t
s
Our people
THE HEROES OF OUR
BUSINESS
Despite the unprecedented scale of the crisis, the year of COVID-19
was an amazing testament to the dedication of our people, who
continued to keep our power plants operating against all the odds.
When a system is put under stress, as through the pandemic,
its performance really shows how well the fundamentals
have been designed. Now as we respond and recover
as a Company, our focus is on what we can learn from
the pandemic and how it will affect our clients, our people,
and even wider society in the time ahead.
Recruiting the right people
As a people-led business, we are dependent on the skills
and experience of our 1,381 employees, so we work hard to
recruit the right people who we know will perform well and
thrive with us. We look for individuals who are motivated
self-starters with a strong will to learn and develop. They
have to be experts in their role, team players and capable of
collaborating effectively with a wide range of other functions,
often using different languages and working across different
time zones. We seek out people who take the initiative, have
potential and are a good cultural fit. The pandemic particularly
showed the resilience of our employees, and we are
incredibly proud of them.
Onboarding
We are committed to ensuring all our new hires quickly learn
about our business, our values and how they can flourish.
We share our Essential Information manual with new hires to
read before they start work. Our comprehensive onboarding
program offers recruits formal and informal training on a wide
range of topics, including health and safety, technology,
communication, anti-corruption and human rights, and 87
people went through this in 2020. In a normal year, the
program also offers them the chance to meet colleagues
from across the business in person. In 2020, this was
curtailed as a result of the pandemic, but through
videoconferencing technology our recruits were
able to interact virtually with other employees.
Learning and development
We had already invested considerable resource in online
learning and training before 2020, but this really came into its
own this year as we had to abandon all face-to-face events as
soon as the pandemic started. We replaced scheduled live
courses and conferences with digital equivalents, which
ContourGlobal’s people performing reforestation
Giving our employees challenges, fair rewards and development opportunities.
activities, embracing our principles ”Enhance our
operating environment” and ”Operate safely and
efficiently and minimize environmental impact”.
46
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
proved very successful. In December, we ran our annual
international conference, CG Way, entirely online, with
keynote speeches delivered live, ‘exhibitions’ presented
through video accompanied by transcripts in different
languages, and even a virtual lounge, where delegates
could chat and network. Some 515 employees from around
the world attended to the conference. Even when the
pandemic is over, we expect e-learning to represent a
significant part of our training offer. Our employees benefited
from 18,882 hours of training in total in 2020 – an average
of 14 hours per person.
Worker exchange program
The worker exchange program (WEP), launched in 2012,
gives employees the chance to live and work at other
ContourGlobal sites, which serves both to boost their
own skills and to facilitate cross-cultural exchange of
ideas and experience.
Cultivating a collaborative culture
The strength of the collaborative culture we seek to cultivate
was brought home during the pandemic by the extraordinary
response we saw from our people. In Togo, for example, plant
workers volunteered to isolate themselves for weeks on end
within the facility so that they could keep the country’s lights
on. This culture does not come about by accident. We
deliberately foster it by communicating transparently, by
rewarding our people fairly and by treating everyone with
respect. During the pandemic, our senior management held
a conference call with every shift of every power plant we
operate, to understand the issues they were facing and to
identify how we could best support them. Using the power
of digital communication, we gave staff around the world the
chance to ask questions of our CEO in webinars, and our CEO
opened 30-minute slots in his calendar for individual discussion
with any employee, whatever the location or the position (30
employees discussions). We also sought feedback from
employees through our employee surveys made available
in seven languages, and in 2020 we conducted these with a
focus on COVID-19 (office re-opening, daily screening survey
before entering the office), Continuous Improvement and
feedback on webinars and all Company townhalls.
Assessing performance
We want everyone at ContourGlobal to excel, so they
can realize their own goals and contribute effectively as
part of a close-knit multinational team. Assessing individuals’
performance regularly represents an important means
of achieving this. It helps to ensure fairness in career
progression and reward, and at the same time enables us to
check employee adherence to corporate standards. We hold
mid-year reviews designed to give managers and employees
opportunities to discuss progress toward annual goals and
exchange views on performance. These are followed by more
structured year-end reviews, which set objectives for the year
ahead, including performance development opportunities.
Employee rights
Aligned with our commitment to the UN Global Compact,
our Code of Conduct and Business Ethics, together with
other policies and procedures, ensures employee rights
are respected. We support freedom of association and
collective bargaining wherever it is permitted: 830
employees participated in collective bargaining agreements
in 2020. If employees have any labor concerns, we
encourage the use of informal processes to resolve them,
but we provide a formal grievance mechanism if these
prove insufficient. We seek to ensure our suppliers follow
the same high standards of labor relations as those we
practice ourselves, and train our employees to identify
any instances of non-compliance. If these arise, our human
resources teams work actively with our contract managers
to find suitable remedies.
Fair rewards
We apply the same fair and transparent compensation
policies to all ContourGlobal employees irrespective of level,
role, or location. Total rewards include base salary, annual
bonus, and employee benefits. In 2020, in recognition of the
sacrifices they made and the commitment they showed, we
paid a special bonus of $2,020 to each of our workers who
continued to work on site in their plants during the pandemic,
for a total amount of $2.2 million. Our base salaries and
benefits are benchmarked and managed locally, based on
prevailing market practice or legacy arrangements and are
reviewed periodically. We ensure equivalent roles within
countries are paid on the same scale. When we expand
operations into a new country, we conduct a benchmarking
review to ensure our total compensation exceeds the market
average. Our annual bonuses are based on a combination of
corporate and business/function performance; corporate
performance is given increased weight as responsibility level
rises, with executive bonuses receiving a corporate weighting
of 70%. We believe share ownership aligns objectives and
fosters retention and we therefore provide ownership
opportunities in the Company to employees who are
assessed in our talent review process as having high
potential as well as displaying strong performance.
Equality, diversity and inclusion
We need a diverse workforce to be successful as a company,
especially as we advance in the field of energy transition, to
help us solve complex challenges that matter, build long-term
and trusted relationships, and make a real contribution to a
low-carbon future. Our approach to diversity is informed by
our deep roots in many geographical regions and our
international focus: we seek to leverage these skills,
experiences and backgrounds to ensure equal opportunities
for all. At executive leadership level, women represented
50% of our senior management in 2020. We seek to hire
locally at our power plants, preferring to employ in-country
personnel rather than expatriates, but many of our offices are
staffed by people representing a wide range of nationalities
so that we can better serve our regional businesses.
Senior leadership and succession planning
In 2020, Sean McGrath joined us as Chief Human Resources
Officer (CHRO), further strengthening the senior management
team. This year, we introduced a new program to identify and
develop talent, designed to select individuals who are ready
to step up to new challenges outside their comfort zone;
following evaluation and any adjustment necessary, we
expect this to result in a reliable system for growth and
succession planning. We also improved our integration
capabilities by building a group of experts in this field, who
were then successful in spearheading the major acquisition.
we initiated in 2020 and closed in February 2021.
47
Our people (continued)
Looking ahead
Over the course of 2020, further to decisions made at Board
level, we have acted as ‘power’ first responders to the world’s
first responders, supporting people on the front line, from
healthcare, to education, to critical manufacturing, grocery,
and retail in the countries where we operate. This reflects the
fundamental culture of the Company, and has formed part of
our Board’s commitment to comply with its s172 obligations,
taking into account benefit that can be given to each of our
stakeholders. And as we have navigated the response, we
have witnessed years of transformation of the workplace in
mere months, which will continue in the years ahead.
Amid this disruption, what is clear is that we have a once-in-a-
generation opportunity to harness our workplace, and the
future of the enterprise demands a new future for HR. Our
new People technology “Success Factors” will allow many
parts of our HR system to be remote while providing the
foundation from which we can make better talent decisions.
It will also support a different organizational design – which
emphasizes how work gets done to meet the constant
demands of the enterprise. In this regard there will be a
greater focus on linking the talent we have with the value
we seek to create, while at the same time supporting the
organization’s leaders with more science to help them in
their decision-making. Accordingly, in 2021, we will make
hiring better, cheaper, faster and more diverse. We will also
adapt the Objective and Key Results (OKRs) framework into
our performance management processes to redouble our
efforts to increase alignment and delivery of key tasks. We
have done a lot – and we have more to do.
A performance management system covering a very diverse
workforce, over 3 continents.
48
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Gender diversity in numbers
Board
Executive
Management*
Male
Female
89% (8)
Male
11% (1)
Female
50% (4)
50% (4)
Executive
Management and
their direct reports
Total Group
Male
Female
69% (35)
Male
31% (16)
Female
81% (1,120)
19% (261)
* Executive Management refers to the senior managers of the Group,
employees who have responsibility for planning, directing or controlling
the activities of the Group. This figure includes the Chief Executive Officer
and the Chief Financial Officer, who are Executive Directors at the Board
of Directors.
Our people (continued)
Over the course of 2020, further to decisions made at Board
level, we have acted as ‘power’ first responders to the world’s
first responders, supporting people on the front line, from
healthcare, to education, to critical manufacturing, grocery,
and retail in the countries where we operate. This reflects the
fundamental culture of the Company, and has formed part of
our Board’s commitment to comply with its s172 obligations,
taking into account benefit that can be given to each of our
stakeholders. And as we have navigated the response, we
have witnessed years of transformation of the workplace in
mere months, which will continue in the years ahead.
Amid this disruption, what is clear is that we have a once-in-a-
generation opportunity to harness our workplace, and the
future of the enterprise demands a new future for HR. Our
new People technology “Success Factors” will allow many
parts of our HR system to be remote while providing the
foundation from which we can make better talent decisions.
It will also support a different organizational design – which
emphasizes how work gets done to meet the constant
demands of the enterprise. In this regard there will be a
greater focus on linking the talent we have with the value
we seek to create, while at the same time supporting the
organization’s leaders with more science to help them in
their decision-making. Accordingly, in 2021, we will make
hiring better, cheaper, faster and more diverse. We will also
adapt the Objective and Key Results (OKRs) framework into
our performance management processes to redouble our
efforts to increase alignment and delivery of key tasks. We
have done a lot – and we have more to do.
A performance management system covering a very diverse
workforce, over 3 continents.
48
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Male
Female
89% (8)
Male
11% (1)
Female
50% (4)
50% (4)
Executive
Management and
their direct reports
Total Group
Male
Female
69% (35)
Male
31% (16)
Female
81% (1,120)
19% (261)
* Executive Management refers to the senior managers of the Group,
employees who have responsibility for planning, directing or controlling
the activities of the Group. This figure includes the Chief Executive Officer
and the Chief Financial Officer, who are Executive Directors at the Board
of Directors.
Looking ahead
Gender diversity in numbers
Board
Executive
Management*
Ana Maria Palacios,
Occupational Health and Safety Technician
based in Talara (Inka Complex), Peru
PERU
PERFORMING IN A CHALLENGING LOCKDOWN
Pandemic lockdown in Peru was far more severe than in the
United States and Europe. Occupational Health and Safety
Technician at our Inka Complex wind farm business, Ana
Maria Palacios, describes her experience:
“To understand how we were affected, you have to
appreciate the ‘informal’ and fragile nature of the economy
in Peru. Although the first case of COVID-19 here was only
reported on March 6, within 12 days the whole country was
locked down to try to avoid the healthcare system collapsing.
But even with the economy frozen, we had to continue
producing energy. We put in place operational changes to
keep people safe and the lights on. Shift lists were changed,
cleaning stepped up and new protocols implemented on
travel to and from our plants, using only our own vehicles.
“As well as day-to-day business, we had two maintenance
operations planned using contractors. I oversaw this
personally to ensure we adhered to all the measures
needed to avoid contamination. It was a really big
challenge, but we pulled it off.
“Although we were working double, without weekend breaks,
by law we had to allow employees to take vacation. Thanks
to support from ContourGlobal centrally, we were able to test
everyone before they came back to work, and we discovered
that two people had become infected. By having them
self-isolate, we prevented any contamination among other
employees – but their absence put even more pressure on
us. However, excellent cooperation between our two plants
– 436 km distance and eight hours’ travel time away from
each other – meant that we were able to share management
and supervision resources.
“It was a tough period for all of us, personally as well as at
work. One colleague had to spend six months without being
able to see her family. The Company made psychological
support available to anyone who wanted it, and I think we
all used it. ContourGlobal also helped us with educational
resources for our children, who were unable to attend
regular school. I don’t know how we could have got
through everything without the wonderful people
throughout the Company.”
49
Environment
MINIMIZING OUR IMPACT
We seek to minimize the environmental impacts
of our operations wherever possible.
Strategic framework
Our policy on environmental sustainability, which provides the
framework under which we work, is aligned both with the
targets in UN Sustainable Development Goal (SDG) 12 and
with the International Finance Corporation (IFC) performance
standards. For our European assets, we comply with EU
environmental standards. These promote environmental
stewardship, including pollution prevention and abatement,
biodiversity conservation and responsible management of
sustainable natural resources. Our environmental impacts are
intensively regulated in all our markets and reported publicly.
In 2020, we remain a constituent of the FTSE4Good index,
aiming to improve our index year on year, in the spirit of
transparent management of ESG criteria and increasing
commitments. We will also continue to focus on combating
climate change over the course of 2021
and will report against the Task Force on
Climate-related Financial Disclosures (TCFD)
recommendations in our 2021 Annual Report.
Carbon emissions
During 2020, we made important commitments towards
reducing carbon emissions. We announced a long-term target
of net zero carbon by 2050 and a medium-term target to
reduce the CO2 intensity of total energy production to 0.30
by 2030 (a 40% reduction from its 2019 value of 0.51).
We also committed to make no further investments in
coal-powered generation.
We reported for the first time to the Carbon Disclosure
Project, which runs the global disclosure system for investors,
companies, cities, states and regions to manage their
environmental impacts. Additionally, in 2020 we received
limited assurance on our CO2 emissions intensity metric -
electricity produced (tCO2e/MWhe) for the 2019 year.
In 2021, we also received limited assurance on our Scope 1
emissions (tCO2e) and intensity metric – electricity produced
(tCO2e/MWhe) included in this report for the 2020 year. We
will also expand our reporting of our Scope 2 and Scope 3
CO2 emissions in our 2020 Sustainability Report to be
published later in 2021.
Carbon capture technology is an integral part of our strategy
to reduce our greenhouse gas emissions. This is in use at
our European Solutions plants, where we typically capture
and clean 95% of the CO2 generated. Our two new facilities
in Mexico present an opportunity for carbon capture that we
are actively exploring.
Other atmospheric emissions
In addition to carbon emissions, we carefully manage other
atmospheric emissions, such as nitrogen oxide (NOx), sulfur
oxide (SOx), and particulate matter (PM), to reduce health
risks and environmental impacts.
Streamlined Energy and Carbon
Reporting disclosure
The UK portion of our CO2 emissions is 0.2% of our global CO2
emissions of 8,522k tCO2e, of which 8,514k tonnes is from fuel
combustion. The UK portion of our fuel energy consumption is 0.2% of
our global fuel energy consumption of 19,233,896,310 kWh. Our CO2
intensity metrics are 0.57 tCO2e/MWh for electricity production and
0.45 tCO2e/MWh for total energy production.
Our energy and carbon reporting in the annual report is aligned with
the Greenhouse Gas Protocol and covers all global activities where we
have operational control1 and includes CO2 data for acquired
businesses for the period when we had operation control of the
business, i.e., the date of acquisition2. Based on our materiality analysis,
we have included carbon reporting only for our Scope 1 CO2 emission
and we include direct CO2, HFCs, and SF6 but we do not include CH4
and N2O. Our Scope 2 and Scope 3 emissions are not included in this
report as data was unavailable and will be reported in our Sustainability
report issued later in 2021.
Full details on our methodology can be found on our website at:
https://www.contourglobal.com/sites/default/files/2021-03/
contourglobal_greenhouse_gas_emissions_calculation_
methodology_2020.pdf
Scope 1 CO2e tonnes *
Electricity production (MWh)
Energy production (MWh)
Total Energy Input (MWh) **
CO2 emissions intensity –
electricity produced (tCO2e/MWhe)
CO2 emissions intensity –
energy produced (tCO2e/MWhe)
2019
2020
8,522,808.59k
7,741,709.18
14,966,705.63 13,525,041.05
18,810,716.24 15,229,490.01
29,133,979.51 23,240,766.64
0.57k
0.45
0.57
0.51
* 0.2% of the Scope 1 CO2e tonnes is related to UK emissions
** 0.2% of the total energy input is related to the UK proportion of energy
K ContourGlobal plc engaged KPMG LLP (“KPMG”) to undertake limited
assurance under the assurance standard ISAE (UK) 3000 over this Selected
Information. KPMG’s full assurance statement is included on our website at
https://www.contourglobal.com/reports?its_media_category_id%5B%5D=43
1. Under the control approach, a company accounts for 100 percent of the GHG emissions from operations over which it has control. It does not account for GHG
emissions from operations in which it owns an interest but has no control. A company has operational control over an operation if the former or one of its
subsidiaries has the full authority to introduce and implement its operating policies at the operation. Our report includes our CO2 emissions from the TermoemCali
business in Colombia, where we have a minority equity interest but exercise operational control. The report excludes our minority interest in the Sochagota
business in Colombia where we do not exert such control.
2. Our 2019 data includes CO2 emissions from our newly acquired businesses in Mexico from its date of acquisition (November 26, 2019) and excludes CO2 emissions
from our Radzymin business in Poland that was disposed of in 2019 and is immaterial to the overall portfolio. Our 2020 data includes CO2 emissions for Mexico for
the full year of operations.
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Environment
MINIMIZING OUR IMPACT
We seek to minimize the environmental impacts
of our operations wherever possible.
Strategic framework
Our policy on environmental sustainability, which provides the
framework under which we work, is aligned both with the
targets in UN Sustainable Development Goal (SDG) 12 and
with the International Finance Corporation (IFC) performance
standards. For our European assets, we comply with EU
environmental standards. These promote environmental
stewardship, including pollution prevention and abatement,
biodiversity conservation and responsible management of
sustainable natural resources. Our environmental impacts are
intensively regulated in all our markets and reported publicly.
In 2020, we remain a constituent of the FTSE4Good index,
aiming to improve our index year on year, in the spirit of
transparent management of ESG criteria and increasing
commitments. We will also continue to focus on combating
climate change over the course of 2021
and will report against the Task Force on
Climate-related Financial Disclosures (TCFD)
recommendations in our 2021 Annual Report.
Carbon emissions
During 2020, we made important commitments towards
reducing carbon emissions. We announced a long-term target
of net zero carbon by 2050 and a medium-term target to
reduce the CO2 intensity of total energy production to 0.30
by 2030 (a 40% reduction from its 2019 value of 0.51).
We also committed to make no further investments in
coal-powered generation.
We reported for the first time to the Carbon Disclosure
Project, which runs the global disclosure system for investors,
companies, cities, states and regions to manage their
environmental impacts. Additionally, in 2020 we received
limited assurance on our CO2 emissions intensity metric -
electricity produced (tCO2e/MWhe) for the 2019 year.
In 2021, we also received limited assurance on our Scope 1
emissions (tCO2e) and intensity metric – electricity produced
(tCO2e/MWhe) included in this report for the 2020 year. We
will also expand our reporting of our Scope 2 and Scope 3
CO2 emissions in our 2020 Sustainability Report to be
published later in 2021.
Carbon capture technology is an integral part of our strategy
to reduce our greenhouse gas emissions. This is in use at
our European Solutions plants, where we typically capture
and clean 95% of the CO2 generated. Our two new facilities
in Mexico present an opportunity for carbon capture that we
are actively exploring.
Other atmospheric emissions
In addition to carbon emissions, we carefully manage other
atmospheric emissions, such as nitrogen oxide (NOx), sulfur
oxide (SOx), and particulate matter (PM), to reduce health
risks and environmental impacts.
Streamlined Energy and Carbon
Reporting disclosure
The UK portion of our CO2 emissions is 0.2% of our global CO2
emissions of 8,522k tCO2e, of which 8,514k tonnes is from fuel
combustion. The UK portion of our fuel energy consumption is 0.2% of
Full details on our methodology can be found on our website at:
https://www.contourglobal.com/sites/default/files/2021-03/
contourglobal_greenhouse_gas_emissions_calculation_
methodology_2020.pdf
2020
2019
our global fuel energy consumption of 19,233,896,310 kWh. Our CO2
Scope 1 CO2e tonnes *
8,522,808.59k
7,741,709.18
intensity metrics are 0.57 tCO2e/MWh for electricity production and
0.45 tCO2e/MWh for total energy production.
Our energy and carbon reporting in the annual report is aligned with
the Greenhouse Gas Protocol and covers all global activities where we
have operational control1 and includes CO2 data for acquired
businesses for the period when we had operation control of the
business, i.e., the date of acquisition2. Based on our materiality analysis,
we have included carbon reporting only for our Scope 1 CO2 emission
Electricity production (MWh)
14,966,705.63 13,525,041.05
Energy production (MWh)
Total Energy Input (MWh) **
18,810,716.24 15,229,490.01
29,133,979.51 23,240,766.64
CO2 emissions intensity –
electricity produced (tCO2e/MWhe)
CO2 emissions intensity –
energy produced (tCO2e/MWhe)
0.57k
0.45
0.57
0.51
and we include direct CO2, HFCs, and SF6 but we do not include CH4
* 0.2% of the Scope 1 CO2e tonnes is related to UK emissions
and N2O. Our Scope 2 and Scope 3 emissions are not included in this
report as data was unavailable and will be reported in our Sustainability
report issued later in 2021.
** 0.2% of the total energy input is related to the UK proportion of energy
K ContourGlobal plc engaged KPMG LLP (“KPMG”) to undertake limited
assurance under the assurance standard ISAE (UK) 3000 over this Selected
Information. KPMG’s full assurance statement is included on our website at
https://www.contourglobal.com/reports?its_media_category_id%5B%5D=43
1. Under the control approach, a company accounts for 100 percent of the GHG emissions from operations over which it has control. It does not account for GHG
emissions from operations in which it owns an interest but has no control. A company has operational control over an operation if the former or one of its
subsidiaries has the full authority to introduce and implement its operating policies at the operation. Our report includes our CO2 emissions from the TermoemCali
business in Colombia, where we have a minority equity interest but exercise operational control. The report excludes our minority interest in the Sochagota
business in Colombia where we do not exert such control.
2. Our 2019 data includes CO2 emissions from our newly acquired businesses in Mexico from its date of acquisition (November 26, 2019) and excludes CO2 emissions
from our Radzymin business in Poland that was disposed of in 2019 and is immaterial to the overall portfolio. Our 2020 data includes CO2 emissions for Mexico for
the full year of operations.
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Using water responsibly
We seek to use water responsibly throughout our operations.
Where it is a primary fuel source – in hydroelectric generation
– we ensure we utilize it in the most efficient manner
possible; we also manage other impacts, including
sedimentation, drainage, vegetation, and biodiversity. Where
we use dams, such as at our Vorotan complex in Armenia,
we ensure they are limited in size and impact. Where water
is required as an input in thermal operational processes, we
access only the amount required to meet our needs so that
it is available elsewhere. Where we discharge water, we
replenish the sources from which it came with equivalent
volumes, properly treated.
Limiting waste
We minimize waste as far as possible through planned
reuse and recycling. Despite an increase of 24% in power
generation between 2019 and 2020, waste decreased by
7%. This was partly achieved as a result of steady growth
in recycling at our plants (of 1%). However, some waste –
including hazardous waste – is unavoidable during
power plant operations. We ensure this is properly
handled and treated.
Spills and grievances
While we never want to experience an incident or grievance,
we keep ourselves fully prepared to deal with emergencies,
unexpected environmental impacts, or complaints from our
stakeholders. We therefore train our employees on how to
recognize and avoid environmental risks and we report
environmental incidents transparently. In 2020, there were
31 spills, compared with 103 in 2019. As for previous year,
all these spills were rapidly contained and none of them
generated any environmental contamination. There were 6
environmental grievances in 2020. We conducted a full root
cause analysis on each incident to learn from our mistakes.
Grievances are also reported in monthly management
reports and action plans are developed to address them.
Biodiversity
Conscious of the importance of maintaining biodiversity,
we carefully assess our impacts on flora and fauna during
operations, and put in place mitigation wherever possible.
We regularly monitor avian mortality, behavior of bats, and
the effects on other species in the vicinity of our plants. This
information is shared with NGOs and universities for research
and study. Where our businesses may impact biodiversity
over the long term, we seek to restore the ecosystem or
implement an offset program.
We experienced two relevant incidents at our hydro plants in
Brazil, which were investigated in 2020. The first occurred at
our Bahia small hydro plant (“SHP”) in September 2019, when
a trip in our turbines caused a drop in the river’s downstream
water levels. We engaged an external consultant to evaluate
the impact of the incident and no impact on the aquatic
biota was evidenced in the study. An internal investigation
concluded that we could improve our emergency procedure
to enable the units to operate in idle mode, mitigating the
impact on water flow. Investment in certain equipment,
redundancy, and adjustments to the plant’s automation
systems were performed. Continuous monitoring has been
carried out following specific incident management procedures.
The second took place in January 2020 at our Rio SHP
business, when there was an unexpected increase in fish
mortality in the river. Independent investigations by an external
consultant concluded that the fish deaths resulted from a
combination of factors. The most important factor was that
fish were trapped in small pools due to variations in water level
in the river during an extremely wet rainy period, associated
with the migration of a large fish shoal. The study proposed
measures to prevent further incidents, such as filling cavities
and restructuring the threshold of the low flow section of
the river.
Over the last three years we have performed one of our most
extensive reforestation programs in Brazil. In 2018 and 2019, a
total of 269,140 seedlings were planted, followed by a further
248,580 seedlings in 2020. The total area covered, which was
previously devoid of vegetation, comprised 212 hectares. To
preserve all the work carried out in previous years, we carried
out maintenance on 240 hectares by replacing lost seedlings,
controlling pests, mowing, and fertilizing as necessary. The
area is protected by 315,837 meters of fencing, forming a
vital preservation area. The total value of investment for
the execution of this program in 2020 was BRL 2,708,143.
Green financing
In 2020, we were pleased to achieve verification of our
Green Bond Framework and certification that it complies
with the best practice standards set by the relevant governing
bodies, including the International Capital Market Association.
Green bonds facilitate capital-raising and investments for new
and existing projects that have environmental benefits and can
mitigate risks associated with climate change.
While operating our hydro plants, we utilize water resource efficiently
and participate to reducing generation carbon emissions, in line with
our principle ”Manage our business responsibly”.
51
Communities
PROVIDING VITAL SUPPORT
Our mission goes beyond generating energy and
supporting our communities traduces our principle
”Enhance our operating environment”.
As COVID-19 was spreading, we decided to redirect our
entire social investment budget to help fighting the pandemic,
focusing our action where local institutions and civil society
were most in need. In line with our social responsibility
strategy, we rapidly engaged with communities and
authorities to understand their specific challenges and
concerns and worked in partnership with them throughout.
In Bulgaria we focused on supporting the healthcare system,
investing $150,000 in the safety of medical practitioners and
in testing capacities and relevant modern technology for the
hospital serving our local community. Recognizing the strain
the pandemic put on all social systems we continued our
support for the most vulnerable groups of the population –
people with disabilities, women at risk of violence, children
deprived of parental care - providing necessary food, medical
supplies, personal protective equipment and appropriate
facilities improvements. In dire times we stood together with
Bulgarian civil society, governmental institutions and our
business partners, committing $60,000 to the United Against
COVID-19 Fund; the fund raised over $600,000, allocated
to 112 relief projects in 15 municipalities, reinforcing hospitals,
community centers, schools, microbusinesses, or NGOs.
In Togo, where central government lacked resources to
tackle the virus endangering 7,000,000 people, we worked
together with our business partners and invested over
$200,000 to provide a PCR testing platform for use
across the country.
In Armenia, we invested in medical technologies and
direct COVID-19-relief for the most at-risk groups among
our communities, while also extending help to the families
affected by the ranging armed conflict.
We recognized the different aspects of the pandemic and
structured our social investments to respond in the most
suitable ways while supporting the economy and social
equity. For example, we worked with women’s groups in
Brazil to make and distribute face masks, ensuring better
protection of the community, while maintaining a much-
needed income source.
Our support elsewhere ranged from providing medical
equipment needed by the local hospitals (e.g. Spain, Italy,
Brazil, Mexico, Senegal), including emergency vehicles to
hospitals (Brazil), or testing capacities (Brazil, Bulgaria,
Togo), to supplying PPE, food, and sanitary items to
our local communities in Latin America and Africa.
However, the most important social contribution we made
in 2020, was to keep the lights on wherever we operated,
despite the effects of COVID-19. For this, our deep and
sincere thanks go to all our employees, without whom
this would not have been possible.
Community centers and schools donations to support
local education.
COVID-19 protective equipment and material provision to support local
health systems.
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Communities
PROVIDING VITAL SUPPORT
Our mission goes beyond generating energy and
supporting our communities traduces our principle
”Enhance our operating environment”.
As COVID-19 was spreading, we decided to redirect our
$200,000 to provide a PCR testing platform for use
entire social investment budget to help fighting the pandemic,
across the country.
focusing our action where local institutions and civil society
were most in need. In line with our social responsibility
strategy, we rapidly engaged with communities and
authorities to understand their specific challenges and
concerns and worked in partnership with them throughout.
In Bulgaria we focused on supporting the healthcare system,
investing $150,000 in the safety of medical practitioners and
in testing capacities and relevant modern technology for the
hospital serving our local community. Recognizing the strain
the pandemic put on all social systems we continued our
support for the most vulnerable groups of the population –
people with disabilities, women at risk of violence, children
deprived of parental care - providing necessary food, medical
supplies, personal protective equipment and appropriate
facilities improvements. In dire times we stood together with
Bulgarian civil society, governmental institutions and our
business partners, committing $60,000 to the United Against
COVID-19 Fund; the fund raised over $600,000, allocated
to 112 relief projects in 15 municipalities, reinforcing hospitals,
community centers, schools, microbusinesses, or NGOs.
In Togo, where central government lacked resources to
tackle the virus endangering 7,000,000 people, we worked
together with our business partners and invested over
In Armenia, we invested in medical technologies and
direct COVID-19-relief for the most at-risk groups among
our communities, while also extending help to the families
affected by the ranging armed conflict.
We recognized the different aspects of the pandemic and
structured our social investments to respond in the most
suitable ways while supporting the economy and social
equity. For example, we worked with women’s groups in
Brazil to make and distribute face masks, ensuring better
protection of the community, while maintaining a much-
needed income source.
Our support elsewhere ranged from providing medical
equipment needed by the local hospitals (e.g. Spain, Italy,
Brazil, Mexico, Senegal), including emergency vehicles to
hospitals (Brazil), or testing capacities (Brazil, Bulgaria,
Togo), to supplying PPE, food, and sanitary items to
our local communities in Latin America and Africa.
However, the most important social contribution we made
in 2020, was to keep the lights on wherever we operated,
despite the effects of COVID-19. For this, our deep and
sincere thanks go to all our employees, without whom
this would not have been possible.
Looking ahead
We plan to continue focusing our social investment on
COVID-19-related issues until the pandemic is over. At that
point, we will conduct Project Impact Assessments to check
how well the desired outcomes were achieved and to use
this learning for future social investing.
In 2021, whilst still focusing on COVID-19-related projects,
we also intend to resume an initiative that was put on hold
when the pandemic started: the development of long-term
social investment plans by each of our businesses. We
allocate at least 0.3% of our EBITDA to social investment
and, to leverage the impact, we design multi-year projects
where we can partner with communities to invest where it
is most needed.
We invested $2.3m in 2019, achieving our target, and
this sum remained stable in 2020. We continue directing
our social investment to five main themes aligned with
our business strategy – education, health and safety,
environment, human rights, and anti-corruption – which
also align with the United Nations Sustainable Development
Goals (SDGs).
OUR PERFORMANCE IN
NUMBERS
$2.3m
Value of social investment
0.3%
2020 social investment as a %
of Adjusted EBITDA
97
Number of social investment projects
435
Number of employees involved
in social investment
8.4m
Beneficiaries of social projects
Community centers and schools donations to support
COVID-19 protective equipment and material provision to support local
Microbusiness and family support.
local education.
health systems.
Supporting education in the countries we operate in
and contributing to forming future workforce.
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53
Papa Mamadou Diack,
Plant Manager based in Cap des Biches, Senegal
SENEGAL
WORKING WITH OUR COMMUNITIES
The COVID-19 pandemic hit the people of Senegal hard.
Papa Mamadou Diack, Plant Manager of our Cap des
Biches business, describes how ContourGlobal worked
to support the local community:
other personal protective equipment (PPE). This has enabled
front-line medical staff to be better equipped and prepared
to fight COVID-19 and limit the risk of infections among
healthcare workers.
“The two main effects of the pandemic on the local
community were job losses and a stressed healthcare
system. We decided therefore to direct our social investment
fund in 2020 to address these most pressing problems.
“In 2020, $54,000 of our social project budget was spent
to help families who suddenly found themselves on the
breadline, donating supplies of food. To support hospitals
and clinics, we managed to source masks, gloves, boots and
“For our employees, we worked really hard to put strong
COVID-19 testing in place and were able to secure PCR
tests for everyone. We were also able to provide PPE to their
families. Thanks to good self-discipline in maintaining hygiene
and social distancing, our workforce remained infection-free
throughout the crisis, and I pay tribute to them. We were able
to make available our 86MW plant continuously, which was
vital since we are responsible for 9% of Senegal’s electricity.”
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CFO review
RESILIENT PERFORMANCE
Revenue ($m)
Adjusted EBITDA ($m)
1,410.7
2019: 1,330.2
722.0
2019: 702.7
Income from
Operations ($m)
307.9
2019: 292.1
Funds from
Operations ($m)
379.6
2019: 337.9
Proportionate
Adjusted EBITDA ($m)
Leverage ratio
568.7
2019: 561.6
4.75x
2019: 4.40x
Stefan Schellinger
Global Chief Financial Officer
Papa Mamadou Diack,
Plant Manager based in Cap des Biches, Senegal
SENEGAL
WORKING WITH OUR COMMUNITIES
The COVID-19 pandemic hit the people of Senegal hard.
other personal protective equipment (PPE). This has enabled
Papa Mamadou Diack, Plant Manager of our Cap des
front-line medical staff to be better equipped and prepared
Biches business, describes how ContourGlobal worked
to fight COVID-19 and limit the risk of infections among
to support the local community:
healthcare workers.
“The two main effects of the pandemic on the local
“For our employees, we worked really hard to put strong
community were job losses and a stressed healthcare
COVID-19 testing in place and were able to secure PCR
system. We decided therefore to direct our social investment
tests for everyone. We were also able to provide PPE to their
fund in 2020 to address these most pressing problems.
families. Thanks to good self-discipline in maintaining hygiene
“In 2020, $54,000 of our social project budget was spent
to help families who suddenly found themselves on the
breadline, donating supplies of food. To support hospitals
and clinics, we managed to source masks, gloves, boots and
and social distancing, our workforce remained infection-free
throughout the crisis, and I pay tribute to them. We were able
to make available our 86MW plant continuously, which was
vital since we are responsible for 9% of Senegal’s electricity.”
In spite of operating during an unprecedented global
pandemic in 2020, ContourGlobal continued to deliver very
strong financial results and met its financial commitments.
This is a testament to ContourGlobal’s highly robust and
resilient business model generating stable and predictable
cash flows from operations. We continued to meet the
financial commitments made to shareholders by delivering
our progressive dividend policy of 10% growth p.a.. In
addition, earlier in 2020 ContourGlobal announced a share
buyback program of up to £30 million to support long-term
shareholder value, which has been successfully executed
with 12,374,731 million shares being bought back by year end.
Revenue
Revenue continued to grow in 2020 to reach $1,410.7 million
(+$80.5 million or +6%) mainly resulting from the full-year
impact of the acquisition of the Mexican CHP assets
completed in Nov. 2019 (+$188.1 million), as well as increased
revenue on a constant currencies basis from our Wind assets
in Brazil (+$12.9 million), Brazil hydros ($5.4 million) and Inka
($4.8 million) partially offset by lower dispatch of our natural
gas-fired power plant in Arrubal ($51.7 million) and lower
generation in our French Caribbean power plants ($16.6
million). In addition, Group revenue was negatively impacted
by foreign exchange movements by $26.6 million mainly
driven by a lower average level of BRL/USD (0.20 in 2020
compared to 0.25 in 2019).
Income from Operations (IFO)
IFO is a measure taken from the IFRS audited consolidated
statement of income. IFO increased in 2020 by $15.8 million
or +5% to reach $307.9 million as compared to $292.1 million
in 2019, mainly as a result of the following effects:
• Increase in Gross margin in 2020 by $20.4 million to reach
$377.2 million as compared to $356.8 million in 2019,
driven by the increase in Revenue of $80.5 million partially
offset by the increase in Cost of sales by $60.1 million. The
gross margin remains strong at 27% of total Revenue in
2020, in line with 2019.
• We incurred a one-off exceptional restructuring costs
in 2020 of $5.2 million related to the reorganization of
our corporate offices across the Group. In addition, the
Acquisitions related items decreased by $3m and Selling,
general and administrative expenses increased by $2m
as compared to 2019.
The IFO has been driven by the same key contributors
as the Adjusted EBITDA detailed thereafter, positively
impacted by the full-year impact of the acquisition of
the Mexican CHP assets (+$40.1 million) and a negative
foreign exchange variance of around $11.6m.
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CFO review (continued)
Adjusted EBITDA
In $ million
Thermal
Renewable
Corporate & Other
Adjusted EBITDA
2020
420.9
332.0
-31.0
722.0
2019
335.9
397.0
-30.2
702.7
Var
25%
-16%
3%
3%
In 2020, we saw another year of strong Adjusted EBITDA
performance with an increase of 2.7% to $722.0 million.
Adjusted EBITDA benefited from the strong performance of
our existing power generation assets contributing $650.8
million of Adjusted EBITDA as well as from the full-year impact
of the acquisition of the Mexican CHP assets contributing
another +$94.3 million of Adjusted EBITDA, which was
partially offset by a negative foreign exchange impact of
$21.9 million mainly due to a weaker Brazilian real/USD
(-$27.6.million) and partially offset the higher average level
of EUR/USD (+$5.7 million). The 2019 Adjusted EBITDA also
included a $46 million net cash gain on sell-down of CSP
Spain and Solar Italy and Slovakia. Excluding this cash gain,
Adjusted EBITDA increased by +10% in 2020 as compared
to 2019.
Thermal Adjusted EBITDA increased by $85.0 million, or
25%, to $420.9 million for the year ended 31st December
2020 from $335.9 million for the previous year. The growth
in Adjusted EBITDA is mainly driven by the changes resulting
from acquisitions or sale of businesses totaling $88.4 million
with the Mexican CHP acquisition full-year impact of +$94.3
million partially offset by other changes in business perimeter
in the Solutions business and the French Caribbean assets
of -$5.3 million. This demonstrates the stability of the
underlying earnings and cash flows of the portfolio, based
on its contracted business model protecting the segment
from fluctuations in demand, fuel prices, electricity prices
and CO₂ prices. The Thermal fleet is also highly diversified
in terms of geography and technology, which significantly
limits its overall market exposure. The Thermal fleet reached
an average annual availability factor of 94.4% in 2020 (92.8%
in 2019) demonstrating a meaningful improvement in its
operational performance during the year.
Renewable Adjusted EBITDA amounts to $332.0 million
for the year ended 31st December 2020, as compared to
$397.0 million for the year ended 31st December 2019. The
most significant impacts in Adjusted EBITDA for the year
are the prior year non-recurring gain on the sell down of
the CSP portfolio of $51.9m and adverse foreign exchange
movements in Brazil of $24.3 million.
56
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
In 2020, the Renewable segment showed a good
performance of our Wind assets in Peru and Austria, and
a performance in Brazil in line with 2019. The Wind assets
overall contributed a total of $107.9 million to 2020 Adjusted
EBITDA which is in line with the 2019 performance, excluding
the negative foreign exchange impact of -$14.0 million due to
the weakening of the Brazilian real against the US dollar
during 2020.
The Solar portfolio contributed $177 million of Adjusted
EBITDA, $1.4 million below 2019, mainly impacted by lower
resource across the portfolio. The Hydro assets in Brazil
contributed $34.7 million of Adjusted EBITDA which is
$4.8 million better than 2019 (excluding the negative
foreign exchange impact of $10.3 million due to the
weakening of the Brazilian real against the US dollar)
benefiting from the optimization of our commercial strategy.
In 2019, the Renewable segment benefited from the impact
of the highly attractive sell-down of a 49% stake in our
Spanish CSP portfolio which resulted in a $51.9 million gain
recorded directly in equity under IFRS rules and contributed
to 2019 Renewable Adjusted EBITDA by the same amount.
ContourGlobal’s business model does not only generate
stable and predictable earnings and cash flows; it is also
based on significant risk mitigation as a result of various
key components:
CFO review (continued)
Adjusted EBITDA
In $ million
Thermal
Renewable
Corporate & Other
Adjusted EBITDA
2020
420.9
332.0
-31.0
722.0
2019
335.9
397.0
-30.2
702.7
Var
25%
-16%
3%
3%
In 2020, we saw another year of strong Adjusted EBITDA
performance with an increase of 2.7% to $722.0 million.
Adjusted EBITDA benefited from the strong performance of
our existing power generation assets contributing $650.8
million of Adjusted EBITDA as well as from the full-year impact
of the acquisition of the Mexican CHP assets contributing
another +$94.3 million of Adjusted EBITDA, which was
partially offset by a negative foreign exchange impact of
$21.9 million mainly due to a weaker Brazilian real/USD
(-$27.6.million) and partially offset the higher average level
of EUR/USD (+$5.7 million). The 2019 Adjusted EBITDA also
included a $46 million net cash gain on sell-down of CSP
Spain and Solar Italy and Slovakia. Excluding this cash gain,
Adjusted EBITDA increased by +10% in 2020 as compared
to 2019.
Thermal Adjusted EBITDA increased by $85.0 million, or
25%, to $420.9 million for the year ended 31st December
In 2020, the Renewable segment showed a good
performance of our Wind assets in Peru and Austria, and
a performance in Brazil in line with 2019. The Wind assets
2020 from $335.9 million for the previous year. The growth
overall contributed a total of $107.9 million to 2020 Adjusted
in Adjusted EBITDA is mainly driven by the changes resulting
EBITDA which is in line with the 2019 performance, excluding
from acquisitions or sale of businesses totaling $88.4 million
the negative foreign exchange impact of -$14.0 million due to
with the Mexican CHP acquisition full-year impact of +$94.3
the weakening of the Brazilian real against the US dollar
million partially offset by other changes in business perimeter
during 2020.
in the Solutions business and the French Caribbean assets
of -$5.3 million. This demonstrates the stability of the
underlying earnings and cash flows of the portfolio, based
on its contracted business model protecting the segment
from fluctuations in demand, fuel prices, electricity prices
and CO₂ prices. The Thermal fleet is also highly diversified
in terms of geography and technology, which significantly
limits its overall market exposure. The Thermal fleet reached
an average annual availability factor of 94.4% in 2020 (92.8%
in 2019) demonstrating a meaningful improvement in its
operational performance during the year.
Renewable Adjusted EBITDA amounts to $332.0 million
for the year ended 31st December 2020, as compared to
$397.0 million for the year ended 31st December 2019. The
most significant impacts in Adjusted EBITDA for the year
are the prior year non-recurring gain on the sell down of
the CSP portfolio of $51.9m and adverse foreign exchange
movements in Brazil of $24.3 million.
The Solar portfolio contributed $177 million of Adjusted
EBITDA, $1.4 million below 2019, mainly impacted by lower
resource across the portfolio. The Hydro assets in Brazil
contributed $34.7 million of Adjusted EBITDA which is
$4.8 million better than 2019 (excluding the negative
foreign exchange impact of $10.3 million due to the
weakening of the Brazilian real against the US dollar)
benefiting from the optimization of our commercial strategy.
In 2019, the Renewable segment benefited from the impact
of the highly attractive sell-down of a 49% stake in our
Spanish CSP portfolio which resulted in a $51.9 million gain
recorded directly in equity under IFRS rules and contributed
to 2019 Renewable Adjusted EBITDA by the same amount.
ContourGlobal’s business model does not only generate
stable and predictable earnings and cash flows; it is also
based on significant risk mitigation as a result of various
key components:
• Limited currency exposure: 85% of 2020 Adjusted EBITDA
is denominated in either Euros or US dollars. In addition, a
portion of the small Brazilian reais exposure in regards to
distributions is hedged.
• Geographical and technology diversification:
No technology cluster represents more than 23%
of 2020 Adjusted EBITDA and the group is present
on three continents.
• Long-term contracts with strong and creditworthy
counterparties: Approximately 89% of 2020 Adjusted
EBITDA is generated under PPAs concluded with
investment-grade offtakers or non-investment-grade
offtakers under political risk insurance. During 2020 our
cash collections from our offtakers were not impacted by
the COVID-19 pandemic and remained stable and in line
with agreed payment terms.
In terms of financial metrics, we believe that the presentation
of Adjusted EBITDA enhances the understanding of
ContourGlobal’s financial performance, in regards to
understanding our ability to generate stable and predictable
cash flows from operations. ‘Adjusted EBITDA’ is defined
as profit for the year from continuing operations before
income taxes, net finance costs, depreciation and
amortization, acquisition related expenses, plus net cash
gain or loss on sell down transactions (in addition to the
entire full year profit from continuing operations for the
business the sell down transaction relates to) and specific
items which have been identified and material items where
the accounting diverges from the cash flow and therefore
does not reflect the ability of the assets to generate stable
and predictable cash flows in a given period, less the Group’s
share of profit from non consolidated entities accounted for
on the equity method, plus the Group’s prorata portion of
Adjusted EBITDA for such entities.
In determining whether an event or transaction is adjusted,
ContourGlobal’s management considers quantitative as well
as qualitative factors such as the frequency or predictability
of occurrence. Adjusted EBITDA is not a measurement of
financial performance under IFRS.
Proportionate Adjusted EBITDA
Considering the decision to strategically sell down minority
stakes of certain of our assets at a significant premium, we
have included Proportionate Adjusted EBITDA as part of
our core financial metrics since 2018. Proportionate Adjusted
EBITDA is calculated using Adjusted EBITDA calculated on
a proportionally consolidated basis based on applicable
ownership percentage.
The Proportionate Adjusted EBITDA as well includes the net
cash gain or loss on sell down transactions as well as the
underlying profit from continuing operations for the business
in which the minority interest sale relates to reflecting
applicable ownership percentage going forward from
the date of completion of the sale of a minority interest.
Proportionate Adjusted EBITDA increased from $561.6 million
in 2019 to $568.7 million in 2020 (+1%), a lower increase than
Adjusted EBITDA mostly explained by the sell down of 49%
of the Spanish CSP portfolio which took place during 2019.
The following table reconciles net profit before tax to
Proportionate Adjusted EBITDA and Adjusted EBITDA
for each period presented:
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
In $ millions
Proportionate Adjusted EBITDA
Minority interest
Adjusted EBITDA
Reconciliation to profit
before income tax
Depreciation, amortization
and impairment
Share of Adjusted EBITDA
in associates
Acquisition-related items
Cash gain on sale of minority
interest in assets
Restructuring costs
Private incentive plan1
Mexico CHP fixed margin swap2
Change in finance lease and financial
concession assets
Other
Income from Operations
Net finance costs, foreign exchange
gains and losses, and changes in fair
value of derivatives
Share of profit in associates
Profit before income tax
2020
568.7
153.3
722.0
l
S
t
a
t
e
m
e
n
t
s
2019
561.6
141.1
702.7
-311.6
-282.3
-19.9
-20.2
–
-5.2
-6.6
-15.6
-31.7
-3.3
307.8
-247.8
12.3
72.3
-21.7
-23.2
-46.1
–
-9.1
–
-26.4
-1.7
292.1
-243.8
11.1
59.4
1. Refer to note 4.27 of the consolidated financial statements.
2. Reflects an adjustment to align the recognized earnings with the cash
flows generated during the year under the CHP Mexico fixed margin
swap (derivative that locks in a fixed margin for certain contracts)
In relation to the 2020 and 209 financial years, these
adjustments mainly included non-recurring and non cash items.
2019 also included a cash gain on the sale of minority
interests in the Spanish CSP assets of $51.9 million together
with an adjustment related to the 2018 Slovakian and Italy
portfolio sell-down of $(5.8) million, all booked directly in
equity under IFRS.
56
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
57
CFO review (continued)
Cash flow from operations and Funds From
Operations
Funds from Operations is a non-IFRS measure that is
calculated as follows:
In $ millions
Cash flow from operations
Change in working capital1
Interest paid
Maintenance capital expenditure2
Other distributions received from
associates
Cash distributions to minorities3
Funds From Operations (FFO)
Cash conversion rate (%)
2020
719.6
-52.8
-175.8
-50.5
13.0
-74.0
379.6
53%
2019
616.3
-5
-189.2
-40.1
-
-44.2
337.9
48%
1. Change in working capital variance in 2020 was positively impacted by
a VAT refund in CHP Mexico totaling $68 million.
2. Maintenance capital expenditure is defined as funds employed by the
business to maintain the operating capacity, asset base and/or operating
income of the existing power plants. It excludes growth and development
capital expenditure, which are discretionary investments incurred to sustain
our revenue growth (including construction capital expenditure).
3. Cash distributions to minorities as per consolidated cash flow statement
(excluding $8m payment to Credit Suisse related to payment of earn-out
to the previous owner).
Cash flow from operations is presented in the Consolidated
statement of cashflows of the financial statements and
increased from $616.3 million to $719.6 million, mainly driven
by the positive variance in working capital ($52.8 million)
driven by a VAT refund in CHP Mexico ($68 million) and
increase in Adjusted EBITDA ($19 million) excluding the
2019 net cash gain on Sell down ($46 million).
The Funds from operations is a key metric for ContourGlobal
and gives an indication of the strength and predictability
of our cash generation and how much of our Adjusted
EBITDA is converted into cash flow. Funds from operations
significantly improved in 2020 to $379.6 million, a 12% growth
rate compared to 2019. This performance is the consequence
of the continuous growth of Adjusted EBITDA explained
above as well as a result of lower interest paid and $13m
of cash distributions received from associates.
As a result the cash conversion rate, which compares FFO
to Adjusted EBITDA, increased from 48% to 53%.
Leverage ratio
The Group leverage ratio is measured as total net
indebtedness (reported as the difference between
‘Borrowings’ and ‘Cash and Cash Equivalents’ in accordance
with IFRS statement of financial position) to Adjusted EBITDA.
The leverage ratio does not include the IFRS16 liabilities ($33
million as Dec. 31, 2020). Whenever the impact would be
significant, such a ratio is adjusted to reflect the full year
impact of acquisitions or for financial debt of projects
under construction which do not generate EBITDA.
The leverage ratio as of 31st December 2019 was 4.40x
(Including pro forma adjustment for a full year of Mexican
CHP acquisition), and is 4.75x as of 31st December 2020.
The increase in reported Net Debt to Adjusted EBITDA ratio
vs. 2019 is mainly caused by year end appreciation of the
Euro, resulting in 31 December 2020 EUR/USDFX rates of
1.22 vs 2020 average of 1.14.
The Net parent company leverage is 3.0x as of 31 December
2020, and consistent with 3.1x as 31 December 2019. The Net
parent company leverage is defined as:
• net debt at corporate level ($830 million as of 31 December
2020, $786 million as of 31 December 2019): net debt of
the group corporate holding entities (excluding non
recourse financing), mainly including the Corporate Bonds,
less cash and cash equivalent in corporate holding entities
• divided by CFADS (cashflows available for debt service) as
defined in the Corporate Bond Indenture ($274 million for
2020, $251 million for 2019).
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ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
CFO review (continued)
Cash flow from operations and Funds From
Operations
Funds from Operations is a non-IFRS measure that is
rate compared to 2019. This performance is the consequence
of the continuous growth of Adjusted EBITDA explained
above as well as a result of lower interest paid and $13m
of cash distributions received from associates.
calculated as follows:
In $ millions
Cash flow from operations
Change in working capital1
Interest paid
Maintenance capital expenditure2
Other distributions received from
associates
Cash distributions to minorities3
Funds From Operations (FFO)
Cash conversion rate (%)
2020
719.6
-52.8
-175.8
-50.5
13.0
-74.0
379.6
53%
2019
616.3
-5
-189.2
-40.1
-
-44.2
337.9
48%
1. Change in working capital variance in 2020 was positively impacted by
a VAT refund in CHP Mexico totaling $68 million.
2. Maintenance capital expenditure is defined as funds employed by the
business to maintain the operating capacity, asset base and/or operating
income of the existing power plants. It excludes growth and development
capital expenditure, which are discretionary investments incurred to sustain
our revenue growth (including construction capital expenditure).
3. Cash distributions to minorities as per consolidated cash flow statement
(excluding $8m payment to Credit Suisse related to payment of earn-out
to the previous owner).
As a result the cash conversion rate, which compares FFO
to Adjusted EBITDA, increased from 48% to 53%.
Leverage ratio
The Group leverage ratio is measured as total net
indebtedness (reported as the difference between
‘Borrowings’ and ‘Cash and Cash Equivalents’ in accordance
with IFRS statement of financial position) to Adjusted EBITDA.
The leverage ratio does not include the IFRS16 liabilities ($33
million as Dec. 31, 2020). Whenever the impact would be
significant, such a ratio is adjusted to reflect the full year
impact of acquisitions or for financial debt of projects
under construction which do not generate EBITDA.
The leverage ratio as of 31st December 2019 was 4.40x
(Including pro forma adjustment for a full year of Mexican
CHP acquisition), and is 4.75x as of 31st December 2020.
The increase in reported Net Debt to Adjusted EBITDA ratio
vs. 2019 is mainly caused by year end appreciation of the
Euro, resulting in 31 December 2020 EUR/USDFX rates of
Cash flow from operations is presented in the Consolidated
1.22 vs 2020 average of 1.14.
statement of cashflows of the financial statements and
increased from $616.3 million to $719.6 million, mainly driven
by the positive variance in working capital ($52.8 million)
driven by a VAT refund in CHP Mexico ($68 million) and
increase in Adjusted EBITDA ($19 million) excluding the
2019 net cash gain on Sell down ($46 million).
The Funds from operations is a key metric for ContourGlobal
and gives an indication of the strength and predictability
of our cash generation and how much of our Adjusted
The Net parent company leverage is 3.0x as of 31 December
2020, and consistent with 3.1x as 31 December 2019. The Net
parent company leverage is defined as:
• net debt at corporate level ($830 million as of 31 December
2020, $786 million as of 31 December 2019): net debt of
the group corporate holding entities (excluding non
recourse financing), mainly including the Corporate Bonds,
less cash and cash equivalent in corporate holding entities
EBITDA is converted into cash flow. Funds from operations
• divided by CFADS (cashflows available for debt service) as
significantly improved in 2020 to $379.6 million, a 12% growth
defined in the Corporate Bond Indenture ($274 million for
2020, $251 million for 2019).
There is no reconciliation of the Net parent company
leverage to statutory measures because they do not derive
from the statutory measure.
Finance costs – net
Finance costs – net increased from $243.8 million in 2019
to $247.8 million in 2020 (2%).
Interest expense increased from to $188.8 million in 2019
to $195.0 million, largely due to the impact of the project
financing issued for the acquisition of the Mexican CHP
($26.8 million) partially offset by the natural deleveraging
of the project financings together with the foreign exchange
impact of the weakened BRL as compared to the US dollar
(-$18.3 million).
The Realized and unrealized foreign exchange gains and
(losses) and change in fair value of derivatives increased
by $20.8 million primarily attributable to:
• a positive impact in fair value of derivatives of $70.5 million
in 2020 (driven by the $56.1 million non cash net change
in fair value of the Mexican CHP fixed margin swap), as
compared to -$13.4 million in 2019, and
• a -$59.8 million foreign exchange loss in 2020 (driven by
an unfavorable exchange rate of the US dollar against the
Euro which resulted in a negative revaluation of cash
amounts held in USD by $14 million, and other unfavorable
exchange rate movements of the US dollar against the
Brazilian real and Armenian dram totalling $26.9 million)
as compared to a $3.4 million gain in 2019.
Profit before tax
Profit before tax increased by $12.9 million to $72.3 million
in 2020 as a result of the factors previously explained.
Taxation
The Group recognized a tax charge of $43.7 million in 2020
as compared to $36.3 million in 2019. This increase in the
tax charge between periods was driven by the impact of
the Mexican CHP acquisition ($21.1 million) and the profit mix
between territories with different income tax rates. The main
jurisdictions contributing to the income tax expense in 2020
are Mexico, Bulgaria and Brazil.
Net income and Adjusted Net Income
Net income increased from $23.1 million in 2019 to $28.6
million in 2020. Considering 666.6 millions of average
number of shares outstanding in 2020 (670.7 millions in
2019), and a profit attributable to shareholders of $16 million
in 2020 ($27.7 million in 2019) the Earnings per share (basic)
decreased from $0.04 to $0.02.
Adjusted Net Income is defined as Net income excluding
some items for the year. A reconciliation of Net income to
Adjusted Net Income is as follows:
In $ millions
Net income
Change in fair value of the CHP
Mexico fixed margin swap1
Acquisition-related items2
FX unrealized losses3
Restructuring costs4
Private Incentive Plan5
Corp. Bond and Italian / Slovakian
refinancing6
Adjusted Net Income
Adjusted Net Income attributable
to shareholders
2020
28.6
(28.4)
20.2
26.5
5.2
6.6
8.9
67.4
54.8
2019
23.1
–
23.2
3.6
–
9.1
15.4
74.4
79.0
1. Change in fair value of the Mexican CHP fixed margin swap (-$56m), net
of $16m impact in Adj. EBITDA and net of 30% income tax impact ($12m).
2. Includes pre-acquisition costs and other incremental costs incurred as
part of completed or contemplated acquisitions. ContourGlobal incurred
exceptional amounts of such costs in 2020 and 2019 while signing and/or
closing acquisitions in the US and Mexico in particular.
3. Includes FX unrealized losses as reported in the consolidated financial
statements, and represent non-cash unrealized losses recognized during
the year. 2020 was notably impacted by a decrease in local currency in
Armenia (AMD), generating unrealized FX losses for the dollar denominated
project financing debt totalling $20 million.
4. Costs incurred as part of the reorganization of our corporate offices.
5. Non-cash impact of the Private Incentive Plan implementation, which does
not constitute a liability for the Company as the obligation is met by the
transfer of existing shares own by Reservoir Capital.
6. Costs incurred in 2020 as part of the Bond refinancing and in 2020 as part
of the Slovakian and Italian refinancings which required early settlement of
the existing swaps and immediate recycling to profit and loss of deferred
financing costs.
Non-current assets
Non-current assets mainly comprise property, plant and
equipment (”PP&E”), financial and contract assets, and
intangible and goodwill. The decrease in non-current assets
by $260.3 million to $4,375.7 million as of 31 December 2020
was mainly due to the decrease of intangible assets by
$32.9m (amortization -$26.2m, FX translation -$16.5m,
partially offset by the additions $9.9m), decrease of PP&E by
$255.2m (depreciation -$285.3m, CTA FX impact -$24.2m,
reclassification of Kosovo project development costs to Other
non-current assets -$21.7m, partially offset by the additions
+$90.6m). Additions of PP&E in 2020 were mainly recognized
in Vorotan ($22.5m), Maritsa ($12.4m), Brazil Wind $10.9m, and
Spanish CHP ($8.6m).
Borrowings
Current and non-current borrowings increased by $739.7
million to $4,830.2 million as of 31 December 2020, mainly
as a result of new or acquired borrowings (+$938.9 million
mainly composed of the new Corporate bond for $810.3
million, RCF drawn and repaid totaling $77.0 million and
new financing in Austria Wind totaling $38.7 million), partially
offset by scheduled financing repayments totaling $353.0
million and currency translation differences and other ($153.8
million). Following the issuance of the new Corporate bond in
December 2020, the € 450 million Corporate bond due in
2023 has been repaid in January 2021.
58
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
59
Outlook
We remain focused on generating strong and predictable
cash flows as a result of our business model of development
and operationally led acquisitions of power generation assets
under long-term contracts providing significant protection
from the risks associated with volumes, commodity prices
or merchant energy prices as recently evidenced by the
acquisition of a portfolio of natural gas-fired and Combined
Heat and Power assets totaling 1,502 MW located in the US
and Trinidad & Tobago which completed in February 2021
and which we are looking forward to integrating into the
wider business in 2021.
Stefan Schellinger
Global Chief Financial Officer
CFO review (continued)
Equity and non-controlling interests
Equity and non-controlling interests decreased by $203.1
million to $337.7 million as of 31st December 2020 mainly
due to the following factors: dividends paid to shareholders
(-$105.7 million), dividends paid to non-controlling interests
(-$5.4 million), purchase of treasury shares (-$30.4 million),
change in hedging and other reserves (-$13.6 million), and
currency translation adjustment and other (-$97.1 million)
partially offset by the net income of the year ($37.3 million).
Dividend
The Board recognizes the importance of paying a regular
dividend to shareholders. The underlying business generates
secure, highly visible, long-term cash flows, and it is the
Board’s intention that dividends will be paid on a quarterly
basis. Reflecting the growth potential of the business, since
listing in 2017 the Board has targeted a high single-digit
annual dividend increase, which was raised to a 10% annual
target in 2019. At times the Board may approve additional
returns of capital, arising from surplus generation of cash
or corporate transactions.
The Board periodically reviews the dividend policy,
considering overall prospects, conditions and capital
requirements of the Group. The Company paid a dividend of
$24.8 million in May 2020 corresponding to the final dividend
for the year ended 31st December 2019 and three interim
dividends for the year ended 31st December 2020 in total
of $80.9 million in June, September and December 2020.
The Directors expect to pay a total dividend of approximately
$107.5 million for the year ended 31 December 2020,
including a quarterly dividend of 4.0591 USD cents per share
(around $26.6 million) to be paid in April 2021.
Our dividend cover remains strong at 2.2x. Dividend cover is
measured as “Parent Company free cash flow” of $234 million
in total ($274 million CFADS as defined in the Corporate Bond
indenture, less $40 million Corporate Bond interest costs),
relative to the total declared dividend for the year ended 31
December 2020. There is no reconciliation of the Dividend
cover to statutory measures because they do not derive from
the statutory measure.
60
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
CFO review (continued)
Equity and non-controlling interests
Outlook
Equity and non-controlling interests decreased by $203.1
We remain focused on generating strong and predictable
million to $337.7 million as of 31st December 2020 mainly
cash flows as a result of our business model of development
due to the following factors: dividends paid to shareholders
and operationally led acquisitions of power generation assets
(-$105.7 million), dividends paid to non-controlling interests
under long-term contracts providing significant protection
(-$5.4 million), purchase of treasury shares (-$30.4 million),
from the risks associated with volumes, commodity prices
change in hedging and other reserves (-$13.6 million), and
or merchant energy prices as recently evidenced by the
currency translation adjustment and other (-$97.1 million)
acquisition of a portfolio of natural gas-fired and Combined
partially offset by the net income of the year ($37.3 million).
Heat and Power assets totaling 1,502 MW located in the US
and Trinidad & Tobago which completed in February 2021
and which we are looking forward to integrating into the
wider business in 2021.
Stefan Schellinger
Global Chief Financial Officer
Dividend
The Board recognizes the importance of paying a regular
dividend to shareholders. The underlying business generates
secure, highly visible, long-term cash flows, and it is the
Board’s intention that dividends will be paid on a quarterly
basis. Reflecting the growth potential of the business, since
listing in 2017 the Board has targeted a high single-digit
annual dividend increase, which was raised to a 10% annual
target in 2019. At times the Board may approve additional
returns of capital, arising from surplus generation of cash
or corporate transactions.
The Board periodically reviews the dividend policy,
considering overall prospects, conditions and capital
requirements of the Group. The Company paid a dividend of
$24.8 million in May 2020 corresponding to the final dividend
for the year ended 31st December 2019 and three interim
dividends for the year ended 31st December 2020 in total
of $80.9 million in June, September and December 2020.
The Directors expect to pay a total dividend of approximately
$107.5 million for the year ended 31 December 2020,
including a quarterly dividend of 4.0591 USD cents per share
(around $26.6 million) to be paid in April 2021.
Our dividend cover remains strong at 2.2x. Dividend cover is
measured as “Parent Company free cash flow” of $234 million
in total ($274 million CFADS as defined in the Corporate Bond
indenture, less $40 million Corporate Bond interest costs),
relative to the total declared dividend for the year ended 31
December 2020. There is no reconciliation of the Dividend
cover to statutory measures because they do not derive from
the statutory measure.
Alexandre da Fonseca Reis,
Brazil Thermal Operation
Manager
BRAZIL
FOCUSING ON THE PEOPLE AROUND US
Supporting the community is a key part of our ethos and was
as important as ever during 2020. Alexandre da Fonseca
Reis explains the measures ContourGlobal took in this
pandemic year:
“Our efforts focused on what we could do to help the
communities we serve in the face of COVID-19. At Balsa
Nova in the state of Paraná, where one of our Solutions Brazil
plants is based, the town of some 13,000 inhabitants saw a
massive surge in infections in November and December. We
contacted the health authorities to find out how we could
help, and they said they were short of Personal Protective
Equipment (PPE) and COVID-19 tests for their key healthcare
teams. We pulled out all the stops and were able to supply
PPE and PCR tests for more than half of their medical staff.
Our contribution was worth 1.2% of the town’s entire health
care budget and made a real difference in reducing cases
at a time when the death rate was at a record high.
“At our Rio PCH business, where we operate two hydro
plants in the state of Rio de Janeiro, the needs were
different. There, the biggest problem was that the local
people who relied on selling agricultural products at market
were unable to operate and lost their income. Without this,
many were unable to feed themselves and their families.
With Government supplies slow in reaching people, we
stepped in to donate food baskets to 140 families, taking
them door to door to avoid crowds and the risk of infection.
We found people who were starving and didn’t know who
to turn to. I am proud that ContourGlobal was able to come
to their rescue.”
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61
Managing our principal risks
OUR APPROACH TO RISK
MANAGEMENT
We manage our risks rigorously across all businesses and
corporate functions. This is a disciplined and dynamic
process led from the top and applied day by day
throughout the Company.
The Board of Directors has overall responsibility for the
Company’s risk appetite, risk management and ensuring
that there is an effective risk management strategy and
framework. The Audit & Risk Committee assists the Board
with monitoring the Company’s risk management framework,
identifying areas of risk, challenging control weaknesses
and providing independent assessment and opinion on
the effectiveness and efficiency of the Company’s internal
controls and risk management systems. This also includes
reviewing the risk register and providing regular updates to
the Board on actions taken to mitigate the risks faced by the
Group. Details of the Audit & Risk Committee’s composition,
responsibilities and activities can be found in the Audit & Risk
Committee Report on pages 101 to 109.
Robust risk management
The Company’s risk management framework consists of a
register of all key risks, a risk map and qualitative analysis of
the likely causes and impacts of each risk. The register details
the management action plans in place to mitigate the effects
of any risk materializing.
Our risk management approach is based on the three lines
of defense model, with a set of controls, procedures, and
responsibilities designed to provide reasonable assurance.
Operational management in our businesses is the first line
of defense. This ensures that day-to-day risk management
controls are implemented and monitored and that relevant
systems are in place to identify, evaluate and mitigate the
Company’s business risks.
The second line of defense comprises Group functions such
as compliance, internal control, legal, IT and quality. These
focus on monitoring and compliance with risk control systems
and processes implemented by the business.
Our internal audit function together with external assurance
providers serves as the third line of defense, providing
independent assurance of risk management, internal
controls and governance.
Senior management plays a key role in monitoring the risk
management governance framework and policy. A focus
group of key senior management members reviews and
updates the risks listed on the risk register.
New and emerging risks
We follow a robust process to review current risks and
to identify emerging risks. In 2020, as part of this process,
we held a moderated workshop on emerging risks for
the first time, conducted jointly with one of the top risk
management consulting firms. The reflection on ongoing
changes to operating environment and emerging global
risk factors and potential scenarios analyzed during the
workshop led to identification of two new risks (in addition
to COVID-19), which were added to the Risk Register:
‘Disruptive innovation in power generation and storage
technologies’ (R04) and ‘Supply Chain’ (R05). We continue
to monitor all risks through the online Risk Management
Portal that we established in 2019.
Online Survey conducted through risk
management portal
Emerging risks identified through
moderated workshop
Updated risk register including emerging risks
presented to the Executive Management
Existing and proposed emerging risks reviewed
by Audit and Risk Committee
Final review conducted by the Board
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Managing our principal risks
OUR APPROACH TO RISK
MANAGEMENT
We manage our risks rigorously across all businesses and
corporate functions. This is a disciplined and dynamic
process led from the top and applied day by day
throughout the Company.
The Board of Directors has overall responsibility for the
Senior management plays a key role in monitoring the risk
Company’s risk appetite, risk management and ensuring
management governance framework and policy. A focus
that there is an effective risk management strategy and
group of key senior management members reviews and
framework. The Audit & Risk Committee assists the Board
updates the risks listed on the risk register.
with monitoring the Company’s risk management framework,
identifying areas of risk, challenging control weaknesses
and providing independent assessment and opinion on
the effectiveness and efficiency of the Company’s internal
controls and risk management systems. This also includes
reviewing the risk register and providing regular updates to
the Board on actions taken to mitigate the risks faced by the
Group. Details of the Audit & Risk Committee’s composition,
responsibilities and activities can be found in the Audit & Risk
Committee Report on pages 101 to 109.
Robust risk management
New and emerging risks
We follow a robust process to review current risks and
to identify emerging risks. In 2020, as part of this process,
we held a moderated workshop on emerging risks for
the first time, conducted jointly with one of the top risk
management consulting firms. The reflection on ongoing
changes to operating environment and emerging global
risk factors and potential scenarios analyzed during the
workshop led to identification of two new risks (in addition
to COVID-19), which were added to the Risk Register:
‘Disruptive innovation in power generation and storage
The Company’s risk management framework consists of a
technologies’ (R04) and ‘Supply Chain’ (R05). We continue
register of all key risks, a risk map and qualitative analysis of
to monitor all risks through the online Risk Management
the likely causes and impacts of each risk. The register details
Portal that we established in 2019.
the management action plans in place to mitigate the effects
of any risk materializing.
Our risk management approach is based on the three lines
of defense model, with a set of controls, procedures, and
responsibilities designed to provide reasonable assurance.
Operational management in our businesses is the first line
of defense. This ensures that day-to-day risk management
controls are implemented and monitored and that relevant
systems are in place to identify, evaluate and mitigate the
Company’s business risks.
The second line of defense comprises Group functions such
as compliance, internal control, legal, IT and quality. These
focus on monitoring and compliance with risk control systems
and processes implemented by the business.
Our internal audit function together with external assurance
providers serves as the third line of defense, providing
independent assurance of risk management, internal
controls and governance.
Online Survey conducted through risk
management portal
Emerging risks identified through
moderated workshop
Updated risk register including emerging risks
presented to the Executive Management
Existing and proposed emerging risks reviewed
by Audit and Risk Committee
Final review conducted by the Board
COVID-19 pandemic
The significance of the COVID-19 pandemic and its potential
for numerous impacts across the Company’s operations, led
us quickly in the first quarter of 2020 to organize a dedicated
Task Force consisting of several working groups focusing on
specific operational and logistical areas: remote working and
internal communication; spares and procurement; operations
staffing and Operational Technologies management; health,
medical and testing. The activities of the COVID-19 Task force
were reflected in a new ‘Pandemic virus’ risk (R03) added to
our Risk Register, and risks were monitored through our Risk
Management Portal from the first quarter of 2020.
Controlling risks
The Company faces a broad range of risks related to
operating, maintaining and refurbishing power generation
facilities. These include operational, health, safety and
environmental (HSE) as well as cyber security and systems
integrity risk. In line with our culture of operational excellence
and safety, we make sure all the resources are available to
control these risks at the right level.
The Internal Audit function conducted six audits in 2020,
including information technology spend governance, energy
trading, operating permits compliance and three assets-
focused audits. These audits are directly or indirectly related
to ContourGlobal’s major risks and allow us to detect areas
for improvement. The findings from the audit allowed us to
strengthen controls around how the company enters into
major commitments and contracts, compliance with the
Company’s processes and procedures at asset level.
In December 2020, the Audit & Risk Committee approved
the 2021 Internal Audit risk-based plan.
Further information can be found in the Audit & Risk
Committee report on page 105.
Our framework for managing risk
Roles and responsibilities
Board
Overall responsibility for risk management:
Risk appetite, strategy, policy and systems, approval
of the risk register
Audit and
Risk
Committee
Assessing
the
effectiveness
and efficiency
of the internal
control and risk
management
systems
Assisting the
Board
with developing
and monitoring
the risk
management
framework,
identifying
and monitoring
areas of risk and
reducing control
weaknesses
Reviewing
the
Company’s
internal
control, risk
management
systems and
risk register
Senior
management
team
Senior
management
team
Monitoring
the risk
management
governance
framework
and policy
Reviewing
and updating
the
Company’s
risk register
in a working
group of
key senior
management
members
First line of defense
Business
operations
Policies,
Organization,
Risk assessment
procedures
Second line
of defense
Compliance, Legal,
IT, Internal Control,
Quality
Third line
of defense
Internal Audit
Monitoring and
compliance
regarding risk control
systems and processes
implemented by the
business
Independent assurance
of risk management,
internal controls and
governance
Risk ownership
and control
ensuring day-to-day risk
management controls
are implemented and
monitored, and that
systems are in place to
identify, evaluate and
mitigate Company’s
business risks
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63
Managing our principal risks (continued)
Reducing uncertainties
The Company’s diversified geographical and technological
approach to contracted and regulated power generation,
as well as political risk insurance coverage of higher-risk
assets, reduces uncertainties relating to medium-term
operational results. We closely monitor residual risks
related to governmental regulations, macroeconomic
uncertainties and changes in market conditions through
the risk management framework.
Focusing on the major risks
This section of the strategic report provides an overview
of our approach to managing risk, focusing on the major
risk factors related to implementing the Company’s strategy
and business model. It is not an exhaustive list of all possible
risks. Additional uncertainties exist, some of which may not
be known to the Company and could have a negative effect
on the Company’s financial position and performance. The
principal risks and uncertainties were considered in assessing
the long-term viability of the Company.
The viability statement can be found on page 72.
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Managing our principal risks (continued)
Reducing uncertainties
Focusing on the major risks
The Company’s diversified geographical and technological
This section of the strategic report provides an overview
approach to contracted and regulated power generation,
of our approach to managing risk, focusing on the major
as well as political risk insurance coverage of higher-risk
risk factors related to implementing the Company’s strategy
assets, reduces uncertainties relating to medium-term
operational results. We closely monitor residual risks
related to governmental regulations, macroeconomic
and business model. It is not an exhaustive list of all possible
risks. Additional uncertainties exist, some of which may not
be known to the Company and could have a negative effect
uncertainties and changes in market conditions through
on the Company’s financial position and performance. The
the risk management framework.
principal risks and uncertainties were considered in assessing
the long-term viability of the Company.
The viability statement can be found on page 72.
Risk map
c i a l
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a
F i n
n
tio
a
niz
a
g
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ple a
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P
12
Strategy
1
2
3
4
5
6
7
8
O
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9
10
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c
h
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g
y
Regulation and compliance
The order of these risks does not reflect their
relative significance – they are all major risks.
Our Risk Radar maps the top 12 risks
ContourGlobal is facing. The risk radar
has three levels of residual risk: high,
moderate and low.
Each level is a combination of the inherent
risk significance (potential impact and
likelihood) and the risk response in place.
Inherent risk is the risk to an entity in the
absence of any direct or focused actions
by management to alter its severity/
significance. Residual risk is the risk
remaining after management has taken
action to alter its severity/significance.
R01
R02
Impact of governmental actions and
regulations
Geopolitical uncertainties and social
instability (including environmental
activism, sanctions and trade war)
R03
Pandemic virus
R04
Disruptive innovation in power
generation and storage technologies
R05
Supply chain
R06
Project execution (CAPEX)
R07
Asset integrity (OPEX)
R08
Resources/Climate change
R09
Health, Safety and Environment (HSE)
and food: prevention and regulation
R10
Fraud, bribery and corruption
R11
Cyber security and systems integrity
R12
Key people (senior executive
management) succession planning
OSHA and environment
Risk Level
Moderate
High
High: residual risk remaining likely to have
a strong impact on the achievement of
strategic objectives even if risk management
measures are in place. Additional actions
should be taken to alter risk severity further.
Moderate: risk that could strongly affect
the achievement of the objectives for
which level of control is high enough
to result in a moderate residual risk.
Additional actions could be taken
to reduce risk significance further.
Low: risk that may have limited impact on the
business given that control mechanisms are
in place together with relevant monitoring
and assessment measures.
The closer the positioning of the risk to the
center of the radar, the higher the residual
severity of the risk.
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65
Managing our principal risks (continued)
Risk Factor
Main impact
Risk Response (management and mitigation)
R01. Strategy – Impact of governmental actions and regulations
PPAs are held with state-owned, regulated or
other offtakers, the majority of which are rated by
Standard & Poor’s, with a weighted average credit
rating (after Political Risk insurance - PRI) of BBB+
(weighted by EBITDA).
PRI policies (from commercial insurers) are in place
for several projects in case of events that can affect
our assets, in particular the loss of invested capital.
In some cases, these cover a return on our capital.
These include:
Maritsa, Vorotan, KivuWatt, Togo, Cap des Biches,
TermoemCali, and Kosovo.
Close relationships are maintained with energy
lawyers and associations to anticipate any potential
changes in regulation and express our interests.
Partnerships are fostered with multilateral
development banks for both equity and debt which
makes governments reticent to renegotiate.
Investment is placed in local communities and
hiring locally.
The business has a sovereign credit rating of BBB+
post-PRI impact (based on the individual sovereign
ratings determined by Standard & Poor’s).
Close monitoring of global climate change
initiatives and taking them into account in
our medium- and long-term operations and
growth strategy.
Proactive engagement and communication.
The risk that governmental
actions or changes in (1)
taxes or (2) regulations of our
non-PPA long-term fixed rate
arrangements (i.e. feed-in-
tariffs) and Power Purchase
Agreements (PPAs) including
new adverse policymaking
and investigations by
regulatory or competition
law authorities, as well as
(3) restrictive regulation of
Thermal generation as the
result of climate change
initiatives and transition to
low-carbon economy, without
regulatory risk pass-through
mechanisms will have a
negative impact on our
results of operation and
growth prospects.
Risk unchanged
Included in the sensitivity
analysis on principal risks
for viability and going
concern assessment.
Deterioration of financial performance including loss
of revenue and an increase in expenses (including
fossil fuel cost).
Loss of business/growth opportunities:
Termination of agreements:
• Inability to obtain, maintain or renew required
governmental permits/licenses
• Inability to receive permits for extension of
existing capacities
Financing impact:
• Limited access to capital for Thermal power
generation projects
Major Asset impact:
• Maritsa anticipates that in the near term it will engage
in discussions with the government of Bulgaria related
to the Bulgarian energy regulator’s complaint to the
European Commission that the Maritsa PPA contains
elements of state aid and the EC’s related review
of the PPA. Separately, Bulgaria has submitted its
proposed energy market reform plan to the EC, which
plan proposes a market-wide capacity remuneration
mechanism and termination of the long-term PPAs,
including that of Maritsa, and foresees discussions
with Maritsa on this subject. We cannot predict the
outcome of such discussions, or of any resolution
by the EC of its review should those discussions
not result in an agreement. Maritsa believes
termination of the PPA would not be justified and
will take all required actions to protect its rights and
interests. Resolution of the matter could nonetheless
contain terms that adversely affect the Maritsa PPA
and have a material adverse impact on Maritsa’s and
ContourGlobal’s business.
Impact on other key Assets:
• The Group is subject to changes in laws or
regulations or changes in the application or
interpretation of laws or regulations in jurisdictions
where we operate (particularly utilities where
electricity tariffs are subject to regulatory review
or approval) which could adversely affect our
business. This is the case for instance in Mexico
where the current government has engaged in
several attempts to change the regulatory regime
under which the Company's plants are operating,
and related to Rwanda and Kosovo, where the
Company is engaged in arbitrations related to
the interpretation of its and counterparties'
contractual obligations.
R02. Strategy – Geopolitical uncertainties and social instability
(including environmental activism, sanctions and trade war)
The risk that geopolitical
instability, increased social
pressure on politics and
increasing activism will
create additional uncertainty
for our multinational business
operation and will affect
our business model or
specific assets.
Deterioration of financial performance:
• Increase in operational costs (including additional
costs associated with supply chain disruptions)
• Higher financing transaction costs
• Disruption of operation of one or more of
our assets
• Increase in OPEX and CAPEX
• Loss of invested capital
• Adverse effect on results of operation
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PRI policies (from commercial insurers) are in
place for several projects in case of events that
can affect our assets, in particular in Africa and
Eastern Europe.
In some cases we can recover a return on
our capital:
• Maritsa, Vorotan, KivuWatt, Togo, Cap des
Biches, TermoemCali, and Kosovo
• Our diversified operations limit the downside as the
impact of a localized geopolitical effect is unlikely
to have a significant effect on the full portfolio
• Diversification of jurisdictions and technologies
minimizes the risk
S
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Managing our principal risks (continued)
R01. Strategy – Impact of governmental actions and regulations
The risk that governmental
Deterioration of financial performance including loss
PPAs are held with state-owned, regulated or
actions or changes in (1)
of revenue and an increase in expenses (including
other offtakers, the majority of which are rated by
taxes or (2) regulations of our
fossil fuel cost).
• Maritsa anticipates that in the near term it will engage
in discussions with the government of Bulgaria related
changes in regulation and express our interests.
Standard & Poor’s, with a weighted average credit
rating (after Political Risk insurance - PRI) of BBB+
(weighted by EBITDA).
PRI policies (from commercial insurers) are in place
for several projects in case of events that can affect
our assets, in particular the loss of invested capital.
In some cases, these cover a return on our capital.
These include:
Maritsa, Vorotan, KivuWatt, Togo, Cap des Biches,
TermoemCali, and Kosovo.
Close relationships are maintained with energy
lawyers and associations to anticipate any potential
Partnerships are fostered with multilateral
development banks for both equity and debt which
makes governments reticent to renegotiate.
Investment is placed in local communities and
hiring locally.
The business has a sovereign credit rating of BBB+
post-PRI impact (based on the individual sovereign
ratings determined by Standard & Poor’s).
Close monitoring of global climate change
initiatives and taking them into account in
our medium- and long-term operations and
growth strategy.
Proactive engagement and communication.
non-PPA long-term fixed rate
arrangements (i.e. feed-in-
tariffs) and Power Purchase
Agreements (PPAs) including
new adverse policymaking
and investigations by
regulatory or competition
law authorities, as well as
(3) restrictive regulation of
Thermal generation as the
result of climate change
initiatives and transition to
low-carbon economy, without
regulatory risk pass-through
mechanisms will have a
negative impact on our
results of operation and
growth prospects.
Risk unchanged
Included in the sensitivity
analysis on principal risks
for viability and going
concern assessment.
Loss of business/growth opportunities:
Termination of agreements:
• Inability to obtain, maintain or renew required
governmental permits/licenses
• Inability to receive permits for extension of
• Limited access to capital for Thermal power
existing capacities
Financing impact:
generation projects
Major Asset impact:
to the Bulgarian energy regulator’s complaint to the
European Commission that the Maritsa PPA contains
elements of state aid and the EC’s related review
of the PPA. Separately, Bulgaria has submitted its
proposed energy market reform plan to the EC, which
plan proposes a market-wide capacity remuneration
mechanism and termination of the long-term PPAs,
including that of Maritsa, and foresees discussions
with Maritsa on this subject. We cannot predict the
outcome of such discussions, or of any resolution
by the EC of its review should those discussions
not result in an agreement. Maritsa believes
termination of the PPA would not be justified and
will take all required actions to protect its rights and
interests. Resolution of the matter could nonetheless
contain terms that adversely affect the Maritsa PPA
and have a material adverse impact on Maritsa’s and
ContourGlobal’s business.
Impact on other key Assets:
• The Group is subject to changes in laws or
regulations or changes in the application or
interpretation of laws or regulations in jurisdictions
where we operate (particularly utilities where
electricity tariffs are subject to regulatory review
or approval) which could adversely affect our
business. This is the case for instance in Mexico
where the current government has engaged in
several attempts to change the regulatory regime
under which the Company's plants are operating,
and related to Rwanda and Kosovo, where the
Company is engaged in arbitrations related to
the interpretation of its and counterparties'
contractual obligations.
R02. Strategy – Geopolitical uncertainties and social instability
(including environmental activism, sanctions and trade war)
The risk that geopolitical
Deterioration of financial performance:
PRI policies (from commercial insurers) are in
instability, increased social
• Increase in operational costs (including additional
place for several projects in case of events that
pressure on politics and
increasing activism will
costs associated with supply chain disruptions)
can affect our assets, in particular in Africa and
• Higher financing transaction costs
Eastern Europe.
create additional uncertainty
• Disruption of operation of one or more of
for our multinational business
our assets
operation and will affect
our business model or
specific assets.
• Increase in OPEX and CAPEX
• Loss of invested capital
• Adverse effect on results of operation
In some cases we can recover a return on
our capital:
• Maritsa, Vorotan, KivuWatt, Togo, Cap des
Biches, TermoemCali, and Kosovo
• Our diversified operations limit the downside as the
impact of a localized geopolitical effect is unlikely
to have a significant effect on the full portfolio
• Diversification of jurisdictions and technologies
minimizes the risk
Risk Factor
Main impact
Risk Response (management and mitigation)
Risk Factor
Main impact
Risk Response (management and mitigation)
R02. Strategy – Geopolitical uncertainties and social instability
(including environmental activism, sanctions and trade war) (continued)
• Unforeseen additional recurring
costs vs. financial model projections
(project IRR and cash flow)
• Charges and penalties due to
non-compliance with external
requirements
• Access to several financial markets allows the
business to choose the most opportune sources
of transactional financing
• Investment in local communities and hiring locally
creates goodwill with local governments and populations
• Reduced risk mitigation in place through diversified
business
• Regular analysis of suppliers and supply chain - related
business case study on Spain on page 36
Loss of business/growth
opportunities:
• Inability to operate effectively
• Termination of agreements
• Fewer opportunities for growth
Business disruption:
• Inability to procure required equipment
• Impact on EAF and EFOR
The risk that sanctions
affect our counterparties
or stakeholders along our
supply chain will have
negative impact on our
cost structure and our
ability to acquire the
required equipment.
The risk that excessive
cross border tariffs or
negative regulation on
foreign capital flow will
have an impact on our supply
chain and limit our flexibility
in cross border investments.
Risk unchanged
Included in the sensitivity
analysis on principal risks
for viability statement and
going concern assessment.
R03. Strategy – Pandemic virus
The risk that global
pandemic(s) will cause
(1) health issues for our
employees, (2) business
disruptions at operational
as well as at corporate level,
(3) disruption of our supply
chain, (4) delays in power
plants’ major overhauls, (5)
increase in counterparty risk
given deterioration of our
offtakers’ credit strength
as well as (6) slowdown
of economic growth and
thus disruption of global
commodity markets which
will result in adverse financial
impact on results of our
operation as well as growth
targets and long-term
impact on sustainability
of regulated returns/FIT.
New risk
Included in the sensitivity
analysis on principal risks
for viability statement and
going concern assessment.
Direct financial impact:
• Adverse impact on revenue due to
force majeure claims, decreasing
power demand caused by slowdown
of economic growth
• Slow payment of certain of our
offtakers/the country system, potential
financial distress post-crisis of certain
clients, regulatory measures to slow
down payments
• Adverse effect on results of operation
due to increase of O&M costs and
CAPEX expenditures due to supply
chain disruption
Business interruption:
• Disruption to business-as-usual
activities caused by restrictions
imposed on travel and movement
of goods
• Business leaders’ distraction from core
business activities due to focus on risk
prevention and mitigation measures
• Disruption due to employees’ illness
at plant and corporate level
• Disruption and delays to plants’
planned maintenance due to travel
restriction of O&M contractors (Impact
on EAF and EFOR)
• Potential supply chain disruption
resulting in inability to procure
important equipment, consumables
or spare parts
Information and Communication
• Emergency communication online site on the
intranet that contains the most recent communication
regarding Coronavirus to Company’s employees in
different languages
• Crisis management task force (COVID-19) consisting of
sub-groups: remote work and internal communication;
operations staffing and OT management; IT readiness;
health, medical and testing
• Regular calls of senior management with business
leaders and global Webinars for all employees
Mobility restriction, remote work and social
distancing
• Employees training (Okta, VPN, zoom) and necessary
IT set-ups in place and tested to ensure seamless
remote operation for corporate functions
• Remote power plant operations in some locations
• Temporary travel business ban during quarantine
and strict monitoring of travel situation going forward
• Strict third-party visitors control (contractors, service
providers) screening and authorization process including
online questionnaire
• Issuance of “Temporary home-based employee
guidance” and “Emerging Respiratory Viruses
Prevention Response Guidance”
• Regular check-ins with managers
• Procurement of masks and PPE equipment and
shipment to sites for front-line workers
• Assets operating in isolation mode
Supply chain analysis and contract management
• Global supply chain actions tracker per plant with regular
update in case of potential risks. Calls with sites to review
the status
• Force majeure and termination clauses analysis for key
contracts (PPA, facility agreements, supply chain) with
regular communication on potential delivery delays.
Local assets were advised to avoid or to require
protection for advance payments
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Managing our principal risks (continued)
Risk Factor
Main impact
Risk Response (management and mitigation)
R03. Strategy – Pandemic virus (continued)
Indirect financial impact
(Country/Counterparty):
• Adverse financial impact on the result
of Company’s operation through the
adverse effect of economic growth
slowdown on our counterparties, i.e.
PPA offtakers and governments’
feed-in tariffs
• FX rate exposure due to disruption
in countries with weak currencies
Financing and growth impact:
• Inability to get access to financing
for new or existing projects due to
potential liquidity crunch caused
by global economy slowdown
O&M optimization and inventory management
• Review of annual maintenance program to reschedule
any maintenance activities that would require third-party
interventions on site
• Inventory requirement in place for spares and
consumables at least through the end of 2020
(6-12 months’ stock)
Health, Insurance and Testing
• PRC testing of front-line workers
• COVID insurance policy for infected employees
(in addition to existing health benefits)
• Strict protocols for maintaining physical distance,
disinfection of premises, masks and gloves use when
required physical distance cannot be kept. In addition,
screenings for temperature are conducted
R04. Strategy – Disruptive innovation in power generation and storage technologies
Deterioration of financial
performance:
• Loss of revenue
• Decrease in operating cashflow
Loss of business/growth
opportunities:
• Renegotiation/termination of existing
contracts
• Inability to expand in strategically
important regions
• Strong PPAs drafted to protect ContourGlobal from
non-payments
• PRI policies, several of which provide protection against
non-honoring of arbitration award
• Diversification of ContourGlobal’s portfolio (Thermal
and Renewable) and installing the most modern
technologies (where possible) in order to remain
as competitive as possible
• Innovation monitoring and using internal capabilities
to capitalize on emerging technologies and innovative
solutions already implemented within the Group
The risk that technological
breakthrough in renewable
generation, storage
technologies and/or energy
trading and financial markets
(i.e. blockchain) will reduce
our ability to be competitive in
the new investments or could
result in stranded assets.
Note: this risk is regarded
as an emerging risk but one
unlikely to impact in the next
three years.
New risk
R05. Strategy – Supply Chain
Business disruption:
• Inability to procure required equipment
or parts
• Impact on EAF and EFOR
Deterioration of financial
performance:
• Increase in Opex and Capex
Potential breach of loan agreements
• Supply chain analysis and contract management: global
supply chain actions tracker per plant with regular update
in case of risks, regular reviews
• Monitoring of force majeure and termination clauses and
communication of potential termination
Increased supply chain risk,
with the identification and
management of supply
requiring greater efforts to
maintain resilience. This may
be due to a more competitive
landscape among the
Company’s peers increasing
costs; or due to a shrinking
of available supply due to
suppliers going out of
business during economic
downturn; or politically
motivated restrictions (such
as trade restrictions e.g.
quotas, tariffs, additional
screening or sanctions)
following from heightened
geopolitical tensions.
New risk
Included in the sensitivity
analysis on principal risks
for viability statement and
going concern assessment.
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Managing our principal risks (continued)
R03. Strategy – Pandemic virus (continued)
Indirect financial impact
(Country/Counterparty):
• Adverse financial impact on the result
of Company’s operation through the
adverse effect of economic growth
slowdown on our counterparties, i.e.
PPA offtakers and governments’
feed-in tariffs
O&M optimization and inventory management
• Review of annual maintenance program to reschedule
any maintenance activities that would require third-party
interventions on site
• Inventory requirement in place for spares and
consumables at least through the end of 2020
(6-12 months’ stock)
• FX rate exposure due to disruption
in countries with weak currencies
Health, Insurance and Testing
• PRC testing of front-line workers
Financing and growth impact:
• Inability to get access to financing
for new or existing projects due to
potential liquidity crunch caused
by global economy slowdown
• COVID insurance policy for infected employees
(in addition to existing health benefits)
• Strict protocols for maintaining physical distance,
disinfection of premises, masks and gloves use when
required physical distance cannot be kept. In addition,
screenings for temperature are conducted
R04. Strategy – Disruptive innovation in power generation and storage technologies
The risk that technological
breakthrough in renewable
generation, storage
Deterioration of financial
performance:
• Loss of revenue
technologies and/or energy
• Decrease in operating cashflow
Loss of business/growth
opportunities:
• Strong PPAs drafted to protect ContourGlobal from
non-payments
• PRI policies, several of which provide protection against
non-honoring of arbitration award
• Diversification of ContourGlobal’s portfolio (Thermal
and Renewable) and installing the most modern
technologies (where possible) in order to remain
• Renegotiation/termination of existing
as competitive as possible
contracts
• Inability to expand in strategically
important regions
• Innovation monitoring and using internal capabilities
to capitalize on emerging technologies and innovative
solutions already implemented within the Group
Increased supply chain risk,
Business disruption:
with the identification and
• Inability to procure required equipment
• Supply chain analysis and contract management: global
supply chain actions tracker per plant with regular update
or parts
in case of risks, regular reviews
• Impact on EAF and EFOR
• Monitoring of force majeure and termination clauses and
communication of potential termination
Deterioration of financial
performance:
• Increase in Opex and Capex
Potential breach of loan agreements
trading and financial markets
(i.e. blockchain) will reduce
our ability to be competitive in
the new investments or could
result in stranded assets.
Note: this risk is regarded
as an emerging risk but one
unlikely to impact in the next
three years.
New risk
R05. Strategy – Supply Chain
management of supply
requiring greater efforts to
maintain resilience. This may
be due to a more competitive
landscape among the
Company’s peers increasing
costs; or due to a shrinking
of available supply due to
suppliers going out of
business during economic
downturn; or politically
motivated restrictions (such
as trade restrictions e.g.
quotas, tariffs, additional
screening or sanctions)
following from heightened
geopolitical tensions.
New risk
Included in the sensitivity
analysis on principal risks
for viability statement and
going concern assessment.
Risk Factor
Main impact
Risk Response (management and mitigation)
Risk Factor
Main impact
Risk Response (management and mitigation)
R06. Operation and execution – Project execution (CAPEX)
The risk that inefficient
contractors’ selection,
contracting, project
management and execution
of greenfield construction or
refurbishment investment
projects will result in delays
or unanticipated cost
overruns.
Risk unchanged
Included in the sensitivity
analysis on principal risks
for viability and going
concern assessment.
Financial impact e.g.:
• Overrun of project costs (including
financing fees) vs. investment case
impacting projected cash flows and IRR
• Liquidated damages/penalties/litigation
• Reduced revenue due to construction
delays
• Potential defaults on financing
and debt repayment before COD
• Image and reputation impact
resulting from a loss of credibility
with counterparties, lenders and
other stakeholders
R07. Operation and execution – Asset integrity (OPEX)
The risk that asset
maintenance processes
are not managed in line
with the O&M plan and
quality standards will
prevent the power plants
from delivering electricity
and ensuring availability
at the levels defined in
the long-term PPAs.
Risk unchanged
Deterioration of operational
performance:
• Business interruption and power
outages
• Performance below expected
efficiency and output levels
• Inability to deliver electricity or ensure
availability defined in long-term PPAs
Reduced profitability and cash flows:
• Increase of expenses (OPEX & CAPEX)
• Unplanned O&M and capital
expenditures
• Loss of revenue and PPA penalties
• Liquidated damages
• Reduction in distribution and inability
to service debt
• Reputational impact
• Controlling methodology: specific internal resource
is dedicated to provide guidance and best practice to
ensure strict and real-time project cost control, enabling
cost overruns to be identified early and mitigation actions
put in place
• Minimizing the risk of exceeding construction budgets
by entering into fixed price contracts with engineering,
procurement and construction (EPC) contractors with
proven track records
• EPC contracts contain back-to-back liquidated damages
provisions which protect ContourGlobal against
construction delays and other breaches by EPC
contractors
• Contract monitoring and management with legal support
• External support to obtain permits
• Project Review Procedure: monthly review of the
projects organized by the Project Management Team
(including the Group COO) and presented to the Project
Steering Committee
• Regular analysis of suppliers and supply chain
• Business interruption insurance
• O&M strategy focusing on HSE, O&M organization,
O&M performance management, benchmarks and KPIs
• Maintenance strategy including hydro and civil structures.
