C
o
n
t
o
u
r
G
l
o
b
a
l
p
l
c
–
A
n
n
u
a
l
R
e
p
o
r
t
2
0
2
1
ENER G Y
SOL UT IO NS
FOR A
CHA NGI NG
WORL D
Annual Report 2021
Financial review
Managing our principal risks
Viability statement
Non-Financial Information Statement
Governance
Board of Directors
Senior Management
Corporate governance report
Report of the Nomination Committee
56
62
72
73
76
79
81
96
Report of the Audit and Risk Committee 101
Financial statements
Independent auditors’ report to the
members of ContourGlobal plc
Consolidated statement of income
and other comprehensive income
Consolidated statement of financial
position
Consolidated statement of changes
in equity
Consolidated statement of cash flows
Notes to the consolidated financial
statements
Report of the Remuneration Committee 112
Company balance sheet
Remuneration at a glance
Annual Report on Remuneration
Directors’ report
Statement of Directors’ responsibilities
in respect of the financial statements
114
118
130
134
Company statement of changes in
equity
Notes to the Company financial
statements
Shareholder information
224
136
146
147
148
149
170
218
218
219
Overview
2021 in numbers
Strategic report
Supporting the energy transition
Committed to decarbonization
Delivering reliable energy
Who we are
Where we operate
Chairman’s statement
Business model
CEO review
Market review
Our stakeholder ecosystem
Strategy for growth
Our KPIs
Sustainability
2
4
6
8
10
12
14
16
18
22
24
30
38
40
Our sustainable business principles 40
Health & safety
Our people
Environment
Task Force on Climate-related
Financial Disclosures
Communities
42
44
48
50
54
ENER GY FOR LIF E
ContourGlobal develops, acquires, owns and operates power generation
assets around the world, producing reliable energy responsibly.
ContourGlobal operates 138 thermal and renewable power generation assets in
20 countries across Europe, Latin America, North America and Africa, with a total
installed capacity of over 6.3 GW.
We add value through best-in-class operations both in our existing portfolio and in
the new assets we develop or acquire.
Wherever we operate, we are committed to the highest standards of health and
safety, environmental and social responsibility. The reliable electricity 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 lives of the communities and countries in
which we operate and we are proud of the difference we make.
2021
138
Conventional & innovative
power plants
2021
6,310.7
Megawatts capacity
4
6
8
SUPPORTING THE
ENE RGY TRANSITION
Find out more on page 4 about how our
Maritsa plant supported Bulgaria with
affordable power
COMMITTED TO
DEC ARBO NIZATION
Find out more on page 6 about win-win
opportunity for our Austria Wind plants
DELIV ERING
RELIABLE E NERGY
Find out more on page 8 about how our
Arrubal plant provided critical stability to
the grid
1
Strategic ReportGovernanceFinancial Statements 20 21 H IGHLIGHTS
2021 I N NUMBE RS
Capacity split by source
Capacity split by energy type
Capacity split by geographic
region
Breakdown
Capacity
Breakdown
Capacity
Breakdown
Capacity
Thermal
Renewable
High Efficiency
Cogen1
57%
29%
14%
Europe
Latin America
Africa
North America
42%
29%
4%
25%
Natural gas
Coal
Wind
High Efficiency Cogen1
Hydro
Solar
Liquid fuels
Biogas
37.1%
17.0%
13.6%
13.6%
9.1%
6.1%
3.1%
0.4%
RELIA BI LITY AND E FFIC IENC Y
Total portfolio (%)
Thermal fleet
availability factor (%)
Renewable fleet
availability factor (%)
94.4
93.9
95.9
Against a benchmark
of 94.3%
Against a benchmark
of 92.9%
Against a benchmark
of 98.1%
94.3
95
94.4
94.3
120
100
80
60
40
20
0
120
100
80
60
40
20
0
92.8
94.4
93.9
92.9
96.3
96.0
95.9
98.1
120
100
80
60
40
20
0
2019
2020
2021
2019
2020
2021
2019
2020
2021
1. High Efficiency Cogen is part of our Solutions business and included within our Thermal segment for financial
reporting purposes.
2. The net thermal efficiency of our assets is calculated using the following formula:
Net efficiency = net energy produced / total fuel energy input
Full details on ContourGlobal Greenhouse Gas Emissions and Thermal Efficiency Calculation Methodology 2021 can be
found on our website at: https://www.contourglobal.com/environmental-responsibility
K ContourGlobal plc engaged KPMG LLP (“KPMG”) to undertake limited assurance under the assurance standard ISAE
(UK) 3000 over selected information. KPMG’s full assurance statements for 2019, 2020 and 2021 can be found on our
website at https://www.contourglobal.com/reports
2
Lost Time Incident Rate
0.073
Against a benchmark of zero
Net efficiency2
2021
76.9k
49.7k
2020
2019
2018
2017
2016
2015
69
72
73
63
60
63
42
41
41
42
42
42
Total Solutions portfolio efficiency
Total Thermal portfolio efficiency
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC FINA NCIAL AND O PERATIONAL HIG HLIG HT S*
2021 Financial KPIs have been positively impacted by the acquisition of the Western Generation
assets in February 2021
Revenue ($m)
2,151.9
2021 change: +53%
2,151.0
1,330
1,410.7
2,500
2,000
1,500
1,000
500
0
Adjusted revenue1 ($m)
Income from operations1 ($m)
1,724.8
2021 change: +38%
1,724.8
1,252.6
2,000
1,500
1,000
500
0
370.1
2021 change: +20%
400
370.1
300
292.1
307.9
200
100
0
2019
2020
2021
2019
2020
2021
Adjusted EBITDA1 ($m)
841.5
2021 change: +17%
Proportionate adjusted
EBITDA1 ($m)
692.3
2021 change: +22%
841.5
702.7
722.0
800
700
600
500
400
300
200
100
0
692.3
561.6
568.7
600
500
400
300
200
100
0
2019
2020
2021
2019
2020
2021
Funds from operations1 ($m)
Installed capacity (MW)
439.8
2021 change: +16%
439.8
379.6
337.9
400
300
200
100
0
6,310.7
2021 change: +31%
6,000
5,000
4,846
4,8042
6,311
4,000
3,000
2,000
1,000
0
2019
2020
2021
2019
2020
2021
In 2021 we continued to enhance
our reporting and aligned it with
the recommendations of the TCFD
(see on pages 50 to 53).