O&M IT systems (including remote monitoring control room)
• Maintenance activities with regular KPIs for control, and
timely corrective actions
• Daily KPIs and improvement meetings between local plant
managers and operators
• Regular analysis of suppliers and supply chain
R08. Operation and execution – Resources/Climate change
• Deterioration of financial performance
including a loss of revenue and/or
an increase in expenses (O&M costs)
• Impact on the operational performance
with a strong deviation of actual
renewable generation vs. projections
in the investment case specifically
for wind and hydro
• Read more about how we managed
this risk in Armenia this year on
page 19.
The risk that climate
change (e.g. changes in
temperature, wind patterns
and hydrological conditions)
will affect the certainty of our
forecasts, will impact our
operations and adversely
affect our financial
performance.
Risk unchanged
Included in the sensitivity
analysis on principal risks
for viability and going
concern assessment.
• Diversified geographical and technological portfolio
of assets
• Extensive weather phenomena studies and due
diligence before acquisitions
• Sign-off on all investment case assumptions by
a reputable advisory firm
• Scenario analysis carried out across the portfolio
• StormGeo forecasting service has been implemented
that provides medium- to long- range prognostics for
LATAM assets
• Retina Performance Management platform for Renewable
businesses to improve data analytics and forecasting,
enabling predictive analysis for medium- to long- range
maintenance planning and downtime reduction
• Review of weatherization planning for extreme
temperatures
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Managing our principal risks (continued)
Risk Factor
Main impact
Risk Response (management and mitigation)
R09. Health, safety and environment (HSE) and food – prevention and regulation
The risk that failure to
prevent major health, safety,
environmental and food
(CO2 production for human
consumption) incidents and/
or comply with relevant
regulations due to inherent
risks related to our activities
(fuel types, technology,
equipment in more than
20 countries) will have a
material adverse impact on
our operations, financing
conditions and reputation.
Risk unchanged
Human and environmental
impact:
• LTIs (Lost Time Incidents) and
fatalities of ContourGlobal
employees, contractors or
people in local communities
around the facilities due to
incidents at the power plants
• Environmental accidents on
site and in local communities
• Contamination of food supply
• Reputational impact
Financial and operational
impact:
• Increase in liabilities and
compliance costs
• Business interruption
• Loss of efficiency/productivity
• Breach of loan covenants
• Non-compliance with applicable
HSE legal requirements and
potential sanctions
• Health and Safety Policy reviewed annually and communicated
Company-wide
• Health and Safety and Environmental management system is
aligned with H&S 18001, ISO 14001 standards, and also with
World Bank guidelines, namely the IFC Performance Standards
• Monitoring of reactive indicators (such as responses to
accidents) and proactive indicators (including known hazards,
inspection quality and number of training hours)
• Intense regular training
• Continuous improvement and failure analysis (like 5 whys
and lessons learned) to prevent incident recurrence
• Strong environmental policies and procedures:
• Each business’s compliance with applicable policies, local laws
and permit requirements is managed directly by the business
• Oversight and audit through operations, environmental, health
and safety departments
• Third-party contractors’ environmental audits, including Coca-
Cola audits of food grade CO2
• Arrubal, Togo and Knockmore Hill have achieved ISO 14001
certification
• Adherence to a Company-wide environmental policy, reflecting
the business commitment to the United Nations Global Compact
R10. Regulation and compliance – Fraud, bribery and corruption
The risk that lack of
transparency, threat of fraud,
public sector corruption,
money laundering and other
forms of criminal activity
involving government officials
or suppliers will result in a
failure to comply with
anti-corruption legislation,
including the UK Bribery Act
2010 and other international
anti-bribery laws.
Financial impact:
• Financial losses as a result
of fraudulent activities
• Violations of anti-corruption
or other laws
• Criminal and/or civil sanctions
against individuals and/or the
Company
• Loss of trust by key stakeholders
• Debarment by multilateral
development banks and
international financial institutions
• Reputation impact and loss
Risk unchanged
of trust
• A strong anti-bribery compliance program that reflects the
components of an ‘effective ethics and compliance program’
as set forth by various international conventions and
enforcement authorities, which is reviewed at least quarterly
• Policies and procedures include:
• Code of Conduct and Business Ethics
• Anti-Corruption Policy
• Anti-Corruption Compliance Guide
• Policy for Engaging Suppliers and Third-Party Service
Providers
• Gifts & Hospitality Policy
• Compliance Transactional Due Diligence Protocol
• Business Development Consultant Compliance Protocol
Included in the sensitivity
analysis on principal risks for
viability and going concern
assessment.
• Exclusion from government
funding programs
• Regular certification by employees
• Risk-based due diligence, including for third parties and
transactions
• Pre-approval by Compliance of gifts and hospitality offered
to Governmental Officials
• Online portals:
• EthicsLine
• Regular checks and audits:
• Bi-annual combined Compliance and Finance Audits,
internal audits
• Internal spot checks
• Tailored, risk-based training according to a yearly training plan
• Anti-Corruption e-learning course for new joiners and regular
refresh course for existing employees
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Managing our principal risks (continued)
The risk that failure to
prevent major health, safety,
environmental and food
(CO2 production for human
consumption) incidents and/
or comply with relevant
regulations due to inherent
risks related to our activities
(fuel types, technology,
equipment in more than
20 countries) will have a
our operations, financing
conditions and reputation.
Risk unchanged
Human and environmental
• Health and Safety Policy reviewed annually and communicated
Company-wide
impact:
• LTIs (Lost Time Incidents) and
fatalities of ContourGlobal
employees, contractors or
people in local communities
around the facilities due to
incidents at the power plants
• Environmental accidents on
site and in local communities
• Contamination of food supply
Financial and operational
impact:
• Increase in liabilities and
compliance costs
• Business interruption
• Loss of efficiency/productivity
• Breach of loan covenants
• Non-compliance with applicable
HSE legal requirements and
potential sanctions
• Health and Safety and Environmental management system is
aligned with H&S 18001, ISO 14001 standards, and also with
World Bank guidelines, namely the IFC Performance Standards
• Monitoring of reactive indicators (such as responses to
accidents) and proactive indicators (including known hazards,
inspection quality and number of training hours)
• Intense regular training
• Continuous improvement and failure analysis (like 5 whys
and lessons learned) to prevent incident recurrence
• Strong environmental policies and procedures:
• Each business’s compliance with applicable policies, local laws
and permit requirements is managed directly by the business
• Oversight and audit through operations, environmental, health
and safety departments
• Third-party contractors’ environmental audits, including Coca-
Cola audits of food grade CO2
• Arrubal, Togo and Knockmore Hill have achieved ISO 14001
certification
• Adherence to a Company-wide environmental policy, reflecting
the business commitment to the United Nations Global Compact
material adverse impact on
• Reputational impact
R10. Regulation and compliance – Fraud, bribery and corruption
The risk that lack of
Financial impact:
transparency, threat of fraud,
• Financial losses as a result
public sector corruption,
of fraudulent activities
money laundering and other
• Violations of anti-corruption
forms of criminal activity
involving government officials
or suppliers will result in a
failure to comply with
anti-corruption legislation,
including the UK Bribery Act
2010 and other international
anti-bribery laws.
or other laws
• Criminal and/or civil sanctions
against individuals and/or the
Company
• Loss of trust by key stakeholders
• Debarment by multilateral
development banks and
international financial institutions
• Reputation impact and loss
Risk unchanged
of trust
• A strong anti-bribery compliance program that reflects the
components of an ‘effective ethics and compliance program’
as set forth by various international conventions and
enforcement authorities, which is reviewed at least quarterly
• Policies and procedures include:
• Code of Conduct and Business Ethics
• Anti-Corruption Policy
• Anti-Corruption Compliance Guide
• Policy for Engaging Suppliers and Third-Party Service
Providers
• Gifts & Hospitality Policy
• Compliance Transactional Due Diligence Protocol
• Business Development Consultant Compliance Protocol
• Exclusion from government
funding programs
• Regular certification by employees
• Risk-based due diligence, including for third parties and
Included in the sensitivity
analysis on principal risks for
viability and going concern
assessment.
• Pre-approval by Compliance of gifts and hospitality offered
transactions
to Governmental Officials
• Online portals:
• EthicsLine
• Regular checks and audits:
internal audits
• Internal spot checks
• Bi-annual combined Compliance and Finance Audits,
• Tailored, risk-based training according to a yearly training plan
• Anti-Corruption e-learning course for new joiners and regular
refresh course for existing employees
Risk Factor
Main impact
Risk Response (management and mitigation)
Risk Factor
Main impact
Risk Response (management and mitigation)
R09. Health, safety and environment (HSE) and food – prevention and regulation
R11. Information technology – Cyber security and system integrity
Organizational and operational
impact:
• Disruptions to business operations
• Compromise of data integrity in
core systems
Financial impact:
• Potential for fraudulent activity due
to segregation of duties conflicts
• Penalties related to non-compliance
with data-related laws and regulations
• Loss of revenue due to disruptions
to operations
• Impact on reputation due to breach
of confidentiality
The risk that insufficient IT
security or maintenance
of systems will expose the
Company to data corruption.
This could have a negative
impact on information
systems as well as electronic
control systems used at the
generating plants, and could
disrupt business operations,
resulting in loss of service to
customers, expense to repair
security breaches and/or
system damage.
Risk unchanged
Included in the sensitivity
analysis on principal risks
for viability statement and
going concern assessment.
• Dedicated IT security function established for corporate
and Operations
Plants
• Physical access controls
• Dedicated plant IT functions established to consolidate
IT management approach in the plants under a global
framework of IT/OT security policies and procedures.
This local, segregated approach to the management
of plants minimizes risk
Corporate
• Security governance controls in place (including
security policies, security training, security reviews)
• Security systems implemented (e.g. anti-virus, web
filtering, firewalls, multifactor authentication, encryption)
• Security information and event management system
(SIEM)
• Infrastructure hosting security in place (ISO-27001
compliant data centers)
• User provisioning process for key financial accounting
and reporting systems, and segregation of duties
where applicable
• Governance processes in place (e.g. change
management, incident management)
• Restricted USB access
• Centralized administrative access restricting
any changes introduced by individual users
• Annual external audits of financial systems and IT security
R12. People and organization – Key people (senior executive management)
succession planning
• Removal or departure of key
• Focused action to attract, retain and develop high-caliber
individuals could result in operational
disruption, while competition for
employees could lead to higher
than expected increases in the
cost of recruitment, training and
employee costs
• Loss of key management members
could have a reputational impact
employees
• Managing organizational capability and capacity to meet
our customers’ needs
• Effective remuneration arrangements to promote effective
employee behaviors
• Clear succession plans in place
The risk that a combination
of key people’s (senior
executive management)
departure at short notice
may affect the Company’s
ability to deliver its strategic
objectives and the overall
Company performance
and the availability of
talent to support long-term
growth plans.
Risk decreased
The risk assessment was
re-evaluated due to set
of measures implemented
earlier in 2020 related
to succession planning.
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Managing our principal risks (continued)
Viability statement
In accordance with paragraph 31 of the UK Corporate
Governance Code 2018 (”the Code”), the Board has
assessed the prospects of the Company over a period
of three years. The Board believes that an assessment
period of three years is appropriate based on management’s
reasonable expectations of the position and performance
of the Company over this period, taking account of its
short-term and longer-range plans.
The Directors’ assessment has been performed using a
two-stage approach:
i) the assessment of the prospects of the Group through
the review of the Group’s current position, strategy and
business model, financial projections and principal risks.
In particular, the Group’s financial performance has been
assessed as relatively predictable given more than 90%
of revenue and related cash flows are fully contracted
or regulated, with no material contracts expiring during
this period other than Arrubal (PPA expiring in July 2021).
In addition, the resources available considering the
financial projections provide sufficient headroom to
serve its financing commitments.
ii) the assessment of the viability of the Company through
the preparation of the most severe but plausible scenarios
applied on these principal risks, the analysis of their
financial impact (on revenue, profitability, cash generation
cash distribution, and covenants), and the review of the
mitigation factors that management reasonably believes
would be available to the Company over this period.
Each of the risks presented on pages 66 to 71 has
been assessed in terms of their potential financial impact.
Out of those, the most severe but plausible scenarios
(individual or combination) are presented in the table
here below.
The results of the risk scenarios modelled showed that
neither an individual risk nor a combination of the plausible
risk events would have significant enough financial impact
to endanger the viability of the Company over the period
assessed. In addition, the geographical spread of the
Group, present in 20 countries with 117 operating plants
and the significant portion of non-recourse financing
arrangements at the asset level, mitigate the impact
at Group level.
After reviewing all of the above considerations, the Board
has a reasonable expectation that the Company will be able
to continue in operation and meet its liabilities as they fall due
over three years.
In assessing the prospects of the Company, the Directors
noted that such assessment is subject to a degree of
uncertainty that can be expected to increase looking
out over time and, accordingly, that future outcomes
cannot be guaranteed or predicted with certainty.
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Risk scenario tested
Linked to the principal risk
Changes in governmental
regulations, and commercial
market conditions – Financial
impact of no post-PPA
business for a material asset
($65 million cash impact)
Construction and
refurbishment activities
– Financial impact of
significant delay in
refurbishment activities due
to a pandemic and vendors’
force majeure ($15 million
cash impact)
Reduction of solar/wind/
hydro resource due
to climate change –
Financial impact resulting
from the loss of revenue
of the selected
renewable assets
($30 million cash impact)
Significant compliance
breach – Financial impact
in the form of hypothetical
fines and associated
reputational damage (
$40 million cash impact)
Cyber-attack stopping a
major asset for two weeks
– Financial impact of revenue
loss from a major asset in
that period ($10 million
cash impact)
R01 – Governmental
regulations
R02 – Macroeconomic
and political conditions
R03 – Pandemic virus
R05 – Supply Chain
R06 – Project execution
(CAPEX)
R08 – Resources/Climate
change
R10 – Fraud, bribery and
corruption
R11 – Cyber security and
system integrity
Going concern statement
The Directors have formed a judgment, at the time of
approving the financial statements, that there is a reasonable
expectation that the Group and the Company have adequate
resources to continue in operational existence for a period of
at least 12 months from the date of this report. For this reason,
the Directors continue to adopt the going concern basis in
preparing the Group and Company financial statements.
In reaching this conclusion, the Directors have considered:
• The financial position of the Group as set out in the Annual
Report and additional information provided in the financial
statements including note 4.13 (Management of financial
risk), notes 4.21 and 4.24 (Cash and cash equivalents and
Borrowings) and note 4.14 (Derivative financial instruments).
• The resources available to the Group taking account of
its financial projections and existing headroom against
committed debt facilities and covenants.
• The principal risks and uncertainties to which the Group
is exposed, as set out on pages 66 to 71, the likelihood
of them arising and the mitigating actions available.
Managing our principal risks (continued)
i) the assessment of the prospects of the Group through
the review of the Group’s current position, strategy and
cash impact)
Viability statement
In accordance with paragraph 31 of the UK Corporate
Governance Code 2018 (”the Code”), the Board has
assessed the prospects of the Company over a period
of three years. The Board believes that an assessment
period of three years is appropriate based on management’s
reasonable expectations of the position and performance
of the Company over this period, taking account of its
short-term and longer-range plans.
The Directors’ assessment has been performed using a
two-stage approach:
business model, financial projections and principal risks.
In particular, the Group’s financial performance has been
assessed as relatively predictable given more than 90%
of revenue and related cash flows are fully contracted
or regulated, with no material contracts expiring during
this period other than Arrubal (PPA expiring in July 2021).
In addition, the resources available considering the
financial projections provide sufficient headroom to
serve its financing commitments.
ii) the assessment of the viability of the Company through
the preparation of the most severe but plausible scenarios
applied on these principal risks, the analysis of their
financial impact (on revenue, profitability, cash generation
cash distribution, and covenants), and the review of the
mitigation factors that management reasonably believes
would be available to the Company over this period.
Each of the risks presented on pages 66 to 71 has
been assessed in terms of their potential financial impact.
Out of those, the most severe but plausible scenarios
(individual or combination) are presented in the table
here below.
The results of the risk scenarios modelled showed that
neither an individual risk nor a combination of the plausible
risk events would have significant enough financial impact
to endanger the viability of the Company over the period
assessed. In addition, the geographical spread of the
Group, present in 20 countries with 117 operating plants
and the significant portion of non-recourse financing
arrangements at the asset level, mitigate the impact
at Group level.
After reviewing all of the above considerations, the Board
has a reasonable expectation that the Company will be able
to continue in operation and meet its liabilities as they fall due
over three years.
In assessing the prospects of the Company, the Directors
noted that such assessment is subject to a degree of
uncertainty that can be expected to increase looking
Risk scenario tested
Linked to the principal risk
Changes in governmental
regulations, and commercial
market conditions – Financial
impact of no post-PPA
business for a material asset
($65 million cash impact)
Construction and
refurbishment activities
– Financial impact of
significant delay in
refurbishment activities due
to a pandemic and vendors’
force majeure ($15 million
Reduction of solar/wind/
hydro resource due
to climate change –
Financial impact resulting
from the loss of revenue
of the selected
renewable assets
($30 million cash impact)
Significant compliance
breach – Financial impact
in the form of hypothetical
fines and associated
reputational damage (
$40 million cash impact)
Cyber-attack stopping a
major asset for two weeks
– Financial impact of revenue
loss from a major asset in
that period ($10 million
cash impact)
R01 – Governmental
regulations
R02 – Macroeconomic
and political conditions
R03 – Pandemic virus
R05 – Supply Chain
R06 – Project execution
(CAPEX)
R08 – Resources/Climate
change
R10 – Fraud, bribery and
corruption
R11 – Cyber security and
system integrity
Going concern statement
The Directors have formed a judgment, at the time of
approving the financial statements, that there is a reasonable
expectation that the Group and the Company have adequate
resources to continue in operational existence for a period of
at least 12 months from the date of this report. For this reason,
the Directors continue to adopt the going concern basis in
preparing the Group and Company financial statements.
In reaching this conclusion, the Directors have considered:
• The financial position of the Group as set out in the Annual
Report and additional information provided in the financial
statements including note 4.13 (Management of financial
risk), notes 4.21 and 4.24 (Cash and cash equivalents and
Borrowings) and note 4.14 (Derivative financial instruments).
• The resources available to the Group taking account of
its financial projections and existing headroom against
committed debt facilities and covenants.
out over time and, accordingly, that future outcomes
• The principal risks and uncertainties to which the Group
cannot be guaranteed or predicted with certainty.
is exposed, as set out on pages 66 to 71, the likelihood
of them arising and the mitigating actions available.
Francisco Javier Martinez Garcia,
Alvarado Plant Manager
SPAIN
EMBRACING CONTINUOUS IMPROVEMENT
Keeping outage to a minimum is always our goal, but it
was doubly difficult at our solar facilities in Spain during the
pandemic, when a large program of planned maintenance
was due. Francisco Javier Martinez Garcia, Alvarado Plant
Manager, explains how he overcame the challenges:
“We had a big program of inspection and maintenance
planned for 2020, including an assessment of the condition
of our main generator required by the original equipment
manufacturer (OEM) ahead of a major refurbishment in 2021.
COVID-19 was forcing us to change our shift patterns to keep
teams in ‘bubbles’ isolated from each other and apart from
contractors, but the pandemic brought other problems too:
normally, the OEM sends its own teams over from Germany
or Sweden to conduct the inspections, but foreign travel was
out of the question; and spare parts can usually be shipped
overnight by air – again not an option.
“We therefore organized to use robotics to help carry out
the assessments, supported by our own workforce in place
of the OEM team. To ensure we had the parts necessary for
any contingency that might arise during the maintenance,
we built up an inventory in cooperation with our sister
plants elsewhere in Spain, checking that all the components
were compatible.
“To minimize downtime while keeping to the usual high
standards of quality and safety and sticking to budget, we
had to be creative. We modified the normal maintenance
and inspection process by undertaking some preparatory
work in advance and conducting some final work after the
outage. This worked really well.
“There was an upside to the pandemic therefore. We have
found a new way of running inspections and maintenance
that will be more efficient and improve our productivity –
all part of our culture of continuous improvement.”
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ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
73
Non-Financial Information Statement
Non-Financial Information Statement
We create value for all our stakeholders and track our performance against key financial and non-financial indicators. The table
below sets out where more information on non-financial matters can be found in this Annual Report together with an overview
of our relevant policies and standards.
Reporting
requirement
Business
Model
Relevant information
Policies, Standards and Commitments
Page 6-7 Who we are
Our values:
Page 12-13 Business
Model
• To care about our people’s health, safety, wellbeing and development.
• To expect, embrace and enable excellence and continuous learning through
Principal risk
and impact
of business
activity
Page 62-71 Our approach
to Risk Management
Page 72 Viability
statement
Environmental
Matters
Page 50-51 Environment
– Minimizing our impact
Employees
Page 46-48 Our People
– The Heroes of our
business
Social Matters
Page 52-53 Communities
– Providing vital support
humility, and knowledge that we will fail but when we do, we will learn.
• To act transparently and with moral integrity.
• To honor the commitments of those who have placed their trust in us.
• To work hard and without boundaries as a multinational, integrated team.
• Risk Management Framework
Our environmental commitments include:
• Complying with all environmental regulations and world-class best practices.
• Striving towards reducing our environmental footprint.
• Training and developing our workforce to understand our environmental
and social responsibilities.
• Executing targeted social investments aligned with our core business.
We are also a signatory of the United Nations Global Compact
• Code of Conduct and Business Ethics*
• Supplier Code of Conduct*
• Social Responsibility & Environmental Sustainability policy
• Signatory of the United Nations Global Compact
• Code of Conduct and Business Ethics*
• Signatory of the United Nations Global Compact
• Code of Conduct and Business Ethics*
• Social Responsibility Environmental Sustainability policy
• Social Investments Framework
• United Nations Global Compact signatory
Human Rights
Page 46-48 Our People
– The Heroes of our
business
Page 52-53 Communities
– Providing vital support
• Signatory of the United Nations Global Compact
• Code of Conduct and Business Ethics*
• Supplier Code of Conduct*
• ContourGlobal Modern Slavery Statement 2019*
• Human Rights Policy Statement
Anti-Corruption
and
anti-bribery
Page 109 Whistleblowing
mechanism
Page 109 Bribery
and anti-corruption policy
Page 70 Risk Factor
– Regulation and
Compliance – Fraud,
bribery and corruption
• Code of Conduct and Business Ethics*
• Anti-Corruption Policy*
• Anti-Corruption Compliance Guide*
• Supplier Code of Conduct*
• Policy for Engaging Supplier and Third-Party Service Providers
• Gifts & Hospitality Policy
• Compliance Transactional Due Diligence Protocol
• Business Development Consultant Compliance Protocol
• ContourGlobal Modern Slavery Statement 2019*
* Available at https://www.contourglobal.com/compliance-ethics
74
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Non-Financial Information Statement
Non-Financial Information Statement
We create value for all our stakeholders and track our performance against key financial and non-financial indicators. The table
below sets out where more information on non-financial matters can be found in this Annual Report together with an overview
of our relevant policies and standards.
Reporting
requirement
Business
Model
Model
Relevant information
Policies, Standards and Commitments
Page 6-7 Who we are
Our values:
Page 12-13 Business
• To care about our people’s health, safety, wellbeing and development.
• To expect, embrace and enable excellence and continuous learning through
humility, and knowledge that we will fail but when we do, we will learn.
• To act transparently and with moral integrity.
• To honor the commitments of those who have placed their trust in us.
• To work hard and without boundaries as a multinational, integrated team.
Principal risk
Page 62-71 Our approach
• Risk Management Framework
and impact
of business
activity
to Risk Management
Page 72 Viability
statement
Environmental
Page 50-51 Environment
Our environmental commitments include:
Matters
– Minimizing our impact
• Complying with all environmental regulations and world-class best practices.
• Striving towards reducing our environmental footprint.
• Training and developing our workforce to understand our environmental
and social responsibilities.
• Executing targeted social investments aligned with our core business.
We are also a signatory of the United Nations Global Compact
• Code of Conduct and Business Ethics*
• Supplier Code of Conduct*
• Social Responsibility & Environmental Sustainability policy
Employees
Page 46-48 Our People
• Signatory of the United Nations Global Compact
– The Heroes of our
business
• Code of Conduct and Business Ethics*
Social Matters
Page 52-53 Communities
• Signatory of the United Nations Global Compact
– Providing vital support
• Code of Conduct and Business Ethics*
• Social Responsibility Environmental Sustainability policy
• Social Investments Framework
• United Nations Global Compact signatory
Human Rights
Page 46-48 Our People
• Signatory of the United Nations Global Compact
– The Heroes of our
business
Page 52-53 Communities
– Providing vital support
• Code of Conduct and Business Ethics*
• Supplier Code of Conduct*
• ContourGlobal Modern Slavery Statement 2019*
• Human Rights Policy Statement
Anti-Corruption
Page 109 Whistleblowing
• Code of Conduct and Business Ethics*
and
anti-bribery
mechanism
• Anti-Corruption Policy*
Page 109 Bribery
• Anti-Corruption Compliance Guide*
and anti-corruption policy
• Supplier Code of Conduct*
Page 70 Risk Factor
– Regulation and
Compliance – Fraud,
bribery and corruption
• Policy for Engaging Supplier and Third-Party Service Providers
• Gifts & Hospitality Policy
• Compliance Transactional Due Diligence Protocol
• Business Development Consultant Compliance Protocol
• ContourGlobal Modern Slavery Statement 2019*
* Available at https://www.contourglobal.com/compliance-ethics
74
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
BRINGING OUR
STORY TO LIFE
Participants
• Andre Botao
• Alexes Devocion
• Alexandre da
Fonseca Reis
• Bonifacia Rubio
• Ederval Silva
• Imen Turki
• Marcus Oliveira
• Petar Kovachev
• Roman Tokarcik
• Tadeu Fayad
• Tatiana
Cavalcanti
• Tiago Siqueira
A YEARLY PHOTOGRAPHY COMPETITION ALLOWS ALL OUR EMPLOYEES AROUND THE WORLD TO
SHARE THEIR OWN CONTOURGLOBAL STORY.
It is another occasion for the Board to engage with employees, and acknowledge the value and commitment they bring
everyday to our businesses on the ground.
S
t
r
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S
t
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e
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t
s
Maritsa
KivuWatt
Balsa Nova
Majadas
Asa Branca
Asa Branca
Maritsa
Asa Branca
Slovakia
PCH of Goiandira
Chapada do Piauí Wind Farm
75
Board of Directors
EXPERIENCED LEADERSHIP
N
Craig A. Huff
Chairman
Mr. Huff co-founded ContourGlobal in
2005 and has served as the Chairman
of the Board of Directors since 2017.
The Board has determined that the
Chairman’s tenure is regarded as
having commenced following the
Company’s IPO in 2017.
Mr. Huff co-founded Reservoir Capital
in 1998 and is a member of all fund
Investment Committees. He currently
serves on the boards of many of
Reservoir Capital’s portfolio companies
in industries such as energy, power,
aircraft leasing, and insurance. He has
also been instrumental in the formation
and development of a variety of hedge
funds and private investment firms.
Mr. Huff is the President of the Board
of Trustees of St. Bernard’s School
and is active in several non-profits.
Prior to founding Reservoir Capital,
Mr. Huff was a Partner at Ziff Brothers
Investments and, prior to business
school, served in the U.S. Navy as a
nuclear submarine officer and nuclear
engineer. Mr. Huff graduated magna
cum laude from Abilene Christian
University with a B.S. in Engineering
Physics. He completed his M.B.A. at
Harvard Business School, where he
graduated with high distinction as a
Baker Scholar.
Joseph C. Brandt
President and
Chief Executive Officer
Stefan Schellinger
Chief Financial Officer
and Executive Director
Mr. Brandt co-founded ContourGlobal
and has served as ContourGlobal’s
President and Chief Executive Officer
since 2005 and is a member of its
Board of Directors.
Mr. Schellinger joined ContourGlobal
in April 2019 and serves as Executive
Vice President, Global Chief Financial
Officer and is a member of the Board
of Directors of ContourGlobal plc.
He has led development and
operations in the global electric
utility industry in Europe, the Americas
and Africa for over two decades.
Prior to co-founding ContourGlobal in
2005, Mr. Brandt worked at The AES
Corporation, an international power
company, from 1999 to 2005, serving
as Executive Vice President, Chief
Operating Officer and Chief
Restructuring Officer.
Mr. Brandt received a B.A. from George
Mason University, a M.A. from the
University of Virginia and a J.D. from
Georgetown University Law Center.
Mr. Brandt also attended graduate
school at the University of California,
Berkeley and was a Fulbright Fellow
at Helsinki University in Finland.
Prior to joining Stefan was Group
Finance Director and Executive Director
of Essentra plc from 2015 until 2018,
having joined the company as
Corporate Development Director
and Group Management Committee
member in 2013. Prior to this, Stefan
spent eight years with Danaher
Corporation, as Corporate Development
Director and as Finance Director –
Emerging Markets at Gilbarco Veeder
Root. Stefan has previously worked as
Vice President in investment banking at
J.P. Morgan in London with a focus on
strategic advisory and M&A. He started
his career in accountancy in Germany
at Arthur Andersen.
Stefan received his MBA from the
University of Chicago, Graduate School
of Business and holds a degree in
Finance and Accounting from the
University of St. Gallen, Switzerland.
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ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Board of Directors
EXPERIENCED LEADERSHIP
Committee membership
Chair
R
Remuneration
N
Nomination
A
Audit & Risk
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
N
Craig A. Huff
Chairman
Mr. Huff co-founded ContourGlobal in
2005 and has served as the Chairman
of the Board of Directors since 2017.
The Board has determined that the
Chairman’s tenure is regarded as
having commenced following the
Company’s IPO in 2017.
Mr. Huff co-founded Reservoir Capital
in 1998 and is a member of all fund
Investment Committees. He currently
serves on the boards of many of
Reservoir Capital’s portfolio companies
in industries such as energy, power,
aircraft leasing, and insurance. He has
also been instrumental in the formation
and development of a variety of hedge
funds and private investment firms.
Mr. Huff is the President of the Board
of Trustees of St. Bernard’s School
and is active in several non-profits.
Prior to founding Reservoir Capital,
Mr. Huff was a Partner at Ziff Brothers
Investments and, prior to business
school, served in the U.S. Navy as a
nuclear submarine officer and nuclear
engineer. Mr. Huff graduated magna
cum laude from Abilene Christian
University with a B.S. in Engineering
Physics. He completed his M.B.A. at
Harvard Business School, where he
graduated with high distinction as a
Baker Scholar.
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ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Joseph C. Brandt
President and
Chief Executive Officer
Stefan Schellinger
Chief Financial Officer
and Executive Director
Mr. Brandt co-founded ContourGlobal
Mr. Schellinger joined ContourGlobal
and has served as ContourGlobal’s
in April 2019 and serves as Executive
President and Chief Executive Officer
Vice President, Global Chief Financial
since 2005 and is a member of its
Officer and is a member of the Board
Board of Directors.
of Directors of ContourGlobal plc.
He has led development and
operations in the global electric
Prior to joining Stefan was Group
Finance Director and Executive Director
utility industry in Europe, the Americas
of Essentra plc from 2015 until 2018,
and Africa for over two decades.
Prior to co-founding ContourGlobal in
2005, Mr. Brandt worked at The AES
Corporation, an international power
company, from 1999 to 2005, serving
as Executive Vice President, Chief
Operating Officer and Chief
Restructuring Officer.
Mr. Brandt received a B.A. from George
Mason University, a M.A. from the
University of Virginia and a J.D. from
Georgetown University Law Center.
Mr. Brandt also attended graduate
school at the University of California,
Berkeley and was a Fulbright Fellow
at Helsinki University in Finland.
having joined the company as
Corporate Development Director
and Group Management Committee
member in 2013. Prior to this, Stefan
spent eight years with Danaher
Corporation, as Corporate Development
Director and as Finance Director –
Emerging Markets at Gilbarco Veeder
Root. Stefan has previously worked as
Vice President in investment banking at
J.P. Morgan in London with a focus on
strategic advisory and M&A. He started
his career in accountancy in Germany
at Arthur Andersen.
Stefan received his MBA from the
University of Chicago, Graduate School
of Business and holds a degree in
Finance and Accounting from the
University of St. Gallen, Switzerland.
N
R
N
of the Board of Channel Thirteen/WNET
(PBS), a Member of the Board of DKMS; a
foundation dedicated to finding donors for
leukemia patients, and he is a Member of
the Board of Fundacion Pies Descalzos.
Mr. Santo Domingo is a Member of the
Board of Trustees of the Mount Sinai
Health System.
Mr. Santo Domingo is a graduate of
Harvard College.
Alejandro Santo Domingo
Non-Executive Director
Mr. Santo Domingo has served on
ContourGlobal’s Board of Directors
since October 2017. He is a Senior
Managing Director at Quadrant Capital
Advisors, Inc. in New York City.
Mr. Santo Domingo is a member of the
board of Anheuser-Busch Inbev (ABI).
He was a member of the Board of
Directors of SABMiller Plc, where he
was also Vice-Chairman of SABMiller
Plc. for Latin America. Mr. Santo
Domingo is Chairman of the Board
of Bavaria S.A. in Colombia.
In the non-profit sector, he is Chairman
of the Wildlife Conservation Society and
Fundación Mario Santo Domingo. He is
also a Member of the Board of Trustees of
the Metropolitan Museum of Art, a Member
Mariana Gheorghe
Independent Non-Executive
Director
Ms. Gheorghe has served as Non-
Executive Director on ContourGlobal’s
Board of Directors since 30th June 2019.
Prior to this, Ms. Gheorghe held several
senior finance roles, including working
as an international banker for the
European Bank for Reconstruction
and Development based in London
and as Deputy General Director for
the Romanian Ministry of Finance.
From 2006 to 2018, Ms. Gheorghe
was Chief Executive Officer and
President of the Romanian oil and
gas company OMV Petrom which
is part of the Austrian-listed OMV
Group. Ms. Gheorghe led OMV
Petrom's transformation following
privatization and oversaw its entry
into electricity generation.
She is currently a member of the
Supervisory Board of ING Group and
ING Bank, based in the Netherlands,
a position she has held since 2015.
In respect of not for profit sector
involvement, Ms. Gheorghe has served,
amongst other appointments, as a
board member of the Aspen Institute,
Foreign Investor Council, United Way
and UN Global Compact Romania.
Ms. Gheorghe graduated from both
the Academy for Economic Studies
and University of Bucharest Law School.
77
Board of Directors (continued)
Committee membership
Chair
R
Remuneration
N
Nomination
A
Audit & Risk
Dr. Alan Gillespie
Senior Independent Director
Dr. Gillespie has served on
ContourGlobal’s Board of Directors
since 2017.
Dr. Gillespie previously served as
a Non-Executive Director of Elan
Corporation plc from 1996 to 2007,
as Chairman of Ulster Bank Group from
2001 to 2008, as Senior Independent
Director of United Business Media plc
from 2008 to 2017 and as Senior
Independent Director of Old Mutual plc
2009 to 2018.
In the public sector, Dr. Gillespie served
as Chairman of The Northern Ireland
Industrial Development Board from
1996 to 2002, Chief Executive of the
United Kingdom’s Commonwealth
Development Corporation (CDC
Capital Partners) from 2000 to 2003,
where he was responsible for the
creation of Globeleq, an electricity
generation and transmission business
across the emerging markets, and
Chairman of The International Finance
Facility for Immunisation (IFFIm) from
2005 to 2012 and as Chairman of
the United Kingdom’s Economic and
Social Research Council (ESRC) from
2009 to 2018.
Dr. Gillespie’s investment banking
career spanned 10 years at Citigroup,
Inc. in London and Geneva, and 15
years at Goldman Sachs & Co. in
London, where he was a Partner
for 10 years.
Dr. Gillespie received an M.A. and Ph.D.
from the University of Cambridge and is
an Honorary Fellow at Clare College,
University of Cambridge.
Ronald Trächsel
Independent Non-Executive
Director
Mr. Trächsel has served on
ContourGlobal’s Board of
Directors since May 2015.
He currently serves as the Chief
Financial Officer of the BKW Group
and has been in that position since
2014. From 2007 to 2014, Mr. Trächsel
served as the Chief Financial Officer of
Sika Group, and from 1999 to 2007, he
held several positions at Vitra Group,
including Chief Financial Officer and
Chief Executive Officer.
Prior to joining Vitra Group, Mr. Trächsel
also worked at Ringier Group, Ciba-
Geigy Corporation and BDO/Visura.
Mr. Trächsel also serves on various
boards of directors, including the
board of Swissgrid AG, and KWO AG.
Mr. Trächsel received an M.B.A. from
the University of Bern.
R
N
A
A
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ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
i
S
t
r
a
t
e
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c
R
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G
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s
R
N
A
R
N
A
Board of Directors (continued)
Committee membership
Chair
R
Remuneration
N
Nomination
A
Audit & Risk
Dr. Alan Gillespie
Senior Independent Director
Dr. Gillespie has served on
ContourGlobal’s Board of Directors
since 2017.
Dr. Gillespie previously served as
a Non-Executive Director of Elan
Corporation plc from 1996 to 2007,
Capital Partners) from 2000 to 2003,
where he was responsible for the
creation of Globeleq, an electricity
generation and transmission business
across the emerging markets, and
Chairman of The International Finance
Facility for Immunisation (IFFIm) from
2005 to 2012 and as Chairman of
the United Kingdom’s Economic and
Social Research Council (ESRC) from
as Chairman of Ulster Bank Group from
2009 to 2018.
2001 to 2008, as Senior Independent
Director of United Business Media plc
from 2008 to 2017 and as Senior
Independent Director of Old Mutual plc
2009 to 2018.
Dr. Gillespie’s investment banking
career spanned 10 years at Citigroup,
Inc. in London and Geneva, and 15
years at Goldman Sachs & Co. in
London, where he was a Partner
In the public sector, Dr. Gillespie served
for 10 years.
as Chairman of The Northern Ireland
Industrial Development Board from
1996 to 2002, Chief Executive of the
United Kingdom’s Commonwealth
Development Corporation (CDC
Dr. Gillespie received an M.A. and Ph.D.
from the University of Cambridge and is
an Honorary Fellow at Clare College,
University of Cambridge.
Ronald Trächsel
Independent Non-Executive
Director
Mr. Trächsel has served on
ContourGlobal’s Board of
Directors since May 2015.
He currently serves as the Chief
Financial Officer of the BKW Group
and has been in that position since
2014. From 2007 to 2014, Mr. Trächsel
served as the Chief Financial Officer of
Sika Group, and from 1999 to 2007, he
held several positions at Vitra Group,
including Chief Financial Officer and
Chief Executive Officer.
Prior to joining Vitra Group, Mr. Trächsel
also worked at Ringier Group, Ciba-
Geigy Corporation and BDO/Visura.
Mr. Trächsel also serves on various
boards of directors, including the
board of Swissgrid AG, and KWO AG.
Mr. Trächsel received an M.B.A. from
the University of Bern.
A
Daniel Camus
Independent Non-Executive
Director
Mr. Camus has served on
ContourGlobal’s Board of Directors
since April 2016.
He most recently served as Chief
Financial Officer of the humanitarian
finance organization The Global Fund
to Fight AIDS, Tuberculosis and Malaria,
based in Geneva, a position he held
from 2012 to 2017. Mr. Camus also
serves on the Board of Directors
of Cameco Corp (Canada) and is a
member of the Board of Directors
of FIND Diagnostics in Geneva
(Switzerland) and MediAcdess
Gurantee (London).
From 2002 to 2011, Mr. Camus served
as Group CFO and head of Strategy
and International Activities of Electricité
de France SA (EDF), an integrated
energy operator with an international
presence, active in the generation,
distribution, transmission, supply
and trading of electrical energy.
Prior to joining EDF, Mr. Camus held
various roles in the chemical and
pharmaceutical industry in Germany,
France, the United States and Canada.
He held several senior responsibilities
with the Hoechst and Aventis Groups.
Mr. Camus received his PhD in
Economics from the Sorbonne
University and is a Laureate of the
Institute d’Études Politiques de Paris,
with specialization in finance.
Gregg M. Zeitlin
Non-Executive Director
Mr. Zeitlin has served on
ContourGlobal’s Board of Directors
since 2008.
Mr. Zeitlin co-founded Reservoir Capital
in 1998, serves as a Senior Managing
Director, and is a member of all fund
Investment Committees. He serves on
the boards of several Reservoir Capital
portfolio companies and has been
instrumental in the formation and
development of several investment
firms seeded by Reservoir Capital.
Prior to founding Reservoir Capital,
Mr. Zeitlin was a partner at Ziff Brothers
Investments. Before joining Ziff Brothers
Investments, Mr. Zeitlin was Vice
President, Financial Strategy for Ziff
Communications Company, where he
focused on strategic partnerships and
acquisitions, and ultimately, the sale of
the Ziff family’s operating businesses.
Previously, Mr. Zeitlin worked at Sunrise
Capital Partners and Wasserstein
Perella & Co.
M. Zeitlin graduated with Highest
Honors from the University of Texas
at Austin with a BBA in Finance.
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ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
79
Corporate Governance Report
CHAIRMAN’S
INTRODUCTION
Dear Shareholder,
On behalf of the Board, I am
pleased to introduce the Group’s
corporate governance statement
for 2020.
Corporate strategy setting and monitoring
The Board has overseen significant developments in our
strategic delivery over the course of 2020. At the forefront
of these has been the continued development of our growth
strategy, with the announcement of the acquisition of a
portfolio of natural gas-fired and Combined Heat and Power
assets totalling 1,502 MW located in the US and Trinidad
and Tobago on 7th December 2020, the establishment of a
CO2 intensity reduction target for 2030 and a commitment to
achieve net zero carbon emissions by 2050. We also made
the decision to commence a share buyback program of up to
£30m. As we reflect throughout this Report, this has all been
against the challenging backdrop of the COVID-19 pandemic.
We have taken time this year to understand the impact of the
pandemic on our operations, our financial performance and
our employees.
Stakeholder engagement
A key area of focus has been the Sustainability Strategy. The
Board reviewed and updated its Sustainability Strategy and
published the revision in its 2019 Corporate Sustainability
Report. The Nomination Committee has continued to discuss
the best method for formalizing the engagement channel
with the workforce. Since the year end it has been agreed
that Mariana Gheorghe will be appointed as the designated
Non-Executive Director for workforce engagement. She will
commence the role in H2 2021, working closely with the Chief
Human Resources Officer and Company Secretary, giving
both the newly appointed Chief Human Resources Officer
and Company Secretary time to embed into the Company.
Throughout the pandemic, there has been a concerted
effort to communicate with employees across the Company,
through either a communication channel or meetings in
person. More details on the ways in which we engaged
with stakeholders and factored such engagement into our
decision-making over the year are set out in the “Engaging
with our Stakeholders” (pages 23 to 27) and “s172 statement”
(pages 88 to 89) sections of this Report.
The Board is responsible for the long-term
success of the Company and our governance
framework helps to ensure that success.
Governance highlights for 2020
• Total announced dividend of $107.4m for
the year 2020 – in line with our progressive
dividend policy of 10% growth p.a.;
• Announcement of an up to £30m share
buyback program in April to support long-term
shareholder value;
• A task force was created during the outbreak
of COVID-19 to manage all aspects of our
response to the global pandemic, such as
mitigating risks to employees and preventing
disruption to our operations and contractual
arrangements with our customers and suppliers
and the Board has been actively engaged on
the task force’s activities. There has been
continuous monitoring and engagement with
key stakeholders both internally and externally.
The CEO offered and held 1:1 meetings with
employees during this difficult period.
• The mechanism for Board-level workforce
engagement was discussed during the year
and it has been agreed that a new model
for such engagement will be employed
from H2 2021 (as detailed in this report); and
• A detailed internally facilitated Board evaluation
review was undertaken, which included a
number of recommendations on how to
continue to improve our governance
arrangements in 2021.
Meeting attendance shown on page 91
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Corporate Governance Report
CHAIRMAN’S
INTRODUCTION
Dear Shareholder,
On behalf of the Board, I am
pleased to introduce the Group’s
corporate governance statement
for 2020.
Corporate strategy setting and monitoring
The Board has overseen significant developments in our
strategic delivery over the course of 2020. At the forefront
of these has been the continued development of our growth
strategy, with the announcement of the acquisition of a
portfolio of natural gas-fired and Combined Heat and Power
assets totalling 1,502 MW located in the US and Trinidad
and Tobago on 7th December 2020, the establishment of a
CO2 intensity reduction target for 2030 and a commitment to
achieve net zero carbon emissions by 2050. We also made
the decision to commence a share buyback program of up to
£30m. As we reflect throughout this Report, this has all been
against the challenging backdrop of the COVID-19 pandemic.
We have taken time this year to understand the impact of the
pandemic on our operations, our financial performance and
our employees.
Stakeholder engagement
A key area of focus has been the Sustainability Strategy. The
The Board is responsible for the long-term
success of the Company and our governance
framework helps to ensure that success.
Governance highlights for 2020
• Total announced dividend of $107.4m for
the year 2020 – in line with our progressive
dividend policy of 10% growth p.a.;
• Announcement of an up to £30m share
buyback program in April to support long-term
shareholder value;
• A task force was created during the outbreak
Board reviewed and updated its Sustainability Strategy and
of COVID-19 to manage all aspects of our
response to the global pandemic, such as
mitigating risks to employees and preventing
disruption to our operations and contractual
published the revision in its 2019 Corporate Sustainability
Report. The Nomination Committee has continued to discuss
the best method for formalizing the engagement channel
with the workforce. Since the year end it has been agreed
arrangements with our customers and suppliers
that Mariana Gheorghe will be appointed as the designated
and the Board has been actively engaged on
Non-Executive Director for workforce engagement. She will
the task force’s activities. There has been
commence the role in H2 2021, working closely with the Chief
continuous monitoring and engagement with
Human Resources Officer and Company Secretary, giving
key stakeholders both internally and externally.
both the newly appointed Chief Human Resources Officer
The CEO offered and held 1:1 meetings with
and Company Secretary time to embed into the Company.
employees during this difficult period.
• The mechanism for Board-level workforce
engagement was discussed during the year
and it has been agreed that a new model
for such engagement will be employed
from H2 2021 (as detailed in this report); and
• A detailed internally facilitated Board evaluation
review was undertaken, which included a
number of recommendations on how to
continue to improve our governance
arrangements in 2021.
Meeting attendance shown on page 91
Throughout the pandemic, there has been a concerted
effort to communicate with employees across the Company,
through either a communication channel or meetings in
person. More details on the ways in which we engaged
with stakeholders and factored such engagement into our
decision-making over the year are set out in the “Engaging
with our Stakeholders” (pages 23 to 27) and “s172 statement”
(pages 88 to 89) sections of this Report.
We have welcomed both the evaluation process and its
findings, which we believe have identified a significant
number of strengths in our current governance processes
alongside a number of areas in which we can continue to
improve. This is set out in more detail below on page 95.
Annual General Meeting
I would encourage all shareholders to vote on the resolutions
to be put to the Company’s Annual General Meeting on 12th
May 2021, all of which are supported by the Board. Further
details on the Annual General Meeting (AGM) are set out
in the Notice of AGM, which has been circulated to
shareholders separately.
Craig A. Huff
Chairman
information on the Board evaluation process is set out in the
Board performance review section on page 95.
Provision 41 of the Code: “Engagement with the workforce to
explain how executive remuneration aligns with wider company
pay policy.” The Board has, since-year end, decided to appoint
Ms Gheorghe as the designated Non-Executive Director to lead
on Board engagement with the workforce and engagement on
executive remuneration will be incorporated within her role.
This statement complies with sub-sections 2.1, 2.2(1), 2.3(1), 2.5,
2.7, 2.8A and 2.10 of Rule 7 of the Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority. The
information required to be disclosed in accordance with
sub-section 2.6 of Rule 7 is shown on pages 141 to 144.
Details on the Board’s approach to s172 of the Companies Act
2006 are shown on pages 88 to 89 of this Report. As a Board,
we always want to improve engagement with all our
stakeholders and will continue to consider ways of deepening
our engagement over the next 12 months to complement
existing stakeholder relationships.
Succession planning
There were no changes to the Board throughout 2020.
Nonetheless, succession planning at both the Board and
senior management level remains a key area of focus in
order to ensure that we have the resources and capabilities
at both levels to develop and execute our long-term strategy.
The search continues for a further independent Non-
Executive Director. Diversity is an important strategic area for
the Group and, with the formal adoption of a Board diversity
policy, we will be looking to integrate diversity considerations
further into our succession planning approach over the
course of 2021.
Board Effectiveness
This year we conducted an internal evaluation of the
Board and the Committees by way of a questionnaire.
This evaluation was led by the Chair with the assistance
of Independent Audit Limited, a specialist board evaluator.
Corporate Governance Code compliance
statement
This corporate governance statement, together with the
Nomination Committee report on pages 96 to 100, the Audit &
Risk Committee report on pages 101 to 109, and the Directors’
Remuneration report on pages 110 to 140, provide a description
of how the main principles of the UK Corporate Governance
Code 2018 (“the Code”) have been applied by the Company
during 2019. The Code is published by the Financial Reporting
Council and is available on its website at www.frc.org.uk. It is the
Board’s view that, throughout the year ended 31st December
2020, the Company fully complied with the relevant provisions
set out in the Code, with the following exceptions:
Provision 9 of the Code: “The chair should be independent
on appointment.” We set out the safeguards in place to ensure
independence in Board discussions and decision-making in
the Board Independence section of this Corporate
Governance Statement on page 92.
Provision 21 of the Code: “There should be a formal and
rigorous annual evaluation of the performance of the board, its
committees, the chair and individual directors. The chair should
consider having a regular externally facilitated board evaluation.
In FTSE 350 companies this should happen at least every three
years.” The Board had intended for the board evaluation in
2020 to be externally facilitated. However, due to the COVID-19
pandemic, the external evaluation has been postponed and will
now be conducted in 2021. As set out above, the evaluation for
2020 was supported by an external consultancy. Further
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Corporate Governance Report (continued)
BOARD LEADERSHIP
AND COMPANY PURPOSE
Management aims to ensure that information shared with our
Board is detailed enough to facilitate debate and to enable
a complete understanding of the content without becoming
unwieldy and unproductive. Further information on the
evaluation of the Board is set out on pages 93 to 95.
Matters reserved for the Board
The Board is responsible for the long-term sustainable
success of the Company by setting its strategy and
purpose, promoting the desired culture, and ensuring
that an appropriate risk management framework is in
place. The Board has the following principal roles:
An effective Board
Our Board is composed of highly skilled professionals
who bring a range of skills, perspectives and corporate
experience to our Boardroom (biographies are on pages
76 to 79). It is through this diversity, and its deep
understanding of our business, culture and stakeholders,
that the Board generates sustainable long-term value.
Information sharing
We recognize that a prerequisite of an effective Board is
the flow of high-quality information to the Board. Directors
use an electronic Board paper system which provides
immediate and secure access to documents. The Chairman
of the Board and the Chairs of the Committees set the
agendas for upcoming meetings with support from the
Company Secretary. Through our formal evaluation process,
we regularly review the quality of information provided to
the Board and promote improvements in this area, with the
support of the executive team and Company Secretary, as
and when required.
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Corporate Governance Report (continued)
BOARD LEADERSHIP
AND COMPANY PURPOSE
Management aims to ensure that information shared with our
Board is detailed enough to facilitate debate and to enable
a complete understanding of the content without becoming
unwieldy and unproductive. Further information on the
evaluation of the Board is set out on pages 93 to 95.
Matters reserved for the Board
The Board is responsible for the long-term sustainable
success of the Company by setting its strategy and
purpose, promoting the desired culture, and ensuring
that an appropriate risk management framework is in
place. The Board has the following principal roles:
An effective Board
Our Board is composed of highly skilled professionals
who bring a range of skills, perspectives and corporate
experience to our Boardroom (biographies are on pages
76 to 79). It is through this diversity, and its deep
understanding of our business, culture and stakeholders,
that the Board generates sustainable long-term value.
Information sharing
We recognize that a prerequisite of an effective Board is
the flow of high-quality information to the Board. Directors
use an electronic Board paper system which provides
immediate and secure access to documents. The Chairman
of the Board and the Chairs of the Committees set the
agendas for upcoming meetings with support from the
Company Secretary. Through our formal evaluation process,
we regularly review the quality of information provided to
the Board and promote improvements in this area, with the
support of the executive team and Company Secretary, as
and when required.
Role
Description
Strategic objective
Key stakeholders
PURPOSE,
VALUES AND
CULTUR E
CORPORATE
STR ATEGY
SETTING AND
MONITORING
ORGANIZATION
AND
LEADER SHIP
EFFECTIVENES S
OPERATIONAL
AND FINA NCI A L
PER FORMANCE
SHAREHOLDER
AND
STAK EHOLDER
ENGAGEMENT
We help management to shape the core values
and culture that will best enable the Group to 1)
deliver our mission to develop, acquire and
operate electricity generation businesses
worldwide, creating economic and social value
through better operations, and assisting the
communities where we work, and 2) adhere to
the highest standard of ethical, transparent
conduct in our dealings with customers,
regulators, suppliers and investors.
Further details of our purposes, values and culture
are set out on page 7.
We approve the strategic plan and objectives
and consider changes, and recommendations
of changes, to the Group’s capital structure. We
set and review performance indicators to assess
progress on the agreed strategy.
Further details on our strategic objectives are set
out on pages 28 and 29. Our key performance
indicators are set out on pages 30 and 31.
We ensure that the organization leadership,
design, capabilities and supporting systems match
the requirements of the Group and the diverse
strategies of our current and future businesses.
Further details of our leadership team are set
out on pages 76 to 79. Further details on our risk
management and internal control systems and
processes are set out on pages 62 to 71.
We review the performance of the Group in
the light of strategic aims, business plans and
budgets. With the support of the Audit and Risk
Committee, we approve the Group’s annual and
interim financial statements.
Further details of our financial performance are
set out on pages 55 to 59.
We put the balance of stakeholder interests and
the long-term interest of the Group at the heart
of all of our decision-making.
Further details of how we have engaged with
stakeholders over 2020 and how we have taken
stakeholders into account in our decision-making
process are set out on pages 23 to 27.
Operational
excellence
Shareholders,
investors and lenders
High growth
Customers and
suppliers
Employees
Governments and
regulators
Communities
High growth
Shareholders,
investors and lenders
Financial
strength
Customers and
suppliers
Employees
Governments and
regulators
Communities
Operational
excellence
Shareholders,
investors and lenders
Customers and
suppliers
Employees
Operational
excellence
Shareholders,
investors and lenders
Financial
strength
Customers and
suppliers
Employees
High growth
Shareholders,
investors and lenders
Customers and
suppliers
Employees
Governments and
regulators
Communities
The Board maintains a formal schedule of matters which are reserved solely for its approval, which sets out
the Board’s responsibilities in full. This was last reviewed in December 2020 and is available on our website at:
https://www.contourglobal.com/corporate-governance.
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Corporate Governance Report (continued)
Month
MEETINGS
KEY BOA RD
DECI SIONS/
DISC USSIONS
March
Board
April
Board
Audit & Risk Committee
(ARC)
Remuneration (Rem)
Nomination (Nom)
• Preliminary Results
• Approval of the Annual
Report
• Approval of share buyback
program (subsequently
extended by the Board in
June and September 2020)
May
Board
ARC
Rem
• Q1 update and FY outlook
• COVID-19 measures to
protect employees
• Operational and Commercial
Risk assessment
• Financial performance
• Strategic update, incl.
COVID-19
• Financial performance
• Investor relations
• Legal and regulatory update
• Review of Stakeholder
engagement
• Modern Slavery statement
reviewed and updated
KEY STAK EHOLDE RS
• Shareholders, investors
• Shareholders, investors
• All stakeholders
and lenders
• Governments and regulators
and lenders
• Customers and clients
• Employees
Purpose, values and culture
The importance of purpose, values and culture
Purpose
Why we do what we do
Values
The qualities we embody
Culture
How we work together
Our intranet is used as a platform for employees to access
our policies and be kept fully informed of the latest Group
news, and to receive updates and share information on all
aspects of the business.
If the Board is concerned or dissatisfied with any behaviors or
actions, it seeks assurance from the Executive Management
Board that corrective action is being taken. The Board did
not have to seek corrective action during the course of 2020.
Purpose and values
The Board has established the Group’s purpose and values
which are set out in detail on page 7. The Group’s purpose
was last reviewed by the Board during its strategy day in
October 2020. Further details of that session are set out
subsequently on pages 85 and 86.
Sustainability
Sustainability and ESG considerations have been a key area
of discussion for the Board over 2020. Sustainability is at the
very core of our corporate strategy, and we report our work
in this area further both throughout this Annual Report,
through our website and in our Annual Sustainability Report.
In respect of ESG, the Board recognizes and is supportive
of ESG factors continuing to gain importance with investors.
ESG will increasingly impact upon companies’ ability to
access capital, capital allocation and portfolio composition.
The Board has therefore dedicated time in 2020 both to
understanding investor expectations around ESG strategies
and disclosures, and to reviewing the Company’s ESG
strategy. Our ESG strategy commits to clear and meaningful
targets but leaves strategic flexibility with regards to the
portfolio composition and generation mix moving forward.
Culture
Our culture is a key strength of our business, the benefits
of which are evident in our employees’ engagement, risk
management, internal control and our health and safety
(H&S) and compliance performance. Our culture is
described on pages 7 in the strategic report.
The Board monitors and assesses the culture of the Group
by regularly meeting with management and reviewing the
outcomes of employee compliance, audit and H&S surveys.
The Board also assesses cultural indicators such as
management’s attitude to risk, behaviors and compliance
with the Group’s policies and procedures. The Executive
Management Board has delegated responsibility for ensuring
that policies and behaviors set at Board level are effectively
communicated and implemented across the business.
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Corporate Governance Report (continued)
Month
MEETINGS
KEY BO ARD
DECISIONS/
DISCUSSI ONS
April
Board
March
Board
(ARC)
Audit & Risk Committee
Remuneration (Rem)
Nomination (Nom)
May
Board
ARC
Rem
• Preliminary Results
• Q1 update and FY outlook
• Strategic update, incl.
• Approval of the Annual
• COVID-19 measures to
COVID-19
Report
protect employees
• Financial performance
• Approval of share buyback
• Operational and Commercial
• Investor relations
program (subsequently
extended by the Board in
June and September 2020)
Risk assessment
• Financial performance
• Legal and regulatory update
• Review of Stakeholder
engagement
• Modern Slavery statement
reviewed and updated
KEY STAK EHOLDERS
and lenders
• Governments and regulators
• Customers and clients
and lenders
• Employees
Purpose, values and culture
The importance of purpose, values and culture
Purpose
Why we do what we do
Values
The qualities we embody
Culture
How we work together
Our intranet is used as a platform for employees to access
our policies and be kept fully informed of the latest Group
news, and to receive updates and share information on all
aspects of the business.
If the Board is concerned or dissatisfied with any behaviors or
actions, it seeks assurance from the Executive Management
Board that corrective action is being taken. The Board did
not have to seek corrective action during the course of 2020.
Purpose and values
Sustainability
The Board has established the Group’s purpose and values
which are set out in detail on page 7. The Group’s purpose
was last reviewed by the Board during its strategy day in
October 2020. Further details of that session are set out
subsequently on pages 85 and 86.
Sustainability and ESG considerations have been a key area
of discussion for the Board over 2020. Sustainability is at the
very core of our corporate strategy, and we report our work
in this area further both throughout this Annual Report,
through our website and in our Annual Sustainability Report.
In respect of ESG, the Board recognizes and is supportive
of ESG factors continuing to gain importance with investors.
ESG will increasingly impact upon companies’ ability to
access capital, capital allocation and portfolio composition.
The Board has therefore dedicated time in 2020 both to
understanding investor expectations around ESG strategies
and disclosures, and to reviewing the Company’s ESG
strategy. Our ESG strategy commits to clear and meaningful
targets but leaves strategic flexibility with regards to the
portfolio composition and generation mix moving forward.
Culture
Our culture is a key strength of our business, the benefits
of which are evident in our employees’ engagement, risk
management, internal control and our health and safety
(H&S) and compliance performance. Our culture is
described on pages 7 in the strategic report.
The Board monitors and assesses the culture of the Group
by regularly meeting with management and reviewing the
outcomes of employee compliance, audit and H&S surveys.
The Board also assesses cultural indicators such as
management’s attitude to risk, behaviors and compliance
with the Group’s policies and procedures. The Executive
Management Board has delegated responsibility for ensuring
that policies and behaviors set at Board level are effectively
communicated and implemented across the business.
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August
Board
ARC
Rem
October
Board
Nom
November
Board
December
Board
ARC
Rem
Nom
• COVID-19 Operational and
Commercial Risk assessment
• Review of Principal risks
• Q2 update and FY outlook
• Approval of Interim Results
• Growth pipeline
• Investor Relations
• Reviewed and approved a
new Sustainability Strategy
and key performance
indicators
• Q3 update, incl. COVID-19
• Strategic growth opportunities
• Bond and refinancing
discussions
• Acquisition of US and
Trinidad & Tobago Portfolio
• Acquisition of US and
Trinidad & Tobago Portfolio
• Approval of the Company’s
revised refinancing
arrangements
• Review and approval of 2021
budget
• Shareholders, investors
• Shareholders, investors
• All stakeholders
• Shareholders, investors
• Shareholders, investors
• Shareholders, investors
• Shareholders, investors
and lenders
• Governments and regulators
and lenders
• Communities
and lenders
• Customers and clients
• Communities
and lenders
• Customers and clients
• Communities
We recognize shareholder, investor body and government
expectations in terms of corporate disclosure on climate
change and welcome the recent change in listing
requirements in the UK that mandate certain disclosures
against the Task Force on Climate-related Financial
Disclosures (TCFD) recommendations. As a Board, we
will continue to focus on our work in combating climate
change over the course of 2021 and will report against
TCFD recommendations in our 2021 Annual Report.
For further information on our sustainability activities,
please see our Company sustainability report available
on our website, www.contourglobal.com.
Workforce engagement mechanisms
We are mindful of the provisions in the Code around
workforce engagement; however, the Board did not adopt
any of the recommended methods in the Code on workforce
engagement in 2020. Following year-end, the Board decided
to appoint Mariana Gheorghe as the designated workforce
representative director, with effect from H2 2021. In 2020,
the Board received presentations at regular intervals from
executive management on workforce issues and regularly
considers other data sources, including employee surveys
and themes emerging from exit interviews, to help to inform
our discussions. We set out the views of our workforce, and
how we have responded to those views in 2020, in our
stakeholder engagement section on page 26.
Whilst we believe that the current arrangements allow for
us to have a balanced picture of workforce views, obtained
from a variety of different data sources, and are therefore
considered effective, the Board is eager to remain in line with
developing good practice in this area and has, as set out
above, decided to appoint a designated non-executive
director for workforce engagement, as per one of the
recommended methods in the Code for workforce
engagement with effect from H2 2021.
Corporate strategy setting and monitoring
This has been a particularly demanding year for the Board
in terms of corporate strategy, as reflected throughout this
Annual Report. The Board holds dedicated strategy sessions
to undertake a careful review of our strategic positioning,
with the last such session being held in October 2020.
Further details of that session are set out below.
As set out in the strategic report on page 33, we have
delivered excellent progress on our growth strategy. The
acquisition of a portfolio of natural gas-fired and Combined
Heat and Power assets totalling 1,502 MW located in the US
and Trinidad and Tobago, which completed in February 2021,
has been a key area of discussion for the Board over 2020,
and we are looking forward to integrating these businesses
over the course of 2021.
The Board remains confident that our acquisitions strategy
will continue to provide demonstrable long-term value to
our shareholders. Through our continuing regular review of
the business development pipeline, which remains healthy,
and supported by our continued strong financial and liquidity
position, we will continue to remain alert to attractive
acquisitive opportunities that further our purpose and support
long-term shareholder value. The Board also continues to
receive regular updates on the implementation of our
organic growth strategy.
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Corporate Governance Report (continued)
The considerable strategic activity of 2020 was undertaken
against the backdrop of the COVID-19 pandemic and this
has been a focal area of Board discussions over the course
of 2020, not just in respect of potential immediate financial,
operational, reputational and stakeholder impacts but also
on long-term structural changes that may impact on the
Company’s business model. As a Board, we are pleased
to note that the pandemic has not, to date, had the same
financial or indeed operational impact upon us as it has
on other businesses and sectors. Our assessment of the
impact of the pandemic upon our stakeholders, and further
details of the decisions we took in response to the pandemic,
are set out in the stakeholder engagement section on pages
23 to 27 and in our s172 statement (page 88 and 89).
Nonetheless, the Board will continue to focus carefully
in 2021 on the ongoing impact of COVID-19, including an
assessment of how the business model may need to adapt,
and any consequential changes to the Company’s longer-
term aims and prospects.
Annual strategic discussion
On an annual basis, the Board conducts a review of its
strategy to ensure it remains relevant, flexible and capable
of adapting to our changing environment.
remuneration policy are set out in the Remuneration
Committee Report on pages 117 to 127;
• Continued review of improvement data on the Group’s
“5 Whys” – these are significant accomplishments that
speak to the growth of a continuous improvement culture
at ContourGlobal;
• Evaluated the performance of the Board, its Committees
and all Directors to ensure that the composition of the
Board and Committees remains appropriate and that the
procedures and processes underpinning the Board and
Committees continue to be effective. Further details on
the evaluation is set out on pages 93 to 95;
• Review of succession planning arrangements at both the
Board and senior management level, through both the
Board and the Nomination Committee. Our approach to
Board and senior management succession planning is
set out in more detail on pages 47 and 93 and in the
Nomination Committee report on pages 96 to 98; and
• Approval of a diversity policy for the Board and the
Company’s Modern Slavery Statement.
Operational and financial performance
The diversity of our businesses demands highly tailored
operating and financial performance management.
Through its review, the Board can assess and identify
changing or emerging risks which could impact on the
Group in the short and medium term (further information
on our principal risks is on pages 62 to 71).
The Board met in October 2020 to review, discuss and
challenge the strategy. The discussion included:
• The impact of key industry trends and drivers on the
Company’s strategy and the risks and opportunities
of its strategic positioning;
• The political environment in the markets in which the
Company operates;
• How new technologies may impact on our business;
• Review of current financial framework and capital allocation
and the financial implications of the various strategic
alternatives;
• The impact and implications of ESG perspectives on
the Group’s strategy and portfolio composition; and
• Key markets and opportunities for growth
Organization and leadership effectiveness
We have taken a number of important steps over the course
to improve organizational and leadership effectiveness
over the course of 2020. A number of those steps are
detailed below:
• Engagement with shareholders in respect of the
development of our remuneration policy, to ensure that the
incentives in place for our Executives continue to serve to
deliver long-term shareholder value. Further details on the
One significant decision made by the Board over the course
of 2020 was to pursue a share buyback program. The Board
agreed to pursue this program in view of the share price not
being considered reflective of the fundamental value and
resilience of the underlying business. The Board decided to
subsequently extend this program in June 2020, September
2020 and January 2021.
Following our adoption in 2019 of a progressive dividend
policy intended to grow the dividend each year, comprising
a move to quarterly dividend payouts and an increased
dividend growth guidance to 10% per annum, we were
pleased to confirm a total dividend to shareholders of
$107.4m for the year 2020, in line with our revised and
progressive dividend policy. In 2020, the Board rigorously
challenged a number of scenarios underpinning this
dividend policy and remains confident that the policy
remains appropriate and in the long-term interest of the
Company and its shareholders.
During 2020, we made important progress on developing
our risk management and internal control systems and
processes, working in collaboration with our external and
internal auditors. The Board and Audit and Risk Committee
have spent significant time considering the Company’s
Principal Risks and Uncertainties, alongside potential
emerging risks and their impact on the business should they
materialize. The Board has reviewed the Company’s Principal
Risks and Uncertainties, which are set out on pages 62 to 71.
The Group’s governance structure for risk management is
illustrated on page 63.
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Corporate Governance Report (continued)
The considerable strategic activity of 2020 was undertaken
remuneration policy are set out in the Remuneration
against the backdrop of the COVID-19 pandemic and this
Committee Report on pages 117 to 127;
has been a focal area of Board discussions over the course
of 2020, not just in respect of potential immediate financial,
operational, reputational and stakeholder impacts but also
on long-term structural changes that may impact on the
Company’s business model. As a Board, we are pleased
to note that the pandemic has not, to date, had the same
financial or indeed operational impact upon us as it has
on other businesses and sectors. Our assessment of the
impact of the pandemic upon our stakeholders, and further
details of the decisions we took in response to the pandemic,
are set out in the stakeholder engagement section on pages
23 to 27 and in our s172 statement (page 88 and 89).
Nonetheless, the Board will continue to focus carefully
in 2021 on the ongoing impact of COVID-19, including an
assessment of how the business model may need to adapt,
and any consequential changes to the Company’s longer-
term aims and prospects.
Annual strategic discussion
On an annual basis, the Board conducts a review of its
strategy to ensure it remains relevant, flexible and capable
of adapting to our changing environment.
Through its review, the Board can assess and identify
changing or emerging risks which could impact on the
Group in the short and medium term (further information
on our principal risks is on pages 62 to 71).
• Continued review of improvement data on the Group’s
“5 Whys” – these are significant accomplishments that
speak to the growth of a continuous improvement culture
at ContourGlobal;
• Evaluated the performance of the Board, its Committees
and all Directors to ensure that the composition of the
Board and Committees remains appropriate and that the
procedures and processes underpinning the Board and
Committees continue to be effective. Further details on
the evaluation is set out on pages 93 to 95;
• Review of succession planning arrangements at both the
Board and senior management level, through both the
Board and the Nomination Committee. Our approach to
Board and senior management succession planning is
set out in more detail on pages 47 and 93 and in the
Nomination Committee report on pages 96 to 98; and
• Approval of a diversity policy for the Board and the
Company’s Modern Slavery Statement.
Operational and financial performance
The diversity of our businesses demands highly tailored
operating and financial performance management.
One significant decision made by the Board over the course
of 2020 was to pursue a share buyback program. The Board
agreed to pursue this program in view of the share price not
being considered reflective of the fundamental value and
resilience of the underlying business. The Board decided to
The Board met in October 2020 to review, discuss and
subsequently extend this program in June 2020, September
challenge the strategy. The discussion included:
2020 and January 2021.
• The impact of key industry trends and drivers on the
Following our adoption in 2019 of a progressive dividend
Company’s strategy and the risks and opportunities
policy intended to grow the dividend each year, comprising
of its strategic positioning;
• The political environment in the markets in which the
Company operates;
• How new technologies may impact on our business;
• Review of current financial framework and capital allocation
and the financial implications of the various strategic
alternatives;
• The impact and implications of ESG perspectives on
the Group’s strategy and portfolio composition; and
• Key markets and opportunities for growth
Organization and leadership effectiveness
We have taken a number of important steps over the course
to improve organizational and leadership effectiveness
over the course of 2020. A number of those steps are
detailed below:
• Engagement with shareholders in respect of the
development of our remuneration policy, to ensure that the
incentives in place for our Executives continue to serve to
deliver long-term shareholder value. Further details on the
a move to quarterly dividend payouts and an increased
dividend growth guidance to 10% per annum, we were
pleased to confirm a total dividend to shareholders of
$107.4m for the year 2020, in line with our revised and
progressive dividend policy. In 2020, the Board rigorously
challenged a number of scenarios underpinning this
dividend policy and remains confident that the policy
remains appropriate and in the long-term interest of the
Company and its shareholders.
During 2020, we made important progress on developing
our risk management and internal control systems and
processes, working in collaboration with our external and
internal auditors. The Board and Audit and Risk Committee
have spent significant time considering the Company’s
Principal Risks and Uncertainties, alongside potential
emerging risks and their impact on the business should they
materialize. The Board has reviewed the Company’s Principal
Risks and Uncertainties, which are set out on pages 62 to 71.
The Group’s governance structure for risk management is
illustrated on page 63.
The 2021 AGM is to be held on 12th May 2021. The Board is
keen to ensure that, notwithstanding the current restrictions
on travel and public gatherings in the UK in response to the
COVID-19 pandemic, that the AGM continues to provide
a key opportunity for shareholders to engage with the
Directors and the chairs of each of the Board Committees.
Annual Report
Our Annual Report is available to all shareholders. Through
our electronic communication initiatives, we aim to make
our Annual Report as accessible as possible. Shareholders
can opt to receive a hard copy in the post, or PDF copies
via email or from our website. Additionally, if a shareholder
holds their ContourGlobal ordinary shares in a nominee
account and encounters difficulty receiving our Annual
Report via their nominee provider, they are welcome to
contact the Company Secretary to request a copy.
Corporate website
Our website, www.contourglobal.com, has a dedicated
investor section which includes our Annual Reports, results
presentations (which are made available to analysts and
investors at the time of the half and full-year results) and
our financial and dividend calendar for the upcoming year.
Senior Independent Director
If shareholders have any concerns, which the normal
channels of communication to the CEO, CFO or Chairman
have failed to resolve, or for which contact is inappropriate,
then our Senior Independent Director, Alan Gillespie, is
available to address them.
Other contacts
Contact details for our Investor Relations team, Company
Secretary and our Registrars are available on page 228.
Health and safety matters continue to be a focal area for the
business, and the Board receives periodic reports on health
and safety practices across different sites within the Group.
As at the time of this report, the Group had 100 days without
an LTI (lost time injury). We are pleased with this achievement
and remain committed as a Board and as a Group to health
and safety, and the Group’s Target Zero objective.
We also review the Company’s Annual Report to check it is
fair, balanced and understandable, and approve the going
concern and viability statements, alongside the statement of
Directors’ responsibilities, for inclusion in the Annual Report.
The process that the Board, with the support of the Audit and
Risk Committee, undertakes to ensure that the Annual Report
is fair, balanced and understandable is set out in the Audit
and Risk Committee report on pages 101 to 109. Further
information on the going concern and viability statements
can be found on page 72.
Shareholder engagement
How do we engage with our shareholders?
Shareholders play a valuable role in safeguarding the Group’s
corporate governance through, for example, the annual
re-election of Directors, monitoring and rewarding their
performance, and their engagement and constructive
dialogue with the Board.
Shareholder consultation
We will always seek to engage with shareholders when
considering material changes to either our Board, strategy
or remuneration policies. We have been particularly
conscious in 2020 of the need to engage with a number
of our shareholders to address any issues or uncertainties
associated with the COVID-19 pandemic. Further information
is set out in our stakeholder engagement section on pages
23 to 27 on how we have engaged with shareholders over
2020, the themes emerging from that engagement, and the
ways in which we have responded to those themes.
Investor meetings, presentations and asset
tours
Investor meetings are predominantly attended by our
CEO, Chief Financial Officer and at least one other senior
executive. Views that were expressed, either during or
following the meetings, are recorded and circulated to
all Directors on a regular basis.
Annual General Meeting (AGM)
Our 2020 Annual General Meeting was held on 27th May
2020 and we were delighted to receive in excess of 95%
of votes in favour of all our resolutions. We were pleased
that, despite the unprecedented circumstances in which the
AGM was held in 2020 in view of the COVID-19 pandemic,
engagement from shareholders remained strong. In total,
93.7% of our shareholders (voting capital) voted at the
2020 AGM.
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Corporate Governance Report (continued)
Section 172 – compliance statement
The Board of Directors confirms that during the year under review, it has acted to promote the long-term success
of the Company for the benefit of shareholders, whilst having due regard to the matters set out in Section 172(1)(a)
to (f) of the Companies Act 2006, being:
(a) the likely consequences of any decision in the long term
(b) the interests of the Company’s employees
(c) the need to foster the Company’s business relationships with suppliers, customers and others
(d) the impact of the Company’s operations on the community and the environment
(e) the desirability of the Company maintaining a reputation for high standards of business conduct; and
(f)
the need to act fairly between members of the Company
Issues, factors and stakeholders
The Board has direct engagement principally with our
employees and shareholders but is also kept fully apprised
of the material issues of other stakeholders through the
Executive Directors, reports from senior management and
external advisors. On pages 23 to 27, we outline the ways
in which the Board and management have engaged with
key stakeholders and the material issues that they have
raised with us.
Stakeholder engagement not only allows the Board to
understand the impact of its decisions on key stakeholders,
but also ensures it is kept aware of any significant changes in
the market, including the identification of emerging trends and
risks, which in turn can be factored into its strategy discussions.
Methods used by the Board to fulfil their
s172 duties
The main methods used by the Directors to perform their
duties include:
• An annual strategy review which assesses the long-term
sustainable success of the Group and our impact on key
stakeholders (see page 86);
• The Board’s procedures have recently been updated to
encourage further consideration and analysis underpinning
all material decisions requiring Board approval on potential
or actual impact on one or more of our stakeholder groups.
Such analysis will assist the Directors in performing their
duties under s172 and provide the Board with assurance
that the potential impacts on our stakeholders are being
carefully considered by management when developing
plans for Board approval;
• The Board’s risk management procedures identify the
potential consequences of decisions in the short, medium
and long term so that mitigation plans can be put in place
to prevent, reduce or eliminate risks to our business and
wider stakeholders (see pages 62 to 71);
• The Board sets the Group’s purpose, values and strategy
and ensures it is aligned with our culture (see page 7);
• Direct and indirect stakeholder engagement, alongside
details of the themes emerging from such engagement
(see pages 23 to 27);
• External assurance is received through audits, stakeholder
surveys and reports from brokers and advisors; and
• Specific training for our Directors and senior managers,
including tailored induction processes for new Directors
and ongoing training on strategic, legal and regulatory
developments (see pages 94).
The table on the following page sets out where relevant
disclosure against each s172 factor can be found.
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The likely consequences of any decision in the long term
• Our Business model (pages 12 and 13)
• Our strategy for growth (pages 29 and 39)
The interests of the Company’s employees
The need to foster the Company’s business relationships
The impact of the Company’s operations on the community
and the environment
• Our people (pages 46 to 49)
• Health and Safety (pages 42 to 44)
• Our KPIs (pages 30 and 31)
• Business review (pages 34 to 37)
• Our four sustainability principles (pages 38 and 39)
• Environment (pages 50 and 51)
• Communities (pages 52 and 53)
• Managing our principal risks (pages 62 to 71)
Corporate Governance Report (continued)
Section 172 – compliance statement
The Board of Directors confirms that during the year under review, it has acted to promote the long-term success
of the Company for the benefit of shareholders, whilst having due regard to the matters set out in Section 172(1)(a)
to (f) of the Companies Act 2006, being:
(a) the likely consequences of any decision in the long term
(b) the interests of the Company’s employees
(c) the need to foster the Company’s business relationships with suppliers, customers and others
(d) the impact of the Company’s operations on the community and the environment
(e) the desirability of the Company maintaining a reputation for high standards of business conduct; and
(f)
the need to act fairly between members of the Company
Issues, factors and stakeholders
Methods used by the Board to fulfil their
The Board has direct engagement principally with our
employees and shareholders but is also kept fully apprised
of the material issues of other stakeholders through the
Executive Directors, reports from senior management and
s172 duties
duties include:
The main methods used by the Directors to perform their
external advisors. On pages 23 to 27, we outline the ways
• An annual strategy review which assesses the long-term
in which the Board and management have engaged with
key stakeholders and the material issues that they have
sustainable success of the Group and our impact on key
stakeholders (see page 86);
raised with us.
Stakeholder engagement not only allows the Board to
understand the impact of its decisions on key stakeholders,
but also ensures it is kept aware of any significant changes in
the market, including the identification of emerging trends and
risks, which in turn can be factored into its strategy discussions.
• The Board’s procedures have recently been updated to
encourage further consideration and analysis underpinning
all material decisions requiring Board approval on potential
or actual impact on one or more of our stakeholder groups.
Such analysis will assist the Directors in performing their
duties under s172 and provide the Board with assurance
that the potential impacts on our stakeholders are being
carefully considered by management when developing
plans for Board approval;
• The Board’s risk management procedures identify the
potential consequences of decisions in the short, medium
and long term so that mitigation plans can be put in place
to prevent, reduce or eliminate risks to our business and
wider stakeholders (see pages 62 to 71);
• The Board sets the Group’s purpose, values and strategy
and ensures it is aligned with our culture (see page 7);
• Direct and indirect stakeholder engagement, alongside
details of the themes emerging from such engagement
(see pages 23 to 27);
• External assurance is received through audits, stakeholder
surveys and reports from brokers and advisors; and
• Specific training for our Directors and senior managers,
including tailored induction processes for new Directors
and ongoing training on strategic, legal and regulatory
developments (see pages 94).
The table on the following page sets out where relevant
disclosure against each s172 factor can be found.
Maintaining a reputation for high standards of business
conduct
• Business review (pages 34 to 37)
• Engaging with our stakeholders (pages 23 to 27)
Acting fairly between members of the Company
• Engaging with our stakeholders (pages 23 to 27)
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Major Board decisions during 2020
The Board factored the needs and concerns of our
stakeholders into its decisions in accordance with s172
of the Companies Act 2006.
The major decisions taken by the Board and its Committees
during 2020 include:
• The Company’s response to the COVID-19 pandemic,
its impact upon our investors, our employees, our
customers and suppliers, the communities we work in,
and on governments and the regulatory environment
in which we operate, and the potential impact of the
pandemic on our purpose and long-term value generation.
This is discussed throughout the Annual Report (see pages
2, 3, 10 to 19, 22 to 27, 40, 41, 49, 54, 61, 73, 84 and 85);
• Approval of our sustainability strategy (see pages 17, 80
and 85);
• Approval of the Company’s revised refinancing
arrangements (see pages 25, 59 and 85);
• Acquisition of 1.5 GW contracted power plants in the
US and Caribbean (see pages 2, 11, 16, and 33); and
• Adoption of our share buyback program (see pages
84, 86 and 141).
The impact on all stakeholders was an integral part of
these decisions, and the way in which stakeholder impact
was considered is set out above and in our stakeholder
engagement section of the Annual Report (see pages
23 to 27).
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Corporate Governance Report (continued)
DIVISION OF
RESPONSIBILITIES
Board roles
There is clear division between executive and non-executive responsibilities which ensures accountability and oversight. The
roles of Chairman and Chief Executive Officer are separately held, and their responsibilities are well defined, set out in writing
and regularly reviewed by the Board. The role and remits of each of the Board Committees, alongside details of how each
Committee has fulfilled that role and remit over 2020, are set out in the Committee reports.
Board of Directors
Chairman: Craig A. Huff
Chief Executive Officer
Audit and Risk Committee
Nomination Committee
Remuneration Committee
• Ronald Trächsel (Chairman)
• Daniel Camus
• Dr. Alan Gillespie
• Craig A. Huff (Chairman)
• Mariana Gheorghe
• Dr. Alan Gillespie
• Alejandro Santo Domingo
• Daniel Camus
• Daniel Camus (Chairman)
• Mariana Gheorghe
• Dr. Alan Gillespie
Key:
Operational excellence
High Growth
Financial strength
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Corporate Governance Report (continued)
DIVISION OF
RESPONSIBILITIES
Board roles
There is clear division between executive and non-executive responsibilities which ensures accountability and oversight. The
roles of Chairman and Chief Executive Officer are separately held, and their responsibilities are well defined, set out in writing
and regularly reviewed by the Board. The role and remits of each of the Board Committees, alongside details of how each
Committee has fulfilled that role and remit over 2020, are set out in the Committee reports.
Board of Directors
Chairman: Craig A. Huff
Chief Executive Officer
Audit and Risk Committee
Nomination Committee
Remuneration Committee
• Ronald Trächsel (Chairman)
• Craig A. Huff (Chairman)
• Daniel Camus
• Dr. Alan Gillespie
• Mariana Gheorghe
• Dr. Alan Gillespie
• Alejandro Santo Domingo
• Daniel Camus
• Daniel Camus (Chairman)
• Mariana Gheorghe
• Dr. Alan Gillespie
Key:
Operational excellence
High Growth
Financial strength
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Chairman
Mr Craig A. Huff currently serves as Chairman of the Board.
The role of the Chairman includes:
• Responsibility for the effective running of the Board and
ensuring it is appropriately balanced to deliver the Group’s
strategic objectives
• Promoting a Boardroom culture that is rooted in the
principles of good governance and enables transparency,
debate and challenge
• Ensuring that the Board as a whole plays a full and
constructive part in the development of strategy and
that there is sufficient time for Boardroom discussion
• Effective engagement between the Board and its shareholders
Senior Independent Director
Dr Alan Gillespie currently serves as the Senior Independent
Director (SID). The role of the SID includes:
• Providing a ‘sounding board’ for the Chairman in matters
of governance or the performance of the Board
• Being available to shareholders if they have concerns
which have not been resolved through the normal
channels of communication with the Company
• Leading a meeting of the Non-Executive Directors without
the Chairman present to appraise the performance of the
Chairman at least once a year
• Acting as an intermediary for Non-Executive Directors
when necessary
• Acting as an independent point of contact in the
Group’s whistleblowing procedures
Non-Executive Directors
• Providing constructive challenge to our executives,
helping to develop proposals on strategy and monitoring
performance against our KPIs
• Ensuring that no individual or group dominates the
Board’s decision-making
• Promotion of the highest standards of integrity and
corporate governance throughout the Company and
particularly at Board level
• Determining appropriate levels of remuneration for
the senior executives
• Reviewing the integrity of financial reporting and ensuring
that financial controls and systems of risk management
are robust
Board members and attendance
Chief Executive Officer (CEO)
• Executing the Group’s strategy and commercial objectives
together with implementing the decisions of the Board and
its Committees
• Keeping the Chairman and Board apprised of important
and strategic issues facing the Group
• Ensuring that the Group’s business is conducted with the
highest standards of integrity, in keeping with our culture
• Managing the Group’s risk profile, including the
maintenance of appropriate health, safety and
environmental policies
Company Secretary
Link Company Matters Limited was appointed as the
Company Secretary in November 2020. The responsibilities
of the Company Secretary include:
• Responsibility for compliance with Board procedures and
supporting the Chairman
• Ensuring the Board has high-quality information, adequate
time and appropriate resources to function effectively
• Advising and keeping the Board updated on corporate
governance developments
• Considering Board effectiveness in conjunction with the
Chairman
• Facilitating induction programs and assisting with
professional development
• Providing advice, services and support to all Directors,
as required
The appointment and removal of the Company Secretary
are at the discretion of the Board, as set out in the Matters
Reserved for the Board.
Executive Management Board
Delivering the Board’s strategy is the collective
responsibility of the Executive Management Board (EMB)
and it is composed of two Executive Directors and circa
seven Executive Vice Presidents. To assist the EMB, a
number of supporting committees have been established,
to provide additional oversight of key business activities
and risks. The EMB usually meets several times per quarter
and can also meet on an ad hoc basis enabling the team
to handle complex transactions and make quick decisions,
with the overall aim of creating value and driving
development and value growth.
Board
Audit and Risk Committee
Nomination Committee
Remuneration Committee
Craig A. Huff
Joseph C. Brandt
Stefan Schellinger
Alejandro Santo Domingo
Mariana Gheorghe
Dr. Alan Gillespie
Ronald Trächsel
Daniel Camus
Gregg M. Zeitlin
5
5
5
5
5
5
5
5
5
2
2
2
2
2
4
4
4
In addition to the scheduled board meetings, there were ten ad hoc Board meetings and written resolutions.
There was one other meeting in addition to the five scheduled Remuneration Committee meetings
5
5
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Corporate Governance Report (continued)
Board independence
Chairman
As a representative of the Company’s largest shareholder,
our Chairman, Craig Huff, is not considered to be
independent under the Code, as he was not considered
independent on appointment to the Board upon the
Company’s listing in 2017. The Board has determined
that the Chairman’s tenure is regarded as having
commenced following the Company’s IPO in 2017.
Non-Executive Directors
Together with the Chairman, two other Non-Executive
Directors (Alejandro Santo Domingo and Gregg Zeitlin)
are not considered as independent under the Code.
Notwithstanding this, the Board considers that the Non-
Executive Directors as a unit play an important role in
ensuring that no individual or group dominates the Board’s
decision-making. It is therefore of paramount importance
that their independence of mind and operation is maintained.
At each Board meeting, the Chairman meets with the
Non-Executive Directors without executive management
being present. These meetings are useful to safeguard the
independence of our Non-Executive Directors by providing
them with time to discuss their views in a private context.
Any Director who has concerns about the running of the
Group or a proposed course of action is encouraged to
express those concerns for further discussion and minuting
if consensus is not reached. No such concerns were raised
during 2020. All Directors have confirmed (as they are
required to do annually) that they have been able to allocate
sufficient time to discharge their responsibilities effectively.
The Board considers that, except as disclosed in respect of
Craig Huff, Alejandro Santo Domingo and Gregg Zeitlin, our
Non-Executive Directors remain independent from executive
management and free from any business or other relationship
which could materially interfere with the exercise of their
judgment. Any Director is recused from any discussion
involving any perceived or actual conflict of interest.
Conflict of interests
Directors are required to notify the Company as soon as they
become aware of a situation that could give rise to a conflict
or potential conflict of interest. The register of potential
conflicts of interest is regularly reviewed by the Nomination
Committee on behalf of the Board to ensure it remains up
to date. The Board is satisfied that potential conflicts have
been effectively managed throughout the year.
As a Non-Executive Director’s independence could be
impacted where a Director has a conflict of interest, the
Board operates a policy that restricts a Director from voting
on any matter in which they might have a personal interest
unless the Board unanimously decides otherwise. At the
start of every meeting and before all major Board decisions,
the Chairman requires the Directors to confirm that they do
not have a potential personal conflict with the matter being
discussed. If a conflict does arise, the Director is recused
from the relevant discussions.
Other external appointments
Our Directors are required to notify the Chairman of any
alterations to their external commitments that arise during the
year with an indication of the time commitment involved, and
to notify our Chairman in advance of any additional external
appointments. In 2020, the Nomination Committee, on behalf
of the Board, reviewed the Directors’ current list of external
appointments and confirmed that it does not believe any
current directorships will affect our Non-Executive Directors’
commitment to, or involvement with, the ContourGlobal
Board, nor will they give rise to a potential conflict of
interest which cannot be effectively managed by recusal.
Executive Directors
Executive Directors may accept a non-executive role
at another company with the approval of the Board.
Currently, none of our Executive Directors is a director
of another listed company.
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Corporate Governance Report (continued)
Board independence
Chairman
As a representative of the Company’s largest shareholder,
our Chairman, Craig Huff, is not considered to be
independent under the Code, as he was not considered
independent on appointment to the Board upon the
Company’s listing in 2017. The Board has determined
that the Chairman’s tenure is regarded as having
commenced following the Company’s IPO in 2017.
Non-Executive Directors
Together with the Chairman, two other Non-Executive
Directors (Alejandro Santo Domingo and Gregg Zeitlin)
are not considered as independent under the Code.
Notwithstanding this, the Board considers that the Non-
Executive Directors as a unit play an important role in
ensuring that no individual or group dominates the Board’s
decision-making. It is therefore of paramount importance
that their independence of mind and operation is maintained.
At each Board meeting, the Chairman meets with the
Non-Executive Directors without executive management
being present. These meetings are useful to safeguard the
independence of our Non-Executive Directors by providing
them with time to discuss their views in a private context.
Any Director who has concerns about the running of the
Group or a proposed course of action is encouraged to
express those concerns for further discussion and minuting
if consensus is not reached. No such concerns were raised
during 2020. All Directors have confirmed (as they are
required to do annually) that they have been able to allocate
sufficient time to discharge their responsibilities effectively.
Conflict of interests
Directors are required to notify the Company as soon as they
become aware of a situation that could give rise to a conflict
or potential conflict of interest. The register of potential
conflicts of interest is regularly reviewed by the Nomination
Committee on behalf of the Board to ensure it remains up
to date. The Board is satisfied that potential conflicts have
been effectively managed throughout the year.
As a Non-Executive Director’s independence could be
impacted where a Director has a conflict of interest, the
Board operates a policy that restricts a Director from voting
on any matter in which they might have a personal interest
unless the Board unanimously decides otherwise. At the
start of every meeting and before all major Board decisions,
the Chairman requires the Directors to confirm that they do
not have a potential personal conflict with the matter being
discussed. If a conflict does arise, the Director is recused
from the relevant discussions.
Other external appointments
Our Directors are required to notify the Chairman of any
alterations to their external commitments that arise during the
year with an indication of the time commitment involved, and
to notify our Chairman in advance of any additional external
appointments. In 2020, the Nomination Committee, on behalf
of the Board, reviewed the Directors’ current list of external
appointments and confirmed that it does not believe any
current directorships will affect our Non-Executive Directors’
commitment to, or involvement with, the ContourGlobal
Board, nor will they give rise to a potential conflict of
interest which cannot be effectively managed by recusal.
The Board considers that, except as disclosed in respect of
Executive Directors
Craig Huff, Alejandro Santo Domingo and Gregg Zeitlin, our
Executive Directors may accept a non-executive role
Non-Executive Directors remain independent from executive
at another company with the approval of the Board.
management and free from any business or other relationship
Currently, none of our Executive Directors is a director
which could materially interfere with the exercise of their
of another listed company.
judgment. Any Director is recused from any discussion
involving any perceived or actual conflict of interest.
COMPOSITION, SUCCESSION
AND EVALUATION
Composition
The Nomination Committee facilitates, and the Board ensures
that appointments to the Committee are made solely on merit
with the overriding objective of ensuring that the Board
maintains the correct balance of skills, experience, diversity,
length of service and knowledge of the Group to successfully
determine the Group’s strategy. The benefits of diversity are
considered in the widest sense, including gender, social and
ethnic backgrounds.
The Code recommends that at least half of the Board,
excluding the Chairman, should be composed of
independent Non-Executive Directors. Our Board is
composed of 50% independent Non-Executive Directors
(excluding the Chairman) as at 31st December 2020.
Succession
We have used this year to focus upon the desired skills and
diversity mix that we need on the Board to develop and our
long-term strategic goals. The development and approval of
our Board diversity policy (further details of which are below)
is an important step in embedding diversity considerations in
our succession planning activity.
In the 2019 Annual Report, we reported that we were in the
process of recruiting another independent non-executive
director following the resignation of Ruth Cairnie in late
2019, with a view in particular to having further independent
director representation on the Board.
It remains the Board’s intention to appoint a further
independent non-executive director, and we expect
to be able to report progress in this area in 2021.
The Board has also, primarily through its Nomination
Committee, dedicated significant time to reviewing and
developing the senior management pipeline. The Board is
pleased with the range and efficacy of the various initiatives
in place across the Company to develop internal talent, as
mentioned in this Report. Further details on the Nomination
Committee’s activities, and on the Board appointment
process, are set out in the Nomination Committee report
on pages 96 to 100.
Further information on the Board appointment process
is set out in the Nomination Committee report.
Board Diversity Policy
The Board agreed that further work on promoting
diversity and inclusion at all levels of the Company was
one of the priority areas for the Board throughout the
course of 2020. This work has been ongoing in 2020,
and we were pleased to be able to approve a Board
diversity policy in December 2020. The policy is
available to view via: www.contourglobal.com
The Board recognizes the importance and value of
diversity in all its forms, and the Board’s role in driving
diversity and inclusion across the organization. We
are committed to creating a culture which reflects the
diverse communities we serve, and which provides
equal opportunity and support for all to utilize their
experiences and skills to contribute to the business.
We are pleased that, as at 31st December 2020, we
have 50% female representation on the Executive
Management Board. In the Hampton Alexander review
published in February 2021, the Company had the fifth
highest female representation of its Combined Executive
Committee and direct reports within the FTSE 250.
We believe a key driver in delivering our organizational
diversity commitments is through a Board which is diverse
in gender, social and ethnic background, cognitive and
personal strengths. The Board diversity policy sets out the
importance of recent diversity reviews, most notably the
Hampton-Alexander Review and the Parker Review, and
sets out the Board’s aims in respect of achieving the
diversity targets set out in both of those Reviews.
We have not currently set timeframes in which we might
achieve those targets. Nonetheless, we recognize that
both Board diversity in respect of both gender and ethnic
diversity, and senior management diversity in respect of
ethnic diversity, are not yet at the stage we want them to
be, and a priority area for the Board, supported by the
Nomination Committee, in 2021 and beyond will be on
driving initiatives that will allow us to continue to improve
diversity at all levels of the Company.
We will continue to report in future Annual Reports on
how our Board Diversity Policy has been implemented
and to set out our achievements against the policy. Further
details of our diversity and inclusion initiatives throughout
the Company are set out on pages 47 and 99. Gender
diversity across our business is set out on page 48.
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Corporate Governance Report (continued)
Induction
On appointment, each Director takes part in a tailored
induction program, during which they meet members of senior
management and receive information about the role of the
Board and individual Directors, each Board Committee and the
powers delegated to those Committees. They are also advised
by the General Counsel and Company Secretary of the legal
and regulatory obligations of a Director of a company listed on
the London Stock Exchange. Induction sessions are designed
to be interactive and are tailored to suit the needs of the
individual’s previous experience and knowledge.
Training and development
With the ever-changing environment in which the
Group operates, it is important for our Executive and
Non-Executive Directors to remain aware of recent,
and upcoming, developments. We require all Directors
to keep their knowledge and skills up to date and include
training discussions with the Chairman in their annual
performance reviews.
We invite professional advisors to provide in-depth updates
and training on legislative developments and a range of
issues including, but not limited to, market trends, the
economic and political environment, environmental, and
technological and social considerations. Our Company
Secretary provides regular updates to the Board and its
Committees on regulatory and corporate governance matters.
All Directors have access to the services of the Company
Secretary and any Director may instigate an agreed
procedure whereby independent professional advice
may be sought at the Company’s expense.
Directors’ skills and experiences
An effective Board requires the right mix of skills and
experience. Our Board possesses a diverse range of skills,
competencies and experience, and works collectively as an
effective team focused on promoting the long-term success
of the Group. An overview of the skills and experience of
our Directors as at 31st December 2020 is set out in the
Nominations Committee report on page 98. As part of the
Board’s annual effectiveness review, described on page 81,
the Nominations Committee considers the composition of
the Board and its Committees in terms of its balance of skills,
experience, length of service, knowledge of the Group and
wider diversity considerations. The Nomination Committee
has confirmed that the membership of each of the
Committees continues to be appropriate and in accordance
with best practice and the Code.
Board performance review
On an annual basis, an evaluation process is undertaken
which considers the performance of the Board, its
Committees and individual Directors. This review identifies
areas of strength and areas for improvement, informs training
plans for our Directors and identifies areas of knowledge,
expertise or diversity which should be considered in our
succession plans.
2019 Board Evaluation
The recommendations arising from the 2019 internal Board evaluation conducted by the Chairman and Company Secretary
together with the actions implemented in response were:
Recommendations
Action taken and outcome
People strategy and ensuring that the Group has the skills
and characteristics needed to underpin its strategy
Ensuring the leadership team stays effective and maintaining
a clear management succession and development plan
Tackling the IT security challenge and ensuring the Board asks
the right questions on cyber risks
Crisis management and knowing that there is a response plan
that will stand up to stress
The Nomination committee has considered the
Group’s people and its strategy and will continue
to focus on these in 2021.
The Nomination committee has considered
succession planning and the succession plan
has been further developed for 2021.
Systems were enhanced and new capabilities
were introduced in 2021: findings from previous
audits were addressed and training activity was
increased to improve IT security and to adapt to
the evolving cyber risks.
The crisis management plan was activated in 2020.
Due to the management teams’ fast response and
the efficiency of its implementation this ensured the
Company’s performance was maintained.
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Corporate Governance Report (continued)
Induction
On appointment, each Director takes part in a tailored
induction program, during which they meet members of senior
management and receive information about the role of the
Board and individual Directors, each Board Committee and the
powers delegated to those Committees. They are also advised
by the General Counsel and Company Secretary of the legal
and regulatory obligations of a Director of a company listed on
the London Stock Exchange. Induction sessions are designed
to be interactive and are tailored to suit the needs of the
individual’s previous experience and knowledge.
Training and development
With the ever-changing environment in which the
Group operates, it is important for our Executive and
Non-Executive Directors to remain aware of recent,
and upcoming, developments. We require all Directors
to keep their knowledge and skills up to date and include
training discussions with the Chairman in their annual
performance reviews.
All Directors have access to the services of the Company
Secretary and any Director may instigate an agreed
procedure whereby independent professional advice
may be sought at the Company’s expense.
Directors’ skills and experiences
An effective Board requires the right mix of skills and
experience. Our Board possesses a diverse range of skills,
competencies and experience, and works collectively as an
effective team focused on promoting the long-term success
of the Group. An overview of the skills and experience of
our Directors as at 31st December 2020 is set out in the
Nominations Committee report on page 98. As part of the
Board’s annual effectiveness review, described on page 81,
the Nominations Committee considers the composition of
the Board and its Committees in terms of its balance of skills,
experience, length of service, knowledge of the Group and
wider diversity considerations. The Nomination Committee
has confirmed that the membership of each of the
Committees continues to be appropriate and in accordance
with best practice and the Code.
We invite professional advisors to provide in-depth updates
and training on legislative developments and a range of
Board performance review
issues including, but not limited to, market trends, the
On an annual basis, an evaluation process is undertaken
economic and political environment, environmental, and
which considers the performance of the Board, its
technological and social considerations. Our Company
Committees and individual Directors. This review identifies
Secretary provides regular updates to the Board and its
areas of strength and areas for improvement, informs training
Committees on regulatory and corporate governance matters.
plans for our Directors and identifies areas of knowledge,
expertise or diversity which should be considered in our
succession plans.
2019 Board Evaluation
The recommendations arising from the 2019 internal Board evaluation conducted by the Chairman and Company Secretary
together with the actions implemented in response were:
Recommendations
Action taken and outcome
People strategy and ensuring that the Group has the skills
and characteristics needed to underpin its strategy
The Nomination committee has considered the
Group’s people and its strategy and will continue
to focus on these in 2021.
Ensuring the leadership team stays effective and maintaining
The Nomination committee has considered
a clear management succession and development plan
succession planning and the succession plan
has been further developed for 2021.
Tackling the IT security challenge and ensuring the Board asks
Systems were enhanced and new capabilities
the right questions on cyber risks
were introduced in 2021: findings from previous
audits were addressed and training activity was
increased to improve IT security and to adapt to
the evolving cyber risks.
Crisis management and knowing that there is a response plan
The crisis management plan was activated in 2020.
that will stand up to stress
Due to the management teams’ fast response and
the efficiency of its implementation this ensured the
Company’s performance was maintained.
2020 Board Evaluation
In line with previous years, the Board undertook a Board performance review in 2020, which was supported by Independent
Audit Limited, a Board evaluation specialist. Independent Audit do not have any other connections with either the Company
or individual Directors of the Board.
The Board recognizes the provisions in the UK Corporate Governance Code 2018 around FTSE 350 companies completing
an externally facilitated review at least once every three years. Due to the extraordinary circumstances posed by the COVID-19
pandemic, it was decided that it would be more appropriate to hold an externally facilitated review in 2021, which will allow for
further reflection on the Board’s role, processes and practices as we emerge from the pandemic.
Process steps for the 2020 Board Evaluation
Step 1
Step 2
Step 3
The Chairman agreed all the questions
to be asked and the questionnaire
was tailored to the Company’s
specific circumstances.
Independent Audit subsequently
finalized the online questionnaire
as agreed with the Chairman to
cover the review of Board, chair
and individual performances.
The anonymity of all respondents was
ensured throughout the process to
encourage open feedback.
Independent Audit agreed a report
of the evaluation with the Chairman
for discussion at the meeting.
Additionally, pertinent information
was provided to the Chairman only.
Areas addressed for the evaluation
Outcomes from the 2020 Board Evaluation
The result of the Board evaluation was that the Board operated effectively and with the right balance between its contribution
to development of strategy, as well as the risks and uncertainties that may impact the business. Board papers were well
written and the agenda was used effectively. In addition, the Board also felt it had adapted and worked well together during
the pandemic.
The result of this evaluation demonstrated that the Board undertakes effective assessment of the Company’s financial
health, focuses on compliance, effectively uses meeting arrangements to facilitate discussions and benefits from effective
management of the agenda.
Focus areas in 2021
Through the evaluation, we have identified the below as being areas where the Board will look to dedicate continued focus
in 2021:
• Continued focus on the Company’s people strategy and succession planning; and
• Educational sessions on Cyber and Data Security in respect of the Company and its industry
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Report of the Nomination Committee
REPORT OF THE
NOMINATION COMMITTEE
Dear Shareholders,
In 2020, the Committee
maintained its focus on Board and
senior management succession
planning. We also approved our
Board diversity policy, which will
help to further embed diversity
and inclusion in succession
planning discussions. In 2021,
we plan to recruit an additional
female independent non-
executive director. As part
of our workforce engagement
arrangements, it has been
agreed, since year-end, that
Mariana Gheorghe be appointed
as the designated director for
workforce engagement,
commencing in H2 2021.
Roles and Responsibilities
The role of the Nomination Committee is set out in its terms
of reference which are available on the Company’s website
at www.contourglobal.com/corporate-governance.
The Committee plays an important role in making
recommendations of appropriate candidates for
appointment to the Board. It also keeps under review
the composition of the Board and its Committees; the
balance of skills, knowledge and experience on the Board;
and the size, structure and composition of the Board.
The Nomination Committee is also responsible for making
recommendations to the Board concerning succession
planning. Since the year end, the Committee has reviewed
the talent pipeline and succession regarding the executive
and senior management teams with the Chief Human
Resources Officer.
Members of the Nomination
Committee
• Craig Huff (Chairman of the Committee)
• Daniel Camus*
• Mariana Gheorghe*
• Dr. Alan Gillespie*
• Alejandro Santo Domingo
Meeting attendance shown on page 91
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Independent Director.
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Report of the Nomination Committee
REPORT OF THE
NOMINATION COMMITTEE
Members of the Nomination
Committee
• Craig Huff (Chairman of the Committee)
• Daniel Camus*
• Mariana Gheorghe*
• Dr. Alan Gillespie*
• Alejandro Santo Domingo
Meeting attendance shown on page 91
*
Independent Director.
Dear Shareholders,
In 2020, the Committee
maintained its focus on Board and
senior management succession
planning. We also approved our
Board diversity policy, which will
help to further embed diversity
and inclusion in succession
planning discussions. In 2021,
we plan to recruit an additional
female independent non-
executive director. As part
of our workforce engagement
arrangements, it has been
agreed, since year-end, that
Mariana Gheorghe be appointed
as the designated director for
workforce engagement,
commencing in H2 2021.
Roles and Responsibilities
The role of the Nomination Committee is set out in its terms
of reference which are available on the Company’s website
at www.contourglobal.com/corporate-governance.
The Committee plays an important role in making
recommendations of appropriate candidates for
appointment to the Board. It also keeps under review
the composition of the Board and its Committees; the
balance of skills, knowledge and experience on the Board;
and the size, structure and composition of the Board.
The Nomination Committee is also responsible for making
recommendations to the Board concerning succession
planning. Since the year end, the Committee has reviewed
the talent pipeline and succession regarding the executive
and senior management teams with the Chief Human
Resources Officer.
Main responsibilities of the
Nomination Committee include:
• Regularly review the structure, size and
composition (including the skills, knowledge,
experience and diversity) of the Board and
its Committees and making recommendations
to the Board
• Lead the process for appropriate executive
and non-executive Board appointments and
make recommendations for Board approval,
including recommendations to the Board on
refreshing the membership of the Board’s
principal Committees
• Implement plans for the orderly succession
of Board members and senior management
• Review Directors’ conflicts of interest
authorization and the time required from
Non-Executive Directors
• Consider requests from Directors for
appointment to the boards of other
companies (delegated to the Chairman,
except in his own regard)
• Annually review the terms of reference.
The Board also takes into account the results of the annual
Board evaluation process to determine any necessary
changes to the Board membership or structure. Recent
evaluation results have supported the view that the structure
and composition of the Board and its Committees supports
the overall effectiveness of the Board. This is an area that
will remain under review at least annually.
Meetings
The Nomination Committee will normally meet at least twice
per year and otherwise as required in order to discharge
its duties. It met twice in 2020.
Craig Huff is the Chair of the Committee. He is a
representative of ContourGlobal LP, the Company’s major
shareholder. The Committee’s composition meets the
requirements of the Code with the majority of members
being independent. The Company Secretary is Secretary
to the Committee and attends all meetings.
Other attendees at meetings are at the invitation of the
Committee and include the CEO or advisors. Neither the
Chairman nor the CEO would participate in the recruitment
of their own successor.
The Committee is authorized to seek outside legal
or other independent professional advice as required.
Board and Committee composition
Over the course of 2020, the Committee continued to review
the current structure and composition of the Board and its
Committees. Our considerations around the composition
of the Board are set out subsequently in this Report.
During the year, the Committee considered the composition
of the Committees of the Board, taking into account the roles
and responsibilities of those Committees and the outcomes
of the most recent Committee effectiveness reviews. On that
basis, the Committee did not recommend any changes to
the membership of the Board Committees in 2020. This
will remain under review at least annually.
Board and Committee skills
and competencies mix
The Committee frequently considers a skills matrix for
the Board, which identifies the core competencies, skills,
diversity and experience required for the Board to deliver
its strategic goals. The Committee reviews the skills matrix
when considering a potential new appointment to the Board,
as well as reviewing the current and expected Board and
Board Committee composition.
Any gaps in the Board’s needs, identified either as
part of a current Director’s retirement, or in view of the
changing strategic priorities, are used to inform the search
for a new Director or Directors and the specific skills that
are required will be identified, for example, an individual
with international experience, or recent history serving
on a particular board committee.
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Report of the Nomination Committee (continued)
Board skills and competencies matrix
Industry knowledge/experience
Industry experience: engineering
Knowledge of power sector
Regulatory/public policy sector knowledge
Environmental knowledge
International experience
Central/South America
Western Europe
Eastern Europe
Africa
Technical skills
Financial literacy
Executive management/leadership
Strategic planning
Technology/digital
M&A/transactional
Compliance/ethics
UK FTSE experience
Risk management:
Operational
Governance
No of
Directors
3
7
5
5
5
7
6
5
9
9
8
2
9
6
5*
6
7
*
includes partial knowledge.
Process for Board appointments
Board and Committee appointment process
The Board has formal, thorough and transparent
procedures in place for Board recruitment and appointment.
As mentioned above, the Company’s goal is to ensure that
the Board is well balanced and appropriate for the needs of
the business. The Nomination Committee has regard to the
Board’s balance of skills, knowledge, experience and
diversity, including gender and ethnic diversity.
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How do we identify candidates?
In identifying suitable candidates, the Board will typically seek
to use either open advertising or external search services to
facilitate the recruitment. Egon Zehnder have recently been
appointed as external search consultants to assist the Board
with recent Board appointment exercises. We carefully
assess each candidate against our objectives and the
Diversity Policy, and take care that appointees have
enough time available to devote to the position.
The Committee is cognizant of Board diversity targets,
including those recommended from the Parker Review
and Hampton-Alexander Review. Our approach to diversity
is set out in more detail below and in the Corporate
Governance Statement on pages 80 and 81.
What is the appointment process employed?
Shortlisted candidates are generally seen first by the
Chairman of the Board, the Senior Independent Non-
Executive Director and the CEO. If the selection process
progresses further, each potential candidate is invited to
meet other members of the Nomination Committee as
well as members of senior management.
The Nomination Committee will agree whether to recommend
that the candidate be appointed to the Board. The Board will
ultimately resolve whether to make the suggested appointment.
Diversity and inclusion
Having a diverse, highly talented and skilled group of people
at all levels at ContourGlobal is fundamental to our business
success and a key part of the business model. Diversity and
inclusion bring new ideas and fresh perspectives which fuel
creativity and innovation. Therefore, the Company works to
attract, retain and develop employees to improve the talent
pipeline. As a multinational company with operations in more
than 20 countries across the globe, diversity of thought and
background is essential and will remain one of the key
criteria by which candidates are selected for the Board
and the pipeline for senior leadership positions.
The Company’s position is that no individual should be
discriminated against on the grounds of race, color, ethnicity,
religious belief, political affiliation, gender orientation, sexual
orientation, national origin, ancestry, age, medical condition,
physical or mental disability, marital status, worker’s
compensation status, veteran status, citizenship status,
or any other legally protected status and this extends
to Board appointments.
The Nomination Committee and the Board ensure that,
together, the Directors possess the appropriate diversity of
skills, experience, knowledge and perspectives to support
the long-term success of the Company.
The Committee was pleased that, upon their recommendation,
a Board diversity policy was adopted by the Board in 2020.
Further details of the policy are set out on page 93.
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Report of the Nomination Committee (continued)
No of
Directors
Board skills and competencies matrix
Industry knowledge/experience
Industry experience: engineering
Knowledge of power sector
Regulatory/public policy sector knowledge
Environmental knowledge
International experience
Central/South America
Executive management/leadership
Western Europe
Eastern Europe
Africa
Technical skills
Financial literacy
Strategic planning
Technology/digital
M&A/transactional
Compliance/ethics
Risk management:
Operational
Governance
UK FTSE experience
5*
3
7
5
5
5
7
6
5
9
9
8
2
9
6
6
7
*
includes partial knowledge.
Process for Board appointments
Board and Committee appointment process
The Board has formal, thorough and transparent
procedures in place for Board recruitment and appointment.
As mentioned above, the Company’s goal is to ensure that
the Board is well balanced and appropriate for the needs of
the business. The Nomination Committee has regard to the
Board’s balance of skills, knowledge, experience and
diversity, including gender and ethnic diversity.
How do we identify candidates?
In identifying suitable candidates, the Board will typically seek
to use either open advertising or external search services to
facilitate the recruitment. Egon Zehnder have recently been
appointed as external search consultants to assist the Board
with recent Board appointment exercises. We carefully
assess each candidate against our objectives and the
Diversity Policy, and take care that appointees have
enough time available to devote to the position.
The Committee is cognizant of Board diversity targets,
including those recommended from the Parker Review
and Hampton-Alexander Review. Our approach to diversity
is set out in more detail below and in the Corporate
Governance Statement on pages 80 and 81.
What is the appointment process employed?
Shortlisted candidates are generally seen first by the
Chairman of the Board, the Senior Independent Non-
Executive Director and the CEO. If the selection process
progresses further, each potential candidate is invited to
meet other members of the Nomination Committee as
well as members of senior management.
The Nomination Committee will agree whether to recommend
that the candidate be appointed to the Board. The Board will
ultimately resolve whether to make the suggested appointment.
Diversity and inclusion
Having a diverse, highly talented and skilled group of people
at all levels at ContourGlobal is fundamental to our business
success and a key part of the business model. Diversity and
inclusion bring new ideas and fresh perspectives which fuel
creativity and innovation. Therefore, the Company works to
attract, retain and develop employees to improve the talent
pipeline. As a multinational company with operations in more
than 20 countries across the globe, diversity of thought and
background is essential and will remain one of the key
criteria by which candidates are selected for the Board
and the pipeline for senior leadership positions.
The Company’s position is that no individual should be
discriminated against on the grounds of race, color, ethnicity,
religious belief, political affiliation, gender orientation, sexual
orientation, national origin, ancestry, age, medical condition,
physical or mental disability, marital status, worker’s
compensation status, veteran status, citizenship status,
or any other legally protected status and this extends
to Board appointments.
The Nomination Committee and the Board ensure that,
together, the Directors possess the appropriate diversity of
skills, experience, knowledge and perspectives to support
the long-term success of the Company.
The Committee was pleased that, upon their recommendation,
a Board diversity policy was adopted by the Board in 2020.
Further details of the policy are set out on page 93.
The Committee is of the view that this will help to further
integrate diversity and inclusion considerations into the
Company, including in Board and senior management
recruitment and retention processes.
Review of progress against diversity policy
Objectives
Progress
Place emphasis on development of diversity within
the Group and commit to further pursuing diversity,
as appropriate and on merit, within the Group senior
management roles.
Aspire to achieve a level of at least 33% female directors
on the ContourGlobal plc Board.
Aspire to achieve the recommendations of the Parker
Review by having at least one Director on the Board
from an ethnic minority background.
We continue to strengthen the pipeline of senior female
executives within the business. We were delighted to be
recognized in the 2020 Hampton-Alexander Review report
as one of the five highest performing FTSE 250 companies,
in terms of female representation at senior management
level (defined as those working at Executive Committee
level and their direct reports). Our initiatives to support
senior management diversity are outlined on pages 47,
98 and 100.
The Board is committed to its target for female
representation and is mindful of the target set out in the
Hampton-Alexander Review of a minimum of 33 per cent
female representation at Board level. The Committee will
continue to make recommendations for new appointments
to the Board based on merit, with candidates measured
against objective criteria and with regard to the skills
and experience they would bring to the Board. As at
31st December 2020, the female representation on
the Board represents 11 per cent of the membership.
The Committee has adopted this in its Policy and the
Board continues to consider candidates from a wide range
of backgrounds. As a multinational Group with operations
in more than 20 countries, diversity of thought and
background is essential and will remain one of the key
criteria by which candidates are selected for the Board
and the pipeline for senior leadership positions.
In its search for candidates, to engage with executive
search firms which are signatories to the Voluntary Code
of Conduct for Executive Search Firms.
The Board supports the provisions of the Voluntary Code
of Conduct for Executive Search Firms and will only engage
those who have signed up to this Code. The Board’s current
executive search firm is a signatory to the Code.
As required by the UK Corporate Governance Code, report
annually against these objectives and other initiatives taking
place within the Company to promote gender and other
forms of diversity.
The Board recognizes the importance of diversity and that
it is a wider issue than gender. Our diversity initiatives are
outlined on pages 47, 98 and 100.
Report annually on the outcome of the Board evaluation,
the composition and structure of the Board.
The Board continues to commit to reporting annually on
the outcome of the Board evaluation, and the composition
and structure of the Board.
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Report of the Nomination Committee (continued)
Appointment of a Non-Executive
Director update
The Committee reported in the 2019 Annual
Report and Accounts that the Committee had,
following a review of the current and desired
future skills and competencies mix amongst
Directors, and the structure, diversity and
independence of the current Board, determined
that an additional independent Non-Executive
Director would add value. No appointments
to the Board were made in 2020, due to the
unprecedented events that took place over the
course of the year arising from the COVID-19
pandemic. The Committee continues its search
and will take care to ensure that the provisions
and aims set out within the Board Diversity Policy
agreed in 2020 inform future appointments. The
Committee and the Board fully understands and
appreciates the benefits of diversity in all its forms
in promoting balanced and considered decision-
making which aligns with ContourGlobal’s
purpose, values and strategy.
The Committee’s current assessment of the
current skills and competencies on the Board is
set out in this Report on page 98.
Directors’ independence and re-appointment
The Board keeps the independence of the Non-Executive
Directors under continuous review. In July 2020, the
Committee assessed the performance and independence of
each of the Non-Executive Directors and concluded that each
of them contributed effectively to the operation of the Board.
Each year Directors are subject to appointment or re-
appointment by shareholders at our AGM. Non-Executive
Directors are appointed for a specified term of three years,
subject to annual re-election at the AGM. Re-appointment
for a second three-year term is not automatic, and any term
for a Non-Executive Director beyond six years is subject to
a particularly rigorous review.
Conflicts of interest and time requirements
for Non-Executive Directors
The Company’s Articles of Association contain provisions
which permit unconflicted Directors to authorize conflict
situations. Each Director is required to notify the Chairman
of any potential conflict or potential new appointment or
directorship. This year, the Committee reviewed the list
of Directors’ external appointments and decided that there
were no apparent conflicts of interest that could not be
adequately managed by recusal and, consequently,
recommended the same for approval by the Board.
The Board does not specify the exact time commitment
required from its Non-Executive Directors as they are
expected to fulfil the role and manage their commitments
accordingly. The Board is satisfied that none of its Directors
is overcommitted and unable to fulfil their responsibilities
as a Director of the Company. Should a Director be unable
to attend meetings on a regular basis, not be preparing for or
contributing appropriately to Board discussions, the Chairman
would be responsible for discussing the matter with them and
agreeing a course of action.
Committee evaluation
The Committee undertook an internal self-evaluation
supported by Independent Audit Limited as part of the 2020
Board evaluation. The results demonstrated that members
of the Committee ensured that core skills were covered
and there was good discussion and debate. However, the
Committee is mindful that, while pleased with the progress
made on the Company’s talent management and executive
succession processes, this will need to remain an area of
continued focus for 2021, as reflected below.
Priorities for 2021
For the coming financial year, the Committee will, among
other matters, focus on the following:
• the continued development of succession plans, the
talent pipeline and diversity strategy.
• the continuous review of the composition of the Board
and its Committees in respect of skills and diversity.
Craig A. Huff
Chairman of the Nomination Committee
18th March 2021
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Report of the Nomination Committee (continued)
Report of the Audit & Risk Committee
Appointment of a Non-Executive
Director update
The Committee reported in the 2019 Annual
Report and Accounts that the Committee had,
following a review of the current and desired
future skills and competencies mix amongst
Directors, and the structure, diversity and
independence of the current Board, determined
that an additional independent Non-Executive
Director would add value. No appointments
to the Board were made in 2020, due to the
unprecedented events that took place over the
course of the year arising from the COVID-19
pandemic. The Committee continues its search
and will take care to ensure that the provisions
and aims set out within the Board Diversity Policy
agreed in 2020 inform future appointments. The
Committee and the Board fully understands and
appreciates the benefits of diversity in all its forms
in promoting balanced and considered decision-
making which aligns with ContourGlobal’s
purpose, values and strategy.
The Committee’s current assessment of the
current skills and competencies on the Board is
set out in this Report on page 98.
Directors’ independence and re-appointment
The Board keeps the independence of the Non-Executive
Directors under continuous review. In July 2020, the
Committee assessed the performance and independence of
each of the Non-Executive Directors and concluded that each
of them contributed effectively to the operation of the Board.
Each year Directors are subject to appointment or re-
appointment by shareholders at our AGM. Non-Executive
Directors are appointed for a specified term of three years,
subject to annual re-election at the AGM. Re-appointment
for a second three-year term is not automatic, and any term
for a Non-Executive Director beyond six years is subject to
a particularly rigorous review.
Conflicts of interest and time requirements
for Non-Executive Directors
The Company’s Articles of Association contain provisions
which permit unconflicted Directors to authorize conflict
situations. Each Director is required to notify the Chairman
of any potential conflict or potential new appointment or
directorship. This year, the Committee reviewed the list
of Directors’ external appointments and decided that there
were no apparent conflicts of interest that could not be
adequately managed by recusal and, consequently,
recommended the same for approval by the Board.
The Board does not specify the exact time commitment
required from its Non-Executive Directors as they are
expected to fulfil the role and manage their commitments
accordingly. The Board is satisfied that none of its Directors
is overcommitted and unable to fulfil their responsibilities
as a Director of the Company. Should a Director be unable
to attend meetings on a regular basis, not be preparing for or
contributing appropriately to Board discussions, the Chairman
would be responsible for discussing the matter with them and
agreeing a course of action.
Committee evaluation
The Committee undertook an internal self-evaluation
supported by Independent Audit Limited as part of the 2020
Board evaluation. The results demonstrated that members
of the Committee ensured that core skills were covered
and there was good discussion and debate. However, the
Committee is mindful that, while pleased with the progress
made on the Company’s talent management and executive
succession processes, this will need to remain an area of
continued focus for 2021, as reflected below.
Priorities for 2021
For the coming financial year, the Committee will, among
other matters, focus on the following:
• the continued development of succession plans, the
talent pipeline and diversity strategy.
• the continuous review of the composition of the Board
and its Committees in respect of skills and diversity.
Craig A. Huff
Chairman of the Nomination Committee
18th March 2021
REPORT OF THE AUDIT
& RISK COMMITTEE
Members of the Audit and Risk
Committee
• Ronald Trächsel (Chairman)
• Daniel Camus
• Dr. Alan Gillespie
Meeting attendance shown on page 91
Dear shareholders,
My report seeks to provide you
with an understanding of the
Committee’s work during the
year and with assurance of the
integrity of the 2020 Annual
Report and Financial Statements.
During the year the Committee focused on the Company’s
financial performance and integrity of the annual, half-yearly
and interim financial statements. This included a thorough
review of the Company’s going concern, viability statement
and principal and emerging risks and uncertainties. The
Committee had continually reviewed the impact of the
outbreak of COVID-19 and management actions in mitigating
risks to the Company’s employees and preventing disruption
to contractual arrangements with customers and suppliers.
A dedicated Task Force was created, and risks to the
business associated with the pandemic were closely
monitored. As part of the process an emerging risk was
identified as a potential principal risk in respect of supply
chain management. In addition, cyber security risk mitigation
was enhanced and various initiatives were put into place to
mitigate the risks posed, such as software, platform upgrades
and increased training.
The Committee also reviewed the key accounting areas
of judgment, the adequacy and effectiveness of the Group’s
system of internal controls, including whistleblowing, and the
effectiveness, performance and objectivity of the internal and
external audit functions. The Committee also took steps to
ensure that, when taken as a whole, the Annual Report is
fair, balanced and understandable.
The Committee, along with management and the external
auditor, considered the impact of reporting recommendations
published by the Financial Reporting Council (FRC), as well as
the new accounting and reporting requirements introduced
by International Financial Reporting Standards (IFRS).
As part of the FRC’s regular oversight role on company
reporting in November 2020 the Company received a letter
from the FRC which raised a limited number of queries in
connection with disclosures contained in the 2019 Annual
Report. These queries related to the recoverability of the
certain development costs, purchase price allocation in
relation to acquisitions, clarification of the accounting for
the change in borrowings, accounting for emissions quotas,
non-controlling interest disclosures, and the Company’s
approach to alternative performance measures. The
Company’s response was overseen by the Audit and
Risk Committee and discussed with the Company’s
external auditors. We have taken the FRC’s feedback into
consideration and enhanced disclosures in the 2020 Annual
Report and Financial Statements to reflect this, most notably
regarding purchase price allocation, non-controlling interests
and alternative performance measures. At the time of writing
we have recently responded to the FRC's feedback and are
awaiting their response to the last two matters. In 2020, the
FRC’s Audit Quality Review Team reviewed the audit work
carried out by the Company’s external auditors on our 2019
Annual Report and Financial Statements. The Audit and Risk
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Report of the Audit & Risk Committee (continued)
Committee discussed the FRC review with the Company’s
external auditors. There were no key findings arising from
the review and, as a result, there were no significant actions
identified, by either the external auditors or the Audit and
Risk Committee, to be undertaken.
Committee evaluation
The Committee’s performance was evaluated by
Independent Audit and the key priorities for 2020-21 are
as referred to on page 95. Further details on the activities
of the Committee during the year and how it has discharged
its responsibilities are provided in the report below.
As Chair of the Committee, I ensure that the Committee’s
agenda is kept under review and reflects relevant
developments, and that this report provides clear and
meaningful disclosure on the Committee’s activities.
Ronald Trächsel
Chairman of the Audit and Risk Committee
18th March 2021
“THE COMMITTEE
CONTINUES TO PROVIDE
OVERSIGHT OF THE
GROUP’S RISK
ASSESSMENT AND
MANAGEMENT, INTERNAL
CONTROL, EXTERNAL
AUDIT, INTERNAL AUDIT,
COMPLIANCE, FINANCIAL
MANAGEMENT, AND
REPORTING FRAMEWORKS,
PROCESSES AND
ACTIVITIES.”
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Principal duties of the Committee
The principal duties of the Committee
are to:
• Monitor the financial reporting process to
ensure the integrity of the Group’s financial
statements and announcements relating
to financial performance, and make any
necessary recommendations for improvements.
• Assess and challenge significant accounting
estimates and judgments.
• Monitor the statutory audit of the Annual Report
and financial statements.
• Manage the relationship with the external
auditor and oversee the external audit process
including assessment of the quality of the audit.
• Review and monitor the external auditor’s
independence and the provision of additional
services.
• Review the Group’s strategic risk register,
principal risks and the going concern and
viability statements.
• Monitor the effectiveness of internal controls
(including financial, operational and compliance
controls) and the risk management framework
used to identify and manage principal and
emerging risks.
• Oversee the internal audit function and process
including the findings of internal audit reports.
• Monitor the effectiveness of financial
controls and the process for identifying
and managing risk.
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Report of the Audit & Risk Committee (continued)
Committee discussed the FRC review with the Company’s
of the Committee during the year and how it has discharged
external auditors. There were no key findings arising from
its responsibilities are provided in the report below.
the review and, as a result, there were no significant actions
identified, by either the external auditors or the Audit and
Risk Committee, to be undertaken.
Committee evaluation
The Committee’s performance was evaluated by
Independent Audit and the key priorities for 2020-21 are
as referred to on page 95. Further details on the activities
As Chair of the Committee, I ensure that the Committee’s
agenda is kept under review and reflects relevant
developments, and that this report provides clear and
meaningful disclosure on the Committee’s activities.
Ronald Trächsel
Chairman of the Audit and Risk Committee
18th March 2021
“THE COMMITTEE
CONTINUES TO PROVIDE
OVERSIGHT OF THE
GROUP’S RISK
ASSESSMENT AND
MANAGEMENT, INTERNAL
CONTROL, EXTERNAL
AUDIT, INTERNAL AUDIT,
COMPLIANCE, FINANCIAL
MANAGEMENT, AND
REPORTING FRAMEWORKS,
PROCESSES AND
ACTIVITIES.”
Principal duties of the Committee
The principal duties of the Committee
are to:
• Monitor the financial reporting process to
ensure the integrity of the Group’s financial
statements and announcements relating
to financial performance, and make any
necessary recommendations for improvements.
• Assess and challenge significant accounting
estimates and judgments.
• Monitor the statutory audit of the Annual Report
and financial statements.
• Manage the relationship with the external
auditor and oversee the external audit process
including assessment of the quality of the audit.
• Review and monitor the external auditor’s
independence and the provision of additional
services.
• Review the Group’s strategic risk register,
principal risks and the going concern and
viability statements.
• Monitor the effectiveness of internal controls
(including financial, operational and compliance
controls) and the risk management framework
used to identify and manage principal and
emerging risks.
• Oversee the internal audit function and process
including the findings of internal audit reports.
• Monitor the effectiveness of financial
controls and the process for identifying
and managing risk.
Ronald Trächsel has chaired the Audit & Risk Committee
since the IPO in November 2017. He is currently the Chief
Financial Officer of a Swiss publicly listed power generation
Grid and Infrastructure company and is considered by the
Board to have recent and relevant financial experience.
All members of the Committee are independent
Non-Executive Directors and the Board is satisfied
that the Committee as a unit has the competence
relevant to the sector and its members have an
appropriate level of experience of corporate financial
matters. The Company Secretary is Secretary to the
Committee and attends all meetings.
Regular attendees at Committee meetings by invitation include
other Non-Executive Directors, the CEO, the CFO, the Head
of Internal Audit, the Chief Compliance Officer, the General
Counsel, the Group Controller, and representatives from
PricewaterhouseCoopers LLP (PwC), the external auditor.
None of these attendees are members of the Committee.
The representatives from PwC and the Head of Internal Audit
are each afforded time with the Committee and the Company
Secretary to raise any concerns they may have without
management being present.
The Committee is authorized to seek outside legal or
other independent professional advice though this was
not required during the year.
The Committee’s terms of reference can be found at:
www.contourglobal.com/investor-relations.
The Directors’ responsibilities statement in respect of the
Annual Report and financial statements can be found on
page 145.
The key role of the Committee is to ensure that the interests
of shareholders are properly protected in relation to the
Company’s financial reporting, internal control and risk
management arrangements, and to provide challenge to
management’s approach and decisions in relation to the
content, significant accounting estimates, judgments and
disclosures within the Company’s financial reports. The
Committee’s role is also to ensure that management’s
disclosures reflect the necessary supporting detail, to
challenge management to explain and justify their judgments.
The Committee reports on its findings to the Board and
makes recommendations accordingly. This includes
confirming to the Board whether, in accordance with the
requirements of the UK Corporate Governance Code 2018
(”the Code”), the Annual Report and financial statements,
taken as a whole, are fair, balanced and understandable
and provide the information necessary for shareholders
to assess the Company’s position and performance,
business model and strategy.
The Committee is supported in this role by the Company’s
internal audit function and the external auditor, who in the
course of the statutory audit, reviews the accounting records
kept by the Company to test whether information is being
recorded in line with agreed accounting practices. The
external auditor’s report is set out on pages 146 to 156.
The Committee is responsible for ensuring that the three-way
relationship between the Committee, the auditor and the
Company’s management is appropriate, and that the external
auditor remains independent of the Company. Independence
is a key focus for the external auditor, whose staff must
comply with their firm’s own ethics and independence criteria
which must be consistent with the FRC’s Revised Ethical
Standard 2019. Information on how the Committee assesses
the independence of the external auditor is set out on page
106. All members of the Committee continue to contribute to
the work of the Committee and have the necessary skills and
financial and accounting experience to do so effectively. The
Committee members seek clarification and a full explanation
from management or the external auditor on any matter we
feel necessary.
Structure and operations
The Audit and Risk Committee’s structure and operations,
including its delegated responsibilities and authority, are
governed by its Terms of Reference which are reviewed
annually and approved by the Board.
All members of the Committee are independent Non-
Executive Directors with a wide range of skills and
experience that enable them to provide effective oversight
of both financial and risk matters, and to advise the Board
accordingly. In the Board’s view, the Committee has
competence relevant to ContourGlobal’s sector; Ronald
Trächsel and Daniel Camus have extensive experience
of international energy companies and Dr. Alan Gillespie
has significant experience in industrial development and
development finance. Ronald Trächsel is determined by
the Board as having recent and relevant financial experience
for the purposes of the Code. Details of the experience of all
members of the Committee can be found on pages 76 to 79.
To maintain effective communication between all relevant
parties, and in support of the Committee’s activities, the CEO,
CFO, General Counsel, Chief Compliance Officer, Head of
Internal Audit, senior members of the finance team and
representatives of the external auditor, attend all Committee
meetings. Other members of the Board also attend as guests
on an ad hoc basis. Additionally, the Committee has private
sessions with the internal and external audit teams.
The Committee works to a structured program of activities
and meetings to coincide with key events around our
financial calendar. Following each meeting, the Committee
chairman reports on the main discussion points and findings
to the Board. The Committee will normally meet no fewer
than three times a year. It met four times during 2020 and
attendance at those meetings can be found on page 91. All
meetings were held remotely and were effective.
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Report of the Audit & Risk Committee (continued)
An additional meeting was held to undertake a deep dive into
the tax function and tax internal controls across the Group.
Outside of the formal meeting program, the Committee
chairman maintains a dialogue with key individuals involved
in the Company’s governance, including the Chairman, CEO,
CFO, Company Secretary, the external audit lead partner
and the Head of Internal Audit, together with KPMG LLC,
our co-sourcing partner who provide additional support
on internal audit matters.
Audit and Risk Committee activity
The main areas of Committee activities during 2020 were:
FINANC IA L
REPORTING
Reviewing the draft full and interim results including key areas of judgment, the Group’s viability, and going
concern for approval by the Board.
The quality, appropriateness and integrity of the interim and full-year financial statements.
The information, underlying assumptions and stress test analysis presented in support of going concern and
the viability statements taking into account the impact of the COVID-19 pandemic on the global economy.
The consistency and appropriateness of the financial control and reporting environment.
The dividend policy.
Review of the alternative performance measures and the related disclosures.
Review of the draft Annual Report and financial statements as a whole, and approval of this Audit & Risk
Committee report.
Review of the comments included in the letter from FRC on their review of the Annual report 2019, discuss
the answers provided and how the key points have been addressed in the 2020 Annual report. At the time
of the reporting, the majority of the points of the FRC review have been closed and the last remaining items
are being discussed.
The fair, balanced and understandable assessment of the Annual Report (and any other financial statements
such as the half-yearly statement).
FINANC IA L
ACCOUNTI NG
MATTER S
Review of impairment tests and potential triggering events during 2020.
Kosovo: Recoverability of project costs incurred in association with the discontinued development project
for a new power generation plant.
Update on Maritsa NOx Receivable recoverability assessment and Maritsa EC Directorate General Competition
matter discussions.
KivuWatt arbitration with Energy Utility Corporation Limited.
Togo CEET Claim.
Other matters related to litigation and claims.
Finalization of Mexico CHP price allocation and fair market value.
The appropriateness of significant accounting judgments made in connection with the financial statements
as set out on pages 106 and 107.
Monitoring the outbreak of COVID-19 and assessing the impact on the Group particularly in relation to the
year-end financial position. There has been focus on developing and implementing mitigating actions and
processes to ensure that the Group can continue to operate in an effective control environment, including
an internal audit in the reporting year on the Group’s control environment.
Reviewing and monitoring the principal and emerging risk profile of the Group.
The scope of the internal control and risk management program and the internal control roadmap for 2020
which included a mid-year review, an internal self-assessment and any recommendations arising from the
PwC external audit.
SIGNIFI CANT
ACCOUNTI NG
JUDGMENTS
RISK
MANAGEMENT
AND
INTERNAL
CONTROL
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Report of the Audit & Risk Committee (continued)
An additional meeting was held to undertake a deep dive into
CFO, Company Secretary, the external audit lead partner
the tax function and tax internal controls across the Group.
and the Head of Internal Audit, together with KPMG LLC,
our co-sourcing partner who provide additional support
on internal audit matters.
Outside of the formal meeting program, the Committee
chairman maintains a dialogue with key individuals involved
in the Company’s governance, including the Chairman, CEO,
Audit and Risk Committee activity
The main areas of Committee activities during 2020 were:
FINANCIAL
REPORTIN G
Reviewing the draft full and interim results including key areas of judgment, the Group’s viability, and going
concern for approval by the Board.
The quality, appropriateness and integrity of the interim and full-year financial statements.
The information, underlying assumptions and stress test analysis presented in support of going concern and
the viability statements taking into account the impact of the COVID-19 pandemic on the global economy.
The consistency and appropriateness of the financial control and reporting environment.
The dividend policy.
Committee report.
Review of the alternative performance measures and the related disclosures.
Review of the draft Annual Report and financial statements as a whole, and approval of this Audit & Risk
Review of the comments included in the letter from FRC on their review of the Annual report 2019, discuss
the answers provided and how the key points have been addressed in the 2020 Annual report. At the time
of the reporting, the majority of the points of the FRC review have been closed and the last remaining items
are being discussed.
such as the half-yearly statement).
The fair, balanced and understandable assessment of the Annual Report (and any other financial statements
FINANCIAL
ACCOUNTING
MATTERS
Review of impairment tests and potential triggering events during 2020.
Kosovo: Recoverability of project costs incurred in association with the discontinued development project
for a new power generation plant.
Update on Maritsa NOx Receivable recoverability assessment and Maritsa EC Directorate General Competition
matter discussions.
Togo CEET Claim.
KivuWatt arbitration with Energy Utility Corporation Limited.
Other matters related to litigation and claims.
Finalization of Mexico CHP price allocation and fair market value.
The appropriateness of significant accounting judgments made in connection with the financial statements
as set out on pages 106 and 107.
SIGNIFICA NT
ACCOUNTING
JUDGMENTS
RISK
MANAGEMENT
AND
INTERNAL
CONTROL
Monitoring the outbreak of COVID-19 and assessing the impact on the Group particularly in relation to the
year-end financial position. There has been focus on developing and implementing mitigating actions and
processes to ensure that the Group can continue to operate in an effective control environment, including
an internal audit in the reporting year on the Group’s control environment.
Reviewing and monitoring the principal and emerging risk profile of the Group.
The scope of the internal control and risk management program and the internal control roadmap for 2020
which included a mid-year review, an internal self-assessment and any recommendations arising from the
PwC external audit.
RISK
MANAGEMENT
AND
INTERNA L
CONTROL
(C ONTINUED)
The results of internal audit reviews and the progress made against agreed management action.
Quarterly reports on investigated internal control issues significant to the Group.
Quarterly reports on the Group’s risk register, including significant and emerging risks.
The implications and management of the General Data Protection Regulation (GDPR), data governance
and information security.
The adequacy and effectiveness of the Group’s internal control and risk management processes.
The review of principal risks and uncertainties and the risk register the top risks.
Deep dive into the tax function and tax internal controls across the Group.
INTERNA L
AUDI T
The internal audit methodology, processes and report template, KPIs and targets and tracking tools.
The scope of the internal audit plan and resourcing requirements, including the selection of KPMG LLP
as a co-sourcing partner.
The independence, appropriateness, and effectiveness of internal audit, including the co-sourcing partner.
EXTERNAL
AUDI T
COMPL IA NCE
AND OTHER
MATTERS
The change of co-sourcing partner.
Monitor the resolution of internal audit findings.
Risk-based internal audits of specific Group companies, business units and processes.
The external audit plan.
The independence and objectivity of PwC.
The level of fees paid to PwC in accordance with the policy for the provision of non-audit services.
PwC’s reappointment to office as external auditor.
Reviewing and approving the non-audit services and related fees provided by the external auditor.
Conducting an annual review of the effectiveness of the external audit process.
Consideration of the findings of the external regulator’s review of PwC’s 2019 audit.
Quarterly compliance reports from the compliance function including updates on investigations for the quarter
as well as the status of the compliance objectives and KPIs.
The Committee’s Terms of Reference and performance effectiveness.
Compliance with the Code and the Group’s regulatory and legislative environment.
Monitoring and reviewing incidents of whistleblowing.
Reviewing and approving the Modern Slavery Statement.
FINANCIAL
MANAGEMENT
Introduction of an updated Treasury policy and reporting to the Committee on exposure, counterparty and
credit risks.
Cash and debt balances, debt covenants and headroom, and the liquidity available to the Group.
TAXA TION
Review of the Tax Strategy and policy.
Comprehensive review of tax advisors.
Committee Performance
External auditor, tenure and audit plan
PwC is engaged to conduct a statutory audit and express
an opinion on the Company and the Group’s financial
statements. Their audit includes an assessment of the
systems of internal controls that produce the information
contained in the financial statements to the extent necessary
to express an audit opinion.
PwC presented their proposed audit plan (reviewed by senior
management) to the Committee for discussion. The objective
was to ensure that the focus of their work remained aligned
to the Group’s structure and strategy as well as the risk
profile. The audit plan was again risk and materiality focused,
challenge-based and designed to provide a high-quality audit
and other valuable insights.
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Report of the Audit & Risk Committee (continued)
Objectivity and independence
The Committee is responsible for monitoring and reviewing
the objectivity and independence of the external auditor.
In undertaking its annual assessment, the Committee
has reviewed:
• The confirmation from PwC that they maintain
appropriate internal safeguards in line with
applicable professional standards;
• The mitigation actions taken to safeguard PwC’s
independent status, including the operation of policies
designed to regulate the non-audit services provided
by PwC and the employment of former PwC employees;
• The tenure of the audit partner and quality review partner
(such tenure not being greater than five and seven years
respectively); and
• The internal performance and effectiveness review of
PwC referred to above, notably considering the findings
of the external regulator’s review of PwC’s 2019 audit
Taking the above review into account, the Committee
concluded that PwC remained objective and independent
in their role as external auditor.
Effectiveness of the external audit
It is the responsibility of the Audit and Risk Committee
to assess the effectiveness of the external audit process.
Following the issue of our Annual Report and Financial
Statements, the Chairman of the Committee leads the
conduct of a performance evaluation and effectiveness
review of the external audit which covered aspects including:
• The quality of reports provided to the Committee
and the Board and the quality of advice given;
• The level of understanding demonstrated by the audit
team of the Group’s businesses and the energy sector;
• The findings of the external regulator’s review of PwC’s
2019 audit, and the fact that there were no significant
matters arising; and
The objectivity of the external auditor’s views on the controls
around the Group and the robustness of challenge and
findings on areas which required management judgment.
The Committee believe that PwC have performed their audit
services effectively and to a high standard. Areas identified
for development will be shared with them for inclusion in their
audit and service delivery plans going forward.
Significant accounting judgments
The Committee reviewed the significant financial matters in connection with the financial statements, having regard to matters
communicated to the Committee by the auditor. The significant matters considered are set out in the table below.
Significant financial matters considered
How the Committee addressed the matters
Accounting for business combinations and power purchase
agreements in the year of acquisition (including renegotiation
of existing agreements)
In November 2019, the Group acquired two Combined Heat and
power assets in Mexico. Consideration was given to the allocation
of the purchase price for the Mexico CHP assets.
The Committee considered the appropriateness
of the items to which the purchase price has
been allocated as well as main assumptions
used in relation with discount rates and future
cash flows.
Impairment of property, plant and equipment, and financial
and contract assets
As at 31st December 2020, the Group had $3,517.1 million of property,
plant and equipment, the majority of which related to power plant assets,
and $408.3 million of financial and contract assets, the majority of which
related to concession arrangements. Impairment assessments of these
assets requires significant judgment including assumptions of future cash
flows, discount rates and inflation which are by essence judgmental.
The Committee has reviewed the indicators of
impairment and main assumptions retained and
described in the financial statements. The Audit
& Risk Committee concurred with the testing
performed with regards to wind farms in Brazil
and agreed with management’s judgment that
no impairment charge was necessary.
Provisions for claims and contingent liabilities
As at 31st December 2020, the Group had $18.3 million of legal and
other provisions. Legal and other provisions include amounts arising
from claims, litigation and regulatory risks which will be utilized as the
obligations are settled and includes sales tax and interest or penalties
associated with taxes. Legal and other provisions have some uncertainty
over the timing of cash outflows.
The Committee has reviewed the main legal or
contractual claims. As part of its review, the
Committee has considered the judgments from
external or internal counsels made as to the
potential likelihood of any claim succeeding
when making a provision or disclosing a
contingent liability
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Significant financial matters considered
How the Committee addressed the matters
Adjusted EBITDA and recognition of change in fair value of
derivatives
A new adjustment within the reconciliation of Adjusted EBITDA to Profit
Before Tax to include the cash gain on the Mexico CMA fixed margin
swap within Adjusted EBITDA for $15.5 million. Management believe
this is a better measure of financial performance as the purpose of the
instrument is to eliminate volatility in CFE tariffs, gas price, and wheeling
charge by fixing margins on power sales. As such the inclusion of the
cash gain (or loss) on the instrument in Adjusted EBITDA results in the
presentation of earnings to reflect the fixed margin.
The Committee has reviewed this adjustment
and believes the commercial rationale for this
adjustment is reasonable and consistent with
similar items included in Adjusted EBITDA – for
example adjustments made in respect of service
concession arrangements. The Committee also
reviewed the associated disclosures in relation
to Adjusted EBITDA and are satisfied that the
adjustment is appropriately disclosed in the
financial statements to support the ‘fair,
balanced and understandable’ requirement.
Report of the Audit & Risk Committee (continued)
Objectivity and independence
Effectiveness of the external audit
The Committee is responsible for monitoring and reviewing
It is the responsibility of the Audit and Risk Committee
the objectivity and independence of the external auditor.
to assess the effectiveness of the external audit process.
In undertaking its annual assessment, the Committee
Following the issue of our Annual Report and Financial
has reviewed:
• The confirmation from PwC that they maintain
appropriate internal safeguards in line with
applicable professional standards;
• The mitigation actions taken to safeguard PwC’s
Statements, the Chairman of the Committee leads the
conduct of a performance evaluation and effectiveness
review of the external audit which covered aspects including:
• The quality of reports provided to the Committee
and the Board and the quality of advice given;
independent status, including the operation of policies
• The level of understanding demonstrated by the audit
designed to regulate the non-audit services provided
team of the Group’s businesses and the energy sector;
by PwC and the employment of former PwC employees;
• The tenure of the audit partner and quality review partner
(such tenure not being greater than five and seven years
respectively); and
• The internal performance and effectiveness review of
PwC referred to above, notably considering the findings
of the external regulator’s review of PwC’s 2019 audit
Taking the above review into account, the Committee
concluded that PwC remained objective and independent
in their role as external auditor.
• The findings of the external regulator’s review of PwC’s
2019 audit, and the fact that there were no significant
matters arising; and
The objectivity of the external auditor’s views on the controls
around the Group and the robustness of challenge and
findings on areas which required management judgment.
The Committee believe that PwC have performed their audit
services effectively and to a high standard. Areas identified
for development will be shared with them for inclusion in their
audit and service delivery plans going forward.
Significant accounting judgments
The Committee reviewed the significant financial matters in connection with the financial statements, having regard to matters
communicated to the Committee by the auditor. The significant matters considered are set out in the table below.
Significant financial matters considered
How the Committee addressed the matters
Accounting for business combinations and power purchase
agreements in the year of acquisition (including renegotiation
of existing agreements)
In November 2019, the Group acquired two Combined Heat and
power assets in Mexico. Consideration was given to the allocation
of the purchase price for the Mexico CHP assets.
The Committee considered the appropriateness
of the items to which the purchase price has
been allocated as well as main assumptions
used in relation with discount rates and future
cash flows.
Impairment of property, plant and equipment, and financial
and contract assets
As at 31st December 2020, the Group had $3,517.1 million of property,
plant and equipment, the majority of which related to power plant assets,
and $408.3 million of financial and contract assets, the majority of which
related to concession arrangements. Impairment assessments of these
assets requires significant judgment including assumptions of future cash
flows, discount rates and inflation which are by essence judgmental.
The Committee has reviewed the indicators of
impairment and main assumptions retained and
described in the financial statements. The Audit
& Risk Committee concurred with the testing
performed with regards to wind farms in Brazil
and agreed with management’s judgment that
no impairment charge was necessary.
Provisions for claims and contingent liabilities
As at 31st December 2020, the Group had $18.3 million of legal and
other provisions. Legal and other provisions include amounts arising
from claims, litigation and regulatory risks which will be utilized as the
obligations are settled and includes sales tax and interest or penalties
associated with taxes. Legal and other provisions have some uncertainty
over the timing of cash outflows.
The Committee has reviewed the main legal or
contractual claims. As part of its review, the
Committee has considered the judgments from
external or internal counsels made as to the
potential likelihood of any claim succeeding
when making a provision or disclosing a
contingent liability
Kosovo development costs
On 24 May 2020, CG Kosovo delivered a Notice of Termination to the
Government of Kosovo (GoK) in relation of the power plant construction
project and a request that GoK pays a total of €20.1m, including €19.7m
for the development costs incurred up to the development cost cap. CG
subsequently issued a notice of arbitration to GoK in November 2020.
€19.7 million ($24.1 million) is recognized as a non-current asset on the
balance sheet, the recovery of which is dependent on the ability of CG
to enforce the reimbursement of costs under the terms of the project
agreements with GoK in the arbitration process.
The Committee assessed the judgments around
the recovery of this asset which is likely to
depend on the outcome of the arbitration
proceedings and so is subject to some degree
of judgement. The Group believes it will be able
to demonstrate that the project failed to close
for reasons attributable to the GoK and/or the
relevant publicly owned companies, which is
the key judgement that supports the recognition
of the asset.
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These items were considered significant considering the
level of materiality and the degree of judgment exercised
by management. The Committee discussed these with
management and PwC, to understand any areas where there
had been or continued to be differences of opinion, and to
satisfy itself that the conclusions drawn were reasonable and
supportable based on the information available at the time,
and that the corresponding disclosures were appropriate.
As a result of this discussion, the Committee was satisfied
that all issues had been fully and adequately addressed
and that the judgments made were reasonable, appropriate,
and disclosed accordingly in the financial statements, and
had been reviewed and challenged by the external auditor,
who concurred with the approach taken by management.
In addition, the Committee considered, acted and made
onward recommendations to the Board, as appropriate, in
respect of other key matters including the viability statement,
the going concern basis on which the financial statements are
prepared and other specific areas of audit focus.
Non-audit services
During the year, the Committee adopted a revised non-audit
services policy to reflect independence rules within the FRC’s
Revised Ethical Standard 2019. PwC UK continues to provide
certain services to the Company in accordance with the
independence rules set out in the revised policy. As a
result, the volume of non-audit services performed by
PwC in respect of the Company, its subsidiaries and related
entities worldwide reduced significantly in 2020, both in
absolute terms and in relation to the fees payable to PwC
for the 2020 audit, as anticipated in 2019.
The non-audit fees paid to PwC for 2020 were $1 million
($1.5 million in 2019), including $0.3 million for the half-yearly
review ($0.2 million in 2019).
Audit tendering
The French firm of PwC was first appointed as the external
auditors of the Group in 2013. The UK firm was first appointed
at the time of the IPO in 2017, and hence the UK firm was the
first appointee to the audit of ContourGlobal plc. Matthew Hall
is the current lead audit partner. Under current regulations,
we will be required to retender the audit by no later than the
2027 financial year. Matthew Hall is required to be rotated off
as audit partner by 2022 and the Committee will liaise with
PwC to address this requirement during the 2021 financial
year. Having regard to the quality, stability and continuity of
the relationship with PwC as the current auditor, the Board
believes that it is in the best interests of the Company and
shareholders to tender the audit contract by a date no later
than that stipulated by the current regulations. On the
recommendation of the Audit and Risk Committee, the
Board is proposing a resolution at this year’s Annual General
Meeting that PwC is reappointed as auditor for a further year.
The Company confirms that it has complied with the
provisions of the Competition and Markets Authority’s
Statutory Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive Tender
Processes and Audit & Risk Committee Responsibilities)
Order 2014 for the 2020 financial year.
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Report of the Audit & Risk Committee (continued)
Audit fee
The fees payable to PwC for the 2020 audit are $2.3 million
($2.7 million in 2019).
Risk management framework and
internal control
The Board is responsible for determining the Group’s risk
management framework and the nature and extent of the risk
appetite that is acceptable in seeking to achieve its strategic
objectives, for overseeing the Group’s risk management
processes and internal controls, reviewing their effectiveness
and reporting on the outcome of their review in the Annual
Report and Financial Statements, assisted by the Committee.
An overview of the risk management process explaining
the key elements of the approach to risk, any changes to
the process over the course of the current year and the key
risk management priorities for 2021 is described on pages
62 to 71.
Primary responsibility for operation of the Company’s
internal control and risk management systems, which include
financial, operational and compliance controls (and accord
with the FRC’s 2014 ‘Guidance on Risk Management, Internal
Control and Related Financial and Business Reporting’),
has been delegated to management. These systems, which
have been in place for the whole of 2020 and continue to be
operative as at the date of this Report, have been designed
to manage, rather than eliminate, the risk of failure to achieve
the Group’s business goals and can provide only reasonable,
not absolute, assurance against material misstatement or
loss. During the year, the internal control framework was
reviewed and revised to incorporate a more risk-based
and streamlined approach and allow for increasing the
application of automation. Management also strengthened
the internal controls documentation in certain areas.
The Committee, in consultation with management, agrees
the annual work plan (including any assistance that may
be required from external specialists) of the internal audit
function to ensure alignment with the needs of the business
and compliance with its governance charter. On a quarterly
basis, the Committee receives and discusses the Group’s
risk register, including significant and emerging risks, and
how exposures have changed during the period; summary
reports of findings and recommendations from completion
of the internal audit plan; and progress against completion
of agreed actions from internal audit on their review of the
effectiveness of various elements of the internal control
system maintained by the Group. The Board is satisfied that
the system of risk and internal control management accords
with the Code and satisfies the requirements for internal
controls over financial reporting. The management team
has continued to further enhance risk awareness across
the Group during the year.
Effectiveness
In line with the provisions of the Code, the Board has
responsibility for carrying out a robust analysis of the
Group’s emerging and principal risks. The Board has
undertaken a careful assessment of the principal and
emerging risks faced by the Group, including those that could
threaten the business model, and its future performance,
solvency and liquidity, as well as monitoring compliance to
ensure that any mitigating actions are properly managed
and completed. Assisted by the Committee, the Board also
reviewed the effectiveness of internal control systems and
risk management processes in place throughout the year
and up to the date of this report, which, in 2020, has also
included consideration of the impact of COVID-19.
The Board’s review also covers the work undertaken by
the internal audit function, which includes a Head of Internal
Audit as well as a co-sourcing partner (with direct access to
the Committee chairman), and the relevant process, controls
and testing work undertaken by PwC as part of their half-
yearly review and full-year audit.
The Committee has not identified, nor been advised of, any
failings or weaknesses that it has determined to be significant
despite the present limitations and challenges imposed by
the pandemic. As part of its review, the Committee noted
that no significant internal control matters had been raised
by PwC in the context of their annual external audit. Where
areas for improvement were identified, new procedures
have been introduced to strengthen the controls and will
themselves be subject to regular review as part of the
ongoing assurance process.
Fair, balanced and understandable
The Committee applied the same due diligence approach
adopted in previous years in order to assess whether the
Annual Report and Financial Statements taken as a whole is
fair, balanced and understandable. The Committee received
assurance from the verification process carried out on the
content of the Annual Report and Financial Statements by
the Executive Directors to ensure consistent reporting and
the existence of appropriate links between key messages
and relevant sections of the Annual Report and this was
supported by a robust schedule of review and verification
by senior management and external advisors to ensure
disclosures are accurate. The Committee itself reviewed a
full draft of the document and considered whether all key
events reported to the Board and its Committees during the
year, both positive and negative, were adequately reflected,
as well as the consistency between the narrative sections
and the financial statements. The Committee also considered
the use of adjusted measures by the Group and confirmed
that these were appropriate for aiding users of the Group’s
financial statements to better understand its performance
year on year.
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Report of the Audit & Risk Committee (continued)
The fees payable to PwC for the 2020 audit are $2.3 million
In line with the provisions of the Code, the Board has
Audit fee
($2.7 million in 2019).
Risk management framework and
internal control
The Board is responsible for determining the Group’s risk
management framework and the nature and extent of the risk
appetite that is acceptable in seeking to achieve its strategic
objectives, for overseeing the Group’s risk management
processes and internal controls, reviewing their effectiveness
and reporting on the outcome of their review in the Annual
Report and Financial Statements, assisted by the Committee.
An overview of the risk management process explaining
the key elements of the approach to risk, any changes to
the process over the course of the current year and the key
risk management priorities for 2021 is described on pages
62 to 71.
Primary responsibility for operation of the Company’s
internal control and risk management systems, which include
financial, operational and compliance controls (and accord
with the FRC’s 2014 ‘Guidance on Risk Management, Internal
Control and Related Financial and Business Reporting’),
has been delegated to management. These systems, which
have been in place for the whole of 2020 and continue to be
operative as at the date of this Report, have been designed
to manage, rather than eliminate, the risk of failure to achieve
the Group’s business goals and can provide only reasonable,
not absolute, assurance against material misstatement or
loss. During the year, the internal control framework was
reviewed and revised to incorporate a more risk-based
and streamlined approach and allow for increasing the
application of automation. Management also strengthened
the internal controls documentation in certain areas.
The Committee, in consultation with management, agrees
the annual work plan (including any assistance that may
be required from external specialists) of the internal audit
Effectiveness
responsibility for carrying out a robust analysis of the
Group’s emerging and principal risks. The Board has
undertaken a careful assessment of the principal and
emerging risks faced by the Group, including those that could
threaten the business model, and its future performance,
solvency and liquidity, as well as monitoring compliance to
ensure that any mitigating actions are properly managed
and completed. Assisted by the Committee, the Board also
reviewed the effectiveness of internal control systems and
risk management processes in place throughout the year
and up to the date of this report, which, in 2020, has also
included consideration of the impact of COVID-19.
The Board’s review also covers the work undertaken by
the internal audit function, which includes a Head of Internal
Audit as well as a co-sourcing partner (with direct access to
the Committee chairman), and the relevant process, controls
and testing work undertaken by PwC as part of their half-
yearly review and full-year audit.
The Committee has not identified, nor been advised of, any
failings or weaknesses that it has determined to be significant
despite the present limitations and challenges imposed by
the pandemic. As part of its review, the Committee noted
that no significant internal control matters had been raised
by PwC in the context of their annual external audit. Where
areas for improvement were identified, new procedures
have been introduced to strengthen the controls and will
themselves be subject to regular review as part of the
ongoing assurance process.
Fair, balanced and understandable
The Committee applied the same due diligence approach
adopted in previous years in order to assess whether the
Annual Report and Financial Statements taken as a whole is
fair, balanced and understandable. The Committee received
assurance from the verification process carried out on the
content of the Annual Report and Financial Statements by
function to ensure alignment with the needs of the business
the Executive Directors to ensure consistent reporting and
and compliance with its governance charter. On a quarterly
the existence of appropriate links between key messages
basis, the Committee receives and discusses the Group’s
risk register, including significant and emerging risks, and
and relevant sections of the Annual Report and this was
supported by a robust schedule of review and verification
how exposures have changed during the period; summary
by senior management and external advisors to ensure
reports of findings and recommendations from completion
of the internal audit plan; and progress against completion
of agreed actions from internal audit on their review of the
effectiveness of various elements of the internal control
disclosures are accurate. The Committee itself reviewed a
full draft of the document and considered whether all key
events reported to the Board and its Committees during the
year, both positive and negative, were adequately reflected,
system maintained by the Group. The Board is satisfied that
as well as the consistency between the narrative sections
the system of risk and internal control management accords
and the financial statements. The Committee also considered
with the Code and satisfies the requirements for internal
controls over financial reporting. The management team
has continued to further enhance risk awareness across
the use of adjusted measures by the Group and confirmed
that these were appropriate for aiding users of the Group’s
financial statements to better understand its performance
the Group during the year.
year on year.
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Taking the above into account, together with the views
expressed by PwC, the Committee recommended, and in
turn the Board confirmed, that the 2020 Annual Report,
taken as a whole, is fair, balanced and understandable and
provides the necessary information for shareholders to
assess the Company’s position, performance, business
model and strategy.
Internal control
The key elements of the Group’s internal control
are as follows:
• The Company has developed and implemented
a detailed internal control management system
and has a dedicated internal control function
within the Group Finance function.
• An established organization structure with
clear lines of responsibility, approval levels
and delegated authorities.
• A disciplined management and Committee
structure which facilitates regular performance
review and decision-making.
• A comprehensive strategic review and annual
planning process.
• A robust budgeting, forecasting and financial
reporting process.
• Various policies, procedures and guidelines
underpinning the development, asset
management, financing and main operations
of the business, together with professional
services support including legal, human
resources, information services, tax, company
secretarial and health, safety and security
including cyber security.
• A compliance certification process from
management conducted in relation to the
half-yearly and full-year results, and business
activities generally.
• A quarterly self-certification by management
confirming that key internal controls within their
respective areas of responsibility have been
operating effectively.
• An internal audit function whose work spans
the whole Group with assurance support from
KPMG LLP who provide the team with additional
resource and skills.
• A focused post-acquisition review and
integration program to ensure the Group’s
governance, procedures, standards and control
environment are implemented effectively and
on time.
• A financial and property information
management system.
Whistleblowing mechanism
On behalf of the Board, the Committee reviews the
Group’s whistleblowing mechanism which allows employees
and third parties to report concerns about suspected
impropriety or wrongdoing (whether financial or otherwise)
on a confidential basis, and anonymously if preferred. This
includes an independent third-party reporting facility
comprising a telephone hotline and an online process. Any
matters reported are investigated in line with our internal
procedures and escalated to the Board, via the Committee,
as appropriate. The Committee and the Board has access
through regular compliance reports to details on matters
raised through the whistleblowing procedure, a description
of the way issues have been addressed and recommended
remediation. The Committee is also provided with quarterly
and full year trend data on whistleblower complaints, and
provides assurance to the Board through regular reporting
that appropriate arrangements are in place for the
proportionate and independent investigation of matters
raised and for appropriate follow-up.
The Company provides regular training to existing employees
reminding them about the available reporting mechanisms
within the Company, including EthicsLine, and the obligations
to report violations of the Company’s policies. The
arrangements also form part of the induction program
for new employees.
Bribery and anti-corruption policy
The Board has a zero-tolerance policy for bribery and
corruption of any sort. We give regular training to employees
on the procedures, highlighting areas of vulnerability. Our
third-party providers are required to comply with our policies
or evidence that they have similar policies and practices in
place within their own businesses on a risk-adjusted basis.
Annual Evaluation Progress on 2020 Actions
The Committee has continued to focus on and has enhanced
its reporting in respect of its activities. The Committee agreed
that the focus for 2021 should be on increasing the number
of deep dives into the business to further build upon its
knowledge of risks within the business.
Shareholder engagement
As Chairman of the Committee, I am ready to engage with
shareholders on significant audit and risk matters. No such
requests were received during 2020.
Ronald Trächsel
Chairman of the Audit & Risk Committee
18th March 2021
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Report of the Remuneration Committee
REPORT OF THE
REMUNERATION COMMITTEE
At ContourGlobal, no employees were furloughed as a result
of the COVID-19 pandemic. We implemented comprehensive
and innovative measures across our global business with
the intention of protecting our workforce. These included
reviewing shift patterns to allow people to work in a less
densely populated environment, hiring physicians on site
to support our employees, introducing remote control
technology, and encouraging our most vulnerable employees
to stay at home (while receiving full pay). We also materially
increased pay for front line workers – those in our power
plants – by awarding a special one-time $2,020 equivalent
payment to every one of them.
Performance in 2020
The resilience of ContourGlobal’s business model, with
technology sophisticated and connected, reliable business
continuity plans and the strength of our management team,
meant we were able to continue to grow notwithstanding
the challenges presented by the pandemic. We delivered an
adjusted EBITDA performance of $722m, an increase of 3%
on prior year. In terms of our growth strategy we completed
on our acquisition of the US and Trinidad & Tobago Portfolio.
Corporate performance as well as strong individual
performance from both Executive Directors, resulted
in annual bonus out-turns of 85% of maximum for the
President & CEO and Chief Financial Officer. The
Committee considered these outcomes reflective
of overall performance during 2020.
Vesting of 2018 LTIP
Following the completion of its three-year performance
period to 31st December 2020, our first LTIP award
granted following our IPO in 2018 will vest in 2021. This
award was subject to EBITDA, Health and Safety and Growth
performance. In terms of the Growth metric, this is measured
by reference to IRR of key projects and completion of
relevant milestones. Based on targets set, the vesting
outcome is 54.4% of maximum.
Members of the Remuneration
Committee
• Daniel Camus (Chairman)
• Mariana Gheorghe
• Dr. Alan Gillespie
Meeting attendance shown on page 91
Dear shareholder,
I am pleased to present the Directors’ Remuneration Report
for 2020.
Undoubtedly, the global COVID-19 pandemic presented new
challenges in 2020. Power generation is however deemed
an essential activity in the countries in which we operate, and
we therefore did not experience any meaningful disruption
to our operations due to COVID-19 during the year. Due to
ample liquidity, the financial impact of COVID-19 was also
minimal and we continued to pay our dividend. Our priority
throughout the pandemic was therefore on the health and
safety of our employees, and providing continuity of service.
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Report of the Remuneration Committee
REPORT OF THE
REMUNERATION COMMITTEE
At ContourGlobal, no employees were furloughed as a result
of the COVID-19 pandemic. We implemented comprehensive
and innovative measures across our global business with
the intention of protecting our workforce. These included
reviewing shift patterns to allow people to work in a less
densely populated environment, hiring physicians on site
to support our employees, introducing remote control
technology, and encouraging our most vulnerable employees
to stay at home (while receiving full pay). We also materially
increased pay for front line workers – those in our power
plants – by awarding a special one-time $2,020 equivalent
payment to every one of them.
Performance in 2020
The resilience of ContourGlobal’s business model, with
technology sophisticated and connected, reliable business
continuity plans and the strength of our management team,
meant we were able to continue to grow notwithstanding
the challenges presented by the pandemic. We delivered an
adjusted EBITDA performance of $722m, an increase of 3%
on prior year. In terms of our growth strategy we completed
on our acquisition of the US and Trinidad & Tobago Portfolio.
Corporate performance as well as strong individual
performance from both Executive Directors, resulted
in annual bonus out-turns of 85% of maximum for the
President & CEO and Chief Financial Officer. The
Committee considered these outcomes reflective
of overall performance during 2020.
Vesting of 2018 LTIP
period to 31st December 2020, our first LTIP award
granted following our IPO in 2018 will vest in 2021. This
award was subject to EBITDA, Health and Safety and Growth
performance. In terms of the Growth metric, this is measured
by reference to IRR of key projects and completion of
relevant milestones. Based on targets set, the vesting
outcome is 54.4% of maximum.
Members of the Remuneration
Committee
• Daniel Camus (Chairman)
• Mariana Gheorghe
• Dr. Alan Gillespie
Meeting attendance shown on page 91
Dear shareholder,
for 2020.
Undoubtedly, the global COVID-19 pandemic presented new
challenges in 2020. Power generation is however deemed
an essential activity in the countries in which we operate, and
we therefore did not experience any meaningful disruption
to our operations due to COVID-19 during the year. Due to
ample liquidity, the financial impact of COVID-19 was also
minimal and we continued to pay our dividend. Our priority
throughout the pandemic was therefore on the health and
safety of our employees, and providing continuity of service.
I am pleased to present the Directors’ Remuneration Report
Following the completion of its three-year performance
Renewal of Remuneration Policy
In accordance with the normal three-year cycle under UK
remuneration regulations, we are required to submit our
Directors’ Remuneration Policy for shareholder approval at
our 2021 AGM. Ahead of this, the Committee spent time
considering our executive remuneration framework and
determined that overall this framework had been effective
in supporting and incentivizing the delivery of our strategy
whilst aligning with the interests of our shareholders. The
Committee also did not consider that this year was the
appropriate time to be making material changes to our
Directors’ Remuneration Policy. We are therefore proposing
to submit, for shareholder approval, a Policy which continues
with the current framework.
It is the Remuneration Committee’s current intention that
next year a more comprehensive review of our remuneration
arrangements is undertaken to ensure that these remain
appropriate for our business and forward-looking strategy.
Dependent on the outcome of that review we may revert
to shareholders with a proposed new Policy in 2022.
Notwithstanding the above, as part of our Policy renewal this
year, the Committee will be formalising a number of changes
in its operation, which have been made since the approval
of our current Policy in 2018. These include:
• Alignment of Executive Director pensions with the
workforce rate.
• Increased share ownership guidelines for Executive
Directors of 250% of salary and, introduced in 2020,
a post-employment shareholding guideline.
• Expanded recovery and withholding provisions under
the annual bonus and LTIP.
Implementation of Policy for 2021
There will be no salary increases for Executive Directors in
2021 and incentive opportunity levels will remain unchanged.
For 2021, the overall annual bonus framework will remain
consistent with prior years. The corporate scorecard, which
comprises 70% of the total bonus, will be subject to financial
(50% weighting), operational (30% weighting) and growth (20%
weighting) performance over the year. Individual objectives will
continue to comprise the remaining 30% of the total bonus.
In respect of the LTIP, the Committee is undertaking
a more thorough review of performance measures to
ensure these remain appropriate, including consideration
of environmental, social and governance measures. The
Committee will disclose the measures and targets on the
Company website and via an RNS in advance of the 2021
AGM, so that shareholders and other stakeholders have
this information before voting at the General Meeting.
Key areas of focus in the year
Review of Directors’ Remuneration Policy
• Reviewed our Directors’ Remuneration Policy
ahead of submitting for shareholder approval
at the 2021 AGM
Incentive arrangements
• Reviewed and approved annual bonus payouts
and targets
• Approved the grant of performance share,
restricted share, and deferred bonus awards
under the long term incentive plan
• Review of LTIP performance measures.
Compliance and governance
• Reviewed practices and changes to corporate
governance environment with regards to
remuneration arrangements and the
Committee’s remit
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Report of the Remuneration Committee (continued)
Legacy arrangements
In December 2020, part of the President & CEO’s legacy
interest in the Private Incentive Plan (PIP) vested. The value
of this interest is reported in our remuneration table for
2020. As disclosed at the time of the IPO, this is a legacy
arrangement established by Reservoir Capital Group (the
major shareholder in the Company) in connection with its
original investment in the business. The Company is not party
to and has no financial obligation to pay cash or issue shares
to settle the PIP. Value delivered under this arrangement has
been funded by Reservoir Capital Group.
Conclusion
In line with the remuneration reporting regulations, at our
forthcoming AGM, our renewed Directors’ Remuneration Policy
will be subject to a binding shareholder vote and the reminder
of this report, including the Annual Report on Remuneration,
will be subject to an advisory shareholder vote. I hope you will
continue to support our approach to executive remuneration.
Yours sincerely
Daniel Camus
Chairman of the Remuneration Committee
18 March 2021
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Index to the Remuneration report
Part 1: Remuneration at a glance
Summary of remuneration policy and
implementation for 2021
Alignment of remuneration strategy
with our core principles
Part 2: Remuneration Policy
Remuneration Policy for shareholder
approval at the 2021 AGM
Part 3: Annual Report
on Remuneration
Governance
Total remuneration
Annual bonus for 2020
Long-term incentive awards vesting in
respect of 2020
Long-term incentive awards granted
in 2020
Deferred bonus awards granted in 2020
Implementation of Non-Executive Director
remuneration policy
Director shareholdings and share interests
Director service contracts
Payments for loss of office
Policy on external appointments
Percentage change in remuneration
Broader executive team and workforce
remuneration
Comparison of overall performance
and pay
Relative importance of spend on pay
External advisors to the Committee
Statement of voting on the Remuneration
Report
Legacy equity arrangements
Statement of compliance and approval
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Report of the Remuneration Committee (continued)
Legacy arrangements
In December 2020, part of the President & CEO’s legacy
interest in the Private Incentive Plan (PIP) vested. The value
of this interest is reported in our remuneration table for
2020. As disclosed at the time of the IPO, this is a legacy
arrangement established by Reservoir Capital Group (the
major shareholder in the Company) in connection with its
original investment in the business. The Company is not party
to and has no financial obligation to pay cash or issue shares
to settle the PIP. Value delivered under this arrangement has
been funded by Reservoir Capital Group.
Conclusion
In line with the remuneration reporting regulations, at our
forthcoming AGM, our renewed Directors’ Remuneration Policy
will be subject to a binding shareholder vote and the reminder
of this report, including the Annual Report on Remuneration,
will be subject to an advisory shareholder vote. I hope you will
continue to support our approach to executive remuneration.
Yours sincerely
Daniel Camus
Chairman of the Remuneration Committee
18 March 2021
Index to the Remuneration report
Part 1: Remuneration at a glance
Summary of remuneration policy and
implementation for 2021
Alignment of remuneration strategy
with our core principles
Part 2: Remuneration Policy
Remuneration Policy for shareholder
approval at the 2021 AGM
Part 3: Annual Report
on Remuneration
Governance
Total remuneration
Annual bonus for 2020
Long-term incentive awards vesting in
respect of 2020
Long-term incentive awards granted
in 2020
Deferred bonus awards granted in 2020
Implementation of Non-Executive Director
remuneration policy
Director shareholdings and share interests
Director service contracts
Payments for loss of office
Policy on external appointments
Percentage change in remuneration
Broader executive team and workforce
remuneration
and pay
Comparison of overall performance
Relative importance of spend on pay
External advisors to the Committee
Statement of voting on the Remuneration
Report
Legacy equity arrangements
Statement of compliance and approval
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Remuneration at a glance
Consideration of wider workforce – COVID-19 pandemic
• No employees were furloughed as a result of the COVID-19 pandemic.
• Management’s first priority remained, and continues to remain, the health and safety of our employees.
• Implementation of comprehensive and innovative measures across our global business with the intention
of protecting our workforce. These include reviewing shift patterns to allow people to work in a less densely
populated environment, hiring physicians on site to support our employees, introducing remote control
technology, and encouraging our most vulnerable employees to stay at home (while receiving full pay).
• Materially increased pay for our front line workers – for those in our power plants, a special one-time
$2,020 equivalent payment to every one of them.
Summary of Remuneration Policy and implementation for 2021
Our Remuneration Policy for Executive and Non-Executive Directors will be presented for shareholder approval at our
2021 AGM. The below summarizes the key elements of the Remuneration Policy and how it will be implemented for 2021,
if approved.
Remuneration
component
Salary
Pension and
benefits
Summary of Remuneration Policy
• Normally reviewed annually, with any changes taking effect from
1st January.
• Set taking into account a number of factors including but not limited
to individual and Company performance, an individual’s skills and
experience, the responsibilities of the role.
• In considering any increase, the Committee is guided by the
general increase for the broader employee population.
• The Company may make contributions, or payment in lieu of
contributions, to a pension scheme. Pension is set in line with
the wider workforce.
• Benefits may include, but are not limited to, private medical
insurance, dental insurance, company car or allowance, life
assurance and income protection. Benefits in relation to
relocation or expatriation may be provided.
Annual
performance
bonus
• Maximum opportunity is:
• 100% of base salary for the current President & CEO
• 150% of base salary for any other Executive Director (including
any future CEO)
• Subject to stretching performance conditions, normally set by the
Committee at the start of each financial year.
• At least 70% of the bonus will be subject to corporate objectives
with the balance based on individual objectives.
• The Committee may adjust the bonus outcome taking into
account any relevant factors, including the Company’s
underlying performance.
• Any bonus earned in excess of 50% of maximum is deferred
into shares for a period of two years.
• Malus and clawback provisions apply.
Remuneration for Executive Directors for 2021
Base salary
effective 1
January 2021
Increase from
2020
President & CEO
$1,200,000
0%
Chief Financial Officer
• No changes for 2021.
• The current President & CEO does not receive
£375,000
0%
any pension contributions or retirement benefits.
• The Chief Financial Officer receives a pension
allowance of 11% of salary, which is in line with
other UK employees (excluding Northern Ireland).
• Executive Directors receive benefits in line with
the Remuneration Policy.
• The overall annual bonus framework for 2021 is
consistent with 2020.
• The maximum opportunity will be 100% of salary
for the President & CEO and 115% of salary for the
Chief Financial Officer.
• Bonus will be based on achievement of corporate
objectives (70%) and individual objectives (30%).
Performance measures for 2021 are:
Performance Metrics
% of Opportunity
Adjusted EBITDA
FFO
Operational metrics
Growth metrics
Sub-Total
Individual objectives
• Targets and performance against these will be
17.5%
17.5%
21%
14%
70%
30%
disclosed retrospectively.
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Report of the Remuneration Committee (continued)
Remuneration
component
Long-Term
Incentive Plan
(LTIP)
Summary of Remuneration Policy
• Maximum opportunity is:
• 100% of base salary for the current President
& CEO
• 200% of base salary for any other Executive
Director (including any future CEO)
• Performance measured over three years.
• The Committee has the flexibility to vary the
performance measures and weightings for each
award taking into account the business priorities
at the time of grant.
• The Committee may adjust the vesting outcome
if it considers that it is not consistent with the
Company’s overall performance.
• An additional two-year holding period
applies post-vesting.
• Malus and clawback provisions apply.
Share
ownership
guidelines
• Executive Directors are required to build and retain
a shareholding in the Company equivalent to at
least 250% of salary.
• A post-employment shareholding guideline
will apply for one year following cessation
of employment.
Legacy
arrangements
• The President & CEO has interests in a ‘Private
Incentive Plan’ (PIP). These relate to legacy
commitments prior to ContourGlobal’s listing,
reflecting that the President & CEO co-founded
the Company in 2005.
• The Company is not a party to the PIP and
has no financial obligation in connection with it.
• The President & CEO also has a carried interest
arrangement which was established in 2008 and
which is funded by a minority co-owner of certain
assets of the Company. The Company has no
financial obligation in relation to these interests.
Remuneration for Executive Directors for 2021
• The maximum opportunity will be 100% of salary for the President
& CEO and 200% of salary for the Chief Financial Officer.
• The Committee is undertaking a more thorough review of
performance measures to ensure these remain appropriate,
including consideration of environmental, social and governance
measures. The Committee will disclose the measures and targets
on the Company website and via an RNS in advance of the 2021
AGM, so that shareholders and other stakeholders have this
information before voting at the General Meeting.
• No changes for 2021.
• The President & CEO has met the guideline in full.
• The Chief Financial Officer has yet to meet the guideline.
However, he will be required to retain at least half of any
share awards vesting (net of tax) under the Company’s
discretionary share-based employee incentive schemes
until the guideline is met.
• Any new Executive Director, including the Chief Financial Officer,
is expected to meet their share ownership guideline within five
years of appointment.
• These arrangements do not form part of ContourGlobal plc’s
ongoing policy.
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Report of the Remuneration Committee (continued)
Remuneration
component
Long-Term
Incentive Plan
(LTIP)
Summary of Remuneration Policy
• Maximum opportunity is:
• The maximum opportunity will be 100% of salary for the President
Remuneration for Executive Directors for 2021
• 100% of base salary for the current President
& CEO and 200% of salary for the Chief Financial Officer.
& CEO
• The Committee is undertaking a more thorough review of
• 200% of base salary for any other Executive
performance measures to ensure these remain appropriate,
including consideration of environmental, social and governance
measures. The Committee will disclose the measures and targets
on the Company website and via an RNS in advance of the 2021
AGM, so that shareholders and other stakeholders have this
information before voting at the General Meeting.
Share
ownership
guidelines
• Executive Directors are required to build and retain
• No changes for 2021.
a shareholding in the Company equivalent to at
• The President & CEO has met the guideline in full.
• The Chief Financial Officer has yet to meet the guideline.
However, he will be required to retain at least half of any
share awards vesting (net of tax) under the Company’s
discretionary share-based employee incentive schemes
until the guideline is met.
• Any new Executive Director, including the Chief Financial Officer,
is expected to meet their share ownership guideline within five
years of appointment.
Director (including any future CEO)
• Performance measured over three years.
• The Committee has the flexibility to vary the
performance measures and weightings for each
award taking into account the business priorities
at the time of grant.
• The Committee may adjust the vesting outcome
if it considers that it is not consistent with the
Company’s overall performance.
• An additional two-year holding period
applies post-vesting.
• Malus and clawback provisions apply.
least 250% of salary.
• A post-employment shareholding guideline
will apply for one year following cessation
of employment.
commitments prior to ContourGlobal’s listing,
reflecting that the President & CEO co-founded
the Company in 2005.
• The Company is not a party to the PIP and
has no financial obligation in connection with it.
• The President & CEO also has a carried interest
arrangement which was established in 2008 and
which is funded by a minority co-owner of certain
assets of the Company. The Company has no
financial obligation in relation to these interests.
Remuneration strategy and alignment with our core principles
ContourGlobal’s core business principles guide our day-to-day operations and our sustainable business strategy, driving
positive, long-term and measurable business impacts.
The Committee is cognizant of these principles when designing and implementing the Remuneration Policy and considers that
the current executive remuneration framework appropriately addresses the following factors, as set out in the UK Corporate
Governance Code.
CLA RITY
The Committee is committed to providing open and transparent disclosures with regards
to executive remuneration arrangements.
The Committee provides additional information on legacy arrangements. The Company
is not party to these arrangements and does not have any financial obligation in connection
with them.
SIMPLIC ITY
Our ongoing executive remuneration arrangements are in line with typical practice for
a UK-listed company and are well understood by both participants and shareholders.
RISK
The Committee has discretion to adjust annual bonus and LTIP outcomes if it considers these
to be inconsistent with overall Company performance, taking into account any relevant factors.
Legacy
• The President & CEO has interests in a ‘Private
• These arrangements do not form part of ContourGlobal plc’s
arrangements
Incentive Plan’ (PIP). These relate to legacy
ongoing policy.
PR EDICTAB ILIT Y
PR OPOR TIONA LIT Y
Malus and clawback provisions apply for both the annual bonus and LTIP.
Post-employment shareholding requirements support a focus on long-term stewardship
of the Company.
The Remuneration Policy contains details of maximum opportunity levels for each component
of pay, with actual incentive outcomes varying depending on the level of performance
achieved against specific measures.
As part of our transparent approach, we provide full details of legacy arrangements including
illustrative potential values.
Our Remuneration Policy has been designed to provide an appropriate balance between
short- and long-term performance targets linked to the delivery of the Company’s strategic
plan and aligned with the Company’s risk appetite.
ContourGlobal operates across 18 countries. When determining remuneration arrangements
for Executive Directors the Committee considers broader workforce remuneration and related
policies across the global business. The Group only has 15 permanent employees in the UK
and therefore falls below the threshold required to disclose pay ratios.
The Committee considers that remuneration arrangements for Executive Directors are
appropriate taking into account the principles, policy and practice for workforce remuneration
and the locality of the relevant Executive Director.
ALIGNMENT T O
CULTUR E
The metrics used within our incentive arrangements for Executive Directors are aligned to
ContourGlobal’s core principles, with the aim of driving behaviors consistent with the
Company’s purpose, values and strategy.
One of our key values relates to our employee’s health and safety, and this is reflected
in our incentive framework.
Fostering a culture of share ownership within the business is a key part of our
remuneration approach.
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Report of the Remuneration Committee (continued)
Alignment of performance measures with core principles
pproach for Executive Directors,
Our core principles are aligned with the metrics used under our remuneration approach for Executive Directors,
as illustrated below.
core business principles
ContourGlobal – our core business principles
Measures used in incentive schemes
Grow well
w well
Manage our
Manage our
business
business
responsibly
responsibly
Enhance our
En
operating
op
environment
env
Operate
safely and
efficiently and
minimize
environmental
impact
Adjusted EBITDA growth
Adjusted Funds From Operations (FFO)
Lost Time Incidents
Fleet Availability
Refurbishment milestones
CO2 capture
Non-fuel operations and maintenance cost
M&A milestones
(project completion; incremental EBITDA)
Project Internal Rate of Return and milestones
Strategic personal objectives
Annual bonus metric
LTIP metric
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Report of the Remuneration Committee (continued)
Alignment of performance measures with core principles
Our core principles are aligned with the metrics used under our remuneration approach for Executive Directors,
pproach for Executive Directors,
as illustrated below.
ContourGlobal – our core business principles
core business principles
Measures used in incentive schemes
Grow well
w well
Manage our
Manage our
Enhance our
En
business
business
responsibly
responsibly
operating
op
environment
env
Operate
safely and
efficiently and
minimize
environmental
impact
Adjusted EBITDA growth
Adjusted Funds From Operations (FFO)
Lost Time Incidents
Fleet Availability
Refurbishment milestones
CO2 capture
Non-fuel operations and maintenance cost
M&A milestones
(project completion; incremental EBITDA)
Project Internal Rate of Return and milestones
Strategic personal objectives
Annual bonus metric
LTIP metric
Remuneration Policy
Directors’ Remuneration Policy
This part of the Remuneration Report sets out the Remuneration Policy for Executive and Non-Executive Directors. The Policy
will be put to a binding shareholder vote at the AGM on 12th May 2021 and, subject to shareholder approval, will take formal
effect from that date.
Renewal of Remuneration Policy
During 2020, the Committee undertook a review of the Remuneration Policy and its implementation. The Committee however
did not consider that this year was the appropriate time to be making material changes to the Remuneration Policy, which
continues to be effective in supporting and incentivizing the delivery of the Company’s strategy whilst aligning with the
long-term interests of shareholders. The renewed Remuneration Policy does however formalize a number of changes made
since the approval of our previous Remuneration Policy in 2018. This includes:
• Alignment of executive director pensions with the workforce rate.
• Increased share ownership guidelines for executive directors of 250% of salary and, introduced in 2020, a post-employment
shareholding guideline.
• Expanded recovery and withholding provisions under the annual bonus and LTIP.
In addition, a number of other minor drafting changes have been made to clarify how the Remuneration Policy operates and
provide additional transparency over the Company’s remuneration arrangements. In the development of this Remuneration
Policy, the Committee followed a robust process and sought input from both management and its independent advisors, while
ensuring that any conflicts of interest were appropriately managed. The Committee also wrote to key shareholders seeking
their views on the proposed renewal as well as any other matters around executive remuneration at the Company and
feedback was considered as part of the review.
In determining executive remuneration, the Committee continues to apply the following principles:
• Attract, retain and motivate high-quality executives in order to deliver the Company’s strategic goals and business objectives
• Align the interests of executives with those of shareholders and other external stakeholders
• Be simple and understandable, both internally and externally
• Have a significant proportion of total remuneration tied to the achievement of stretching performance conditions to ensure
individuals are rewarded fairly for success, while ensuring prevention of rewards for failure
• Provide an appropriate balance between short- and long-term performance targets linked to the delivery of the Company’s
strategic plan and aligned with the Company’s risk appetite
• Take account of good governance and promote the long-term success of the Group
• Consider the wider pay environment, both internally and externally.
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Report of the Remuneration Committee (continued)
Remuneration Policy table
The table below sets out, for each element of pay, a summary of how remuneration is structured and how it supports the
Company’s strategy.
Executive Directors
Purpose and link to strategy
Operation
Maximum opportunity
Performance metrics
Executive Director performance
is a factor considered when
determining salaries.
In considering any increase
in base salary, if any increase
is to be made the Committee
is guided by the general
increase for the broader
employee population.
However, more significant
increases may be awarded
from time to time in certain
circumstances. For example,
an increase in the individual’s
role or responsibility, an
increase in the scale or
complexity of the Company,
or when an individual has
been appointed to a new
role at a below-market salary
while gaining experience.
There is no formal maximum
limit as benefit costs can
fluctuate depending on
changes in provider cost
and individual circumstances.
Not performance related.
Base salary
To help recruit and retain
executives of suitable
caliber to deliver the
Company’s strategic goals
and business outputs.
Reflects the individual’s
experience, performance
and responsibilities within
the Company.
Benefits
To provide a market-
competitive benefits package
to assist with recruitment
and retention of Executive
Directors of suitable caliber.
Salaries are normally reviewed
annually with any changes
taking effect from 1st January
each year.
Salaries are set taking into
consideration a number of
factors, including but not
limited to:
• Individual and Company
performance
• Skills and experience
of each individual
• Responsibilities and
accountabilities of each role
• Mix of package of the
individual
• Salary increases for the
overall employee population
• Changes in size or complexity
of the Company
• Market competitiveness
• External indicators, such
as inflation
• Broad alignment with
equivalent roles at relevant
peers, taking into account the
country in which the Director
is based
Benefits may include, but are
not limited to, private medical
insurance, dental insurance,
company car or allowance,
life assurance and income
protection.
Under certain circumstances,
additional benefits in relation
to relocation or expatriation
may be provided.
Executive Directors are eligible
for other benefits which are
introduced for the wider
workforce on broadly
similar terms.
Any reasonable business-
related expenses (including
tax thereon) incurred in
connection with the role
may be reimbursed.
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Report of the Remuneration Committee (continued)
Remuneration Policy table
Company’s strategy.
Executive Directors
Base salary
and business outputs.
Reflects the individual’s
experience, performance
and responsibilities within
the Company.
Purpose and link to strategy
Operation
Maximum opportunity
Performance metrics
To help recruit and retain
executives of suitable
caliber to deliver the
Salaries are normally reviewed
annually with any changes
taking effect from 1st January
In considering any increase
in base salary, if any increase
is to be made the Committee
Executive Director performance
is a factor considered when
determining salaries.
Company’s strategic goals
each year.
Salaries are set taking into
consideration a number of
factors, including but not
limited to:
• Individual and Company
performance
• Skills and experience
of each individual
• Responsibilities and
is guided by the general
increase for the broader
employee population.
However, more significant
increases may be awarded
from time to time in certain
circumstances. For example,
an increase in the individual’s
role or responsibility, an
increase in the scale or
accountabilities of each role
complexity of the Company,
• Mix of package of the
individual
or when an individual has
been appointed to a new
• Salary increases for the
role at a below-market salary
overall employee population
while gaining experience.
Benefits
To provide a market-
competitive benefits package
to assist with recruitment
and retention of Executive
Directors of suitable caliber.
There is no formal maximum
Not performance related.
limit as benefit costs can
fluctuate depending on
changes in provider cost
and individual circumstances.
• Changes in size or complexity
of the Company
• Market competitiveness
• External indicators, such
as inflation
• Broad alignment with
equivalent roles at relevant
peers, taking into account the
country in which the Director
is based
Benefits may include, but are
not limited to, private medical
insurance, dental insurance,
company car or allowance,
life assurance and income
protection.
Under certain circumstances,
additional benefits in relation
to relocation or expatriation
may be provided.
Executive Directors are eligible
for other benefits which are
introduced for the wider
workforce on broadly
similar terms.
Any reasonable business-
related expenses (including
tax thereon) incurred in
connection with the role
may be reimbursed.
The table below sets out, for each element of pay, a summary of how remuneration is structured and how it supports the
Purpose and link to strategy
Operation
Maximum opportunity
Performance metrics
Pensions
To provide a market
competitive pension package
to assist with recruitment
and retention of Executive
Directors of suitable caliber.
The Company may make
contributions, or payment
in lieu of contributions, to
a pension scheme.
The current President &
CEO does not receive
any pension contributions.
Annual performance bonus
To incentivize and reward the
achievement of annual
strategic business priorities.
Delivery of a proportion of
remuneration in shares
reinforces retention and
provides alignment with the
interests of shareholders
over the longer term.
Annual bonuses are subject
to achievement of stretching
performance conditions,
which are normally set by
the Committee at the start
of each financial year. At the
end of the year, the Committee
determines the extent to which
these were achieved.
Annual bonuses are payable
in cash, with any bonus earned
in excess of the target bonus
deferred into shares which vest
after at least two years subject
to continued employment.
Participants may also be entitled
to receive dividend equivalents
on share awards that vest.
Bonus payments, including
deferred bonus awards,
are subject to recovery and
withholding provisions in certain
circumstances, including in the
event of a material misstatement
of accounts, an error in
assessing the performance
condition, serious misconduct,
and, for awards from 2020,
significant reputational damage
and material corporate failure,
or any other exceptional
circumstances which the
Committee considers justify
the operation of the recovery
and withholding provisions.
Pension set in line with the
wider workforce.
Taking into account the
global nature of the
Company, the Committee has
the flexibility to determine the
methodology and approach
to determining the wider
workforce rate, including but
not limited to consideration
of the country in which a
Director is based.
The current Chief Financial
Officer receives a pension
allowance of 11% of salary,
which was set to be in line
with other UK employees
(excluding Northern Ireland)
at the time of his recruitment.
The maximum bonus
opportunity is:
• 100% of base salary for the
current President & CEO
• 150% of base salary for any
other Executive Director
(including any future CEO).
50% of maximum is payable
for on-target performance
and no more than 25% of
maximum is payable for
threshold performance.
Not performance related.
Performance is measured
over the financial year.
Performance measures and
weightings are determined
by the Committee each year
and may vary to take into
account changes in the
business strategy.
At least 70% of the bonus will be
subject to corporate objectives
(EBITDA, cash flow, growth
targets, Health & Safety, other
Environmental, Social &
Governance (ESG) measures and
other corporate measures) with
the balance being subject to
measurable individual objectives.