ContourGlobal’s sustainability
strategy is built upon our four
sustainable business principles
(see on pages 40 and 41) and our
activities are aligned with the
Sustainable Development Goals
and the United Nations Global
Compact commitments. Reducing
the CO2 intensity of the total
energy production is a vital
component of our environmental
strategy, alongside water usage,
waste and biodiversity.
CO2 intensityk
0.44
0.6
0.5
0.4
0.3
0.2
0.1
0
0.51
0.45k
0.44k
0.30
0.00
2019 2020 2021 2030 2050
Calculated as CO2 (metric tonnes)/total
energy produced
* For non-financial highlights see page 39
1. See pages 38 for definitions.
2. Capuava plant transferred to customer and Guadeloupe plant dismantled further to Power Purchase Agreement expiry in 2020.
K ContourGlobal plc engaged KPMG LLP (“KPMG”) to undertake limited assurance under the assurance standard ISAE (UK) 3000 over selected information.
KPMG’s full assurance statements for 2019, 2020 and 2021 can be found on our website at https://www.contourglobal.com/reports
3
Strategic ReportGovernanceFinancial Statements SU PP OR TI NG
TH E ENERGY
TRANSITION
4
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC The global population is growing, demand
for electricity is increasing and transitioning
to net zero is one of the key challenges of
our time.
To meet this challenge, ContourGlobal is deploying
its deep expertise and experience in power
generation to ensure the security and affordability
of power supply while gradually reducing CO2
emissions intensity.
Guided by our purpose and our four sustainability
principles, we are growing while maintaining
operational excellence and increasingly deploying
low-carbon technologies. Through all these
initiatives we will deliver a reliable and flexible
supply of electricity to our clients and the
communities where we operate.
It is key for us to deliver attractive risk-adjusted
returns for our shareholders whilst reducing the
CO2 intensity of the portfolio of assets we own, and
we continue to maintain a disciplined capital
allocation process to achieve that objective.
ENSURING EN ERG Y SE CURITY,
AFFO RDABILITY AND ORDERLY
TRANSITIO N
During 2021, we have seen some of the side effects of the disruption
caused by the energy transition: record gas and electricity prices,
disruption of supply, among others.
Our Maritsa plant in Bulgaria has been running at a very high capacity
factor using indigenous fuel sources (lignite). The electricity it
generates keeps the lights on. In addition, our contracted prices are
well below market prices, benefiting Bulgaria’s people and
businesses, and avoiding the need to import expensive electricity
from other countries. The plant’s reliable operation in 2021 accounted
for 15% of domestic consumption, providing affordable power to the
equivalent of 1.235 million households, quality employment for 450
direct employees and several thousand indirect jobs in the supply
chain. Being fully compliant with the latest environmental
requirements, the plant is well positioned to serve consumers in
Bulgaria as part of an orderly energy transition, by providing secure
and affordable power and valuable electricity system services, while
the newly required mix of low- and no-carbon flexible capacity in the
country is developing.
Electricity
for
1.235
Quality
employment
450
million households
direct & thousands
of indirect jobs
Local
resources
100%
indigenous fuel
(lignite)
5
Strategic ReportGovernanceFinancial Statements COMMITTED TO
DECARBONIZATION
6
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC The energy industry is going through a
meaningful shift and its transition to net
zero is vital to reach a 1.5°C pathway.
ContourGlobal plays its part in the transition to net
zero by 2050, and has committed to make no new
investments in coal. The timing of exiting coal
completely will depend in large part on geopolitical
events and pressures related to commodity pricing
and availability and, in particular, the timing of the
implementation of the energy transition in Bulgaria
where we are working actively in cooperation with
the new Bulgarian government. Additionally,
exiting coal will take into consideration the need
for a “just transition”, protecting the interests of our
employees and the community, balanced by the
impact on climate.
Our diverse portfolio combines renewable assets
in diverse regions and flexible and low-carbon
sources of energy production - such as efficient
gas-fired and co-generation plants. The last ones
provide reliable sources of electricity base-load
and supply flexibility, thus contributing to balancing
the generation of electricity for renewable energy.
In the medium term, we are focused on delivering
a 40% decrease in CO2 intensity by 2030 from
2019 levels.
This commitment is reflected in our sustainability
business principles: “Operate safely and efficiently
and minimize environmental impacts” and
permeates our strategy and capital allocation.
DISRUPTION O F ENERG Y
MARKE TS – AUSTRIA
The disruption in the energy market created a win-win opportunity for
our wind assets in Austria, where the energy law allows renewable
companies to temporarily suspend the Feed-in-Tariff (FiT).
As market prices went dramatically above the average FiT of €92.4 /
MWh, ContourGlobal suspended the FiT starting from December 2021
onwards and entered into a fixed price Power Purchase Agreement
(PPA) based on forward prices. This benefited both parties: the Austrian
Government and Austrian households, as the renewable levy on monthly
electricity bills for 2022 was suspended temporarily, at a time when
the household price of electricity has dramatically increased, and
ContourGlobal, who sold power produced at market prices, earned an
additional EBITDA of €650k for December 2021 compared to the FiT.
77
Strategic ReportGovernanceFinancial Statements DE LIVER ING
RE L IABLE
ENER GY
8
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Renewable capacity is increasing and
managing its intermittency is a key
challenge for the energy transition.
Sometimes renewable production exceeds
demand but when the sun goes down or the
wind does not blow, production is insufficient.
Hence flexible sources of power generation,
such as gas, have an important role to play. The
introduction of new technologies, such as carbon
capture, makes gas a viable low-carbon option
to support a smooth energy transition.
Building on our deep expertise and experience,
ContourGlobal is well-placed to capitalize on this
opportunity and generate attractive returns that
support our dividend policy of 10% growth
per annum.
This commitment is reflected in our sustainability
business principles: “Grow well” and “Enhance
our operating environment” and is embedded in
our strategy and capital allocation.