The Committee may adjust the
bonus outcome if it considers
that the payout is inconsistent
with the Company’s overall
performance, taking into
account any relevant factors.
The Committee will consult
with major shareholders if
appropriate before any
exercise of its discretion to
increase the bonus outcome.
In addition, the Committee has
absolute discretion as to the
amount of any bonus outcome,
notwithstanding achievement
of the measures applicable to
the bonus, which may take into
account the Company’s
underlying performance.
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Report of the Remuneration Committee (continued)
Purpose and link to strategy
Operation
Maximum opportunity
Performance metrics
The maximum award level is:
• 100% of base salary per
annum for the current
President & CEO
• 200% of base salary
per annum for any
other Executive Director
(including any future CEO).
No more than 25%
of each performance
element may vest for
threshold performance.
Performance is normally
measured over three years.
Measures are selected
to support the Company’s
long-term strategy and
align with the long-term
goal to create value for all
stakeholders. The Committee
has the flexibility to vary
measures and weightings,
including introduction of new
measures, for each award
taking into account business
priorities at the time of grant.
Performance measures for
the 2018 to 2020 LTIP grants
included growth in Adj. EBITDA,
H&S Lost Time Incident Rate,
Growth (IRR and Milestones).
The Committee may adjust the
vesting outcome if it considers
that the level of vesting is
inconsistent with the
Company’s overall
performance, taking into
account any relevant factors.
Executive Directors are
required to build and retain a
shareholding in the Company
equivalent to at least 250% of
their base salary.
Not performance related.
Long-Term Incentive Plan (LTIP)
To reward delivery of
sustained long-term
performance and incentivize
successful execution of
business strategy over the
longer term.
Facilitates share ownership
to provide further alignment
with shareholders.
Share ownership guidelines
To encourage Executive
Directors to build a
meaningful shareholding
in the Company so as
to further align interests
with shareholders.
Awards will normally be granted
annually to Executive Directors
in the form of conditional free
shares or nil (or nominal) cost
options that normally vest
after three years subject to
performance conditions and
continued service.
Following vesting, awards will
normally be subject to a holding
period whereby vested awards,
net of tax, must be retained for
at least a further two years.
Participants may also be entitled
to receive dividend equivalents
on awards that vest.
Awards are subject to recovery
and withholding provisions in
certain circumstances, including
in the event of a material
misstatement of accounts,
an error in assessing the
performance condition,
serious misconduct, and, for
awards from 2020, significant
reputational damage and
material corporate failure,
or any other exceptional
circumstances which the
Committee considers justify
the operation of the recovery
and withholding provisions.
Executive Directors are required
to retain at least half of any
share awards vesting (net
of tax) under the Company’s
discretionary share-based
employee incentive schemes
until the guideline is met.
Shares owned outright on
or following Admission will
count towards the guideline.
A post-employment
shareholding guideline will
apply for one year following
cessation of employment.
Executive Directors will be
required to retain 100% of their
shareholding guideline, or 100%
of their actual shareholding of
relevant shares if lower, for a
period of six months post-
cessation of employment,
reducing to 50% for a further
six months. The Committee
retains discretion to waive
this guideline if it is not
considered appropriate in
the specific circumstances.
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Long-Term Incentive Plan (LTIP)
To reward delivery of
sustained long-term
performance and incentivize
successful execution of
business strategy over the
longer term.
Facilitates share ownership
to provide further alignment
with shareholders.
Awards will normally be granted
The maximum award level is:
Performance is normally
annually to Executive Directors
• 100% of base salary per
measured over three years.
in the form of conditional free
shares or nil (or nominal) cost
options that normally vest
after three years subject to
performance conditions and
continued service.
annum for the current
President & CEO
• 200% of base salary
per annum for any
other Executive Director
(including any future CEO).
No more than 25%
of each performance
element may vest for
threshold performance.
Measures are selected
to support the Company’s
long-term strategy and
align with the long-term
goal to create value for all
stakeholders. The Committee
has the flexibility to vary
measures and weightings,
including introduction of new
measures, for each award
taking into account business
priorities at the time of grant.
Performance measures for
the 2018 to 2020 LTIP grants
included growth in Adj. EBITDA,
H&S Lost Time Incident Rate,
Growth (IRR and Milestones).
The Committee may adjust the
vesting outcome if it considers
that the level of vesting is
inconsistent with the
Company’s overall
performance, taking into
account any relevant factors.
Share ownership guidelines
To encourage Executive
Directors to build a
meaningful shareholding
in the Company so as
to further align interests
with shareholders.
Executive Directors are required
Executive Directors are
Not performance related.
required to build and retain a
shareholding in the Company
equivalent to at least 250% of
their base salary.
Following vesting, awards will
normally be subject to a holding
period whereby vested awards,
net of tax, must be retained for
at least a further two years.
Participants may also be entitled
to receive dividend equivalents
on awards that vest.
Awards are subject to recovery
and withholding provisions in
certain circumstances, including
in the event of a material
misstatement of accounts,
an error in assessing the
performance condition,
serious misconduct, and, for
awards from 2020, significant
reputational damage and
material corporate failure,
or any other exceptional
circumstances which the
Committee considers justify
the operation of the recovery
and withholding provisions.
to retain at least half of any
share awards vesting (net
of tax) under the Company’s
discretionary share-based
employee incentive schemes
until the guideline is met.
Shares owned outright on
or following Admission will
count towards the guideline.
A post-employment
shareholding guideline will
apply for one year following
cessation of employment.
Executive Directors will be
required to retain 100% of their
shareholding guideline, or 100%
of their actual shareholding of
relevant shares if lower, for a
period of six months post-
cessation of employment,
reducing to 50% for a further
six months. The Committee
retains discretion to waive
this guideline if it is not
considered appropriate in
the specific circumstances.
Purpose and link to strategy
Operation
Maximum opportunity
Performance metrics
Chairman and Non-Executive Directors
Purpose and link to strategy
Operation
Maximum opportunity
Performance metrics
Fees
To attract and retain a
high-caliber Chairman and
Non-Executive Directors by
offering market-competitive
fee levels.
The Company Chairman is paid
a single annual fee.
There is no maximum level
of fees.
Not performance related.
When reviewing fee
levels, account is taken
of market movements in
Non-Executive Director
fees, Board Committee
responsibilities, ongoing time
commitments and the general
economic environment.
Non-Executive Directors are
paid an annual basic fee, plus
additional fees for additional
responsibilities such as a
Committee Chairmanship and
the role of Senior Independent
Director, to reflect their
extra responsibilities
and time commitments.
Non-Executive Directors are
encouraged to purchase shares
in the Company annually to the
value of 25% of their gross fees.
The Chairman’s fee is reviewed
annually by the Committee and
Chief Executive. Fee levels for
Non-Executive Directors are
determined by the Company
Chairman and Executive
Directors.
Fee levels are set taking into
consideration market levels in
comparably sized companies,
the time commitment and
responsibilities of the role,
and the experience and
expertise required.
The Chairman and Non-
Executives are not eligible
to participate in incentive
arrangements or to receive
any pension. Reasonable travel,
accommodation and other
business-related expenses
incurred in carrying out the
role will be reimbursed by
the Company, including
any tax thereon.
Notes to the policy table
Prior commitments - PIP and carried interest in Brazilian assets
The Committee reserves the right to make any remuneration payments and/or payments for loss of office (including exercising
any discretions available to it in connection with such payments) notwithstanding that they are not in line with the policy set
out above where the terms of the payment were agreed (i) before 25 May 2018 (the date the Company’s first shareholder-
approved directors’ remuneration policy came into effect); (ii) before the policy set out above came into effect, provided that
the terms of the payment were consistent with the shareholder-approved directors’ remuneration policy in force at the time
they were agreed; or (iii) at a time when the relevant individual was not a Director of the Company and, in the opinion of the
Committee, the payment was not in consideration for the individual becoming a Director of the Company. For these purposes,
“payments” includes the Committee satisfying awards of variable remuneration and, in relation to an award over shares, the
terms of the payment are “agreed” at the time the award is granted.
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Report of the Remuneration Committee (continued)
For the avoidance of doubt, all outstanding legacy awards that were granted in connection with, or prior to, listing including
those made by ContourGlobal L.P. under the PIP and the current President & CEO’s carried interest in the Brazilian assets
will continue in accordance with their original or modified terms.
Performance measures and target-setting
The Committee determines performance conditions for incentives that are appropriately challenging and tied to the delivery
of key business objectives and the Company’s overall strategy. The Committee retains flexibility in the Policy on the specific
measures used for each award to ensure alignment with the strategic priorities prevailing at the time they are set.
Annual bonus measures are normally determined at the start of each financial year, based on the key business priorities for
the year ahead. LTIP measures are normally determined at the time of grant of each award, and are selected to support the
Company’s long-term strategy and align with the long-term goal to create value for all stakeholders.
Targets for the annual bonus and LTIP are reviewed annually to ensure they remain sufficiently challenging but achievable,
taking into account a range of internal and external reference points, including internal budgets and analyst consensus forecasts.
Recovery and withholding provisions
Awards under the annual bonus, including deferred bonus awards, and the LTIP are subject to recovery and withholding
provisions which permit the Committee, in its discretion, to reduce the size of any future bonus or share award granted to the
employee, to reduce the size of any granted but unvested share award held by the employee, or to require the employee to
make a cash payment to the Company. The circumstances in which the Company may apply the provisions include a material
misstatement of accounts, an error in assessing the performance condition, serious misconduct on the part of a participant,
or any other exceptional circumstances which the Committee considers justify the operation of the recovery and withholding
provisions. For awards granted from 2020, the circumstances have been expanded to also include significant reputational
damage and material corporate failure.
In respect of cash bonus payments, the recovery and withholding provisions apply for one year from the date of payment of
the bonus (or, if later, the date of publication of the Company’s financial results for the year following the relevant year over
which the bonus was earned).
In respect of deferred bonus awards, the provisions apply up until the third anniversary of the date on which the relevant
award was granted, and in respect of any other awards under the LTIP, the provisions apply up until the third anniversary
of the date on which the relevant award vests.
Committee discretion
The Committee operates under the powers it has been delegated by the Board. In addition, it complies with rules that are
either subject to shareholder approval (Long-Term Incentive Plan) or by approval from the Board (annual performance bonus
scheme). These rules provide the Committee with certain discretions which serve to ensure that the implementation of the
remuneration policy is fair, both to the individual Director and to the shareholders. The Committee also has discretions to
vary the level of the various components of remuneration. The extent of such discretions is set out in the relevant rules, and
the maximum opportunity or performance metrics section of the policy table above. To ensure the efficient administration of
the variable incentive plans outlined above, the Committee will apply certain operational discretions.
These include the following:
• Selecting the participants in the plans on an annual basis
• Determining the timing of grants of awards and/or payments
• Determining the quantum of awards and/or payments (within the limits set out in the policy table above)
• Determining the extent of vesting based on the assessment of performance
• Determining whether malus or clawback shall be applied to any award in the relevant circumstances and, if so, the extent
to which it shall be applied
• Making the appropriate adjustments required in certain circumstances, for instance for changes in capital structure,
special dividends, acquisitions or disposals, or changes in accounting standards
• Determining “good leaver” status for incentive plan purposes and applying the appropriate treatment
• Undertaking the annual review of weighting of performance measures and setting targets for the annual bonus plan
and other incentive schemes, where applicable, from year to year
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Report of the Remuneration Committee (continued)
For the avoidance of doubt, all outstanding legacy awards that were granted in connection with, or prior to, listing including
those made by ContourGlobal L.P. under the PIP and the current President & CEO’s carried interest in the Brazilian assets
will continue in accordance with their original or modified terms.
Performance measures and target-setting
The Committee determines performance conditions for incentives that are appropriately challenging and tied to the delivery
of key business objectives and the Company’s overall strategy. The Committee retains flexibility in the Policy on the specific
measures used for each award to ensure alignment with the strategic priorities prevailing at the time they are set.
Annual bonus measures are normally determined at the start of each financial year, based on the key business priorities for
the year ahead. LTIP measures are normally determined at the time of grant of each award, and are selected to support the
Company’s long-term strategy and align with the long-term goal to create value for all stakeholders.
Targets for the annual bonus and LTIP are reviewed annually to ensure they remain sufficiently challenging but achievable,
taking into account a range of internal and external reference points, including internal budgets and analyst consensus forecasts.
Recovery and withholding provisions
Awards under the annual bonus, including deferred bonus awards, and the LTIP are subject to recovery and withholding
provisions which permit the Committee, in its discretion, to reduce the size of any future bonus or share award granted to the
employee, to reduce the size of any granted but unvested share award held by the employee, or to require the employee to
make a cash payment to the Company. The circumstances in which the Company may apply the provisions include a material
misstatement of accounts, an error in assessing the performance condition, serious misconduct on the part of a participant,
or any other exceptional circumstances which the Committee considers justify the operation of the recovery and withholding
provisions. For awards granted from 2020, the circumstances have been expanded to also include significant reputational
damage and material corporate failure.
In respect of cash bonus payments, the recovery and withholding provisions apply for one year from the date of payment of
the bonus (or, if later, the date of publication of the Company’s financial results for the year following the relevant year over
which the bonus was earned).
In respect of deferred bonus awards, the provisions apply up until the third anniversary of the date on which the relevant
award was granted, and in respect of any other awards under the LTIP, the provisions apply up until the third anniversary
of the date on which the relevant award vests.
Committee discretion
The Committee operates under the powers it has been delegated by the Board. In addition, it complies with rules that are
either subject to shareholder approval (Long-Term Incentive Plan) or by approval from the Board (annual performance bonus
scheme). These rules provide the Committee with certain discretions which serve to ensure that the implementation of the
remuneration policy is fair, both to the individual Director and to the shareholders. The Committee also has discretions to
vary the level of the various components of remuneration. The extent of such discretions is set out in the relevant rules, and
the maximum opportunity or performance metrics section of the policy table above. To ensure the efficient administration of
the variable incentive plans outlined above, the Committee will apply certain operational discretions.
These include the following:
• Selecting the participants in the plans on an annual basis
• Determining the timing of grants of awards and/or payments
• Determining the quantum of awards and/or payments (within the limits set out in the policy table above)
• Determining the extent of vesting based on the assessment of performance
• Determining whether malus or clawback shall be applied to any award in the relevant circumstances and, if so, the extent
to which it shall be applied
• Making the appropriate adjustments required in certain circumstances, for instance for changes in capital structure,
special dividends, acquisitions or disposals, or changes in accounting standards
• Determining “good leaver” status for incentive plan purposes and applying the appropriate treatment
• Undertaking the annual review of weighting of performance measures and setting targets for the annual bonus plan
and other incentive schemes, where applicable, from year to year
If an event occurs which results in the annual bonus plan or LTIP performance conditions and/or targets being deemed no
longer appropriate (e.g. material acquisition or divestment), the Committee will have the ability to amend the performance
conditions and/or targets, provided that the revised conditions are not materially less challenging than the original conditions.
Any use of the above discretion would, where relevant, be explained in the Annual Report on Remuneration and may, as
appropriate, be the subject of consultation with the Company’s major shareholders.
The Committee reserves the right to make minor amendments to the Remuneration Policy to aid its operation or
implementation without seeking shareholder approval. For example, for regulatory, exchange control, tax or administrative
purposes or to take account of changes in legislation.
Remuneration scenarios for Executive Directors
The charts below show an estimate of the 2021 remuneration package for the current President & CEO and Chief Financial
Officer, under four assumed performance scenarios, (“minimum”, “target”, “maximum” and “maximum plus share price growth”),
based on the Remuneration Policy set out above.
Joseph Brandt
President and CEO
Stefan Schellinger
Chief Financial Officer
)
s
0
0
0
(
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R
5,000
4,000
3,000
2,000
1,000
0
$3,630
33%
$4,230
15%
28%
33%
28%
34%
29%
$2,430
25%
25%
50%
$1,230
100%
2,000
1,500
1,000
500
0
£1,982
19%
38%
£1,607
47%
27%
22%
26%
21%
£1,016
37%
21%
42%
£425
100%
Minimum
Target
Maximum
Maximum
plus share
price growth
Minimum
Target
Maximum
Maximum
plus share
price growth
Fixed pay
Annual bonus
Long-term incentive
Share price growth
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Report of the Remuneration Committee (continued)
The scenarios above are based on the following assumptions, and exclude any share price growth or dividends except where
stated:
Remuneration
component
Minimum
Target
Maximum
Maximum plus share price
growth
Base
salary
Base salary as at 1st January 2021 ($1.2m for the President & CEO and £375k for
the Chief Financial Officer)
Fixed pay
Pension
The President & CEO receives no pension contribution and the Chief Financial Officer receives a pension
allowance of 11% of salary in line with other UK employees (excluding Northern Ireland)
Benefits
In line with benefits provided in 2020
Annual
bonus
No bonus payable
Target bonus
(50% of maximum)
LTIP
No LTIP vesting
Target vesting
(50% of maximum)
Maximum bonus (100% of
salary for the President & CEO
and 115% of salary for the Chief
Financial Officer)
Maximum bonus
Maximum vesting (100% of
salary for the President & CEO
and 200% of salary for the
Chief Financial Officer)
Maximum vesting
plus share price
growth of 50%
Approach to recruitment or promotion
The Committee’s approach when considering the remuneration arrangements in the recruitment of a new Executive Director
is to take account of the caliber, expertise and responsibilities of the individual, his or her remuneration package in their prior
role, and market rates, without paying more than is necessary to facilitate their recruitment. The remuneration package for a
new Executive Director will be set in accordance with the terms of the Company’s approved remuneration policy in force at the
time of appointment and the maximum limits set out therein subject to any variation in or additional elements as set out below:
Salary
Benefits
Pension
Variable pay
Replacement awards
The Committee has the flexibility to set the salary of a new Executive Director at a discount to the market
level initially, with a view to increasing it in phases over the following few years to bring the salary to the
desired positioning, subject to individual performance. In exceptional circumstances, the Committee has
the ability to set the salary of a new Executive Director at a rate higher than the market level to reflect the
criticality of the role and the experience and performance of the individual.
The Company may award certain additional benefits and other allowances including, but not limited to, those
to assist with relocation support, temporary living and transportation expenses, educational costs for children
and tax equalization, to allow flexibility to secure the best candidate, including an overseas national.
Pension in accordance with policy table above.
Maximum bonus and LTIP award opportunities for any new Executive Director shall be in line with the
maximum opportunities specified in the policy table above. Depending on the timing and responsibilities
of the appointment, it may be necessary to set different performance measures and targets, and different
vesting and/or holding periods, as applicable to other Executive Directors in the year of appointment.
In addition to the above, the Committee may offer additional cash and/or share-based awards in order to
“buyout” remuneration forfeited on leaving a former employer, where necessary to facilitate the recruitment
of a new Executive Director. Any such payments would be limited to what is felt to be a fair estimate of the
value of the remuneration foregone when leaving the former employer, taking into account all relevant
factors including the form of awards, expected value and vesting timeframe of forfeited opportunities.
When determining any such buy-out, the guiding principle would be that awards would generally be
on a like-for-like basis unless this is considered by the Committee not to be practical or appropriate.
Internal appointments
Remuneration will be set in line with the policy detailed above as amended by the additional provisions
for external recruits. Where an individual has contractual commitments made prior to their appointment
in respect of their prior role, the Company will continue to honor these arrangements.
The terms of appointment for a Non-Executive Director will be in accordance with the remuneration policy for Non-Executive
Directors as set out in the policy table.
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Report of the Remuneration Committee (continued)
The scenarios above are based on the following assumptions, and exclude any share price growth or dividends except where
stated:
Remuneration
component
Minimum
Target
Maximum
Maximum plus share price
growth
Base
salary
Base salary as at 1st January 2021 ($1.2m for the President & CEO and £375k for
the Chief Financial Officer)
Fixed pay
Pension
The President & CEO receives no pension contribution and the Chief Financial Officer receives a pension
allowance of 11% of salary in line with other UK employees (excluding Northern Ireland)
Benefits
In line with benefits provided in 2020
Annual
bonus
No bonus payable
Target bonus
(50% of maximum)
Maximum bonus (100% of
salary for the President & CEO
and 115% of salary for the Chief
Financial Officer)
Maximum bonus
Maximum vesting (100% of
salary for the President & CEO
and 200% of salary for the
Chief Financial Officer)
Maximum vesting
plus share price
growth of 50%
LTIP
No LTIP vesting
Target vesting
(50% of maximum)
Approach to recruitment or promotion
The Committee’s approach when considering the remuneration arrangements in the recruitment of a new Executive Director
is to take account of the caliber, expertise and responsibilities of the individual, his or her remuneration package in their prior
role, and market rates, without paying more than is necessary to facilitate their recruitment. The remuneration package for a
new Executive Director will be set in accordance with the terms of the Company’s approved remuneration policy in force at the
time of appointment and the maximum limits set out therein subject to any variation in or additional elements as set out below:
Salary
Benefits
Pension
Variable pay
The Committee has the flexibility to set the salary of a new Executive Director at a discount to the market
level initially, with a view to increasing it in phases over the following few years to bring the salary to the
desired positioning, subject to individual performance. In exceptional circumstances, the Committee has
the ability to set the salary of a new Executive Director at a rate higher than the market level to reflect the
criticality of the role and the experience and performance of the individual.
The Company may award certain additional benefits and other allowances including, but not limited to, those
to assist with relocation support, temporary living and transportation expenses, educational costs for children
and tax equalization, to allow flexibility to secure the best candidate, including an overseas national.
Pension in accordance with policy table above.
Maximum bonus and LTIP award opportunities for any new Executive Director shall be in line with the
maximum opportunities specified in the policy table above. Depending on the timing and responsibilities
of the appointment, it may be necessary to set different performance measures and targets, and different
vesting and/or holding periods, as applicable to other Executive Directors in the year of appointment.
Replacement awards
In addition to the above, the Committee may offer additional cash and/or share-based awards in order to
“buyout” remuneration forfeited on leaving a former employer, where necessary to facilitate the recruitment
of a new Executive Director. Any such payments would be limited to what is felt to be a fair estimate of the
value of the remuneration foregone when leaving the former employer, taking into account all relevant
factors including the form of awards, expected value and vesting timeframe of forfeited opportunities.
When determining any such buy-out, the guiding principle would be that awards would generally be
on a like-for-like basis unless this is considered by the Committee not to be practical or appropriate.
Internal appointments
Remuneration will be set in line with the policy detailed above as amended by the additional provisions
for external recruits. Where an individual has contractual commitments made prior to their appointment
in respect of their prior role, the Company will continue to honor these arrangements.
The terms of appointment for a Non-Executive Director will be in accordance with the remuneration policy for Non-Executive
Directors as set out in the policy table.
Service contracts and termination policy
In accordance with long-established policy, Executive Directors have rolling service agreements which may be terminated
in accordance with the terms of these agreements. The period of notice for Executive Directors will not normally exceed
12 months. Executive Directors’ service agreements are available for inspection at the Company’s registered office during
normal business hours.
Generally, in the event of termination, the Directors’ service contracts provide for payments of base salary, pension and
benefits over the notice period. The Company may elect to make a payment in lieu of notice (PILON) equivalent in value
to basic salary, benefits and pension for any unexpired portion of the notice period. PILON payments may be made in
monthly instalments or as a lump sum. The individual is expected to take reasonable steps to seek alternative income
to mitigate the payments.
Any outstanding incentive awards will be treated in accordance with the plan rules as follows:
Plan
Treatment on cessation
Cash annual bonus
There is no contractual right to any bonus payment in the event of termination; however, the Committee
may exercise its discretion to pay a bonus for the period of employment, based on performance assessed
after the end of the financial year. Any bonus paid will normally be pro-rated for time.
Deferred bonus
Any outstanding deferred bonus award will ordinarily vest in full on the normal vest date (or, in the case of
death or in any other circumstances at the discretion of the Committee, at the date of cessation). However,
if a participant ceases to be employed due to their dismissal for serious misconduct, the awards shall lapse.
LTIP
The default treatment is for any outstanding LTIP award to lapse on cessation of employment.
However, if a participant is deemed to be a “good leaver” in certain prescribed circumstances such as
injury, disability, retirement, their employing Company or the business for which they work being sold out
of the Group or other circumstances at the Committee’s discretion, their awards will ordinarily vest on the
original vesting date to the extent that the performance conditions have been satisfied, and will normally
be subject to time pro-rating for the proportion of the vesting period served.
Alternatively, the Committee may determine that awards for good leavers will vest early on cessation,
subject to performance conditions measured at that time and ordinarily pro-rating for the proportion
of the vesting period served. Such treatment shall apply in the case of death.
In the event of a Change of Control, awards will vest early subject to the achievement of performance
conditions, and will normally be time pro-rated for the proportion of the vesting period served. Alternatively,
it may be determined, that awards be exchanged for equivalent awards in the acquiring company.
Legacy awards
PIP shares are fully vested. The current President & CEO’s carried interest in the Brazilian assets will vest in
accordance with its terms.
Current Executive Directors
Name
Joseph C. Brandt
Stefan Schellinger
Date of service contract
14th November 2017
15th April 2019
Notice period
6 months either party
12 months either party
The President & CEO’s service contract states that, in certain circumstances, he is entitled to any cash annual bonus earned
but unpaid in respect of the prior financial year, and he is also entitled to certain benefits for a period of up to six months
following termination. His service contract also states that any PILON would be payable in a lump sum.
The Company is unequivocally against rewards for failure; the circumstances of any departure, including the individual’s
performance, would be taken into account in every case. Statutory redundancy payments may be made, as appropriate,
as would payment for any accrued but untaken holiday. Service agreements may be terminated summarily without notice
(or on shorter notice periods) and without payment in lieu of notice in certain circumstances, such as gross misconduct or
any other material breach of the obligations under their employment contract. The Company may require the individual to
work during their notice period or may place them on garden leave during which they would be entitled to salary, benefits
and pension only.
Any statutory entitlements or sums to settle or compromise claims in connection with a termination (including, at the discretion
of the Committee, reimbursement for legal advice and provision of outplacement services) would be paid as necessary.
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Report of the Remuneration Committee (continued)
Policy on external appointments
The Board believes that it may be beneficial to the Group for Executives to hold Non-Executive Directorships outside the
Group. Any such appointments are subject to approval by the Board, and will be determined based on the impact on their
role within the Company. The Board will determine on a case-by-case basis whether the Directors will be permitted to
retain any fees arising from such appointments. Neither Executive Director currently holds any external directorships.
Non-Executive Directors’ terms of engagement
All Non-Executive Directors have letters of appointment with the Company for a three-year term. In any event, each
appointment is terminable by either party on one month’s written notice. All Non-Executive Directors are subject to
annual re-election at each AGM. The Chairman and Non-Executive Directors are only entitled to fees accrued to the
date of termination.
Directors’ letters of appointment are available for inspection at the Company’s registered office during normal business
hours and will be available for inspection at the AGM.
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Report of the Remuneration Committee (continued)
Policy on external appointments
The Board believes that it may be beneficial to the Group for Executives to hold Non-Executive Directorships outside the
Group. Any such appointments are subject to approval by the Board, and will be determined based on the impact on their
role within the Company. The Board will determine on a case-by-case basis whether the Directors will be permitted to
retain any fees arising from such appointments. Neither Executive Director currently holds any external directorships.
Non-Executive Directors’ terms of engagement
All Non-Executive Directors have letters of appointment with the Company for a three-year term. In any event, each
appointment is terminable by either party on one month’s written notice. All Non-Executive Directors are subject to
annual re-election at each AGM. The Chairman and Non-Executive Directors are only entitled to fees accrued to the
date of termination.
Directors’ letters of appointment are available for inspection at the Company’s registered office during normal business
hours and will be available for inspection at the AGM.
Consideration of employment conditions elsewhere in the Group
The Committee receives regular updates throughout the year on pay and conditions applying to employees across the
Company, and takes these into account when setting remuneration for Executive Directors. The Committee seeks to ensure
that the underlying principles which form the basis for decisions on Executive Directors’ pay are consistent with those on which
pay decisions for the rest of the workforce are taken. In particular, the Committee takes into account the general base salary
increase for the broader employee population when determining any annual salary increases and the remuneration packages
for the Executive Directors.
Following the revised UK Corporate Governance Code the Committee has enhanced its process for reviewing workforce pay
and conditions as part of the annual cycle, and continues to develop its approach. While the Committee does not currently
consult directly with employees regarding its policy for Directors, the Committee considered workforce pay and conditions
across the wider organization.
The remuneration of senior managers below Board level is reviewed by the Committee on an annual basis. The remuneration
packages of these executives are broadly consistent with the policy outlined above, with selected senior managers eligible
to participate in the LTIP, save that different bonus and LTIP opportunities may be applicable and performance measures may
vary to ensure relevance to individuals. Bonus deferral will apply to the significant majority of senior managers but the two-year
holding period under the LTIP will not apply. Unlike Executive Directors, senior managers may receive awards of restricted
shares without performance conditions. The remuneration of employees that are not senior managers generally include
market-based salary, benefits, and discretionary bonuses.
Consideration of shareholders’ views
The Committee is committed to open dialogue with shareholders and will seek to engage directly with them and their
representative bodies when considering any material changes to remuneration arrangements. In addition, shareholder
feedback received in relation to the AGM, as well as any additional feedback and guidance received during the year,
will be considered by the Committee as it develops the Company’s remuneration framework and practices going forward.
As part of the review of the Remuneration Policy, the Committee wrote to key shareholders seeking their views on the
proposed renewal as well as any other matters around executive remuneration at the Company. No significant feedback
was received.
Assisted by its independent advisor, the Committee actively monitors developments in the expectations of institutional
investors and their representative bodies.
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127
Report of the Remuneration Committee (continued)
Annual Report on Remuneration
Governance
Membership of the Remuneration Committee during the year is shown below. The Board considers each of the Committee
members to be independent in accordance with the Code.
Members:
Daniel Camus (Chairman)
Dr. Alan Gillespie
Mariana Gheorghe
Company Secretary:
Lola Emetulu (interim Company Secretary until 12th February 2020), Penny Thomas
(until October 9th 2020) and Link Company Matters Limited (from 12th November 2020)
External advisors:
Deloitte, appointed by the Committee following a competitive tender, has been advisors to the
Committee from November 2018.
Other attendees:
Joseph C. Brandt (President & CEO), Stefan Schellinger (CFO), Sarah Flanigan (Executive Vice
President), Barbara Greutter (Executive Vice President, Chief Human Resources Officer until
31st March 2020), Robert Head (external advisor until May 2020) and, from his appointment on
10th November 2020, Sean McGrath (Executive Vice President, Chief Human Resources Officer)
were consulted and invited to attend meetings as necessary.
Care was taken to ensure there were no conflicts of interest when consulting with senior
management and no Director or member of management was present when matters relating
to their own remuneration were discussed.
Meetings held
The Committee held five meetings during 2020. See page 89 for attendance at
Committee meetings.
Role:
The Board has delegated responsibility to the Committee for:
• Setting, approving and implementing the remuneration policy, including pension arrangements
and any compensation payments, for the Executive Directors, the Company Chairman,
Executive Managers and Company Secretary;
• Within the terms of the agreed remuneration policy and in consultation with the Chairman of the
Board and/or President & CEO, as appropriate, determining the total individual remuneration
package of each Executive Director, the Company Chairman, Executive Managers and
Company Secretary including base salary, bonuses, incentive payments, share options
or other share awards, pension arrangements and other benefits;
• Approving the design of, and determining targets for, any performance-related pay schemes
operated by the Company;
• Monitoring the operation of performance-related pay schemes and approving the total annual
payments made under such schemes; and
• Ensuring that contractual terms on termination, and any payments made, are fair for the
individual and the Company, that failure is not rewarded and that the duty to mitigate loss
is fully recognized.
The Committee’s terms of reference are available on our website at www.contourglobal.com.
Introduction
This section sets out details of the remuneration of the Executive Directors and Non-Executive Directors (including
the Chairman) earned between 1st January 2020 and 31st December 2020 and also describes the operation of the
Remuneration Committee.
This Annual Report on Remuneration will, together with the Annual Statement of the Remuneration Committee Chairman
on pages 110 and 112, be proposed for an advisory vote by shareholders at the 2021 AGM. Where required, data has been
audited by the external auditors, PricewaterhouseCoopers LLP, and this is indicated where appropriate.
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Report of the Remuneration Committee (continued)
Membership of the Remuneration Committee during the year is shown below. The Board considers each of the Committee
Annual Report on Remuneration
Governance
members to be independent in accordance with the Code.
Members:
Daniel Camus (Chairman)
Dr. Alan Gillespie
Mariana Gheorghe
Company Secretary:
Lola Emetulu (interim Company Secretary until 12th February 2020), Penny Thomas
(until October 9th 2020) and Link Company Matters Limited (from 12th November 2020)
External advisors:
Deloitte, appointed by the Committee following a competitive tender, has been advisors to the
Committee from November 2018.
Other attendees:
Joseph C. Brandt (President & CEO), Stefan Schellinger (CFO), Sarah Flanigan (Executive Vice
President), Barbara Greutter (Executive Vice President, Chief Human Resources Officer until
31st March 2020), Robert Head (external advisor until May 2020) and, from his appointment on
10th November 2020, Sean McGrath (Executive Vice President, Chief Human Resources Officer)
were consulted and invited to attend meetings as necessary.
Care was taken to ensure there were no conflicts of interest when consulting with senior
management and no Director or member of management was present when matters relating
to their own remuneration were discussed.
Meetings held
The Committee held five meetings during 2020. See page 89 for attendance at
Committee meetings.
Role:
The Board has delegated responsibility to the Committee for:
• Setting, approving and implementing the remuneration policy, including pension arrangements
and any compensation payments, for the Executive Directors, the Company Chairman,
Executive Managers and Company Secretary;
• Within the terms of the agreed remuneration policy and in consultation with the Chairman of the
Board and/or President & CEO, as appropriate, determining the total individual remuneration
package of each Executive Director, the Company Chairman, Executive Managers and
Company Secretary including base salary, bonuses, incentive payments, share options
or other share awards, pension arrangements and other benefits;
• Approving the design of, and determining targets for, any performance-related pay schemes
operated by the Company;
• Monitoring the operation of performance-related pay schemes and approving the total annual
payments made under such schemes; and
• Ensuring that contractual terms on termination, and any payments made, are fair for the
individual and the Company, that failure is not rewarded and that the duty to mitigate loss
is fully recognized.
The Committee’s terms of reference are available on our website at www.contourglobal.com.
Introduction
Remuneration Committee.
This section sets out details of the remuneration of the Executive Directors and Non-Executive Directors (including
the Chairman) earned between 1st January 2020 and 31st December 2020 and also describes the operation of the
This Annual Report on Remuneration will, together with the Annual Statement of the Remuneration Committee Chairman
on pages 110 and 112, be proposed for an advisory vote by shareholders at the 2021 AGM. Where required, data has been
audited by the external auditors, PricewaterhouseCoopers LLP, and this is indicated where appropriate.
Total remuneration (audited information)
The table below sets out remuneration received by the Executive Directors and Non-Executive Directors for the year 1st
January to 31st December 2020.
Base salary
and fees1
$000
Taxable
Benefits2,3
$000
Annual bonus
$000
Long-term
incentives4
$000
Pension Plan
$000
Total fixed pay
$000
Total variable
pay
$000
Total
(excluding
legacy awards)
$000
Legacy
agreement
with Reservoir
Capital – PIP5
$000
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
1,200
1,200
479
332
1,679
1,532
319
86
0
70
96
86
70
70
319
86
53
35
96
86
70
70
797
815
2,475 2,347
30
11
41
–
1
–
–
10
9
–
10
30
71
30
9
1,024
471
39
1,495
714
225
939
635
0
635
1
1
1
0
2
1
0
0
6
–
–
–
–
–
–
–
–
0
0
0
–
0
0
0
0
0
0
–
–
–
–
–
–
–
–
0
45
1,495
939
635
0
0
0
0
0
–
0
0
0
0
0
0
0
0
52
52
–
–
–
–
–
–
–
–
0
0
37
37
0
0
–
0
0
0
0
0
0
1,230
1,230
1,659
714 2,889
1,944
19,866
542
378
471
225
1,013
603
–
1,772
1,608
2,130
939 3,902 2,547
19,866
319
320
87
0
70
106
95
70
80
87
54
35
98
87
70
70
827
821
–
–
–
–
–
–
–
–
0
–
–
–
–
–
–
–
–
0
319
320
87
0
70
106
95
70
80
87
54
35
98
87
70
70
827
821
–
–
–
–
–
–
–
–
–
52
37 2,599 2,429
2,130
939 4,729 3,367
19,866
–
–
–
–
–
–
–
–
–
–
–
–
–
Executive Directors
Joseph C Brandt
Stefan Schellinger6
Total
Non-Executive Directors
Craig A. Huff
Daniel Camus
Ruth Carnie7
Mariana Gheorghe8
Dr Alan Gillespie
Ronald Trächsel
Alejandro Santo Domingo
Gregg M. Zeitlin
Total
Grand Total
1. The Chief Financial Officer and Non-Executive Directors are paid in GBP. The numbers in the table have been converted to USD using the average exchange
rate for 2020 of $1.276733:£1. The average exchange rate used for 2019 was $1.2775:£1.
2. Benefits for Executive Directors include medical insurance, dental insurance, income protection, life assurance, and disability cover.
3. Benefits for Non-Executive Directors comprise travel and other expenses incurred in the discharge of their duties including attendance at Board meetings which
are deemed taxable by the relevant authority. The 2019 figures comprise expenses paid during 2020 including expenses for 2019 which were deemed taxable
during 2020. In accordance with the Remuneration Policy, the Company will reimburse Non-Executive Directors for any tax thereon.
4. The 2018 LTIP award will vest in 2021 based on performance to 31st December 2020. The award will vest at 54.4% of maximum as described on page 132.
The award value for the President & CEO included in the table above is based on a share price of 198.69p, being the three-month average share price to 31st
December 2020. The President and CEO will also receive additional shares in relation to dividends accrued on the shares vesting during the vesting period,
the value of which is included in the figure above. Given the fall in share price since grant, none of the above value is attributable to share price growth. The
2018 LTIP was the first LTIP award to be granted.
5. This relates to the vesting of an award made by Reservoir Capital Group under the Private Incentive Plan (PIP). The PIP is a legacy arrangement established
by Reservoir Capital Group in connection with its original investment in the business. The Company is not party to the PIP and has no financial obligation to pay
cash or issue shares to settle the PIP. The amount relates to the value of the ordinary shares (GLO) now held in Contour Management Holdings LLC following
the conversion of Mr Brandt’s Class S units into ordinary shares of the Company following the testing of the financial condition on 27 December 2020. The total
PIP amount shown of $19,866k is based on 7,403,453 shares using the share price of 207p on 24th December 2020, and a dividend of $300k paid into
Contour Management Holdings LLC in Dec. 2020. Further information on the PIP is provided on page 138.
6. Stefan Schellinger was appointed as Chief Financial Officer with effect from 15th April 2019. The 2019 figures are therefore part-year figures relating to the
period during which he served as a Director of the Company. His annualized salary for 2019 was £375,000.
7. Resigned from the Board on 30th September 2019.
8. Appointed to the Board on 30th June 2019.
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Report of the Remuneration Committee (continued)
Annual bonus for 2020 (audited information)
In 2020, the bonus opportunity is dependent on achievement of corporate objectives (70%) and individual objectives (30%).
All of the information pertaining to the bonus is auditable. Maximum opportunity for the President & CEO was 100% of salary
and for the Chief Financial Officer 115% of salary. Full disclosure of the specific Group performance metrics, targets and
achievement against these is provided.
Targets for Total Fleet Availability Factor and NFOM/MW (Non Fuel O&M Cost per MW installed capacity) were set individually
for each of the relevant sectors rather than on an aggregate Group basis. The Committee considers this to be a more robust
approach to measurement as maximum vesting requires strong performance against all relevant sectors within the Group.
It also better reflects how performance is measured and reported within the business. Although, under this more granular
approach, we do not provide the specific target for each sector, we provide the indicative weighted average Group target.
Group scorecard (70% of bonus opportunity)
Performance target
Weighting
0% of
element
25% of
element
50% of
element
75% of
element
100% of
element
Performance
achieved1
Bonus
award
Less than
$710m
Less than
$350m
$710m
$735m
$350m
$365m
–
–
$760m
$757.6m
23.8%
$380m
$397.1m
25%
Financial metrics (50%)
Adjusted EBITDA
Funds From Operations
Operations metrics (30%)
Health and safety –
Lost Time Incident Rate
Total Fleet Availability Factor
Vorotan refurbishment
schedule
Vorotan refurbishment
budget
Mexico CO2 capture
NFOM/MW
Growth metrics (20%)
M&A related milestones
25%
25%
10%
5%
2.5%
2.5%
5%
5%
0.09
0.06
n/a
0.03
0.00
0.07
Less than
target
Milestone
not met
Milestone
not met
Milestone
not met
Less than
target
Based on the weighted average achievement against
individual EAF targets for each of the sectors. The
weighted average target is 95%.
100% awarded if Unit 1 and 2 of the Shamb are
completed to schedule
100% awarded if Unit 1 and 2 of Shamb
are on budget
100% awarded if MOU and JV agreement are signed
See below
0%
2.5%
2.5%
Based on the weighted average achievement against
individual NFOM/MW targets for each of the sectors.
The weighted average target is 71.4.
See below
15%
Milestone
not met
100% awarded if relevant milestones met:
Close off Brazil; Close Costa Rica and Dominican
Republic; Additional M&A transactions or commercial
close of Greenfield Projects
1.7%
4.3%
0%
2.5%
2.5%
4.3%
10%
5%
79% of
Group
element
Brazilian
divesture
process;
Acquisition
of US and
Trinidad &
Tobago
Portfolio
signed.
5%
Financing activities
5%
Milestone
not met
100% awarded if relevant milestones met:
Refinance bonds
Total
100%
1. Performance achieved against the financial metrics is stated at 2020 budget exchange rates to align with the performance targets set and to negate the impact
of exchange rate movements in determining the outcome of the annual bonus for the year.
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100% of element
100% of element
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100% of element
100% of element
100% of element
100% of element
Overall outcome
86.0% of element
Overall outcome
86.0% of element
Turbines
Engines
Solutions (includes CHP Mexico) 0% of element
Wind
Hydro
Solar PV
Solar CSP
Turbines
Engines
Solutions
Wind
Hydro
Solar PV
Solar CSP
100% of element
100% of element
100% of element
0% of element
100% of element
100% of element
100% of element
Sector performance – Total Fleet Availability Factor and NFOM/MW
Based on the achievement (100% of element) or not (0% of element) of individual EAF and NFOM/MW targets for each sector.
Total Fleet Availability
Achievement by sector
NFOM/MW
Achievement by sector
Report of the Remuneration Committee (continued)
Annual bonus for 2020 (audited information)
In 2020, the bonus opportunity is dependent on achievement of corporate objectives (70%) and individual objectives (30%).
All of the information pertaining to the bonus is auditable. Maximum opportunity for the President & CEO was 100% of salary
and for the Chief Financial Officer 115% of salary. Full disclosure of the specific Group performance metrics, targets and
achievement against these is provided.
Targets for Total Fleet Availability Factor and NFOM/MW (Non Fuel O&M Cost per MW installed capacity) were set individually
for each of the relevant sectors rather than on an aggregate Group basis. The Committee considers this to be a more robust
approach to measurement as maximum vesting requires strong performance against all relevant sectors within the Group.
It also better reflects how performance is measured and reported within the business. Although, under this more granular
approach, we do not provide the specific target for each sector, we provide the indicative weighted average Group target.
Group scorecard (70% of bonus opportunity)
Performance target
Weighting
0% of
element
25% of
element
50% of
element
75% of
element
100% of
element
Performance
achieved1
Bonus
award
Funds From Operations
25%
$350m
$365m
$380m
$397.1m
25%
25%
Less than
$710m
$735m
$760m
$757.6m
23.8%
$710m
Less than
$350m
–
–
Total Fleet Availability Factor
5%
Less than
Based on the weighted average achievement against
See below
10%
0.09
0.06
n/a
0.03
0.00
0.07
NFOM/MW
5%
Less than
Based on the weighted average achievement against
See below
target
individual EAF targets for each of the sectors. The
weighted average target is 95%.
100% awarded if Unit 1 and 2 of the Shamb are
completed to schedule
100% awarded if Unit 1 and 2 of Shamb
are on budget
5%
Milestone
100% awarded if MOU and JV agreement are signed
2.5%
2.5%
Milestone
not met
Milestone
not met
not met
target
individual NFOM/MW targets for each of the sectors.
The weighted average target is 71.4.
15%
Milestone
not met
100% awarded if relevant milestones met:
Close off Brazil; Close Costa Rica and Dominican
Republic; Additional M&A transactions or commercial
close of Greenfield Projects
Acquisition
Financial metrics (50%)
Adjusted EBITDA
Operations metrics (30%)
Health and safety –
Lost Time Incident Rate
Vorotan refurbishment
schedule
Vorotan refurbishment
budget
Mexico CO2 capture
Growth metrics (20%)
M&A related milestones
0%
2.5%
2.5%
Brazilian
divesture
process;
of US and
Trinidad &
Tobago
Portfolio
signed.
1.7%
4.3%
0%
2.5%
2.5%
4.3%
10%
79% of
Group
element
Financing activities
100% awarded if relevant milestones met:
5%
5%
5%
Milestone
not met
Total
100%
1. Performance achieved against the financial metrics is stated at 2020 budget exchange rates to align with the performance targets set and to negate the impact
of exchange rate movements in determining the outcome of the annual bonus for the year.
Personal performance (30% of bonus opportunity)
The remaining 30% of the bonus is based on the delivery of key individual objectives. In reviewing achievements
and objectives, the Committee took into account management’s exceptional performance in meeting the challenges
presented by the pandemic in 2020.
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President & CEO
Performance areas
People
Key achievements
• Successful recruitment of senior positions and deepening of the succession pool.
• Progress on key organizational initiatives, including the adoption of a new regional organization.
• Redeployment of senior management across the organisation to lead and reinvigorate, both in the
context of the pandemic and the strategic development of the business.
Strategic and operational
excellence
• Rapid and successful implementation of significant changes to operational and health and safety procedures:
• Under new procedures senior management held calls with every single shift in every single plant
• Sourcing COVID-19 tests and Personal Protective Equipment and shipping to employees, contractors,
and communities.
• Board measures in the context of pandemic - Production of an increased reporting framework on Company
performance, including on reliability of supply and safety of employees, ensuring the Board was fully informed
throughout the pandemic.
• Strategic review of acquisition pipeline in light of the pandemic and new sustainability strategy and, where
necessary, renegotiation of agreements.
Long-term value creation • Acquisition of the US and Trinidad & Tobago Portfolio, enhancing and diversifying cash generation and
dividend coverage. Expected EBITDA contribution in first year of $92m and expected cash distributions
of $40m. Builds on established track record of acquiring contracted, low carbon assets and provides
flexible generation supporting the transition to renewables in highly developed, constrained markets.
• Due diligence on the US and Trinidad & Tobago acquisition successfully conducted notwithstanding the
limitations on travel during the year.
• Addition of two new Vestas powered sites for construction at Austria repowering development and
identification of development capabilities in Italy having obtained exclusivity for two new Italian solar
acquisitions.
Shareholder relations
• Dedicated engagement process with key shareholders in the first half of the year in response to the impact
of the pandemic – reaffirming operational and financial resilience.
• Successful expansion of shareholder base, new shareholders attracted by quarterly dividend policy and
Refinance bonds
share buy back programme.
ESG
• Adoption of new sustainability strategy accompanying publication of sustainability report containing
explicit CO2 reduction targets. Announcement that ContourGlobal would not pursue new coal projects.
• First filing with the Carbon Disclosure Project and increased engagement with other ESG monitoring and
rating bodies.
• Renewal of membership and upgraded rating in the FTSE4Good Index, the responsible investment index
of FTSE companies.
Taking into account the above the Committee determined that 100% of this element of the annual bonus was achieved for the
President & CEO.
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Chief Financial Officer
Performance areas
Key achievements
Finance function
Strategy,
operational
excellence and
long-term value
Shareholder
Relations
• Implementation of process changes resulting in improvements to the speed and quality of reporting.
• Comprehensive review of the entire corporate SGA cost base.
• Led and managed deep dive reviews into a broad range of business areas within the Finance and IT function.
• Material increase within the Finance function in the completed number of “5 Whys”, the continuous improvement
tool to tackle problems and learn and improve (90 in 2020 compared to 68 in 2019).
• Successful re-financing of corporate bond, which was upsized and priced at historical record low interest,
and refinancing of the RCF facility.
• Launch of Brazilian assets divestiture and commencement of a competitive broad auction process with
significant interest generated.
• Investor engagement leading to significant number of new top 20 shareholders entering the register.
• Average daily trading volume measured as a percentage of free float increasing in 2020 (from 0.074%
in 2019 to 0.211% in 2020)
• Successful implementation of strategy to connect with private client fund managers, smaller institutions and
regional pension funds leading to significantly more investor engagement and additions to the shareholder register.
• Successful execution of £30m share buy back programme.
Taking into account the above performance the Committee determined that 100% of this element of the annual bonus was
achieved for the Chief Financial Officer.
Overall bonus award
Executive Director
Joseph C. Brandt
President & CEO
Stefan Schellinger
Chief Financial Officer
Group scorecard element
(70% of maximum)
Personal objectives element
(30% of maximum)
Total bonus earned
(% of maximum)
79%
79%
100%
100%
85%
85%
Total bonus earned
$1,023,600
£367,856
The Committee considered the Company’s underlying performance prior to finalization of the annual bonus and was satisfied
that it reflected the overall performance of the Company.
The Remuneration Policy requires any bonus in excess of 50% of maximum to be deferred into shares for a period of two years.
For 2020, this means that the $423,600 of the total bonus earned will be deferred for the President & CEO and £152,231 of the
total bonus earned will be deferred for the Chief Financial Officer. Deferred Bonus Awards, which will be subject to continued
employment, will be made under the Long-Term Incentive plan and set out in the Annual Report on the Remuneration for 2021.
Long-term incentive awards with performance periods ending in 2020 (audited information)
The 2018 LTIP award was the first LTIP award to be granted following the Company’s listing in 2017. The President & CEO
was granted an LTIP award equal to 100% of base salary on 28th June 2018. This award will vest in 2021 following completion
of its three-year performance period to 31st December 2020. Achievement against performance targets is as set out below.
Performance target
Weighting
0% of
element
50%
Below 10%
p.a.
25% Above 0.09
25% of
element
10% p.a.
50% of
element
–
75% of
element
–
0.09
0.06
0.03
100% of
element
Performance
achieved
25% p.a.
and above
Zero
12% p.a.
Growth
0.04
Compound annual growth rate in
adjusted EBITDA / share
Health and safety performance –
Lost Time Incident Rate
Growth – IRR1
12.5%
IRR for
qualifying
projects
below 90%
IRR for
qualifying
projects at
90%
Growth – Milestones1
12.5%
Less than
90% of
milestones
for qualifying
projects met
90% of
milestones
for qualifying
projects met
Overall vesting
–
–
Actual IRR of
27.6%
against
target IRR of
17.4%2
67% vesting3
–
–
IRR for
qualifying
projects met
All
milestones
for qualifying
projects met
LTIP award
17.6 %
16.0%
12.5%
8.3%
54.4% of
maximum
1. Qualifying projects means such projects approved by the Board during the performance period and in respect of which the Board has specified (a) a target IRR
for the performance period and/or (b) milestones for the performance period.
2. Weighted average IRR across relevant qualifying projects.
3. Average vesting across relevant qualifying projects with specified milestones.
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Report of the Remuneration Committee (continued)
Chief Financial Officer
Performance areas
Key achievements
Finance function
• Implementation of process changes resulting in improvements to the speed and quality of reporting.
Strategy,
operational
excellence and
long-term value
Shareholder
Relations
• Comprehensive review of the entire corporate SGA cost base.
• Led and managed deep dive reviews into a broad range of business areas within the Finance and IT function.
• Material increase within the Finance function in the completed number of “5 Whys”, the continuous improvement
tool to tackle problems and learn and improve (90 in 2020 compared to 68 in 2019).
• Successful re-financing of corporate bond, which was upsized and priced at historical record low interest,
• Launch of Brazilian assets divestiture and commencement of a competitive broad auction process with
and refinancing of the RCF facility.
significant interest generated.
• Investor engagement leading to significant number of new top 20 shareholders entering the register.
• Average daily trading volume measured as a percentage of free float increasing in 2020 (from 0.074%
in 2019 to 0.211% in 2020)
• Successful implementation of strategy to connect with private client fund managers, smaller institutions and
regional pension funds leading to significantly more investor engagement and additions to the shareholder register.
• Successful execution of £30m share buy back programme.
Taking into account the above performance the Committee determined that 100% of this element of the annual bonus was
achieved for the Chief Financial Officer.
Overall bonus award
Executive Director
Joseph C. Brandt
President & CEO
Stefan Schellinger
Chief Financial Officer
Group scorecard element
Personal objectives element
(70% of maximum)
(30% of maximum)
Total bonus earned
(% of maximum)
79%
79%
100%
100%
85%
85%
Total bonus earned
$1,023,600
£367,856
The Committee considered the Company’s underlying performance prior to finalization of the annual bonus and was satisfied
that it reflected the overall performance of the Company.
The Remuneration Policy requires any bonus in excess of 50% of maximum to be deferred into shares for a period of two years.
For 2020, this means that the $423,600 of the total bonus earned will be deferred for the President & CEO and £152,231 of the
total bonus earned will be deferred for the Chief Financial Officer. Deferred Bonus Awards, which will be subject to continued
employment, will be made under the Long-Term Incentive plan and set out in the Annual Report on the Remuneration for 2021.
Long-term incentive awards with performance periods ending in 2020 (audited information)
The 2018 LTIP award was the first LTIP award to be granted following the Company’s listing in 2017. The President & CEO
was granted an LTIP award equal to 100% of base salary on 28th June 2018. This award will vest in 2021 following completion
of its three-year performance period to 31st December 2020. Achievement against performance targets is as set out below.
Performance target
Weighting
0% of
element
25% of
element
50% of
element
75% of
element
100% of
element
Performance
achieved
LTIP award
Compound annual growth rate in
50%
Below 10%
10% p.a.
adjusted EBITDA / share
p.a.
25% p.a.
and above
12% p.a.
Growth
17.6 %
Health and safety performance –
25% Above 0.09
0.09
0.06
0.03
Zero
0.04
16.0%
Lost Time Incident Rate
Growth – IRR1
Overall vesting
12.5%
IRR for
qualifying
projects
below 90%
IRR for
qualifying
projects at
90%
90% of
milestones
milestones
for qualifying
for qualifying
projects met
projects met
for the performance period and/or (b) milestones for the performance period.
2. Weighted average IRR across relevant qualifying projects.
3. Average vesting across relevant qualifying projects with specified milestones.
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–
–
–
–
–
–
IRR for
Actual IRR of
12.5%
qualifying
projects met
27.6%
against
target IRR of
17.4%2
milestones
for qualifying
projects met
54.4% of
maximum
Growth – Milestones1
12.5%
Less than
90% of
All
67% vesting3
8.3%
1. Qualifying projects means such projects approved by the Board during the performance period and in respect of which the Board has specified (a) a target IRR
The 2018 LTIP will vest on 28th June 2021. In line with the Remuneration Policy, a two year additional holding period will apply.
The Committee also considered the Company’s underlying performance over the performance period and was satisfied that
the vesting outcome reflected the overall performance of the Company.
Long-term incentive awards granted in 2020 (audited information)
In line with our Remuneration Policy, the President & CEO and Chief Financial Officer were granted performance share awards
under our LTIP of 100% and 200% of base salary respectively in 2020.
Executive Director
Joseph C. Brandt
President & CEO
Stefan Schellinger
Chief Financial Officer
Date of award
Form of award
Number of LTIP
shares awarded
Value of awards at
date of grant1
11th August 2020 Conditional award
459,564
£919,128
Value %
of salary1
100%
11th August 2020
Nil-cost option
375,000
£750,000
200%
Performance
period
1st Jan 2020 –
31st Dec 2022
1st Jan 2020 –
31st Dec 2022
1. The award value and number of shares was calculated by reference to the closing price of ContourGlobal shares of 200.0p on 10th August 2020, the dealing
day immediately prior to the date of grant, and base salary converted where appropriate to GBP using the exchange rate on that date of $1.3056:£1.
LTIP awards granted during 2020 were subject to the following performance conditions.
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Weighting
100% vesting
25% vesting
0% vesting
Adjusted EBITDA
per share growth % p.a.
50%
25% and above
10%
Health and safety
Lost time incident rate
Growth Internal
Rate of Return (IRR)1
Growth
milestones1
25%
Zero
0.09
12.5%
IRR for qualifying projects
met
IRR for qualifying
projects at 90%
IRR for qualifying
projects below 90%
12.5%
All milestones for
qualifying projects met
90% of milestones for
qualifying projects met
Less than 90% of
milestones for
qualifying projects met
Below 10%
Above 0.09
1. Qualifying projects means such projects approved by the Board during the performance period and in respect of which the Board has specified (a) a target IRR
for the performance period and/or (b) milestones for the performance period.
Awards vest on a straight-line basis between 25% and 100% achievement.
In line with the Remuneration Policy, a two-year additional holding period will apply to any shares vesting for Executive Directors.
Deferred bonus awards granted in 2020 (audited information)
During the year, the Company also granted deferred bonus awards to the Executive Directors in respect of a deferral of 20%
of the bonus amount for the 2019 bonus year, as voluntarily agreed by the Executive Directors.
Executive Director
Joseph C. Brandt
President & CEO
Stefan L. Schellinger
Date of award
Form of award
11th August 2020 Deferred bonus awards/
Conditional Award
Deferred bonus awards/
Nil-cost option
11th August 2020
Number of shares
awarded1
Value of awards
at date of grant1
Vesting date
54,666
$142,744
9th March 2022
17,579
£35,159
9th March 2022
1. The award value and number of shares was calculated by reference to the mid-market price of ContourGlobal shares of 200.0p on 10th August 2020, the
dealing day immediately prior to the date of grant, and the amount deferred converted where appropriate to GBP using the exchange rate on that date of
$1.3056:£1.
Pension and benefits (audited information)
The President & CEO does not currently receive any pension contributions or retirement benefits. The Chief Financial Officer
receives a pension allowance of 11% of salary, which is in line with other UK employees (excluding Northern Ireland).
Other benefits received include medical insurance, dental insurance, income protection, life assurance, and disability cover.
133
Report of the Remuneration Committee (continued)
Implementation of Non-Executive Director Remuneration Policy in 2021
The annual fees for serving as the Chairman or a Non-Executive Director were last reviewed by the Board on 4th April 2019
They remain unchanged for 2021.
Chairman
Non-Executive Director
Additional fees
Senior Independent Director
Audit & Risk Committee Chairman
Remuneration Committee Chairman
Fees effective from
1st January 2020
Fees effective from
1st January 2021
£250,000
£55,000
£250,000
£55,000
£20,000
£12,000
£12,000
£20,000
£12,000
£12,000
Each Non-Executive Director will also be entitled to reimbursement of reasonable business-related expenses, including any
tax thereon.
Statement of Directors’ shareholdings and share interests (audited information)
Executive Directors are required to accumulate and maintain a holding in ordinary shares in the Company equivalent to no less
than 250% of salary. At least 50% of any vested share awards (net of tax) must be retained until the guideline is achieved.
In 2020, the Committee introduced a post-employment shareholding guideline for Executive Directors, which applies for one
year following cessation of employment. The Executives are required to retain 100% of their shareholding guideline, or 100% of
their actual shareholding of relevant shares if lower, for a period of six months post-cessation of employment, reducing to 50%
for a further six months. The guidelines will apply to shares delivered via deferred bonus and performance share awards from
2020 onwards. The Committee will be considering the mechanism by which it will enforce the post-employment shareholding
guideline during 2021.
The share interests of the Executive Directors and their connected persons as at 31st December 2020 are as follows:
Total number of
beneficially owned
shares at 31st
December 2020
Shares held in
Contour Management
Holdings LLC1
Unvested interests in
share schemes
awarded without
performance
conditions at 31st
December 2020
Unvested interests in
share incentive
schemes awarded
subject to
performance
conditions as at 31st
December 20202
1,798,774
7,403,453
104,694
1,333,393
–
–
17,579
757,262
Shareholding
requirement (% of
base salary)
Current shareholding
(% of base salary)3
250%
250%
2,259%
_4
Executive Director
Joseph C. Brandt
President & CEO
Stefan Schellinger
Chief Financial Officer
1. The Private Incentive Plan comprised an interest in Class S units, Class C units and Class B units. The number of shares shown represents the total number
of ordinary shares (GLO) now held in Contour Management Holdings LLC following the conversion of Mr Brandt’s Class S units into ordinary shares of the
Company. The number of shares delivered through the Class B and Class C units is uncapped and could be substantial depending upon levels of return
to Reservoir Capital Group.
2. Unvested interests in share incentive schemes awarded subject to performance conditions comprise performance share awards under the ContourGlobal
Long-Term Incentive Plan and are structured as Conditional Awards (President and CEO) or Nil-Cost Options (Chief Financial Officer).
3. The value of the Executive Directors’ shareholdings was calculated by reference to the closing price of ContourGlobal shares of 215p on 31st December 2020
and base salary converted where appropriate to GBP using the exchange rate on that date of $1.37: £1. This includes the value of those shares in Contour
Management Holdings LLC.
4. Stefan Schellinger has five years from the date of his appointment as an Executive Director to reach the shareholding guideline. In accordance with the policy
for Executive Directors, he is required to retain at least half of any share awards vesting (net of tax) under the Company’s discretionary share-based employee
incentive schemes until the guideline is met.
The President & CEO participates in the Private Incentive Plan (PIP), a legacy arrangement under which he holds an interest in
shares. Further details on the PIP and the allocation of shares under award for the President & CEO are provided on page 138.
There were no changes to the Executive Directors’ interests in the Company’s shares during the period between 31st
December 2020 and 18th March 2021.
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Report of the Remuneration Committee (continued)
They remain unchanged for 2021.
Chairman
Non-Executive Director
Additional fees
Senior Independent Director
Audit & Risk Committee Chairman
Remuneration Committee Chairman
tax thereon.
Implementation of Non-Executive Director Remuneration Policy in 2021
The annual fees for serving as the Chairman or a Non-Executive Director were last reviewed by the Board on 4th April 2019
Non-Executive Directors’ shareholdings (audited information)
The share interests of the Non-Executive Directors and their connected persons as at 31st December 2020 are as follows:
Fees effective from
Fees effective from
1st January 2020
1st January 2021
£250,000
£55,000
£250,000
£55,000
£20,000
£12,000
£12,000
£20,000
£12,000
£12,000
Non-Executive Director
Craig A. Huff1
Daniel Camus
Mariana Gheorghe
Dr. Alan Gillespie
Alejandro Santo Domingo2
Ronald Trächsel
Gregg M. Zeitlin1
Shareholding as at 31st December 2020
–
35,000
–
200,0003
–
24,0003
–
Each Non-Executive Director will also be entitled to reimbursement of reasonable business-related expenses, including any
Statement of Directors’ shareholdings and share interests (audited information)
Executive Directors are required to accumulate and maintain a holding in ordinary shares in the Company equivalent to no less
than 250% of salary. At least 50% of any vested share awards (net of tax) must be retained until the guideline is achieved.
In 2020, the Committee introduced a post-employment shareholding guideline for Executive Directors, which applies for one
year following cessation of employment. The Executives are required to retain 100% of their shareholding guideline, or 100% of
their actual shareholding of relevant shares if lower, for a period of six months post-cessation of employment, reducing to 50%
for a further six months. The guidelines will apply to shares delivered via deferred bonus and performance share awards from
2020 onwards. The Committee will be considering the mechanism by which it will enforce the post-employment shareholding
guideline during 2021.
The share interests of the Executive Directors and their connected persons as at 31st December 2020 are as follows:
Total number of
beneficially owned
Shares held in
Unvested interests in
share schemes
awarded without
performance
Unvested interests in
share incentive
schemes awarded
subject to
performance
Shareholding
shares at 31st
Contour Management
conditions at 31st
conditions as at 31st
requirement (% of
Current shareholding
December 2020
Holdings LLC1
December 2020
December 20202
base salary)
(% of base salary)3
1,798,774
7,403,453
104,694
1,333,393
250%
250%
2,259%
_4
–
–
17,579
757,262
Executive Director
Joseph C. Brandt
President & CEO
Stefan Schellinger
Chief Financial Officer
1. The Private Incentive Plan comprised an interest in Class S units, Class C units and Class B units. The number of shares shown represents the total number
of ordinary shares (GLO) now held in Contour Management Holdings LLC following the conversion of Mr Brandt’s Class S units into ordinary shares of the
Company. The number of shares delivered through the Class B and Class C units is uncapped and could be substantial depending upon levels of return
to Reservoir Capital Group.
2. Unvested interests in share incentive schemes awarded subject to performance conditions comprise performance share awards under the ContourGlobal
Long-Term Incentive Plan and are structured as Conditional Awards (President and CEO) or Nil-Cost Options (Chief Financial Officer).
3. The value of the Executive Directors’ shareholdings was calculated by reference to the closing price of ContourGlobal shares of 215p on 31st December 2020
and base salary converted where appropriate to GBP using the exchange rate on that date of $1.37: £1. This includes the value of those shares in Contour
4. Stefan Schellinger has five years from the date of his appointment as an Executive Director to reach the shareholding guideline. In accordance with the policy
for Executive Directors, he is required to retain at least half of any share awards vesting (net of tax) under the Company’s discretionary share-based employee
Management Holdings LLC.
incentive schemes until the guideline is met.
The President & CEO participates in the Private Incentive Plan (PIP), a legacy arrangement under which he holds an interest in
shares. Further details on the PIP and the allocation of shares under award for the President & CEO are provided on page 138.
There were no changes to the Executive Directors’ interests in the Company’s shares during the period between 31st
December 2020 and 18th March 2021.
1. Craig A. Huff and Gregg M. Zeitlin each have an indirect interest in ordinary shares as a result of their interests in entities controlled by Reservoir Capital that
in turn have indirect interests in the Company.
2. Alejandro Santo Domingo has an indirect interest in ordinary shares as a result of having a discretionary share interest in certain entities which have indirect
interests in the Company. Alejandro Santo Domingo disclaims all beneficial interests and control in respect to such ordinary shares.
3. As disclosed in the Prospectus, at Admission Dr. Alan Gillespie and Ronald Trächsel were issued ordinary shares in the Company at the offer price, by way
of private subscription.
Service contracts
Executive Directors have a service contract as follows:
Executive Director
Joseph C. Brandt, President & CEO
Stefan Schellinger, Chief Financial Officer
Date of service contract
14th November 2017
15th April 2019
Notice period
6 months either party
12 months either party
All Non-Executive Directors have letters of appointment with the Company for a three-year term. The letters of appointment
were renewed in October 2020. Each appointment is terminable by either party on one month’s written notice. All Non-Executive
Directors are subject to annual re-election at each AGM.
The dates of appointment of each of the Non-Executive Directors serving at 31st December 2020 are summarized in the
table below.
Non-Executive Director
Craig A. Huff (Chairman)
Daniel Camus
Mariana Gheorghe
Dr. Alan Gillespie
Ronald Trächsel
Alejandro Santo Domingo
Gregg M. Zeitlin
Term of Appointment
Date of Appointment
Date of Expiry
3 years
3 years
3 years
3 years
3 years
3 years
3 years
23rd October 2017
23rd October 2017
30th June 2019
23rd October 2017
23rd October 2017
23rd October 2017
23rd October 2017
23rd October 2023
3rd October 2023
30th June 2022
23rd October 2023
23rd October 2023
23rd October 2023
23rd October 2023
Executive Director service contracts and the Non-Executive Directors’ letters of appointment are available for inspection
at the Company’s registered office during normal business hours and will be available for inspection at the AGM.
Payments to past Directors and payments for loss of office (audited information)
During the year, the Company has not made any payments to past Directors; neither has it made any payments to Directors
for loss of office.
Policy on external appointments
The Board believes that it may be beneficial to the Group for Executives to hold Non-Executive Directorships outside the
Group. Any such appointments are subject to approval by the Board, and will be determined based on the impact on their
role within the Company. The Board will determine on a case-by-case basis whether the Directors will be permitted to retain
any fees arising from such appointments. Neither Executive Director currently holds any external directorships.
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135
Report of the Remuneration Committee (continued)
Percentage change in remuneration
The following table shows the movement in the salary/fees, benefits and annual bonus of each Director of the Company from
2019 to 2020, compared with that of the average employee.
While the Committee reviews base salary for the President & CEO and Chief Financial Officer relative to the broader
employee population and all employees are eligible for an annual performance bonus, benefits are driven by local practices
and eligibility for annual bonus and benefits is determined by level and individual circumstances which do not lend themselves
to comparison.
Executive Directors
Joseph C. Brandt, President & CEO
Stefan Schellinger, Chief Financial Officer
Non-Executive Directors
Craig A. Huff (Chairman)
Daniel Camus
Mariana Gheorghe
Alan Gillespie
Ronald Trächsel
Alejandro Santo Domingo
Gregg M. Zeitlin
Average parent company employee
Percentage change in remuneration from 2019 to 2020
Percentage change
in salary/fees
Percentage changes
in benefits
Percentage change
in annual bonus
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
22%
-100%
0%
0%
400%
800%
0%
100%
0%
43%
40%
–
–
–
–
–
–
–
0%
1. The figures shown for average parent company employee are the average percentage increase/decrease for employees employed for the whole of 2019
and 2020 calculated by reference to base salary, benefits and annual bonus received in respect of those years. The sample size is small and bonus payouts
across the wider organization are considered to be reflected of overall business performance.
2. Where figures in the remuneration table are part-year figures, these have been annualized to enable year-on-year comparison.
Broader executive team and workforce remuneration
In line with the UK Corporate Governance Code, the Committee has responsibility for determining remuneration arrangements
for the broader executive team. In order to ensure all members of the global executive team are focused on the delivery of
ContourGlobal’s strategic priorities, all participate in the annual bonus scheme and long-term incentive on a similar basis to
the Executive Directors.
The Committee has taken steps to strengthen the information provided to the Committee regarding broader workforce
remuneration and related policies to ensure that these are fully considered when determining the remuneration arrangements
for Executive Directors and that the principles, policy and practice for executive and workforce remuneration are aligned.
The Committee continues to develop its approach to engagement with the workforce in the area of executive remuneration,
recognizing the global reach of the Company and its employee population.
As ContourGlobal only has 15 permanent employees in the UK, the number of employees in the UK falls below the threshold
for the requirement to disclose the CEO pay ratio.
Comparison of overall performance and pay
The chart opposite shows the Company’s total shareholder return performance compared with that of the FTSE 250 over the
period from the date of the Company’s admission onto the London Stock Exchange to 31st December 2020. The FTSE 250
Index has been chosen as an appropriate comparator as it is the index of which the Company is a constituent. TSR is defined
as the return on investment obtained from holding a company’s shares over a period. It includes dividends paid, the change
in capital value of the shares and any other payments made to or by shareholders within the period.
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Report of the Remuneration Committee (continued)
Percentage change in remuneration
The following table shows the movement in the salary/fees, benefits and annual bonus of each Director of the Company from
2019 to 2020, compared with that of the average employee.
While the Committee reviews base salary for the President & CEO and Chief Financial Officer relative to the broader
employee population and all employees are eligible for an annual performance bonus, benefits are driven by local practices
and eligibility for annual bonus and benefits is determined by level and individual circumstances which do not lend themselves
to comparison.
Executive Directors
Joseph C. Brandt, President & CEO
Stefan Schellinger, Chief Financial Officer
Non-Executive Directors
Craig A. Huff (Chairman)
Daniel Camus
Mariana Gheorghe
Alan Gillespie
Ronald Trächsel
Alejandro Santo Domingo
Gregg M. Zeitlin
Average parent company employee
Percentage change in remuneration from 2019 to 2020
Percentage change
in salary/fees
Percentage changes
in benefits
Percentage change
in annual bonus
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
22%
-100%
0%
0%
400%
800%
0%
100%
0%
43%
40%
–
–
–
–
–
–
–
0%
1. The figures shown for average parent company employee are the average percentage increase/decrease for employees employed for the whole of 2019
and 2020 calculated by reference to base salary, benefits and annual bonus received in respect of those years. The sample size is small and bonus payouts
across the wider organization are considered to be reflected of overall business performance.
2. Where figures in the remuneration table are part-year figures, these have been annualized to enable year-on-year comparison.
Broader executive team and workforce remuneration
In line with the UK Corporate Governance Code, the Committee has responsibility for determining remuneration arrangements
for the broader executive team. In order to ensure all members of the global executive team are focused on the delivery of
ContourGlobal’s strategic priorities, all participate in the annual bonus scheme and long-term incentive on a similar basis to
the Executive Directors.
The Committee has taken steps to strengthen the information provided to the Committee regarding broader workforce
remuneration and related policies to ensure that these are fully considered when determining the remuneration arrangements
for Executive Directors and that the principles, policy and practice for executive and workforce remuneration are aligned.
The Committee continues to develop its approach to engagement with the workforce in the area of executive remuneration,
recognizing the global reach of the Company and its employee population.
As ContourGlobal only has 15 permanent employees in the UK, the number of employees in the UK falls below the threshold
for the requirement to disclose the CEO pay ratio.
Comparison of overall performance and pay
The chart opposite shows the Company’s total shareholder return performance compared with that of the FTSE 250 over the
period from the date of the Company’s admission onto the London Stock Exchange to 31st December 2020. The FTSE 250
Index has been chosen as an appropriate comparator as it is the index of which the Company is a constituent. TSR is defined
as the return on investment obtained from holding a company’s shares over a period. It includes dividends paid, the change
in capital value of the shares and any other payments made to or by shareholders within the period.
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ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
The total remuneration of the President & CEO along with the value of bonuses paid and LTIP vesting, as a percentage of the
maximum opportunity, is provided for the same period.
Source: Datastream (Thomson Reuters)
CountourGlobal plc
FTSE 250
140
120
100
80
60
40
20
14 Nov 2017
31 Dec 2020
This graph shows the value, by 31st December 2020, of £100 invested in ContourGlobal on
14th November 2017, compared with the value of £100 invested in the FTSE 250 on the same date.
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Joseph C. Brandt, President & CEO
Total remuneration (000)
Actual bonus (% of maximum)
LTIP vesting (% of maximum)
20171
$443
75%2
N/A3
2018
$1,854
52%
N/A3
2019
$1,944
59.5%
N/A3
2020
$2,8894
85%
54.4%
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1. The figure for 2017 represents the remuneration earned in the period from 14th November 2017, being the date of listing, to 31st December 2017.
2. The President & CEO voluntarily agreed to a cap of 100% on his annual bonus for 2017.
3. There were no LTIP awards vesting based on a performance period ending in 2017, 2018 or 2019.
4. This total amount shown excludes legacy payments.
Relative importance of the spend on pay
The following table shows the Company’s total spend on pay for all employees compared to Group performance and
dividend distribution in 2019 and 2020.
Employee costs ($m)
Average number of employees
Adjusted EBITDA ($m)1
Share buyback ($m)
Dividend distributions ($m)
2019
83.8
1,431
702.7
0.0
137.6
2020
88.7
1,435
722
30.4
105.7
% change
5.8%
0.3%
2.7%
100%
-23.2%
1. Adjusted EBITDA is the principal profit measure used by the Group.
External advisors to the Committee
Deloitte LLP were appointed as advisors to the Remuneration Committee in November 2018 following a competitive tender
process. Details of the advice and services provided by Deloitte LLP are set out in the table below.
Advisor
Deloitte LLP
Area of advice/services provided
Provided guidance and advice in respect of corporate governance developments, best practice in remuneration
arrangements, external benchmarking data relating to senior hires, increased transparency relating to legacy
arrangements, remuneration disclosures and shareholder communications. Deloitte LLP received fees of £113,850
in respect of this advice, charged on a time and material basis. Deloitte LLP also provided tax advisory services
and internal audit co-sourcing support to ContourGlobal in 2020. The lead remuneration committee engagement
partner has no other connection with ContourGlobal or its Directors. Deloitte LLP is a member of the Remuneration
Consultants Group and is a signatory to its voluntary Code of Conduct, which requires their advice to be objective
and independent. The Committee is satisfied that this is the case and that the provision of other services in no way
compromised their independence.
Statement of voting on the Remuneration Report at the AGM
The table below provides details on the 2020 AGM voting result for our Annual Report on Remuneration. The voting result for
our Remuneration Policy, as approved at our 2018 AGM, is also provided.
Remuneration Policy (2018 AGM)
Annual Report on Remuneration (2020 AGM)
% of votes
cast in favour
% of votes
cast against
Number of votes
withheld
99.82%
99.78%
0.18%
0.22%
3,884,676
1,250,060
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Report of the Remuneration Committee (continued)
Legacy equity arrangements – the Private Incentive Plan (PIP)
The President & CEO, along with certain members of the ContourGlobal plc management team, have interests in a
‘Private Incentive Plan’ (PIP). As disclosed at the time of IPO and in subsequent Directors’ Remuneration Reports, the
PIP is a legacy equity arrangement established by Reservoir Capital Group (the major shareholder in the Company) in
connection with its original investment in the business.
The Company is not a party to the PIP and has no financial obligation to pay cash or issue shares to settle the PIP. All
shares delivered to the President & CEO under the award are funded by Reservoir Capital Group. Consequently, the
Remuneration Committee has no authority over the plan, or the allocation and release of awards.
The PIP is not an ongoing element of the executive remuneration policy at ContourGlobal plc, and no new allocations
will be made under the plan.
History
Joseph C. Brandt, the current President & CEO, founded the Company together with Reservoir Capital Group in 2005.
Around that time, incentive arrangements were established which enabled the President & CEO, along with other senior
management, to participate in the return on invested capital above a required return hurdle.
The PIP therefore relates to legacy commitments connected with the founding of ContourGlobal and the growth of
the Company in the years prior to its listing on the London Stock Exchange, and modified in anticipation of the listing.
As disclosed in the 2017 DRR, the allocation and terms of the award remained subject to finalization. The allocations
and terms of the President & CEO’s award were substantially agreed prior to listing. Reservoir Capital finalized the
implementation of his allocation on 27th December 2018.
Overview of the PIP
The award is in the form of partnership units in Contour Management Holdings LLC which is a partner in ContourGlobal
L.P. (the limited partnership through which Reservoir Capital Group owns shares in the Company). The award comprised
Class S units, Class C units and Class B units.
Under the terms of the PIP, these units entitle the award-holder to receive from Contour Management Holdings LLC cash
or shares in the Company if certain financial performance conditions are achieved.
Class S Units
Class C Units
Class B Units
Basis of awards
These units are similar in nature to a restricted stock award of 6,943,864 ContourGlobal plc shares, subject to
an underpin share price.
These units represent a value share between management and Reservoir Capital Group.
PIP interests awarded (audited information)
While the allocations and terms of the President & CEO’s award were substantially agreed prior to listing, Reservoir
Capital finalized the implementation of his allocation on 27th December 2018. Details of the award are as follows:
Joseph C. Brandt 27th December 2018 Class S units
Date of award
Value of award
at date of grant
£12,228,145
Form of award
Up to 6,943,864
ContourGlobal plc
shares
Class C units
Value share between management and
Reservoir Capital Group (see below)
Class B units
Vesting date
Units vest in equal tranches over
the three-year period from IPO.
The date of full vesting was 27th
December 2020
Units vest in equal tranches over
the three-year period from IPO.
The date of full vesting was 27th
December 2020
Fully vested
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Additional information on Class S Unit Vesting
The Company was notified that the financial performance condition in respect of the Class S Units was tested on
27 December 2020 (based on closing share price of 207p on the 24th December) and consequently shares were
transferred from Reservoir Capital Group’s holding of shares in ContourGlobal plc (through ContourGlobal L.P.) to
Contour Management Holdings LLC.
The Class S unit financial performance condition was a share price underpin of $2.23 (threshold) to $2.28 (maximum),
assuming no dividends. The number of shares transferred relevant to Mr Brandt’s Class S Unit award (including the
impact of accrued dividends) was determined to be 7,403,453. ContourGlobal L.P also transferred cash to Contour
Management Holdings LLC relating to the dividend payable on 29 December 2020 for these shares. The value of
these shares and cash is included in the remuneration table on page 129. These shares are subject to a sale restriction
until the one year anniversary of the date on which Reservoir Capital (through ContourGlobal L.P.) disposes of its
interests in ContourGlobal plc, unless waived by ContourGlobal LP.
Report of the Remuneration Committee (continued)
Legacy equity arrangements – the Private Incentive Plan (PIP)
The President & CEO, along with certain members of the ContourGlobal plc management team, have interests in a
‘Private Incentive Plan’ (PIP). As disclosed at the time of IPO and in subsequent Directors’ Remuneration Reports, the
PIP is a legacy equity arrangement established by Reservoir Capital Group (the major shareholder in the Company) in
connection with its original investment in the business.
The Company is not a party to the PIP and has no financial obligation to pay cash or issue shares to settle the PIP. All
shares delivered to the President & CEO under the award are funded by Reservoir Capital Group. Consequently, the
Remuneration Committee has no authority over the plan, or the allocation and release of awards.
The PIP is not an ongoing element of the executive remuneration policy at ContourGlobal plc, and no new allocations
will be made under the plan.
History
Joseph C. Brandt, the current President & CEO, founded the Company together with Reservoir Capital Group in 2005.
Around that time, incentive arrangements were established which enabled the President & CEO, along with other senior
management, to participate in the return on invested capital above a required return hurdle.
The PIP therefore relates to legacy commitments connected with the founding of ContourGlobal and the growth of
the Company in the years prior to its listing on the London Stock Exchange, and modified in anticipation of the listing.
As disclosed in the 2017 DRR, the allocation and terms of the award remained subject to finalization. The allocations
and terms of the President & CEO’s award were substantially agreed prior to listing. Reservoir Capital finalized the
implementation of his allocation on 27th December 2018.
Overview of the PIP
The award is in the form of partnership units in Contour Management Holdings LLC which is a partner in ContourGlobal
L.P. (the limited partnership through which Reservoir Capital Group owns shares in the Company). The award comprised
Class S units, Class C units and Class B units.
Under the terms of the PIP, these units entitle the award-holder to receive from Contour Management Holdings LLC cash
or shares in the Company if certain financial performance conditions are achieved.
Class S Units
These units are similar in nature to a restricted stock award of 6,943,864 ContourGlobal plc shares, subject to
Basis of awards
an underpin share price.
Class C Units
Class B Units
These units represent a value share between management and Reservoir Capital Group.
PIP interests awarded (audited information)
While the allocations and terms of the President & CEO’s award were substantially agreed prior to listing, Reservoir
Capital finalized the implementation of his allocation on 27th December 2018. Details of the award are as follows:
Date of award
Form of award
Value of award
at date of grant
Joseph C. Brandt 27th December 2018 Class S units
Up to 6,943,864
£12,228,145
ContourGlobal plc
shares
Class C units
Value share between management and
Units vest in equal tranches over
Reservoir Capital Group (see below)
Class B units
Vesting date
Units vest in equal tranches over
the three-year period from IPO.
The date of full vesting was 27th
December 2020
the three-year period from IPO.
The date of full vesting was 27th
December 2020
Fully vested
Additional information on Class C and B Unit Vesting
Class C units and Class B units are structured as a value share between management and Reservoir Capital Group,
and deliver an award of ContourGlobal plc shares subject to certain thresholds after deducting the value arising from
the Class S units. Distributions from Class C units and Class B units are subject to Reservoir Capital Group realizing value
from its investment in ContourGlobal plc, and the scheme stays in effect until Reservoir Capital Group has disposed of
all its ordinary shares in ContourGlobal plc. Class C and Class B units are fully vested and are not forfeitable.
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Illustration of value receivable under the PIP for Joseph C Brandt
Following the testing of the financial performance condition on 27 December 2020 the Class S Units have now vested.
The value of Class C and Class B Units will be dependent on the timing of the disposal of Reservoir Capital Group’s
holding in ContourGlobal plc, the share price at that time as well as any dividends received in the interim. The table
below illustrates the value to Joseph C Brandt under various sale price scenarios, assuming Reservoir Capital Group
will have disposed of its shareholdings within three years following Admission.
Average sale price
Shares related to Class C units and Class B units (m)1
Total value (£m)2
£3.00
£3.50
£4.00
£5.00
£5.50
Nil
0.4
3.2
6.0
12.77
Nil
1.4
12.8
30.0
70.2
1. Assumes USD/GBP rate of $1.275, no dividends on ContourGlobal plc shares and that ContourGlobal’s shares sold or valued on 1st November 2020.
2. Total value has been calculated using the average sale price in each scenario.
3. The number of shares delivered under the Class C units and Class B units increases above 12.8m in higher sale price scenarios.
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Report of the Remuneration Committee (continued)
Carried interest in Brazilian assets (unaudited)
On 30th June 2008, Joseph C. Brandt was awarded a carried interest, funded by Aguila Ltd, a minority shareholder in
Kani LP, which is an entity formed to develop and acquire hydroelectric and associated cogeneration assets in Brazil.
The Company is not party to the carried interest and has no financial obligation in relation to the interest. Under the
arrangement, funded by Aguila Ltd, management receive in aggregate 18% of the value created above an IRR hurdle
of 9%. Payments would be made on the occurrence of a final liquidity event in respect of the assets.
The President & CEO’s carried interest amounts to 46% of the 18% total carried interest. No service conditions apply.
These interests are not considered to relate to director ‘qualifying services’ in the period prior to IPO.
Payments from the carried interest are uncapped. The value to the President & CEO will depend on a number of factors,
including the timing of any sale, the sale price achieved and the extent to which the IRR 9% hurdle has been met. The
table below illustrates possible value to the President & CEO under this arrangement assuming various sale price
scenarios of the Brazilian assets.
Illustrative sale price achieved in relation to the sale
of the assets (shown as a multiple of 2020 EBITDA of the assets)
Illustrative value realised
by Joseph C. Brandt ($m)
8.0x
9.0x
10.0x
11.0x
12.0x
13.0x
0.30
0.80
1.30
1.90
2.40
2.90
Statement of compliance
This report has been prepared in accordance with the provisions of the Companies Act 2006 and The Large and Medium-
sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended). It also meets the requirements
of the UK Listing Authority’s Rules and the Disclosure and Transparency Rules and has been prepared considering the
recommendations of the UK Corporate Governance Code and the voting guidelines of major UK institutional investor bodies.
Approval
This report was approved by the Board of Directors, on the recommendation of the Remuneration Committee, on 18th March
2021, and signed on its behalf by:
Daniel Camus
Chairman of the Remuneration Committee
18th March 2021
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Report of the Remuneration Committee (continued)
Carried interest in Brazilian assets (unaudited)
On 30th June 2008, Joseph C. Brandt was awarded a carried interest, funded by Aguila Ltd, a minority shareholder in
Kani LP, which is an entity formed to develop and acquire hydroelectric and associated cogeneration assets in Brazil.
The Company is not party to the carried interest and has no financial obligation in relation to the interest. Under the
arrangement, funded by Aguila Ltd, management receive in aggregate 18% of the value created above an IRR hurdle
of 9%. Payments would be made on the occurrence of a final liquidity event in respect of the assets.
The President & CEO’s carried interest amounts to 46% of the 18% total carried interest. No service conditions apply.
These interests are not considered to relate to director ‘qualifying services’ in the period prior to IPO.
Payments from the carried interest are uncapped. The value to the President & CEO will depend on a number of factors,
including the timing of any sale, the sale price achieved and the extent to which the IRR 9% hurdle has been met. The
table below illustrates possible value to the President & CEO under this arrangement assuming various sale price
scenarios of the Brazilian assets.
Illustrative sale price achieved in relation to the sale
of the assets (shown as a multiple of 2020 EBITDA of the assets)
Illustrative value realised
by Joseph C. Brandt ($m)
0.30
0.80
1.30
1.90
2.40
2.90
8.0x
9.0x
10.0x
11.0x
12.0x
13.0x
Statement of compliance
This report has been prepared in accordance with the provisions of the Companies Act 2006 and The Large and Medium-
sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended). It also meets the requirements
of the UK Listing Authority’s Rules and the Disclosure and Transparency Rules and has been prepared considering the
recommendations of the UK Corporate Governance Code and the voting guidelines of major UK institutional investor bodies.
Approval
2021, and signed on its behalf by:
This report was approved by the Board of Directors, on the recommendation of the Remuneration Committee, on 18th March
Daniel Camus
Chairman of the Remuneration Committee
18th March 2021
Directors’ Report
Directors’ Report
In accordance with section 415 of the Companies Act 2006,
the Directors of ContourGlobal plc present their report to
shareholders on the audited consolidated financial
statements for the year ended 31st December 2020.
Strategic report
As permitted by section 414C of the Companies Act 2006,
certain information required to be included in the Directors’
report has been included in the Strategic report, or as set
out below.
Dividends
The Company announced in March 2020 that it expected
to maintain its annual dividend increase by 10% per year,
in line with the Company’s operational scale. The total
dividend paid for the year ended 2019 was $99 million.
With the 10% annual increase, the total dividend for the year
ended 31st December 2020 was $107.4 million equating
to four quarterly payments of $4.0591 cents per share,
equivalent to $24.75 million per quarter. Quarterly dividends
for 2020 were paid/shall be paid (as applicable) on 26th June
2020, 25th September 2020, 29th December 2020 and 19th
April 2021.
The declaration and payment by the Company of any future
dividends and the amounts of any such dividends depend
on the Company’s ability to maintain its credit rating, its
investments, results, financial condition, future prospects,
profits being available for distribution, consideration of certain
covenants under the terms of outstanding indebtedness, and
any other factors deemed by the Directors to be relevant at
the time, subject always to the requirements of applicable laws.
Relations with other capital providers
The Board recognizes the contribution made by other
providers of capital to the Group and welcomes the views
of such providers in relation to the Group’s approach to
corporate governance.
Share capital and voting rights
Details of the Company’s share capital are set out in Note
4.22 to the Consolidated Financial Statements, including
details on the movements in the Company’s issued share
capital during the year.
As at 31st December 2020, the Company’s issued share
capital consisted of 670,712,920 ordinary shares of £0.01
each of which 12,374,731 shares are held in treasury.
Therefore, the total number of voting rights in the Company
is 658,338,189. The Company’s issued ordinary share capital
ranks equally in all respects and carries the right to receive
all dividends and distributions declared, made or paid on or
in respect of the ordinary shares.
Ordinary shareholders are entitled to receive notice of, and
to attend and speak at, any general meeting of the Company.
On a show of hands every shareholder present in person
or by proxy (or being a corporation represented by a duly
authorized representative) shall have one vote, and on a poll
every shareholder who is present in person or by proxy shall
have one vote for every share of which he is the holder. The
Notice of Annual General Meeting specifies deadlines for
exercising voting rights and appointing a proxy or proxies.
Other than the general provisions of the Articles of
Association (and prevailing legislation), there are no
specific restrictions on the size of a holding or on the
transfer of the ordinary shares.
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The Directors are not aware of any agreements between
holders of the Company’s shares that may result in the
restriction of the transfer of securities or on voting rights.
No shareholder holds securities carrying any special rights
or control over the Company’s share capital.
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Authority to purchase own shares
Subject to authorization by shareholder resolution, the
Company may purchase its own shares in accordance
with the Companies Act 2006. Any shares which have
been bought back may be held as treasury shares or
canceled immediately upon completion of the purchase.
Authority was given at a General Meeting of the Company
on 1st April 2020 for the Company to make market purchases
(as defined in section 693(4) of the Companies Act 2006)
of up to 20,000,000 shares. This authority will expire at the
conclusion of the Company’s AGM in 2021 (scheduled for
12th May 2021) or, if earlier, the close of business on 26th
August 2021.
As part of its investment policy, in April 2020, the Board
approved and announced the commencement of a share
buyback program of up to £30 million in accordance with
the terms of the general authority granted by shareholders
at the 2019 General Meeting. The Board has subsequently
approved two extensions to the share buyback program, in
accordance with the terms of the general authority granted
by shareholders at the 2020 General Meeting, with the first
such extension being on 30th June 2020 and the second
being on 22nd September 2020, with this extending the
program to 31st December 2020.
Following the end of the reporting period, the Board
announced on 11th January 2021 a further extension of
the share buyback program until 31st March 2021.
As at 31st December 2020, the Company has repurchased
12,374,731 Shares under the share buyback program, at an
average price of 188.44 pence and total cost of £23.4 million,
with all such shares being held in treasury 658,338,189
Shares remained in issue.
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141
Directors’ Report (continued)
Following year-end, as at 18th March 2021, the Company has
repurchased a further 2,624,774 shares, at an average price
of 208.39 pence and total cost of £5.47 million, with all such
shares being held in treasury pending cancellation or
re-issue. 655,713,415 shares remained in issue.
Research and development
ContourGlobal plc is constantly engaged in process and
product innovation. For examples of the Company’s R&D
activities, please refer to the Business Review.
A renewal of the authority to make market purchases will
be sought from shareholders at each AGM of the Company.
Purchases of Ordinary Shares will be made within guidelines
established from time to time by the Board. Any purchase
of Ordinary Shares would be made only out of the available
cash resources of the Company. Ordinary Shares purchased
by the Company may be held in treasury or canceled.
Articles of Association
The Company’s Articles of Association were adopted
pursuant to a resolution passed at a general meeting of
the Company held on 8th November 2017. The Articles of
Association may only be amended by special resolution
at a general meeting of the shareholders. The Company’s
current articles are available on our website at
www.contourglobal.com.
Stakeholder engagement
We set out further details of our stakeholder engagement
activity over 2020, and the outcomes of such activity, on
pages 23 to 27.
Sustainable development
The business review section of this report, on pages 34 to 53,
focuses on the Company’s health and safety, environmental
compliance and employment performance and outlines the
Company’s core values and commitment to the principles of
sustainable development and the development of community
relations programs.
Financial instruments
Details of the Group’s use of financial instruments can be
found in Notes 4.13, 4.14 and 4.16 to the financial statements.
Directors’ re-appointment and appointment
The Board has the power at any time to elect any person
to be a Director.
Political donations
It is the Company’s policy not to make political donations.
No political contributions were made in 2020 (2019: £nil).
Charitable donations
Please refer to pages 52 and 53.
Overseas branches
ContourGlobal plc does not have any branches. A full list of
the Group’s controlled subsidiaries is disclosed in Note 4.30.
of the Consolidated Financial Statements.
Major shareholding
The table below shows the interests in ordinary shares
notified to the Company in accordance with the Disclosure
Guidance and Transparency Rules as at 31st December 2020
and 18th March 2021.
Shareholder
RCGM LLC1
FIL Limited
Date of notification
No. of Ordinary
Shares
% of voting
Ordinary Share
capital
13th December 2017
3rd July 2019
478,932,408
36,594,082
71
5.45
Note 1 - The Reservoir Funds own approximately 99.6% of
ContourGlobal LP and are themselves ultimately managed
and controlled by Reservoir Capital. The managing member
of Reservoir Capital is RCGM, LLC.
Under the Relationship Agreement, ContourGlobal LP is
entitled to appoint two Non-Executive Directors to the Board
while it continues to control 25% or more of the Company’s
shares. Further details of the Relationship Agreement can
be found on page 143. The appointees by Reservoir Capital
are Craig A. Huff and Gregg M. Zeitlin.
In accordance with the Company’s Articles of Association,
the Directors are subject to annual re-appointment
by shareholders and all the Directors will stand for
re-appointment at the Annual General Meeting to
be held on 12th May 2021.
Powers of Directors
Subject to the Company’s Articles of Association, the
Companies Act 2006 and to any authorities provided
by special resolution, the business of the Company is
managed by the Board, which may exercise all the
powers of the Company.
Directors’ interests
Information on share ownership by Directors can be found
in the Remuneration Report on pages 134 and 135.
Directors’ and officers’ liability insurance
Directors and Officers of the Company and its subsidiaries
have been and continue to be covered by director and
officer liability insurance.
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Directors’ Report (continued)
Following year-end, as at 18th March 2021, the Company has
repurchased a further 2,624,774 shares, at an average price
of 208.39 pence and total cost of £5.47 million, with all such
shares being held in treasury pending cancellation or
re-issue. 655,713,415 shares remained in issue.
Research and development
ContourGlobal plc is constantly engaged in process and
product innovation. For examples of the Company’s R&D
activities, please refer to the Business Review.
A renewal of the authority to make market purchases will
be sought from shareholders at each AGM of the Company.
Purchases of Ordinary Shares will be made within guidelines
established from time to time by the Board. Any purchase
of Ordinary Shares would be made only out of the available
cash resources of the Company. Ordinary Shares purchased
by the Company may be held in treasury or canceled.
Articles of Association
The Company’s Articles of Association were adopted
pursuant to a resolution passed at a general meeting of
the Company held on 8th November 2017. The Articles of
Association may only be amended by special resolution
at a general meeting of the shareholders. The Company’s
current articles are available on our website at
www.contourglobal.com.
Stakeholder engagement
We set out further details of our stakeholder engagement
activity over 2020, and the outcomes of such activity, on
pages 23 to 27.
Sustainable development
The business review section of this report, on pages 34 to 53,
focuses on the Company’s health and safety, environmental
compliance and employment performance and outlines the
Company’s core values and commitment to the principles of
sustainable development and the development of community
relations programs.
Financial instruments
Details of the Group’s use of financial instruments can be
found in Notes 4.13, 4.14 and 4.16 to the financial statements.
Directors’ re-appointment and appointment
Political donations
The Board has the power at any time to elect any person
to be a Director.
It is the Company’s policy not to make political donations.
No political contributions were made in 2020 (2019: £nil).
Under the Relationship Agreement, ContourGlobal LP is
entitled to appoint two Non-Executive Directors to the Board
while it continues to control 25% or more of the Company’s
shares. Further details of the Relationship Agreement can
be found on page 143. The appointees by Reservoir Capital
are Craig A. Huff and Gregg M. Zeitlin.
Charitable donations
Please refer to pages 52 and 53.
Overseas branches
In accordance with the Company’s Articles of Association,
of the Consolidated Financial Statements.
the Directors are subject to annual re-appointment
by shareholders and all the Directors will stand for
re-appointment at the Annual General Meeting to
be held on 12th May 2021.
Powers of Directors
Subject to the Company’s Articles of Association, the
Companies Act 2006 and to any authorities provided
by special resolution, the business of the Company is
managed by the Board, which may exercise all the
powers of the Company.
Directors’ interests
Information on share ownership by Directors can be found
in the Remuneration Report on pages 134 and 135.
Directors’ and officers’ liability insurance
Directors and Officers of the Company and its subsidiaries
have been and continue to be covered by director and
officer liability insurance.
ContourGlobal plc does not have any branches. A full list of
the Group’s controlled subsidiaries is disclosed in Note 4.30.
Major shareholding
The table below shows the interests in ordinary shares
notified to the Company in accordance with the Disclosure
Guidance and Transparency Rules as at 31st December 2020
and 18th March 2021.
Shareholder
Date of notification
Shares
RCGM LLC1
FIL Limited
13th December 2017
478,932,408
3rd July 2019
36,594,082
capital
71
5.45
No. of Ordinary
Ordinary Share
% of voting
Note 1 - The Reservoir Funds own approximately 99.6% of
ContourGlobal LP and are themselves ultimately managed
and controlled by Reservoir Capital. The managing member
of Reservoir Capital is RCGM, LLC.
On 17th December, 2020, a new EuroBond composed of
two tranches was issued for €410 million aggregate principal
amount of 2.75% Senior Secured Notes due in 2026 and
€300 million aggregate principal amount of 3.125% Senior
Secured Notes due in 2028. On 6th January, 2021 the
Group redeemed the €450 million ($549.7 million)
aggregate principal amount of its 3.375% Senior
Secured Notes due 2023.
As a result of the add-on offering, the Euro Bonds have an
aggregate principal amount of €1,010 million split between
three tranches: €400 million of 4.125% Senior Secured Notes
due 2025, €410 million of 2.75% Senior Secured Notes due
2026 and €300 million of 3.125% Senior Secured Notes due
in 2028.
The Euro Bond Indentures provide redemption conditions
depending of the date of the redemption.
If ContourGlobal sells certain of its assets or experiences
specific kinds of changes in control (as defined in the Euro
Bond Indenture), ContourGlobal must offer to purchase the
Euro Bonds at a purchase price equal to 100% and 101%
respectively of the principal amount thereof, plus accrued
and unpaid interest thereon to, but excluding, the date
of purchase.
On 12th December, 2020, the Group also entered into a
€120 million revolving credit facility available for general
corporate purposes, maturing in November 2023, and
which remains undrawn as of 31st December, 2020.
Annual General Meeting (AGM)
The 2021 AGM will be held on 12th May 2021. At the AGM,
shareholders will have the opportunity to ask questions of the
Board, including the Chairmen of the Board Committees. Full
details of the AGM, including explanatory notes, are contained
in the Notice of the AGM. The Notice sets out the resolutions to
be proposed at the AGM and an explanation of each resolution.
All documents relating to the AGM are available on the
Company’s website at www.contourglobal.com.
Significant contractual arrangements
Relationship Agreement
In November 2017, the Company, ContourGlobal LP, the
Reservoir Funds, Reservoir Capital and the Company
President and Chief Executive Officer, Joseph C. Brandt
entered into a Relationship Agreement. The principal
purpose of the Relationship Agreement is to ensure that
the Company can carry on an independent business as its
main activity. The Relationship Agreement contains, among
others, undertakings from ContourGlobal LP (the ‘Major
Shareholder’), the Reservoir Funds and Reservoir Capital
that: (i) transactions and agreements with it (and/or any of
its controlled affiliates) will be conducted at arm’s length
and on normal commercial terms; (ii) neither it nor any of its
controlled affiliates will take any action that would have the
effect of preventing the Company from complying with its
obligations under the Listing Rules; and (iii) neither it nor
any of its controlled affiliates will propose or procure the
proposal of a shareholder resolution which is intended or
appears to be intended to circumvent the proper application
of the Listing Rules (the ‘Independence Provisions’).
Furthermore, Reservoir Capital has agreed to procure the
compliance of its associates with the Independence
Provisions. The Company’s President and Chief Executive
Officer, Joseph C. Brandt, has given similar undertakings.
The Relationship Agreement will continue for so long as: (i)
the shares are listed on the premium listing segment of the
Official List and traded on the London Stock Exchange’s Main
Market for listed securities; and (ii) the Reservoir Funds and
the Major Shareholder and their controlled affiliates hold an
interest in 10% or more of the issued ordinary share capital of
the Company (or which carries 10% or more of the aggregate
voting rights in the Company from time to time). The Directors
believe that the terms of the Relationship Agreement will
enable the Group to carry on its business independently
of Reservoir Capital, the Reservoir Funds and the Major
Shareholder. The Company has complied with the
undertakings of the Relationship Agreement throughout
the period under review and, so far as it is aware, the major
shareholder and its associates have also complied with the
provisions including any procurement obligation.
Revolving Credit Facility and Euro Bonds
On 26th July 2018, CG Power Holdings issued the Euro
Bonds in a private offering exempt from the registration
requirements of the Securities Act 1933, as amended.
The Euro Bonds had an aggregate principal amount of
€750 million split between two tranches: €450 million of
3.375% Senior Secured Notes due 2023 and €300 million
of 4.125% Senior Secured Notes due 2025. On 30th July
2019, CG Power Holdings completed an add-on offering
of €100 million of 4.125% Senior Secured Notes due 2025.
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Directors’ Report (continued)
Additional information incorporated by reference into
this Directors’ report, including information required in
accordance with the Companies Act 2006, can be found
as follows:
Directors
The Directors of the Company who held office during the
year and up to the date of this report, unless otherwise
stated, are:
Disclosure
Financial risk management
objectives and policies
(including hedging policy and
use of financial instruments)
Future business developments
Going concern
Greenhouse gas emissions
Corporate Governance Code
Compliance Statement
Directors’ responsibilities
Events since the reporting date
Streamlined Energy and Carbon
Reporting (SECR)
Diversity policy
Location
Notes 4.13, 4.14 and 4.16 to the
consolidated financial statements
Strategic report pages 16, 21, 29,
32, 33, and 39
Strategic report page 72
Strategic report page 50
Corporate Governance Report
page 81
page 145
No event disclosed in the
consolidated financial statements
page 50
Nomination Committee report
For the purposes of LR 9.8.4CR, the information required to be
disclosed by LR 9.8.4R can be found in the following locations:
Disclosure
Interests capitalized
Detail of long-term incentive
schemes
Contracts of significance with
a controlling shareholder
Agreements with controlling
shareholder
Need to foster business
relationships and impact on
principal decisions
Location
Note 4.10 to the consolidated
financial statements
Directors’ Remuneration report
on pages 120 and 132 and Note
4.27 to the consolidated financial
statements
Relationship Agreement
on page 143
Relationship Agreement
on page 143
Strategic report pages 23 to 27
Craig A. Huff
Joseph C. Brandt
Daniel Camus
Mariana Gheorghe
Dr. Alan Gillespie
Alejandro Santo Domingo
Stefan Schellinger
Ronald Trächsel
Gregg M. Zeitlin
Service in the year ended 31st December 2020
Served throughout the year
Served throughout the year
Served throughout the year
Served throughout the year
Served throughout the year
Served throughout the year
Served throughout the year
Served throughout the year
Served throughout the year
Biographies of the Directors are provided in the Governance
section on pages 76 to 79.
The strategic report, comprising the inside front cover and
pages 1 to 75, and the Directors’ Report, comprising pages
76 to 144, which together form the management report as
required under the Disclosure Guidance and Transparency
Rules 4.1.8R, have been approved and are signed on its
behalf by
Joseph C. Brandt
President, Chief Executive Officer and Executive Director
ContourGlobal plc
18th March 2021
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Directors’ Report (continued)
Additional information incorporated by reference into
this Directors’ report, including information required in
accordance with the Companies Act 2006, can be found
as follows:
Disclosure
Financial risk management
objectives and policies
(including hedging policy and
use of financial instruments)
Going concern
Greenhouse gas emissions
Compliance Statement
Directors’ responsibilities
Location
Notes 4.13, 4.14 and 4.16 to the
consolidated financial statements
32, 33, and 39
Strategic report page 72
Strategic report page 50
page 81
page 145
Corporate Governance Code
Corporate Governance Report
Future business developments
Strategic report pages 16, 21, 29,
Directors
stated, are:
The Directors of the Company who held office during the
year and up to the date of this report, unless otherwise
Craig A. Huff
Joseph C. Brandt
Daniel Camus
Mariana Gheorghe
Dr. Alan Gillespie
Stefan Schellinger
Ronald Trächsel
Gregg M. Zeitlin
Alejandro Santo Domingo
Service in the year ended 31st December 2020
Served throughout the year
Served throughout the year
Served throughout the year
Served throughout the year
Served throughout the year
Served throughout the year
Served throughout the year
Served throughout the year
Served throughout the year
Events since the reporting date
No event disclosed in the
consolidated financial statements
Biographies of the Directors are provided in the Governance
Streamlined Energy and Carbon
Reporting (SECR)
Diversity policy
Nomination Committee report
page 50
section on pages 76 to 79.
The strategic report, comprising the inside front cover and
pages 1 to 75, and the Directors’ Report, comprising pages
76 to 144, which together form the management report as
required under the Disclosure Guidance and Transparency
Rules 4.1.8R, have been approved and are signed on its
For the purposes of LR 9.8.4CR, the information required to be
disclosed by LR 9.8.4R can be found in the following locations:
Disclosure
Interests capitalized
Detail of long-term incentive
schemes
Contracts of significance with
a controlling shareholder
Agreements with controlling
shareholder
Need to foster business
relationships and impact on
principal decisions
Location
behalf by
Note 4.10 to the consolidated
financial statements
Directors’ Remuneration report
on pages 120 and 132 and Note
4.27 to the consolidated financial
Relationship Agreement
on page 143
Relationship Agreement
on page 143
Strategic report pages 23 to 27
statements
Joseph C. Brandt
ContourGlobal plc
18th March 2021
President, Chief Executive Officer and Executive Director
Statement of Directors’ responsibilities in respect of the Annual Report and the
financial statements
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable
law and regulation.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have prepared the group financial statements in accordance
with international accounting standards in conformity with the
requirements of the Companies Act 2006 and international
financial reporting standards adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European Union and
company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising FRS 102
“The Financial Reporting Standard applicable in the UK
and Republic of Ireland”, and applicable law).
Under company law, directors must not approve the financial
statements unless they are satisfied that they give a true and
fair view of the state of affairs of the group and company and
of the profit or loss of the group for that period. In preparing
the financial statements, the directors are required to:
• select suitable accounting policies and then apply them
consistently;
• state whether applicable international accounting standards
in conformity with the requirements of the Companies Act
2006 and international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002
as it applies in the European Union have been followed
for the group financial statements and United Kingdom
Accounting Standards, comprising FRS 102 have been
followed for the company financial statements, subject
to any material departures disclosed and explained in
the financial statements;
• make judgements and accounting estimates that are
reasonable and prudent; and
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the group
and company will continue in business.
The directors are also responsible for safeguarding the
assets of the group and company and hence for taking
reasonable steps for the prevention and detection of
fraud and other irregularities.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the group’s and company’s transactions and disclose with
reasonable accuracy at any time the financial position of
the group and company and enable them to ensure that
the financial statements and the Directors’ Remuneration
Report comply with the Companies Act 2006.
The directors are responsible for the maintenance and integrity
of the company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Directors’ confirmations
The directors consider that the annual report and accounts,
taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders
to assess the group’s and company’s position and
performance, business model and strategy.
Each of the directors, whose names and functions are
listed in the Directors' Report confirm that, to the best
of their knowledge:
• the group financial statements, which have been prepared
in accordance with international accounting standards in
conformity with the requirements of the Companies Act
2006 and international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union, give a true and fair view
of the assets, liabilities, financial position and profit of
the group;
• the company financial statements, which have been
prepared in accordance with United Kingdom Accounting
Standards, comprising FRS 102, give a true and fair view
of the assets, liabilities, financial position and profit of the
company; and
• the Strategic Report includes a fair review of the
development and performance of the business and
the position of the group and company, together with
a description of the principal risks and uncertainties
that it faces.
In the case of each director in office at the date the directors’
report is approved:
• so far as the director is aware, there is no relevant audit
information of which the group’s and company’s auditors
are unaware; and
• they have taken all the steps that they ought to have taken
as a director in order to make themselves aware of any
relevant audit information and to establish that the group’s
and company’s auditors are aware of that information.
This responsibility statement has been approved and is
signed on behalf of the Board by:
Joseph C. Brandt
President, Chief Executive Officer and Executive Director
ContourGlobal plc
18th March 2021
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Consolidated statement of financial position
Year ended December 31, 2020
Independent auditors’ report to the members of ContourGlobal plc ................................................................................................................................. 147
Consolidated statement of income and other comprehensive income ............................................................................................................................ 157
Consolidated statement of financial position ................................................................................................................................................................................ 158
Consolidated statement of changes in equity ............................................................................................................................................................................. 159
Consolidated statement of cash flows ........................................................................................................................................................................................... 160
General information .................................................................................................................................................................................................................. 161
1.
Summary of significant accounting policies................................................................................................................................................................... 162
2.
2.1.
Application of new and revised international financial reporting standards (IFRS) ....................................................................... 162
2.2. New standards and interpretations not yet mandatorily applicable .................................................................................................. 162
2.3.
Summary of significant accounting policies ............................................................................................................................................... 162
2.4. Critical accounting estimates and judgments ............................................................................................................................................173
Significant changes in the reporting period .................................................................................................................................................................. 177
3.
2020 transactions ............................................................................................................................................................................................... 177
3.1.
2019 transactions ................................................................................................................................................................................................ 177
3.2.
Notes to the consolidated financial statements ........................................................................................................................................................... 179
4.
Segment reporting ............................................................................................................................................................................................. 179
4.1.
Revenue ................................................................................................................................................................................................................ 182
4.2.
Expenses by nature ........................................................................................................................................................................................... 182
4.3.
Employee costs and numbers ........................................................................................................................................................................ 183
4.4.
Acquisition related items .................................................................................................................................................................................. 183
4.5.
4.6. Net finance costs, foreign exchange gains and losses, and changes in fair value of derivatives ........................................... 184
Income tax expense and deferred income tax ......................................................................................................................................... 184
4.7.
Earnings per share ............................................................................................................................................................................................. 187
4.8.
4.9.
Intangible assets and goodwill ...................................................................................................................................................................... 187
4.10. Property, plant and equipment ...................................................................................................................................................................... 188
Financial and contract assets ......................................................................................................................................................................... 190
4.11.
4.12.
Investments in associates ................................................................................................................................................................................. 191
4.13. Management of financial risk ........................................................................................................................................................................... 191
4.14. Derivative financial instruments ..................................................................................................................................................................... 196
4.15. Fair value measurements ................................................................................................................................................................................ 197
4.16. Financial instruments by category ................................................................................................................................................................ 198
4.17. Other non-current assets ................................................................................................................................................................................. 199
4.18.
Inventories ............................................................................................................................................................................................................ 199
4.19. Trade and other receivables .......................................................................................................................................................................... 199
4.20. Other current assets .......................................................................................................................................................................................... 199
4.21. Cash and cash equivalents ........................................................................................................................................................................... 200
4.22.
Issued capital ..................................................................................................................................................................................................... 200
4.23. Non-controlling interests .................................................................................................................................................................................. 201
4.24. Borrowings .......................................................................................................................................................................................................... 203
4.25. Other non-current liabilities ............................................................................................................................................................................ 207
4.26. Provisions ............................................................................................................................................................................................................. 207
4.27. Share-based compensation plans ............................................................................................................................................................... 208
4.28. Trade and other payables ............................................................................................................................................................................... 210
4.29. Other current liabilities ...................................................................................................................................................................................... 210
4.30. Group undertakings ............................................................................................................................................................................................ 211
4.31. Related party disclosure .................................................................................................................................................................................. 217
4.32. Financial commitments and contingent liabilities ..................................................................................................................................... 217
4.33. Guarantees and letters of credit ................................................................................................................................................................... 220
4.34. Statutory auditors’ fees ..................................................................................................................................................................................... 221
4.35. Subsequent events ............................................................................................................................................................................................ 221
The accompanying notes are an integral part of these consolidated financial statements
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Consolidated statement of financial position
Year ended December 31, 2020
Independent auditors’ report to the members of ContourGlobal plc
3.
3.1.
3.2.
4.
4.1.
4.2.
4.3.
4.4.
4.5.
4.7.
4.8.
4.9.
4.11.
4.12.
Independent auditors’ report to the members of ContourGlobal plc ................................................................................................................................. 147
Consolidated statement of income and other comprehensive income ............................................................................................................................ 157
Consolidated statement of financial position ................................................................................................................................................................................ 158
Consolidated statement of changes in equity ............................................................................................................................................................................. 159
Consolidated statement of cash flows ........................................................................................................................................................................................... 160
1.
2.
General information .................................................................................................................................................................................................................. 161
Summary of significant accounting policies................................................................................................................................................................... 162
2.1.
Application of new and revised international financial reporting standards (IFRS) ....................................................................... 162
2.2. New standards and interpretations not yet mandatorily applicable .................................................................................................. 162
2.3.
Summary of significant accounting policies ............................................................................................................................................... 162
2.4. Critical accounting estimates and judgments ............................................................................................................................................173
Significant changes in the reporting period .................................................................................................................................................................. 177
2020 transactions ............................................................................................................................................................................................... 177
2019 transactions ................................................................................................................................................................................................ 177
Notes to the consolidated financial statements ........................................................................................................................................................... 179
Segment reporting ............................................................................................................................................................................................. 179
Revenue ................................................................................................................................................................................................................ 182
Expenses by nature ........................................................................................................................................................................................... 182
Employee costs and numbers ........................................................................................................................................................................ 183
Acquisition related items .................................................................................................................................................................................. 183
4.6. Net finance costs, foreign exchange gains and losses, and changes in fair value of derivatives ........................................... 184
Income tax expense and deferred income tax ......................................................................................................................................... 184
Earnings per share ............................................................................................................................................................................................. 187
Intangible assets and goodwill ...................................................................................................................................................................... 187
4.10. Property, plant and equipment ...................................................................................................................................................................... 188
Financial and contract assets ......................................................................................................................................................................... 190
Investments in associates ................................................................................................................................................................................. 191
4.13. Management of financial risk ........................................................................................................................................................................... 191
4.14. Derivative financial instruments ..................................................................................................................................................................... 196
4.15. Fair value measurements ................................................................................................................................................................................ 197
4.16. Financial instruments by category ................................................................................................................................................................ 198
4.17. Other non-current assets ................................................................................................................................................................................. 199
4.18.
Inventories ............................................................................................................................................................................................................ 199
4.19. Trade and other receivables .......................................................................................................................................................................... 199
4.20. Other current assets .......................................................................................................................................................................................... 199
4.21. Cash and cash equivalents ........................................................................................................................................................................... 200
4.22.
Issued capital ..................................................................................................................................................................................................... 200
4.23. Non-controlling interests .................................................................................................................................................................................. 201
4.24. Borrowings .......................................................................................................................................................................................................... 203
4.25. Other non-current liabilities ............................................................................................................................................................................ 207
4.26. Provisions ............................................................................................................................................................................................................. 207
4.27. Share-based compensation plans ............................................................................................................................................................... 208
4.28. Trade and other payables ............................................................................................................................................................................... 210
4.29. Other current liabilities ...................................................................................................................................................................................... 210
4.30. Group undertakings ............................................................................................................................................................................................ 211
4.31. Related party disclosure .................................................................................................................................................................................. 217
4.32. Financial commitments and contingent liabilities ..................................................................................................................................... 217
4.33. Guarantees and letters of credit ................................................................................................................................................................... 220
4.34. Statutory auditors’ fees ..................................................................................................................................................................................... 221
4.35. Subsequent events ............................................................................................................................................................................................ 221
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REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Opinion
In our opinion:
• ContourGlobal plc’s group financial statements and company financial statements (the “financial statements”) give a true
and fair view of the state of the group’s and of the company’s affairs as at 31 December 2020 and of the group’s profit
and the group’s cash flows for the year then ended;
• the group financial statements have been properly prepared in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006;
• the company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard
applicable in the UK and Republic of Ireland”, and applicable law); and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report, which comprise: the consolidated statement of
financial position and the company balance sheet as at 31 December 2020; the consolidated statement of income and other
comprehensive income, the consolidated statement of cash flows, and the consolidated statement of changes in equity and
the company statement of changes in equity for the year then ended; and the notes to the financial statements, which include
a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit and Risk Committee.
Separate opinion in relation to international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union
As explained in note 1 to the group financial statements, the group, in addition to applying international accounting standards
in conformity with the requirements of the Companies Act 2006, has also applied international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
In our opinion, the group financial statements have been properly prepared in accordance with international financial reporting
standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were
not provided to the group.
Other than those disclosed in note 4.34 to the financial statements, we have provided no non-audit services to the group
in the period under audit.
The accompanying notes are an integral part of these consolidated financial statements
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Independent auditors’ report to the members of ContourGlobal plc continued
Our audit approach
Overview
Audit Scope
• We conducted our audit work over 11 components in 10 countries.
• 7 components were subject to an audit of their complete financial information due to their size.
• 4 components were subject to audit of specified financial statement line items reflecting either the financial significance
of the balances or audit risk.
• Specific audit procedures were performed on certain material balances within cash and cash equivalents, and borrowings
in out of scope components.
• In addition, centrally managed functions, including the group consolidation, were audited at the head office by the group
engagement team.
Key audit matters
• Impairment of property, plant and equipment, intangible assets and financial and contract assets (group)
• Assessment of significant judgements relating to litigation and claims (group)
• Impact of Covid-19 (group)
• Impairment of investment in subsidiary company (parent)
Materiality
• Overall group materiality: US$18,000,000 (2019: US$16,250,000) based on approximately 2.5% of Adjusted EBITDA
less cash gain on sale of minority interest in assets (where applicable).
• Overall company materiality: US$16,500,000 (2019: US$16,600,000) based on approximately 1% of total assets.
• Performance materiality: US$13,500,000 (group) and US$12,400,000 (company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Capability of the audit in 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 in the Auditors’ responsibilities for the audit of the financial statements section, to detect material
misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws
and regulations related to breaches of health and safety regulations, environmental regulations and unethical and prohibited
business practises, and we considered the extent to which non-compliance might have a material effect on the financial
statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial
statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks
were related to inappropriate journal entries and/or management exercising bias in accounting estimates that would result
in the overstatement of Adjusted EBITDA. The group engagement team shared this risk assessment with the component
auditors so that they could include appropriate audit procedures in response to such risks in their work. Audit procedures
performed by the group engagement team and/or component auditors included:
• Assessment of compliance with local laws and regulations by each component audit team.
• Review of board minutes, internal audit reports, compliance review reports and attendance at Audit and Risk Committee
meetings where the heads of the compliance and internal audit functions present findings from their activities, which
include any known or suspected instances of non-compliance with laws and regulations and fraud.
• Meeting with internal legal counsel and internal audit to confirm any known instances of non-compliance with laws
and regulations.
• Identifying and testing journal entries that increased Adjusted EBITDA, in particular journal entries posted with
unusual account combinations, or posted by members of senior management with a financial reporting oversight role.
• Challenging assumptions and judgements made by management in significant accounting estimates, including the
disclosure of such matters in the financial statements.
• Incorporating elements of unpredictability into the audit procedures performed.
• Reviewing the presentation of Adjusted EBITDA in the Annual Report, including the disclosure of the reconciliation of
Adjusted EBITDA to statutory profit, and ensuring that sufficient prominence was given to statutory profit measures in
the Annual Report.
• Reviewing the disclosures in the Annual Report and financial statements against the specific legal requirements, and
involving technical experts to help us assess compliance of the disclosures against relevant legislation, for example
within the Directors’ Remuneration Report and the Corporate Governance Report.
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Our audit approach
Overview
Audit Scope
of the balances or audit risk.
in out of scope components.
engagement team.
Key audit matters
• We conducted our audit work over 11 components in 10 countries.
• 7 components were subject to an audit of their complete financial information due to their size.
• 4 components were subject to audit of specified financial statement line items reflecting either the financial significance
• Specific audit procedures were performed on certain material balances within cash and cash equivalents, and borrowings
• In addition, centrally managed functions, including the group consolidation, were audited at the head office by the group
• Impairment of property, plant and equipment, intangible assets and financial and contract assets (group)
• Assessment of significant judgements relating to litigation and claims (group)
• Impact of Covid-19 (group)
• Impairment of investment in subsidiary company (parent)
Materiality
• Overall group materiality: US$18,000,000 (2019: US$16,250,000) based on approximately 2.5% of Adjusted EBITDA
less cash gain on sale of minority interest in assets (where applicable).
• Overall company materiality: US$16,500,000 (2019: US$16,600,000) based on approximately 1% of total assets.
• Performance materiality: US$13,500,000 (group) and US$12,400,000 (company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Capability of the audit in 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 in the Auditors’ responsibilities for the audit of the financial statements section, to detect material
misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws
and regulations related to breaches of health and safety regulations, environmental regulations and unethical and prohibited
business practises, and we considered the extent to which non-compliance might have a material effect on the financial
statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial
statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks
were related to inappropriate journal entries and/or management exercising bias in accounting estimates that would result
in the overstatement of Adjusted EBITDA. The group engagement team shared this risk assessment with the component
auditors so that they could include appropriate audit procedures in response to such risks in their work. Audit procedures
performed by the group engagement team and/or component auditors included:
• Assessment of compliance with local laws and regulations by each component audit team.
• Review of board minutes, internal audit reports, compliance review reports and attendance at Audit and Risk Committee
meetings where the heads of the compliance and internal audit functions present findings from their activities, which
include any known or suspected instances of non-compliance with laws and regulations and fraud.
• Meeting with internal legal counsel and internal audit to confirm any known instances of non-compliance with laws
and regulations.
• Identifying and testing journal entries that increased Adjusted EBITDA, in particular journal entries posted with
unusual account combinations, or posted by members of senior management with a financial reporting oversight role.
• Challenging assumptions and judgements made by management in significant accounting estimates, including the
disclosure of such matters in the financial statements.
• Incorporating elements of unpredictability into the audit procedures performed.
• Reviewing the presentation of Adjusted EBITDA in the Annual Report, including the disclosure of the reconciliation of
Adjusted EBITDA to statutory profit, and ensuring that sufficient prominence was given to statutory profit measures in
the Annual Report.
• Reviewing the disclosures in the Annual Report and financial statements against the specific legal requirements, and
involving technical experts to help us assess compliance of the disclosures against relevant legislation, for example
within the Directors’ Remuneration Report and the Corporate Governance Report.
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There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances
of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial
statements. Also, 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.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the 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) identified by the auditors, including 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, and any comments we
make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
The impact of Covid-19 on the group and the impairment of investment in subsidiary company within the company financial
statements are new key audit matters this year. Accounting for business combinations and power purchase agreements (PPA)
in the year of acquisition including valuation of assets acquired and liabilities assumed, which was a key audit matter last year,
is no longer included as there were no business combination transactions closed during the period. Otherwise, the key audit
matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Impairment of property, plant and equipment,
intangible assets and financial and contract
assets (group)
The group has $3.5 billion of property, plant
and equipment, the majority of which relates
to power plant assets, $0.3 billion of intangible
assets, the majority of which relates to legado
rights in Mexico and $0.4 billion of financial and
contract assets, the majority of which relate to
service concession arrangements.
We evaluated the impairment triggers identified by management
in their assessment by reviewing performance data by power plant,
considering significant variances in performance against forecasts,
and from meetings we held with divisional finance directors to
discuss individual plant performance. We have also considered other
information gathered during the course of our audits of components
and assessed whether there are any other indicators of impairment,
as well as considering other factors that could indicate increased
impairment risk such as regulatory changes and potential impacts
of climate change.
The group is required to assess whether or
not there are any indicators of impairment over
these assets. In the event that an impairment
trigger is identified, the recoverable value of
property, plant and equipment and intangible
assets are assessed by a calculation of the
higher of value in use (which is based on future
discounted cash flow forecasts) and fair value
less costs to sell, and financial and contract
assets by assessing the expected credit losses.
Impairment assessments of this nature require
significant judgement and there is the risk that
potential impairment triggers are not identified
by management and, in the event that there
is an impairment trigger, there is a risk that the
calculation of the recoverable amount of the asset
is incorrect and therefore the value of the assets
may be misstated. Forecasts and assumptions
used in both value in use calculations and the
estimation of fair value less costs to sell are
inherently judgemental and therefore may
give rise to increased risk of misstatement.
In concluding on the audit risk that there could be further unidentified
impairment triggers, we specifically evaluated the Mexico plants
where the government in Mexico announced certain changes to the
legado regime which would result in significant increases to wheeling
charges. Management have filed a lawsuit and received an injunction
suspending the application of these higher fees, and obtained legal
advice from external legal counsel which supports their view that the
changes are unconstitutional and therefore unlikely to be sustained.
In evaluating this matter:
• We reviewed the external legal opinion obtained by management
which confirms management’s view that the proposed changes
are considered unconstitutional under Mexican laws;
• We evaluated a recent ruling on the application of these increased
wheeling charges in a case brought by another power generation
company in Mexico which found in favour of the company,
therefore further corroborating management’s view that the
proposed changes are unlikely to be sustained; and
• We consulted with our own local energy sector specialists
regarding their opinion on whether or not these changes
in wheeling charges are likely to be sustained.
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Key audit matter
How our audit addressed the key audit matter
Impairment indicators were identified in the
current year for the Brazilian wind power
plant, following lower than expected wind
conditions. A calculation was therefore
performed to estimate the recoverable
amount of this asset which was based
on a value in use calculation.
In addition, whilst the expiry of relevant
PPAs in 2021 and 2023 are not considered
impairment triggers, management also
performed an assessment of the future
discounted cash flows for the Spain Arrubal
and Bulgaria Maritsa plants given that the
existing power purchase agreements
for these plants are due to expire in
mid-2021 and early-2024 respectively.
These assessments took account of
most likely scenarios at the end of
the existing PPA arrangements.
For each of the value in use calculations
performed over the Brazilian wind power
plants, Spain Arrubal and Bulgaria Maritsa,
management performed sensitivity analysis
on certain key variables in the calculations
to understand the impact of changes in
certain assumptions.
No impairments in value were identified in
the assets subject to impairment reviews.
In relation to financial and contract assets,
the majority of which relate to service
concession arrangements, the group
assesses the expected credit losses on a
forward-looking basis and the impairment
methodology applied depends on whether
there has been a significant increase in
credit risk
We therefore consider that management’s conclusion that there is no
impairment trigger to be reasonable. We also read the disclosures included
in the financial statements in relation to this judgement and found these
to be appropriate
No impairment triggers other than the Brazilian wind power plants
already noted by management were identified from our procedures.
In relation to Brazilian wind power plants, we performed audit procedures
over the value in use calculations prepared by management. We used
PwC valuation specialists to assess the methodology applied in the
valuation and the discount rate used. We benchmarked the discount rate
to comparable assets and considered the underlying assumptions based
on our knowledge of the group and its industry. We assessed the accuracy
of management’s forecasting by reference to the accuracy of historical
forecasts compared to actual cash flows and tested the mathematical
accuracy of the impairment model.
A wind study which reflects more recent wind performance in the data, was
performed by an external expert engaged by management. This forecasts
the future expected wind performance which is a key assumption in the
estimation of future cash flows from the operation of the plants in the value in
use calculation. We evaluated the objectivity, independence and competence
of the expert engaged by management. We validated the key assumptions
related to future capacity by reference to resource forecast, board approved
forecasts specific to wind assets, and comparability of expected wind
conditions per the forecasts to actual conditions during the year.
In respect of the Spain Arrubal plant and Bulgaria Maritsa plant, we
used industry specialists to evaluate the market studies prepared by
management’s experts, which were used to determine likely future
scenarios beyond the expiry of these PPAs and therefore the associated
future cash inflows of these plants.
We tested management’s sensitivity analysis to ensure appropriate
judgement has been applied.
Based on our audit procedures performed we found the methodology
and assumptions used in the calculation of value in use for the Brazilian
wind, Spain Arrubal and Bulgaria Maritsa power plants and the conclusion
that no impairment charges were required, were reasonable.
We also assessed the disclosures in relation to the impairment assessments
completed, the critical accounting judgements and estimates associated
with impairment of property, plant equipment and intangible assets, and
the associated sensitivity analyses and have found these to be appropriate.
In concluding on the expected credit losses associated with service
concession arrangements, mainly in Togo, Senegal and Rwanda, we
performed an assessment of the financial results of these subsidiaries
which did not indicate any specific impairment risk. We also reviewed
the expected credit loss calculation which takes into account the risk
of non-payment considering ageing, previous experience of collections,
economic conditions, existing insurance policies and forward looking data.
We found that management’s conclusion that there is no material impairment
loss to be reasonable.
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Impairment indicators were identified in the
We therefore consider that management’s conclusion that there is no
current year for the Brazilian wind power
impairment trigger to be reasonable. We also read the disclosures included
plant, following lower than expected wind
in the financial statements in relation to this judgement and found these
conditions. A calculation was therefore
to be appropriate
performed to estimate the recoverable
amount of this asset which was based
on a value in use calculation.
In addition, whilst the expiry of relevant
PPAs in 2021 and 2023 are not considered
impairment triggers, management also
performed an assessment of the future
discounted cash flows for the Spain Arrubal
and Bulgaria Maritsa plants given that the
existing power purchase agreements
for these plants are due to expire in
mid-2021 and early-2024 respectively.
These assessments took account of
most likely scenarios at the end of
the existing PPA arrangements.
For each of the value in use calculations
performed over the Brazilian wind power
plants, Spain Arrubal and Bulgaria Maritsa,
management performed sensitivity analysis
on certain key variables in the calculations
to understand the impact of changes in
certain assumptions.
No impairment triggers other than the Brazilian wind power plants
already noted by management were identified from our procedures.
In relation to Brazilian wind power plants, we performed audit procedures
over the value in use calculations prepared by management. We used
PwC valuation specialists to assess the methodology applied in the
valuation and the discount rate used. We benchmarked the discount rate
to comparable assets and considered the underlying assumptions based
on our knowledge of the group and its industry. We assessed the accuracy
of management’s forecasting by reference to the accuracy of historical
forecasts compared to actual cash flows and tested the mathematical
accuracy of the impairment model.
A wind study which reflects more recent wind performance in the data, was
performed by an external expert engaged by management. This forecasts
the future expected wind performance which is a key assumption in the
estimation of future cash flows from the operation of the plants in the value in
use calculation. We evaluated the objectivity, independence and competence
of the expert engaged by management. We validated the key assumptions
related to future capacity by reference to resource forecast, board approved
forecasts specific to wind assets, and comparability of expected wind
conditions per the forecasts to actual conditions during the year.
No impairments in value were identified in
In respect of the Spain Arrubal plant and Bulgaria Maritsa plant, we
the assets subject to impairment reviews.
used industry specialists to evaluate the market studies prepared by
management’s experts, which were used to determine likely future
scenarios beyond the expiry of these PPAs and therefore the associated
future cash inflows of these plants.
assesses the expected credit losses on a
We tested management’s sensitivity analysis to ensure appropriate
forward-looking basis and the impairment
judgement has been applied.
In relation to financial and contract assets,
the majority of which relate to service
concession arrangements, the group
methodology applied depends on whether
there has been a significant increase in
credit risk
Based on our audit procedures performed we found the methodology
and assumptions used in the calculation of value in use for the Brazilian
wind, Spain Arrubal and Bulgaria Maritsa power plants and the conclusion
that no impairment charges were required, were reasonable.
We also assessed the disclosures in relation to the impairment assessments
completed, the critical accounting judgements and estimates associated
with impairment of property, plant equipment and intangible assets, and
the associated sensitivity analyses and have found these to be appropriate.
In concluding on the expected credit losses associated with service
concession arrangements, mainly in Togo, Senegal and Rwanda, we
performed an assessment of the financial results of these subsidiaries
which did not indicate any specific impairment risk. We also reviewed
the expected credit loss calculation which takes into account the risk
of non-payment considering ageing, previous experience of collections,
economic conditions, existing insurance policies and forward looking data.
We found that management’s conclusion that there is no material impairment
loss to be reasonable.
Key audit matter
How our audit addressed the key audit matter
Key audit matter
How our audit addressed the key audit matter
Assessment of significant judgements
relating to litigation and claims (group)
In the ordinary course of business, the
group is subject to actual or potential
liabilities arising from litigations and claims,
including contractual disputes brought by
government bodies (including regulators
and tax authorities), off-takers and suppliers.
Power Purchase Agreements (PPAs) are
held with state owned, regulated bodies
and other off-takers. Where disputes arise
in connection with such agreements, there
is usually a process of dialogue between
the counterparties which can take place
over an extended period of time.
Management review such litigation
and claims on a case-by-case basis
to determine the likely outcome and
to estimate the possible magnitude
and timing of any resultant payments
from adverse outcomes. Matters of this
nature are inherently uncertain and as
such management apply significant
judgement in determining the likely
outcome of such matters as well as
the potential effect on future operations
and the financial statements.
Impact of Covid-19 (group)
The Covid-19 pandemic has caused significant
global disruption and economic uncertainty.
Management has assessed the impact
of Covid-19 on the group, including any
potential financial reporting implications.
The group has proved highly resilient
throughout the pandemic with no significant
adverse impact on its financial performance.
Management implemented a series of
temporary measures to respond to the fast
evolving situation, including personnel working
remotely where possible, measures to
change shift patterns and protect the wellbeing
of staff, and reducing international travel.
The group has continued to deliver in line
with its obligations to supply power, both
under power purchase agreements and
regulated arrangements, with all power
plant assets remaining operational
throughout the pandemic. The nature
of the group’s power purchase agreements
have protected the group from any material
adverse financial effect of any changes in
demand for power.
We met with Executive Vice President - General Counsel and other
members of senior management to discuss ongoing and potential litigation
and claims. We evaluated the significant judgements associated with each of
these matters on a case-by-case basis including the likelihood of economic
outflow to settle the obligation and whether a reliable estimate can be
determined based on the facts of the case. Audit procedures performed to
support our conclusions have included review and assessment of contracts,
review of correspondence with counterparties and internal and external
legal counsel, assessment of the local political climate (where relevant to the
specific matter), and obtaining representation from management’s external
legal counsel on matters of significant judgement to evaluate management’s
views against those of external legal counsel. In certain cases, we have also
discussed matters directly with external legal counsel and involved our own
internal litigation specialists in evaluating the likely outcome of the cases.
We have considered the completeness of litigation and claims identified to
us by management by reference to other audit information obtained during
the course of work, and specific procedures performed to identify matters,
including review of board minutes. We did not identify any further litigation
or claims that had not already been disclosed to us.
Based on the evidence obtained we have evaluated the accounting for
litigation and claims, including the determination of whether a provision
should be recorded, or a contingent liability should be disclosed. We
found that all items had been accounted for appropriately.
We also assessed the disclosure for litigation and claims against the
requirements of the relevant accounting standards and concluded that
the disclosures were appropriate. Where significant judgements have
been applied by management, we also found that these judgements
are appropriately disclosed with the financial statements.
We have independently assessed the impact of Covid-19 on the group
through discussion with both group and local management, review of
board minutes, discussion with our component audit teams, consideration
of financial performance and evaluation of the overall findings of audits
across the group. We have specifically focussed on the impact on financial
performance of the group, financial reporting risk and the effective operation
of controls and processes.
We have evaluated the ongoing effective operation of controls and
processes to address the risk that a failure in key controls could result in
material misstatement, either due to fraud or error, both through our own
assessment of the control environment, and through our review of the work
of internal audit. We have not identified any material weakness in financial
controls as a result of actions management has taken to respond to the
Covid-19 pandemic.
We have assessed the financial performance of the group as a whole and
the performance of significant power plants within the group to respond to
any heightened risk surrounding going concern of the group or impairment
of assets as a result of the impact of Covid-19. Our procedures have
included an assessment of both the performance during 2020, as well
as management’s forecasts of future performance in light of the financial
performance of the group during 2020. We have found that management’s
forecasts appear reasonable and support management’s conclusion that the
going concern basis is appropriate, and that there is no indication of any
material impairment in assets as a result of Covid-19.
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Key audit matter
How our audit addressed the key audit matter
Prior to the pandemic the group had existing systems and
processes in place to enable employees to work from
multi-locations across the world. As a consequence
management have not identified any material weakness
in controls and processes as a consequence of the
different working practices enforced by remote working.
Management has assessed the ongoing impact of the
pandemic on the future performance of the group, the
continued effective operation of controls and processes,
and any further potential financial reporting risk, and have
not identified any material risks.
Impairment of investment in subsidiary company
(parent)
The company has an investment of $1,642.1 million in
subsidiaries. Annually, the Directors consider whether
any events or circumstances have occurred that could
indicate that the carrying amount of the investment in
subsidiaries may not be recoverable. If such circumstances
are identified an impairment review is undertaken to
establish whether the carrying amount of the investment
exceeds its recoverable amount, being the higher of net
realisable value or value in use.
Impairment assessments of this nature requires significant
judgement and there is the risk that a potential impairment
trigger may not be identified by management and, in the
event that there is an impairment trigger, there is a risk that
the calculation of the recoverable amount of the investment
is incorrect and therefore the value of the investment may
be misstated.
No such indicators of impairment have been identified.
We have read the disclosures made in the Annual Report
in respect of Covid-19 and we are satisfied that they are
consistent with our understanding of the impact of the
global pandemic on the group based on the evidence
obtained through our audit.
We have evaluated management’s consideration
of impairment triggers through performing our own
independent assessment, which has included:
• Assessing the overall financial performance of the group,
as well as larger and financially more significant assets
within the group, to identify any indicators of impairment
as a result of poor financial performance;
Considering other information gathered during the course of
our audits of components and assessing whether there are
any other indicators of impairment, as well as considering
other factors that could indicate increased impairment risk
such as regulatory changes and potential impacts of climate
change on the group;
Comparing the market capitalisation of the group at year
end, adjusted for the other net assets of the company, and
comparing this to the carrying value of investments; and
Comparing the carrying value of investments to an estimate
of fair value by reference to earnings of the group multiplied
by relevant market multiples for acquisition transactions of
similar companies or groups.
We found that management’s conclusion that there are
no impairment triggers in the investment carrying value
was reasonable.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the group and the company, the accounting processes and
controls, and the industry in which they operate.
The group financial statements are a consolidation of multiple reporting components, comprising the group’s operating
locations (including operating entities and their related financing entities) and other centralised functions.
The group’s reporting components vary significantly in size and we identified seven components that, in our view, required an
audit of their complete financial information due to specific risk criteria and/or their size and contribution to the group. A further
three further reporting components were identified that required audit procedures over specified financial statement line items
based on specific risks and/or the contribution of each to those financial statement line items. Specific audit procedures were
also performed on certain material balances in out of scope components to ensure we have obtained sufficient coverage over
all material financial statement line items.
Where the work was performed by component auditors, we determined the level of involvement we needed to have in their
audit work at those entities to conclude whether sufficient appropriate audit evidence has been obtained as a basis for our
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Key audit matter
How our audit addressed the key audit matter
Prior to the pandemic the group had existing systems and
We have read the disclosures made in the Annual Report
processes in place to enable employees to work from
in respect of Covid-19 and we are satisfied that they are
multi-locations across the world. As a consequence
consistent with our understanding of the impact of the
management have not identified any material weakness
global pandemic on the group based on the evidence
in controls and processes as a consequence of the
obtained through our audit.
different working practices enforced by remote working.
Management has assessed the ongoing impact of the
pandemic on the future performance of the group, the
continued effective operation of controls and processes,
and any further potential financial reporting risk, and have
not identified any material risks.
Impairment of investment in subsidiary company
(parent)
The company has an investment of $1,642.1 million in
subsidiaries. Annually, the Directors consider whether
any events or circumstances have occurred that could
indicate that the carrying amount of the investment in
subsidiaries may not be recoverable. If such circumstances
are identified an impairment review is undertaken to
establish whether the carrying amount of the investment
exceeds its recoverable amount, being the higher of net
realisable value or value in use.
Impairment assessments of this nature requires significant
judgement and there is the risk that a potential impairment
trigger may not be identified by management and, in the
event that there is an impairment trigger, there is a risk that
the calculation of the recoverable amount of the investment
is incorrect and therefore the value of the investment may
be misstated.
No such indicators of impairment have been identified.
We have evaluated management’s consideration
of impairment triggers through performing our own
independent assessment, which has included:
• Assessing the overall financial performance of the group,
as well as larger and financially more significant assets
within the group, to identify any indicators of impairment
as a result of poor financial performance;
Considering other information gathered during the course of
our audits of components and assessing whether there are
any other indicators of impairment, as well as considering
other factors that could indicate increased impairment risk
such as regulatory changes and potential impacts of climate
change on the group;
Comparing the market capitalisation of the group at year
end, adjusted for the other net assets of the company, and
comparing this to the carrying value of investments; and
Comparing the carrying value of investments to an estimate
of fair value by reference to earnings of the group multiplied
by relevant market multiples for acquisition transactions of
similar companies or groups.
We found that management’s conclusion that there are
no impairment triggers in the investment carrying value
was reasonable.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the group and the company, the accounting processes and
controls, and the industry in which they operate.
The group financial statements are a consolidation of multiple reporting components, comprising the group’s operating
locations (including operating entities and their related financing entities) and other centralised functions.
The group’s reporting components vary significantly in size and we identified seven components that, in our view, required an
audit of their complete financial information due to specific risk criteria and/or their size and contribution to the group. A further
three further reporting components were identified that required audit procedures over specified financial statement line items
based on specific risks and/or the contribution of each to those financial statement line items. Specific audit procedures were
also performed on certain material balances in out of scope components to ensure we have obtained sufficient coverage over
all material financial statement line items.
Where the work was performed by component auditors, we determined the level of involvement we needed to have in their
audit work at those entities to conclude whether sufficient appropriate audit evidence has been obtained as a basis for our
opinion on the group financial statements as a whole. The group engagement team performed virtual “site visits” for the
seven full scope components. These virtual “site visits” involved conducting a series of video conference calls to discuss the
audit approach and any issues arising from our work, as well as meeting local management. For all components, we received
detailed reports on the findings of their audit work and held a number of calls with the component teams before, during and
after the completion of their work. We also remotely reviewed certain working papers of all full scope component teams at
the year end.
The group consolidation, including the consolidated financial statement disclosures and certain centrally managed functions
and balances were audited at the head office by the group audit engagement team.
The company is principally a holding company and there are no branches or other locations to be considered when scoping
the audit. There are no financial statement line items in scope for the group audit. The company is audited on a stand-alone
basis, and hence, testing has been performed on all material financial statement line items.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect
of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements - group
Financial statements - company
Overall materiality
US$18,000,000 (2019: US$16,250,000).
US$16,500,000 (2019:
US$16,600,000).
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How we
determined it
Rationale for
benchmark
applied
Approximately 2.5% of Adjusted EBITDA less cash gain
on sale of minority interest in assets (where applicable)
Approximately 1% of total assets
We believe that total assets is
an appropriate benchmark for the
company as the entity is principally
a holding company.
We applied Adjusted EBITDA as the benchmark for
materiality and we consider that this is the key profit-based
measure used by management in both assessing the
performance of the business, and in reporting performance
of the business to stakeholders. Management use this
measure as it allows the underlying profitability of the
group’s core business activities, including the contribution
from associates, to be assessed year on year. It eliminates
transactions related to the initial acquisition of assets
(which are not directly related to ongoing performance
of the assets) and certain other items which give rise to
fluctuations in results which are not directly linked to the
performance of the asset. Where applicable, as was the
case in 2019, we have removed the cash gain on minority
sale from our benchmark which we believe is appropriate
as it eliminates volatility and maintains the link between
audit materiality and underlying business performance.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality.
The range of materiality allocated across components was between $1 million and $14 million. Certain components were
audited to a local statutory audit materiality that was also less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope
of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example
in determining sample sizes. Our performance materiality was approximately 75% of overall materiality, amounting to
US$13,500,000 for the group financial statements and US$12,400,000 for the company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range
was appropriate.
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Independent auditors’ report to the members of ContourGlobal plc continued
We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit above
$1 million (group audit) (2019: $1 million) and $0.8 million (company audit) (2019: $1 million) as well as misstatements below
those amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group’s and the company’s ability to continue to adopt the going concern
basis of accounting included:
• Obtaining management’s cash flow forecast performed at the group level, which sets out the expected distributions from
subsidiaries to the holding companies, net of repayments of corporate debt and other cash outflows at the group level.
• Performing audit procedures over the group cash flow forecast, including inquiries with management over the preparation
of the distribution forecast, agreeing cash flow distributions from subsidiaries to the underlying trading company cash flow
forecasts for full scope components, agreeing existing cash balances in the holding companies to underlying financial
records, assessing reasonableness of forecast cash outflows, testing the mathematical accuracy of the forecast model,
assessing the adequacy of sensitivities applied based on expected significant outflows (e.g for acquisitions) and assessing
whether the stress testing performed by management appropriately considers other risks such as covenant breaches and
refinancing due within the next 12 months.
• Performing audit procedures at all full scope components to assess the ability of trading subsidiaries to make future
distributions to the group in line with the group cash flow forecast.
• Evaluating the debt covenants including the assessment of any breaches or potential breaches and the impact this may
have on management’s cash flow forecast.
• Where debt finance is held at the component level, we have corroborated management’s assessment of debt held as
being “non recourse” to the parent entity to third party evidence, where applicable.
• Local component audit teams performing full scope audits have evaluated the going concern basis at the component level
and where any risks have been identified these have been considered through sensitivities performed over the group cash
flow forecast.
• We reviewed the board meeting minutes confirming that the going concern assumption was evaluated and confirmed as
appropriate by the Board.
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’s and the company’s ability to continue as a going concern
for a period of at least twelve months from when the financial statements are authorised for issue.
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.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group’s
and the company’s ability to continue as a going concern.
In relation to the company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the
directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements
does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise
explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, 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 audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based
on these responsibilities.
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those amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
basis of accounting included:
Our evaluation of the directors’ assessment of the group’s and the company’s ability to continue to adopt the going concern
• Obtaining management’s cash flow forecast performed at the group level, which sets out the expected distributions from
subsidiaries to the holding companies, net of repayments of corporate debt and other cash outflows at the group level.
• Performing audit procedures over the group cash flow forecast, including inquiries with management over the preparation
of the distribution forecast, agreeing cash flow distributions from subsidiaries to the underlying trading company cash flow
forecasts for full scope components, agreeing existing cash balances in the holding companies to underlying financial
records, assessing reasonableness of forecast cash outflows, testing the mathematical accuracy of the forecast model,
assessing the adequacy of sensitivities applied based on expected significant outflows (e.g for acquisitions) and assessing
whether the stress testing performed by management appropriately considers other risks such as covenant breaches and
refinancing due within the next 12 months.
• Performing audit procedures at all full scope components to assess the ability of trading subsidiaries to make future
distributions to the group in line with the group cash flow forecast.
• Evaluating the debt covenants including the assessment of any breaches or potential breaches and the impact this may
have on management’s cash flow forecast.
• Where debt finance is held at the component level, we have corroborated management’s assessment of debt held as
being “non recourse” to the parent entity to third party evidence, where applicable.
• Local component audit teams performing full scope audits have evaluated the going concern basis at the component level
and where any risks have been identified these have been considered through sensitivities performed over the group cash
• We reviewed the board meeting minutes confirming that the going concern assumption was evaluated and confirmed as
flow forecast.
appropriate by the Board.
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’s and the company’s ability to continue as a going concern
for a period of at least twelve months from when the financial statements are authorised for issue.
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.
and the company’s ability to continue as a going concern.
In relation to the company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the
directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements
does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise
explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, 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 audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based
on these responsibilities.
We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit above
$1 million (group audit) (2019: $1 million) and $0.8 million (company audit) (2019: $1 million) as well as misstatements below
With respect to the Strategic report and Directors’ Report, we also considered whether the disclosures required by the
UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain
opinions and matters as described below.
Strategic report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and
Directors’ Report for the year ended 31 December 2020 is consistent with the financial statements and has been prepared
in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and company and their environment obtained in the course
of the audit, we did not identify any material misstatements in the Strategic report and Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance
with the Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that
part of the corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate
Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement
as other information are described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement, included within the Corporate Governance Report is materially consistent with the financial statements
and our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their identification of any material uncertainties to the group’s and
company’s ability to continue to do so over a period of at least twelve months from the date of approval of the
financial statements;
• The directors’ explanation as to their assessment of the group’s and company’s prospects, the period this assessment
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group’s
covers and why the period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue
in operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures
drawing attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the group was substantially less in scope than an
audit and only consisted of making inquiries and considering the directors’ process supporting their statement; checking that
the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the
statement is consistent with the financial statements and our knowledge and understanding of the group and company and
their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements
of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained
during the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable,
and provides the information necessary for the members to assess the group’s and company’s position, performance,
business model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control
systems; and
• The section of the Annual Report describing the work of the Audit and Risk Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the company’s
compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the
Listing Rules for review by the auditors.
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Independent auditors’ report to the members of ContourGlobal plc continued
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities in respect of the Annual Report and the financial
statements, the directors are responsible for the preparation of the financial statements in accordance with the applicable
framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal
control as they 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’s and the 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 company or to cease operations, or have no
realistic alternative but to do so.
Auditors’ 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 auditors’ 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.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete
populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases,
we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance
with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept
or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it
may come save where expressly agreed by our prior consent in writing.
OTHER REQUIRED REPORTING
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the company, or returns adequate for our audit have not been
received from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit and Risk Committee, we were appointed by the directors on 13 December 2017
to audit the financial statements for the year ended 31 December 2017 and subsequent financial periods. The period of total
uninterrupted engagement is four years, covering the years ended 31 December 2017 to 31 December 2020.
Matthew Hall (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
19 March 2021
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Independent auditors’ report to the members of ContourGlobal plc continued
Consolidated statement of income and other comprehensive income
Year ended December 31, 2020
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities in respect of the Annual Report and the financial
statements, the directors are responsible for the preparation of the financial statements in accordance with the applicable
framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal
control as they 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’s and the 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 company or to cease operations, or have no
realistic alternative but to do so.
Auditors’ 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 auditors’ 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.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete
populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases,
we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance
with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept
or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it
may come save where expressly agreed by our prior consent in writing.
OTHER REQUIRED REPORTING
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the company, or returns adequate for our audit have not been
received from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit and Risk Committee, we were appointed by the directors on 13 December 2017
to audit the financial statements for the year ended 31 December 2017 and subsequent financial periods. The period of total
uninterrupted engagement is four years, covering the years ended 31 December 2017 to 31 December 2020.
Matthew Hall (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
19 March 2021
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Consolidated statement of income and other comprehensive income
In $ millions
Revenue
Cost of sales
Gross profit
Selling, general and administrative expenses
Other operating income
Other operating expenses
Acquisition related items
Income from Operations
Share of profit in associates
Finance income
Finance costs
Realized and unrealized foreign exchange gains and (losses) and change in fair value of
derivatives
Profit before income tax
Income tax expenses
Net profit
Profit / (Loss) attributable to
– Equity shareholders of the Company
– Non-controlling interests
Earnings per share (in $)
– Basic
– Diluted
In $ millions
Net profit for the year
Changes in actuarial gains and losses on retirement benefit, before tax
Deferred taxes on changes in actuarial gains and losses on retirement benefit
Items that will not be reclassified subsequently to income statement
Loss on hedging transactions
Cost of hedging reserve
Deferred taxes on loss on hedging transactions
Share of other comprehensive income of investments accounted for using the equity method
Currency translation differences
Items that may be reclassified subsequently to income statement
Other comprehensive loss for the year net of tax
Total comprehensive loss for the year
Attributable to
– Equity shareholders of the Company
– Non-controlling interests
The accompanying notes are an integral part of these consolidated financial statements
Note
4.2
4.3
4.3
4.3
4.5
4.12
4.6
4.6
4.6
4.7
Years ended December 31
2020
1,410.7
(1,033.5)
377.2
(36.8)
7.4
(19.7)
(20.2)
307.9
12.3
4.4
(262.9)
10.7
72.3
(43.7)
28.6
16.0
12.6
0.02
0.02
2019
1,330.2
(973.4)
356.8
(34.6)
7.3
(14.2)
(23.2)
292.1
11.1
11.2
(244.9)
(10.1)
59.4
(36.3)
23.1
27.7
(4.6)
0.04
0.04
Years ended December 31
2020
28.6
0.2
–
0.2
(40.0)
(1.5)
27.9
–
(97.1)
(110.7)
(110.5)
(81.9)
(74.8)
(7.1)
2019
23.1
(0.5)
–
(0.5)
(45.6)
(2.7)
–
(9.3)
(57.6)
(58.1)
(35.0)
(29.2)
(5.8)
157
Consolidated statement of financial position
Year ended December 31, 2020
Consolidated statement of financial position
In $ millions
Non-current assets
Intangible assets and goodwill
Property, plant and equipment
Financial and contract assets
Investments in associates
Derivative financial instruments
Other non-current assets
Deferred tax assets
Current assets
Inventories
Financial and contract assets
Trade and other receivables
Current income tax assets
Derivative financial instruments
Other current assets
Cash and cash equivalents
Total assets
In $ millions
Total equity and non-controlling interests
Issued capital
Share premium
Treasury shares
Retained earnings and other reserves
Non-controlling interests
Non-current liabilities
Borrowings
Derivative financial instruments
Deferred tax liabilities
Provisions
Other non-current liabilities
Current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Current income tax liabilities
Provisions
Other current liabilities
Total liabilities
Total equity and non-controlling interests and liabilities
Note
4.9
4.10
4.11
4.12
4.14
4.17
4.7
4.18
4.11
4.19
4.14
4.20
4.21
4.22
4.22
4.22
4.23
4.24
4.14
4.7
4.26
4.25
4.28
4.24
4.14
4.7
4.26
4.29
December 31,
2020
4,375.7
319.7
3,517.1
408.3
29.5
1.1
42.5
57.5
1,995.1
247.4
30.0
264.0
21.3
0.4
35.1
1,396.9
6,370.8
December 31,
2020
337.7
8.9
380.8
(30.4)
(176.9)
155.3
4,492.2
3,895.5
151.0
269.0
51.8
124.9
1,540.9
333.7
934.8
41.0
24.3
12.3
194.8
6,033.1
6,370.8
December 31,
2019
4,636.0
352.6
3,772.3
417.5
26.6
–
22.1
44.9
1,203.4
229.6
33.4
343.6
14.1
0.3
23.9
558.5
5,839.4
December 31,
2019
550.1
8.9
380.8
–
(4.9)
165.3
4,414.0
3,787.6
84.7
263.4
48.4
229.9
875.3
336.1
302.9
25.2
20.5
12.6
178.0
5,289.3
5,839.4
The financial statements on pages 157 to 221 were approved by the Board of Directors and authorized for issue on
18th March 2021 and signed on its behalf by
Joseph C. Brandt
President & CEO
December 31, 2019 figures were amended (see note 2.3)
The accompanying notes are an integral part of these consolidated financial statements
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Consolidated statement of financial position
Year ended December 31, 2020
Consolidated statement of changes in equity
Year ended December 31, 2020
Consolidated statement of financial position
Consolidated statement of changes in equity
December 31,
December 31,
In $ millions
Non-current assets
Intangible assets and goodwill
Property, plant and equipment
Financial and contract assets
Investments in associates
Derivative financial instruments
Other non-current assets
Deferred tax assets
Current assets
Inventories
Financial and contract assets
Trade and other receivables
Current income tax assets
Derivative financial instruments
Other current assets
Cash and cash equivalents
Total assets
Total equity and non-controlling interests
In $ millions
Issued capital
Share premium
Treasury shares
Retained earnings and other reserves
Non-controlling interests
Non-current liabilities
Borrowings
Derivative financial instruments
Deferred tax liabilities
Provisions
Other non-current liabilities
Current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Current income tax liabilities
Provisions
Other current liabilities
Total liabilities
Note
4.9
4.10
4.11
4.12
4.14
4.17
4.7
4.18
4.11
4.19
4.14
4.20
4.21
4.22
4.22
4.22
4.23
4.24
4.14
4.7
4.26
4.25
4.28
4.24
4.14
4.7
4.26
4.29
December 31,
December 31,
1,995.1
1,203.4
2020
4,375.7
319.7
3,517.1
408.3
29.5
1.1
42.5
57.5
247.4
30.0
264.0
21.3
0.4
35.1
1,396.9
6,370.8
2020
337.7
8.9
380.8
(30.4)
(176.9)
155.3
4,492.2
3,895.5
151.0
269.0
51.8
124.9
1,540.9
333.7
934.8
41.0
24.3
12.3
194.8
2019
4,636.0
352.6
3,772.3
417.5
26.6
–
22.1
44.9
229.6
33.4
343.6
14.1
0.3
23.9
558.5
5,839.4
2019
550.1
8.9
380.8
–
(4.9)
165.3
4,414.0
3,787.6
84.7
263.4
48.4
229.9
875.3
336.1
302.9
25.2
20.5
12.6
178.0
In $ millions
Balance as of January 1, 2019
Profit / (loss) for the year
Other comprehensive loss
Total comprehensive loss for the
period
Transaction with non-controlling
interests
Sale of non-controlling interest not
resulting in a change of control
Employee share schemes
Dividends
Acquisition of and contribution
received from non-controlling interest
Other
Balance as of December 31, 2019
Balance as of January 1, 2020
Profit for the year
Other comprehensive loss
Total comprehensive income / (loss)
for the period
Purchase of treasury shares
Employee share schemes
Contribution received from non-
controlling interest
Transaction with non-controlling
interests
Dividends
Balance as of December 31, 2020
Total equity and non-controlling interests and liabilities
6,033.1
6,370.8
5,289.3
5,839.4
The financial statements on pages 157 to 221 were approved by the Board of Directors and authorized for issue on
18th March 2021 and signed on its behalf by
Joseph C. Brandt
President & CEO
December 31, 2019 figures were amended (see note 2.3)
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Share
capital
Share
premium
8.9 380.8
–
–
–
–
Treasury
shares
–
–
–
Currency
Translation
reserve
(92.3)
–
(8.9)
Hedging
reserve
(34.0)
–
(47.5)
Cost of
hedging
reserve
–
–
–
Actuarial
reserve
Retained
earnings
and other
reserves
(1.8) 233.7
27.7
–
–
(0.5)
Total equity
attributable
to
shareholders
of the
Company
495.3
27.7
(56.9)
Non-
controlling
interests
Total
equity
185.2 680.5
23.1
(58.1)
(4.6)
(1.2)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8.9 380.8
8.9 380.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(8.9)
(47.5)
–
–
–
–
–
–
–
–
–
–
(101.2)
–
–
(81.5)
(101.2)
–
(78.0)
(81.5)
–
(11.5)
–
(30.4)
–
(78.0)
–
–
(11.5)
–
–
–
–
–
–
–
–
–
–
–
–
(1.5)
(1.5)
–
–
(0.5)
27.7
(29.2)
(5.8)
(35.0)
–
–
–
–
–
–
(7.8)
(7.8)
46.1
10.4
(137.6)
46.1
10.4
(137.6)
5.2
–
(24.5)
51.3
10.4
(162.1)
–
–
(2.3)
–
(0.2)
180.1
–
(0.2)
384.8
12.9
0.1
12.9
(0.1)
165.3 550.1
(2.3)
–
0.2
180.1
16.0
–
384.8
16.0
(90.8)
165.3 550.1
28.6
(110.5)
12.6
(19.7)
0.2
–
–
16.0
–
8.5
(74.8)
(30.4)
8.5
(7.1)
–
–
(81.9)
(30.4)
8.5
–
–
–
–
–
–
–
3.4
3.4
–
–
–
–
8.9 380.8
–
–
(30.4)
–
–
(179.2)
–
–
(93.0)
–
–
(1.5)
–
–
(2.1)
–
(105.7)
98.9
–
(105.7)
182.4
(1.0)
(5.4)
(1.0)
(111.1)
155.3 337.7
The accompanying notes are an integral part of these consolidated financial statements
The accompanying notes are an integral part of these consolidated financial statements
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159
Consolidated statement of cash flows
Year ended December 31, 2020
Consolidated statement of cash flows
In $ millions
CASH FLOW FROM OPERATING ACTIVITIES
Net profit
Adjustment for:
Amortization, depreciation and impairment expense
Change in provisions
Share of profit in associates
Realized and unrealized foreign exchange gains and losses and change in fair value
of derivatives
Interest expenses – net
Other financial items
Income tax expense
Mexico CHP fixed margin swap
Change in finance lease and financial concession assets
Acquisition related items
Other items
Change in working capital
Income tax paid
Contribution received from associates
Net cash generated from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Purchase of intangibles
Acquisition of subsidiaries, net of cash received
Other investing activities
Net cash used in investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Dividends paid
Purchase of treasury shares
Proceeds from borrowings
Repayment of borrowings
Debt issuance costs - net
Interest paid
Cash distribution to non-controlling interests
Dividends paid to non-controlling interest holders
Transactions with non-controlling interest holders, cash received
Transactions with non-controlling interest holders, cash paid
Other financing activities
Net cash generated from financing activities
Exchange gains on cash and cash equivalents
Net change in cash and cash equivalents
Cash & cash equivalents at beginning of the year
Cash & cash equivalents at end of the year
Years ended December 31
Note
2020
2019
28.6
23.1
4.3
4.12
4.6
4.6
4.6
4.7
4.1
4.1
4.5
4.12
4.22
4.24
4.24
4.23
4.23
4.23
4.23
311.6
(2.7)
(12.3)
(10.7)
190.6
68.0
43.7
15.6
31.7
20.2
12.2
52.8
(37.5)
7.8
719.6
(77.0)
(3.8)
–
(24.5)
(105.3)
(105.7)
(30.4)
938.9
(323.4)
(13.1)
(175.8)
(18.5)
(5.4)
3.4
(57.5)
(9.6)
202.9
21.2
838.4
558.5
1,396.9
282.3
0.2
(11.1)
10.1
177.6
56.2
36.3
–
26.4
23.2
10.5
5.0
(34.8)
11.3
616.3
(102.1)
(1.4)
(820.5)
(0.9)
(924.9)
(137.6)
–
947.5
(428.2)
(29.3)
(189.2)
(15.0)
(23.4)
174.4
(91.5)
(52.2)
155.5
14.7
(138.4)
696.9
558.5
The accompanying notes are an integral part of these consolidated financial statements
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Realized and unrealized foreign exchange gains and losses and change in fair value
Consolidated statement of cash flows
CASH FLOW FROM OPERATING ACTIVITIES
In $ millions
Net profit
Adjustment for:
Amortization, depreciation and impairment expense
Change in provisions
Share of profit in associates
of derivatives
Interest expenses – net
Other financial items
Income tax expense
Mexico CHP fixed margin swap
Change in finance lease and financial concession assets
Acquisition related items
Other items
Change in working capital
Income tax paid
Contribution received from associates
Net cash generated from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Purchase of intangibles
Acquisition of subsidiaries, net of cash received
Other investing activities
Net cash used in investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Dividends paid
Purchase of treasury shares
Proceeds from borrowings
Repayment of borrowings
Debt issuance costs - net
Interest paid
Cash distribution to non-controlling interests
Dividends paid to non-controlling interest holders
Transactions with non-controlling interest holders, cash received
Transactions with non-controlling interest holders, cash paid
Other financing activities
Net cash generated from financing activities
Exchange gains on cash and cash equivalents
Net change in cash and cash equivalents
Cash & cash equivalents at beginning of the year
Cash & cash equivalents at end of the year
4.3
4.12
4.6
4.6
4.6
4.7
4.1
4.1
4.5
4.12
4.22
4.24
4.24
4.23
4.23
4.23
4.23
311.6
(2.7)
(12.3)
(10.7)
190.6
68.0
43.7
15.6
31.7
20.2
12.2
52.8
(37.5)
7.8
719.6
(77.0)
(3.8)
–
(24.5)
(105.3)
(105.7)
(30.4)
938.9
(323.4)
(13.1)
(175.8)
(18.5)
(5.4)
3.4
(57.5)
(9.6)
202.9
21.2
838.4
558.5
1,396.9
282.3
0.2
(11.1)
10.1
177.6
56.2
36.3
–
26.4
23.2
10.5
5.0
(34.8)
11.3
616.3
(102.1)
(1.4)
(820.5)
(0.9)
(924.9)
(137.6)
–
947.5
(428.2)
(29.3)
(189.2)
(15.0)
(23.4)
174.4
(91.5)
(52.2)
155.5
14.7
(138.4)
696.9
558.5
Consolidated statement of cash flows
Year ended December 31, 2020
General information
Year ended December 31, 2020
Years ended December 31
Note
2020
2019
28.6
23.1
General information
1.
ContourGlobal plc (the ‘Company’) is a public listed company, limited by shares, domiciled in the United Kingdom and incorporated
in the United Kingdom. It is the holding company for the group whose principal activities during the period were the operation of
wholesale power generation businesses with thermal and renewables assets in Europe, Latin America and Africa, and its registered
office is:
7th Floor
Park House
116 Park Street
London
W1K 6SS
United Kingdom
Registered number: 10982736
ContourGlobal plc is listed on the London Stock Exchange.
Basis of preparation
The consolidated financial statements have been prepared in accordance with international accounting standards in conformity with
the requirements of the Companies Act 2006 and International Financial Reporting Standards (IFRS) adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European Union. The consolidated financial statements have been prepared on the going
concern basis under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including
derivative instruments) at fair value through profit or loss.
The financial information is presented in millions of U.S. dollars, with one decimal. Thus numbers may not sum precisely due
to rounding.
The principal accounting policies applied in the preparation of the consolidated financial statements are set out in note 2.3. These
policies have been consistently applied to the periods presented, unless otherwise stated.
The financial information presented is at and for the financial years ended 31 December 2020 and 31 December 2019. Financial year
ends have been referred to as 31 December throughout the consolidated financial statements as this is the accounting reference
date of ContourGlobal plc. Financial years are referred to as 2020 and 2019 in these consolidated financial statements.
The preparation of the IFRS financial statements requires the use of estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during
the year. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results may
differ from those estimates, as noted in the critical accounting estimates and judgements in note 2.4.
Impact of Covid-19
The Company has considered the impact of the new coronavirus (‘COVID-19’ or ‘the virus’) on the financial statements for the year
ended 31 December 2020. This analysis included the potential accounting impacts under IFRS on non-financial assets, financial
instruments, leases, revenue recognition, non-financial obligations, going concern and events after the reporting period.
During the year ended 31 December 2020, the Company experienced no material operational or financial impact as a result
of COVID-19. Action was taken around the health of employees, critical spares and inventory to ensure continued reliability
of operations. To date, the disruption in spares and supply chain has been insignificant.
The Company is not involved in the distribution of power and has limited exposure to merchant markets and energy pricing. The
Company has received force majeure notices from some suppliers and commercial customers, but these have not been material and
are not expected to impact future operations. In addition, the Company has not faced any significant delays in payments from off-
takers as a result of the COVID-19.
The Company has also reviewed its forecasts and projections, taking into account possible changes in operating performance
due to COVID-19 and possible impact on liquidity and concluded that there is a reasonable expectation that the Group and the
Company have adequate resources to continue in operational existence for a period of at least 12 months. For this reason, the
Group continues to adopt the going concern basis in preparing the Group financial statements.
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The accompanying notes are an integral part of these consolidated financial statements
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161
Summary of significant accounting policies
Year ended December 31, 2020
Summary of significant accounting policies
2.
2.1 Application of new and revised International Financial Reporting Standards (IFRS)
The following standards and interpretations apply for the first time to financial reporting periods commencing on or after
1 January 2020:
Definition of a Business – Amendments to IFRS 3
The amended definition of a business requires an acquisition to include an input and a substantive process that together
significantly contribute to the ability to create outputs. The definition of the term ‘outputs’ is amended to focus on goods and
services provided to customers, generating investment income and other income, and it excludes returns in the form of lower
costs and other economic benefits.
There were no acquisitions during the year and therefore the amendment has no impact on these financial statements. Going
forwards, it is expected that the amendment could likely result in more acquisitions being accounted for as asset acquisitions.
2.2 New standards and interpretations not yet mandatorily applicable
A number of additional new standards and amendments and revisions to existing standards have been published which will
apply to the Group’s future accounting periods. None of these are expected to have a significant impact on the consolidated
results, financial position or cash flows of the Group when they are adopted.
The replacement of benchmark interest rates such as LIBOR and other interbank offered rates (IBORs) is a priority for global
regulators and is expected to be largely completed in 2021. To prepare for this, the Group early adopted the Phase 1
amendments to IFRS 9 ‘Financial Instruments’ and IFRS 7 ‘Financial Instruments: Disclosures’ in 2019. These amendments
provide relief from applying specific hedge accounting requirements to hedge relationships directly affected by IBOR reform
and have the effect that the reform should generally not cause hedge accounting to terminate. There was no financial impact
from the early adoption of these amendments. Further amendments (Phase 2) were issued on 27 August 2020 and the Group
will apply these in 2021.
The Group has IFRS 9 designated hedge relationships that is impacted by IBOR reform including interest rate swap
contracts and cross currency swap that qualifies as cash-flow hedge with a nominal value amounted to $1,213.4 million
as of 31 December 2020, used to hedge a proportion of our external borrowings. These swaps reference six-month EURIBOR,
three-month USD LIBOR and six-month USD LIBOR and uncertainty arising from the Group’s exposure to IBOR reform will
cease when these swaps matures by 2030, 2031 and 2034 respectively. The uncertainty arising from the Group’s exposure
to IBOR reform on the wider business will be assessed during 2021.
2.3 Summary of significant accounting policies
Principles of consolidation
The consolidated financial statements include both the assets and liabilities, and the results and cash flows, of the Group and
its subsidiaries and the Group’s share of the results and the Group’s investments in associates.
Inter-company transactions and balances between Group companies are eliminated.
(a) Subsidiaries
Entities over which the Group has the power to direct the relevant activities so as to affect the returns to the Group, generally
through control over the financial and operating policies, are accounted for as subsidiaries. Interests acquired in subsidiaries
are consolidated from the date the Group acquires control.
(b) Associates
Where the Group has the ability to exercise significant influence over entities, generally from a shareholding of between 20%
and 50% of the voting rights, they are accounted for as associates. The results and assets and liabilities of associates are
incorporated into the consolidated financial statements using the equity method of accounting. The Group’s investment in
associates includes goodwill identified on acquisition.
The Group determines at each reporting date whether there is objective evidence that the investment in the associate is
impaired. If there is evidence, the Group calculates the amount of impairment as the difference between the recoverable
amount of the investment in the associate and its carrying value and recognizes this amount as a reduction to the amount
of ‘Share of profit of associates’ in the consolidated statement of income.
The accompanying notes are an integral part of these consolidated financial statements
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Summary of significant accounting policies
Year ended December 31, 2020
2.
Summary of significant accounting policies
2.1 Application of new and revised International Financial Reporting Standards (IFRS)
The following standards and interpretations apply for the first time to financial reporting periods commencing on or after
1 January 2020:
Definition of a Business – Amendments to IFRS 3
The amended definition of a business requires an acquisition to include an input and a substantive process that together
significantly contribute to the ability to create outputs. The definition of the term ‘outputs’ is amended to focus on goods and
services provided to customers, generating investment income and other income, and it excludes returns in the form of lower
costs and other economic benefits.
There were no acquisitions during the year and therefore the amendment has no impact on these financial statements. Going
forwards, it is expected that the amendment could likely result in more acquisitions being accounted for as asset acquisitions.
2.2 New standards and interpretations not yet mandatorily applicable
A number of additional new standards and amendments and revisions to existing standards have been published which will
apply to the Group’s future accounting periods. None of these are expected to have a significant impact on the consolidated
results, financial position or cash flows of the Group when they are adopted.
The replacement of benchmark interest rates such as LIBOR and other interbank offered rates (IBORs) is a priority for global
regulators and is expected to be largely completed in 2021. To prepare for this, the Group early adopted the Phase 1
amendments to IFRS 9 ‘Financial Instruments’ and IFRS 7 ‘Financial Instruments: Disclosures’ in 2019. These amendments
provide relief from applying specific hedge accounting requirements to hedge relationships directly affected by IBOR reform
and have the effect that the reform should generally not cause hedge accounting to terminate. There was no financial impact
from the early adoption of these amendments. Further amendments (Phase 2) were issued on 27 August 2020 and the Group
will apply these in 2021.
The Group has IFRS 9 designated hedge relationships that is impacted by IBOR reform including interest rate swap
contracts and cross currency swap that qualifies as cash-flow hedge with a nominal value amounted to $1,213.4 million
as of 31 December 2020, used to hedge a proportion of our external borrowings. These swaps reference six-month EURIBOR,
three-month USD LIBOR and six-month USD LIBOR and uncertainty arising from the Group’s exposure to IBOR reform will
cease when these swaps matures by 2030, 2031 and 2034 respectively. The uncertainty arising from the Group’s exposure
to IBOR reform on the wider business will be assessed during 2021.
2.3 Summary of significant accounting policies
Principles of consolidation
The consolidated financial statements include both the assets and liabilities, and the results and cash flows, of the Group and
its subsidiaries and the Group’s share of the results and the Group’s investments in associates.
Inter-company transactions and balances between Group companies are eliminated.
(a) Subsidiaries
(b) Associates
Entities over which the Group has the power to direct the relevant activities so as to affect the returns to the Group, generally
through control over the financial and operating policies, are accounted for as subsidiaries. Interests acquired in subsidiaries
are consolidated from the date the Group acquires control.
Where the Group has the ability to exercise significant influence over entities, generally from a shareholding of between 20%
and 50% of the voting rights, they are accounted for as associates. The results and assets and liabilities of associates are
incorporated into the consolidated financial statements using the equity method of accounting. The Group’s investment in
associates includes goodwill identified on acquisition.
The Group determines at each reporting date whether there is objective evidence that the investment in the associate is
impaired. If there is evidence, the Group calculates the amount of impairment as the difference between the recoverable
amount of the investment in the associate and its carrying value and recognizes this amount as a reduction to the amount
of ‘Share of profit of associates’ in the consolidated statement of income.
The accompanying notes are an integral part of these consolidated financial statements
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Business combinations
The acquisition consideration is measured at fair value which is the aggregate of the fair values of the assets transferred, the
liabilities incurred or assumed and the equity interests issued in exchange for control. The consideration transferred includes
the fair value of any asset or liability resulting from a contingent consideration arrangement. Any contingent consideration to
be transferred by the Group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the
contingent consideration are recognized in the consolidated statement of income. Where the consideration transferred,
together with the non-controlling interest, exceeds the fair value of the net assets, liabilities and contingent liabilities acquired,
the excess is recorded as goodwill. Acquisition related costs are expensed as incurred and classified as “Acquisition related
items” in the consolidated statement of income.
Goodwill is capitalized as a separate item in the case of subsidiaries and as part of the cost of investment in the case
of associates. Goodwill is denominated in the functional currency of the operation acquired.
Changes in ownership interests in subsidiaries without change of control
In line with IFRS 10 “Consolidated financial statements”, transactions with non-controlling interests that do not result in a gain or
loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners.
In the case of an acquisition of non-controlling interest that does not result in a gain of control, the difference between
fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary
is recorded in equity.
In the case of a sale of non-controlling interests that do not result in a loss of control (“sell-down”), the net cash gain
on sale of these assets are recorded as an increase in the equity attributable to owners of the parent and corresponds
to the difference between the consideration received for the sale of shares and of the carrying amount of non-controlling
interest sold. Consistent with this approach, subsequent true-ups to earn-outs in the context of sell-down transactions
are also recorded in equity. The net cash gain or loss on sell-down is presented in Adjusted EBITDA, as disclosed in the
note 4.1.
Functional and presentation currency and currency translation
The assets and liabilities of foreign undertakings are translated into US dollars, the Group’s presentation currency, at the
year-end exchange rates. The results of foreign undertakings are translated into US dollars at the relevant average rates
of exchange for the year. Foreign exchange differences arising on retranslation of opening net assets, and the difference
between average exchange rates and year end exchange rates on the result for the year are recognized directly in the
currency translation reserve.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of transactions and from the translation
of monetary assets and liabilities denominated in foreign currencies are recognized at period end exchange rates in the
consolidated statement of income line which most appropriately reflects the nature of the item or transaction.
The following table summarizes the main exchange rates used for the preparation of the consolidated financial statements of
ContourGlobal:
Currency
EUR / USD
BRL / USD
BGN / USD
MXN / USD
CLOSING RATES
AVERAGE RATES
Year ended 31st December
Year ended 31st December
2020
1.2216
0.1925
0.6246
0.0501
2019
1.1213
0.2481
0.5733
0.0531
2020
1.1413
0.1960
0.5835
0.0469
2019
1.1195
0.2540
0.5725
0.0520
Operating and reportable segments
The Group’s reporting segments reflect the operating segments which are based on the organizational structure
and financial information provided to the Chief Executive Officer, who represents the chief operating decision-maker
(“CODM”). The Group’s organizational structure reflects the different electricity generation methods, being Thermal
and Renewables. A third category, Corporate & Other, primarily reflects costs for certain centralized functions including
executive oversight, corporate treasury and accounting, legal, compliance, human resources, IT and facilities management
and certain technical support costs that are not allocated to the segments for internal management reporting purposes.
The principal profit measure used by the CODM is “Adjusted EBITDA” as defined in note 4.1. A segmented analysis of
“Adjusted EBITDA” is accordingly provided in the notes to the consolidated financial statements (see note 4.1).
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Revenue recognition
The Group revenue is mainly generated from the following:
revenue from power sales;
revenue from operating leases;
revenue from financial assets (concession and finance lease assets); and
(i)
(ii)
(iii)
(iv) other revenue such as environmental, operational and maintenance services rendered to offtakers.
Revenue from operating leases is recognized under IFRS 16, Revenue from financial assets is recognized under IFRS 16 and
IFRIC 12, and Revenue from power sales and other revenue are recognized under IFRS 15.
IFRS 15, Revenues from contracts with customers, revenue recognition is based on the transfer of control, i.e. notion of control
is used to determine when a good or service is transferred to the customer. In accordance with this, the Group has adopted
a single comprehensive model for the accounting for revenues from contracts with customers, using a five-step approach for
revenue recognition: (1) identifying the contract; (2) identifying the performance obligations in the contract; (3) determining the
transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing
revenue when the Group satisfies a performance obligation.
Based on this recognition model, sales are recognized when goods are delivered to the customer and have been accepted
by the customer, even if they have not been invoiced, or when services are rendered, and it is probable that the economic
benefits associated with the transaction will flow to the entity. Revenue for the year includes the estimate of the energy
supplied that has not yet been invoiced.
When determining the transaction price, the Group consider the effects of the variable consideration, the constraining
estimates of variable consideration, the existence of a significant financing component in the contract, the non-cash
consideration and consideration payable to a customer.
If the consideration promised in a contract includes a variable amount, the Group estimates the amount of consideration to
which it will be entitled in exchange for transferring the promised goods or services to a customer. An amount of consideration
can vary because of discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties or
other similar items.
Certain of the Group power plants sell their output under Power Purchase Agreements (“PPAs”) and other long-term
arrangements. Under such arrangements it is usual for the Group to receive payment for the provision of electrical capacity
or availability whether or not the offtaker requests the electrical output (capacity payments) and for the variable costs of
production (energy payments). In such situations, revenue is recognized in respect of capacity payments as:
(a) Service income in accordance with the contractual terms, to the extent that the capacity has been made available to the
contracted offtaker during the period and / or energy produced and delivered in the period. This income is recognized
as part of revenue from power sales;
(b) Financial return on the operating financial asset where the PPA is considered to be or to contain a finance lease or where
the contract is considered to be a financial asset under interpretation IFRIC 12: “Service Concession Arrangements”.
(c) Service income related to environmental, operational and maintenance services rendered to offtakers are presented
as part of Other revenue.
Under finance lease arrangements, those payments which are not included within minimum lease payments are accounted
for as service income (outlined in (a) above).
Energy payments under PPAs are recognized in revenue in all cases as the contracted output is delivered.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial
asset to that asset’s net carrying amount on initial recognition.
Concession arrangements
The interpretation IFRIC 12 governs accounting for concession arrangements. An arrangement within the scope of IFRIC 12 is
one which involves a private sector entity (known as “an operator”) constructing infrastructure used to provide a public service,
or upgrading it (for example, by increasing its capacity) and operating and maintaining that infrastructure for a specified period
of time.
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Summary of significant accounting policies continued
Year ended December 31, 2020
Revenue recognition
The Group revenue is mainly generated from the following:
revenue from power sales;
revenue from operating leases;
(i)
(ii)
(iii)
revenue from financial assets (concession and finance lease assets); and
(iv) other revenue such as environmental, operational and maintenance services rendered to offtakers.
Revenue from operating leases is recognized under IFRS 16, Revenue from financial assets is recognized under IFRS 16 and
IFRIC 12, and Revenue from power sales and other revenue are recognized under IFRS 15.
IFRS 15, Revenues from contracts with customers, revenue recognition is based on the transfer of control, i.e. notion of control
is used to determine when a good or service is transferred to the customer. In accordance with this, the Group has adopted
a single comprehensive model for the accounting for revenues from contracts with customers, using a five-step approach for
revenue recognition: (1) identifying the contract; (2) identifying the performance obligations in the contract; (3) determining the
transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing
revenue when the Group satisfies a performance obligation.
Based on this recognition model, sales are recognized when goods are delivered to the customer and have been accepted
by the customer, even if they have not been invoiced, or when services are rendered, and it is probable that the economic
benefits associated with the transaction will flow to the entity. Revenue for the year includes the estimate of the energy
supplied that has not yet been invoiced.
When determining the transaction price, the Group consider the effects of the variable consideration, the constraining
estimates of variable consideration, the existence of a significant financing component in the contract, the non-cash
consideration and consideration payable to a customer.
If the consideration promised in a contract includes a variable amount, the Group estimates the amount of consideration to
which it will be entitled in exchange for transferring the promised goods or services to a customer. An amount of consideration
can vary because of discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties or
other similar items.
Certain of the Group power plants sell their output under Power Purchase Agreements (“PPAs”) and other long-term
arrangements. Under such arrangements it is usual for the Group to receive payment for the provision of electrical capacity
or availability whether or not the offtaker requests the electrical output (capacity payments) and for the variable costs of
production (energy payments). In such situations, revenue is recognized in respect of capacity payments as:
(a) Service income in accordance with the contractual terms, to the extent that the capacity has been made available to the
contracted offtaker during the period and / or energy produced and delivered in the period. This income is recognized
as part of revenue from power sales;
(b) Financial return on the operating financial asset where the PPA is considered to be or to contain a finance lease or where
the contract is considered to be a financial asset under interpretation IFRIC 12: “Service Concession Arrangements”.
(c) Service income related to environmental, operational and maintenance services rendered to offtakers are presented
as part of Other revenue.
Under finance lease arrangements, those payments which are not included within minimum lease payments are accounted
for as service income (outlined in (a) above).
Energy payments under PPAs are recognized in revenue in all cases as the contracted output is delivered.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial
asset to that asset’s net carrying amount on initial recognition.
Concession arrangements
The interpretation IFRIC 12 governs accounting for concession arrangements. An arrangement within the scope of IFRIC 12 is
one which involves a private sector entity (known as “an operator”) constructing infrastructure used to provide a public service,
or upgrading it (for example, by increasing its capacity) and operating and maintaining that infrastructure for a specified period
of time.
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IFRIC 12 applies to public-to-private service concession arrangements if:
(a) The “grantor” (i.e. the public sector entity – the offtaker) controls or regulates what services the operator must provide
with the infrastructure, to whom it must provide them, and at what price, and
(b) The grantor controls through ownership, beneficial entitlement or otherwise any significant residual interest in the
infrastructure at the end of the term of the arrangement. Infrastructure used in a public-to-private service concession
arrangement for its entire useful life (a whole of life asset) is within the scope of IFRIC 12 if the conditions in a) are met.
Under concession arrangements within the scope of IFRIC 12, which comply with the “financial asset” model requirements,
the operator recognizes a contract asset, attracting revenue in consideration for the services it provides (design, construction,
etc.), to the extent that it has an unconditional contractual right to receive cash or another financial asset from or at the
direction of the grantor for the construction services; the grantor has little, if any, discretion to avoid payment, usually
because the agreement is enforceable by law. The Group has an unconditional right to receive cash if the grantor
contractually guarantees to pay the Group (a) specified or determinable amounts or (b) the shortfall, if any, between
amounts received from users of the public service and specified or determinable amounts, even if payment is contingent
on the Group ensuring that the infrastructure meets specified quality or efficiency requirements. This model is based on
input assumptions such as budgets and cash flow forecasts. Any change in these assumptions may have a material impact
on the measurement of the recoverable amount and could result in reducing the value of the asset. Such contract assets
are recognized in the consolidated statement of financial position in an amount corresponding to the fair value of the
infrastructure on first recognition and subsequently at amortized cost less impairment losses. The receivable is settled by
means of the grantor’s payments being received. The financial income calculated on the basis of the effective interest rate,
equivalent to the project’s internal rate of return, is reflected within the “Revenue from concession and finance lease assets”
line in the note 4.2 “Revenue” to the consolidated financial statements. Cash outflows relating to the acquisition of contract
assets under concession agreements are presented as part of cash flow from investing activities. Net cash inflows generated
by the contract assets' operations are presented as part of cash flow from operating activities.
Under arrangements within the scope of IFRIC 12 which complies with the “intangible asset” model requirements, the operator
recognizes an intangible asset in accordance with IAS 38 to the extent that it has a right to charge users of the public service.
Such intangible asset is recognized in the consolidated statement of financial position at cost on first recognition and
subsequently measured over its useful economic life at cost less accumulated amortization and impairment losses. Net
cash inflows generated by the intangible asset’s operations are presented as part of Cash Flow from operating activities.
For purchase power arrangements, revenue for service income is generally recognized as billed after excluding the portion
of the payment that is allocated to cover the return on financial assets arising from service concession arrangements as
described above. We have therefore not disclosed the transaction price allocated to unsatisfied contracts based as permitted
by paragraph 121 of IFRS 15.
Share-based compensation plans
The share-based payment charge arises from the Long Term Incentive Plan (LTIP) and the Private Incentive Plan (PIP). The PIP
scheme is applicable to senior executives whilst the LTIP scheme is applicable to senior executives and senior and middle
management. Shares issued under the schemes vest subject to continued employment within the Group and satisfaction
of the non-market performance conditions. Employees leaving prior to the vesting date will normally forfeit their rights to
unvested share awards. The fair value of the awards is measured using the market value at the date of grant. The fair value
determined at the grant date is expensed on a straight-line basis together with a corresponding increase in equity over the
vesting period, based on the Group’s estimate of the number of awards that will vest, and adjusted for the effect of non-
market-based vesting conditions.
Acquisition related items
Acquisition related items include pre-acquisition costs such as various professional fees and due diligence costs, earn-outs
and other related incremental costs incurred as part of completed or contemplated acquisitions.
Finance income and finance costs
Finance income primarily consists of interest income on funds invested. Finance costs primarily comprise interest expense
on borrowings, unwinding of the discount/step up on financial and contract assets and provisions, interests and penalties
that arise from late payments of suppliers or taxes, swap margin calls, bank charges, changes in fair value of the debt payable
to non-controlling interests in our Bulgarian power plant, changes in the fair value of derivatives not qualifying for hedge
accounting and unrealized & realized foreign exchange gains and losses.
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Year ended December 31, 2020
Intangible assets and goodwill
Goodwill
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating
units (“CGUs”), or groups of CGUs that is expected to benefit from the synergies of the combination. Each unit or group of units
represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. A CGU is
determined as a group of assets at a country level using shared technology which is typically the case for Solar and Wind assets.
The reporting units (which generally correspond to power plants) or group of reporting units have been identified as its cash-
generating units.
Goodwill impairment reviews are undertaken at least annually.
Intangible assets
Intangible assets include licenses, permits and project development rights when specific rights and contracts are acquired.
Intangible assets separately acquired in the normal course of business are recorded at historical cost, and intangible assets
acquired in a business combination are recognized at fair value at the acquisition date. When the power plant achieves its
commercial operations date, the related intangible assets are amortized using the straight-line method generally over the
life of the PPA or over the duration of the permits and licenses granted, generally over 15 to 20 years (excluding software).
Software is amortized over 1 to 3 years.
Property, plant and equipment
Initial recognition and subsequent measurement
Property, plant and equipment are stated at historical cost, less depreciation and impairment, or at fair value if acquired
in the context of a business combination. Historical cost includes an initial estimate of the costs of dismantling and removing
the item and restoring the site on which it is located, when the entity has a present legal or constructive obligation to do so.
In the context of a business combination the fair value valuation is usually based on an income-approach based method.
Property, plant and equipment recognized as right-of-use assets under IFRS 16 are measured at cost less depreciation,
impairment and adjustments to certain remeasurements of the lease liability.
Costs relating to major inspections and overhauls are capitalized and any remaining carrying amount of the cost of the
previous overhaul is derecognized when new expenditure is capitalized. Minor replacements, repairs and maintenance,
including planned outages to our power plants that do not improve the efficiency or extend the life of the respective asset,
are expensed as incurred.
The Group capitalizes certain direct pre-construction costs associated with its power plant project development activities
when it has been determined that it is more likely than not that the opportunity will result in an operating asset. Factors
considered in this determination include (i) the availability of adequate funding, (ii) the likelihood that the Group will be
awarded with the project or the barriers are not likely to prohibit closing the project, and (iii) there is an available market
and the regulatory, environmental and infrastructure requirements are likely to be met. Capitalized pre-construction costs
include initial engineering, environmental and technical feasibility studies, legal costs, permitting and licensing and direct
internal staff salary and travel costs, among others. Pre-construction costs are charged to expense if a project is abandoned
or if the conditions stated above are not met. Construction work in progress (“CWIP”) assets are transferred out of CWIP when
construction is substantially completed and the power plant achieves its commercial operations date (“COD”), at which point
depreciation commences.
Borrowing costs directly attributable to construction of a qualifying assets are capitalized during the period of time that
is required to complete and prepare the asset for its intended use.
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Summary of significant accounting policies continued
Year ended December 31, 2020
Intangible assets and goodwill
Goodwill
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating
units (“CGUs”), or groups of CGUs that is expected to benefit from the synergies of the combination. Each unit or group of units
represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. A CGU is
determined as a group of assets at a country level using shared technology which is typically the case for Solar and Wind assets.
The reporting units (which generally correspond to power plants) or group of reporting units have been identified as its cash-
generating units.
Intangible assets
Goodwill impairment reviews are undertaken at least annually.
Intangible assets include licenses, permits and project development rights when specific rights and contracts are acquired.
Intangible assets separately acquired in the normal course of business are recorded at historical cost, and intangible assets
acquired in a business combination are recognized at fair value at the acquisition date. When the power plant achieves its
commercial operations date, the related intangible assets are amortized using the straight-line method generally over the
life of the PPA or over the duration of the permits and licenses granted, generally over 15 to 20 years (excluding software).
Software is amortized over 1 to 3 years.
Property, plant and equipment
Initial recognition and subsequent measurement
Property, plant and equipment are stated at historical cost, less depreciation and impairment, or at fair value if acquired
in the context of a business combination. Historical cost includes an initial estimate of the costs of dismantling and removing
the item and restoring the site on which it is located, when the entity has a present legal or constructive obligation to do so.
In the context of a business combination the fair value valuation is usually based on an income-approach based method.
Property, plant and equipment recognized as right-of-use assets under IFRS 16 are measured at cost less depreciation,
impairment and adjustments to certain remeasurements of the lease liability.
Costs relating to major inspections and overhauls are capitalized and any remaining carrying amount of the cost of the
previous overhaul is derecognized when new expenditure is capitalized. Minor replacements, repairs and maintenance,
including planned outages to our power plants that do not improve the efficiency or extend the life of the respective asset,
are expensed as incurred.