ENSURING A RE LIA BLE S UPPLY
Following the expiry of the previous 10-year PPA, our gas-fired plant in
Arrubal (Spain) sold generated energy directly on power markets from
July 2021. During the last five months of the year, the plant operated in
the ancillary services market, providing critical stability to the energy
system in a challenging volatile market where electricity prices have
been well above €200/MWh. Our gas-fired plant can rapidly dispatch
electricity, generating a reliable supply of electricity. This flexible
capacity is critical to address the intermittency of renewables and the
current limitations of storage solutions.
In this context, the plant achieved 98% availability and delivered an
outstanding financial performance in 2021. Arrubal will continue to play
an important role in the stability of the energy system and is expected
to run merchant in 2022.
89%
of the days from August to
December 2021 dispatched
in the power markets
98.7%
availability achieved despite the
demanding operational regime
with a higher number of start-ups
and running the two units
simultaneously (which had not
happened since 2013)
9
Strategic ReportGovernanceFinancial Statements AT A GLA NCE
WH O W E ARE
ContourGlobal develops, acquires, and operates thermal
and renewable power plants to generate electricity.
ContourGlobal is a power generation
company committed to growth with a
focus on low-carbon technologies.
Since our foundation in 2005, we have
become an internationally recognized
company with technologically and
geographically diverse assets and
best-in-class operations.
Our purpose is to create economic
and social value through developing,
acquiring, and operating electricity
generation businesses worldwide. In this
regard, our strategy is built on operational
excellence, high growth and financial
strength throughout our business.
What we do
We supply electricity principally in the
wholesale market, selling it under
contracts and regulated tariffs to those
who then 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.
Because 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.
Our portfolio is diversified across
different technologies, and geographies.
At the end of 2021, we owned and
operated 138 thermal and renewable
power generation assets in Europe,
Latin America, North America and Africa,
with a total installed capacity of 6.3 GW.
We take innovative approaches to energy
storage and fuel sources to ensure that
we are able to offer reliable supply around
the clock where solar, wind or hydro
power are the source of base-load.
In all the regions we operate in, we aim
to support the local communities.
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 (and biogas)
Natural gas consists mainly of methane and is
created as a result of underground decomposition.
The gas is used as fuel for different technologies
to produce electricity.
high efficiency cogen1
Cogeneration is the simultaneous production of electricity
and useful heat. Cogeneration uses the waste heat
produced in the generation of electricity but lost in
regular power plants to increase efficiency.
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.
liquid fuels
Liquid fuels are used in reciprocating engines to
produce electricity.
wind
Wind turbines harness the kinetic energy of the
wind and redirect it to a generator to convert it to
electrical power.
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.
hydropower
Hydropower is produced by moving water spinning
turbines at speed, which in turn are attached to
electrical generators.
1. High Efficiency Cogen is part of our Solutions business and included within our Thermal segment for financial reporting purposes.
10
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC OUR PURPOSE
Our purpose is to create economic and social value through developing, acquiring
and operating electricity generation businesses worldwide.
OUR STRATEGY
Our overall strategy to achieve our purpose is built on three pillars1:
Operational
excellence
High
growth
Financial
strength
Four sustainability principles and five Company values underpin
everything we do
OU R SU STAINABLE BUSINES S P RIN CIP LE S 2
Operate safely
and efficiently
and minimize
environmental impacts
By running our power plants
efficiently, we maximize
electricity output, minimize
environmental impacts, and
reduce costs. We seek to
promote health, safety, and
well-being throughout the
organization: safety is our
number one priority.
Grow well
By growing well, we help
meet energy needs through
a clean energy model that
reduces climate impacts.
We promote energy and
economic security and
increase energy access,
creating economic wealth for
investors, our employees,
and, indirectly, our
communities.
Manage our business
responsibly
We are committed to
maintaining the highest
ethical and legal standards
wherever we operate. We
seek to attract, develop, and
retain a workforce that
reflects the diversity of the
communities in which
we operate.
Enhance our
operating
environment
We share our expertise and
improve quality of life through
long-term sustainable
improvement of the electricity
sector, civil society, and
local communities.
OUR VALUES
3
We act
transparently
and with moral
integrity
4
We honor the
commitments of
those who have
placed their
trust in us
5
We work hard and
without boundaries
as a multinational,
integrated team
1
2
We care about our
people’s health,
safety, well-being,
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
1. See pages 30 and 31 for further information on strategy.
2. See pages 40 and 41 for further information on our sustainable business principles.
11
Strategic ReportGovernanceFinancial Statements AT A GLA NCE ( CONTINUE D)
WH ERE WE OPERA TE
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
MARI TSA,
BU LGARIA
908 MW
ARRUBAL,
SPA IN
800 MW
HOBBS,
UNI TED STATES
604 MW
15
24
24
25
25
26
27 33
MEXICO CHP,
MEXICO
518 MW
VORO TAN,
ARMENIA
404 MW
CSP, SPAIN
250 MW
CHAPADA I, II
& III, BRAZIL
438 MW
138Power generation assets
(including Brazil Hydro plants
held for sale)
32Thermal plants
(including 12 High Efficiency
Cogen 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. Bonaire Engines, DUTCH ANTILLES
13. KivuWatt, RWANDA
14.
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)
106Renewable plants
12
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 MW1
160 MW
136 MW2
1. currently held for sale. 2. not including windfarms currently being repowered.
ANNUAL REPORT 2021 | 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
Renewable
plants
High Efficiency
Cogen plants3
Thermal plants
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
18
2
25
34
22
36
30
23
20
1
24
32
10
9
21
19
13
8
5
16
3
15
11
35
14
6
12
7
4
31
26 27
33
29
28
17
Thermal: High Efficiency Cogen
15. Mexico CHP, MEXICO (2)*
16. Borger, UNITED STATES
17.
Solutions Brazil, BRAZIL (3)*
18. Knockmore Hill, NORTHERN IRELAND
19.