The Group capitalizes certain direct pre-construction costs associated with its power plant project development activities
when it has been determined that it is more likely than not that the opportunity will result in an operating asset. Factors
considered in this determination include (i) the availability of adequate funding, (ii) the likelihood that the Group will be
awarded with the project or the barriers are not likely to prohibit closing the project, and (iii) there is an available market
and the regulatory, environmental and infrastructure requirements are likely to be met. Capitalized pre-construction costs
include initial engineering, environmental and technical feasibility studies, legal costs, permitting and licensing and direct
internal staff salary and travel costs, among others. Pre-construction costs are charged to expense if a project is abandoned
or if the conditions stated above are not met. Construction work in progress (“CWIP”) assets are transferred out of CWIP when
construction is substantially completed and the power plant achieves its commercial operations date (“COD”), at which point
depreciation commences.
Borrowing costs directly attributable to construction of a qualifying assets are capitalized during the period of time that
is required to complete and prepare the asset for its intended use.
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Depreciation
Property, plant and equipment are depreciated down to their estimated residual using the straight-line method over the
following estimated useful lives:
Generating plants and equipment
Lignite, coal, gas, oil, biomass power plants
Hydro plants and equipment
Wind farms
Tri and quad-generation combined heat power plants
Solar plants
Other property, plant and equipment
Useful lives as of December 31, 2019 and 2020
12 to 30 years
25 to 40 years
16 to 25 years
15 to 20 years
14 to 20 years
3 to 10 years
Useful economic lives have been updated to reflect the lives of plants from the date of acquisition by the Group.
‘Generation plants and equipment’ and ‘Other property, plant and equipment’ categories are presented respectively
under ‘Power plant assets’ and ‘Other’ in note 4.10 Property, plant and equipment.
See below for depreciation policy on right-of-use assets.
The range of useful lives is due to the diversity of the assets in each category, which is partly due to acquired assets and from
assets groupings.
The residual values and useful lives are reviewed at least annually taking into account a number of factors such as operational
and technical risks, and risks linked to climate change (for example from emerging government policies) and if expectations
differ from previous estimates, the remaining useful lives are reassessed and adjustments are made. The remaining useful
lives are assessed when acquisitions are made by performing technical due diligence procedures. The remaining useful
economic life of the Group’s largest asset, the Maritsa East 3 power plant in Bulgaria, is approximately 9 years.
Leases
The Group applies IFRS 16 “Leases” and leases are recognized as a right-of-use asset and a corresponding liability at the date
at which the leased asset is available for use by the Group.
Accounting for a lease as a lessee – Assets and liabilities arising from a lease are initially measured on a present value basis.
Lease liabilities include the net present value of the following lease payments:
(cid:120) fixed payments (including in-substance fixed payments), less any lease incentives receivable
(cid:120) variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the
commencement date
(cid:120) amounts expected to be payable by the Group under residual value guarantees
(cid:120) the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and
(cid:120) payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which
is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being the rate that the individual
lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar
economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Group applied a single discount rate to a portfolio of leases with reasonably
similar characteristics.
The Group is exposed to potential future increases in variable lease payments which are linked to gross revenues or based
on an index or rate. No right of use assets or corresponding lease liability is recognized in respect of variable consideration
leases which are linked to gross revenues. Variable lease payments that depend on gross revenues are recognized in the
statement of income in the period in which the related revenue is generated.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease
period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
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Year ended December 31, 2020
Right-of-use assets are measured at cost comprising the following:
(cid:120) the amount of the initial measurement of lease liability
(cid:120) any lease payments made at or before the commencement date less any lease incentives received
(cid:120) any initial direct costs, and
(cid:120) restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line
basis. If the group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the
underlying asset’s useful life.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognized on
a straight-line basis as an expense in the statement of income.
Accounting for arrangements that contain a lease as lessor – Power purchase arrangements (“PPA”) and other long-term
contracts may contain, or may be considered to contain, leases where the fulfilment of the arrangement is dependent on the
use of a specific asset such as a power plant and the arrangement conveys to the customer the right to use that asset. Such
contracts may be identified as either operating leases or finance leases.
(i) Accounting for finance leases as lessor
Where the Group determines that the contractual provisions of a long-term PPA contain, or are, a lease and result in the
offtaker assuming the principal risks and rewards of ownership of the power plant, the arrangement is a finance lease.
Accordingly the assets are not reflected as PP&E and the net investment in the lease, represented by the present value
of the amounts due from the lessee is recorded within financial assets as a finance lease receivable.
The capacity payments as part of the leasing arrangement are apportioned between minimum lease payments (comprising
capital repayments relating to the plant and finance income) and service income. The finance income element is recognized
as revenue, using a rate of return specific to the plant to give a constant rate of return on the net investment in each period.
Finance income and service income are recognized in each accounting period at the fair value of the Group’s performance
under the contract.
(ii) Accounting for operating leases as lessor
Where the Group determines that the contractual provisions of the long-term PPA contain, or are, a lease, and result in the Group
retaining the principal risks and rewards of ownership of the power plant, the arrangement is an operating lease. For operating
leases, the power plant is, or continues to be, capitalized as property, plant and equipment and depreciated over its useful
economic life. Rental income from operating leases is recognized on a straight-line basis over the term of the arrangement.
Impairment of non-financial assets
Assets that are subject to depreciation or amortization are reviewed for impairment whenever events or changes in
circumstances indicate that carrying values may not be recoverable. An impairment loss is recognized for the amount by
which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair
value less costs of disposal (market value) and value in use determined using estimates of discounted future net cash flows
of the asset or group of assets to which it belongs. For the purposes of assessing impairment, assets are grouped at the
lowest levels for which there are largely independent cash inflows (cash-generating units).
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Summary of significant accounting policies continued
Year ended December 31, 2020
Right-of-use assets are measured at cost comprising the following:
(cid:120) the amount of the initial measurement of lease liability
(cid:120) any lease payments made at or before the commencement date less any lease incentives received
(cid:120) any initial direct costs, and
(cid:120) restoration costs.
underlying asset’s useful life.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line
basis. If the group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the
Financial assets
Classification of financial assets
The Group classifies its financial assets in the following categories: at fair value through statement of income and at
amortized costs.
(a) Financial assets at fair value through statement of income
Financial assets have been acquired principally for the purpose of selling, or being settled, in the short term. Financial assets
at fair value through statement of income are “Cash and cash equivalents” which includes restricted cash and derivatives held
for trading unless they are designated as hedges.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognized on
(b) Financial assets at amortized costs
a straight-line basis as an expense in the statement of income.
Accounting for arrangements that contain a lease as lessor – Power purchase arrangements (“PPA”) and other long-term
contracts may contain, or may be considered to contain, leases where the fulfilment of the arrangement is dependent on the
use of a specific asset such as a power plant and the arrangement conveys to the customer the right to use that asset. Such
contracts may be identified as either operating leases or finance leases.
(i) Accounting for finance leases as lessor
Where the Group determines that the contractual provisions of a long-term PPA contain, or are, a lease and result in the
offtaker assuming the principal risks and rewards of ownership of the power plant, the arrangement is a finance lease.
Accordingly the assets are not reflected as PP&E and the net investment in the lease, represented by the present value
of the amounts due from the lessee is recorded within financial assets as a finance lease receivable.
The capacity payments as part of the leasing arrangement are apportioned between minimum lease payments (comprising
capital repayments relating to the plant and finance income) and service income. The finance income element is recognized
as revenue, using a rate of return specific to the plant to give a constant rate of return on the net investment in each period.
Finance income and service income are recognized in each accounting period at the fair value of the Group’s performance
under the contract.
(ii) Accounting for operating leases as lessor
Where the Group determines that the contractual provisions of the long-term PPA contain, or are, a lease, and result in the Group
retaining the principal risks and rewards of ownership of the power plant, the arrangement is an operating lease. For operating
leases, the power plant is, or continues to be, capitalized as property, plant and equipment and depreciated over its useful
economic life. Rental income from operating leases is recognized on a straight-line basis over the term of the arrangement.
Impairment of non-financial assets
Assets that are subject to depreciation or amortization are reviewed for impairment whenever events or changes in
circumstances indicate that carrying values may not be recoverable. An impairment loss is recognized for the amount by
which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair
value less costs of disposal (market value) and value in use determined using estimates of discounted future net cash flows
of the asset or group of assets to which it belongs. For the purposes of assessing impairment, assets are grouped at the
lowest levels for which there are largely independent cash inflows (cash-generating units).
Financial assets at amortized costs are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They are included in current assets, except those that mature greater than 12 months after the end of the
reporting period, which are classified in non-current assets. The Group’s Financial assets and amortized costs comprise “Trade
and other receivables” and “Financial and contract assets” in the consolidated statement of financial position.
The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the
cash flows.
Recognition and measurement
Purchases and sales of financial assets are recognized on trade date (that is, the date on which the Group commits to
purchase or sell the asset).
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value
through income, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of
financial assets carried at fair value through income are expensed in the consolidated statement of income and other
comprehensive income. Financial assets are derecognized when the rights to receive cash flows from the financial assets
have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
(a) Financial assets at fair value through statement of income
Gains or losses on financial assets at fair value through statement of income are recognized in the consolidated statement
income and other comprehensive income. These are presented within finance income and finance costs respectively.
(b) Loans and receivable
These financial assets are held for collection of contractual cash flows, where those cash flows represent solely payments of
principal and interest, and are measured at amortized cost. Interest income from these financial assets is included in finance
income using the effective interest rate method. Any gain or loss arising on derecognized is recognized directly in profit or
loss and presented in finance income or finance costs.
Impairment
The Group assesses, on a forward-looking basis, the expected credit losses associated with its financial assets carried at
amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
Allowances for expected credit losses are made based on the risk of non-payment taking into account ageing, previous
experience, economic conditions, existing insurance policies and forward looking data. Political risk insurance (PRI) policies
are factored into this assessment due to being closely related insurance policies for which cash flows have been factored
into the expected credit loss calculations (including risk of default on insurance provider) and presented on a net basis.
Such allowances are measured as either 12-months expected credit losses or lifetime expected credit losses depending
on changes in the credit quality of the counterparty.
While the financial assets of the Company are subject to the impairment requirements of IFRS 9, the identified impairment loss
was immaterial.
The group has three types of financial assets that are subject to the expected credit loss model:
(1) Trade and other receivables
(2) Financial and contract assets
(3) Loans
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While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, no impairment loss has
been identified.
Derivative financial instruments and hedging activities
Derivative instruments are measured at fair value upon initial recognition in the consolidated statement of financial position
and subsequently are re-measured to their fair value at the end of each reporting period. The accounting for subsequent
changes in fair value depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the
item being hedged.
Derivative instruments are presented according to their maturity date, regardless of whether they qualify for hedge accounting
under IFRS 9 (hedging instruments versus trading instruments). Derivatives are classified as a separate line item in the
consolidated statement of financial position.
As part of its overall foreign exchange and interest rate risk management policy, the Group enters into various hedging
transactions involving derivative instruments.
The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the
hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged
item is less than 12 months.
In connection with the Group’s hedging policy, the Group uses forward exchange contracts for currency risk management as
well as foreign exchange options.
The Group also hedges particular risks associated with the cash flows of recognized assets and liabilities and highly
probable forecast transactions (cash flow hedges). Notably, the Group uses interest rate swap contracts for interest rate
risk management in order to hedge certain forecasted transactions and to manage its anticipated cash payments under its
variable rate financing by converting a portion of its variable rate financing to a fixed rate basis through the use of interest
rate swap agreements, and a cross currency swap contract for both currency and interest rate risk management.
The Group can also hedge specific risks identified such as exposure to energy spot price for example in the case of the
CHP Mexico fixed margin swap which protects certain power purchase agreements against variations in the CFE tariffs.
Items qualifying as hedges
The Group formally documents all relationships between hedging instruments and hedged items, as well as its risk
management objectives and strategies for undertaking hedge transactions and the method used to assess hedge
effectiveness. Hedging transactions are expected to be highly effective in achieving offsetting changes in cash flows
and are regularly assessed to determine that they actually have been highly effective throughout the financial reporting
periods for which they are implemented.
When derivative instruments qualify as hedges for accounting purposes, as defined in IFRS 9 “Financial instruments”, they
are accounted for as follows:
(a) Cash flow hedges that qualify for hedge accounting
(cid:120) The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognized in the cash flow hedge reserve within equity and through the consolidated statement of other comprehensive
income (“OCI”). The gain or loss relating to the ineffective portion is recognized immediately within the consolidated
statement of income. Amounts recognized directly in OCI are reclassified to the consolidated statement of income
when the hedged transaction affects the consolidated statement of income.
(cid:120) If a forecast transaction or firm commitment is no longer expected to occur, amounts previously recognized in OCI are
reclassified to the consolidated statement of income as finance income or finance costs.
If a hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation
as a hedge is revoked, amounts previously recognized in OCI remain in accumulated OCI until the forecast transaction
or firm commitment occurs, at which point they are reclassified to the consolidated statement of income.
(b) Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that
does not qualify for hedge accounting are recognized immediately in profit or loss and are included in realized and unrealized
foreign exchange (losses) and gains and change in fair value of derivatives.
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While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, no impairment loss has
been identified.
Derivative financial instruments and hedging activities
Derivative instruments are measured at fair value upon initial recognition in the consolidated statement of financial position
and subsequently are re-measured to their fair value at the end of each reporting period. The accounting for subsequent
changes in fair value depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the
item being hedged.
Derivative instruments are presented according to their maturity date, regardless of whether they qualify for hedge accounting
under IFRS 9 (hedging instruments versus trading instruments). Derivatives are classified as a separate line item in the
consolidated statement of financial position.
As part of its overall foreign exchange and interest rate risk management policy, the Group enters into various hedging
transactions involving derivative instruments.
The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the
hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged
item is less than 12 months.
well as foreign exchange options.
In connection with the Group’s hedging policy, the Group uses forward exchange contracts for currency risk management as
The Group also hedges particular risks associated with the cash flows of recognized assets and liabilities and highly
probable forecast transactions (cash flow hedges). Notably, the Group uses interest rate swap contracts for interest rate
risk management in order to hedge certain forecasted transactions and to manage its anticipated cash payments under its
variable rate financing by converting a portion of its variable rate financing to a fixed rate basis through the use of interest
rate swap agreements, and a cross currency swap contract for both currency and interest rate risk management.
The Group can also hedge specific risks identified such as exposure to energy spot price for example in the case of the
CHP Mexico fixed margin swap which protects certain power purchase agreements against variations in the CFE tariffs.
Items qualifying as hedges
The Group formally documents all relationships between hedging instruments and hedged items, as well as its risk
management objectives and strategies for undertaking hedge transactions and the method used to assess hedge
effectiveness. Hedging transactions are expected to be highly effective in achieving offsetting changes in cash flows
and are regularly assessed to determine that they actually have been highly effective throughout the financial reporting
periods for which they are implemented.
When derivative instruments qualify as hedges for accounting purposes, as defined in IFRS 9 “Financial instruments”, they
are accounted for as follows:
(a) Cash flow hedges that qualify for hedge accounting
(cid:120) The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognized in the cash flow hedge reserve within equity and through the consolidated statement of other comprehensive
income (“OCI”). The gain or loss relating to the ineffective portion is recognized immediately within the consolidated
statement of income. Amounts recognized directly in OCI are reclassified to the consolidated statement of income
when the hedged transaction affects the consolidated statement of income.
(cid:120) If a forecast transaction or firm commitment is no longer expected to occur, amounts previously recognized in OCI are
reclassified to the consolidated statement of income as finance income or finance costs.
If a hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation
as a hedge is revoked, amounts previously recognized in OCI remain in accumulated OCI until the forecast transaction
or firm commitment occurs, at which point they are reclassified to the consolidated statement of income.
(b) Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that
does not qualify for hedge accounting are recognized immediately in profit or loss and are included in realized and unrealized
foreign exchange (losses) and gains and change in fair value of derivatives.
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In connection with the Group’s hedging policy, the Group uses forward exchange contracts for currency risk management
as well as foreign exchange options, interest rate swap contracts for interest rate risk management in order to hedge certain
forecasted transactions and to manage its anticipated cash payments under its variable rate financing by converting a portion
of its variable rate financing to a fixed rate basis through the use of interest rate swap agreements, and a cross currency swap
contract for both currency and interest rate risk management.
Inventories
Inventories consist primarily of power generating plant fuel, non-critical spare parts that are held by the Group for its own use
and Emission quotas (see below). Inventories are stated at the lower of cost, using a first-in, first-out method, and net realizable
value, which is the estimated selling price in the ordinary course of business, less applicable selling expenses.
Emission quotas
Some companies of the Group emit CO2 and have as a result obligations to buy emission quotas on the basis of local legislation.
The emissions made by the companies emitting CO2 which are in excess of any allocated quotas are purchased at free market
price and shown as inventories before their effective use. If emissions are higher than allocated quotas, the companies
recognizes an expense and respective liability for those emissions at prevailing market value. At the end of each reporting
period, CO2 quotas that remain available to the companies are revalued at the lower of costs or prevailing market value.
The Group presents the quotas in Inventory which reflects the fact that the cost to purchase the quotas is part of the
production cost and linked to the production output rather than the plant itself. The quotas directly contribute to revenue
as the cost of quotas is billed on to the customer as a pass-through cost. The Group expects to realize the asset within
twelve months after the year end.
Trade receivables
Trade receivables are recognized initially at fair value, which is usually the invoiced amount, and subsequently carried
at amortized cost using the effective interest method, less provision for impairment. Details about the Group’s impairment
policies on financial assets and the calculation of the provision for impairment are provided on note 4.10.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and current balances with banks and similar institutions and short-term
investments, all of which are readily convertible to cash and are subject to insignificant risk of changes in value and have an
original maturity of three months or less. Bank overdrafts are included within current borrowings. Cash and cash equivalents
also includes cash deposited on accounts to cover for short-term debt service of certain project financings and which can be
drawn for short term related needs. Money market funds comprise investment in funds that are subject to an insignificant risk
of changes in fair value.
Maintenance reserves held for the purpose of covering long-term major maintenance and long-term deposits kept as collateral
to cover decommissioning obligations are excluded from cash and cash equivalents and included in non-current assets.
Share capital and share premium
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown
in equity as a deduction from the proceeds.
The premium received on the issue of shares in excess of the nominal value of shares is credited to the share premium
account and included within shareholders’ equity.
Treasury shares
At year end, the Group’s treasury shares are included under “Treasury shares” in the consolidated statement of financial
position and are measured at acquisition cost.
The gains and losses obtained on disposal of treasury shares are recognized in “Other reserves” in the consolidated
statement of financial position. There has been no disposal of treasury shares during the years ended 31 December 2020
and 2019.
The Group buys and sells treasury shares in accordance with the prevailing law and the resolutions of the General
Shareholders’ Meeting. Such transactions include sale and purchase of company shares.
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Financial liabilities
(a) Borrowings
Borrowings are recognized initially at fair value of amounts received, net of transaction costs. Borrowings are subsequently
measured at amortized cost using the effective interest method; any difference between the proceeds (net of transaction
costs) and the redemption value is recognized in the consolidated statement of income over the period of the borrowings
using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for
at least 12 months after the reporting period.
(b) Trade and other payables
Financial liabilities within trade and other payables are initially recognized at fair value, which is usually the invoiced amount,
and subsequently carried at amortized cost using the effective interest method.
Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period.
Unless otherwise stated, carrying value approximates to fair value for all financial liabilities.
Provisions
Provisions principally relate to decommissioning, maintenance, environmental, tax and legal obligations and which are
recognized when there is a present obligation as a result of past events; it is probable that an outflow of resources will
be required to settle the obligation; and the amount can be reliably estimated.
Provisions are re-measured at each statement of financial position date and adjusted to reflect the current best estimate. Any
change in present value of the estimated expenditure attributable to changes in the estimates of the cash flow or the current
estimate of the discount rate used are reflected as an adjustment to the provision. The increase in the provisions due to
passage of time are recognized as finance costs in the consolidated statement of income.
Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognized in the consolidated statement of
income, except to the extent that it relates to items recognized in other comprehensive income. In this case, the tax is
also recognized in other comprehensive income.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement
of financial position date in the countries where the Group and its subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation
is subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment.
The group measures its tax balances either based on the most likely amount or the expected value, depending on which
method provides a better prediction of the resolution of the uncertainty.
Deferred income tax is recognized on temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognized if they arise
from the initial recognition of goodwill; deferred income tax is not recognized if it arises from initial recognition of an asset
or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor
taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively
enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is
realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profits will be available
against which the temporary differences can be utilized.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the
same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the
balances on a net basis.
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Financial liabilities
(a) Borrowings
Borrowings are recognized initially at fair value of amounts received, net of transaction costs. Borrowings are subsequently
measured at amortized cost using the effective interest method; any difference between the proceeds (net of transaction
costs) and the redemption value is recognized in the consolidated statement of income over the period of the borrowings
using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for
at least 12 months after the reporting period.
(b) Trade and other payables
Financial liabilities within trade and other payables are initially recognized at fair value, which is usually the invoiced amount,
and subsequently carried at amortized cost using the effective interest method.
Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period.
Unless otherwise stated, carrying value approximates to fair value for all financial liabilities.
Provisions
Provisions principally relate to decommissioning, maintenance, environmental, tax and legal obligations and which are
recognized when there is a present obligation as a result of past events; it is probable that an outflow of resources will
be required to settle the obligation; and the amount can be reliably estimated.
Provisions are re-measured at each statement of financial position date and adjusted to reflect the current best estimate. Any
change in present value of the estimated expenditure attributable to changes in the estimates of the cash flow or the current
estimate of the discount rate used are reflected as an adjustment to the provision. The increase in the provisions due to
passage of time are recognized as finance costs in the consolidated statement of income.
Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognized in the consolidated statement of
income, except to the extent that it relates to items recognized in other comprehensive income. In this case, the tax is
also recognized in other comprehensive income.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement
of financial position date in the countries where the Group and its subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation
is subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment.
The group measures its tax balances either based on the most likely amount or the expected value, depending on which
method provides a better prediction of the resolution of the uncertainty.
Deferred income tax is recognized on temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognized if they arise
from the initial recognition of goodwill; deferred income tax is not recognized if it arises from initial recognition of an asset
or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor
taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively
enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is
realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profits will be available
against which the temporary differences can be utilized.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the
same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the
balances on a net basis.
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Restatements
The prior year comparatives have been restated in the consolidated statement of financial position and the relevant notes
as follows:
(a) Trade and other receivables have been further disaggregated into trade and other receivables and current income
tax assets. The total current assets remain unchanged.
(b) Financial and contract assets have been disaggregated into financial and contract assets non-current and financial
and contract assets current. The financial and contract assets current was $22.0 million as at 1 January 2019.
(c)
In accordance with IFRS 3 Business Combinations, the measurement period adjustments identified prior to November 25,
2020 and resulting in changes to the fair value of assets and liabilities acquired in Mexico, have also been reflected in the
prior year balance sheet. Total equity and non-controlling interests has not changed as a result of this restatement. See
note 3.2 for further details.
(d) The fair value of the CHP Mexico fixed margin swap was presented in Other non-current liabilities as of December 31,
2019 for a total amount of $82.8 million. In 2020, the Group has re-reviewed the terms of the instruments and determined
that they should be classified as derivatives and not as other liabilities. The fair value of the CHP Mexico fixed margin
swap was reclassified in December 31, 2019 from “other financial liabilities at amortized cost” to “liabilities at fair value
through profit and loss”.
(e) Debt to Maritsa non-controlling interests presented in other non-current liabilities was reclassified in December 31, 2019
from “liabilities at fair value through profit and loss” to “other financial liabilities at amortized cost” reflecting the correct
and applied accounting treatment for the instrument.
2.4 Critical accounting estimates and judgments
The preparation of the consolidated financial statements in line with the Group’s accounting policies set out in note 2.3
involves the use of judgment and/or estimation. These judgments and estimates are based on management's best knowledge
of the relevant facts and circumstances, giving consideration to previous experience, and are regularly reviewed and revised
as necessary. Actual results may differ from the amounts included in the consolidated financial statements. The estimates and
judgments that have the most significant effect on the carrying amounts of assets and liabilities are presented below.
Critical accounting judgments
Accounting for long-term power purchase agreements and related revenue recognition
When power plants sell their output under long-term power purchase agreements (“PPA”), it is usual for the operator of the
power plant to receive payment (known as a capacity payment) for the provision of electrical capacity whether or not the
offtaker requests electrical output. In assessing the accounting for the PPA, there may be a degree of judgement as to whether
a long-term contract to sell electrical capacity constitutes a service concession arrangement, a form of lease, or a service
contract. This determination is made at the inception of the PPA, and is not required to be revisited in subsequent periods
under IFRS, unless the agreement is renegotiated.
Given that the fulfilment of the PPAs is dependent on the use of a specified asset, the key judgement in determining if the PPA
contains a lease is the assessment of whether the PPA conveys a right for the offtaker to obtain substantially all the power
output from the asset and whether the offtaker has the right to direct the use of the asset throughout the period of use.
In assessing whether the PPA contains a service concession, the Group considers whether the arrangement (i) bears a public
service obligation; (ii) has prices that are regulated by the offtaker; and (iii) the residual interest is transferred to the offtaker at
an agreed value.
All other PPAs are determined to be service contracts.
Concession arrangements – For those agreements which are determined to be a concession arrangement, there are
judgements as to whether the infrastructure should be accounted for as an intangible asset or a financial asset depending on
the nature of the payment entitlements established in the agreement.
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Concession arrangements determined to be a financial asset – The Group recognizes a financial asset when demand risk is
assumed by the grantor, to the extent that the contracted concession holder has an unconditional right to receive payments
for the asset. The asset is recognized at the fair value of the construction services provided. The fair value is based on input
assumptions such as budgets and cash flow forecasts, future costs include maintenance costs which impact the overall
calculation of the estimated margin of the project. The inputs include in particular the budget for fixed and variable costs.
Any change in these assumptions may have a material impact on the measurement of the recoverable amount and could
result in reducing the value of the asset. The financial asset is subsequently recorded at amortized cost calculated according
to the effective interest rate method. Revenue for operating and managing the asset is recorded as revenue in each period.
Leases – For those arrangements determined to be or to contain leases, further judgement is required to determine whether
the arrangement is finance or operating lease. This assessment requires an evaluation of where the substantial risks and
rewards of ownership reside, for example due to the existence of a bargain purchase option that would allow the offtaker
to buy the asset at the end of the arrangement for a minimal price. Judgement has been applied based on the significance
of the life of the asset remaining and the remaining net book value of the asset at the end of the lease term.
Assessing property, plant and equipment and intangible assets for impairment triggers
The Group’s property, plant and equipment and intangible assets are reviewed for indications of impairment (an impairment
“trigger”). Judgement is applied in determining whether an impairment trigger has occurred, based on both internal and
external sources. External sources may include: market value declines, negative changes in technology, markets, economy,
impact of climate changes or laws. Internal sources may include: obsolescence or physical damage, or worse economic
performance than expected, including from adverse weather conditions for renewable plants.
The Group considers the end date of the power purchase agreements as part of the analysis and assesses if the market
conditions are significantly adverse such that the expiry of the power purchase agreement indicates an impairment trigger.
The Group has notably considered the ending date of the PPAs in Arrubal and Maritsa ending in July 2021 and February 2024
respectively and concluded that they do not constitute an impairment indicator considering the current economic conditions in
their respective market.
In the current year, impairment triggers were noted for Brazilian wind power plants (see note 4.10).
Provisions for claims
The Group receives legal or contractual claims against it from time to time, in the normal course of business. The Group
considers external and internal legal counsel opinions in order to assess the likelihood of loss and to define the defense
strategy. Judgements are made as to the potential likelihood of any claim succeeding when making a provision or disclosing
a contingent liability. The timeframe for resolving legal or contractual claims may be judgmental, as is the amount of possible
outflow of economic benefits.
The main judgments are related to the litigations disclosed in the Note 4.32 Contingent liability, such as the Kivuwatt
arbitration, and those disclosed below related to Mexico and Kosovo.
Functional currency of the assets
The Group operates in different countries and performs an analysis of the functional currency of each operating asset
considering the IAS21 standard requirements. In some countries, the functional currency of the operating asset may differ
from the local currency when the primary indicators (such as sales and cash inflows and expenses and cash outflows) are
influenced by a currency which is not the local currency. For example, this is the case of the Peru, Rwanda and the CHP
Mexico assets that have a USD functional currency despite being located in such countries due to USD being the currency
that influences prices in the local market.
Cash generating units (“CGUs”)
A cash generating unit (“CGU”) is defined as the asset or smallest identifiable group of assets that generates cash inflows that are
largely independent of the cash inflows from other assets or groups of assets. In the case of Solar and Wind assets, typically a group
of assets at a country level using shared technology is identified as a CGU.
Judgments are made in allocating each reporting unit (which generally correspond to power plants) or group of reporting units
to CGUs. The Group notably consider that the assessment of the independence of cash flows involves consideration of the
business transactions or financing relationship between the reporting units, or how management makes decisions about
continuing or disposing of the entity’s assets and operations.
The definition of the CGU is critical for the purpose of assessing impairment indicators and performing impairment testing.
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Concession arrangements determined to be a financial asset – The Group recognizes a financial asset when demand risk is
assumed by the grantor, to the extent that the contracted concession holder has an unconditional right to receive payments
for the asset. The asset is recognized at the fair value of the construction services provided. The fair value is based on input
assumptions such as budgets and cash flow forecasts, future costs include maintenance costs which impact the overall
calculation of the estimated margin of the project. The inputs include in particular the budget for fixed and variable costs.
Any change in these assumptions may have a material impact on the measurement of the recoverable amount and could
result in reducing the value of the asset. The financial asset is subsequently recorded at amortized cost calculated according
to the effective interest rate method. Revenue for operating and managing the asset is recorded as revenue in each period.
Leases – For those arrangements determined to be or to contain leases, further judgement is required to determine whether
the arrangement is finance or operating lease. This assessment requires an evaluation of where the substantial risks and
rewards of ownership reside, for example due to the existence of a bargain purchase option that would allow the offtaker
to buy the asset at the end of the arrangement for a minimal price. Judgement has been applied based on the significance
of the life of the asset remaining and the remaining net book value of the asset at the end of the lease term.
Assessing property, plant and equipment and intangible assets for impairment triggers
The Group’s property, plant and equipment and intangible assets are reviewed for indications of impairment (an impairment
“trigger”). Judgement is applied in determining whether an impairment trigger has occurred, based on both internal and
external sources. External sources may include: market value declines, negative changes in technology, markets, economy,
impact of climate changes or laws. Internal sources may include: obsolescence or physical damage, or worse economic
performance than expected, including from adverse weather conditions for renewable plants.
The Group considers the end date of the power purchase agreements as part of the analysis and assesses if the market
conditions are significantly adverse such that the expiry of the power purchase agreement indicates an impairment trigger.
The Group has notably considered the ending date of the PPAs in Arrubal and Maritsa ending in July 2021 and February 2024
respectively and concluded that they do not constitute an impairment indicator considering the current economic conditions in
In the current year, impairment triggers were noted for Brazilian wind power plants (see note 4.10).
their respective market.
Provisions for claims
The Group receives legal or contractual claims against it from time to time, in the normal course of business. The Group
considers external and internal legal counsel opinions in order to assess the likelihood of loss and to define the defense
strategy. Judgements are made as to the potential likelihood of any claim succeeding when making a provision or disclosing
a contingent liability. The timeframe for resolving legal or contractual claims may be judgmental, as is the amount of possible
outflow of economic benefits.
The main judgments are related to the litigations disclosed in the Note 4.32 Contingent liability, such as the Kivuwatt
arbitration, and those disclosed below related to Mexico and Kosovo.
Functional currency of the assets
The Group operates in different countries and performs an analysis of the functional currency of each operating asset
considering the IAS21 standard requirements. In some countries, the functional currency of the operating asset may differ
from the local currency when the primary indicators (such as sales and cash inflows and expenses and cash outflows) are
influenced by a currency which is not the local currency. For example, this is the case of the Peru, Rwanda and the CHP
Mexico assets that have a USD functional currency despite being located in such countries due to USD being the currency
that influences prices in the local market.
Cash generating units (“CGUs”)
A cash generating unit (“CGU”) is defined as the asset or smallest identifiable group of assets that generates cash inflows that are
largely independent of the cash inflows from other assets or groups of assets. In the case of Solar and Wind assets, typically a group
of assets at a country level using shared technology is identified as a CGU.
Judgments are made in allocating each reporting unit (which generally correspond to power plants) or group of reporting units
to CGUs. The Group notably consider that the assessment of the independence of cash flows involves consideration of the
business transactions or financing relationship between the reporting units, or how management makes decisions about
continuing or disposing of the entity’s assets and operations.
The definition of the CGU is critical for the purpose of assessing impairment indicators and performing impairment testing.
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Regulatory changes in Mexico
Change in wheeling charges
During June 2020 the government in Mexico announced certain changes to the legado regime which would result in
significant increases to wheeling fees. The Company filed an Amparo lawsuit against these changes, claiming the increases to
be unconstitutional, and received an injunction suspending the application of these higher wheeling fees until final judgement
(expected in 2021). Under the majority of the current PPAs in place, these increased charges would be passed through to
offtakers, however, if the final judgement approves these changes to legado rights, such increases in charges would impact
the cash flows generated in Mexico at the time these PPAs are renewed. The Company analyzed these potential changes to
the legado rights, and, based on an external legal opinion that confirmed the changes as unconstitutional and therefore
unlikely to be sustained, concluded that those changes do not constitute an indication of impairment (impairment “trigger”)
as per IAS 36 as of December 31, 2020. The Group will continue to monitor future changes in regulation in Mexico and the
potential impact on its operations.
Amendment to permit modification
On October 2020, CRE (Energy Regulatory Commission) issued a new resolution amending the general administrative rules
to modify and transfer the "Legado" Permits. This amendment included additional restrictions on including new Offtakers in
the "Legado" Permits. The Resolution 1094 is expected to be used by CRE to reject the permit modifications required for
expanding the Off-takers and the load points in the "Legado Permits". The Company filed an Amparo against these changes,
claiming them to be unconstitutional. This new resolution could generate a delay in the interconnections expected in 2021
which would adversely impact revenue and profits. Management's judgement is that these interconnections will be completed
by mid-2021.
Kosovo e Re project arbitration
On 24 May 2020, ContourGlobal Kosovo LLC (“CG Kosovo”), a wholly-owned subsidiary within the ContourGlobal Group,
sent a notice of termination to the government of Kosovo (represented by the Ministry of Economy and Environment of
the government of Kosovo) (the “GoK”) and other publicly owned entities, namely Kosovo Energy Corporation, J.S.C., New
Kosovo Electric Company J.S.C., HPE Ibër-Lepenc, J.S.C. and Operator Sistemi, Transmission Dhe Tregu – KOSTT, SH.A.,
under various project documents entered into with each of those entities in respect of a project whereby CG was to build
a coal-fired power plant in Kosovo. The notice of termination was sent as a result of the failure of the above-mentioned
entities to meet certain obligations and conditions precedent under such project documents, which prevented the project
from meeting certain required milestones by its scheduled closing date and therefore meant the project could not go forward.
On 25 September 2020, CG Kosovo sent a formal written notice of dispute under the project documents seeking recovery
of recovery of costs incurred to date, as anticipated and set out in the project contract document and capped a €19.7 million
($22.1 million) plus interest for late payment, to which CG Kosovo is entitled where the termination of the project is attributable
to failures by GoK and/or the relevant publicly owned entities. On 19 November 2020, CG Kosovo filed a request for arbitration
with ICSID. The arbitration proceedings are not expected to conclude before the end of 2021.
As of 31 December 2019, the €19.7 million ($24.0 million) in recoverable development costs were presented as Property,
plant and equipment. No additional costs have been capitalized during the year ended 31 December 2020. During 2020,
given the termination of the project agreements, the €19.7 million ($24 million) recoverable development costs have been
derecognized from Property, plant and equipment and recognized as a contract asset arising from a revenue arrangement
in line with IFRS 15, which is presented in Other non-current assets. The derecognition of PPE and subsequent recognition
of revenue from the contract asset is disclosed net within the consolidated statement of income.
The recovery of this asset is likely to depend on the outcome of the arbitration proceedings and so is subject to some degree of
judgement. The Group believes it will be able to demonstrate that the project failed to close for reasons attributable to the GoK
and/or the relevant publicly owned companies, which is the key judgement that supports the recognition of the asset.
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Summary of significant accounting policies continued
Year ended December 31, 2020
Critical accounting estimates
Estimation of useful lives of property, plant and equipment
Property, plant and equipment represents a significant proportion of the asset base of the Group, primarily due to power plants
owned, being 55.3% (2019: 64.3%) of the Group’s total assets. Estimates and assumptions made to determine their carrying
value and related depreciation are significant to the Group’s financial position and performance. The annual depreciation
charge is determined after estimating an asset’s expected useful life and its residual value at the end of its life. The useful
lives and residual values of the Group’s assets are determined by management at the time the asset is acquired and reviewed
annually for appropriateness. The Group derives useful economic lives based on experience of similar assets, including use
of third party experts at the time of acquisition of assets, and these lives may exceed the period covered by contracted power
purchase agreements. Emerging governmental policies relating to climate change are also considered when reviewing the
appropriateness of useful economic lives. A decrease in the average useful life by one year in power plant assets would
result in a decrease in the net book value by $13.8 million (2019: $10.8 million).
Recoverable amount of property, plant and equipment and intangible assets
Where an impairment trigger has been identified (see critical accounting judgements section), the Group makes significant
estimates in its impairment evaluations of property, plant and equipment and intangible assets. The determination of the
recoverable amount is typically the most judgmental part of an impairment evaluation. The recoverable amount is the higher
of (i) an asset’s fair value less costs of disposal (market value), and (ii) value in use determined using estimates of discounted
future net cash flows (“DCF”) of the asset or group of assets to which it belongs.
Management applies considerable judgment in selecting several input assumptions in its DCF models, including discount rates
and capacity / availability factors. These assumptions are consistent with the Group’s internal budgets and forecasts for such
valuations. Examples of the input assumptions that budgets and cash-flow forecasts are sensitive to include macroeconomic
factors such as growth rates, inflation, exchange rates, and, in the case of renewables plants, environmental factors such as
wind, solar and water resource forecast. Any changes in these assumptions may have a material impact on the measurement
of the recoverable amount and could result in impairing the tested assets. See note 4.10 for further information on the
impairment tests performed, and relevant sensitivity analysis.
Fair value of assets acquired and liabilities assumed in a business combination
Business combinations are recorded in accordance with IFRS 3 using the acquisition method. The Group estimates the excess
purchase price in accordance with IFRS3 as the difference of the consideration paid for the acquisition (including potential
contingent consideration) and the net asset of the target company at the acquisition date.
Under this method, the identifiable assets acquired and the liabilities assumed are recognized at their fair value at the
acquisition date.
Therefore, through a number of different approaches and with the assistance of external independent valuation experts for
acquisitions as considered appropriate by management, the Group identifies what it believes is the fair value of the assets
acquired and liabilities assumed at the acquisition date. These valuations involve the use of judgement and include a number
of estimates. Judgement is exercised in identifying the most appropriate valuation approach which is then used to determine
the allocation of fair value. The group typically uses one of the cost approach, the income approach and the market approach.
Judgement is as well exercised in identifying intangible assets, separately from the power purchase agreements and property
plant and equipment.
Each of these valuation approaches involve the use of estimates in a number of areas, including the determination of cash flow
projections and related discount rates, industry indices, market prices regarding replacement cost and comparable market
transactions. While the Group believes that the estimates and assumptions underlying the valuation methodologies are
reasonable, different assumptions could result in different fair values.
Fixed margin swap
Certain estimates are made in relation to the valuation of the fixed margin swap agreements held by CHP Mexico which
protect certain power purchase agreements against variations in the CFE tariffs. The valuation of this derivative is based
on a number of datapoints, which includes both factual inputs and estimates. Refer to note 4.15 for sensitivity analysis of
this instrument.
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Summary of significant accounting policies continued
Year ended December 31, 2020
Significant changes in the reporting period
Year ended December 31, 2020
Critical accounting estimates
Estimation of useful lives of property, plant and equipment
Property, plant and equipment represents a significant proportion of the asset base of the Group, primarily due to power plants
owned, being 55.3% (2019: 64.3%) of the Group’s total assets. Estimates and assumptions made to determine their carrying
value and related depreciation are significant to the Group’s financial position and performance. The annual depreciation
charge is determined after estimating an asset’s expected useful life and its residual value at the end of its life. The useful
lives and residual values of the Group’s assets are determined by management at the time the asset is acquired and reviewed
annually for appropriateness. The Group derives useful economic lives based on experience of similar assets, including use
of third party experts at the time of acquisition of assets, and these lives may exceed the period covered by contracted power
purchase agreements. Emerging governmental policies relating to climate change are also considered when reviewing the
appropriateness of useful economic lives. A decrease in the average useful life by one year in power plant assets would
result in a decrease in the net book value by $13.8 million (2019: $10.8 million).
Recoverable amount of property, plant and equipment and intangible assets
Where an impairment trigger has been identified (see critical accounting judgements section), the Group makes significant
estimates in its impairment evaluations of property, plant and equipment and intangible assets. The determination of the
recoverable amount is typically the most judgmental part of an impairment evaluation. The recoverable amount is the higher
of (i) an asset’s fair value less costs of disposal (market value), and (ii) value in use determined using estimates of discounted
future net cash flows (“DCF”) of the asset or group of assets to which it belongs.
Management applies considerable judgment in selecting several input assumptions in its DCF models, including discount rates
and capacity / availability factors. These assumptions are consistent with the Group’s internal budgets and forecasts for such
valuations. Examples of the input assumptions that budgets and cash-flow forecasts are sensitive to include macroeconomic
factors such as growth rates, inflation, exchange rates, and, in the case of renewables plants, environmental factors such as
wind, solar and water resource forecast. Any changes in these assumptions may have a material impact on the measurement
of the recoverable amount and could result in impairing the tested assets. See note 4.10 for further information on the
impairment tests performed, and relevant sensitivity analysis.
Fair value of assets acquired and liabilities assumed in a business combination
Business combinations are recorded in accordance with IFRS 3 using the acquisition method. The Group estimates the excess
purchase price in accordance with IFRS3 as the difference of the consideration paid for the acquisition (including potential
contingent consideration) and the net asset of the target company at the acquisition date.
Under this method, the identifiable assets acquired and the liabilities assumed are recognized at their fair value at the
acquisition date.
Therefore, through a number of different approaches and with the assistance of external independent valuation experts for
acquisitions as considered appropriate by management, the Group identifies what it believes is the fair value of the assets
acquired and liabilities assumed at the acquisition date. These valuations involve the use of judgement and include a number
of estimates. Judgement is exercised in identifying the most appropriate valuation approach which is then used to determine
the allocation of fair value. The group typically uses one of the cost approach, the income approach and the market approach.
Judgement is as well exercised in identifying intangible assets, separately from the power purchase agreements and property
plant and equipment.
Each of these valuation approaches involve the use of estimates in a number of areas, including the determination of cash flow
projections and related discount rates, industry indices, market prices regarding replacement cost and comparable market
transactions. While the Group believes that the estimates and assumptions underlying the valuation methodologies are
reasonable, different assumptions could result in different fair values.
Fixed margin swap
this instrument.
Certain estimates are made in relation to the valuation of the fixed margin swap agreements held by CHP Mexico which
protect certain power purchase agreements against variations in the CFE tariffs. The valuation of this derivative is based
on a number of datapoints, which includes both factual inputs and estimates. Refer to note 4.15 for sensitivity analysis of
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Significant changes in the reporting period
3
3.1 2020 transactions
Corporate bond
See note 4.24 Borrowings for a description of the two new Corporate bond issued on December 17, 2020.
Acquisition in the United States of America and Trinidad and Tobago
On December 7th, 2020, the Group entered into an agreement to acquire a 1,502 MW portfolio of six contracted operating
power plants located in the United States and Trinidad and Tobago from Western Generation Partners, LLC. The consideration
for the Acquired Assets is $837.0 million on a debt free, cash free basis. The Group will assume approximately $207.3 million
of existing project net debt with the Acquired Assets. The closing of the transaction was on February 18, 2021. Preliminary
determination of fair value of assets acquired and liabilities assumed as at acquisition date is underway and will be disclosed
in the first half of 2021 as disclosure is impracticable at this time due to the limited amount of time between closing the
acquisition and the financial statements being finalized.
3.2
2019 transactions
Sale of non-controlling interest which did not result in a change of control
Spanish CSP portfolio
In December 2018, the Group signed an agreement to sell 49% minority interest of the Spanish CSP portfolio with Credit
Suisse Energy Infrastructure Partners for an amount of €134.2 million ($150.5 million). The sale closed on 20 May 2019 and the
cash received amounted to €128.4 million or $144.0 million (net of €5.8 million or $6.5 million pre-closing distribution), €51.0
million ($57.1 million) was for the sale of shares and €77.4 million ($86.9 million) was for the sale of existing shareholder loans.
In line with IFRS 10 “Consolidated financial statements”, this transaction is considered as an equity transaction as it does not result
in a loss of control. Therefore, the net cash gain on sale of these assets, which represented an amount of €46.3 million or $51.9
million, was recorded as an increase in the equity attributable to owners of the parent, and reflected in Adjusted EBITDA as a
gain in the year ended December 31, 2019. It corresponds to the difference between the consideration received for the sale of
shares (€51.0 million or $57.1 million) and of the carrying amount of non-controlling interest sold (€4.7 million or $5.2 million).
Solar portfolio acquisition – Italy
In February 2019, the Group entered into an agreement for the acquisition of Interporto, a 12.4 MW Solar Photovoltaic portfolio
in northern Italy.
This transaction closed on June 11, 2019. The total consideration amounted to €28.3 million ($32.0 million) including
€21.1 million ($23.9 million) for the acquisition of 100% of the shares and €7.2 million (or $8.1 million) for the repayment
of shareholders loans.
The Group and Credit Suisse Energy Infrastructure Partners have a 51% and a 49% interest in the shares of the acquired entity
respectively, and have paid their share of the consideration.
On a consolidated basis, had these acquisitions taken place as of 1st January 2019, the Group would have recognized 2019
consolidated revenue of $1,331.1 million and consolidated net profit of $25.5 million.
Determination of fair value of assets acquired and liabilities assumed as at acquisition date is as follows. This was finalized in
the prior year and has not been subject to any adjustment.
In $ millions
Intangible assets
Property, plant and equipment
Other assets
Cash and cash equivalents
Total assets
Borrowings
Other liabilities
Total liabilities
Total net identifiable assets
Net purchase consideration
Goodwill
Solar portfolio
–
53.7
4.6
4.9
63.2
22.1
17.3
39.4
23.9
23.9
–
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Significant changes in the reporting period continued
Year ended December 31, 2020
From the acquisition date to 31st December 2019, this acquisition contributed to consolidated revenue and net result
of $3.5 million and $0.2 million respectively.
Acquisition of two CHP plants in Mexico
On 6th January 2019, the Group signed an agreement to acquire two natural gas-fired combined heat and power (‘CHP’)
plants, together with development rights and permits for a third plant, in Mexico from Alpek. The CHP plants have a gross
installed capacity of 518 MW. The transaction closed on 25 November 2019.
The total consideration amounted to $814.5 million, including $232.0 million for the shares and $582.5 million for the plants net assets.
Since December 31, 2019 the final working capital adjustment has been reduced by $1.5 million impacting the total
consideration by the same amount and the preliminary determination of the fair value of assets has been updated accordingly.
On a consolidated basis, had these acquisitions taken place as of 1st January 2019, the Group would have recognized 2019
consolidated revenue of $1,568.9 million and consolidated net profit of $52.4 million.
Updated determination of fair value of assets acquired and liabilities assumed at acquisition date are:
In $ millions
Intangible assets
Property, plant and equipment
Other assets
Cash and cash equivalents
Total assets
Deferred tax liabilities
Accounts payables
Other liabilities
Total liabilities
Total net identifiable assets
Net purchase consideration
Goodwill
Preliminary
247.2
661.4
134.7
16.5
1,059.8
136.4
582.5
107.5
826.4
233.4
233.4
–
Mexican CHP
Update
–
(37.5)
–
–
(37.5)
(36.0)
–
–
(36.0)
(1.5)
(1.5)
–
Final
247.2
623.9
134.7
16.5
1,022.3
100.4
582.5
107.5
790.4
231.9
231.9
–
Since December 31, 2019, the Group has completed the purchase price allocation and updated the fair value of the assets
acquired and liabilities assumed leading to the following adjustments:
(cid:120) Deferred tax liabilities have been reduced by $24.8 million due to the recognition of future tax benefits in respect of the
$82.8 million fixed margin liabilities following the conclusion of work undertaken by the group’s tax advisors that has
confirmed that this liability is deductible under Mexican tax rules.
(cid:120) The book value of the PP&E was reduced by $37.5 million and the corresponding deferred tax liability by $11.2 million,
following a final external valuation of the fair value of assets and liabilities acquired. The resulting impact on depreciation
was immaterial.
Due to these measurement period adjustments, in line with IFRS 3 Business Combinations it has been necessary to present
a restated 2019 balance sheet and related notes to the accounts for those balances affected.
After consideration of those measurement period adjustments, the updated fair value of assets acquired and liabilities
assumed at acquisition date as of December 31, 2020 notably includes the following adjustments that have been recognized
following an external independent valuation:
(cid:120) An intangible asset of $232.5 million representing the fair value of the Legado rights based on an income approach based method.
(cid:120) An increase to the book value of the PP&E of $157.2 million to reflect the fair value of these assets at acquisition based on
an income approach method.
In finalizing the purchase price allocation, management applied certain estimates in calculating the fair value of net assets acquired,
including the rate used to discount future cash flows in calculating the value of intangible assets and PP&E. A 1% increase in the
discount rate used in the valuation of the Legado rights would result in a $22.6 million decrease in the fair value of the intangible
asset and a 1% increase in the discount rate used in the valuation of the property, plant and equipment would result in a $41.1 million
decrease in property, plant and equipment.
From the acquisition date to 31 December 2019, this acquisition contributed to consolidated revenue and net loss of
$23.4 million and $11.3 million respectively.
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Significant changes in the reporting period continued
Year ended December 31, 2020
Notes to the consolidated financial statements
Year ended December 31, 2020
From the acquisition date to 31st December 2019, this acquisition contributed to consolidated revenue and net result
of $3.5 million and $0.2 million respectively.
Acquisition of two CHP plants in Mexico
On 6th January 2019, the Group signed an agreement to acquire two natural gas-fired combined heat and power (‘CHP’)
plants, together with development rights and permits for a third plant, in Mexico from Alpek. The CHP plants have a gross
installed capacity of 518 MW. The transaction closed on 25 November 2019.
The total consideration amounted to $814.5 million, including $232.0 million for the shares and $582.5 million for the plants net assets.
Since December 31, 2019 the final working capital adjustment has been reduced by $1.5 million impacting the total
consideration by the same amount and the preliminary determination of the fair value of assets has been updated accordingly.
On a consolidated basis, had these acquisitions taken place as of 1st January 2019, the Group would have recognized 2019
consolidated revenue of $1,568.9 million and consolidated net profit of $52.4 million.
Updated determination of fair value of assets acquired and liabilities assumed at acquisition date are:
In $ millions
Intangible assets
Property, plant and equipment
Other assets
Cash and cash equivalents
Total assets
Deferred tax liabilities
Accounts payables
Other liabilities
Total liabilities
Total net identifiable assets
Net purchase consideration
Goodwill
Mexican CHP
Preliminary
Update
1,059.8
247.2
661.4
134.7
16.5
136.4
582.5
107.5
826.4
233.4
233.4
–
(37.5)
(37.5)
(36.0)
–
–
–
–
–
(36.0)
(1.5)
(1.5)
–
1,022.3
Final
247.2
623.9
134.7
16.5
100.4
582.5
107.5
790.4
231.9
231.9
–
Since December 31, 2019, the Group has completed the purchase price allocation and updated the fair value of the assets
acquired and liabilities assumed leading to the following adjustments:
(cid:120) Deferred tax liabilities have been reduced by $24.8 million due to the recognition of future tax benefits in respect of the
$82.8 million fixed margin liabilities following the conclusion of work undertaken by the group’s tax advisors that has
confirmed that this liability is deductible under Mexican tax rules.
(cid:120) The book value of the PP&E was reduced by $37.5 million and the corresponding deferred tax liability by $11.2 million,
following a final external valuation of the fair value of assets and liabilities acquired. The resulting impact on depreciation
was immaterial.
Due to these measurement period adjustments, in line with IFRS 3 Business Combinations it has been necessary to present
a restated 2019 balance sheet and related notes to the accounts for those balances affected.
After consideration of those measurement period adjustments, the updated fair value of assets acquired and liabilities
assumed at acquisition date as of December 31, 2020 notably includes the following adjustments that have been recognized
following an external independent valuation:
(cid:120) An intangible asset of $232.5 million representing the fair value of the Legado rights based on an income approach based method.
(cid:120) An increase to the book value of the PP&E of $157.2 million to reflect the fair value of these assets at acquisition based on
an income approach method.
In finalizing the purchase price allocation, management applied certain estimates in calculating the fair value of net assets acquired,
including the rate used to discount future cash flows in calculating the value of intangible assets and PP&E. A 1% increase in the
discount rate used in the valuation of the Legado rights would result in a $22.6 million decrease in the fair value of the intangible
asset and a 1% increase in the discount rate used in the valuation of the property, plant and equipment would result in a $41.1 million
decrease in property, plant and equipment.
From the acquisition date to 31 December 2019, this acquisition contributed to consolidated revenue and net loss of
$23.4 million and $11.3 million respectively.
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4. Notes to the consolidated financial statements
4.1 Segment reporting
The Group’s reportable segments are the operating segments overseen by distinct segment managers responsible for their
performance with no aggregation of operating segments.
Thermal Energy for power generating plants operating from coal, lignite, natural gas, fuel oil and diesel. Thermal plants include
Maritsa, Arrubal, Togo, Cap des Biches, KivuWatt, Energies Antilles, Energies Saint-Martin, Bonaire, Mexican CHP and our
equity investees (primarily Termoemcali and Sochagota). Our thermal segment also includes plants which provide electricity
and certain other services to beverage bottling companies and other industries.
Renewable Energy for power generating plants operating from renewable resources such as wind, solar and hydro in Europe
and Latin America. Renewables plants include Asa Branca, Chapada I, II, III, Inka, Vorotan, Austria Portfolio 1 & 2, Spanish
Concentrated Solar Power and our other European and Brazilian plants.
The Corporate & Other category primarily reflects costs for certain centralized functions including executive oversight,
corporate treasury and accounting, legal, compliance, human resources, IT and facilities management and certain technical
support costs that are not allocated to the segments for internal management reporting purposes.
The Group’s reporting segments reflect the operating segments which are based on the organizational structure and financial
information provided to the Chief Executive Officer, who represents the chief operating decision-maker (“CODM”).
The CODM assesses the performance of the operating segments based on Adjusted EBITDA which is defined as profit
for the year from continuing operations before income taxes, net finance costs, depreciation and amortization, acquisition
related expenses, plus net cash gain or loss on sell down transactions (in addition to the entire full year profit from continuing
operations for the business the sell down transaction relates to) and specific items which have been identified and material
items where the accounting diverges from the cash flow and therefore does not reflect the ability of the assets to generate
stable and predictable cash flows in a given period, less the Group’s share of profit from non-consolidated entities accounted
for on the equity method, plus the Group’s prorata portion of Adjusted EBITDA for such entities. In determining whether an
event or transaction is adjusted, management considers quantitative as well as qualitative factors such as the frequency or
predictability of occurrence.
The Group as well presents the Proportionate Adjusted EBITDA which is the Adjusted EBITDA calculated on a proportionally
consolidated basis based on applicable ownership percentage. The Proportionate Adjusted EBITDA as well includes the net
cash gain or loss on sell down transactions as well as the underlying profit from continuing operations for the business in
which the minority interest sale relates to reflecting applicable ownership percentage going forward from the date of
completion of the sale of a minority interest.
The Group considers that the presentation of Adjusted EBITDA and Proportionate Adjusted EBITDA enhances the
understanding of ContourGlobal’s financial performance, in regards to understanding its ability to generate stable and
predictable cash flows from operations. The cash gain on sell down is also included to demonstrate the ability of the Group
to sell down assets at a significant premium, which is a distinct activity from operational performance of the power plants. The
Group also believes Adjusted EBITDA is useful to investors because it is frequently used by security analysts, investors, ratings
agencies and other interested parties to evaluate other companies in our industry and to measure the ability of companies to
service their debt.
The Chief Operating Decision-Maker does not review nor is presented a segment measure of total assets and total liabilities.
All revenue is derived from external customers.
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Notes to the consolidated financial statements continued
Year ended December 31, 2020
Geographical information
The Group also presents revenue in each of the geographical areas in which it operates as follows:
(cid:120) Europe (including our operations in Austria, Armenia, Northern Ireland, Italy, Romania, Poland, Bulgaria, Slovakia, Spain
and Ukraine)
(cid:120) Latin America which includes South America (including Brazil, Peru, Colombia), Mexico and Caribbean Islands (including
Dutch Antilles and French Territory)
(cid:120) Africa (including Nigeria, Togo, Senegal and Rwanda)
In $ millions
Revenue
Thermal Energy
Renewable Energy
Total revenue
Adjusted EBITDA
Thermal Energy
Renewable Energy
Corporate & Other (1)
Total adjusted EBITDA
Proportionate adjusted EBITDA
Non-controlling interests (note 4.23)
Total adjusted EBITDA
Reconciliation to profit before income tax
Depreciation, amortization and impairment (note 4.3)
Net finance costs, foreign exchange gains and losses, and changes in fair value of derivatives (note 4.6)
Share of adjusted EBITDA in associates (2)
Share of profit in associates (note 4.12)
Acquisition related items (note 4.5)
Cash gain on sale of minority interest in assets (3)
Restructuring costs (note 4.27) (4)
Private incentive plan (5)
Mexico CHP fixed margin swap (6)
Change in finance lease and financial concession assets (7)
Other
Profit before income tax
Years ended December 31
2020
2019
963.3
447.4
1,410.7
859.7
470.6
1,330.2
420.9
332.0
(30.9)
722.0
568.7
153.3
722.0
(311.6)
(247.8)
(19.9)
12.3
(20.2)
–
(5.2)
(6.6)
(15.6)
(31.7)
(3.4)
72.3
335.9
397.0
(30.2)
702.7
561.6
141.1
702.7
(282.3)
(243.8)
(21.7)
11.1
(23.2)
(46.1)
–
(9.1)
–
(26.4)
(1.7)
59.4
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Corporate costs correspond to selling, general and administrative expenses before depreciation and amortization of $5.3 million (December 31, 2019: $4.6
million).
Corresponds to our share of Adjusted EBITDA of plants accounted for under the equity method (Sochagota and Termoemcali) which are reviewed by our
CODM as part of our Thermal Energy segment.
Represents in 2019 the cash gain on the divestment of 49% stake of our CSP Portfolio in Spain and the adjustment to the earnout calculation on the
divestment of 49% stake of our Italian and Slovakian solar portfolio.
Represents redundancy and staff-related restructuring costs.
Represents the private incentive plan as described in note 4.27 share-based compensation plan of the annual accounts.
Reflects an adjustment to align the recognized earnings with the cash flows generated under the CHP Mexico fixed margin swap during the year
($15.6 million) as presented in the consolidated statement of cash flow as “Change in CHP Mexico fixed margin swap”.
Reflects an adjustment to align the recognized earnings with the cash flows generated under finance lease and financial concession arrangements
($31.7 million in December 31, 2020 and $26.4 million in December 31, 2019) which is presented in the consolidated statement of cash flow as “Change
in finance lease and financial concession assets”. This was previously presented within Other.
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Geographical information
The Group also presents revenue in each of the geographical areas in which it operates as follows:
(cid:120) Europe (including our operations in Austria, Armenia, Northern Ireland, Italy, Romania, Poland, Bulgaria, Slovakia, Spain
(cid:120) Latin America which includes South America (including Brazil, Peru, Colombia), Mexico and Caribbean Islands (including
and Ukraine)
Dutch Antilles and French Territory)
(cid:120) Africa (including Nigeria, Togo, Senegal and Rwanda)
Cash outflows on capital expenditure
In $ millions
Thermal Energy
Renewable Energy
Corporate & Other
Total capital expenditure
Years ended December 31
2020
27.2
47.4
2.4
77.0
2019
48.9
49.6
3.6
102.1
Years ended December 31
2020
2019
963.3
447.4
859.7
470.6
1,410.7
1,330.2
420.9
332.0
(30.9)
722.0
568.7
153.3
722.0
(311.6)
(247.8)
(19.9)
12.3
(20.2)
–
(5.2)
(6.6)
(15.6)
(31.7)
(3.4)
72.3
335.9
397.0
(30.2)
702.7
561.6
141.1
702.7
(282.3)
(243.8)
(21.7)
11.1
(23.2)
(46.1)
(9.1)
–
–
(26.4)
(1.7)
59.4
Geographical information
The geographical analysis of revenue, based on the country of origin in which the Group’s operations are located, and
Adjusted EBITDA is as follows:
In $ millions
Europe (1)
Latin America (2)
Africa
Total revenue
Years ended December 31
2020
840.9
444.5
125.3
1,410.7
2019
899.6
290.1
140.5
1,330.2
(1)
(2)
Revenue generated in 2020 in Bulgaria and Spain amounted to $406.3 million and $296.9 million respectively (December 31, 2019: $403.0 million
and $351.5 million respectively).
Revenue generated in 2020 in Brazil and Mexico amounted to $142.0 million and $211.5 million respectively (December 31, 2019: $164.3 million
and $23.4 million respectively).
In $ millions
Europe (1)
Latin America (2)
Africa
Corporate & Other
Total adjusted EBITDA
Years ended December 31
2020
402.5
273.2
77.2
(30.9)
722.0
2019
454.6
199.4
78.9
(30.2)
702.7
(1)
(2)
Adjusted EBITDA generated in 2020 in Bulgaria and Spain amounted to $121.6 million and $189.0 million respectively (December 31, 2019: $120.4 million and
$193.9 million respectively). Adjusted EBITDA generated from Spain CSP sell down transaction in 2019 of $51.9 million is recorded within an intermediate
holding company in Luxembourg.
Adjusted EBITDA generated in 2020 in Brazil and Mexico amounted to $94.7 million and $104.9 million respectively (December 31, 2019: $118.4 million and
$10.2 million respectively).
The geographic analysis of non-current assets, excluding derivative financial instruments and deferred tax assets, based on
the location of the assets, which are not presented to the CODM, is as follows:
In $ millions
Europe
Latin America
Africa
Total non-current assets
Years ended December 31
2020
2,151.1
1,761.6
405.4
4,318.1
2019
2,148.9
2,028.0
414.1
4,591.0
Notes to the consolidated financial statements continued
Year ended December 31, 2020
In $ millions
Revenue
Thermal Energy
Renewable Energy
Total revenue
Adjusted EBITDA
Thermal Energy
Renewable Energy
Corporate & Other (1)
Total adjusted EBITDA
Proportionate adjusted EBITDA
Non-controlling interests (note 4.23)
Total adjusted EBITDA
Reconciliation to profit before income tax
Depreciation, amortization and impairment (note 4.3)
Share of adjusted EBITDA in associates (2)
Share of profit in associates (note 4.12)
Acquisition related items (note 4.5)
Cash gain on sale of minority interest in assets (3)
Restructuring costs (note 4.27) (4)
Private incentive plan (5)
Mexico CHP fixed margin swap (6)
Change in finance lease and financial concession assets (7)
Other
Profit before income tax
million).
Net finance costs, foreign exchange gains and losses, and changes in fair value of derivatives (note 4.6)
(1)
Corporate costs correspond to selling, general and administrative expenses before depreciation and amortization of $5.3 million (December 31, 2019: $4.6
(2)
Corresponds to our share of Adjusted EBITDA of plants accounted for under the equity method (Sochagota and Termoemcali) which are reviewed by our
CODM as part of our Thermal Energy segment.
(3)
Represents in 2019 the cash gain on the divestment of 49% stake of our CSP Portfolio in Spain and the adjustment to the earnout calculation on the
divestment of 49% stake of our Italian and Slovakian solar portfolio.
Represents redundancy and staff-related restructuring costs.
(4)
(5)
(6)
Represents the private incentive plan as described in note 4.27 share-based compensation plan of the annual accounts.
Reflects an adjustment to align the recognized earnings with the cash flows generated under the CHP Mexico fixed margin swap during the year
($15.6 million) as presented in the consolidated statement of cash flow as “Change in CHP Mexico fixed margin swap”.
(7)
Reflects an adjustment to align the recognized earnings with the cash flows generated under finance lease and financial concession arrangements
($31.7 million in December 31, 2020 and $26.4 million in December 31, 2019) which is presented in the consolidated statement of cash flow as “Change
in finance lease and financial concession assets”. This was previously presented within Other.
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Year ended December 31, 2020
4.2 Revenue
In $ millions
Revenue from power sales
Revenue from operating leases (1)
Revenue from concession and finance lease assets (2)
Other revenue (3)
Total revenue
Years ended 31st December
2020
1,191.4
85.6
34.6
99.1
1,410.7
2019
1,078.8
108.5
38.0
104.9
1,330.2
Revenue from power sales and other revenue are recognized under IFRS 15 and total $1,290.5 million in December 31, 2020
(December 31, 2019: $1,183.7 million). Revenue from operating leases and revenue from concession and finance lease assets
are recognized under IFRS 16 and IFRIC 12 respectively.
(1) Revenue from operating leases mainly includes $43.2 million relating to our Solutions plants, $25.9 million relating
to our Bonaire plant and $16.6 million relating to our Energie Antilles plant in December 31, 2020 (December 31, 2019:
$50.9 million, $26.1 million and $31.5 million respectively)
(2) Some of our main plants are operating under specific arrangements for which certain other accounting principles
are applied as follows:
(cid:120) Our Togo, Rwanda (Kivuwatt) and Senegal (Cap des Biches) plants are operating pursuant to concession agreements
that are under the scope of IFRIC 12.
(cid:120) Our Energies Saint Martin plant is operating pursuant to power purchase agreements that are considered to contain
a finance lease
(3) Other revenue primarily relates to environmental, operational and maintenance services rendered to offtakers in our
Bulgaria, Togo, Rwanda and Senegal power plants and CO2 quota recharges to customers.
The Group has two customers contributing more than 10% of Group’s revenue (2019: two customers).
Customer A
Customer B
4.3 Expenses by nature
In $ millions
Fuel costs
Depreciation, amortization and impairment
Operation and maintenance costs
Employee costs
Emission allowance utilized (1)
Professional fees
Purchased power
Transmission charges
Operating consumables and supplies
Insurance costs
Other expenses (2)
Total cost of sales and selling, general and administrative expenses
Years ended December 31
2020
28.8%
9.8%
2019
30.3%
10.7%
Years ended 31st December
2020
270.2
311.6
77.7
88.7
153.7
19.1
29.6
33.2
24.4
23.7
38.4
1,070.3
2019
227.0
282.3
74.7
83.8
151.2
19.7
52.5
27.5
22.4
20.3
46.6
1,008.0
(1)
Emission allowances utilized corresponds mainly to the costs of CO2 quotas in Maritsa which are passed through to its offtaker, and includes any write-
downs to net realizable value.
(2) Other expenses include facility costs of $12.7 million in December 31, 2020 (December 31, 2019: $13.2 million). In the current year, other expenses have
been further disaggregated into transmission charges and operating consumables and supplies.
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Notes to the consolidated financial statements continued
Year ended December 31, 2020
4.2 Revenue
In $ millions
Revenue from power sales
Revenue from operating leases (1)
Other revenue (3)
Total revenue
Revenue from concession and finance lease assets (2)
Revenue from power sales and other revenue are recognized under IFRS 15 and total $1,290.5 million in December 31, 2020
(December 31, 2019: $1,183.7 million). Revenue from operating leases and revenue from concession and finance lease assets
are recognized under IFRS 16 and IFRIC 12 respectively.
(1) Revenue from operating leases mainly includes $43.2 million relating to our Solutions plants, $25.9 million relating
to our Bonaire plant and $16.6 million relating to our Energie Antilles plant in December 31, 2020 (December 31, 2019:
$50.9 million, $26.1 million and $31.5 million respectively)
(2) Some of our main plants are operating under specific arrangements for which certain other accounting principles
are applied as follows:
that are under the scope of IFRIC 12.
a finance lease
(cid:120) Our Togo, Rwanda (Kivuwatt) and Senegal (Cap des Biches) plants are operating pursuant to concession agreements
(cid:120) Our Energies Saint Martin plant is operating pursuant to power purchase agreements that are considered to contain
(3) Other revenue primarily relates to environmental, operational and maintenance services rendered to offtakers in our
Bulgaria, Togo, Rwanda and Senegal power plants and CO2 quota recharges to customers.
The Group has two customers contributing more than 10% of Group’s revenue (2019: two customers).
Years ended 31st December
2020
1,191.4
85.6
34.6
99.1
2019
1,078.8
108.5
38.0
104.9
1,410.7
1,330.2
Years ended December 31
2020
28.8%
9.8%
2019
30.3%
10.7%
Years ended 31st December
2020
270.2
311.6
77.7
88.7
153.7
19.1
29.6
33.2
24.4
23.7
38.4
2019
227.0
282.3
74.7
83.8
151.2
19.7
52.5
27.5
22.4
20.3
46.6
Customer A
Customer B
In $ millions
Fuel costs
4.3 Expenses by nature
Depreciation, amortization and impairment
Operation and maintenance costs
Employee costs
Emission allowance utilized (1)
Professional fees
Purchased power
Transmission charges
Insurance costs
Other expenses (2)
Operating consumables and supplies
Total cost of sales and selling, general and administrative expenses
1,070.3
1,008.0
(1)
Emission allowances utilized corresponds mainly to the costs of CO2 quotas in Maritsa which are passed through to its offtaker, and includes any write-
downs to net realizable value.
(2) Other expenses include facility costs of $12.7 million in December 31, 2020 (December 31, 2019: $13.2 million). In the current year, other expenses have
been further disaggregated into transmission charges and operating consumables and supplies.
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Variable lease payments amounts to $0.8 million in December 31, 2020 ($0.2 million in December 31, 2019). The future cash outflows
due to variable lease payments to which the group is potentially exposed are estimated at $12 million over the next fifteen years, and
are mainly related to our Brazilian wind farms.
In $ millions
Private Incentive Plan (1)
Restructuring costs (2)
Other
Total other operating expenses
(1)
(2)
Represents the private incentive plan as described in note 4.27 share-based compensation plan of the annual accounts.
Represents redundancy and staff-related restructuring costs.
4.4 Employee costs and numbers
In $ millions
Wages and salaries
Social security costs
Share-based payments (1)
Pension and other post-retirement benefit costs
Other
Total employee costs before private incentive plan
Private incentive plan (1)
Total employee costs
Monthly average number of full-time equivalent employees
– Thermal
– Renewable
– Corporate
(1)
See note 4.27 Share-based compensation plans for a description of the private incentive plan and long term incentive plan.
4.5 Acquisition related items
In $ millions
Acquisition costs (1)
Earn-out (2)
Acquisition related items
Years ended 31st December
2020
6.6
5.2
7.9
19.7
2019
9.1
0.1
5.1
14.3
Years ended December 31
2020
(67.8)
(14.1)
(1.9)
(0.9)
(4.0)
(88.7)
(6.6)
(95.3)
1,435
822
425
188
2019
(63.0)
(13.5)
(1.3)
(0.7)
(5.2)
(83.8)
(9.1)
(92.9)
1,431
824
411
196
Years ended December 31,
2020
(20.2)
–
(20.2)
2019
(20.9)
(2.3)
(23.2)
(1)
Acquisition costs include notably pre-acquisition costs such as due diligence costs and professional fees and other related incremental costs incurred
as part of completed acquisitions or contemplated acquisitions. In 2020, costs incurred primarily related to a contemplated acquisition in the United States
(subsequently completed on February 18). In 2019, costs incurred primarily related to completed acquisition of CHP assets in Mexico.
(2)
Earn-out related to adjustments to previously estimated earn-outs.
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Notes to the consolidated financial statements continued
Year ended December 31, 2020
4.6 Net finance costs, foreign exchange gains and losses, and changes in fair value of
derivatives
In $ millions
Finance income
Net change in fair value of fixed margin derivative (1)
Net change in fair value of other derivatives (2)
Net realized foreign exchange differences (3)
Net unrealized foreign exchange differences (3)
Realized and unrealized foreign exchange gains and (losses) and change in fair value of derivatives
Interest expenses on borrowings
Amortization of deferred financing costs
Unwinding of discounting (4)
Other (5)
Finance costs
Net finance costs, foreign exchange gains and losses, and changes in fair value of derivatives
Years ended December 31,
2020
4.4
56.1
14.4
(33.3)
(26.5)
10.7
(195.0)
(13.2)
(15.9)
(38.8)
(262.9)
(247.8)
2019
11.2
–
(13.4)
7.0
(3.6)
(10.1)
(188.8)
(12.5)
(15.9)
(27.8)
(244.9)
(243.8)
(1)
(2)
(3)
(4)
Net change in fair value of derivative related to the CHP Mexico fixed margin liability.
The Group recognized a profit of $5.6 million in the twelve months ended December 31, 2020 in relation to its interest rate, cross currency, financial swaps,
options, foreign exchange options and forward contracts (December 31, 2019: loss of $0.4 million) and a profit of $8.8 million in the twelve months ended
December 31, 2020 in relation with settled positions (December 31, 2019: loss of $13.0 million). Change in fair value of derivatives relates primarily to interest
rate swaps, options and forward contracts.
Net realized foreign exchange differences include realized foreign exchange gains and losses related to conversion of foreign currency denominated cash
balances recorded as fair value through profit or loss. Unrealized foreign exchange differences primarily relate to subsidiaries and loans in subsidiaries that
have a functional currency different to the currency in which the loans are denominated.
Unwinding of discounting mainly effects related to Maritsa debt to non-controlling interests and other long-term liabilities in the twelve months ended
December 31, 2020 and 2019.
(5) Other mainly includes costs associated with other financing, finance costs of leases, as well as income and expenses related to interests and penalties
for late payments.
Income tax expense and deferred income tax
4.7
Income tax expense
In $ millions
Current tax
– current tax expense of the year
– prior year adjustment
Total current tax expense
Deferred tax
– deferred tax expense of the year
– prior year adjustment
Total Deferred tax expense
Income tax expense
Years ended December 31,
2020
2019
(33.7)
0.9
(32.8)
(17.9)
7.0
(10.9)
(43.7)
(32.2)
(1.7)
(33.9)
(8.0)
5.6
(2.4)
(36.3)
The main jurisdictions contributing to the income tax expense for the year ending December 31, 2020 are i) Mexico, ii) Brazil
and iii) Bulgaria.
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Notes to the consolidated financial statements continued
Year ended December 31, 2020
derivatives
In $ millions
Finance income
Net change in fair value of fixed margin derivative (1)
Net change in fair value of other derivatives (2)
Net realized foreign exchange differences (3)
Net unrealized foreign exchange differences (3)
Interest expenses on borrowings
Amortization of deferred financing costs
Unwinding of discounting (4)
Other (5)
Finance costs
(1)
(2)
Realized and unrealized foreign exchange gains and (losses) and change in fair value of derivatives
Net finance costs, foreign exchange gains and losses, and changes in fair value of derivatives
Net change in fair value of derivative related to the CHP Mexico fixed margin liability.
The Group recognized a profit of $5.6 million in the twelve months ended December 31, 2020 in relation to its interest rate, cross currency, financial swaps,
options, foreign exchange options and forward contracts (December 31, 2019: loss of $0.4 million) and a profit of $8.8 million in the twelve months ended
December 31, 2020 in relation with settled positions (December 31, 2019: loss of $13.0 million). Change in fair value of derivatives relates primarily to interest
rate swaps, options and forward contracts.
(3)
Net realized foreign exchange differences include realized foreign exchange gains and losses related to conversion of foreign currency denominated cash
balances recorded as fair value through profit or loss. Unrealized foreign exchange differences primarily relate to subsidiaries and loans in subsidiaries that
have a functional currency different to the currency in which the loans are denominated.
(4)
Unwinding of discounting mainly effects related to Maritsa debt to non-controlling interests and other long-term liabilities in the twelve months ended
(5) Other mainly includes costs associated with other financing, finance costs of leases, as well as income and expenses related to interests and penalties
4.7
Income tax expense and deferred income tax
2020
4.4
56.1
14.4
(33.3)
(26.5)
10.7
(195.0)
(13.2)
(15.9)
(38.8)
(262.9)
(247.8)
2019
11.2
–
(13.4)
7.0
(3.6)
(10.1)
(188.8)
(12.5)
(15.9)
(27.8)
(244.9)
(243.8)
Years ended December 31,
2020
2019
(33.7)
0.9
(32.8)
(17.9)
7.0
(10.9)
(43.7)
(32.2)
(1.7)
(33.9)
(8.0)
5.6
(2.4)
(36.3)
December 31, 2020 and 2019.
for late payments.
Income tax expense
In $ millions
Current tax
– current tax expense of the year
– prior year adjustment
Total current tax expense
Deferred tax
– deferred tax expense of the year
– prior year adjustment
Total Deferred tax expense
Income tax expense
and iii) Bulgaria.
The main jurisdictions contributing to the income tax expense for the year ending December 31, 2020 are i) Mexico, ii) Brazil
4.6 Net finance costs, foreign exchange gains and losses, and changes in fair value of
The tax on the Group’s profit before income tax differs from the theoretical amount that would arise from applying the statutory
tax rate of the parent company (2020: 19%, 2019: 19%) to the results of the consolidated entities as follows:
Years ended December 31,
Effective tax rate reconciliation
In $ millions
Profit before income tax
Profit before income tax at statutory tax rate
Tax effects of:
Differences between statutory tax rate and foreign statutory
tax rates (1)
Changes in unrecognized deferred tax assets (2)
Reduced rate and specific taxation regime (3)
Foreign exchange movement(4)
Prior year adjustment - current tax
Prior year adjustment - deferred tax
Permanent differences and other items (5)
Income tax expense
Effective rate of income tax
Years ended December 31,
2020
72.3
(13.7)
(0.4)
(19.5)
6.2
(3.7)
0.9
7.0
(20.4)
(43.7)
60.4%
2019
59.4
(11.3)
9.6
(23.2)
6.9
1.6
(1.7)
5.6
(23.8)
(36.3)
61.1%
(1)
Includes the effect of recognizing net income of investments in associates in the profit before income tax.
(2) Mainly relates to tax losses in Luxembourg and Brazil where deferred tax assets are not recognized.
(3)
Relates to specific tax regimes and some of the Brazilian entities being taxed by reference to revenue rather than accounting profits.
(4) Mainly driven by difference between functional currency of statutory entities and currency used for local tax reporting and non-deductibility of foreign
exchange movements in certain jurisdictions.
(5)
This category includes a number of individually immaterial items such as non-deductible group costs, withholding taxes or inflation adjustments.
Net deferred tax movement
The gross movements of net deferred income tax assets (liabilities) were as follows:
In $ millions
Net deferred tax assets (liabilities) as of January, 1
Statement of income
Deferred tax recognized directly in other comprehensive income
Acquisitions
Currency translation differences and other
Net deferred tax assets (liabilities) as of December, 31
Restatement for finalization of fair values on acquisition
Net deferred tax assets (liabilities) as of December, 31 (restated)
Including net deferred tax assets balance of:
Deferred tax liabilities balance of:
December 31,
2020
(218.5)
(10.9)
27.9
–
(9.9)
(211.4)
(211.4)
57.5
(268.9)
2019
(112.2)
(2.4)
(2.7)
(139.7)
2.5
(254.5)
36.0
(218.5)
44.9
(263.4)
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Notes to the consolidated financial statements continued
Year ended December 31, 2020
Analysis of the net deferred tax position recognized in the consolidated statement of financial position
The net deferred tax positions and their movement can be broken down as follows:
In $ millions
As of January 1, 2019
Statement of income
Other comprehensive income
Acquisitions
Currency translations and other
As of December 31, 2019
Restatement for finalization of fair values on
acquisition
As of January 1, 2020 (restated)
Statement of income
Other comprehensive income
Acquisitions
Currency translations and other
As of December 31, 2020
Tax losses Tangible assets (1)
(149.6)
(19.3)
–
(52.2)
3.4
(217.7)
16.6
(2.3)
–
14.0
(0.2)
28.1
Intangible assets
(2)
5.2
3.5
–
(108.0)
–
(99.4)
Derivative
financial
instruments (3)
12.3
(2.1)
(2.7)
0.5
(0.3)
7.7
–
28.1
88.7
–
–
0.8
117.6
(23.1)
(240.8)
(95.1)
–
–
(13.5)
(349.4)
39.5
(59.9)
9.6
(0.1)
–
0.8
(49.5)
–
7.7
(1.4)
28.0
–
0.8
35.1
Other (4)
3.3
17.8
–
6.0
(0.4)
26.7
19.6
46.3
(12.6)
–
–
1.1
34.7
Total
(112.2)
(2.4)
(2.7)
(139.7)
2.5
(254.5)
36.0
(218.5)
(10.9)
27.9
–
(10.0)
(211.4)
(1)
(2)
(3)
(4)
2019 figures are represented to show property, plant and equipment separately.
2019 figures are represented to show acquired intangible assets separately.
$25.8 million of the current year movement through other comprehensive income represents the recognition of deferred tax assets on hedging expenses
in Mexico incurred in both 2020 and 2019, following the conclusion that such derivative costs should be deductible under Mexican tax rules.
This category is made up of various items, the main material items are in respect of deferred financing costs of $28.1 million (2019: $19.5 million), finance
lease capitalization of -$16.0 million (2019: -$16.8 million) and Mexico fixed margin swap provision of $13.0 million (2019 restated: $24.8 million).
Analysis of the deferred tax position unrecognized in the consolidated statement of financial position
Unrecognized deferred tax assets amount to $268.2 million as of December 31, 2020 (December 31, 2019: $242.3 million) and
can be broken down as follows:
In $ millions
Unrecognized deferred tax assets on tax losses (1)
Unrecognized deferred tax assets on deductible temporary differences
Total unrecognized deferred tax assets
December 31,
2020
245.9
22.3
268.2
2019
231.8
10.5
242.3
The total amount of deductible temporary differences and unused tax losses for which no deferred tax asset is recognized
amounts to $1,067.0 million (2019: $946.9 million) and is broken down as follows:
Tax losses – no deferred tax asset recognized
Deductible temporary differences – no deferred tax asset recognized
Total
December 31,
2020
969.7
97.3
1,067.0
2019
896.4
50.5
946.9
Deferred tax assets that have not been recognized mainly relate to amounts in Luxembourg and Brazil where it is not probable
that future taxable profit will be available against which the temporary differences can be utilized. The amounts unrecognized
for deferred tax purposes generally do not expire with the exception of in Luxembourg.
With respect to Luxembourg, tax losses of $331.6m arising prior to 31 December 2016 can be carried forward without time
limit. As from January 1, 2017, new tax losses expire after 17 years and therefore tax losses of $55.2 million, $103.5 million,
$159.2 million and $87.9 million expire on December 31, 2034, 2035, 2036 and 2037, respectively.
The group accrues deferred tax liabilities for the withholding tax that will arise on the future repatriation of undistributed
earnings. There are no undistributed earnings with material unrecognized temporary differences.
186
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Notes to the consolidated financial statements continued
Year ended December 31, 2020
In $ millions
As of January 1, 2019
Statement of income
Other comprehensive income
Acquisitions
Currency translations and other
As of December 31, 2019
Restatement for finalization of fair values on
acquisition
As of January 1, 2020 (restated)
Statement of income
Other comprehensive income
Acquisitions
Currency translations and other
As of December 31, 2020
Tax losses Tangible assets (1)
(2)
instruments (3)
Other (4)
Intangible assets
Derivative
financial
16.6
(2.3)
–
14.0
(0.2)
28.1
–
28.1
88.7
–
–
0.8
117.6
(149.6)
(19.3)
–
(52.2)
3.4
(217.7)
(23.1)
(240.8)
(95.1)
–
–
(13.5)
(349.4)
5.2
3.5
–
(108.0)
–
(99.4)
39.5
(59.9)
9.6
(0.1)
–
0.8
(49.5)
12.3
(2.1)
(2.7)
0.5
(0.3)
7.7
–
7.7
(1.4)
28.0
–
0.8
35.1
26.7
(254.5)
3.3
17.8
–
6.0
(0.4)
19.6
46.3
(12.6)
–
–
1.1
34.7
Total
(112.2)
(2.4)
(2.7)
(139.7)
2.5
36.0
(218.5)
(10.9)
27.9
–
(10.0)
(211.4)
2019 figures are represented to show property, plant and equipment separately.
2019 figures are represented to show acquired intangible assets separately.
(1)
(2)
(3)
$25.8 million of the current year movement through other comprehensive income represents the recognition of deferred tax assets on hedging expenses
in Mexico incurred in both 2020 and 2019, following the conclusion that such derivative costs should be deductible under Mexican tax rules.
(4)
This category is made up of various items, the main material items are in respect of deferred financing costs of $28.1 million (2019: $19.5 million), finance
lease capitalization of -$16.0 million (2019: -$16.8 million) and Mexico fixed margin swap provision of $13.0 million (2019 restated: $24.8 million).
Analysis of the deferred tax position unrecognized in the consolidated statement of financial position
Unrecognized deferred tax assets amount to $268.2 million as of December 31, 2020 (December 31, 2019: $242.3 million) and
can be broken down as follows:
In $ millions
Unrecognized deferred tax assets on tax losses (1)
Unrecognized deferred tax assets on deductible temporary differences
Total unrecognized deferred tax assets
The total amount of deductible temporary differences and unused tax losses for which no deferred tax asset is recognized
amounts to $1,067.0 million (2019: $946.9 million) and is broken down as follows:
Tax losses – no deferred tax asset recognized
Deductible temporary differences – no deferred tax asset recognized
Total
Deferred tax assets that have not been recognized mainly relate to amounts in Luxembourg and Brazil where it is not probable
that future taxable profit will be available against which the temporary differences can be utilized. The amounts unrecognized
for deferred tax purposes generally do not expire with the exception of in Luxembourg.
With respect to Luxembourg, tax losses of $331.6m arising prior to 31 December 2016 can be carried forward without time
limit. As from January 1, 2017, new tax losses expire after 17 years and therefore tax losses of $55.2 million, $103.5 million,
$159.2 million and $87.9 million expire on December 31, 2034, 2035, 2036 and 2037, respectively.
The group accrues deferred tax liabilities for the withholding tax that will arise on the future repatriation of undistributed
earnings. There are no undistributed earnings with material unrecognized temporary differences.
December 31,
2020
245.9
22.3
268.2
2019
231.8
10.5
242.3
December 31,
2020
969.7
97.3
1,067.0
2019
896.4
50.5
946.9
Analysis of the net deferred tax position recognized in the consolidated statement of financial position
4.8 Earnings per share
The net deferred tax positions and their movement can be broken down as follows:
Profit attributable to CG plc shareholders (in $ millions)
Number of shares (in millions)
Weighted average number of shares outstanding
Potential dilutive effects related to share-based compensation
Adjusted weighted average number of shares
Profit attributable to CG plc shareholders per share (in $)
Years ended December 31,
2020
Basic
16.0
666.6
0.02
Diluted
16.0
666.6
2.3
668.9
0.02
2019
Basic
27.7
670.7
0.04
Diluted
27.7
670.7
1.7
672.4
0.04
There is no dilutive impact from the Private Incentive Plan (PIP) on the earnings per share as the shares are settled in full by
existing shares held by Reservoir Capital Group.
4.9
Intangible assets and goodwill
In $ millions
Cost
Accumulated amortization and impairment
Carrying amount as of December 31, 2018
Additions
Disposals
Acquired through business combination
Currency translation differences
Reclassification
Amortization charge
Closing net book amount
Cost
Accumulated amortization and impairment
Carrying amount as of December 31, 2019
Additions
Disposals
Currency translation differences
Reclassification
Amortization charge
Closing net book amount
Cost
Accumulated amortization and impairment
Carrying amount as of December 31, 2020
Goodwill
0.5
–
0.5
–
–
–
–
–
–
0.5
0.5
–
0.5
–
–
0.1
–
–
0.6
0.6
–
0.6
Work in
progress
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.5
–
1.5
1.5
–
1.5
Permits, licenses
and other project
development
rights
149.0
(37.8)
111.2
2.0
–
–
(3.3)
(0.2)
(8.2)
101.5
145.8
(44.3)
101.5
2.2
–
(16.6)
(1.1)
(6.4)
79.4
122.8
(43.4)
79.4
Legado
rights
–
–
–
–
–
233.3
–
–
(1.1)
232.2
233.3
(1.1)
232.2
–
–
–
–
(13.7)
218.4
233.3
(14.9)
218.4
Software
and Other
18.7
(13.0)
5.7
0.5
(0.2)
13.9
–
0.1
(1.6)
18.4
34.6
(16.1)
18.4
3.5
–
–
3.8
(6.0)
19.7
40.9
(21.1)
19.7
Total
168.2
(50.8)
117.4
2.5
(0.2)
247.2
(3.3)
(0.1)
(10.9)
352.6
414.2
(61.6)
352.6
5.7
–
(16.5)
4.2
(26.2)
319.7
399.1
(79.4)
319.7
Legado rights relates to Mexico CHP fair value of the Legado rights.
Permits, licenses and other project development rights relate to the fair value of licenses acquired from the initial developers
for our wind parks in Peru and Brazil.
Assets acquired through business combination in 2019 relate to the Mexican CHP acquisition, detailed in note 3.2.
Amortization included in ‘cost of sales’ in the consolidated statement of income amounted to $24.2 million in the period ended
December 31, 2020 (December 31, 2019: $9.9 million) and amortization included in ‘selling, general and administrative expenses’
amount to $2.o million in the period ended December 31, 2020 (December 31, 2019: $1.0 million).
For the years ended December 31, 2019, and 2020, certain impairment triggering events were identified in the Brazilian wind
power plants, and the related intangible assets (principally project development rights) were tested for impairment. These
impairment tests did not result in any impairment (refer to note 4.10).
i
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R
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ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
187
Notes to the consolidated financial statements continued
Year ended December 31, 2020
4.10 Property, plant and equipment
The power plant assets predominantly relate to wind farms, natural gas plants, fuel oil or diesel plants, coal plants, hydro
plants, solar plants and other buildings.
Other assets mainly include IT equipment, furniture and fixtures, facility equipment, asset retirement obligations and vehicles,
and project development costs.
Assets acquired through business combinations are explained in Note 3 Significant changes in the reporting period.
Assets held for use in operating leases as a lessor are included in note 4.32 Financial commitments and contingent liabilities.
In $ millions
Cost
Accumulated depreciation and impairment
Carrying amount as of January 1, 2020
Restatement for finalization of fair values on acquisition (1)
Carrying amount as of January 1, 2020 (restated)
Additions
Disposals
Reclassification (2) (3)
Currency translation differences
Depreciation charge
Closing net book amount
Cost
Accumulated depreciation and impairment
Carrying amount as of December 31, 2020
Power plant
assets
5,187.1
(1,736.7)
3,450.5
(37.5)
3,413.0
17.4
(5.8)
42.7
(20.1)
(263.1)
3,184.1
5,172.5
(1,988.5)
3,184.0
Construction
work in
progress
61.5
–
61.5
–
61.5
59.3
(4.6)
(36.9)
(2.4)
–
76.8
76.8
–
76.8
Right of use of
assets
43.7
(8.3)
35.4
–
35.4
4.2
(1.1)
–
2.0
(6.0)
34.5
47.6
(13.1)
34.5
Land
68.6
(0.5)
68.1
–
68.1
–
–
–
3.6
(0.1)
71.6
72.2
(0.6)
71.6
Other
325.8
(131.4)
194.4
–
194.4
9.8
–
(30.7)
(7.2)
(16.1)
150.2
285.2
(135.0)
150.2
Total
5,686.7
(1,876.9)
3,809.8
(37.5)
3,772.3
90.6
(11.5)
(24.9)
(24.1)
(285.3)
3,517.1
5,654.4
(2,137.3)
3,517.1
(1)
IFRS 3 remeasurement adjustment on assets acquired through business combination relate to our Mexican CHP portfolio, detailed in note 3.2.
(2) Mainly relates to project development costs in Kosovo of €19.7 million ($22.5 million). Given the termination of the Kosovo project agreements in May 2020,
the recoverable costs have been derecognized from Property, plant and equipment and recognized as a contract asset arising from a revenue arrangement
presented in line with IFRS 15 in Other non-current assets.
(3)
Reclassification includes previous year’s non-material reallocations between assets categories to reflect current positions.
Construction work in progress as of December 31, 2020 predominantly related to our Vorotan refurbishment project,
our Austria Wind project repowering, our Mexico CHP and our Maritsa plants.
As of December 31, 2020, the Other category mainly related to $62.1 million of instruments and tools, $48.7 million of facility
equipment, $29.7 million of assets retirement obligations.
Depreciation included in ‘cost of sales’ in the consolidated statement of income amounted to $282.0 million in the period
ended December 31, 2020 (December 31, 2019: $255.1 million) and depreciation included in ‘selling, general and
administrative expenses’ amount to $3.3 million in the period ended December 31, 2020 (December 31, 2019: $3.6 million).
In the period ended December 31, 2020, the Group capitalized $1.1 million of borrowing costs in relation to project financing.
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Notes to the consolidated financial statements continued
Year ended December 31, 2020
4.10 Property, plant and equipment
plants, solar plants and other buildings.
The power plant assets predominantly relate to wind farms, natural gas plants, fuel oil or diesel plants, coal plants, hydro
Other assets mainly include IT equipment, furniture and fixtures, facility equipment, asset retirement obligations and vehicles,
and project development costs.
Assets acquired through business combinations are explained in Note 3 Significant changes in the reporting period.
Assets held for use in operating leases as a lessor are included in note 4.32 Financial commitments and contingent liabilities.
Carrying amount as of January 1, 2020 (restated)
68.1
3,413.0
In $ millions
Cost
Accumulated depreciation and impairment
Carrying amount as of January 1, 2020
Restatement for finalization of fair values on acquisition (1)
Additions
Disposals
Reclassification (2) (3)
Currency translation differences
Depreciation charge
Closing net book amount
Cost
Accumulated depreciation and impairment
Carrying amount as of December 31, 2020
Construction
Power plant
work in
Right of use of
assets
progress
Land
68.6
5,187.1
(0.5)
(1,736.7)
68.1
3,450.5
–
–
–
–
3.6
(0.1)
71.6
72.2
(37.5)
17.4
(5.8)
42.7
(20.1)
(263.1)
3,184.1
5,172.5
(0.6)
(1,988.5)
71.6
3,184.0
61.5
61.5
–
–
61.5
59.3
(4.6)
(36.9)
(2.4)
–
76.8
76.8
–
76.8
assets
43.7
(8.3)
35.4
–
35.4
4.2
(1.1)
–
2.0
(6.0)
34.5
47.6
(13.1)
34.5
Other
325.8
Total
5,686.7
(131.4)
(1,876.9)
194.4
3,809.8
–
(37.5)
194.4
3,772.3
9.8
–
(30.7)
(7.2)
(16.1)
150.2
285.2
90.6
(11.5)
(24.9)
(24.1)
(285.3)
3,517.1
5,654.4
(135.0)
(2,137.3)
150.2
3,517.1
(1)
IFRS 3 remeasurement adjustment on assets acquired through business combination relate to our Mexican CHP portfolio, detailed in note 3.2.
(2) Mainly relates to project development costs in Kosovo of €19.7 million ($22.5 million). Given the termination of the Kosovo project agreements in May 2020,
the recoverable costs have been derecognized from Property, plant and equipment and recognized as a contract asset arising from a revenue arrangement
presented in line with IFRS 15 in Other non-current assets.
(3)
Reclassification includes previous year’s non-material reallocations between assets categories to reflect current positions.
Construction work in progress as of December 31, 2020 predominantly related to our Vorotan refurbishment project,
our Austria Wind project repowering, our Mexico CHP and our Maritsa plants.
As of December 31, 2020, the Other category mainly related to $62.1 million of instruments and tools, $48.7 million of facility
equipment, $29.7 million of assets retirement obligations.
Depreciation included in ‘cost of sales’ in the consolidated statement of income amounted to $282.0 million in the period
ended December 31, 2020 (December 31, 2019: $255.1 million) and depreciation included in ‘selling, general and
administrative expenses’ amount to $3.3 million in the period ended December 31, 2020 (December 31, 2019: $3.6 million).
In the period ended December 31, 2020, the Group capitalized $1.1 million of borrowing costs in relation to project financing.
Audited
In $ millions
Cost
Accumulated depreciation and impairment
Carrying amount as of January 1, 2019
Effect of change in accounting standard (1)
Carrying amount as of January 1, 2019 (restated)
Additions
Disposals
Reclassification
Acquired through business combination (2)
Effect of change in classification of contract (3)
Currency translation differences
Depreciation charge
Impairment charge (4)
Closing net book amount
Cost
Accumulated depreciation and impairment
Carrying amount as of December 31, 2019
Land
68.2
(0.5)
67.7
–
67.7
0.1
–
–
2.0
–
(1.7)
–
–
68.1
68.6
(0.5)
68.1
Power plant
assets
4,440.8
(1,532.5)
2,908.3
–
2,908.3
58.5
(7.9)
38.5
711.2
42.1
(69.7)
(230.4)
–
3,450.5
5,187.1
(1,736.7)
3,450.5
Construction
work in
progress
60.6
–
60.6
–
60.6
45.0
(4.3)
(40.9)
1.9
–
(0.9)
–
–
61.5
61.5
–
61.5
Right of use of
assets
–
–
–
31.0
31.0
13.2
–
–
–
–
(0.5)
(8.3)
35.4
43.7
(8.3)
35.4
Other
333.5
(116.9)
216.6
–
216.6
14.6
(2.0)
2.4
0.1
–
(4.9)
(20.0)
(12.4)
194.4
325.8
(131.4)
194.4
Total
4,903.1
(1,649.9)
3,253.1
31.0
3,284.1
131.4
(14.2)
–
715.2
42.1
(77.7)
(258.7)
(12.4)
3,809.8
5,686.7
(1,876.9)
3,809.8
(1) With the implementation of IFRS 16 on 1 January 2019, right of use assets amounting to $31.0 million were recognized. The right of use assets mainly relates
to office space and land.
(2)
(3)
(4)
Assets acquired through business combination relate to an additional solar portfolio and the Mexican CHP acquisitions, detailed in note 3.2.
The effect of change in classification of contract corresponds to the change in the Bonaire power purchase agreement, which resulted in the recognition of
property, plant and equipment and the derecognition of a financial asset of the same value under IFRS 16.
Given the uncertainty regarding the future of this project created by the local political climate in Kosovo, an impairment trigger was identified and a charge
of $12.1m was recorded as of 31 December 2019. The terms of the agreement with the Government of Kosovo (“GoK”) requires, among other things, the
GoK to reimburse development costs up to the value of €19.7 million ($22.1 million) in the event of certain defaults by the GoK. In 2020, this amount was
subsequently derecognized from Property, plant and equipment and instead recognized as a contract asset as described in note 4.17. Development costs
in excess of the reimbursement cap were impaired; other property plant and equipment were also impaired resulting in a charge of $0.3 million.
Construction work in progress as of December 31, 2019 predominantly related to our Vorotan refurbishment project,
our Austria Wind project repowering, Bonaire and Maritsa plants.
Other as of December 31, 2019 mainly relate to $61.4 of facility equipment, $60.9 million of instruments and tools, $33.6 million
of project development costs, $18.0 million of assets retirement obligations. Project development costs mainly relate to the
Kosovo project and are not depreciated.
Depreciation included in ‘cost of sales’ in the consolidated statement of income amounted to $255.1 million in the
period ended December 31, 2019 (December 31, 2018: $229.4 million) and depreciation included in ‘selling, general and
administrative expenses’ amount to $3.6 million in the period ended December 31, 2019 (December 31, 2018: $0.2 million).
In period ended December 31, 2019, the Group capitalized $0.5 million borrowing costs in relation to project financing.
Impairment tests on tangible and intangible assets
For the years ended December 31, 2020 and 2019 certain triggering events were identified related to the Brazilian wind power
plants primarily driven by lower performance of the assets and environmental factors impacting resource level, requiring an
impairment test of the relevant assets.
The recoverable amount is determined as the higher of the value in use determined by the discounted value of future cash flows
(discounted cash flow method or “DCF”, determined by using cash flow projections consistent with the following year budget and
the most recent forecasts prepared by management and approved by the Board) and the fair value (less costs to sell), determined
on the basis of market data (comparison with the value attributed to similar assets or companies in recent transactions).
188
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189
Notes to the consolidated financial statements continued
Year ended December 31, 2020
Impairment tests were performed for the year ended December 31, 2020 using the following assumptions and related
sensitivity analysis:
In $ million
Brazilian wind power
plants
Net book value
458.2
Valuation
approach
DCF
Discount rate
11.46%
Generation
2,178 Gwh average Discount rate increased by 1%
Sensitivity analysis
4% decrease in generation
The sensitivity calculations show that an increase by 1% of the discount rate and a 4% decrease in generation for Brazilian
wind power plants assets would not have a material impact on the results of impairment tests or, therefore, on the Group’s
consolidated financial statements as of December 31, 2020.
There are no reasonably possible changes to the key impairment test assumptions that would result in an impairment charge.
Impairment tests were performed for the year ended December 31, 2019 over the same assets using the following
assumptions and related sensitivity analysis.
In $ million
Brazilian wind power
plants
Net book value
607.2
Valuation
approach
DCF
Discount rate
10%
Generation
2,186 Gwh average Discount rate increased by 1%
Sensitivity analysis
5% decrease in generation
The sensitivity calculations show that an increase by 1% of the discount rate and a 5% decrease in generation for Brazilian
wind power plants assets would not have a material impact on the results of impairment tests or, therefore, on the Group’s
consolidated financial statements as of December 31, 2019.
There are no reasonably possible changes to the key impairment test assumptions that would result in an impairment charge.
4.11 Financial and contract assets
In $ millions
Contract assets – Concession arrangements (1)
Finance lease receivables (2)
Other
Total financial and contract assets
Total financial and contract assets non-current portion
Total financial and contract assets current portion
December 31
2020
416.5
15.2
6.6
438.3
408.3
30.0
2019
425.6
18.9
6.4
450.9
417.5
33.4
(1)
The Group operates plants in Togo, Rwanda and Senegal which are in the scope of the financial model of IFRIC 12 ‘Service Concession Arrangements’.
Our Togo power plant was commissioned in 2010 and is operated under a power purchase agreement with a unique offtaker, Compagnie Energie Electrique
du Togo (“CEET”) which has an average remaining contract life of approximately 14.8 years as of December 31, 2020 (December 31, 2019: 15.8 years). At
expiration, the Togo plant, along with all equipment necessary for the operation of the plant, will be transferred to the Republic of Togo. This arrangement
is accounted for as a concession arrangement and the value of the asset is recorded as a financial asset. The all-in base capacity tariff under the Togo
power purchase agreement is adjusted annually for a combination of US$, Euro and local consumer price index related to the cost structure.
Our Rwanda power plant consists of the development, construction and operation of Gas Extraction Facilities (“GEF”) and an associated power plant. The
GEF is used to extract methane and biogas from the depths of Lake Kivu in Rwanda and deliver the gas via submerged gas transport pipelines to shore-
based power production facilities totaling 26 MW of gross capacity. The PPA runs for 25 years starting on the commercial operation date and ending in
2040, date when the GEF along with all equipment necessary for the operation of the plant, will be transferred to the Republic of Rwanda.
Our Cap des Biches power plant in Senegal consists of the development, construction and operation of five engines with a flexi-cycle system technology
based on waste heat recovery totaling about 86MW. A PPA integrating all the Cap des Biches requirements and agreements on price was signed for
20 years starting on the commercial operation date of the project and ending in 2036, the date when the power plant along with all equipment necessary
for the operation of the plant, will be transferred to the Republic of Senegal.
(2)
Relates to finance leases where the Group acts as a lessor, and includes our Saint Martin plant in the French Territory. Saint Martin has an average remaining
contract life of approximately 2.3 years as of December 31, 2020 (December 31, 2019: 3.3 years).
No losses from impairment of contracted concessional assets and finance lease receivables in the above projects were
recorded during the years ended December 31, 2020 and 2019.
Net cash inflows generated by the financial assets under concession agreements amounted to $70.6 million as of December
31, 2020 (December 31, 2019: $74.7 million).
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ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Notes to the consolidated financial statements continued
Year ended December 31, 2020
Impairment tests were performed for the year ended December 31, 2020 using the following assumptions and related
sensitivity analysis:
In $ million
Net book value
Discount rate
Generation
Sensitivity analysis
Brazilian wind power
458.2
11.46%
2,178 Gwh average Discount rate increased by 1%
Valuation
approach
DCF
plants
4% decrease in generation
The sensitivity calculations show that an increase by 1% of the discount rate and a 4% decrease in generation for Brazilian
wind power plants assets would not have a material impact on the results of impairment tests or, therefore, on the Group’s
consolidated financial statements as of December 31, 2020.
There are no reasonably possible changes to the key impairment test assumptions that would result in an impairment charge.
Impairment tests were performed for the year ended December 31, 2019 over the same assets using the following
assumptions and related sensitivity analysis.
In $ million
Net book value
Discount rate
Generation
Sensitivity analysis
Brazilian wind power
607.2
10%
2,186 Gwh average Discount rate increased by 1%
Valuation
approach
DCF
plants
5% decrease in generation
The sensitivity calculations show that an increase by 1% of the discount rate and a 5% decrease in generation for Brazilian
wind power plants assets would not have a material impact on the results of impairment tests or, therefore, on the Group’s
consolidated financial statements as of December 31, 2019.
There are no reasonably possible changes to the key impairment test assumptions that would result in an impairment charge.
4.11 Financial and contract assets
Contract assets – Concession arrangements (1)
Finance lease receivables (2)
In $ millions
Other
Total financial and contract assets
Total financial and contract assets non-current portion
Total financial and contract assets current portion
(1)
The Group operates plants in Togo, Rwanda and Senegal which are in the scope of the financial model of IFRIC 12 ‘Service Concession Arrangements’.
Our Togo power plant was commissioned in 2010 and is operated under a power purchase agreement with a unique offtaker, Compagnie Energie Electrique
du Togo (“CEET”) which has an average remaining contract life of approximately 14.8 years as of December 31, 2020 (December 31, 2019: 15.8 years). At
expiration, the Togo plant, along with all equipment necessary for the operation of the plant, will be transferred to the Republic of Togo. This arrangement
is accounted for as a concession arrangement and the value of the asset is recorded as a financial asset. The all-in base capacity tariff under the Togo
power purchase agreement is adjusted annually for a combination of US$, Euro and local consumer price index related to the cost structure.
Our Rwanda power plant consists of the development, construction and operation of Gas Extraction Facilities (“GEF”) and an associated power plant. The
GEF is used to extract methane and biogas from the depths of Lake Kivu in Rwanda and deliver the gas via submerged gas transport pipelines to shore-
based power production facilities totaling 26 MW of gross capacity. The PPA runs for 25 years starting on the commercial operation date and ending in
2040, date when the GEF along with all equipment necessary for the operation of the plant, will be transferred to the Republic of Rwanda.
Our Cap des Biches power plant in Senegal consists of the development, construction and operation of five engines with a flexi-cycle system technology
based on waste heat recovery totaling about 86MW. A PPA integrating all the Cap des Biches requirements and agreements on price was signed for
20 years starting on the commercial operation date of the project and ending in 2036, the date when the power plant along with all equipment necessary
for the operation of the plant, will be transferred to the Republic of Senegal.
(2)
Relates to finance leases where the Group acts as a lessor, and includes our Saint Martin plant in the French Territory. Saint Martin has an average remaining
contract life of approximately 2.3 years as of December 31, 2020 (December 31, 2019: 3.3 years).
No losses from impairment of contracted concessional assets and finance lease receivables in the above projects were
recorded during the years ended December 31, 2020 and 2019.
Net cash inflows generated by the financial assets under concession agreements amounted to $70.6 million as of December
31, 2020 (December 31, 2019: $74.7 million).
4.12 Investments in associates
Set out below are the associates of the Group as of December 31, 2020:
Operational plant
Sochagota
Termoemcali
Productora de Energia de Boyaca
Evacuacion Villanueva del Rey, S.L.
Associate
Associate
Associate
Associate
Country of incorporation
Colombia
Colombia
Colombia
Spain
Ownership interests
2020
49.0%
37.4%
–
39.9%
2019
49.0%
37.4%
50.0%
39.9%
Date of acquisition
2006 and 2010
2010
2016
2018
Set out below is the summarized financial information for the investments which are accounted for using the equity method
(presented at 100%):
In $ millions
Year ended December 31, 2019
Sochagota
Termoemcali
Productora de Energia de Boyaca
Evacuacion Villanueva del Rey, S.L.
Year ended December 31, 2020
Sochagota
Termoemcali
Productora de Energia de Boyaca
Evacuacion Villanueva del Rey, S.L.
Current assets
assets Current liabilities
Non-current
Non-current
liabilities
Revenue
Net income
51.8
20.5
0.2
0.1
79.1
24.4
–
0.1
13.5
49.1
–
2.9
33.8
48.4
–
3.0
9.1
12.6
0.1
0.2
22.9
17.0
–
0.2
0.8
46.6
–
2.8
35.8
35.9
–
2.9
99.4
28.2
–
–
93.7
27.8
–
0.3
18.7
6.5
(1.1)
–
16.4
11.5
–
–
The reconciliation of the investments in associates for each year is as follows:
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
December 31
2020
416.5
15.2
6.6
438.3
408.3
30.0
2019
425.6
18.9
6.4
450.9
417.5
33.4
In $ millions
Balance as of January 1,
Share of profit
Dividends
Other
Balance as of December 31,
Years ended 31st December
2020
26.6
12.3
(7.8)
(1.6)
29.5
2019
26.6
11.1
(11.3)
0.2
26.6
4.13 Management of financial risk
The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize
potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge
certain risk exposures.
Interest Rate Risk
Interest rate risk arises primarily from our long-term borrowings. Interest cash flow risk arises from borrowings issued at
variable rates, partially offset by cash held at variable rates. Typically for any new investments, the Group hedges variable
interest risk on newly issued debt in a range of 75% to 100% of the nominal debt value. Interest rate risk is managed on an
asset by asset basis through entering into interest rate swap agreements, entered into with commercial banks and other
institutions. The interest rate swaps qualify as cash flow hedges. Their duration usually matches the duration of the debt
instruments. Approximately 11.5% of the Group’s existing external debt obligations carry variable interest rates in 2020
(2019: 19.8%) (taking into account the effect of interest rate swaps).
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness
assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. To hedge
interest rate exposures, the group enters into interest rate swaps and cross currency swaps that have similar critical terms
to the hedged items, such as the notional amounts, payment dates, reference rate and maturities. The group does not hedge
100% of its loans, therefore the hedged item is identified as a proportion of outstanding loans up to the notional amount of
the swaps. As all critical terms matched, there is an economic relationship and the hedge ratio is established as 1:1. The group
therefore performs a qualitative assessment of effectiveness. If changes in circumstances affect the terms of the hedged item
such that the critical terms no longer match exactly with the critical terms of the hedging instrument, the group uses the
hypothetical derivative method to assess effectiveness.
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191
Notes to the consolidated financial statements continued
Year ended December 31, 2020
The main sources of hedge ineffectiveness in these hedging relationships is the effect of the counterparty and the Group’s
own credit risk on the fair value of the interest rate swap and cross currency swap contracts, which are not reflected in the
fair value of the hedged item attributable to changes in underlying rates, and the risk of over-hedging where the hedge
relationship requires re-balancing. No other material sources of ineffectiveness emerged from these hedging relationships.
Any hedge ineffectiveness is recognized immediately in the income statement in the period that it occurs.
The following table presents a reconciliation by risk category of the cash-flow hedge reserve and analysis of other
comprehensive income in relation to hedge accounting:
In $ millions
Brought forward cash-flow hedge reserve
Interest rate and cross currency swap contracts:
Net fair value gain/(loss) on effective hedges
Amounts reclassified to Net finance cost
Carried forward cash-flow hedge reserve (1)
Years ended December 31
2020
(86.0)
(40.8)
(0.7)
(127.5)
2019
(41.3)
(52.9)
8.2
(86.0)
(1)
Above table show pre-tax cash flow hedge positions, including non-controlling interest. The amounts on balance sheet include $31.4 million deferred tax
(2019: $3.5 million).
The debit value adjustment on the interest rate swaps and cross currency swaps in the interest rate hedge amounts to $3.7m
(2019: $4.7 million). These amounts are recognized on the financial statements against the fair value of derivative (note 4.16).
Aside from the IFRS 13 credit/debit risk adjustment, cash-flow hedges generated immaterial ineffectiveness in FY2020 which
was recognized in the income statement through finance costs.
The following tables set out information regarding the change in value of the hedged item used in calculating hedge
ineffectiveness as well as the impacts on the cash-flow hedge reserve:
In $ millions
Hedged item
As of December 31, 2019
Cash flows payable on a proportion of
borrowings
Cash flows payable on a proportion of
borrowings
As of December 31, 2020
Cash flows payable on a proportion of
borrowings
Cash flows payable on a proportion of
borrowings
Hedged exposure
Hedging instrument
Interest rate risk
Interest rate swaps
Interest rate risk and
foreign currency risk
Cross currency swaps
Interest rate risk
Interest rate swaps
Interest rate risk and
foreign currency risk
Cross currency swaps
Change in value of hedged
item for calculating
ineffectiveness
Change in value of hedging
instrument for calculating
ineffectiveness
(182.4)
(7.5)
(185.8)
(7.6)
182.6
7.5
185.9
7.6
Hedged cash flows are contractual such that the maturity dates on the IRS are aligned to the hedged item, except for hedged
cash flows on $509m principal, with swap maturing in 2031, in relation to CHP assets in Mexico that are subject to refinancing
after 2026. Refinancing for an additional five years to match the term of the swap is considered highly probable since the
Group will continue to maintain significant levels of US$ debt in relation to the CHP assets in Mexico through to 2031.
These agreements involve the receipt of variable payments in exchange for fixed payments over the term of the agreements
without the exchange of the underlying principal amounts. The main interest rate exposure for the Group relates to the floating
rates with the TJLP, EURIBOR and LIBOR (refer to note 4.24). A change of 0.5% of those floating rates would result in an
increase in interest expenses by $2.8 million in the year ended December 31, 2020 (2019: $3.7 million).
Foreign Currency Risk
Foreign exchange risk arises from various currency exposures, primarily with respect to the Euro, Brazilian Real and Bulgarian
Lev. Currency risk comprises (i) transaction risk arising in the ordinary course of business, including certain financial debt
denominated in a currency other than the currency of the operations; (ii) transaction risk linked to investments or mergers
and acquisition; and (iii) translation risk arising on the consolidation in US dollars of the consolidated financial statements of
subsidiaries with a functional currency other than the US dollar.
To mitigate foreign exchange risk, (i) most revenues and operating costs incurred in the countries where the Group operates
are denominated in the functional currency of the project company, (ii) the external financial debt is mostly denominated in the
currency that matches the currency of the revenue expected to be generated from the benefiting project, thereby reducing
currency risk, and (iii) the Group enters into various foreign currency sale / forward and / or option transactions at a corporate
level to hedge against the risk of lower distribution. Typically, the Group hedges its future distributions in Brazil through a
192
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Notes to the consolidated financial statements continued
Year ended December 31, 2020
The main sources of hedge ineffectiveness in these hedging relationships is the effect of the counterparty and the Group’s
own credit risk on the fair value of the interest rate swap and cross currency swap contracts, which are not reflected in the
fair value of the hedged item attributable to changes in underlying rates, and the risk of over-hedging where the hedge
relationship requires re-balancing. No other material sources of ineffectiveness emerged from these hedging relationships.
Any hedge ineffectiveness is recognized immediately in the income statement in the period that it occurs.
The following table presents a reconciliation by risk category of the cash-flow hedge reserve and analysis of other
comprehensive income in relation to hedge accounting:
Years ended December 31
2020
(86.0)
(40.8)
(0.7)
(127.5)
2019
(41.3)
(52.9)
8.2
(86.0)
In $ millions
Brought forward cash-flow hedge reserve
Interest rate and cross currency swap contracts:
Net fair value gain/(loss) on effective hedges
Amounts reclassified to Net finance cost
Carried forward cash-flow hedge reserve (1)
(2019: $3.5 million).
(1)
Above table show pre-tax cash flow hedge positions, including non-controlling interest. The amounts on balance sheet include $31.4 million deferred tax
The debit value adjustment on the interest rate swaps and cross currency swaps in the interest rate hedge amounts to $3.7m
(2019: $4.7 million). These amounts are recognized on the financial statements against the fair value of derivative (note 4.16).
Aside from the IFRS 13 credit/debit risk adjustment, cash-flow hedges generated immaterial ineffectiveness in FY2020 which
was recognized in the income statement through finance costs.
The following tables set out information regarding the change in value of the hedged item used in calculating hedge
ineffectiveness as well as the impacts on the cash-flow hedge reserve:
In $ millions
Hedged item
borrowings
borrowings
borrowings
borrowings
As of December 31, 2019
Cash flows payable on a proportion of
Interest rate risk
Interest rate swaps
Hedged exposure
Hedging instrument
Cash flows payable on a proportion of
Cross currency swaps
Interest rate risk and
foreign currency risk
As of December 31, 2020
Cash flows payable on a proportion of
Interest rate risk
Interest rate swaps
Cash flows payable on a proportion of
Cross currency swaps
Interest rate risk and
foreign currency risk
Change in value of hedged
Change in value of hedging
item for calculating
instrument for calculating
ineffectiveness
ineffectiveness
(182.4)
(7.5)
(185.8)
(7.6)
182.6
7.5
185.9
7.6
Hedged cash flows are contractual such that the maturity dates on the IRS are aligned to the hedged item, except for hedged
cash flows on $509m principal, with swap maturing in 2031, in relation to CHP assets in Mexico that are subject to refinancing
after 2026. Refinancing for an additional five years to match the term of the swap is considered highly probable since the
Group will continue to maintain significant levels of US$ debt in relation to the CHP assets in Mexico through to 2031.
These agreements involve the receipt of variable payments in exchange for fixed payments over the term of the agreements
without the exchange of the underlying principal amounts. The main interest rate exposure for the Group relates to the floating
rates with the TJLP, EURIBOR and LIBOR (refer to note 4.24). A change of 0.5% of those floating rates would result in an
increase in interest expenses by $2.8 million in the year ended December 31, 2020 (2019: $3.7 million).
Foreign Currency Risk
Foreign exchange risk arises from various currency exposures, primarily with respect to the Euro, Brazilian Real and Bulgarian
Lev. Currency risk comprises (i) transaction risk arising in the ordinary course of business, including certain financial debt
denominated in a currency other than the currency of the operations; (ii) transaction risk linked to investments or mergers
and acquisition; and (iii) translation risk arising on the consolidation in US dollars of the consolidated financial statements of
subsidiaries with a functional currency other than the US dollar.
To mitigate foreign exchange risk, (i) most revenues and operating costs incurred in the countries where the Group operates
are denominated in the functional currency of the project company, (ii) the external financial debt is mostly denominated in the
currency that matches the currency of the revenue expected to be generated from the benefiting project, thereby reducing
currency risk, and (iii) the Group enters into various foreign currency sale / forward and / or option transactions at a corporate
level to hedge against the risk of lower distribution. Typically, the Group hedges its future distributions in Brazil through a
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
combination of forwards and options for any new investment in the country. The analysis of financial debt by currency is
presented in note 4.24.
Potential sensitivity on the post-tax profit result for the year linked to financial instruments is as follows:
(cid:120) if the US dollar had weakened/strengthened by 10% against the Euro, post-tax profit for the year ended December 31, 2020
would have been $4.7 million higher/lower (2019: $4.2 million higher/lower).
(cid:120) if the US dollar had weakened/strengthened by 10% against the Brazilian Real, post-tax profit for the year ended December
31, 2020 would have been $0.5 million higher/lower (2019: $0.8 million higher/lower).
The exposure to the Bulgarian Lev is considered remote due to the pegging mechanism of the Lev on the Euro. The exposure
to the Mexican peso is limited to the Fixed margin swap derivative sensitivity as disclosed in Note 4.15. The Group hedge
policy states that the exposure between US dollar and Euros will not be hedged, both currencies being considered as more
stable currencies.
Commodity and electricity pricing risk
The Group’s current and future cash flows are generally not impacted by changes in the prices of electricity, gas, oil and
other fuel prices as most of the Group’s non-renewable plants operate under long-term power purchase agreements and
fuel purchase agreements and other commercial agreements such as the fixed margin swap arrangement. These agreements
generally mitigate against significant fluctuations in cash flows as a result in changes in commodity prices by passing through
changes in fuel prices to the offtaker.
In the particular case of the Brazilian hydro power plants, the Group hedges most of its exposure against the change in local
electricity price in case of low generation. In such a case, Brazilian hydro power plants may be required to buy electricity on
the market.
Credit risk
Credit risk relates to risk arising from customers, suppliers, partners, intermediaries and banks on its operating and financing
activities, when such parties are unable to honor their contractual obligations. Credit risk results from a combination of
payment risk, delivery risk (failure to deliver services or products) and the risk of replacing contracts in default (known as mark
to market exposure – i.e. the cost of replacing the contract in conditions other than those initially agreed). The Group analyzes
the credit risk for each new client prior to entering into an agreement. In addition, in order to minimize risk, the Group contracts
Political Risk Insurance policies from multilateral organizations or commercial insurers which usually provide insurance against
government defaults. Such policies cover project companies in Armenia, Bulgaria, Colombia, Nigeria, Rwanda, Togo, Senegal
and Kosovo.
Where possible, the Group restricts exposure to any one counterparty by setting credit limits based on the credit quality as
defined by Moody’s and S&P and by defining the types of financial instruments which may be entered into. The minimum credit
ratings the Group generally accepts from banks or financial institutions are BBB- (S&P) and Baa3 (Moody’s). For offtakers, where
credit ratings are CCC+ or below, the Group generally hedges its counterparty risk by contracting Political Risk Insurance.
If there is no independent rating, the Group assesses the credit quality of the customer, taking into account its financial
position, past experience and other factors.
For trade receivables, financial and contract assets, the group applies the IFRS 9 simplified approach to measuring expected
credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk
characteristics and the days past due. The contract assets have substantially the same risk characteristics as the trade
receivables for the same types of contracts.
The group has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of
the loss rates for the contract assets. The expected loss rates are based on the payment profiles of sales over a period of 36
months before 31 December 2020 or 1 January 2020 respectively and the corresponding historical credit losses experienced
within this period. In this context, the Group has taken into account available information on past events (such as customer
payment behavior), current conditions and forward-looking factors that might impact the credit risk of the Group’s debtors.
Trade receivables can be due from a single customer or a few customers who will purchase all or a significant portion of a
power plant’s output under long-term power purchase agreements. This customer concentration may impact the Group’s
overall exposure to credit risk, either positively or negatively, in that the customers may be affected by changes in economic,
industry or other conditions.
Ageing of trade receivables – net are analyzed below:
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ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
193
Notes to the consolidated financial statements continued
Year ended December 31, 2020
In $ millions
Trade receivables not overdue
Past due up to 90 days
Past due between 90 – 180 days
Past due over 180 days
Total trade receivables
December 31
2020
68.9
17.3
2.1
19.7
108.0
2019
89.5
11.4
1.3
16.4
118.6
As of December 31, 2020, $31.1 million (December 31, 2019: $47.4 million) of trade receivables were outstanding in connection
with our Bulgarian power plant, Maritsa East 3. The trade receivables include around €14.6 million ($17.8 million) as of
December 31, 2020 that are subject to an ad hoc arbitration under the arbitration rules of the United Nation Commission on
International Trade Law (UNCITRAL) between Maritsa and its off-taker NEK in relation to environmental capex reimbursement
that the Group considers recoverable under the terms of the PPA and signed contract amendments.
The trade receivables include an expected credit loss of $3.1 million (December 31, 2019: $2.7 million) on the Past due over
180 days category with an increase in allowance recognized in profit and loss of $0.4 million in 2020, $0.0 million in 2019.
There were immaterial credit losses and no overdue balances identified on financial and contract assets. The Group deems
the associated credit risk of the trade receivables not overdue to be suitably low.
Liquidity risk
Liquidity risk arises from the Group not being able to meet its obligations. The Group mainly relies on long-term debt
obligations to fund its acquisitions and construction activities with Corporate bond issued in the corporate Luxembourg
holdcos and project financing arrangement at the assets level. All significant long-term financing arrangements are supported
locally and covered by the cash flows expected from the power plants when operational. The Group has, to the extent
available at acceptable terms, utilized non-recourse debt to fund a significant portion of the capital expenditures and
investments required to construct and acquire its electric power plants and related assets.
On December 12, 2020, the Group also entered into a €120 million revolving credit facility available for general corporate
purposes, maturing in November 2023, and which remains undrawn as of December 31, 2020.
A rolling cash flow forecast of the Group’s liquidity requirements is prepared to confirm sufficient cash is available to meet
operational needs and to comply with borrowing limits or covenants. Such forecasting takes into consideration the future debt
financing strategy, covenant compliance, compliance with internal statement of financial position ratio targets and, if applicable
external regulatory or legal requirements – for example, cash restrictions.
The subsidiaries are separate and distinct legal entities and, unless they have expressly guaranteed any of the holding
company indebtedness, have no obligation, contingent or otherwise, to pay any amounts due pursuant to such debt or
to make any funds available whether by dividends, fees, loans or other payments.
Some of the Group’s subsidiaries have given guarantees on the credit facilities and outstanding debt securities of certain
holding companies in the Group.
194
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Notes to the consolidated financial statements continued
Year ended December 31, 2020
In $ millions
Trade receivables not overdue
Past due up to 90 days
Past due between 90 – 180 days
Past due over 180 days
Total trade receivables
December 31
2020
68.9
17.3
2.1
19.7
108.0
2019
89.5
11.4
1.3
16.4
118.6
As of December 31, 2020, $31.1 million (December 31, 2019: $47.4 million) of trade receivables were outstanding in connection
with our Bulgarian power plant, Maritsa East 3. The trade receivables include around €14.6 million ($17.8 million) as of
December 31, 2020 that are subject to an ad hoc arbitration under the arbitration rules of the United Nation Commission on
International Trade Law (UNCITRAL) between Maritsa and its off-taker NEK in relation to environmental capex reimbursement
that the Group considers recoverable under the terms of the PPA and signed contract amendments.
The trade receivables include an expected credit loss of $3.1 million (December 31, 2019: $2.7 million) on the Past due over
180 days category with an increase in allowance recognized in profit and loss of $0.4 million in 2020, $0.0 million in 2019.
There were immaterial credit losses and no overdue balances identified on financial and contract assets. The Group deems
the associated credit risk of the trade receivables not overdue to be suitably low.
Liquidity risk
Liquidity risk arises from the Group not being able to meet its obligations. The Group mainly relies on long-term debt
obligations to fund its acquisitions and construction activities with Corporate bond issued in the corporate Luxembourg
holdcos and project financing arrangement at the assets level. All significant long-term financing arrangements are supported
locally and covered by the cash flows expected from the power plants when operational. The Group has, to the extent
available at acceptable terms, utilized non-recourse debt to fund a significant portion of the capital expenditures and
investments required to construct and acquire its electric power plants and related assets.
On December 12, 2020, the Group also entered into a €120 million revolving credit facility available for general corporate
purposes, maturing in November 2023, and which remains undrawn as of December 31, 2020.
A rolling cash flow forecast of the Group’s liquidity requirements is prepared to confirm sufficient cash is available to meet
operational needs and to comply with borrowing limits or covenants. Such forecasting takes into consideration the future debt
financing strategy, covenant compliance, compliance with internal statement of financial position ratio targets and, if applicable
external regulatory or legal requirements – for example, cash restrictions.
The subsidiaries are separate and distinct legal entities and, unless they have expressly guaranteed any of the holding
company indebtedness, have no obligation, contingent or otherwise, to pay any amounts due pursuant to such debt or
to make any funds available whether by dividends, fees, loans or other payments.
Some of the Group’s subsidiaries have given guarantees on the credit facilities and outstanding debt securities of certain
holding companies in the Group.
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period to the
contractual maturity date:
In $ millions
Year ended December 31, 2019
Borrowings (1)
Trade and other payables
Derivative financial instruments
IFRS 16 lease liabilities
Other current liabilities
Other non-current liabilities
Year ended December 31, 2020
Borrowings (1)
Trade and other payables
Derivative financial instruments
IFRS 16 lease liabilities
Other current liabilities (2)
Other non-current liabilities (2)
Less than 1 year
810.2
269.4
336.1
25.2
5.3
174.2
–
1,469.2
899.7
333.7
41.0
4.3
190.5
–
Between 1 and 5 years
1,755.6
1,521.3
–
54.0
21.2
–
159.1
1,580.0
1,379.6
–
106.2
17.2
–
77.0
Over 5 years
2,425.3
2,345.0
–
30.7
6.8
–
42.8
2,668.0
2,592.5
–
44.8
11.4
–
19.3
Total
4,991.1
4,135.7
336.1
109.9
33.3
174.2
201.9
5,717.2
4,871.8
333.7
192.0
32.9
190.5
96.3
(1)
Borrowings represent the outstanding nominal amount (note 4.24). Short-term debt of $899.7 million as of December 31, 2020 relates to the short-term
portion of long-term financing that matures within the next twelve months, that we expect to repay using cash on hand and cash received from operations.
(2) Other current liabilities and Other non-current liabilities as presented in notes 4.29 and 4.25 respectively, excluding IFRS16 lease liabilities.
The table below analyses the Group’s forecasted interest to be paid into relevant maturity groupings based on the interest’s
maturity date:
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Year ended December 31, 2019
In $ millions
Forecast interest expense to be paid
Year ended December 31, 2020
In $ millions
Forecast interest expense to be paid
Less than 1 year
209.3
Between
1 and 5 years
643.2
Over 5 years
502.9
Total
1,355.4
Less than 1 year
196.0
Between
1 and 5 years
634.3
Over 5 years
444.6
Total
1,274.9
The Group’s forecasts and projections, taking into account reasonably possible changes in operating performance, indicate
that the Group has sufficient financial resources, together with assets that are expected to generate free cash flow to the
Group. As a consequence, the Group has reasonable expectation to be well placed to manage its business risks and to
continue in operational existence for the foreseeable future (at least for the twelve month period from the approval date of
these financial statements). Accordingly, the Group continues to adopt the going concern basis in preparing the consolidated
financial statements.
Capital risk management
The Company considers its capital and reserves attributable to equity shareholders to be the Company’s capital.
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern while
providing adequate returns for shareholders and benefits for other stakeholders and to maintain a capital structure to optimize
the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares, sell assets to reduce debt or implement a share buyback programme (note 4.22).
It may also increase debt provided that the funded venture provides adequate returns so that the overall capital structure
remains supportable.
194
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
195
Notes to the consolidated financial statements continued
Year ended December 31, 2020
4.14 Derivative financial instruments
The Group uses interest rate swaps to manage its exposure to interest rate movements on borrowings, foreign exchange
forward contracts and option contracts to mitigate currency risk, a financial swap in our Mexican CHP business to protect
power purchase agreements and cross currency swap contracts in Cap des Biches project in Senegal to manage both
currency and interest rate risks. The fair value of derivative financial instruments are as follows:
In $ millions
Interest rate swaps – Cash flow hedge (1)
Cross currency swaps – Cash flow hedge (2)
Foreign exchange forward contracts – Trading (3)
Option contracts – not in hedge relationships (4)
Financial swap on commodity (5)
Fixed margin swap(6)
Total
Less non-current portion:
Interest rate swaps – Cash flow hedge
Cross currency swaps – Cash flow hedge
Foreign exchange forward contracts – Trading
Option contracts – not in hedge relationships
Financial swap on commodity
Fixed margin swap
Total non-current portion
Current portion
December 31,
2020
Assets
–
–
–
1.5
–
–
1.5
–
–
–
1.1
–
–
1.1
0.4
Liabilities
120.9
26.2
0.6
1.6
0.1
42.6
192.0
92.7
24.2
0.1
–
0.1
33.9
151.0
41.0
December 31,
2019
Assets
Liabilities
–
0.3
–
–
–
–
0.3
–
–
–
–
–
–
–
0.3
86.0
14.1
4.3
5.3
0.2
–
109.9
65.9
14.1
1.8
2.9
–
–
84.7
25.2
(1)
(2)
(3)
(4)
(5)
(6)
Interest Rate swaps are used to hedge floating rate borrowings such that in effect the Group will be paying interest at a fixed rate. The decrease in LIBOR
floating rates over the period to December 31, 2020 has contributed to an increase in the fair value liability of these instruments. The fair value of the interest
rate swaps mostly relate to contracts in Mexico for $83.4 million (December 31, 2019: $50.7 million) maturing in November 2031, Armenia for $16.8 million
(December 31, 2019: $10.2 million) maturing in November 2034 and Spain for $14.5 million (December 31, 2019: $18.7 million) maturing in June 2023. Hedge
accounting is applied related to the interest rate hedged therefore recognized in the consolidated statement of income.
In 2015, the Group entered into cross currency swaps in our Cap des Biches project in Senegal. The fair value of the instruments as of December 31, 2020
amounts to $27.4 million (December 31, 2019: $14.8 million) maturing in July 2033. Credit value adjustment amounts to $1.2 million as of December 31, 2020
and $1.0 million as of December 31, 2019. Hedge accounting is applied related to the interest rate hedged and currency swap therefore recognized in the
consolidated statement of income.
The Group has executed a series of offsets to protect the value, in USD terms, of the BRL-denominated expected distributions from the Brazilian portfolio, the
MXN-denominated expected distributions from the Mexican portfolio, and of the COP-denominated distributions from the Colombian portfolio. The BRL-
denominated 2022 distributions have been hedged using a forward exchange contract with a fair value of liability $0.1 million and maturity in December
2022 (2019: $1.8 million). The MXN-denominated distributions had been economically hedged using forward contracts that have been closed during the
period ended December 31, 2020 (2019: $2.5 million). The COP-denominated distributions have been economically hedged using a forward with a fair value
of liability $0.5 million maturing in January 2021. Hedge accounting is not applied to BRL/USD, MXN/USD and COP/USD foreign exchange forward contracts,
change in fair value is therefore recognized in the consolidated statement of income.
The Group has executed a series of offsets to protect the value, in USD terms, of the BRL-denominated expected distributions from the Brazilian portfolio and
the MXN-denominated expected distributions from the Mexican portfolio. The distributions expected in 2020 were protected against material depreciation of
the BRL using option contracts which have been closed in the period ended December 31, 2020, distributions expected in 2021 have been protected against
material depreciation of the BRL using option contracts with fair values of liability $1.6 million maturing in December 2021 (2019: $2.4 million and $2.9 million
maturing in December 2020 and 2021 respectively). The MXN-denominated distributions were protected against material depreciation of the MXN using a
new option contract in place with a fair value of asset $0.4 million maturing in November 2021. The Group entered into an option allowing the possibility to
enter into an underlying swap with the objective to protect the Group against changes on the interest rates over our financing projects with a fair value of
asset $1.1 million and available until May 2031.
The Group entered into a financial swap related to our Mexican CHP business to protect one purchase power agreement against the variations of the natural
gas price maturing in April 2024.
CHP Mexico entered into fixed margin swap agreements with the Seller’s affiliates in order to protect certain power purchase agreements against variations
in the CFE tariffs (electricity prices). The cash flows hedged amount to around $45 million of annual revenue over the next 9 years. The fair value of the
liability from those instruments was presented in Other non-current liabilities as of December 31, 2019 for a total amount of $82.8 million. During 2020, the
Group has re-reviewed the terms of the instruments and determined that they should be classified as derivatives and not as other liabilities. However, the
comparative as of December 31, 2019 has not been restated as the Group considers the change in classification to be immaterial to the users of the financial
statements, in the context of the size of total non-current liabilities.
196
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Notes to the consolidated financial statements continued
Year ended December 31, 2020
4.14 Derivative financial instruments
The Group uses interest rate swaps to manage its exposure to interest rate movements on borrowings, foreign exchange
forward contracts and option contracts to mitigate currency risk, a financial swap in our Mexican CHP business to protect
power purchase agreements and cross currency swap contracts in Cap des Biches project in Senegal to manage both
currency and interest rate risks. The fair value of derivative financial instruments are as follows:
In $ millions
Interest rate swaps – Cash flow hedge (1)
Cross currency swaps – Cash flow hedge (2)
Foreign exchange forward contracts – Trading (3)
Option contracts – not in hedge relationships (4)
Financial swap on commodity (5)
Fixed margin swap(6)
Total
Less non-current portion:
Interest rate swaps – Cash flow hedge
Cross currency swaps – Cash flow hedge
Foreign exchange forward contracts – Trading
Option contracts – not in hedge relationships
Financial swap on commodity
Fixed margin swap
Total non-current portion
Current portion
December 31,
2020
December 31,
2019
Assets
Liabilities
Assets
Liabilities
–
–
–
–
–
1.5
1.5
–
–
–
1.1
–
–
1.1
0.4
120.9
26.2
0.6
1.6
0.1
42.6
192.0
92.7
24.2
0.1
–
0.1
33.9
151.0
41.0
0.3
109.9
–
0.3
–
–
–
–
–
–
–
–
–
–
–
0.3
86.0
14.1
4.3
5.3
0.2
–
65.9
14.1
1.8
2.9
–
–
84.7
25.2
(1)
Interest Rate swaps are used to hedge floating rate borrowings such that in effect the Group will be paying interest at a fixed rate. The decrease in LIBOR
floating rates over the period to December 31, 2020 has contributed to an increase in the fair value liability of these instruments. The fair value of the interest
rate swaps mostly relate to contracts in Mexico for $83.4 million (December 31, 2019: $50.7 million) maturing in November 2031, Armenia for $16.8 million
(December 31, 2019: $10.2 million) maturing in November 2034 and Spain for $14.5 million (December 31, 2019: $18.7 million) maturing in June 2023. Hedge
accounting is applied related to the interest rate hedged therefore recognized in the consolidated statement of income.
(2)
In 2015, the Group entered into cross currency swaps in our Cap des Biches project in Senegal. The fair value of the instruments as of December 31, 2020
amounts to $27.4 million (December 31, 2019: $14.8 million) maturing in July 2033. Credit value adjustment amounts to $1.2 million as of December 31, 2020
and $1.0 million as of December 31, 2019. Hedge accounting is applied related to the interest rate hedged and currency swap therefore recognized in the
consolidated statement of income.
(3)
The Group has executed a series of offsets to protect the value, in USD terms, of the BRL-denominated expected distributions from the Brazilian portfolio, the
MXN-denominated expected distributions from the Mexican portfolio, and of the COP-denominated distributions from the Colombian portfolio. The BRL-
denominated 2022 distributions have been hedged using a forward exchange contract with a fair value of liability $0.1 million and maturity in December
2022 (2019: $1.8 million). The MXN-denominated distributions had been economically hedged using forward contracts that have been closed during the
period ended December 31, 2020 (2019: $2.5 million). The COP-denominated distributions have been economically hedged using a forward with a fair value
of liability $0.5 million maturing in January 2021. Hedge accounting is not applied to BRL/USD, MXN/USD and COP/USD foreign exchange forward contracts,
change in fair value is therefore recognized in the consolidated statement of income.
(4)
The Group has executed a series of offsets to protect the value, in USD terms, of the BRL-denominated expected distributions from the Brazilian portfolio and
the MXN-denominated expected distributions from the Mexican portfolio. The distributions expected in 2020 were protected against material depreciation of
the BRL using option contracts which have been closed in the period ended December 31, 2020, distributions expected in 2021 have been protected against
material depreciation of the BRL using option contracts with fair values of liability $1.6 million maturing in December 2021 (2019: $2.4 million and $2.9 million
maturing in December 2020 and 2021 respectively). The MXN-denominated distributions were protected against material depreciation of the MXN using a
new option contract in place with a fair value of asset $0.4 million maturing in November 2021. The Group entered into an option allowing the possibility to
enter into an underlying swap with the objective to protect the Group against changes on the interest rates over our financing projects with a fair value of
(5)
The Group entered into a financial swap related to our Mexican CHP business to protect one purchase power agreement against the variations of the natural
asset $1.1 million and available until May 2031.
gas price maturing in April 2024.
(6)
CHP Mexico entered into fixed margin swap agreements with the Seller’s affiliates in order to protect certain power purchase agreements against variations
in the CFE tariffs (electricity prices). The cash flows hedged amount to around $45 million of annual revenue over the next 9 years. The fair value of the
liability from those instruments was presented in Other non-current liabilities as of December 31, 2019 for a total amount of $82.8 million. During 2020, the
Group has re-reviewed the terms of the instruments and determined that they should be classified as derivatives and not as other liabilities. However, the
comparative as of December 31, 2019 has not been restated as the Group considers the change in classification to be immaterial to the users of the financial
statements, in the context of the size of total non-current liabilities.
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The notional principal amount of:
(cid:120) the outstanding interest rate swap contracts and cross currency swap qualified as cash-flow hedge amounted to $1,213.4
million as of December 31, 2020 (December 31, 2019: $1,231.1 million).
(cid:120) the outstanding foreign exchange forward and option contracts amounted to $161.8 million as of December 31, 2020
(December 31, 2019: $251.4 million). The new outstanding option giving the Group the possibility to enter into an underlying
swap on our financing projects amounted to $200.0 million as of December 31, 2020 (December 31, 2019: nil).
(cid:120) the swap on commodity related to our Mexican CHP amounted to $3.0 million as of December 31, 2020 (December 31, 2019:
$4.0 million).
The Group recognized in Finance costs net a profit in respect of changes in fair value of derivatives listed above of $61.7 million
in the twelve months ended December 31, 2020 (December 31, 2019: loss $0.4 million) and a profit of $8.8 million in the twelve
months period ended December 31, 2020 in relation to settled positions (December 31, 2019: loss of $13.0 million).
4.15 Fair value measurements
Fair value measurements of financial instruments are presented through the use of a three-level fair value hierarchy that
prioritizes the valuation techniques used in fair value calculations. The Group’s policy is to recognize transfers into and
out of fair value hierarchy levels as at the end of the reporting period.
The levels in the fair value hierarchy are as follows:
(cid:120) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group has the ability
to access at the measurement date.
(cid:120) Level 2 inputs are inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly or indirectly.
(cid:120) Level 3 inputs are unobservable inputs for the asset or liability.
There were no transfers between fair value measurement levels between December 31, 2019 and December 31, 2020.
When measuring our interest rate, cross currency swaps and foreign exchange forward and option contracts at fair value
on a recurring basis at both December 31, 2020 and December 31, 2019, we have measured these at level 2 in the fair value
hierarchy with the exception of the fixed margin swap which are level 3. The fair value of those financial instruments is
determined by using valuation techniques. These valuations techniques maximize the use of observable data where it is
available and rely as little as possible on entity specific estimates.
The Group uses a market approach as part of their available valuation techniques to determine the fair value of derivatives.
The market approach uses prices and other relevant information generated from market transactions.
The Group’s finance department performs valuation of financial assets and liabilities required for financial reporting purposes
as categorized at levels 2 and 3. The Group’s only derivatives are interest rate swaps, foreign exchange forward contracts,
option contracts, commodity swap contract, fixed margin swap in our Mexican CHP business and cross currency swap
contracts in our Cap des Biches project in Senegal.
The change in the fair value of the fixed margin swap since December 31, 2020 of $56.1 million is driven by the movement
of market inputs, in particular the USD/MXN spot exchange rate, accounting for $48.4 million of the total.
The sensitivity calculations on the CHP Mexico fixed margin swap liability show that (i) for an increase/decrease of 5% in the
USD/MXN exchange rate, the fixed margin swap liability will increase/decrease by $10.9 million, (ii) for an increase/decrease
of 5% in the Natural Gas cost, the fixed margin swap liability will decrease/increase by $5.7 million (iii) and for an
increase/decrease of 25% in discount rates, the fixed margin swap liability will decrease/increase by $1.3 million, (iv)
for an increase/decrease of 5% in the CFE tariff, the fixed margin swap liability will increase/decrease by $13.7 million.
Money market funds comprise investment in funds that are subject to an insignificant risk of changes in fair value. The
fair value of money market funds is calculated by multiplying the net asset value per share by the investment held at the
balance sheet date, we have measured these at level 2 in the fair value hierarchy.
196
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
197
Notes to the consolidated financial statements continued
Year ended December 31, 2020
4.16 Financial instruments by category
In $ millions
As at December 31, 2019
Derivative financial instruments
Financial and contract assets
Trade and other receivables
Other non-current assets (1)
Cash and cash equivalents (2)
Total
In $ millions
As at December 31, 2020
Derivative financial instruments
Financial and contract assets
Trade and other receivables
Other non-current assets (1)
Cash and cash equivalents (2)
Total
Financial asset category
Financial assets at
amortized costs
Assets at fair value
through profit and
loss
Derivative used for
hedging
Total net book value
per balance sheet
–
450.9
226.3
18.6
–
695.8
–
–
–
–
558.5
558.5
0.3
–
–
–
–
0.3
0.3
450.9
226.3
18.6
558.5
1,254.6
Financial asset category
Financial assets at
amortized costs
–
438.3
228.0
41.1
–
707.4
Assets at fair value
through profit and
loss
1.5
–
–
–
1,396.9
1,398.4
Derivative used for
hedging
–
–
–
–
–
–
Total net book value
per balance sheet
1.5
438.3
228.0
41.1
1,396.9
2,105.8
In $ millions
Financial liability category
As at December 31, 2019
Borrowings
Derivative financial instruments
Trade and other payables
Other current liabilities (1)
Other non-current liabilities (3)
Total
In $ millions
As at December 31, 2020
Borrowings
Derivative financial instruments
Trade and other payables
Other current liabilities (1)
Other non-current liabilities
Total
Liabilities at fair value
through profit and
loss
Other financial
liabilities at amortized
cost
Derivative used for
hedging
Total net book value
per balance sheet
–
9.8
–
–
82.8
92.6
4,090.5
–
336.1
144.5
147.1
4,718.2
–
100.1
–
–
–
100.1
4,090.5
109.9
336.1
144.5
229.9
4,910.9
Liabilities at fair value
through profit and
loss
–
44.8
–
–
–
44.8
Financial liability category
Other financial
liabilities at
amortized cost
4,830.3
–
333.7
154.6
124.9
5,443.5
Derivative used for
hedging
–
147.2
–
–
–
147.2
Total net book value
per balance sheet
4,830.3
192.0
333.7
154.6
124.9
5,635.5
(1)
These balances exclude receivables and payables balances in relation to taxes and deferred revenue balance of $5.6 million. Other current liabilities were
amended by $1.5 million in December 31, 2019 following a restatement for finalization of fair values on acquisition, refer to note 3.2 2019 transactions.
(2)
These balances include money market funds, which comprise investment in funds that are subject to an insignificant risk of changes in fair value.
(3) Mexico CHP fixed margin liability, presented in other non-current liabilities, for $82.8 million was reclassified in December 31, 2019 from “other financial
liabilities at amortized costs” to “liabilities at fair value through profit and loss” after the terms of the instrument were re-reviewed during the measurement
period. Debt to Maritsa non-controlling interest was reclassified in December 31, 2019 from “liabilities to fair value through profit and loss” to “other financial
liabilities at amortized cost” reflecting the correct and applied accounting treatment for the instrument.
198
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Notes to the consolidated financial statements continued
Year ended December 31, 2020
4.16 Financial instruments by category
In $ millions
Financial asset category
Assets at fair value
Financial assets at
through profit and
Derivative used for
Total net book value
amortized costs
loss
hedging
per balance sheet
As at December 31, 2019
Derivative financial instruments
Financial and contract assets
Trade and other receivables
Other non-current assets (1)
Cash and cash equivalents (2)
Total
In $ millions
As at December 31, 2020
Derivative financial instruments
Financial and contract assets
Trade and other receivables
Other non-current assets (1)
Cash and cash equivalents (2)
Total
In $ millions
As at December 31, 2019
Borrowings
Derivative financial instruments
Trade and other payables
Other current liabilities (1)
Other non-current liabilities (3)
Total
In $ millions
As at December 31, 2020
Borrowings
Derivative financial instruments
Trade and other payables
Other current liabilities (1)
Other non-current liabilities
Total
0.3
1,254.6
Financial asset category
Assets at fair value
through profit and
Financial assets at
amortized costs
Derivative used for
Total net book value
hedging
per balance sheet
–
450.9
226.3
18.6
–
695.8
–
438.3
228.0
41.1
–
707.4
loss
–
9.8
–
–
82.8
92.6
loss
–
44.8
–
–
–
–
–
–
–
558.5
558.5
loss
1.5
–
–
–
1,396.9
1,398.4
cost
4,090.5
–
336.1
144.5
147.1
4,830.3
–
333.7
154.6
124.9
0.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100.1
147.2
0.3
450.9
226.3
18.6
558.5
1.5
438.3
228.0
41.1
1,396.9
2,105.8
4,090.5
109.9
336.1
144.5
229.9
4,830.3
192.0
333.7
154.6
124.9
Financial liability category
Liabilities at fair value
Other financial
through profit and
liabilities at amortized
Derivative used for
Total net book value
hedging
per balance sheet
4,718.2
100.1
4,910.9
Liabilities at fair value
through profit and
Financial liability category
Other financial
liabilities at
Derivative used for
Total net book value
amortized cost
hedging
per balance sheet
4.17 Other non-current assets
In $ millions
Kosovo receivables (1)
Advance to supplier (2)
Other
Total other non-current assets
December 31
2020
24.1
1.4
17.0
42.5
2019
–
3.5
18.6
22.1
(1)
Mainly relates to project development costs in Kosovo, which were presented in Property, Plant and Equipment in December 31, 2019. Given the termination
of the project agreements in May 2020, the recoverable development costs have been derecognized from Property, plant and equipment and recognized
as a contract asset arising from a revenue arrangement in line with IFRS 15, which is presented in Other non-current assets. The recoverability of the contract
asset has been assessed under IFRS 9 and in the context of the arbitration disclosed in Note 2.4.
(2)
Advance payment to supplier relates to Vorotan EPC (engineering, procurement and construction) contract as part of the refurbishment program.
4.18 Inventories
In $ millions
Emission allowance
Spare parts
Fuel
Other
Total
Provision
Total inventories
4.19 Trade and other receivables
In $ millions
Trade receivables – gross
Accrued revenue (unbilled)
Provision for impairment of trade receivables
Trade receivables – Net
Other taxes receivables
Other receivables
Trade and other receivables
December 31
2020
165.8
54.6
14.8
17.0
252.2
(4.8)
247.4
December 31
2020
111.0
113.1
(3.1)
221.0
36.0
7.0
264.0
2019
161.1
46.9
12.9
13.1
234.0
(4.4)
229.6
2019
121.3
91.9
(2.7)
210.5
122.4
10.7
343.6
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(1)
These balances exclude receivables and payables balances in relation to taxes and deferred revenue balance of $5.6 million. Other current liabilities were
amended by $1.5 million in December 31, 2019 following a restatement for finalization of fair values on acquisition, refer to note 3.2 2019 transactions.
(2)
These balances include money market funds, which comprise investment in funds that are subject to an insignificant risk of changes in fair value.
(3) Mexico CHP fixed margin liability, presented in other non-current liabilities, for $82.8 million was reclassified in December 31, 2019 from “other financial
liabilities at amortized costs” to “liabilities at fair value through profit and loss” after the terms of the instrument were re-reviewed during the measurement
period. Debt to Maritsa non-controlling interest was reclassified in December 31, 2019 from “liabilities to fair value through profit and loss” to “other financial
liabilities at amortized cost” reflecting the correct and applied accounting treatment for the instrument.
All trade and other receivables are short term and the net carrying value of trade receivables is considered a reasonable
approximation of the fair value. The ageing of trade receivables – net is presented in note 4.13.
All trade and other receivables are pledged as security in relation with the Group’s project financings.
44.8
5,443.5
147.2
5,635.5
The increase in accrued revenue (unbilled) is primarily related to CO2 quotas in connection with our Maritsa plant which are
passed through to the offtaker and a decrease in our Arrubal plant.
The decrease in other taxes receivable is primarily related to the Mexican VAT receivable which was refunded in 2020. Other
taxes receivable correspond to indirect tax receivables, mainly in our power plants in Senegal, Brazil, Italy and our Luxemburg
holdcos.
4.20 Other current assets
In $ millions
Prepaid expenses
Advances to suppliers
Other
Other current assets
December 31
2020
17.4
7.9
9.8
35.1
2019
11.7
6.3
5.9
23.9
198
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
199
Notes to the consolidated financial statements continued
Year ended December 31, 2020
4.21 Cash and cash equivalents
Certain restrictions on our cash and cash equivalents have been primarily imposed by financing agreements or long term
obligations. They mainly include short-term security deposits kept as collateral and debt service reserves that cover short-term
repayments and which meet the definition of cash and cash equivalents. Money market funds comprise investments in funds
that are subject to an insignificant risk of changes in fair value. 22.0% of our cash and cash equivalents as of December 31,
2020 is pledged as security in relation with the Group’s project financings (December 31, 2019: 67.4%); cash and cash
equivalents includes $117.3 million as of December 31, 2020 (December 31, 2019: $154.6 million) of cash balances relating
to debt service reserves required by project finance agreements and $1,011.9 million in money market funds (December 31,
2019: $80.3 million). Additional cash held as a result of the refinancing detailed in note 4.24 Borrowings was used on January
6, 2021 to redeem the €450 million ($549.7 million) aggregate principal amount of its 3.375% senior secured notes due 2023.
4.22 Issued capital
Issued capital
Issued capital of the Company amounted to $8.9 million as at 31 December 2020, with no changes in the years ended
31 December 2019.
Allotted, authorized, called up and fully paid
As at 31 December 2019
As at 31 December 2020
Number
670,712,920
670,712,920
Nominal value
0.01
0.01
£ million
6.7
6.7
$ million
8.9
8.9
During the year the Company paid dividends of $105.7 million (2019: $137.6 million).
In $ millions
Declared during the financial year:
Final dividend for the year ended 31 December 2018: 9.4000 US cents per share
Three interim dividends for the year ended 31 December 2019: 11.0703 US cents per share in total
Final dividend for the year ended 31 December 2019: 3.6901 US cents per share
Interim dividends for the year ended 31 December 2020: 12.1773 US cents per share
Total dividends provided for or paid
Years ended December 31
2020
2019
63.3
74.3
137.6
24.8
80.9
105.7
Share repurchases
On 1 April 2020 ContourGlobal announced a buyback programme of up to £30 million of ContourGlobal plc ordinary shares
of £0.01 each ("Shares"), to initially run from 1 April 2020 to 30 June 2020, subsequently extended to 30 September 2020
and then further extended to December 31, 2020.
During the year ended December 31, 2020, the Company repurchased 12,374,731 treasury shares at an average price of
188.4 pence per share for an aggregate amount of GBP23.4 million ($30.4 million), representing 1.85% of its share capital.
On January 11, 2021 the Company announced the continuation of the buyback programme from 11 January 2021 to 31 March
2021 for a maximum number of shares of 2,700,000, based on closing share price of 215 pence on 8 January 2021, but in
any event not to exceed a cumulative amount of £30 million including the share buy backs competed in 2020.
200
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Notes to the consolidated financial statements continued
Year ended December 31, 2020
4.21 Cash and cash equivalents
Certain restrictions on our cash and cash equivalents have been primarily imposed by financing agreements or long term
obligations. They mainly include short-term security deposits kept as collateral and debt service reserves that cover short-term
repayments and which meet the definition of cash and cash equivalents. Money market funds comprise investments in funds
that are subject to an insignificant risk of changes in fair value. 22.0% of our cash and cash equivalents as of December 31,
2020 is pledged as security in relation with the Group’s project financings (December 31, 2019: 67.4%); cash and cash
equivalents includes $117.3 million as of December 31, 2020 (December 31, 2019: $154.6 million) of cash balances relating
to debt service reserves required by project finance agreements and $1,011.9 million in money market funds (December 31,
2019: $80.3 million). Additional cash held as a result of the refinancing detailed in note 4.24 Borrowings was used on January
6, 2021 to redeem the €450 million ($549.7 million) aggregate principal amount of its 3.375% senior secured notes due 2023.
4.22 Issued capital
Issued capital
31 December 2019.
Allotted, authorized, called up and fully paid
As at 31 December 2019
As at 31 December 2020
Issued capital of the Company amounted to $8.9 million as at 31 December 2020, with no changes in the years ended
Number
Nominal value
£ million
$ million
670,712,920
670,712,920
0.01
0.01
6.7
6.7
8.9
8.9
During the year the Company paid dividends of $105.7 million (2019: $137.6 million).
In $ millions
Declared during the financial year:
Final dividend for the year ended 31 December 2018: 9.4000 US cents per share
Three interim dividends for the year ended 31 December 2019: 11.0703 US cents per share in total
Final dividend for the year ended 31 December 2019: 3.6901 US cents per share
Interim dividends for the year ended 31 December 2020: 12.1773 US cents per share
Total dividends provided for or paid
Share repurchases
Years ended December 31
2020
2019
63.3
74.3
137.6
24.8
80.9
105.7
On 1 April 2020 ContourGlobal announced a buyback programme of up to £30 million of ContourGlobal plc ordinary shares
of £0.01 each ("Shares"), to initially run from 1 April 2020 to 30 June 2020, subsequently extended to 30 September 2020
and then further extended to December 31, 2020.
During the year ended December 31, 2020, the Company repurchased 12,374,731 treasury shares at an average price of
188.4 pence per share for an aggregate amount of GBP23.4 million ($30.4 million), representing 1.85% of its share capital.
On January 11, 2021 the Company announced the continuation of the buyback programme from 11 January 2021 to 31 March
2021 for a maximum number of shares of 2,700,000, based on closing share price of 215 pence on 8 January 2021, but in
any event not to exceed a cumulative amount of £30 million including the share buy backs competed in 2020.
4.23 Non-controlling interests
The tables below provide summarized financial information for each subsidiary that has non-controlling interests that are
material to the group. These new disclosures were added following FRC review.
The amounts disclosed for each subsidiary are before inter-company eliminations.
In $ millions
Year ended December 31, 2019
Non-controlling interest
Electrobras (49%)
Electrobras (49%)
NEK (27%)
CG Aguila Holdings (20%) Brazil Hydro and Brazil
CG assets
Chapadas I (Wind Brazil)
Chapadas II (Wind Brazil)
Maritsa (Bulgaria)
Solution
Italy Solar
Spain CSP
Deutsch Haslau (Austria
Wind)
Credit Suisse Energy
Infrastructure Partners (49%)
Credit Suisse Energy
Infrastructure Partners (49%)
Energie Burgenland and
DH Energie (38%)
Other
Total
(Loss)/Profit
allocated to NCI
Dividends paid to
NCI
Distribution paid
to NCI
Contribution
received from
NCI
Proportionate
adjusted EBITDA
NCI(1)
(4.9)
(1.9)
–
4.1
(7.1)
1.1
0.2
3.9
(4.6)
–
–
–
3.6
–
–
–
19.8
23.4
–
–
15.0(2)
–
31.9
48.0
–
11.6
106.5
6.7
6.2
–
–
16.0
144.0
–
1.5
174.4
9.9
11.5
32.5
13.4
14.0
44.7
1.7
13.3
141.1
Acc. NCI
26.7
49.5
53.0
17.4
(1.5)
7.5
6.8
5.9
165.3
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(1)
Represents the non-controlling interest portion included in the Adjusted EBITDA, ie, the difference between the Adjusted EBITDA and Proportionate
adjusted EBITDA.
(2) Only reflects the payments of the Debt to NCI in our Maritsa asset disclosed in the Note 4.25 Other non-current liabilities.
In $ millions
Non-controlling interest
Electrobras (49%)
Electrobras (49%)
NEK (27%)
CG Aguila Holdings (20%)
Credit Suisse Energy
Infrastructure Partners (49%)
Credit Suisse Energy
Infrastructure Partners (49%)
Energie Burgenland and DH
Energie (38%)
Other
Total
CG assets
Chapadas I (Wind Brazil)
Chapadas II (Wind Brazil)
Maritsa (Bulgaria)
Brazil Hydro and Brazil
Solution
Italy Solar
Spain CSP
Deutsch Haslau (Austria
Wind)
Year ended December 31, 2020
Acc. NCI
21.5
37.3
53.3
(Loss)/Profit
allocated to NCI
(2.7)
(1.1)
–
Dividends paid to
NCI
–
–
–
Distribution paid
to NCI
–
–
18.5(2)
Contribution
received from
NCI
3.4
–
–
Proportionate
adjusted EBITDA
NCI(1)
6.6
8.7
32.8
13.7
(4.5)
20.0
6.8
7.2
155.3
4.5
2.6
4.1
0.1
5.1
12.6
–
–
–
0.2
5.2
5.4
2.6
8.4
46.2
0.3
–
76.0
–
–
–
–
–
3.4
11.5
17.0
61.9
1.5
13.1
153.3
(1)
Represents the non-controlling interest portion included in the Adjusted EBITDA, ie, the difference between the Adjusted EBITDA and Proportionate
adjusted EBITDA.
(2) Only reflects the payments of the Debt to NCI in our Maritsa asset disclosed in the Note 4.25 Other non-current liabilities.
200
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201
Notes to the consolidated financial statements continued
Year ended December 31, 2020
Set out below is summarized financial information for each subsidiary that has non-controlling interests that are material to the
group. The amounts disclosed for each subsidiary are before inter-company eliminations.
In $ millions
Non-controlling interest
CG assets
Electrobras (49%)
Electrobras (49%)
NEK (27%)
CG Aguila Holdings (20%) Brazil Hydro and Brazil
Chapadas I (Wind Brazil)
Chapadas II (Wind Brazil)
Maritsa (Bulgaria)
Solution
Italy Solar
Spain CSP
Credit Suisse Energy
Infrastructure Partners (49%)
Credit Suisse Energy
Infrastructure Partners (49%)
Energie Burgenland and
DH Energie (38%)
Non-current
assets
198.9
219.9
341.7
274.5
226.3
Year ended December 31, 2019
Non-current
Current assets
liabilities Current liabilities
Revenue
Profit or (Loss)
27.6
29.1
336.1
39.1
43.3
127.5
110.6
125.2
171.0
238.7
45.9
37.1
268.2
70.4
29.0
66.0
3.3
26.7
29.2
403.0
76.4
34.6
167.3
5.1
(10.1)
(3.8)
59.6
15.6
(12.4)
6.2
0.7
Deutsch Haslau (Austria
Wind)
1,085.7
72.7
1,072.8
25.0
3.5
21.8
In $ millions
Non-controlling interest
Electrobras (49%)
Electrobras (49%)
NEK (27%)
CG Aguila Holdings (20%) Brazil Hydro and Brazil
CG assets
Chapadas I (Wind Brazil)
Chapadas II (Wind Brazil)
Maritsa (Bulgaria)
Non-current
assets
151.6
165.1
333.1
Current assets
25.8
22.3
330.8
Year ended December 31, 2020
Non-current
liabilities Current liabilities
37.5
30.4
264.4
97.4
80.5
99.6
Revenue
20.1
27.0
406.3
Profit or (Loss)
(5.6)
(2.3)
58.5
Solution
Italy Solar
Spain CSP
Credit Suisse Energy
Infrastructure Partners (49%)
Credit Suisse Energy
Infrastructure Partners (49%)
Energie Burgenland and
DH Energie (38%)
Deutsch Haslau (Austria
Wind)
212.9
225.6
1,120.5
24.8
27.7
39.4
77.6
3.2
126.7
237.8
1,087.1
21.1
55.1
30.5
65.9
3.5
64.2
40.7
161.8
4.6
18.1
5.5
8.4
0.3
In $ millions
Non-controlling interest
CG assets
Electrobras (49%)
Electrobras (49%)
NEK (27%)
CG Aguila Holdings (20%)
Credit Suisse Energy Infrastructure Partners (49%)
Credit Suisse Energy Infrastructure Partners (49%)
Energie Burgenland and DH Energie (38%)
Chapadas I (Wind Brazil)
Chapadas II (Wind Brazil)
Maritsa (Bulgaria)
Brazil Hydro and Brazil Solution
Italy Solar
Spain CSP
Deutsch Haslau (Austria Wind)
In $ millions
Non-controlling interest
Electrobras (49%)
Electrobras (49%)
NEK (27%)
CG Aguila Holdings (20%)
Credit Suisse Energy Infrastructure Partners (49%)
Credit Suisse Energy Infrastructure Partners (49%)
Energie Burgenland and DH Energie (38%)
CG assets
Chapadas I (Wind Brazil)
Chapadas II (Wind Brazil)
Maritsa (Bulgaria)
Brazil Hydro and Brazil Solution
Italy Solar
Spain CSP
Deutsch Haslau (Austria Wind)
Year ended December 31, 2019
Net cash
generated by
operating
activities
Net cash
generated by
investing
activities
Net cash
generated by
financing
activities
21.1
24.2
103.4
38.9
25.5
128.0
4.3
(1.4)
(1.1)
(12.7)
(6.6)
3.7
(6.1)
–
(8.6)
(9.7)
(75.1)
(40.4)
(26.8)
(180.2)
(5.4)
Year ended December 31, 2020
Net cash
generated by
operating
activities
16.5
17.6
80.2
43.6
30.2
115.4
3.9
Net cash
generated by
investing
activities
(3.6)
(1.9)
(11.3)
(4.5)
(0.4)
(6.9)
–
Net cash
generated by
financing
activities
(9.5)
(16.1)
(79.4)
(38.3)
(39.7)
(113.6)
(4.2)
Considering the different natures of cash transactions with Non controlling interests (“NCI”), different categories
are presented in the Consolidated statement of cash flows:
(cid:120) Cash distribution to non-controlling interests: only reflects the payments done as payment of the Debt to NCI in
our Maritsa asset disclosed in the Note 4.25 Other non-current liabilities.
(cid:120) Dividends paid to NCI: reflects the payments to NCI in the form of dividends payments.
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Notes to the consolidated financial statements continued
Year ended December 31, 2020
In $ millions
Non-current
Non-current
Year ended December 31, 2019
Non-controlling interest
CG assets
assets
Current assets
liabilities Current liabilities
Revenue
Profit or (Loss)
In $ millions
Non-current
Non-current
Year ended December 31, 2020
Non-controlling interest
CG assets
assets
Current assets
liabilities Current liabilities
Revenue
Profit or (Loss)
Electrobras (49%)
Electrobras (49%)
NEK (27%)
Chapadas I (Wind Brazil)
Chapadas II (Wind Brazil)
Maritsa (Bulgaria)
CG Aguila Holdings (20%) Brazil Hydro and Brazil
Solution
Italy Solar
Credit Suisse Energy
Infrastructure Partners (49%)
Credit Suisse Energy
Spain CSP
Infrastructure Partners (49%)
Energie Burgenland and
Deutsch Haslau (Austria
DH Energie (38%)
Wind)
Electrobras (49%)
Electrobras (49%)
NEK (27%)
Chapadas I (Wind Brazil)
Chapadas II (Wind Brazil)
Maritsa (Bulgaria)
CG Aguila Holdings (20%) Brazil Hydro and Brazil
Solution
Italy Solar
Credit Suisse Energy
Infrastructure Partners (49%)
Credit Suisse Energy
Spain CSP
Infrastructure Partners (49%)
Energie Burgenland and
Deutsch Haslau (Austria
DH Energie (38%)
Wind)
198.9
219.9
341.7
274.5
226.3
151.6
165.1
333.1
212.9
225.6
1,120.5
24.8
27.6
29.1
336.1
39.1
43.3
25.8
22.3
330.8
27.7
39.4
77.6
3.2
127.5
110.6
125.2
171.0
238.7
97.4
80.5
99.6
126.7
237.8
1,087.1
21.1
1,085.7
72.7
1,072.8
25.0
3.5
21.8
In $ millions
Non-controlling interest
Electrobras (49%)
Electrobras (49%)
NEK (27%)
In $ millions
Non-controlling interest
Electrobras (49%)
Electrobras (49%)
NEK (27%)
CG Aguila Holdings (20%)
Brazil Hydro and Brazil Solution
Credit Suisse Energy Infrastructure Partners (49%)
Credit Suisse Energy Infrastructure Partners (49%)
Italy Solar
Spain CSP
Energie Burgenland and DH Energie (38%)
Deutsch Haslau (Austria Wind)
CG assets
Chapadas I (Wind Brazil)
Chapadas II (Wind Brazil)
Maritsa (Bulgaria)
CG assets
Chapadas I (Wind Brazil)
Chapadas II (Wind Brazil)
Maritsa (Bulgaria)
26.7
29.2
403.0
76.4
34.6
167.3
5.1
20.1
27.0
406.3
64.2
40.7
161.8
4.6
(1.4)
(1.1)
(12.7)
(6.6)
3.7
(6.1)
–
(3.6)
(1.9)
(11.3)
(4.5)
(0.4)
(6.9)
–
(10.1)
(3.8)
59.6
15.6
(12.4)
6.2
0.7
(5.6)
(2.3)
58.5
18.1
5.5
8.4
0.3
(8.6)
(9.7)
(75.1)
(40.4)
(26.8)
(180.2)
(5.4)
(9.5)
(16.1)
(79.4)
(38.3)
(39.7)
(113.6)
(4.2)
Year ended December 31, 2019
Net cash
Net cash
Net cash
generated by
generated by
generated by
operating
activities
investing
activities
financing
activities
Year ended December 31, 2020
Net cash
Net cash
Net cash
generated by
generated by
generated by
operating
activities
investing
activities
financing
activities
45.9
37.1
268.2
70.4
29.0
66.0
3.3
37.5
30.4
264.4
55.1
30.5
65.9
3.5
21.1
24.2
103.4
38.9
25.5
128.0
4.3
16.5
17.6
80.2
43.6
30.2
115.4
3.9
CG Aguila Holdings (20%)
Brazil Hydro and Brazil Solution
Credit Suisse Energy Infrastructure Partners (49%)
Credit Suisse Energy Infrastructure Partners (49%)
Italy Solar
Spain CSP
Energie Burgenland and DH Energie (38%)
Deutsch Haslau (Austria Wind)
Considering the different natures of cash transactions with Non controlling interests (“NCI”), different categories
are presented in the Consolidated statement of cash flows:
(cid:120) Cash distribution to non-controlling interests: only reflects the payments done as payment of the Debt to NCI in
our Maritsa asset disclosed in the Note 4.25 Other non-current liabilities.
(cid:120) Dividends paid to NCI: reflects the payments to NCI in the form of dividends payments.
Set out below is summarized financial information for each subsidiary that has non-controlling interests that are material to the
(cid:120) Transactions with NCI (cash received): reflects the cash received from NCI usually in the form of capital contributions and
group. The amounts disclosed for each subsidiary are before inter-company eliminations.
proceeds from sell down transactions.
(cid:120) Transactions with NCI (cash paid): reflects the payments/distributions to NCI in a form other than dividends (principally as
capital reduction or shareholders’ loans principal and interests repayments).
(cid:120) Transactions with NCI are presented as financing activities in accordance with IAS 7.
4.24 Borrowings
Certain power plants have financed their electric power generating projects by entering into external financing arrangements
which require the pledging of collateral and may include financial covenants as described below. The financing arrangements
are generally non-recourse (subject to certain guarantees) and the legal obligation for repayment is limited to the borrowing entity.
The Group’s principal borrowings with a nominal outstanding amount of $4,871.8 million in total as of December 31, 2020
(December 31, 2019: $4,135.7 million) primarily relate to the following:
Type of borrowing
Corporate bond (1)
Corporate bond (1)
Loan Agreement (2)
Loan Agreement
Loan Agreement
Loan agreement (3)
Project bond
Loan Agreement
Loan Agreement
Loan Agreement /
Debentures (6)
Loan Agreement
Loan Agreement (5)
Loan Agreement
Loan Agreement
Loan Agreement (4)
Loan Agreement
Loan Agreement (4)
Loan Agreement
Debentures
Loan Agreement (6)
Currency Project Financing
EUR
Issue
2018
Maturity
2023 2025
2020
2026 2028
Corporate
Indenture
Corporate
Indenture
Mexican CHP
Spanish CSP
Spanish CSP
Solar Italy
Inka
2019
2018
2018
2019
2014
Spanish CSP
2009
Vorotan
Chapada I
2016
2015
2026
2026 2038
2036
2030
2034
2029
2034
2032 2029
Maritsa
2006
2023
Austria Wind
2013 2020 2027 2033
Arrubal
2011
Cap des Biches 2015
Chapada II
Togo
Asa Branca
KivuWatt
Hydro Brazil
Portfolio II
Solar Slovakia
2016
2008
2011
2011
2018
2021
2033
2032
2028
2030
2026
2026
2019
2012–2013 2021–2034
2025
EUR
USD
EUR
EUR
EUR
USD
EUR
USD
BRL
EUR
EUR
EUR
USD
BRL
USD
BRL
USD
BRL
EUR
Other Credit facilities
(individually < $50 million)
Various Various
Total
Outstanding
nominal amount
December 31,
2020
($ million)
Outstanding
nominal amount
December 31,
2019
($ million) Rate
1,038.4
953.1
3.375%, 4.125%
867.3
508.5
392.5
348.4
215.5
173.2
152.2
121.5
115.5
109.1
105.2
98.9
96.3
84.8
80.8
58.5
57.2
49.9
44.4
153.7
–
2.75%, 3.125%
535.0 LIBOR + 2.5%
387.7 Fixed 5.8% and 6.7%
339.3 3.438%
214.8 EURIBOR 6M + 1.7%
179.5 6.0%
153.1 EURIBOR 6M + Variable
128.4 LIBOR + 4.625%
155.2
TJLP + 2.18% / IPCA + 8%
130.6 EURIBOR + 0.125%
71.7
EURIBOR 6M + 2.45% and 4.305% /
EURIBOR 3M+1.95% and 4.0% / EURIBOR
6M +1.55%
128.6 4.9%
101.1 USD-LIBOR BBA (ICE)+3.20%
118.8 TJLP + 2.18%
88.7 7.16% (Weighted average)
83.6 TJLP+ 1.92%
66.0 LIBOR plus 5.50% and mix of fixed rates
69.8
CDI +3%, 4.2%
49.4 Mix of fix and variable rates
Mix of fix and variable rates
181.3
4,871.8
4,135.7
(1)
Corporate bond issued by ContourGlobal Power Holdings S.A. in July 2018 for €750 million dual-tranche, it includes €450 million bearing a fixed interest rate
of 3.375% maturing in 2023 and €300 million bearing a fixed interest rate of 4.125% maturing in 2025. In July 2019, a new €100 million corporate bond tab
was added to the €300 million tranche bearing the same fixed interest rate of 4.125% maturing also in 2025. On December 17, 2020 two new Corporate
bond were issued by ContourGlobal Power Holdings S.A. for €410 million aggregate principal amount of 2.75% senior secured notes due in 2026 and €300
million aggregate principal amount of 3.125% senior secured notes due in 2028. On January 6, 2021 the Group redeemed the €450 million ($549.7 million)
aggregate principal amount of its 3.375% senior secured notes due 2023.
(2) On 25th November 2019, the Group acquired a Thermal portfolio in Mexico representing a total of 518 MW, new debt was issued at acquisition due in 2026
with an outstanding nominal of $508.5 million at 31st December 2020. The loan bears an interest rate of LIBOR +2.5% maturing in 2026.
(3) On June 20, 2019, ContourGlobal Mediterraneo S.r.l. entered into a €196.0 million facilities agreement with Banco BPM S.p.A., Bayerische Landesbank
Anstalt des öffentlichen Rechts, BNP Paribas, Italian Branch, Crédit Agricole Corporate and Investment Bank, Société Générale, Milan Branch and UBI Banca
S.p.A. (the “Mediterraneo Facility”), refinancing all the existing Italian Solar Plants facilities. The Facility bears interest at EURIBOR 6-month plus 1.70% per year
and matures on December 31, 2030.
(4)
Taxa de Juros de Longo Prazo (“TJLP”) represents the Brazil Long Term Interest Rate, which was approximately 4.55% at December 31, 2020 (December 31,
2019: 5.57%).
(5) On February 18, 2020, the group signed a loan agreement to refinance our Austria Wind portfolio. The new loan agreement was issued for €35.9 million
bearing a rate of 6M EURIBOR + 1.55% maturing in 2033.
(6) On January 26, 2019, the group signed a loan agreement to refinance our Solar Slovak portfolio. The new loan agreement was issued for €51.1 million
bearing a mix of fix rate of 0.161% + 1.4% with a variable part bearing a rate of EURIBOR 6M +1.4% maturing in 2025.
202
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
203
Notes to the consolidated financial statements continued
Year ended December 31, 2020
With the exception of our corporate bond and revolving credit facility, all external borrowings relate to project financing. Such
project financing are generally non-recourse (subject to certain guarantees).
The carrying amounts of the Group’s borrowings are denominated in the following currencies:
In $ millions
US Dollars
Euros (1)
Brazilian Reals
Total
Non-current borrowings
Current borrowings
Total
Years ended December 31
2020
1,056.1
3,382.2
392.0
4,830.3
3,895.5
934.8
4,830.3
2019
1,099.5
2,442.5
548.5
4,090.5
3,787.6
302.9
4,090.5
(1)
€450 million corporate bond maturing in 2023 ($549.7 million) shown as current as a result of the refinancing in December 2020 which resulted in a
commitment to repay these bonds in January 2021.
The carrying amounts and fair value of the current and non-current borrowings are as follows:
In $ millions
Credit facilities
Bonds
Total
Net debt as of December 31, 2020 and 2019 is as follows:
In $ millions
Cash and cash equivalents
Borrowings - repayable within one year
Borrowings - repayable after one year
Interests payable, deferred financing costs and other
IFRS 16 liabilities
Net debt
Cash and cash equivalents
Borrowings - fixed interest rates (1)
Borrowings - variable interest rates
Interests payable, deferred financing costs and other
IFRS 16 liabilities
Net debt
Carrying amount
Fair Value
Years ended December 31,
Years ended December 31,
2020
2,720.2
2,110.1
4,830.3
2019
2,909.1
1,181.4
4,090.5
2020
2,817.9
2,191.3
5,009.2
2019
3,005.3
1,274.4
4,279.7
Years ended December 31
2020
1,396.9
(899.7)
(3,972.1)
41.5
(32.9)
(3,466.3)
1,396.9
(4,306.6)
(565.2)
41.5
(32.9)
(3,466.3)
2019
558.5
(269.4)
(3,866.3)
45.2
(33.3)
(3,565.3)
558.5
(3,386.3)
(749.4)
45.2
(33.3)
(3,565.3)
(1)
Borrowings with fixed interest rates taking into account the effect of interest rate swaps.
IFRS 16 lease liabilities were previously not included within the above reconciliation and has been restated accordingly.
204
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Notes to the consolidated financial statements continued
Year ended December 31, 2020
With the exception of our corporate bond and revolving credit facility, all external borrowings relate to project financing. Such
project financing are generally non-recourse (subject to certain guarantees).
The carrying amounts of the Group’s borrowings are denominated in the following currencies:
In $ millions
US Dollars
Euros (1)
Brazilian Reals
Total
Non-current borrowings
Current borrowings
Total
In $ millions
Credit facilities
Bonds
Total
(1)
€450 million corporate bond maturing in 2023 ($549.7 million) shown as current as a result of the refinancing in December 2020 which resulted in a
commitment to repay these bonds in January 2021.
The carrying amounts and fair value of the current and non-current borrowings are as follows:
Carrying amount
Fair Value
Years ended December 31,
Years ended December 31,
2020
2,720.2
2,110.1
4,830.3
2019
2,909.1
1,181.4
2020
2,817.9
2,191.3
4,090.5
5,009.2
2019
3,005.3
1,274.4
4,279.7
Net debt as of December 31, 2020 and 2019 is as follows:
In $ millions
Cash and cash equivalents
Borrowings - repayable within one year
Borrowings - repayable after one year
Interests payable, deferred financing costs and other
IFRS 16 liabilities
Net debt
Cash and cash equivalents
Borrowings - fixed interest rates (1)
Borrowings - variable interest rates
Interests payable, deferred financing costs and other
IFRS 16 liabilities
Net debt
(1)
Borrowings with fixed interest rates taking into account the effect of interest rate swaps.
IFRS 16 lease liabilities were previously not included within the above reconciliation and has been restated accordingly.
Years ended December 31
2020
1,056.1
3,382.2
392.0
4,830.3
3,895.5
934.8
2019
1,099.5
2,442.5
548.5
4,090.5
3,787.6
302.9
4,830.3
4,090.5
Years ended December 31
2020
1,396.9
(899.7)
(3,972.1)
41.5
(32.9)
1,396.9
(4,306.6)
(565.2)
41.5
(32.9)
2019
558.5
(269.4)
(3,866.3)
45.2
(33.3)
558.5
(3,386.3)
(749.4)
45.2
(33.3)
(3,466.3)
(3,565.3)
In $ millions
As of January 1, 2019
Cash-flows
Acquisitions / disposals
Proceeds of borrowings
Repayments of borrowings
Currency translations differences and other (1)
IFRS 16 liabilities net movement (3)
As of December 31, 2019
Cash-flows
Acquisitions / disposals
Proceeds of borrowings
Repayments of borrowings
Repayments of borrowings and interests to NCI(2)
Currency translations differences and other
IFRS 16 liabilities net movement (3)
As of December 31, 2020
Cash and cash
equivalents
Borrowings
IFRS 16 liabilities
Total net debt
697.0
(174.6)
21.4
–
–
14.7
–
558.5
810.6
–
–
–
-
27.8
–
1,396.9
(3,560.1)
–
(22.0)
(947.5)
428.2
10.9
–
(4,090.5)
–
–
(938.9)
323.4
49.5
(173.8)
–
(4,830.3)
(27.5)
–
–
–
–
–
(5.8)
(33.3)
–
–
–
–
-
–
0.4
(32.9)
(2,890.6)
(174.6)
(0.6)
(947.5)
428.2
25.6
(5.8)
(3,565.3)
810.6
–
(938.9)
323.4
49.5
(146.0)
0.4
(3,466.3)
(1)
(2)
(3)
Includes $48 million repayment of shareholders loans principal and interests with NCI presented in the consolidated statement of cash flows on the line
“Transactions with non-controlling interest holders, cash paid” related to CSP Spain (note 4.23).
Refers to repayment of shareholders loans principal and interests with NCI included in the consolidated statement of cash flows on the line “Transactions
with non-controlling interest holders, cash paid” related to CSP Spain (note 4.23).
IFRS 16 liabilities net movement includes -$3.6 million lease additions (2019: -$13.1 million), $6.8 million lease payments (2019: $7.8 million) and -$2.8 million
currency translation adjustment (2019: -$0.5 million). IFRS 16 lease liabilities were previously not included within the above reconciliation and has been
restated accordingly.
Debt Covenants and restrictions
The group’s borrowing facilities are subject to a variety of financial and non financial covenants. The most significant financial
covenants include Debt service coverage ratio; Leverage ratio; Debt to equity ratio; Equity to assets ratio; Loan life coverage
ratio and decreasing senior debt to total debt ratio.
Non-financial covenants include the requirement to maintain proper insurance coverage, enter into hedging agreements,
maintain certain cash reserves, restrictions on dispositions, scope of the business, and mergers and acquisitions.
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(3,466.3)
(3,565.3)
These covenants are monitored appropriately to ensure that the contractual conditions are met.
A technical breach in a minor condition regarding the number of authorized offshore bank accounts has been identified in
relation to the financing of our Cap des Biches asset. The Company has performed a technical analysis and concluded that it
has an unconditional right to defer payment for at least 12 months and hence $96.3 million of debt is presented as non current
in line with the contracted repayment schedule.
Securities given
Corporate bond and Revolving Credit Facility at CG Power Holdings level are secured by pledges of shares of certain
subsidiaries (ContourGlobal LLC, ContourGlobal Spain Holding Sàrl, ContourGlobal Bulgaria Holding Sàrl, ContourGlobal
Latam Holding Sàrl, ContourGlobal Hummingbird UK Holdco I Limited, ContourGlobal Hummingbird US Holdco Inc.,
ContourGlobal Terra Holdings Sàrl and ContourGlobal Worldwide Holdings Sàrl), and guarantees from ContourGlobal plc,
and the above subsidiaries.
204
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
205
Notes to the consolidated financial statements continued
Year ended December 31, 2020
Project financing
CSP Spain
(excluding Alvarado)
CSP Spain Alvarado Long Term Facility
Facility
Long Term Facility
Maturity
2036
2029
Inka
Inka
Chapada I
Senior secured notes 2034
Letter of Credit
Agreement
Long Term Facility
2021
2032
Arrubal
Arrubal Term Loan
2021
Maritsa
Credit Facility
2023
Vorotan
Long Term Facility
2034
Chapada II
Long Term Facility
2032
Cap des Biches
Credit Facility
2033
Togo
Loan agreement
2028
Asa Branca
Credit facility
2030
Security / Guarantee given
First ranking security interest in the shares of all the entities in the borrower group
plus pledge of receivables and project accounts. Assignment of insurances.
First ranking security interest in the shares of the borrower group plus pledge of
project accounts. Assignment of rights under project contracts.
Pledge of shares of Energia Eolica SA, EESA assets, accounts, assignment of
receivables of the project contracts and insurances.
$8.5m ContourGlobal Plc guarantee to Credit Suisse.
Pledge of shares of Chapada I SPVs and Holding, SPVs assets, accounts, assignment
of receivables of the project contracts and insurances.
Pledge of (i) the shares of CG La Rioja, (ii) project accounts, (iii) insurance policies,
(iv) receivables on project documents (PPA, Operations & Maintenance, Gas Supply
Agreement…), (v) mortgage over the power station and industrial items.
Pledge of the shares, any dividends on the pledged shares and the entire commercial
enterprise of ME-3, including the receivables from the ME-3 PPA.
Pledge of shares of ContourGlobal HydroCascade CSJC assets and project accounts,
assignment of receivables arising from the project contracts and insurances.
Pledge of shares of Chapada II SPVs and Holding, SPVs assets, accounts, assignment
of receivables of the project contracts and insurances.
Pledge over CG Senegal and CG Cap des Biches Sénégal shares, pledge over
the project accounts, charge over the assets of CG Cap des Biches Sénégal,
assignment of receivables of CG Cap des Biches Sénégal and the insurance
policies, direct agreement on the project contracts.
ContourGlobal Plc guarantee on cash shortfall for Debt service, and (i) a pledge
of CG Togo LLC and CG Togo SA capital stock, (ii) a charge on equipment, material and
assets of CG Togo SA, (iii) the assignment of receivables of CG Togo SA, (iv)
the assignment of insurance policies, and (v) a pledge on the project accounts.
Pledge of shares of Asa Branca Holding SA, pledge of the receivables under the
Asa Branca PPA, pledge on certain project accounts, mortgage of assets of the
Asa Branca Windfarm Complex, assignment of credit rights under project contracts
(EPC, land leases, O&M...).
Energie Europe
Wind & Solar
Kivuwatt
Credit Facilities
2025-30 Pledge of the shares, assets, cash accounts and receivables.
Financing
Arrangement
2026
– Secured by, among others, (i) KivuWatt Holdings’ pledge of all of the shares
of KivuWatt held by KivuWatt Holdings, (ii) certain of KivuWatt’s bank accounts
and (iii) KivuWatt’s movable and immovable assets.
– ContourGlobal Plc $1.2 million guarantee for the benefit of KivuWatt under the
Hydro Brazil
Portfolio II and
Solutions Brazil
Sunburn
Debentures
2026
Letter of Credit
Agreement
2021
Chapada III
Long Term Facility
2032
Mexican CHP
Long Term Facility
2026
PPA and Gas
– Concession to the Government of Rwanda and to Electrogaz (outside of the
loan guarantee).
– $8.5million UK Plc guarantee to cover DSRA as of December 31,2019.
First ranking security interest in the shares of all the entities in the borrower
group (ex-minorities) plus pledge of receivables.
ContourGlobal plc BRL 60 million guarantee to cover Brasil hydro injunctions
risk on ContourGlobal do Brasil Participaçoes SA
On December 22, 2010, a €1.2 million letter of credit facility was entered into to
fund obligations under the debt service reserve account (in accordance with the Saint
Martin loan agreement). This letter of credit expires in June 2021. No amounts have
been recognized in relation to letter of credit in either period.
Pledge of shares of Chapada III SPVs and Holding, SPVs assets, accounts, assignment
of receivables of the project contracts and insurances.
Corporate guarantee from ContourGlobal do Brazil Holding Ltda until
Financial Completion.
Pledge of the CGA I and CELCSA shares, assets and accounts, assignment
of receivables and insurance policies.
206
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Notes to the consolidated financial statements continued
Year ended December 31, 2020
Project financing
Facility
Maturity
Security / Guarantee given
CSP Spain
Long Term Facility
2036
First ranking security interest in the shares of all the entities in the borrower group
(excluding Alvarado)
plus pledge of receivables and project accounts. Assignment of insurances.
CSP Spain Alvarado Long Term Facility
2029
First ranking security interest in the shares of the borrower group plus pledge of
Senior secured notes 2034
Pledge of shares of Energia Eolica SA, EESA assets, accounts, assignment of
project accounts. Assignment of rights under project contracts.
Inka
Inka
Letter of Credit
Agreement
receivables of the project contracts and insurances.
2021
$8.5m ContourGlobal Plc guarantee to Credit Suisse.
Chapada I
Long Term Facility
2032
Pledge of shares of Chapada I SPVs and Holding, SPVs assets, accounts, assignment
of receivables of the project contracts and insurances.
Arrubal
Arrubal Term Loan
2021
Pledge of (i) the shares of CG La Rioja, (ii) project accounts, (iii) insurance policies,
(iv) receivables on project documents (PPA, Operations & Maintenance, Gas Supply
Agreement…), (v) mortgage over the power station and industrial items.
Maritsa
Credit Facility
2023
Pledge of the shares, any dividends on the pledged shares and the entire commercial
enterprise of ME-3, including the receivables from the ME-3 PPA.
Vorotan
Long Term Facility
2034
Pledge of shares of ContourGlobal HydroCascade CSJC assets and project accounts,
assignment of receivables arising from the project contracts and insurances.
Chapada II
Long Term Facility
2032
Pledge of shares of Chapada II SPVs and Holding, SPVs assets, accounts, assignment
of receivables of the project contracts and insurances.
Cap des Biches
Credit Facility
2033
Pledge over CG Senegal and CG Cap des Biches Sénégal shares, pledge over
Togo
Loan agreement
2028
ContourGlobal Plc guarantee on cash shortfall for Debt service, and (i) a pledge
Asa Branca
Credit facility
2030
Pledge of shares of Asa Branca Holding SA, pledge of the receivables under the
the project accounts, charge over the assets of CG Cap des Biches Sénégal,
assignment of receivables of CG Cap des Biches Sénégal and the insurance
policies, direct agreement on the project contracts.
of CG Togo LLC and CG Togo SA capital stock, (ii) a charge on equipment, material and
assets of CG Togo SA, (iii) the assignment of receivables of CG Togo SA, (iv)
the assignment of insurance policies, and (v) a pledge on the project accounts.
Asa Branca PPA, pledge on certain project accounts, mortgage of assets of the
Asa Branca Windfarm Complex, assignment of credit rights under project contracts
(EPC, land leases, O&M...).
Energie Europe
Credit Facilities
2025-30 Pledge of the shares, assets, cash accounts and receivables.
Wind & Solar
Kivuwatt
Hydro Brazil
Portfolio II and
Solutions Brazil
Sunburn
Financing
Arrangement
2026
– Secured by, among others, (i) KivuWatt Holdings’ pledge of all of the shares
of KivuWatt held by KivuWatt Holdings, (ii) certain of KivuWatt’s bank accounts
and (iii) KivuWatt’s movable and immovable assets.
– ContourGlobal Plc $1.2 million guarantee for the benefit of KivuWatt under the
– Concession to the Government of Rwanda and to Electrogaz (outside of the
PPA and Gas
loan guarantee).
Debentures
2026
First ranking security interest in the shares of all the entities in the borrower
– $8.5million UK Plc guarantee to cover DSRA as of December 31,2019.
group (ex-minorities) plus pledge of receivables.
ContourGlobal plc BRL 60 million guarantee to cover Brasil hydro injunctions
risk on ContourGlobal do Brasil Participaçoes SA
Letter of Credit
Agreement
2021
On December 22, 2010, a €1.2 million letter of credit facility was entered into to
fund obligations under the debt service reserve account (in accordance with the Saint
Martin loan agreement). This letter of credit expires in June 2021. No amounts have
been recognized in relation to letter of credit in either period.
Chapada III
Long Term Facility
2032
Pledge of shares of Chapada III SPVs and Holding, SPVs assets, accounts, assignment
of receivables of the project contracts and insurances.
Corporate guarantee from ContourGlobal do Brazil Holding Ltda until
Financial Completion.
Mexican CHP
Long Term Facility
2026
Pledge of the CGA I and CELCSA shares, assets and accounts, assignment
of receivables and insurance policies.
206
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
4.25 Other non-current liabilities
In $ millions
Debt to non-controlling interest (1)
Deferred payments on acquisitions (2)
Fixed margin liability (3)
IFRS 16 lease liabilities
Other (4)
Total other non-current liabilities
December 31
2020
28.6
33.5
–
28.6
34.2
124.9
2019
58.1
38.0
82.8
28.0
23.0
229.9
(1)
Debt to non-controlling interests: in 2011, the Group purchased a 73% interest in the Maritsa power plant. NEK owns the remaining 27% of the Maritsa power
plant. The shareholders’ agreement states that all distributable results available should be distributed to their shareholders, with no unconditional right to avoid
dividends. Consequently and in accordance with IAS 32 ‘Financial Instruments: presentation’, shares held by NEK do not qualify as equity instruments and are
recorded as a liability to non-controlling interests in the Group’s consolidated statement of financial position. The debt to non-controlling interests was recorded
at fair value at the date of acquisition (in accordance with IFRS 3) using a discounted cash flow method based on management’s best estimate at that date of the
future distributable profits to the minority shareholder NEK over the period of the PPA. This debt is discounted using a European risk free rate adjusted for the
credit default swap (CDS) spread for Bulgaria. The debt is subsequently held at amortized cost.