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 (71)*
33. Chapada III, BRAZIL
34. Solar Slovakia, SLOVAKIA (3)*
35. Bonaire Wind, DUTCH ANTILLES
36. Solar Romania, ROMANIA
natural gas
natural gas
natural gas
natural gas
natural gas
natural gas
natural gas
natural gas
natural gas
wind
solar
wind
solar
wind
solar
518 MW
230 MW
59 MW
15 MW
10 MW
9 MW
7 MW
6 MW
3 MW
114 MW
95 MW
59 MW
35 MW
11 MW
7 MW
*
(x) indicates the number of individual plants constituting the asset
4,494.3
Gross capacity (MW)
1,816.4
Gross capacity (MW)
3. High Efficiency Cogen is part of our Solutions business and included within our Thermal segment for financial reporting purposes.
13
CH AI RMAN’ S STATE MENT
FIND ING NEW
OPPOR TUNITIE S
“ WE HAVE EXTENSIVE EXPERIENCE IN CARBON
CAPTURE, WHICH WE BEGAN USING IN 2010,
AND ARE INVESTING INCREASINGLY IN THIS
TECHNOLOGY AROUND THE WORLD.”
Craig A. Huff,
Chairman
The energy transition is upon us. The world faces the dilemma
of how to reduce carbon emissions while providing sufficient
energy to keep everyone’s lights on at an affordable price.
Although Contour’s financial performance
in 2021 was very strong, overall it was a
disappointing year given the fatality of a
sub-contractor on our premises in Brazil.
Our Health and Safety record is in the top
decile of our peer group, but this is an
unacceptable event (see page 42 for
details and corrective action).
Our cash flow generation was particularly
strong in 2021 as management did a
superb job of managing the business
through COVID-19 and optimizing our
assets in a very volatile power market.
Management is very focused on risk
mitigation with respect to our current
portfolio and has successfully integrated
our most recent acquisitions. In addition,
the continued uncertainty in Europe given
the Russian invasion of Ukraine and the
overall strain on the power markets should
provide ContourGlobal with some
interesting opportunities over the next
several quarters. For example, as
countries in Europe rethink the phasing
out of thermal power plants, the
opportunity for economic carbon capture
projects becomes much more likely.
We remain frustrated with our share
price and are actively trying to close the
gap between our share price and the
intrinsic value of ContourGlobal. The
previously announced Brazil asset sales
are a good first step.
Cutting carbon emissions
We have been cutting our carbon
intensity for several years and are
committed to further reducing it by 40%
by 2030 against a 2019 base. We have
committed not to develop or acquire
coal power plants in the future.
We have extensive experience in
carbon capture, which we began using
in 2010, and are investing increasingly
in this technology around the world.
Our thermal businesses are largely
based on natural gas, and 43% of our
net generation capacity comes from
renewable or high efficiency co-
generation. We use batteries, as well as
gas, to help balance the intermittency of
solar and wind generation and continue
to invest in storage technologies.
We welcome the reporting framework
established by the Task Force on
Climate-related Financial Disclosures
(TCFD). It continues to enhance our
reporting as we make further progress
evaluating and managing climate-related
risks and opportunities.
Financial success
2021 was a very strong financial year for
ContourGlobal with record cash flow
generation. In addition to our strong
contracted cash flows across our
portfolio, we benefited from high power
prices in Europe through the small piece
of our portfolio with merchant exposure,
primarily from our natural gas-fired
power plant in Arrubal, Spain.
Operations
We suffered several major outages
in 2021, but our systems proved
effective to remedy them, and I thank
the management for their hard work
minimizing business interruption.
Similarly, efficient handling of the
implications of the COVID-19 pandemic
14
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC UN LOCKING V ALUE ON BRAZIL ASS ETS
In 2021, the Company announced that it had started the process of monetizing its
renewable business in Brazil in order to unlock value for shareholders and close the
gap between its share price and the intrinsic value of the Company's assets as
valued by the private market.
On 19th January 2022 we agreed the sale of our hydro assets in Brazil to Pátria
Investments at a valuation of BRL 1.73bn ($313m1). This sale is consistent with our
drive to realize value from undervalued assets in our portfolio and deliver further
attractive risk-adjusted returns for our shareholders. This demonstrates the value
differential between the public and private markets for our assets.
1 Exchange rate 1 BRL = $0.181159; valuation including the assumption of net debt and other
customary adjustments
ContourGlobal. I am very proud of and
grateful to the ContourGlobal team
for the way they have conducted
themselves throughout the challenges
of COVID-19 and the more recent
volatility in Europe. Their dedication and
professionalism have been exemplary.
Craig A. Huff,
Chairman
in 2021 kept the business running
smoothly while ensuring the welfare of
our people. Management also effectively
executed several major construction
projects, notably in Mexico, Austria
and Armenia.
Health and Safety
In Health and Safety, however, 2021
was a poor year. We bitterly regret
experiencing one fatality and one Lost
Time Injury, resulting in two Lost Time
Incidents (LTI), failing to meet our Target
Zero objectives. These events weigh
heavily on us, and we have learned
important lessons for the future about
how to mitigate such risks inherent to
our activities. Please see page 42 for
more details.
Social investment
We continue to execute on our
responsibilities to behave as good
corporate citizens wherever we do
business, helping to strengthen civil
society. After having channeled our social
investment into healthcare following the
pandemic outbreak in 2020, we reverted
to investing in a broader mix of health,
education and other social projects in
2021 for the benefit of the communities in
which we operate. We have switched from
one-year to three-year projects to ensure
a more impactful and sustainable outcome
for communities.
Dividends
We have continued to grow ordinary
dividends per share at 10% annually
thanks to the strength of our earnings
and predictable cash flows. Dividend
cover is strong and stable. The total
dividend payable for the full year of 2021
is $117 million. The fourth quarter dividend
of 4.465 cents per share, equivalent to
$29.3 million, will be paid on 14th April
2022. 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 61.
These past two years have been
challenging for our world and for
15
Strategic ReportGovernanceFinancial Statements B USI NESS M ODEL
B USINESS MODEL
How we create value
We supply electricity principally in the wholesale market,
mainly selling it under long-term contracts to clients, or
‘offtakers’, who transmit and sell it to retail customers. These
contracts are typically :
• Power Purchase Agreements (PPAs) by which the power
plant gets remunerated to be available to generate
electricity; and
• Regulated tariffs or other regulated mechanisms, by which
we agree a price per unit of electricity output.
These contracts give us good visibility of long-term, de-risked cash
flows, which in turn underpin our progressive dividend policy.
Inputs
Our business depends on a range of inputs:
Human
The skills and expertise, motivation and conduct of our 1,518
employees and contractors are critical to our success. We hire, train,
and develop a diverse workforce, offering equal opportunities for
progression. We insist on the highest standards of health and safety
and have a progressive policy of reward for performance.
WHERE
CONTOURGLOBA L
SITS IN THE VALUE
CHAIN:
Financial
We finance our projects with debt and equity, mostly debt, aiming to
mitigate risks and optimize the cost of capital. We assess the economic
return of our projects on a risk-adjusted basis and typically seek a
minimum double digit internal rate of return for our equity investments.
Natural Resources
We use natural resources to produce electricity such as coal, gas, sun,
wind, or hydro. We seek to minimize environmental impacts arising
from our activity, notably when using chemicals.
Upstream
Generation
Transmission
and
distribution
Retail and
supply
Social
We invest in developing strong relationships with customers,
contractors, suppliers, governments, regulators, and communities in
every region we operate in.
Intellectual
We apply the deep expertise we have accumulated in running power
plants safely and efficiently, using a wide range of technologies to
produce and store electricity, while minimizing our carbon footprint.
Technological
Power plants and their equipment are the key fixed assets we use to
convert all our inputs into a safe and reliable supply of electricity.
16
Aside from operating renewable assets in
diverse regions, through our use of flexible
and low-carbon sources of energy production
(such as efficient gas-fired and co-generation
plants) we can provide reliable sources of
base-load electricity and supply flexibility,
contributing to balancing the generation of
electricity for renewable energy.
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Stakeholders’ value distribution
We distribute the value we create to a wide variety of stakeholders:
Governments/
regulators
We pay local, state and
national taxes. In 2021,
we paid $36.6 million
income tax across
the Group
Employees
We typically spend
3.8% of our revenues
on salaries and
performance incentive
plans; in 2021, we
provided 39,867 hours
of employee training
Customers
We supply electricity
reliably, safely, and
efficiently, in both
developed and
underserved areas
Community
We create jobs for a
total of 1,518 people
worldwide; and we
invest in education,
healthcare and other
social projects, in an
amount of $6.24 million
for the three-year period
Outputs
We create a range of outputs aligned with the UN
Sustainable Development Goals (SDGs):
Human
A skilled, diverse workforce operating safely with
opportunities to grow and develop.
Financial
Metrics
SDGs alignment
39% of senior leadership positions filled
by women; one Lost Time Injury and one
fatality, resulting in two Lost Time
Incidents (LTIs) in 2021.
Stable cash flows supporting 10% annual growth of our
dividend. Our capital structure provides ample opportunities
for further growth.
10% annual dividend increase in FY 2021.
Natural Resources
A commitment to reduce our environmental impact –
decarbonization by 2050 – and an active role in the energy
transition.
Reduction of CO2 intensity of energy
production to 0.44 in 2021.
Social
We create a positive long-term impact on the communities in
which we operate and strong relationships with other
stakeholders, notably supporting our supply chain in applying
our highest standards in terms of compliance.
86 social investment projects pursued in
2021, including 47 projects completed.
Intellectual
Increasing innovation and continuous learning improves the
way we generate electricity. We notably provide innovative
low-carbon solutions such as hybrid technology plants which
work with an optimal mix of resources available.
Equivalent Availability Factor of 94.4%.
CO2 intensity of energy production of
0.44 in 2021.
Technological
A reliable supply of power produced safely and efficiently is
at the core of the value we bring. As part of our High
Efficiency Cogeneration activity, we also supply other
products to our clients, such as heat, or CO2 for industrial
purposes (carbon capture).
Equivalent Availability Factor of 94.4%.
CO2 intensity of energy production of
0.44 in 2021.
17
Strategic ReportGovernanceFinancial Statements CE O REVIEW
CEO LETTER
“THE COMPANY NAVIGATED WELL THROUGH
YEAR TWO OF THE PANDEMIC. ”
Joseph C. Brandt,
CEO
2021 was not a particularly good year for ContourGlobal.
We failed to honor our commitment, to keep our people, contractors and
visitors safe while on our sites. In August a contractor at one of our wind
farms in Piaui Brazil died when he was electrocuted at our substation.
This was our second fatality in 15 years
and our first in Brazil. It profoundly shook
the company and casts a pall over all of
the year’s accomplishments. A detailed
investigation revealed poor work
practices by a long-standing
maintenance provider and poor
management by us of them. Learnings
from this have been shared throughout
the company but will not bring back this
life. Elsewhere we experienced a Lost
Time Incident in Spain, our third there in
four years. We will improve in 2022.
The Company navigated well through
year two of the pandemic despite facing
challenges travelling to sites and reliably
receiving equipment and other supply for
maintenance works. We largely kept our
sites COVID free and expanded testing
globally, encouraging our workforce to
get vaccinated and boosted. Mandates in
many of the countries where we operate
created tension in the organization as
many employees chose not to vaccinate,
a situation that prompted us to debate
whether to impose our own mandates.
We chose not to do so, and instead
decided to encourage vaccination, to
offer free testing for employees and their
families, all the while speaking regularly
about the benefits of vaccination. By
year-end, 71% of our workforce was fully
vaccinated but with meaningful
differences in uptake particularly in nearly
all of the countries in Eastern Europe and
several states in the US. Unfortunately,
we continue to experience the impact of
the disease primarily in those businesses
where vaccine uptake has been low.
Our offices were mostly open throughout
2021 and although we created a
hybrid-working option enabling office
based employees to work up to two days
per week from home, we continue to
emphasize the benefits of in office work
for achieving business objectives and
developing people.
We performed well financially in 2021
and this in turn was a result of good
power plant operations. Equivalent
Availability Factors (“EAF”) were
generally on target across the entire
thermal fleet and, among the large
assets, particularly strong at Arrubal
(Spain), Hobbs (New Mexico), the
California peaking plants, Borger (Texas)
and Maritsa (Bulgaria). As the above list
indicates, performance of the newly
acquired businesses in the United
States and the Caribbean was good
with only our Trinidadian business
performing materially below plan as
the result of an extended forced
outage, albeit one which had a minor
financial impact.