The change in the debt to Maritsa non-controlling interest is presented below:
In $ millions
Beginning of the year
Dividends
Unwinding of discount
Reclassification in current liabilities
Currency translation adjustments
End of the year
December 31
2020
58.1
(18.9)
3.1
(17.7)
4.0
28.6
2019
69.2
(15.0)
5.4
–
(1.5)
58.1
(1)
(2)
(3)
(2) As of December 31, 2020, deferred payments and earn-outs on acquired entities relate to deferred payments to be made to initial developers of certain
Wind Brazil assets ($15.2 millions) and Spain CSP previous owner ($18.3 million). For the Brazil wind assets, the liability is reviewed at each reporting date and
is based on a percentage of the projected revenue generated under the current power purchase agreements and for CSP Spain the liability is based on a
pre-defined amount.
(3) As of December 31, 2019 a liability was recognized by CHP Mexico representing the estimated net present value of the amounts due to Seller’s affiliates
in relation to the CFE fixed margin mechanism on certain power purchase agreements. As of December 31, 2020 this liability is recorded in derivative
financial instruments.
(4) Mainly relates to contractual obligations in Brazil, including shortfall and penalties when wind asset generation falls below contracted PPA for
$15.4 million in December 31, 2020 (December 31, 2019: $10.1 million).
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4.26 Provisions
In $ millions
As of January 1, 2019
Acquired through business combination
Additions
Unused amounts reversed
Amounts used during the period
Currency translation differences and other
As of December 31, 2019
Additions
Unused amounts reversed
Amounts used during the period
Currency translation differences and other
As of December 31, 2020
Provisions have been analyzed between current and non-current as follows:
In $ millions
Current liabilities
Non-current liabilities
As of December 31, 2019
Current liabilities
Non-current liabilities
As of December 31, 2020
Decommissioning /
Environmental /
Maintenance provision Legal and other
15.9
42.7
–
0.2
5.5
3.0
(2.8)
(3.3)
(0.3)
(0.1)
(1.2)
1.4
17.1
43.9
3.7
2.1
(1.4)
(3.1)
(1.3)
–
0.2
2.9
18.3
45.8
Decommissioning /
Environmental /
Maintenance provision
Legal and other
4.6
39.3
43.9
1.9
43.9
45.8
8.0
9.1
17.1
10.4
7.9
18.3
Total
58.6
0.2
8.5
(6.1)
(0.4)
0.2
61.0
5.8
(4.5)
(1.3)
3.1
64.1
Total
12.6
48.4
61.0
12.3
51.8
64.1
207
Notes to the consolidated financial statements continued
Year ended December 31, 2020
Site decommissioning provisions are recognized based on assessment of future decommissioning costs which would need
to be incurred in accordance with existing legislation to restore the sites and expected to occur between 1 and 20 years.
Legal and other provisions include amounts arising from claims, litigation and regulatory risks which will be utilized as the
obligations are settled and includes sales tax and interest or penalties associated with taxes.
Legal and other provisions have some uncertainty over the timing of cash outflows.
4.27 Share-based compensation plans
ContourGlobal long-term incentive plan
On 11 August 2020, a third grant of performance shares was made under the long term incentive plan (“LTIP”) with awards over
a total of 2,137,665 ordinary shares of 1 pence in ContourGlobal plc granted to eligible employees (the “participants”). These
shares will vest on 11 August 2023 subject to the participant’s continued service and to the extent to which further performance
conditions set out below for the awards are satisfied over the period of three years commencing on 1 January 2020 and,
ordinarily, ending on 31 December 2022 (the “Performance Period”):
(i)
EBITDA condition: 50.0 % of award to the compounded annual growth rate of the Company’s EBITDA over the
Performance Period.
IRR condition: 12.5 % of award to the internal rate of return on qualifying Company projects over the Performance Period.
(ii)
(iii) LTIR condition: 25.0 % of award to the lost time incident rate of the Company over the Performance Period.
(iv) Project milestones condition: 12.5 % of award to the number of corporate milestones completed on qualifying projects
conditions over the Performance Period.
The long term incentive plans are considered as equity-settled share-based incentives, with the related share based payment
expense presented within selling, general and administrative expenses in the consolidated statement of income.
These LTIP awards have been valued using the Monte Carlo model and the resulting share-based payments charge is being
spread evenly over the period between the grant date and the vesting date (36 months). The fair value of the award at the
grant date was estimated to be $0.94 per share.
Key assumptions valuing these awards were:
Vesting period
Expecting vesting
Expected volatility
Risk-free interest rate
3 years
75%
2020: 23.1%
2020: (0.05)%
Dividend yield of 0% has been assumed since grantees are compensated for dividends under clause 6.3 of the Long-Term
Incentive Plan.
Expected volatility is a measure of the amount by which the Group’s shares are expected to fluctuate during the life of an option.
Including in this grant, restricted shares were granted under the long term incentive plan (“LTIP”) with awards over a total of
41,496 ordinary shares of 1 pence in ContourGlobal plc granted to eligible employees (the “participants”). These shares will
vest on 11 August 2023 subject to the participant’s continued service.
208
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Notes to the consolidated financial statements continued
Year ended December 31, 2020
obligations are settled and includes sales tax and interest or penalties associated with taxes.
Legal and other provisions have some uncertainty over the timing of cash outflows.
4.27 Share-based compensation plans
ContourGlobal long-term incentive plan
On 11 August 2020, a third grant of performance shares was made under the long term incentive plan (“LTIP”) with awards over
a total of 2,137,665 ordinary shares of 1 pence in ContourGlobal plc granted to eligible employees (the “participants”). These
shares will vest on 11 August 2023 subject to the participant’s continued service and to the extent to which further performance
conditions set out below for the awards are satisfied over the period of three years commencing on 1 January 2020 and,
ordinarily, ending on 31 December 2022 (the “Performance Period”):
(i)
EBITDA condition: 50.0 % of award to the compounded annual growth rate of the Company’s EBITDA over the
Performance Period.
(ii)
IRR condition: 12.5 % of award to the internal rate of return on qualifying Company projects over the Performance Period.
(iii) LTIR condition: 25.0 % of award to the lost time incident rate of the Company over the Performance Period.
(iv) Project milestones condition: 12.5 % of award to the number of corporate milestones completed on qualifying projects
conditions over the Performance Period.
The long term incentive plans are considered as equity-settled share-based incentives, with the related share based payment
expense presented within selling, general and administrative expenses in the consolidated statement of income.
These LTIP awards have been valued using the Monte Carlo model and the resulting share-based payments charge is being
spread evenly over the period between the grant date and the vesting date (36 months). The fair value of the award at the
grant date was estimated to be $0.94 per share.
Key assumptions valuing these awards were:
Vesting period
Expecting vesting
Expected volatility
Risk-free interest rate
Incentive Plan.
3 years
75%
2020: 23.1%
2020: (0.05)%
Dividend yield of 0% has been assumed since grantees are compensated for dividends under clause 6.3 of the Long-Term
Expected volatility is a measure of the amount by which the Group’s shares are expected to fluctuate during the life of an option.
Including in this grant, restricted shares were granted under the long term incentive plan (“LTIP”) with awards over a total of
41,496 ordinary shares of 1 pence in ContourGlobal plc granted to eligible employees (the “participants”). These shares will
vest on 11 August 2023 subject to the participant’s continued service.
Site decommissioning provisions are recognized based on assessment of future decommissioning costs which would need
to be incurred in accordance with existing legislation to restore the sites and expected to occur between 1 and 20 years.
The Group’s total charge for equity-settled share-based incentives for the year of $1.9 million (2019: $1.3 million) has been
included within selling, general and administrative expenses in the consolidated statement of income.
Legal and other provisions include amounts arising from claims, litigation and regulatory risks which will be utilized as the
The movements on awards made under the LTIP are as follows:
Outstanding as of December 31, 2018
Granted during the year
Forfeited
Vested
Outstanding as of December 31, 2019
Granted during the year
Forfeited
Vested
Outstanding as of December 31, 2020
Number of
shares
1,553,753
2,486,318
(415,619)
–
3,624,452
2,137,665
(334,551)
–
5,427,566
Deferred bonus
Certain employees of the group are eligible to receipt of deferred bonus awards as determined by the Remuneration Committee
representing 20% of the individual's total bonus based on performance in the previous year. These awards have a normal vesting
period of two to three years with the recipient required to remain with the company over the vesting period otherwise leading to
forfeiture of the award in the event of termination of employment. On 11 August 2020, a total of 120,628 deferred bonus shares
were awarded to employees with a vesting date of 9 March 2022.
Private Incentive Plan
The President & CEO (“CEO”), along with certain members of the ContourGlobal management team, have interests in a
‘Private Incentive Plan’ (PIP). This is a legacy equity arrangement established by Reservoir Capital (the major shareholder in
the Company) and no new allocations will be made under this plan. The Company is not a party to the PIP and has no financial
obligation, or obligation to issue shares, in connection with it, although it is required to recognize the plan as an expense in
accordance with IFRS 2. All shares that might be delivered under the award will be funded by Reservoir Capital.
While the allocations and terms of the President & CEO’s award were substantially agreed prior to IPO, Reservoir Capital
finalized the implementation of the CEO award on 27 December 2018 and of other managers awards in January 2019.
The charge is recognized in the consolidated statement of income within the line item “Other operating income/expense –
net” and is excluded from the Adjusted EBITDA calculation as it does not constitute a present or future liability nor a cash out
for the Company and will be fully funded or settled through existing Reservoir Capital shareholdings in the Company.
The award is in the form of partnership units in Contour Management Holdings LLC which is a partner in ContourGlobal L.P.
(the limited partnership through which Reservoir Capital owns shares in the Company). The award comprises Class S units,
Class C units and Class B units. All units deliver an award of shares in ContourGlobal plc.
Under the terms of the PIP, those units entitle the award-holders to have shares in the Company delivered to them if certain
financial performance conditions are achieved.
The CEO’s and other beneficiaries’ holding of units in ContourGlobal L.P. is as follows:
Basis of awards
Class S Units
Class C Units
Class B Units
Up to 10,475,657 ContourGlobal plc shares (excluding the impact of any accrued dividends)
Value share between management and Reservoir Capital Group
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S
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208
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
209
Notes to the consolidated financial statements continued
Year ended December 31, 2020
The terms of the value share between management and Reservoir Capital are based on a “waterfall” which operates broadly
as follows:
(i) Class S Units are similar in nature to a restricted stock award, subject to an underpin share price. At final allocation,
Reservoir Capital Group set the underpin share price for the Class S units at $2.23 (£1.74), rather than the £2.57 threshold
referred to in the Prospectus, to reflect the share price at the time of final allocation.
(ii) Class C Units are based on sharing 12% of value above a 6% p.a. threshold on $2.0 billion of total value to ContourGlobal
L.P., but after deducting value arising from Class S Units.
(iii) Class B Units are based on sharing 18% of value above a 9% p.a. threshold on $2.4 billion of total value to ContourGlobal
L.P., but after deducting value arising from Class C Units and Class S Units. The Class B Units
also have a catch-up feature that, at valuations significantly above the threshold value, allow management to
receive additional value.
The Company was notified that the financial performance condition in respect of the Class S Units was tested on
27 December 2020 (based on closing share price of 207p on the 24th December) and consequently shares were transferred
from Reservoir Capital Group’s holding of shares in ContourGlobal plc (through ContourGlobal L.P.) to
Contour Management Holdings LLC.
The Class S unit financial performance condition was a share price underpin of $2.23 (threshold) to $2.28 (maximum),
assuming no dividends. The number of shares transferred relevant to Mr Brandt’s Class S Unit award (including the impact
of accrued dividends) was determined to be 7,403,453. ContourGlobal L.P also transferred cash to Contour Management
Holdings LLC relating to the dividend payable on 29 December 2020 for these shares. Transfers from Contour
Management Holdings LLC are conditional on Reservoir Capital disposing of all its ordinary shares in ContourGlobal plc.
Other transfers of shares in the Company totaling 3,339,531 shares were also made by ContourGlobal L.P. to Contour
Management Holdings LLC in connection with the vesting of Class S units held by other current and former members
of management of the Company.
Class C units and Class B units are structured as a value share between management and Reservoir Capital Group, and deliver
an award of ContourGlobal plc shares subject to certain thresholds after deducting the value arising from the Class S units.
Distributions from Class C units and Class B units are subject to Reservoir Capital Group realizing value from its investment
in ContourGlobal plc, and the scheme stays in effect until Reservoir Capital Group has disposed of all its ordinary shares in
ContourGlobal plc. Class C and Class B units are fully vested and are not forfeitable
Further details of the PIP and of the award can be found in the Company's 2020 Directors' Remuneration Report.
As of 31 December 2020, in accordance with IFRS 2, the Company recognized an expense of $6.6 million in relation with
the PIP ($9.1 million in 2019) recognized within other operating expense in the income statement.
4.28 Trade and other payables
In $ millions
Trade payables
Accrued expenses
Trade and other payables
4.29 Other current liabilities
In $ millions
Deferred revenue
Deferred payment on acquisition (1)
Other taxes payable
IFRS 16 lease liabilities
Other (2)
Other current liabilities
December 31
2020
67.6
266.1
333.7
December 31
2020
5.6
1.2
34.6
4.3
149.1
194.8
2019
77.3
258.8
336.1
2019
6.1
21.6
33.5
5.3
111.5
178.0
(1)
Relates to the deferred payment of the renewable portfolio in Brazil as of December 31, 2020 and to deferred payment of the renewable portfolio in Europe,
Brazil and Mexico as of December 31, 2019.
(2) Mainly relates to contractual obligations in Brazil, including shortfall and penalties when wind asset generation falls below contracted PPA for $47.1 million
in December 31, 2020 (December 31, 2019: $44.2 million), other regulatory obligations for hydro assets related to the Generation scaling factor (GSF) for
$18.2 million in December 31, 2020 (December 31, 2019: $18.9 million), Maritsa current portion of the non-controlling interest debt for $17.7 million in
December 31, 2020 (December 31, 2019: nil) and Maritsa CO2 quota for $28.0 million in December 31, 2020 (December 31, 2019: $20.3 million).
(3)
In the case of the shortfall and penalties for the Brazilian wind assets, there is limited estimation uncertainty as the shortfall and penalties are calculated
based on factual information on actual power generated.
210
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Notes to the consolidated financial statements continued
Year ended December 31, 2020
The terms of the value share between management and Reservoir Capital are based on a “waterfall” which operates broadly
as follows:
(i) Class S Units are similar in nature to a restricted stock award, subject to an underpin share price. At final allocation,
Reservoir Capital Group set the underpin share price for the Class S units at $2.23 (£1.74), rather than the £2.57 threshold
referred to in the Prospectus, to reflect the share price at the time of final allocation.
(ii) Class C Units are based on sharing 12% of value above a 6% p.a. threshold on $2.0 billion of total value to ContourGlobal
L.P., but after deducting value arising from Class S Units.
(iii) Class B Units are based on sharing 18% of value above a 9% p.a. threshold on $2.4 billion of total value to ContourGlobal
L.P., but after deducting value arising from Class C Units and Class S Units. The Class B Units
also have a catch-up feature that, at valuations significantly above the threshold value, allow management to
receive additional value.
The Company was notified that the financial performance condition in respect of the Class S Units was tested on
27 December 2020 (based on closing share price of 207p on the 24th December) and consequently shares were transferred
from Reservoir Capital Group’s holding of shares in ContourGlobal plc (through ContourGlobal L.P.) to
Contour Management Holdings LLC.
The Class S unit financial performance condition was a share price underpin of $2.23 (threshold) to $2.28 (maximum),
assuming no dividends. The number of shares transferred relevant to Mr Brandt’s Class S Unit award (including the impact
of accrued dividends) was determined to be 7,403,453. ContourGlobal L.P also transferred cash to Contour Management
Holdings LLC relating to the dividend payable on 29 December 2020 for these shares. Transfers from Contour
Management Holdings LLC are conditional on Reservoir Capital disposing of all its ordinary shares in ContourGlobal plc.
Other transfers of shares in the Company totaling 3,339,531 shares were also made by ContourGlobal L.P. to Contour
Management Holdings LLC in connection with the vesting of Class S units held by other current and former members
of management of the Company.
Class C units and Class B units are structured as a value share between management and Reservoir Capital Group, and deliver
an award of ContourGlobal plc shares subject to certain thresholds after deducting the value arising from the Class S units.
Distributions from Class C units and Class B units are subject to Reservoir Capital Group realizing value from its investment
in ContourGlobal plc, and the scheme stays in effect until Reservoir Capital Group has disposed of all its ordinary shares in
ContourGlobal plc. Class C and Class B units are fully vested and are not forfeitable
Further details of the PIP and of the award can be found in the Company's 2020 Directors' Remuneration Report.
As of 31 December 2020, in accordance with IFRS 2, the Company recognized an expense of $6.6 million in relation with
the PIP ($9.1 million in 2019) recognized within other operating expense in the income statement.
4.28 Trade and other payables
In $ millions
Trade payables
Accrued expenses
Trade and other payables
4.29 Other current liabilities
In $ millions
Deferred revenue
Deferred payment on acquisition (1)
Other taxes payable
IFRS 16 lease liabilities
Other (2)
Other current liabilities
(1)
Relates to the deferred payment of the renewable portfolio in Brazil as of December 31, 2020 and to deferred payment of the renewable portfolio in Europe,
Brazil and Mexico as of December 31, 2019.
(2) Mainly relates to contractual obligations in Brazil, including shortfall and penalties when wind asset generation falls below contracted PPA for $47.1 million
in December 31, 2020 (December 31, 2019: $44.2 million), other regulatory obligations for hydro assets related to the Generation scaling factor (GSF) for
$18.2 million in December 31, 2020 (December 31, 2019: $18.9 million), Maritsa current portion of the non-controlling interest debt for $17.7 million in
December 31, 2020 (December 31, 2019: nil) and Maritsa CO2 quota for $28.0 million in December 31, 2020 (December 31, 2019: $20.3 million).
(3)
In the case of the shortfall and penalties for the Brazilian wind assets, there is limited estimation uncertainty as the shortfall and penalties are calculated
based on factual information on actual power generated.
4.30 Group undertakings
ContourGlobal PLC owns (directly or indirectly) only ordinary shares of its subsidiaries. There are no preferred shares scheme
in place in the Group.
ContourGlobal plc
United Kingdom 116 Park Street 7th Floor, London, United Kingdom,
W1K 6SS
Ownership
100%
Country of
incorporation
Armenia
100%
Austria
Registered address
AGBU building; 2/2 Meliq-Adamyan str.,0010 Yerevan,
Armenia
Fleischmarkt 1, Top 01, Vienna 1010, Austria
Consolidated subsidiaries
ContourGlobal Hydro Cascade CJSC
ContourGlobal erneuerbare Energie
Europa GmbH
Windpark HAGN GmbH
Windpark HAGN GmbH & Co KG
Windpark Deutsch Haslau GmbH
ContourGlobal Windpark Zistersdorf Ost GmbH
ContourGlobal Windpark Berg GmbH
ContourGlobal Windpark Scharndorf GmbH
ContourGlobal Windpark Trautmannsdorf GmbH
ContourGlobal Windpark Velm GmbH
ContourGlobal Management Europa GmbH
ContourGlobal Wind Holding GmbH
ContourGlobal Development GmbH
ContourGlobal Maritsa East 3 AD
ContourGlobal Operations Bulgaria AD
ContourGlobal Management Sofia EOOD
Galheiros Geração de Energia Elétrica S.A.
95%
95%
62%
100%
100%
100%
100%
100%
100%
100%
100%
73%
73%
100%
77%
Austria
Austria
Austria
Austria
Austria
Austria
Austria
Austria
Austria
Austria
Austria
Bulgaria
Bulgaria
Bulgaria
Brazil
i
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Fleischmarkt 1, Top 01, Vienna 1010, Austria
Fleischmarkt 1, Top 01, Vienna 1010, Austria
Fleischmarkt 1, Top 01, Vienna 1010, Austria
Fleischmarkt 1, Top 01, Vienna 1010, Austria
Fleischmarkt 1, Top 01, Vienna 1010, Austria
Fleischmarkt 1, Top 01, Vienna 1010, Austria
Fleischmarkt 1, Top 01, Vienna 1010, Austria
Fleischmarkt 1, Top 01, Vienna 1010, Austria
Fleischmarkt 1, Top 01, Vienna 1010, Austria
Fleischmarkt 1, Top 01, Vienna 1010, Austria
Fleischmarkt 1, Top 01, Vienna 1010, Austria
48 Sitnyakovo Blvd; 9-th fl., Sofia 1505, Bulgaria
TPP ContourGlobal Maritsa East 3, Mednikarovo village
6294, Galabovo District, Stara Zagora Region, Bulgaria
48 Sitnyakovo Blvd; 9-th fl., Sofia 1505, Bulgaria
Rua Leopoldo Couto Magalhães Junior, 758, 3º andar, São
Paulo 04542-000, Brazil
Rua Leopoldo Couto Magalhães Junior, 758, 3º andar, Itaim
Bibi , São Paulo 04542-000, Brazil
Rua Leopoldo Couto Magalhães Júnior, 758, 3º andar, Sao
Paulo 04542-000, Brazil
Rua Leopoldo Couto Magalhães Júnior, 758, 3º andar, Sao
Paulo 04542-000, Brazil
Rua Leopoldo Couto Magalhães Junior, 758, 3º andar, São
Paulo 04542-000, Brazil
Rodovia Dr. Mendel Steinbruch, S/N – Km, 08 Sala 182 –
Distrito Industrial – Maracanaú – CE
Rua Leopoldo Couto Magalhães Junior, 758, 3º andar, São
Paulo 04542-000, Brazil
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São
Paulo 04542-000 ,Brazil
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São
Paulo 04542-000
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São
Paulo 04542-000 ,Brazil
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São
Paulo 04542-000 ,Brazil
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São
Paulo 04542-000 ,Brazil
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São
Paulo 04542-000 ,Brazil
Santa Cruz Power Corporation Usinas
Hidroelétricas S.A.
Contour Global Do Brasil Holding Ltda
72%
Brazil
100%
Brazil
Contour Global Do Brasil Participações Ltda
80%
Brazil
Abas Geração de Energia Ltda.
100%
Brazil
Ventos de Santa Joana IX Energias Renováveis
S.A.
Calcedônia Geração de Energia Ltda.
51%
Brazil
100%
Brazil
Ventos de Santa Joana X Energias Renováveis
S.A.
Ventos de Santa Joana XI Energias Renováveis
S.A
Ventos de Santa Joana XII Energias Renováveis
S.A.
Ventos de Santa Joana XIII Energias Renováveis
S.A.
Ventos de Santa Joana XV Energias Renováveis
S.A.
Ventos de Santa Joana XVI Energias Renováveis
S.A.
51%
51%
51%
51%
51%
51%
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
December 31
2020
67.6
266.1
333.7
2019
77.3
258.8
336.1
December 31
2020
5.6
1.2
34.6
4.3
149.1
2019
6.1
21.6
33.5
5.3
111.5
194.8
178.0
210
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
211
Notes to the consolidated financial statements continued
Year ended December 31, 2020
Consolidated subsidiaries
Asa Branca Holding S.A.
Ownership
100%
Country of
incorporation
Brazil
Tespias Geração de Energia Ltda.
100%
Brazil
Asa Branca IV Energias Renováveis SA
100%
Brazil
Asa Branca V Energias Renováveis SA
100%
Brazil
Asa Branca VI Energias Renováveis SA
100%
Brazil
Asa Branca VII Energias Renováveis SA
100%
Brazil
Asa Branca VIII Energias Renováveis SA
100%
Brazil
Ventos de Santa Joana I Energias Renováveis S.A. 51%
Brazil
Ventos de Santa Joana III Energias Renováveis
S.A.
Ventos de Santa Joana IV Energias Renováveis
S.A.
Ventos de Santa Joana V Energias Renováveis
S.A.
Ventos de Santa Joana VII Energias Renováveis
S.A.
Ventos de Santo Augusto IV Energias Renováveis
S.A.
Chapada do Piauí I Holdings S.A.
51%
51%
51%
51%
51%
51%
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Ventos de Santo Augusto III Energias Renováveis
S.A.
Ventos de Santo Augusto V Energias Renováveis
S.A.
ContourGlobal Desenvolvimento S.A.
100%
Brazil
100%
Brazil
100%
Brazil
Chapada do Piauí II Holding S.A.
51%
Brazil
Chapada do Piauí III Holding S.A.
100%
Brazil
Capuava Energy Ltda
Afluente Geração de Energia Eletrica S.A.
Goias Sul Geração De Energia S.A.
RIO PCH I S.A.
Bahia PCH I S.A.
ContourGlobal LATAM S.A.
ContourGlobal Solutions Holdings Ltd
80%
80%
80%
56%
80%
100%
100%
Brazil
Brazil
Brazil
Brazil
Brazil
Colombia
Cyprus
ContourGlobal Solutions Ltd
100%
Cyprus
Selenium Holdings Ltd
100%
Cyprus
ContourGlobal La Rioja, S.L
100%
Spain
Registered address
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São Paulo
04542-000, Brazil
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São Paulo
04542-000, Brazil
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São Paulo
04542-000, Brazil
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São Paulo
04542-000, Brazil
Rua Leopoldo Couto Magalhães Júnior, 758, 3º andar, Sao
Paulo 04542-000, Brazil
Rua Leopoldo Couto Magalhães Júnior, 758, 3º andar, Sao
Paulo 04542-000, Brazil
Rua Leopoldo Couto Magalhães Júnior, 758, 3º andar, Sao
Paulo 04542-000, Brazil
Rodovia Dr. Mendel Steinbruch, S/N – Km, 08 Sala 182 –
Distrito Industrial – Maracanaú – CE
Rodovia Dr. Mendel Steinbruch, S/N – Km, 08 Sala 182 –
Distrito Industrial – Maracanaú – CE
Rodovia Dr. Mendel Steinbruch, S/N – Km 08 ,Sala 182 ,
Distrito Industrial – Maracanaú – CE
Rodovia Dr. Mendel Steinbruch, S/N – Km, 08 Sala 182 –
Distrito Industrial – Maracanaú – CE
Rodovia Dr. Mendel Steinbruch, S/N – Km, 08 Sala 182 –
Distrito Industrial – Maracanaú – CE
Rodovia Dr. Mendel Steinbruch, S/N – Km, 08 Sala 182 –
Distrito Industrial – Maracanaú – CE
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São Paulo
04542-000
Rodovia Dr. Mendel Steinbruch, S/N – Km, 08 Sala 182 –
Distrito Industrial – Maracanaú – CE
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São Paulo
04542-000 ,Brazil
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31 São Paulo
04542-000, Brazil
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São Paulo
04542-000
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São Paulo
04542-000
Av. Presidente Costa e Silva, 1178, parte, Santo André/
Praia do Flamengo, 70 – 1º andar Rio de Janeiro – RJ
Praia do Flamengo, 70 – 2º andar, parte. Rio de Janeiro – RJ
Praia do Flamengo, 70 – 4º andar Rio de Janeiro – RJ
Praia do Flamengo, 70 – 6º andar, parte. Rio de Janeiro – RJ
Carrera 7 No. 74-09, Bogota, Colombia
Capital Center, 2-4 Arch, Makarios III Avenue, 9th Floor,
Nicosia 1065, Cyprus
Capital Center, 2-4 Arch, Makarios III Avenue, 9th Floor,
Nicosia 1065, Cyprus
Capital Center, 2-4 Arch, Makarios III Avenue, 9th Floor,
Nicosia 1065, Cyprus
Arrúbal Power Plant, Polígono Industrial El Sequero,
26150 Arrúbal, La Rioja, Spain.
212
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Notes to the consolidated financial statements continued
Year ended December 31, 2020
Consolidated subsidiaries
Asa Branca Holding S.A.
Ownership
incorporation
Registered address
Country of
100%
Brazil
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São Paulo
Tespias Geração de Energia Ltda.
100%
Brazil
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São Paulo
Asa Branca IV Energias Renováveis SA
100%
Brazil
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São Paulo
Asa Branca V Energias Renováveis SA
100%
Brazil
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São Paulo
Asa Branca VI Energias Renováveis SA
100%
Brazil
Rua Leopoldo Couto Magalhães Júnior, 758, 3º andar, Sao
Asa Branca VII Energias Renováveis SA
100%
Brazil
Rua Leopoldo Couto Magalhães Júnior, 758, 3º andar, Sao
04542-000, Brazil
04542-000, Brazil
04542-000, Brazil
04542-000, Brazil
Paulo 04542-000, Brazil
Paulo 04542-000, Brazil
Paulo 04542-000, Brazil
S.A.
S.A.
S.A.
S.A.
S.A.
S.A.
S.A.
Distrito Industrial – Maracanaú – CE
Distrito Industrial – Maracanaú – CE
Distrito Industrial – Maracanaú – CE
Distrito Industrial – Maracanaú – CE
Distrito Industrial – Maracanaú – CE
Distrito Industrial – Maracanaú – CE
04542-000
Distrito Industrial – Maracanaú – CE
04542-000 ,Brazil
04542-000, Brazil
04542-000
04542-000
Ventos de Santa Joana III Energias Renováveis
51%
Brazil
Rodovia Dr. Mendel Steinbruch, S/N – Km, 08 Sala 182 –
Ventos de Santa Joana IV Energias Renováveis
51%
Brazil
Rodovia Dr. Mendel Steinbruch, S/N – Km 08 ,Sala 182 ,
Ventos de Santa Joana V Energias Renováveis
51%
Brazil
Rodovia Dr. Mendel Steinbruch, S/N – Km, 08 Sala 182 –
Ventos de Santa Joana VII Energias Renováveis
51%
Brazil
Rodovia Dr. Mendel Steinbruch, S/N – Km, 08 Sala 182 –
Ventos de Santo Augusto IV Energias Renováveis
51%
Brazil
Rodovia Dr. Mendel Steinbruch, S/N – Km, 08 Sala 182 –
Chapada do Piauí I Holdings S.A.
51%
Brazil
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São Paulo
Ventos de Santo Augusto III Energias Renováveis
100%
Brazil
Rodovia Dr. Mendel Steinbruch, S/N – Km, 08 Sala 182 –
Ventos de Santo Augusto V Energias Renováveis
100%
Brazil
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São Paulo
ContourGlobal Desenvolvimento S.A.
100%
Brazil
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31 São Paulo
Chapada do Piauí II Holding S.A.
51%
Brazil
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São Paulo
Chapada do Piauí III Holding S.A.
100%
Brazil
Rua Leopoldo Couto de Magalhães Jr., 758 – cj. 31, São Paulo
Capuava Energy Ltda
Afluente Geração de Energia Eletrica S.A.
Goias Sul Geração De Energia S.A.
RIO PCH I S.A.
Bahia PCH I S.A.
Brazil
Brazil
Brazil
Brazil
Brazil
Av. Presidente Costa e Silva, 1178, parte, Santo André/
Praia do Flamengo, 70 – 1º andar Rio de Janeiro – RJ
Praia do Flamengo, 70 – 2º andar, parte. Rio de Janeiro – RJ
Praia do Flamengo, 70 – 4º andar Rio de Janeiro – RJ
Praia do Flamengo, 70 – 6º andar, parte. Rio de Janeiro – RJ
ContourGlobal LATAM S.A.
Colombia
Carrera 7 No. 74-09, Bogota, Colombia
ContourGlobal Solutions Holdings Ltd
Cyprus
Capital Center, 2-4 Arch, Makarios III Avenue, 9th Floor,
80%
80%
80%
56%
80%
100%
100%
ContourGlobal Solutions Ltd
100%
Cyprus
Capital Center, 2-4 Arch, Makarios III Avenue, 9th Floor,
Selenium Holdings Ltd
100%
Cyprus
Capital Center, 2-4 Arch, Makarios III Avenue, 9th Floor,
ContourGlobal La Rioja, S.L
100%
Spain
Arrúbal Power Plant, Polígono Industrial El Sequero,
Nicosia 1065, Cyprus
Nicosia 1065, Cyprus
Nicosia 1065, Cyprus
26150 Arrúbal, La Rioja, Spain.
Asa Branca VIII Energias Renováveis SA
100%
Brazil
Rua Leopoldo Couto Magalhães Júnior, 758, 3º andar, Sao
ContourGlobal Management France SAS
100%
France
Ventos de Santa Joana I Energias Renováveis S.A. 51%
Brazil
Rodovia Dr. Mendel Steinbruch, S/N – Km, 08 Sala 182 –
ContourGlobal Worldwide Holdings Limited
100%
Gibraltar
Consolidated subsidiaries
Contourglobal Termosolar Operator S.L.
ContourGlobal Termosolar, S.L.
Rústicas Vegas Altas, S.L.
Termosolar Majadas, S.L.
Termosolar Palma Saetilla, S.L.
Termosolar Alvarado, S.L.
Crasodel Spain SL
Energies Antilles
Energies Saint-Martin
ContourGlobal Saint-Martin SAS
Ownership
100%
51%
51%
51%
51%
51%
100%
100%
100%
100%
Country of
incorporation
Spain
Spain
Spain
Spain
Spain
Spain
Spain
France
France
France
ContourGlobal Helios S.r.l.
ContourGlobal Solar Holdings (Italy) S.r.l.
ContourGlobal Oricola S.r.l.
ContourGlobal Solutions (Italy) S.R.L.
Portoenergy S.r.l.
Officine Solari Barone S.r.l.
Officine Solari Camporeale S.r.l.
Contourglobal Mediterraneo S.r.l
PVP 2 S.R.L.
ContourGlobal Sarda S.r.l
Officine Solari Kaggio S.r.l.
Officine Solari Aquila S.r.l.
ContourGlobal Energetica S.R.L.
ContourGlobal Eight Srl
ContourGlobal Green Srl
ContourGlobal Industrial Srl
ContourGlobal Light Srl
ContourGlobal One Srl
ContourGlobal Sole Srl
ContourGlobal Tracker Srl
ContourGlobal Sungea S.R.L.
Rinnovabili Bari Max S.R.L.
Solar 6 S.R.L.
Solar Realty S.R.L.
Solar 5 S.R.L.
BS Energia New S.R.L.
Campoverde Societa' Agricola S.R.L.
Ecoenergia S.R.L. - Societa' Agricola
ContourGlobal Management Italy S.R.L.
Interporto Solare S.R.L.
ContourGlobal Kosovo L.L.C.
51%
51%
100%
100%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
100%
100%
100%
51%
100%
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Kosovo
i
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a
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S
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t
s
Registered address
Calle Orense, número 34, 7° piso – 28020 Madrid, Spain
Calle Orense, número 34, 7° piso – 28020 Madrid, Spain
Calle Orense, número 34, 7° piso – 28020 Madrid, Spain
Calle Orense, número 34, 7° piso – 28020 Madrid, Spain
Calle Orense, número 34, 7° piso – 28020 Madrid, Spain
Calle Orense, número 34, 7° piso – 28020 Madrid, Spain
Calle Orense, número 34, 7° piso – 28020 Madrid, Spain
8, Avenue Hoche 75008 Paris
8, Avenue Hoche 75008 Paris
5 Rue du Gal de Gaulle, 8 Immeuble le Colibri Marigot,97150
Saint-Martin
Immeuble Imagine
20-26 boulevard du Parc 92200 Neuilly-sur-Seine
Hassans, Line Holdings Limited, 57/63 Line Wall Road,
Gibraltar
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Contrada Piana del Signore s.n.c.
93012 Gela (CL)
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Via Cusani 5, Milan 20121, Italy
Anton çeta 5a 1000 Pristina Republic of Kosovo
212
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
213
Notes to the consolidated financial statements continued
Year ended December 31, 2020
Consolidated subsidiaries
ContourGlobal Luxembourg S.àr.l.
Ownership
100%
Country of
incorporation
Luxembourg
Kani Lux Holdings S.à r.l.
80%
Luxembourg
ContourGlobal Africa Holdings S.à r.l.
100%
Luxembourg
ContourGlobal Bulgaria Holding S.à r.l.
100%
Luxembourg
ContourGlobal Spain Holding S.à r.l.
100%
Luxembourg
ContourGlobal Latam Holding S.à r.l.
100%
Luxembourg
Vorotan Holding S.à r.l.
100%
Luxembourg
ContourGlobal Terra 2 S.à r.l.
100%
Luxembourg
ContourGlobal Terra 3 S.à r.l.
100%
Luxembourg
ContourGlobal Development Holdings S.à r.l
100%
Luxembourg
ContourGlobal Terra 5 S.à r.l.
100%
Luxembourg
ContourGlobal Terra 6 S.à r.l.
100%
Luxembourg
ContourGlobal Solutions Holdings S.a.r.l.
100%
Luxembourg
ContourGlobal Senegal Holdings S.à r.l.
100%
Luxembourg
ContourGlobal Terra Holdings S.à r.l
100%
Luxembourg
ContourGlobal Power Holdings S.A.
100%
Luxembourg
ContourGlobal Worldwide Holdings S.à r.l.
100%
Luxembourg
ContourGlobal Mirror 1 S.à.r.l
ContourGlobal Mirror 2 S.à.r.l
ContourGlobal Mirror 3 S.à.r.l
51%
51%
51%
Luxembourg
Luxembourg
Luxembourg
ContourGlobal Spain O&M HoldCo S.à r.l.
100%
Luxembourg
ContourGlobal Intermediate O&M S.à r.l.
100%
Luxembourg
ContourGlobal Ursaria 3 S.à r.l.
100%
Luxembourg
ContourGlobal Mirror 7 S.à.r.l
100%
Luxembourg
Registered address
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
214
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Consolidated subsidiaries
Ownership
incorporation
Registered address
Country of
ContourGlobal Luxembourg S.àr.l.
100%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
Consolidated subsidiaries
ContourGlobal Mirror 4 S.à.r.l
Ownership
100%
Country of
incorporation
Luxembourg
Kani Lux Holdings S.à r.l.
80%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
Aero Flash Wind, S.A.P.I. DE C.V.
75%
Mexico
ContourGlobal holding de generación de energía de
México
ContourGlobal Servicios Administrativos de
generación
ContourGlobal Servicios Operacionales de México
Cogeneración de Altamira, S.A. DE C.V.
Cogeneración de Energía Limpia De Cosoleacaque S.A
De C.V.
KivuWatt Holdings
100%
100%
100%
100%
100%
100%
Mexico
Mexico
Mexico
Mexico
Mexico
Mauritius
ContourGlobal Solutions (Nigeria) Ltd
100%
Nigeria
ContourGlobal Solutions Nigeria Holdings B.V.
Contourglobal Bonaire B.V.
Energía Eólica S.A.
ContourGlobal Peru SAC
Energía Renovable Peruana S.A.
Energía Renovable del Norte S.A.
ContourGlobal Solutions (Poland) Sp. Z o.o.
ContourGlobal Paraguay Holdings SA
ContourGlobal Solutions (Ploiesti) S.R.L.
100%
100%
100%
100%
100%
100%
100%
100%
100%
Netherlands
Netherlands
Peru
Peru
Peru
Peru
Poland
Paraguay
Romania
Petosolar S.R.L.
100%
Romania
Notes to the consolidated financial statements continued
Year ended December 31, 2020
ContourGlobal Africa Holdings S.à r.l.
100%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
ContourGlobal Bulgaria Holding S.à r.l.
100%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
ContourGlobal Spain Holding S.à r.l.
100%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
ContourGlobal Latam Holding S.à r.l.
100%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
Vorotan Holding S.à r.l.
100%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
ContourGlobal Terra 2 S.à r.l.
100%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
ContourGlobal Terra 3 S.à r.l.
100%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
ContourGlobal Development Holdings S.à r.l
100%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
ContourGlobal Terra 5 S.à r.l.
100%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
ContourGlobal Terra 6 S.à r.l.
100%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
ContourGlobal Solutions Holdings S.a.r.l.
100%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
ContourGlobal Senegal Holdings S.à r.l.
100%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
ContourGlobal Terra Holdings S.à r.l
100%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
ContourGlobal Power Holdings S.A.
100%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
ContourGlobal Worldwide Holdings S.à r.l.
100%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
ContourGlobal Mirror 1 S.à.r.l
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
ContourGlobal Mirror 2 S.à.r.l
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
ContourGlobal Mirror 3 S.à.r.l
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
51%
51%
51%
ContourGlobal Spain O&M HoldCo S.à r.l.
100%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
ContourGlobal Intermediate O&M S.à r.l.
100%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
ContourGlobal Ursaria 3 S.à r.l.
100%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
ContourGlobal Mirror 7 S.à.r.l
100%
Luxembourg
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand Duchy
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
of Luxembourg
Kivu Watt Ltd
100%
RENERGIE Solarny Park Holding SK I a.s.
51%
51%
PV Lucenec S.R.O.
RENERGIE Solárny park Rimavské Jánovce s.r.o. 51%
51%
RENERGIE Solárny park Dulovo s.r.o.
51%
RENERGIE Solárny park Gemer s.r.o.
51%
RENERGIE Solárny park Hodejov s.r.o.
51%
RENERGIE Solárny park Jesenské s.r.o.
51%
RENERGIE Solárny park Nižná Pokoradz s.r.o.
51%
RENERGIE Solárny park Riečka s.r.o.
51%
RENERGIE Solárny park Rohov s.r.o.
51%
RENERGIE Solárny park Starňa s.r.o.
51%
RENERGIE Solárny park Včelince 2 s.r.o.
51%
RENERGIE Solárny park Hurbanovo s.r.o.
51%
AlfaPark s.r.o.
51%
RENERGIE Druhá slnečná s.r.o.
51%
SL03 s.r.o.
51%
RENERGIE Solárny park Bánovce nad Ondavou
s.r.o.
RENERGIE Solárny park Bory s.r.o.
RENERGIE Solárny park Budulov s.r.o.
RENERGIE Solárny park Kalinovo s.r.o.
ZetaPark Lefantovce s.r.o.
RENERGIE Solárny Lefantovce s.r.o.
51%
51%
51%
51%
51%
Registered address
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand
Duchy of Luxembourg
Mexico City, Mexico / Tax Address : Ciudad de Tecate, Baja
California
Monterrey, Estado de Nuevo Leon, Mexico
Monterrey, Estado de Nuevo Leon, Mexico
Monterrey, Estado de Nuevo Leon, Mexico
San Pedro Garza Garcia, Nuevo Leon, Mexico
San Pedro Garza Garcia, Nuevo Leon, Mexico
4th Floor, Tower A, 1CyberCity, c/o Citco (Mauritius) Limited,
Ebene, Mauritius
St. Nicholas House, 10th Floor, Catholic Mission Street,
Lagos, Nigeria
Keplerstraat 34, Badhoevedorp 1171CD, Netherlands
Kaya Carlos A. Nicolaas 3 , Bonaire, Netherlands
Av. Ricardo Palma 341, Office 306, Miraflores, Lima 18, Peru
Av. Ricardo Palma 341, Office 306, Miraflores, Lima 18, Peru
Av. Ricardo Palma 341, Office 306, Miraflores, Lima 18, Peru
Av. Ricardo Palma 341, Office 306, Miraflores, Lima 18, Peru
ul. Przemyslowa 2A, Radzymin 05-250 - Poland
i
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Simon Bolivar, # 914 casi Parapiti, Asuncion, Paraguay
Ploeisti, 285 Gheorge Grigore, Cantacuzino street, Prahova
County, Ploeisti, Romania
7 Ghiocei street, ap. 1, Panciu locality, Panciu city, Vrancea county,
Romania
Plot 9714, Nyarutarama, P. O. Box 6679, Kigali, Rwanda
Rwanda
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Slovak Republic Pribinova 25, 811 09 Bratislava,Slovakia
Slovak Republic Pribinova 25, 811 09 Bratislava,Slovakia
Slovak Republic Pribinova 25, 811 09 Bratislava,Slovakia
Slovak Republic Pribinova 25, 811 09 Bratislava,Slovakia
Slovak Republic Pribinova 25, 811 09 Bratislava,Slovakia
Slovak Republic Pribinova 25, 811 09 Bratislava,Slovakia
Slovak Republic Pribinova 25, 811 09 Bratislava,Slovakia
Slovak Republic Pribinova 25, 811 09 Bratislava,Slovakia
Slovak Republic Pribinova 25, 811 09 Bratislava,Slovakia
Slovak Republic Pribinova 25, 811 09 Bratislava,Slovakia
Slovak Republic Pribinova 25, 811 09 Bratislava,Slovakia
Slovak Republic Pribinova 25, 811 09 Bratislava,Slovakia
Slovak Republic Pribinova 25, 811 09 Bratislava,Slovakia
Slovak Republic Pribinova 25, 811 09 Bratislava,Slovakia
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
214
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
215
Notes to the consolidated financial statements continued
Year ended December 31, 2020
Consolidated subsidiaries
RENERGIE Solárny park Michalovce s.r.o.
RENERGIE Solárny park Nižný Skálnik s.r.o.
RENERGIE Solárny park Otročok s.r.o.
RENERGIE Solárny park Paňovce s.r.o.
RENERGIE Solárny park Gomboš s.r.o.
RENERGIE Solárny park Rimavská Sobota s.r.o.
RENERGIE Solárny park Horné Turovce s.r.o.
RENERGIE Solárny park Uzovská Panica s.r.o.
RENERGIE Solárny park Zemplínsky Branč s.r.o.
ZetaPark s.r.o.
ContourGlobal Cap des Biches Senegal S.à r.l.
ContourGlobal Togo S.A.
ContourGlobal Services Africa S. à r.l.
Ownership
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
100%
80%
100%
75%
AMC Energy LLC
ContourGlobal Solutions Ukraine LLC
100.0
ContourGlobal Solutions (Northern Ireland) Limited 100%
ContourGlobal Europe Limited
Contour Global Hummingbird UK Holdco I Ltd
Contour Global Hummingbird UK Holdco II Ltd
Contour Global LLC
Contour Global Management Inc
ContourGlobal Services Brazil LLC
ContourGlobal Togo LLC
ContourGlobal A Funding LLC
ContourGlobal Senegal Holdings LLC
ContourGlobal Senegal LLC
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
CG Solutions Global Holding Company LLC
100%
Contour Global Hummingbird US Holdco Inc
100%
Registered address
Country of
incorporation
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Senegal
Togo
Togo
2, Place de L'Indépendance, Dakar, BP 23607, Senegal
Route D'Aného, Baguida, BP 3662 , Lomé - Togo
Immeuble SCI – Direction de l’administration pénitentiaire &
de la réinsertion – Angle Rue Agbata, Boulevard du 13
Janvier – 01 BP 3662, Lomé -TOGO
02125 ,1 Prospect Vyzvolyteliv, Kiev, Ukraine
Ukraine
Ukraine
United Kingdom 6th Floor Lesley Tower, 42-26 Fountain Street, Belfast BT1
32, Konstantiniska street, 04071 Kiev, Ukraine
5EF, Ireland
United Kingdom 116 Park Street 7th Floor, London, United Kingdom, W1K 6SS
United Kingdom 116 Park Street 7th Floor, London, United Kingdom, W1K 6SS
United Kingdom 116 Park Street 7th Floor, London, United Kingdom, W1K 6SS
US
1209 Orange Street, Corporation Trust Center, Wilmington,
Delaware 19801
1209 Orange Street, Corporation Trust Center, Wilmington,
Delaware 19801
650 Fifth Ave - 17th Fl., New York, New York 10019
2711 Centerville Road, Suite 400, Wilmington, Delaware
19808
1209 Orange Street, Corporation Trust Center, Wilmington,
Delaware 19801
2711 Centerville Road, Suite 400, Wilmington, Delaware
19808
1209 Orange Street, Corporation Trust Center, Wilmington,
Delaware 19801
Corporation Trust Center, 1209 Orange Street, Corporation
Trust Center, Wilmington, Delaware 19801
12 Timber Creek Lane, Universal Registered Agents, County
of New Castle, Newark, Delaware 19711
US
US
US
US
US
US
US
US
Investments in associates accounted
under the equity method:
TermoemCali I S.A. E.S.P.
Compañía Eléctrica de Sochagota S.A. E.S.P.
Evacuacion Villanueva des Rey, S.L.
Ownership
37%
49%
18%
Country of
incorporation
Colombia
Colombia
Spain
Registered address
Carrera 5A Nº 71-45, Bogotá, Colombia
Carrera 14 No. 20-21 Local 205A, Plaza Real, Tunja, Colombia
Calle Orense 34, 7ª planta, 28020 Madrid, Spain
216
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
Notes to the consolidated financial statements continued
Year ended December 31, 2020
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
100%
80%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Consolidated subsidiaries
Ownership
incorporation
Registered address
Country of
RENERGIE Solárny park Michalovce s.r.o.
RENERGIE Solárny park Nižný Skálnik s.r.o.
RENERGIE Solárny park Otročok s.r.o.
RENERGIE Solárny park Paňovce s.r.o.
RENERGIE Solárny park Gomboš s.r.o.
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
RENERGIE Solárny park Rimavská Sobota s.r.o.
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
RENERGIE Solárny park Horné Turovce s.r.o.
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
RENERGIE Solárny park Uzovská Panica s.r.o.
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
RENERGIE Solárny park Zemplínsky Branč s.r.o.
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
ZetaPark s.r.o.
Slovak Republic 25 Pribinova Str., Bratislava 811 09, Slovakia
ContourGlobal Cap des Biches Senegal S.à r.l.
Senegal
2, Place de L'Indépendance, Dakar, BP 23607, Senegal
ContourGlobal Togo S.A.
ContourGlobal Services Africa S. à r.l.
Togo
Togo
Route D'Aného, Baguida, BP 3662 , Lomé - Togo
Immeuble SCI – Direction de l’administration pénitentiaire &
de la réinsertion – Angle Rue Agbata, Boulevard du 13
Janvier – 01 BP 3662, Lomé -TOGO
02125 ,1 Prospect Vyzvolyteliv, Kiev, Ukraine
32, Konstantiniska street, 04071 Kiev, Ukraine
AMC Energy LLC
ContourGlobal Solutions Ukraine LLC
75%
100.0
Ukraine
Ukraine
ContourGlobal Solutions (Northern Ireland) Limited 100%
United Kingdom 6th Floor Lesley Tower, 42-26 Fountain Street, Belfast BT1
ContourGlobal Europe Limited
United Kingdom 116 Park Street 7th Floor, London, United Kingdom, W1K 6SS
Contour Global Hummingbird UK Holdco I Ltd
United Kingdom 116 Park Street 7th Floor, London, United Kingdom, W1K 6SS
Contour Global Hummingbird UK Holdco II Ltd
United Kingdom 116 Park Street 7th Floor, London, United Kingdom, W1K 6SS
Contour Global LLC
1209 Orange Street, Corporation Trust Center, Wilmington,
Contour Global Management Inc
1209 Orange Street, Corporation Trust Center, Wilmington,
ContourGlobal Services Brazil LLC
ContourGlobal Togo LLC
650 Fifth Ave - 17th Fl., New York, New York 10019
2711 Centerville Road, Suite 400, Wilmington, Delaware
ContourGlobal A Funding LLC
1209 Orange Street, Corporation Trust Center, Wilmington,
ContourGlobal Senegal Holdings LLC
2711 Centerville Road, Suite 400, Wilmington, Delaware
ContourGlobal Senegal LLC
1209 Orange Street, Corporation Trust Center, Wilmington,
5EF, Ireland
Delaware 19801
Delaware 19801
Delaware 19801
19808
19808
Delaware 19801
CG Solutions Global Holding Company LLC
100%
Contour Global Hummingbird US Holdco Inc
100%
12 Timber Creek Lane, Universal Registered Agents, County
Corporation Trust Center, 1209 Orange Street, Corporation
Trust Center, Wilmington, Delaware 19801
of New Castle, Newark, Delaware 19711
US
US
US
US
US
US
US
US
US
Investments in associates accounted
under the equity method:
TermoemCali I S.A. E.S.P.
Compañía Eléctrica de Sochagota S.A. E.S.P.
Evacuacion Villanueva des Rey, S.L.
Country of
Colombia
Colombia
Spain
37%
49%
18%
Ownership
incorporation
Registered address
Carrera 5A Nº 71-45, Bogotá, Colombia
Carrera 14 No. 20-21 Local 205A, Plaza Real, Tunja, Colombia
Calle Orense 34, 7ª planta, 28020 Madrid, Spain
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Related party disclosure
ContourGlobal L.P. and Reservoir Capital Group
As of December 31, 2020 ContourGlobal plc and its subsidiaries have no significant trading relationship with the Group’s main
shareholder, ContourGlobal L.P., and Reservoir Capital Group which ultimately controls ContourGlobal L.P.
Key management personnel
Compensation paid to key management (executive and non-executive committee members) amounted to $15.2 million in
December 31, 2020 (December 31, 2019: $16.1 million).
In $ millions
Salaries and short term employee benefits
Termination benefits
Post employment benefits
Profit-sharing and bonus schemes
Private incentive plan (1)
Non-executive Directors' emoluments
Other share based payments
Total
(1)
Refer to note 4.27 Share-based compensation plans
Years ended December 31
2020
4.6
0.1
2.0
6.6
0.8
1.1
15.2
2019
4.8
-
-
1.2
9.1
0.8
0.2
16.1
4.32 Financial commitments and contingent liabilities
a) Commitments
The Group has contractual commitments with, among others, equipment suppliers, professional service organizations and EPC
contractors in connection with its power projects under construction that require payment upon reaching certain milestones.
As of December 31, 2020, the Group has completed its Maritsa construction projects and had $1.2 million of firm purchase
commitments of property plant and equipment outstanding in connection with its facilities. The Group has also contractual
arrangements with Operating and Maintenance (O&M) providers and transmission operators as it relates to certain of its
operating assets. Maritsa has a long-term Lignite Supply Agreement (LSA) with Maritsa Iztok Mines (MMI) for the purchase
of lignite. According to the agreement, Maritsa has to purchase minimum monthly quantities, amounting to 6,187 thousand
standard tons per calendar year. The total commitment through the remaining term of the LSA (February 2024) is 19,077
thousand standard tons, equal to $196.6 million at December 2020 prices ($10.31 per standard ton), as compared to 25,264
thousand standard tons equal to $239.0 million at the end of 2019 ($9.46 per standard ton). In the event of a failure on the
part of CG Maritsa East 3 AD (ME-3) to take a minimum monthly quantity in any month, ME-3 shall, except in cases caused
by Force Majeure and certain actions of Bulgarian authorities as described in the contract, pay to MMI an amount equal to
the difference between (i) the aggregate amount paid or payable in respect of lignite delivered during such month and (ii)
the aggregate amount that would have been payable had the minimum monthly quantity been taken during such month.
Pursuant to Vorotan acquisition, the Group has agreed to refurbish the hydro power plants and intends to invest approximately
€71.8 million ($87.7 million) over four years in a refurbishment program started in 2017 to modernize Vorotan and improve its
operational performance, safety, reliability and efficiency. As of December 31, 2020 Vorotan disbursed €37.7 million ($46.1 million)
out of the €51.0 million ($62.3 million) of loan of which €0.9 million ($1.1 million) was an advance payment to the EPC contractors.
The Group has also agreements related to our Austria Wind project repowering started in 2017. As of December 31, 2020
we are committed to purchase €45.7 million ($55.8 million) worth of equipment and installation in the years 2021 and 2022.
b) Contingent liabilities
The Group has contingent liabilities in respect of legal and tax claims arising in the ordinary course of business. The Group
reviews these matters in consultation with internal and external legal counsel to make a determination on a case-by-case
basis whether a loss from each of these matters is probable, possible or remote. These claims involve different parties and
are subject to substantial uncertainties.
Operation & Maintenance contractor litigation (Energies Antilles)
In 2015, a €5 million legal claim was brought against EA by the O&M contractor in relation to cost overruns following changes
in French labor laws (“IEG status”—Industries Electriques et Gazières). On 21st September 2018, judgment was rendered by
the Commercial Court of Paris in favor of the O&M contractor. The Commercial Court appointed an expert to determine the
amount of costs for which EA should be liable, as opposed to those costs that were attributable to the O&M contractor's
management decisions. Several meetings with the expert have already taken place. In parallel with the expert proceeding, EA
appealed before the Paris Court of Appeal against the Commercial Court’s decision on legal grounds. To date, the expert has
216
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217
Notes to the consolidated financial statements continued
Year ended December 31, 2020
not yet issued his report as to the costs for which EA should be liable and the decision of the Appeal is expected in the first
half of 2021. No provision has been recorded as of 31st December 2020 in relation to the above claim as the Group considers
it is not possible to make a reliable estimate of amounts that may be due to the O&M contractor and there is also a possibility
of no liability occurring.
Kivuwatt arbitration (KivuWatt Ltd)
REG, which replaced its subsidiary Energy Utility Corporation (EUCL) as the claimant in an ad hoc arbitration under the
arbitration rules of the United Nation Commission on International Trade Law (UNCITRAL), claims damages provisionally
quantified at approximately $80 million allegedly arising from KivuWatt’s alleged delay in entering into commercial service.
KivuWatt contests REG’s right to any damages over and above the $1.2 million cap in liquidated damages provided for in the
Power Purchase Agreement and already paid by KivuWatt.
No provision has been recorded as of 31st December 2020 in relation to the above claims as the Group considers that it is
less than probable that liabilities will arise from these claims.
Solar Italy insurance claim
A fire occurred in September 2018 on a portion of a photovoltaic plant owned by the Group in Italy located on the rooftop of
an industrial building owned by a third-party and caused damage to the facility below. In 2019, the third-party’s insurers have
claimed €6.9 million ($8.3 million).
No provision has been recorded as of 31st December 2020 in relation to the above claim as the Group considers that it is less
than probable that the Group could be held liable and there are reasonable grounds to believe that any such liability will be
covered by the insurance policy.
Mexico CHP wheeling charges
The injunction granted in the context of the Amparo lawsuit in Mexico described in note 2.4 was conditional upon submission
of monthly guarantees (bonds) to the court to cover the difference between the former wheeling fees and the new ones.
These guarantees amount to $15.9 million as of December 31, 2020.
As an unfavorable outcome is considered unlikely, a contingent liability has been disclosed in relation to the guarantees
opposed to a provision. Further, in the unlikely event that the wheeling fees increase is confirmed in the final judgement,
the Company will recharge most of the increased fees to the related offtakers and will incur additional wheeling fees below
$2 million in relation to the year ended 31 December 2020.
Togo new claim
ContourGlobal Togo received in late December 2020 a notification from CEET (offtaker of the power purchase agreement) and the
Republic of Togo regarding certain alleged breaches of the power purchase agreement and concession agreement, respectively,
questioning the performance of the Togo Plant and alleging overpayment of $34 million under “take or pay” provisions. The risk of
a liability to CEET is assessed as possible and no provision has been recognized as of 31 December 2020.
Taxes
Judgement is sometimes required in determining how to account for indirect or direct tax positions where the ultimate
tax determination is uncertain. These positions include areas such as the tax deductibility or treatment of certain costs (in
particular, of one-off items that might arise on an acquisition, disposal or internal restructuring), the pricing of goods or services
provided between group companies and the application of local tax law within each territory in which the group operates.
Liabilities are recognized in accordance with relevant accounting standards based on management's best estimate of the
outcome, having taken advice where it is considered appropriate to do so. However, if the Group is challenged by local tax
authorities, it is possible that the final outcome of these matters may be different from the amounts recorded and additional
expenses may be recognized in later periods. The Group is not currently subject to any tax audit where it is considered there
is a more than remote probability of a material tax adjustment where we have not provisioned and the risk of a material
adjustment to tax provisions within the next 12 months is not considered to be significant.
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Notes to the consolidated financial statements continued
Year ended December 31, 2020
not yet issued his report as to the costs for which EA should be liable and the decision of the Appeal is expected in the first
half of 2021. No provision has been recorded as of 31st December 2020 in relation to the above claim as the Group considers
it is not possible to make a reliable estimate of amounts that may be due to the O&M contractor and there is also a possibility
of no liability occurring.
Kivuwatt arbitration (KivuWatt Ltd)
REG, which replaced its subsidiary Energy Utility Corporation (EUCL) as the claimant in an ad hoc arbitration under the
arbitration rules of the United Nation Commission on International Trade Law (UNCITRAL), claims damages provisionally
quantified at approximately $80 million allegedly arising from KivuWatt’s alleged delay in entering into commercial service.
KivuWatt contests REG’s right to any damages over and above the $1.2 million cap in liquidated damages provided for in the
Power Purchase Agreement and already paid by KivuWatt.
No provision has been recorded as of 31st December 2020 in relation to the above claims as the Group considers that it is
less than probable that liabilities will arise from these claims.
A fire occurred in September 2018 on a portion of a photovoltaic plant owned by the Group in Italy located on the rooftop of
an industrial building owned by a third-party and caused damage to the facility below. In 2019, the third-party’s insurers have
No provision has been recorded as of 31st December 2020 in relation to the above claim as the Group considers that it is less
than probable that the Group could be held liable and there are reasonable grounds to believe that any such liability will be
Solar Italy insurance claim
claimed €6.9 million ($8.3 million).
covered by the insurance policy.
Mexico CHP wheeling charges
The injunction granted in the context of the Amparo lawsuit in Mexico described in note 2.4 was conditional upon submission
of monthly guarantees (bonds) to the court to cover the difference between the former wheeling fees and the new ones.
These guarantees amount to $15.9 million as of December 31, 2020.
As an unfavorable outcome is considered unlikely, a contingent liability has been disclosed in relation to the guarantees
opposed to a provision. Further, in the unlikely event that the wheeling fees increase is confirmed in the final judgement,
the Company will recharge most of the increased fees to the related offtakers and will incur additional wheeling fees below
$2 million in relation to the year ended 31 December 2020.
ContourGlobal Togo received in late December 2020 a notification from CEET (offtaker of the power purchase agreement) and the
Republic of Togo regarding certain alleged breaches of the power purchase agreement and concession agreement, respectively,
questioning the performance of the Togo Plant and alleging overpayment of $34 million under “take or pay” provisions. The risk of
a liability to CEET is assessed as possible and no provision has been recognized as of 31 December 2020.
Togo new claim
Taxes
Judgement is sometimes required in determining how to account for indirect or direct tax positions where the ultimate
tax determination is uncertain. These positions include areas such as the tax deductibility or treatment of certain costs (in
particular, of one-off items that might arise on an acquisition, disposal or internal restructuring), the pricing of goods or services
provided between group companies and the application of local tax law within each territory in which the group operates.
Liabilities are recognized in accordance with relevant accounting standards based on management's best estimate of the
outcome, having taken advice where it is considered appropriate to do so. However, if the Group is challenged by local tax
authorities, it is possible that the final outcome of these matters may be different from the amounts recorded and additional
expenses may be recognized in later periods. The Group is not currently subject to any tax audit where it is considered there
is a more than remote probability of a material tax adjustment where we have not provisioned and the risk of a material
adjustment to tax provisions within the next 12 months is not considered to be significant.
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c) Leasing activities
Operating lease as a lessor
The Group is lessor under non-cancellable operating leases. The future aggregate minimum lease payments receivable under
non-cancellable operating leases are as follows:
In $ millions
Minimum lease payments receivable
No later than 1 year
Later than 1 year and no later than 5 years
Later than 5 years
Total
Years ended December 31
2020
2019
21.9
61.6
13.4
96.9
32.7
79.3
23.2
135.2
The property, plant and equipment related to the assets as the operating lease as a lessor relates to Solutions plants and
Energie Antilles on the year ended December 31, 2020 as follows.
In $ millions
Cost
Accumulated depreciation and impairment
Carrying amount as of January 1, 2020
Additions
Disposals
Reclassification
Currency translation differences
Depreciation charge
Closing net book amount
Cost
Accumulated depreciation and impairment
Carrying amount as of December 31, 2020
Land
6.2
–
6.2
–
–
–
(1.4)
–
4.8
4.8
–
4.8
Power plant
assets
228.6
(121.9)
106.7
0.8
(0.9)
0.9
(18.6)
(5.6)
83.3
208.9
(125.6)
83.3
Construction
work in progress
0.2
–
0.2
1.1
–
(0.6)
–
–
0.7
0.7
–
0.7
Right of use of
assets
0.2
(0.1)
0.1
0.1
–
–
–
(0.1)
0.1
0.1
–
0.1
Other
60.4
(21.1)
39.3
0.9
–
0.5
(8.3)
(3.4)
29.0
50.0
(21.0)
29.0
Total
295.6
(143.1)
152.5
2.9
(0.9)
0.8
(28.3)
(9.1)
117.9
264.5
(146.6)
117.9
The property, plant and equipment related to the assets as the operating lease as a lessor relates to Solutions plants and
Energie Antilles on the year ended December 31, 2019 as follows.
In $ millions
Cost
Accumulated depreciation and impairment
Carrying amount as of January 1, 2019
Effect of change in accounting standard (1)
Carrying amount as of January 1, 2019 (restated)
Additions
Disposals
Reclassification
Currency translation differences
Depreciation charge
Closing net book amount
Cost
Accumulated depreciation and impairment
Carrying amount as of December 31, 2019
Land
6.5
–
6.5
–
6.5
–
–
–
(0.3)
–
6.2
6.2
–
6.2
Power plant
assets
232.0
(116.9)
115.1
–
115.1
1.4
(0.5)
0.8
(3.6)
(6.5)
106.7
228.6
(121.9)
106.7
Construction
work in progress
0.6
–
0.6
–
0.6
0.3
(0.1)
(0.6)
–
–
0.2
0.2
–
0.2
Right of use of
assets
–
–
–
0.2
0.2
–
–
–
–
(0.1)
0.1
0.2
(0.1)
0.1
Other
57.6
(17.4)
40.2
–
40.2
4.7
(0.5)
0.8
(1.5)
(4.4)
39.3
60.4
(21.1)
39.3
Total
296.7
(134.3)
162.4
0.2
162.6
6.4
(1.1)
1.0
(5.4)
(11.0)
152.5
295.6
(143.1)
152.5
(1) With the implementation of IFRS 16 on 1 January 2019, right of use assets amounting to $0.2 million were recognized. The right of use assets mainly relates to
office space.
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219
Notes to the consolidated financial statements continued
Year ended December 31, 2020
Finance lease as a lessor
The future aggregate minimum lease payments under non-cancellable finance leases (relating to our operation of Energies
Saint Martin) are as follows:
In $ millions
Minimum lease payments receivable
No later than 1 year
Later than 1 year and no later than 5 years
Later than 5 years
Gross investment in the lease
Less: unearned finance income
Total
In $ millions
Analyzed as:
Present value of minimum lease payments receivable:
No later than 1 year
Later than 1 year and no later than 5 years
Later than 5 years
Total
Years ended December 31
2020
2019
6.0
12.1
–
18.1
(2.9)
15.2
5.5
16.6
–
22.1
(4.4)
17.7
Years ended December 31
2020
2019
5.6
9.6
–
15.2
5.1
12.6
–
17.7
4.33 Guarantees and letters of credit
The Group and its subsidiaries enter into various contracts that include indemnification and guarantee provisions as a routine
part of the Group’s business activities. Such contracts generally indemnify the counterparty for tax, environmental liability,
litigation, and other matters, as well as breaches of representations, warranties, and covenants set forth in the agreements.
In many cases, the Group’s maximum potential liability cannot be estimated, since some of the underlying agreements contain
no limits on potential liability. The Group considers outflow relating to these guarantees to be remote and therefore no fair
value liability has been recognized.
The Group also acts as guarantor to certain of its subsidiaries and obligor with respect to some long-term arrangements
contracted at project level.
For the financial guarantees and letters of credit, refer to note 4.24 Borrowings.
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The future aggregate minimum lease payments under non-cancellable finance leases (relating to our operation of Energies
Notes to the consolidated financial statements continued
Year ended December 31, 2020
Finance lease as a lessor
Saint Martin) are as follows:
In $ millions
Minimum lease payments receivable
No later than 1 year
Later than 1 year and no later than 5 years
Later than 5 years
Gross investment in the lease
Less: unearned finance income
Total
Present value of minimum lease payments receivable:
Later than 1 year and no later than 5 years
In $ millions
Analyzed as:
No later than 1 year
Later than 5 years
Total
4.33 Guarantees and letters of credit
The Group and its subsidiaries enter into various contracts that include indemnification and guarantee provisions as a routine
part of the Group’s business activities. Such contracts generally indemnify the counterparty for tax, environmental liability,
litigation, and other matters, as well as breaches of representations, warranties, and covenants set forth in the agreements.
In many cases, the Group’s maximum potential liability cannot be estimated, since some of the underlying agreements contain
no limits on potential liability. The Group considers outflow relating to these guarantees to be remote and therefore no fair
value liability has been recognized.
contracted at project level.
The Group also acts as guarantor to certain of its subsidiaries and obligor with respect to some long-term arrangements
For the financial guarantees and letters of credit, refer to note 4.24 Borrowings.
Years ended December 31
2020
2019
6.0
12.1
–
18.1
(2.9)
15.2
5.6
9.6
–
15.2
5.5
16.6
–
22.1
(4.4)
17.7
5.1
12.6
–
17.7
Years ended December 31
2020
2019
4.34 Statutory Auditors’ fees
In $ millions
Fees payable to the Group's auditors for the audit of the Group's annual accounts
and consolidated financial statements
Fees payable to the Group's auditors and its associates for other services:
– The audit of the Group's subsidiaries
– Audit- related assurance services
– Other assurance services
– Tax compliance services
– Tax advisory services
– Other non-audit services
Total (net of out of pocket expenses)
Years ended December 31
2020
2019
1.3
1.0
0.4
0.6
–
–
–
3.3
1.3
1.4
1.1
0.4
–
–
–
4.2
4.35 Subsequent events
On January 6, 2021 the Group redeemed the €450 million ($549.7 million) aggregate principal amount of its 3.375% senior
secured notes due 2023, refer to note 4.24 Borrowings.
On February 18, 2021 the group announced the closing of the acquisition of the 1,502 MW portfolio of six contracted operating
power plants located in the United States and Trinidad and Tobago from Western Generation Partners, LLC. The consideration
for the Acquired Assets is $837 million on a debt free, cash free basis and the Group will assume approximately $207.3 million
of existing project net debt with the Acquired Assets.
On 29 January 2021, the president of the United Mexican States submitted before the Mexican Chamber of Representatives
(Cámara de Diputados) a preferential initiative intended to modify several provisions of the Power Industry Law (Ley de la
Industria Eléctrica) (“LIE”). One of the proposed changes is to modify the order in which electricity is dispatched to the system,
which would favor the State-owned power plants and may have an adverse impact on future revenues and profits in our
Mexican assets, and the LIE would also allow for CRE to revoke self supply permits benefitting legado generators in cases
where they were fraudulently procured. After an express parliamentary process, the reform has been enacted on 10 March
2021. The Group has engaged external advisors who have indicated that the proposed changes are unconstitutional and are
preparing amparo claims to challenge the reform. The Group is currently assessing the potential financial impacts for our CHP
Mexico assets.
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Notes to the Company financial statements
Year ended December 31, 2020
Company balance sheet
At 31st December 2020
In $ millions
Fixed assets
Investments
Current assets
Debtors
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current assets
Net assets
Capital and reserves
Called-up share capital
Share premium account
Treasury shares
Retained earnings and other reserves
Total shareholders' funds
Note
2020
2019
6
7
8
9
1,642.1
1,642.1
3.9
5.0
8.9
(3.7)
5.2
1,647.3
8.9
380.8
(30.4)
1,288.0
1,647.3
6.1
12.9
19.0
(3.8)
15.2
1,657.3
8.9
380.8
–
1,267.7
1,657.3
The Company’s profit for the year ended 31 December 2020 was $124.2 million (2019: $147.3 million).
The financial statements on pages 222 to 227 were approved and authorized for issue by the board and were signed on its
behalf by:
Joseph C. Brandt
Director
18 March 2021
Registered Number: 10982736
Company statement of changes in equity
For the year ended 31 December 2020
in $ millions
At 31st December 2018
Share based payments (1)
Dividends distribution (2)
Profit for the year
At 31st December 2019
Share based payments (1)
Dividends distribution (2)
Treasury shares (3)
Profit for the year
At 31st December 2020
Called-up
share capital
8.9
–
–
–
8.9
–
–
–
–
8.9
Share premium
account
380.8
–
–
–
380.8
–
–
–
–
380.8
Treasury
shares
–
–
–
–
–
–
–
(30.4)
–
(30.4)
Retained
earnings and
other reserves
1,256.6
1.3
(137.6)
147.3
1,267.6
1.9
(105.7)
–
124.2
1,288.0
Total
1,646.3
1.3
(137.6)
147.3
1,657.3
1.9
(105.7)
(30.4)
124.2
1,647.3
(1)
Includes CEO deferred bonus award and Long Term Investing Plan impact on equity.
(2) During the year ended 31 December 2020 the Group paid dividends of $24.8 million on April 9, 2020, $27.1 million on June 26, 2020, $27.0 million on
September 25, 2020 and $26.8 million on December 29, 2020. During the year ended 31st December 2019 the Group paid dividends of $63.3 million on
24th May 2019, $24.75 million on each of the following dates 18th June 2019, 3rd September 2019 and 24th December 2019. For further details on dividends
paid, refer to page 200 of the Group’s financial statements.
(3)
See note 10.
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Notes to the Company financial statements
Year ended December 31, 2020
Company balance sheet
At 31st December 2020
In $ millions
Fixed assets
Investments
Current assets
Debtors
Cash at bank and in hand
Net current assets
Net assets
Capital and reserves
Called-up share capital
Share premium account
Treasury shares
Retained earnings and other reserves
Total shareholders' funds
Creditors: amounts falling due within one year
Note
2020
2019
6
7
8
9
1,642.1
1,642.1
3.9
5.0
8.9
(3.7)
5.2
6.1
12.9
19.0
(3.8)
15.2
1,647.3
1,657.3
8.9
380.8
(30.4)
1,288.0
1,647.3
8.9
380.8
–
1,267.7
1,657.3
The Company’s profit for the year ended 31 December 2020 was $124.2 million (2019: $147.3 million).
The financial statements on pages 222 to 227 were approved and authorized for issue by the board and were signed on its
behalf by:
Joseph C. Brandt
Director
18 March 2021
Registered Number: 10982736
Company statement of changes in equity
For the year ended 31 December 2020
in $ millions
At 31st December 2018
Share based payments (1)
Dividends distribution (2)
Profit for the year
At 31st December 2019
Share based payments (1)
Dividends distribution (2)
Treasury shares (3)
Profit for the year
At 31st December 2020
Called-up
share capital
8.9
Share premium
account
380.8
Treasury
shares
Retained
earnings and
other reserves
1,256.6
8.9
380.8
1,267.6
1,657.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(30.4)
1.3
(137.6)
147.3
(105.7)
1.9
–
124.2
1,288.0
Total
1,646.3
1.3
(137.6)
147.3
1.9
(105.7)
(30.4)
124.2
(1)
Includes CEO deferred bonus award and Long Term Investing Plan impact on equity.
(2) During the year ended 31 December 2020 the Group paid dividends of $24.8 million on April 9, 2020, $27.1 million on June 26, 2020, $27.0 million on
September 25, 2020 and $26.8 million on December 29, 2020. During the year ended 31st December 2019 the Group paid dividends of $63.3 million on
24th May 2019, $24.75 million on each of the following dates 18th June 2019, 3rd September 2019 and 24th December 2019. For further details on dividends
8.9
380.8
(30.4)
1,647.3
paid, refer to page 200 of the Group’s financial statements.
(3)
See note 10.
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Notes to the Company financial statements
General information
1.
ContourGlobal plc is a public limited company which is listed on the London Stock Exchange and is domiciled in the
United Kingdom and incorporated in England and Wales under the Companies Act 2006. The Company was incorporated
on 26 September 2017 and adopted FRS 102 from that date.
Statement of compliance
2.
The financial statements of ContourGlobal plc have been prepared in compliance with United Kingdom Accounting Standards,
including Financial Reporting Standard 102, ‘The Financial Reporting Standard applicable in the United Kingdom and the
Republic of Ireland’ (‘FRS 102’) and the Companies Act 2006.
Summary of Significant Accounting Policies
3.
The principal accounting policies applied in the preparation of these financial statements are set out below. The policies have
been consistently applied throughout the period presented.
3.1. Basis of preparation
The Company financial statements have been prepared under the historical cost convention. The current year financial
information presented is for the year ended 31 December 2020, and the comparative for the year ended 31 December 2019.
The preparation of the financial statements in conformity with FRS 102 requires the use of certain critical accounting estimates.
It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. The areas
involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial
statements are set out below. The financial statements have been prepared on the going concern basis under the historical
cost convention.
As permitted by Section 408 of the Companies Act 2006, an entity profit and loss account is not included as it is part of the
published consolidated financial statements of ContourGlobal plc.
3.2 Exemptions for qualifying entities under FRS 102
The Company has taken advantage of the following FRS 102 disclosure exemptions available to qualifying entities:
(cid:120) The requirements of Section 4 Statement of Financial Position 4.12 (a) (iv);
(cid:120) The requirements of Section 7 Statements of Cash Flows;
(cid:120) The requirements of Section 3 Financial Statement Presentation paragraph 3.17 (d); and
(cid:120) The requirements of Section 11 Financial Instruments paragraphs 11.41(b), 11.41(c), 11.41(e), 11.41 (f), 11.42, 11.44, 11.47, 11.48(a)(iii),
11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c).
3.3 Foreign currency
(i)
Functional and presentation currency
The Company’s functional and presentation currency is the US Dollar.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rate at the dates
of the transactions.
At each period end foreign currency non-monetary items measured at historical cost are translated using the exchange
rate on the date of the transaction.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation of monetary assets
and liabilities denominated in foreign currencies at period end exchange rates are recognized in profit or loss.
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Notes to the Company financial statements continued
Year ended December 31, 2020
Investments in subsidiaries
3.4
Investments in subsidiaries are held at cost, less any provision for impairment. Annually, the Directors consider whether any
events or circumstances have occurred that could indicate that the carrying amount of fixed asset investments may not be
recoverable. If such circumstances do exist, a full impairment review is undertaken to establish whether the carrying amount
exceeds the higher of net realizable value or value in use. If this is the case, an impairment charge is recorded to reduce the
carrying value of the related investment. Distributions from subsidiaries are treated as dividend income through the profit or loss
account where they relate to returns from underlying trading entities. Alternatively, distributions are treated as a reduction of the
cost of the investment where it relates to a return of the original capital contribution.
3.5 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity
as a deduction from the proceeds.
Treasury shares
At year end, the Group’s treasury shares are included under “Treasury shares” in the consolidated statement of financial
position and are measured at acquisition cost.
The gains and losses obtained on disposal of treasury shares are recognized in “Other reserves” in the consolidated statement
of financial position. There has been no disposal of treasury shares during the years ended 31 December 2020 and 2019.
The Group buys and sells treasury shares in accordance with the prevailing law and the resolutions of the General
Shareholders’ Meeting. Such transactions include the sale and purchase of company shares.
3.6 Taxation
UK corporation tax is provided at amounts expected to be paid or recovered using the tax rates and laws that have been
enacted or substantively enacted by the balance sheet date. Unrecognized deferred tax assets as at 31 December 2020
were $3.6 million ($2.1 million in 2019).
3.7 Financial instruments
The Company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments.
a) Financial assets
Financial assets including amounts owed by group undertakings and other receivables and cash at bank and in hand are
initially recognized at transaction price and are subsequently carried at amortized cost using the effective interest method.
At the end of each reporting period financial assets measured at amortized cost are assessed for objective evidence of
impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value
of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognized in
profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognized, the
impairment is reversed.
The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the
impairment not previously been recognized. The impairment reversal is recognized in profit or loss.
Financial assets are derecognized when (a) the contractual rights to the cash flows from the asset expire or are settled; or (b)
substantially all the risks and rewards of the ownership of the asset are transferred to another party; or (c) despite having retained
some significant risks and rewards of ownership, control of the asset has been transferred to another party who has the practical
ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.
b) Financial liabilities
Financial liabilities include trade and other payables (including from intercompany Group companies).
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business
from suppliers.
Trade payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-
current liabilities. Trade payables are recognized initially at transaction price and subsequently measured at amortized cost
using the effective interest method.
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Notes to the Company financial statements continued
Year ended December 31, 2020
3.4
Investments in subsidiaries
Investments in subsidiaries are held at cost, less any provision for impairment. Annually, the Directors consider whether any
events or circumstances have occurred that could indicate that the carrying amount of fixed asset investments may not be
recoverable. If such circumstances do exist, a full impairment review is undertaken to establish whether the carrying amount
exceeds the higher of net realizable value or value in use. If this is the case, an impairment charge is recorded to reduce the
carrying value of the related investment. Distributions from subsidiaries are treated as dividend income through the profit or loss
account where they relate to returns from underlying trading entities. Alternatively, distributions are treated as a reduction of the
cost of the investment where it relates to a return of the original capital contribution.
3.5 Share capital
as a deduction from the proceeds.
Treasury shares
3.6 Taxation
were $3.6 million ($2.1 million in 2019).
3.7 Financial instruments
a) Financial assets
At year end, the Group’s treasury shares are included under “Treasury shares” in the consolidated statement of financial
position and are measured at acquisition cost.
The gains and losses obtained on disposal of treasury shares are recognized in “Other reserves” in the consolidated statement
of financial position. There has been no disposal of treasury shares during the years ended 31 December 2020 and 2019.
The Group buys and sells treasury shares in accordance with the prevailing law and the resolutions of the General
Shareholders’ Meeting. Such transactions include the sale and purchase of company shares.
UK corporation tax is provided at amounts expected to be paid or recovered using the tax rates and laws that have been
enacted or substantively enacted by the balance sheet date. Unrecognized deferred tax assets as at 31 December 2020
The Company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments.
profit or loss.
impairment is reversed.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognized, the
The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the
impairment not previously been recognized. The impairment reversal is recognized in profit or loss.
Financial assets are derecognized when (a) the contractual rights to the cash flows from the asset expire or are settled; or (b)
substantially all the risks and rewards of the ownership of the asset are transferred to another party; or (c) despite having retained
some significant risks and rewards of ownership, control of the asset has been transferred to another party who has the practical
ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.
b) Financial liabilities
from suppliers.
Financial liabilities include trade and other payables (including from intercompany Group companies).
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business
Trade payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-
current liabilities. Trade payables are recognized initially at transaction price and subsequently measured at amortized cost
using the effective interest method.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity
(cid:120) Carrying value of investments.
3.8 Dividend distribution
Dividends to the Company’s shareholders are recognized as a liability in the Company’s financial statements in the period in
which the dividends are approved by the Company’s shareholders in the case of final dividends. In respect of interim
dividends, these are recognized in the period in which they are paid.
3.9 Critical accounting judgements and estimation uncertainty
The preparation of financial statements in conformity with FRS 102 requires the use of certain critical accounting estimates. It
also requires management to exercise their judgement in the process of applying the Company’s accounting policies. The
area involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements is:
The Company considers annually whether there is any indication of impairment in the carrying value of investments in
accordance with the accounting policy stated.
In the event that there is an indicator of impairment, the Company performs an impairment assessment to determine if the
carrying value of the investment is supported by its recoverable amount. The determination of the recoverable amount
requires estimation to be applied. The recoverable amount is the higher of (i) an investment’s fair value less costs of disposal
(market value), and (ii) value in use determined using estimates of discounted future net cash flows (“DCF”) of the investment.
The Company uses a fair value less costs of disposal model, being the higher of the previously mentioned metrics, in
estimating the recoverable value, with the key assumption being the EBITDA multiple applied to the actual cash flows for the
year. These EBITDA multiples are highly variable by nature and are determined based on external market transactions in
comparable entities.
4. Directors’ Emoluments and employees
The Company had nine Directors and an average of 4 employees in the year to 31 December 2020 (The Company
had nine Directors and an average of five employees in the year to 31 December 2019). Of the nine Directors, one was
remunerated by the Company. The other eight Directors were remunerated by another company in the Group. The amount
of employees charges, including Directors, recognized in the Company’s profit and loss statement in 2020 amounted to
$3.7 million (2019: $3.2 million).
Financial assets including amounts owed by group undertakings and other receivables and cash at bank and in hand are
initially recognized at transaction price and are subsequently carried at amortized cost using the effective interest method.
At the end of each reporting period financial assets measured at amortized cost are assessed for objective evidence of
impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value
of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognized in
in $ millions
Wages and salaries
Social security costs
Other pension costs
Share-based payments
Total employee costs
2020
(1.4)
(0.3)
(0.1)
(1.9)
(3.7)
2019
(1.6)
(0.2)
(0.1)
(1.3)
(3.2)
Full details of the Directors’ remuneration and interests are set out in the Directors’ remuneration report on page 110 to 140.
5. Auditors’ fees
The amounts payable to the Company’s auditors in respect of the statutory audit were $24,000 (2019: $24,000).
Investments in Subsidiaries
6.
in $ millions
At 1st January
Net variation
At 31 December
2020
1,642.1
–
1,642.1
2019
1,642.1
–
1,642.1
In 2020 the Company received $137.9 million of dividends from ContourGlobal Worldwide Holdings SARL (2019: $154.7).
The Company’s directly wholly owned subsidiary is ContourGlobal Worldwide Holdings SARL. A full list of indirect subsidiaries
and other undertakings as required by Section 409 of the Companies’ Act 2006 is shown on pages 211 to 216 of the Group’s
financial statements.
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Notes to the Company financial statements continued
Year ended December 31, 2020
7. Debtors
In $ millions
Amounts owed by Group undertakings
VAT recoverable
Prepayments and accrued income
2020
2.9
0.5
0.5
3.9
2019
5.1
0.6
0.4
6.1
Amounts owed by Group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
8. Creditors: amounts falling due within one year
In $ millions
Trade payables
Accrued expenses
Amounts owed to Group undertakings
Other
2020
0.7
2.4
0.4
0.2
3.7
2019
0.3
3.2
0.3
–
3.8
Amounts owed to Group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable
on demand.
9. Called-up share capital
Issued capital of the Company amounted to $8.9 million as at 31 December 2020 and 31 December 2019.
As of 31 December 2020 and 2019, the Company has issued 670,712,920 shares of £0.01 each, corresponding to
an allotted, called up and fully paid capital of £6.7 million, or $8.9 million. There has been no change in the called-up share
capital in both years.
10. Treasury shares
On 1 April 2020 ContourGlobal announced a buyback programme of up to £30 million of ContourGlobal plc ordinary shares
of £0.01 each ("Shares"), to initially run from 1 April 2020 to 30 June 2020, subsequently extended to 30 September 2020
and then further extended to December 31, 2020.
During the year ended December 31, 2020, the Company repurchased 12,374,731 treasury shares at an average price of
188.4 pence per share for an aggregate amount of GBP23.4 million ($30.4 million), representing 1.85% of its share capital.
On January 11, 2021 the Company announced the continuation of the buyback programme from 11 January 2021 to 31 March
2021 for a maximum number of shares of 2,700,000, based on closing share price of 215 pence on 8 January 2021, but in
any event not to exceed a cumulative amount of £30 million including the share buy backs competed in 2020.
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2020
2.9
0.5
0.5
3.9
2020
0.7
2.4
0.4
0.2
3.7
2019
5.1
0.6
0.4
6.1
2019
0.3
3.2
0.3
–
3.8
Notes to the Company financial statements continued
Year ended December 31, 2020
7. Debtors
In $ millions
Amounts owed by Group undertakings
VAT recoverable
Prepayments and accrued income
In $ millions
Trade payables
Accrued expenses
Amounts owed to Group undertakings
Other
on demand.
9. Called-up share capital
capital in both years.
10. Treasury shares
Amounts owed by Group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
8. Creditors: amounts falling due within one year
Amounts owed to Group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable
Issued capital of the Company amounted to $8.9 million as at 31 December 2020 and 31 December 2019.
On 1 April 2020 ContourGlobal announced a buyback programme of up to £30 million of ContourGlobal plc ordinary shares
of £0.01 each ("Shares"), to initially run from 1 April 2020 to 30 June 2020, subsequently extended to 30 September 2020
and then further extended to December 31, 2020.
During the year ended December 31, 2020, the Company repurchased 12,374,731 treasury shares at an average price of
188.4 pence per share for an aggregate amount of GBP23.4 million ($30.4 million), representing 1.85% of its share capital.
On January 11, 2021 the Company announced the continuation of the buyback programme from 11 January 2021 to 31 March
2021 for a maximum number of shares of 2,700,000, based on closing share price of 215 pence on 8 January 2021, but in
any event not to exceed a cumulative amount of £30 million including the share buy backs competed in 2020.
11. Contingent Liabilities
The Company acts as a guarantor to certain of its subsidiaries with respect to various financial obligations and project
financing agreements entered into by its subsidiaries. The Company considers outflow relating to these guarantees to
be remote and therefore no fair value liability has been recognized. The main financial obligations are listed below:
(cid:120) $8.5 million guarantee to Credit Suisse for Inka letter of credit;
(cid:120) $8.5 million guarantee to cover Kivuwatt debt service reserve account;
(cid:120) Guarantee on cash shortfall for debt service in ContourGlobal Togo; the loan balance as at 31 December 2020 is
$80.8 million;
(cid:120) Guarantee to Goldman Sachs, Credit Suisse International, Citibank Europe plc, HSBC Bank USA National Association, JP
Morgan Securities plc, and Mizuho Capital Markets LLC in relation with the hedging instruments existing at ContourGlobal
Power Holdings S.A. As at 31 December 2020 this related to instruments with a nominal value of $231.8 million and a fair
value as at year-end of $1.1 million.
(cid:120) Parent guarantor (as defined in the indenture) under the €850 million bond indenture dated 19 July 2018 (out of which
€400 million are outstanding) and under the €710 million bond indenture dated 17 December 2020;
(cid:120) Guarantor under the $175 million Western Generation Portfolio Acquisition in North America bridge facility dated
10 December 2020. This acquisition was closed on February 18th and nothing was drawn at year end;
(cid:120) Guarantor under the corporate level revolving credit facility of €120 million dated 10 December 2020 (nothing was drawn
against this credit facility as of 31 December 2020);
(cid:120) Guarantor under the corporate level letter of credit facility of €75.75 million dated 29 March 2019;
(cid:120) Guarantor under the corporate level letter of credit facility of €50 million dated 10 March 2020;
(cid:120) BRL 60 million guarantee to debenture holders to cover Brasil hydro injunctions risk on ContourGlobal do Brasil
Participaçoes SA.
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As of 31 December 2020 and 2019, the Company has issued 670,712,920 shares of £0.01 each, corresponding to
an allotted, called up and fully paid capital of £6.7 million, or $8.9 million. There has been no change in the called-up share
(cid:120) BRL 64,5 million guarantee to Chapada I letters of credit providers;
(cid:120) Completion guarantee to Mexican CHP lenders to cover expenses required for the project completion.
12. Related Parties
In 2019 and 2020 none of the Company or its subsidiaries have contracted with related parties. As of 31 December 2020, the
Company has no balance due or to be received from related parties other than amounts due to and from subsidiary undertakings.
The directors’ emoluments are disclosed on page 110 to 140 within the Annual Report on Remuneration for the years ended
31 December 2020 and 2019.
13. Controlling party
The Company is majority owned by ContourGlobal L.P. The ultimate controlling party of ContourGlobal L.P. is Reservoir
Capital funds.
The Relation Agreement is disclosed on page 141 to 145 within the Annual Report on Directors’ report for the years ended
31 December 2020 and 2019.
14. Subsequent events
On February 18, 2021 the group announced the closing of the acquisition of the 1,502 MW portfolio of six contracted operating
power plants located in the United States and Trinidad and Tobago from Western Generation Partners, LLC. The consideration
for the Acquired Assets is $837 million on a debt free, cash free basis and the Group will assume approximately $207 million
of existing project net debt with the Acquired Assets.
226
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
227
Shareholder information
SHAREHOLDER INFORMATION
Warning about unsolicited
approaches to shareholders
and ‘Boiler Room’ scams
In recent years, many companies have
become aware that their shareholders
have received unsolicited phone
calls or correspondence concerning
investment matters. These are typically
from overseas based ‘brokers’ who
target UK shareholders, offering to
sell them what often turn out to be
worthless or high risk shares in UK
investments. These operations are
commonly known as ‘boiler rooms’.
These ‘brokers’ can be very persistent
and persuasive. ContourGlobal plc
shareholders are advised to be
extremely wary of such approaches
and advised to only deal with firms
authorized by the FCA. You can
check whether an enquirer is properly
authorized and report scam approaches
by contacting the FCA on www.fca.org.
uk/scams (where you may also review
the latest scams) or by calling the FCA
Consumer Helpline: 0800 111 6768.
If you have already paid money
to share fraudsters then contact
Action Fraud on 0300 123 2040.
Registrar
The Company’s register of shareholders
is maintained by our Registrar, Equiniti
Limited. All enquiries regarding
shareholder administration including lost
share certificates or changes of address
should be communicated to the Registrar
in writing or by calling 0371 384 2030 for
callers from the UK1 or +44 (0)121 415 7047
for callers from outside the UK.
Shareholders can also view and
manage their shareholdings online
by registering at www.shareview.co.uk/
myportfolio.
Forward Looking Statements
This Annual Report has been prepared
for, and only for, the members of
ContourGlobal plc (‘the Company’) as
a body, and for no other persons. The
Company, its Directors, employees,
agents or advisors do not accept or
assume responsibility to any other
person who receives or sees this
document and any such responsibility
or liability is expressly disclaimed. By
their nature, the statements concerning
the risks and uncertainties facing the
Group in this Annual Report involve
uncertainty because future events and
circumstances can cause results and
developments to differ materially from
those anticipated. Forward-looking
statements in this annual report reflect
knowledge and information available
at the date of preparation of this Annual
Report and the Company undertakes
no obligation to update these forward-
looking statements after publication.
Nothing in this Annual Report should
be construed as a profit forecast.
Directors
Craig A. Huff
Joseph C. Brandt
Stefan Schellinger
Daniel Camus
Mariana Gheorghe
Dr. Alan Gillespie
Alejandro Santo Domingo
Ronald Trächsel
Gregg M. Zeitlin
Company Secretary
Link Company Matters Limited
cm-contourglobal@linkgroup.co.uk
Investor relations contact
Alice Heathcote
alice.heathcote@contourglobal.com
Registered Office
7th Floor
Park House
116 Park Street
London
W1K 6SS
United Kingdom
Company Number
10982736
Auditor
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH
United Kingdom
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
United Kingdom
1. Calls to this number are charged at 10 pence
per minute plus network extras. Lines are open
8.30am to 5.30pm Mondays to Fridays,excluding
Bank Holidays in England and Wales.
228
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
SHAREHOLDER INFORMATION
Shareholder information
Warning about unsolicited
approaches to shareholders
and ‘Boiler Room’ scams
In recent years, many companies have
become aware that their shareholders
have received unsolicited phone
calls or correspondence concerning
investment matters. These are typically
from overseas based ‘brokers’ who
target UK shareholders, offering to
sell them what often turn out to be
worthless or high risk shares in UK
investments. These operations are
commonly known as ‘boiler rooms’.
These ‘brokers’ can be very persistent
and persuasive. ContourGlobal plc
shareholders are advised to be
extremely wary of such approaches
and advised to only deal with firms
authorized by the FCA. You can
check whether an enquirer is properly
authorized and report scam approaches
by contacting the FCA on www.fca.org.
uk/scams (where you may also review
the latest scams) or by calling the FCA
Consumer Helpline: 0800 111 6768.
If you have already paid money
to share fraudsters then contact
Action Fraud on 0300 123 2040.
Registrar
The Company’s register of shareholders
is maintained by our Registrar, Equiniti
Limited. All enquiries regarding
shareholder administration including lost
share certificates or changes of address
should be communicated to the Registrar
in writing or by calling 0371 384 2030 for
callers from the UK1 or +44 (0)121 415 7047
for callers from outside the UK.
Shareholders can also view and
manage their shareholdings online
by registering at www.shareview.co.uk/
myportfolio.
Forward Looking Statements
Directors
This Annual Report has been prepared
for, and only for, the members of
ContourGlobal plc (‘the Company’) as
a body, and for no other persons. The
Company, its Directors, employees,
agents or advisors do not accept or
assume responsibility to any other
person who receives or sees this
document and any such responsibility
or liability is expressly disclaimed. By
their nature, the statements concerning
the risks and uncertainties facing the
Group in this Annual Report involve
uncertainty because future events and
circumstances can cause results and
Craig A. Huff
Joseph C. Brandt
Stefan Schellinger
Daniel Camus
Mariana Gheorghe
Dr. Alan Gillespie
Alejandro Santo Domingo
Ronald Trächsel
Gregg M. Zeitlin
Company Secretary
Link Company Matters Limited
cm-contourglobal@linkgroup.co.uk
Investor relations contact
developments to differ materially from
Alice Heathcote
those anticipated. Forward-looking
statements in this annual report reflect
knowledge and information available
alice.heathcote@contourglobal.com
Registered Office
at the date of preparation of this Annual
7th Floor
Report and the Company undertakes
no obligation to update these forward-
looking statements after publication.
Nothing in this Annual Report should
Park House
116 Park Street
London
W1K 6SS
be construed as a profit forecast.
United Kingdom
Company Number
10982736
Auditor
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH
United Kingdom
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
United Kingdom
1. Calls to this number are charged at 10 pence
per minute plus network extras. Lines are open
8.30am to 5.30pm Mondays to Fridays,excluding
Bank Holidays in England and Wales.
228
ANNUAL REPORT 2020 | CONTOURGLOBAL PLC
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+44 (0) 20 7736 0011
ContourGlobal plc
7th Floor
Park House
116 Park Street
London
W1K 6SS
United Kingdom
www.contourglobal.com