Total thermal division EAF was 93.9% and
better than plan overall but the details
show below plan performance for several
key assets. EAF for our CCGT and coal
plant clusters was better than last year.
Our performance in the Engines and
18
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Solutions cluster was mixed with EAF in
Brazil and Mexico Solutions lower than
plan, reflecting equipment failures in
Brazil and a longer outage than planned
at CGA. We also experienced a major
unplanned outage in Togo related to an
engine failure, despite which the plant
still was able to achieve its guaranteed
availability for the year thereby
minimizing financial impact.
Cost control was again excellent in 2021
and as planned which is a significant
tribute to our operating organization
given the supply chain cost pressures
we experienced starting in Q1. Fleet
wide capex was worse than plan by
approximately 10% largely reflecting cost
pressures related to unplanned outages
in Mexico. Our 2022 budgeting and
planning cycle has been focused on
identifying the pinch points in our supply
chains as well as sourcing new suppliers
to replace ones vulnerable to economic
sanctions and other trade restrictions
(Maritsa), ESG concerns (solar panel
replacement in Italy and Slovakia and
new solar development in Bonaire) or
significant shipping costs.
Operating performance in the
renewable fleet was mixed-- excellent
hydroelectric and solar (ex- CSP) EAF
was offset by suboptimal performance in
the wind fleets. The Equivalent Forced
Outage Rate (“EFOR”) was worse than
planned reflecting an extended
unplanned outage in Majadas and Palma
II while within the wind fleets strong EAF
at Peru & Austria was offset by
continued weak performance in Brazil,
mostly in our Chapada wind farms where
a recovery plan was implemented and
the assets have achieved budgeted
levels in 1Q2022.
Renewable resource performance in
2021 was generally in line, with a 4%
negative variance to plan consisting
of slight negative performance in all
clusters with the exception of Brazil
which was 2% better than plan due to
superb wind resources during the year.
Underscoring the balance and risk
mitigation inherent in the portfolio, this
1. See page 60 for definition
CR EATING VALUE BY IMP ROVING TH E
PERFORMA NCE OF OUR W IND AS S ETS
IN AUS TRIA
The approach we took to growth in the Austrian renewable sector is a
good example of how we create value through expanding and improving
platforms in those markets where we have a long-standing presence. We
chose to invest in upgrading the wind turbines at our existing plants. This
type of project enabled us to grow while taking advantage of synergies and
operational expertise, yet minimizing development risk and uncertainties on
local resource (wind).
By leveraging relationships with existing offtakers, lenders, and contractors
and utilizing our expertise at project level, we have been able to improve
the efficiency and power generation of our wind turbines. We were able not
only to limit construction risk but also to obtain favorable financing terms.
“Scharndorf 4+5” assets became fully operational during 2021 and sold
electricity produced under the feed-in-tariff in place. Berg and
Trautmannsdorf are progressing well and are expected to become
operational over the next twelve months.
This organic growth initiative is likely to result in significant value creation,
as similar assets in Europe trade at 13-15x EV/EBITDA.
attractively low long-term interest rates
but enabled us to bring forward future
dividends. The interest rates and terms
of these refinancings were the best in
our history but then window closed
quickly and by year end rates had
moved meaningfully higher.
Growth, Capital and Market
Outlook
With the exception of the repowering
of our Austrian windfarms, the
acquisition of Western Generation and
a bolt on solar acquisition in Italy, we
did not expand the portfolio with new
acquisitions in 2021 — unusual for us but
reflecting our decision in the second half
of the year to take a very cautious
approach to our markets.
4% variance in renewable output had
less than a one percent impact on our
consolidated EBITDA performance.
One outstanding accomplishment
achieved in 2021 was our record
performance distributing cash 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 Service1 (CFADS).
CFADS in 2021 was $367 million,
approximately 34% higher than in 2020,
reflecting not only strong operational
performance but also our agile
commercial and financial teams. In 2021
we took advantage of market
opportunities to sell power and ancillary
services from businesses like Arrubal
and the Italian solar portfolio, and
aggressively tapped the project finance
market for financing and refinancing
several of our existing businesses.
These financings not only locked in
19
Strategic ReportGovernanceFinancial Statements CE O REVIEW ( CONTINUE D)
“WE ARE IN THE MIDST OF A LENGTHIER
TRANSITION WHICH WILL SEE A LARGER
THAN PREVIOUSLY EXPECTED ROLE
FOR POWER GENERATION BASED ON
LIGNITE COAL, NUCLEAR AND LIQUIFIED
NATURAL GAS.”
We were concerned about a rapidly
shifting financing and supply chain not yet
reflected in sellers’ price expectations.
For example, we spent the better part
of eight months preparing a large
acquisition of thermal and renewable
assets in the Americas only to walk away
in the third quarter when seller would not
change its terms. To provide an example
of how dynamic and downside oriented
the market became, our underwriting
rebaselined our financing assumptions
three times in four months (and never for
the better), while assumptions related to
sellers’ solar and wind development
assets proved nearly impossible to risk
adjust and price, reflecting growing price,
availability, and transport challenges
within the renewable related supply
chains. All of the proceeding factors
served to eliminate any margin of safety
and turned the investment decision into a
bet that things would quickly recover.
With the benefit of hindsight provided
by the surreal events of early 2022, our
caution provided the best investment
returns of the year.
We continue to see excellent
opportunity to grow our wind business in
Austria through greenfield development
and the repowering of our existing wind
assets, an activity which we have been
pursuing for over five years. A very
strong development and operations
team in Vienna have shown the ability to
execute our wind repowering strategy
despite unexpected challenges ranging
from low water levels on the Danube, to
financial distress in the wind turbine
industry to a global pandemic.
We made excellent progress
repowering our Trautmannsdorf and
Berg wind farms in lower Austria
executing well our long-standing
repowering plan and achieving some
unexpected upside along the way. The
Berg project is a ~20 MW repowering
with an expected entry into commercial
operations in September of 2022. We
are on plan and below budget and
made very good progress constructing
the on-site infrastructure. The project
known as Trautmannsdorf is a 21 MW
repowering, also located in lower
Austria, and is expected to enter into
commercial operations less than one
year from now in January 2023.
Trautmannsdorf is similarly on plan for
both budget and schedule.
Like our other Austrian repowering
projects, the wind generated output
receives a 13 year feed-in-tariff leaving
us with no price risk until late in the next
decade. Unlike earlier projects, both
Berg and Trautmannsdorf also
benefitted from a COVID-19 investment
bonus designed by the Austrian
government to encourage further
investment during the height of the
pandemic and further enhancing the
projects’ returns. These are exceptional
projects and we expect continuous
growth in Austria.
Finally, in the last months of 2021 we
were able to successfully negotiate the
sale of our hydro portfolio in Brazil which
culminated in the signing of the
transaction with Patria Investments in
January of this year. This transactions
unlocks significant value to our
shareholders with the hydro portfolio
being valued at 9.7 x LTM EBITDA and
net proceeds to ContourGlobal of
approximately $110m, that adds to an
20
earlier distribution of approximately
$26m coming from the refinancing
of this portfolio in the Brazilian
capital markets.
Going into 2022 and with Mergers &
Acquisitions still an important part of
our growth strategy we remain
cautious despite seeing more realistic
expectations from sellers about the
pricing of risk/reward amidst much
uncertainty. Supply chain and financing
pressures are being acutely felt in the
greenfield renewable segment which is
starting, for the first time in seven years,
to create opportunities for us as
renewable developers with sizable
pipelines become more selective about
which projects they will move forward.
Gone are the days when renewable
developers boasted of enormous
pipelines all of which were expected to
be built. However, as I write this letter
in March 2022 these bottom-up
fundamentals are overshadowed by the
impacts on the European power markets
caused by Russia’s invasion of Ukraine.
The dramatic increase in natural gas and
electricity prices is leading to a
fundamental rethinking of the very
cornerstones of these power markets
beginning with the principle of marginal
cost pricing. We have been saying for
four years that the future of the European
power generation market looked to be
increasingly a regulated one with the
abandonment of marginal cost pricing
and its replacement with some form of a
guaranteed regulated rate of return
applied to the entire generation sector.
Such a prospect became visible several
years ago with the progressive
elimination of coal and nuclear in
Europe’s base-load production thereby
increasing the reliance upon natural
gas-fired generation which, in the
marginal price setting framework defining
competitive power markets, meant that
the entire uncontracted generation stack
would earn revenues set by a gas-fired
power plant.
Even prior to unprecedented volatility
and price increases in natural gas that
accompanied building tensions and then
Russia’s invasion of Ukraine, Europe’s
power markets were engaging in
self-help to diversify away from natural
gas whenever possible, as evidenced
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC This wave of policy intervention may be
a Russia-Ukraine related set of
measures that only temporarily transform
the way electricity is bought and sold or
a further step towards creating a
regulated and policy directed
environment which administratively
prices electricity energy and capacity
and admits to the reality, as noted in this
letter last year, 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” albeit. A new realism about
the geo-politics of electricity supply
emphasizing the need for diverse
sources of base-load generation and
decreased reliance on Russian gas
supports our view that we are in the
midst of a lengthier transition which will
see a larger than previously expected
role for power generation based on
lignite coal, nuclear and Liquified
Natural Gas.
As we did last year, we continue to view
such an environment as mostly one of
opportunity which will reward business
models embracing diverse sources of
power generations and market exposure.
Joseph C. Brandt
Chief Executive Officer
by the significant amount of “gas to coal”
switching which characterized the
central European power markets by mid
2021 with German lignite leading the
way and this despite a policy framework
designed to engineer the opposite (coal
to gas switching).
Now in March 2022, policy innovation
abounds in Europe as a new set of
market rules are floated including:
i. elimination of the marginal cost price
setting system,
ii. price caps on natural gas and
electricity,
iii. special taxes on certain generation
profits,
iv. reintroduction of coal plants, and
v. possible extension of nuclear plants,
and other measures meant to
eliminate volatility in the price for
power and, potentially limit the
financial impact on business and
residential consumers by adopting
price caps and direct subsidy
schemes
These measures create risk but also
opportunity for our European operations
and growth prospects. Dismantling the
price setting mechanism which has
characterized competitive power
markets for nearly three decades will
have multiple unintended and
unpredictable consequences. At the
same time, in the absence of a price
signal, there will need to be incentive
frameworks to enable base-load power
plants to provide energy and ancillary
services and this will require a
remuneration regime that will likely look
like some combination of:
i. more predictable and longer capacity
payments
ii. a regulated rate of return which treats
power generation like regulated
distribution, wires and pipes (one
model would be the regulatory
framework adopted by Spain
applicable to renewable energy
technologies)
iii. or a direct subsidy to generators to
protect end use customers
21
Strategic ReportGovernanceFinancial Statements MAR K ET REVIEW
TH E ENERGY
TRANSI TION
How to meet the increasing demand for a reliable and
affordable supply of electricity?
Record high gas and energy prices
combined with demand recovery and
extreme weather events in 2021 are a
reminder that security of supply remains
a key topic for energy markets. The
2021 United Nations Climate Change
Conference (COP26) in the UK in
November brought to the fore questions
about how the world could continue to
balance energy supply and demand
while cutting CO2 emissions.
Growth in power demand
Long-term power demand is expected to
double from 2020 to 20501, driven
by long-term growth in population and
GDP. Over the same period, the share
of electricity in the energy consumption
mix is expected to grow by a third to 30%2,
as a result of consumer trends and new
technologies, such as electric cars.
Growth in renewable capacity
brings new challenges
On the supply side, strong policy support
will continue to channel huge amounts of
investment into renewable energy
generation. As a result, power generation
from renewable could exceed 25% of total
generation by 2030 and 50% by 20503.
Managing the intermittency of renewable
is therefore vital to ensure a reliable
supply of electricity and a smooth energy
transition. Long-term societal well-being
and sustainable economic growth rely
heavily on this.
Natural gas will therefore continue to play
a key role in the energy mix4, together
with the generation of electricity from
natural resources such as the sun and
the wind.
ContourGlobal plays a critical role here.
Aside from operating renewable assets
in diverse regions, through our use of
flexible and low-carbon sources of
energy production – such as efficient
gas-fired and co-generation plants
– we can provide reliable sources of
base-load electricity and supply flexibility,
contributing to balancing the generation
of electricity from renewable energy.
cooperation with the new Bulgarian
government, as well as the interests of our
employees and the community. We will
continue to invest in improving the
efficiency of our plants as well as in no-
and low-carbon generation.
In addition, investments in renewable
assets have been under pressure over
recent years, showing low levels of return
often not in line with our expectations.
ContourGlobal is highly disciplined in
capital allocation and other technologies
have been recently providing more
attractive return opportunities.
Decarbonization
More countries are making public
declarations of goals for reductions in
emissions. President Biden took the US
back into the Paris Agreement and set
emissions goals of a 50-52% reduction
from 2005 levels by 2030, and net zero
by 2050. The EU, in its Green Economy
Plan, agreed to reach net zero emissions
by 2050, with an intermediate objective
of a 55% reduction from 1990 levels
by 2030.
ContourGlobal will play an important part
in decarbonization efforts. In support of
the UN Global Compact environmental
principles and the Sustainable
Development Goal on climate, we have
been cutting our carbon intensity for
several years and are committed to
further reducing it by 40% by 2030 to
our target established in 2019. We aim
to be net carbon zero by 2050.
We have committed not to develop or
acquire coal power plants in the future
and intend to exit coal as early as we
can. This will depend on outcomes of
geopolitical events and pressures related
to commodity pricing and availability
and, in particular, the timing of the
implementation of the energy transition in
Bulgaria where we are working actively in
Battery storage
An important step forward in battery
development was taken at COP26 in
November. Some 25 companies joined
forces to launch the Long Duration Energy
Storage (LDES) Council. The Council’s
mission is to replace the use of fossil fuels
in meeting energy imbalances with
zero-carbon alternatives and enable a net
zero emissions electricity grid by 2040.
BloombergNEF’s 2021 Global Energy
Storage Outlook estimates that 345
gigawatts/999 gigawatt-hours of new
energy storage capacity will be added
globally between 2021 and 2030, which
is more than Japan’s entire power
generation capacity in 2020
Batteries play an important part in the
further development of hybrid plants,
which combine different energy sources
(such as wind, solar and thermal) and
storage to produce an optimal mix of
low- and no-carbon electricity. In our
Bonaire plant, we currently employ three
sets of batteries that can sustain up to
6 MW for one hour. This allows us to
switch smoothly from renewable to
diesel when wind is intermittent, without
any loss of power to the island’s grid.
We are currently exploring further
storage opportunities.
Carbon capture
To prevent carbon emissions reaching
the atmosphere, the gases can either be
sequestered and stored permanently
underground or can be used for
industrial purposes, such as in the food
and beverage industry. For the last 13
years, ContourGlobal has developed,
22
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC constructed, and operated carbon
capture technology, utilizing the carbon
in carbonated beverages for our flagship
client, the Coca-Cola Hellenic Bottling
Company, putting fizz in fizzy drinks.
Carbon capture, utilization and storage
(CCUS) technologies are gaining
momentum across the globe, stimulated
by tax incentives – such as the 45Q tax
credit and California Low Carbon Fuel
Standard in the US as well as carbon
taxes in Europe. Over 40 CCUS power
generation projects are currently under
development, of which 15 involve
gas-fired generation, primarily in the
United States and the United Kingdom.
The Net Zero Emissions by 2050
Scenario envisions ~170 TWh of
generation from CCUS-equipped gas
plants by 20305.
ContourGlobal’s expertise in carbon
capture at our Solutions plants in Europe
and Africa will prove invaluable as we
continue to explore further opportunities
for this technology in Mexico, Africa and
the United States.
Hydrogen
In the longer term, so-called ‘green
hydrogen’ – which is produced by
splitting water using electricity
generated from renewable sources, has
enormous potential as a low-carbon
energy source. However, infrastructure
build takes between three and ten
years, depending on project size and
location, and it is estimated that it will
take ten years before this form of clean
energy can be produced as cost
effectively as its less environmentally
friendly counterparts, ‘blue’ and ‘grey’
hydrogen. It therefore remains a hope
for the future. At ContourGlobal we are
exploring hydrogen technology with our
first green hydrogen pilot project in our
Maritsa plant. Hydrogen is a storable gas
with high energy density and zero CO2
emissions at the point of use and this
project will lay the groundwork for new
opportunities with ‘green’ gas usage.
Market trend
What this means for CG
Link to risk (see page 62 for more details)
Growth in power demand
Growth opportunities
Increasing demand for
lower-carbon solutions
Continued investment in
low- carbon generation and
select renewable projects
• R01. Strategy – Impact of governmental actions and regulations
• R02. Strategy – Geopolitical uncertainties and social instability
(including environmental activism, sanctions and trade war)
• R04. Operation and execution – Pandemic virus
• R05. Operation and execution – Supply chain
• R12. People and organization – Key people (senior executive
management) succession planning
• R01. Strategy – Impact of governmental actions and regulations
• R04. Operation and execution – Pandemic virus
• R05. Operation and execution – Supply chain
• R06. Operation and execution – Project execution (CAPEX)
• R07. Operation and execution – Asset integrity (OPEX)
• R08. Operation and execution – Resources/Climate change
Demand for reliable supply of
electricity to support the
energy transition
Continued investment in
natural gas, co-generation,
and in battery storage to
balance intermittency
• R01. Strategy – Impact of governmental actions and regulations
• R04. Operation and execution – Pandemic virus
• R05. Operation and execution – Supply chain
• R06. Operation and execution – Project execution (CAPEX)
• R07. Operation and execution – Asset integrity (OPEX)
1. McKinsey Global Energy Perspective 2021
2. Idem
3. BP Energy Outlook 2020, share of electricity in total final consumption, Rapid scenario https://www.bp.com/content/dam/bp/business sites/en/global/corporate/
pdfs/energy-economics/energy-outlook/bp-energy-outlook-2020.pdf
4. IEA Global Report 2021
5. IEA (2021), Natural Gas-Fired Power, IEA, Paris https://www.iea.org/reports/natural-gas-fired-power
23
Strategic ReportGovernanceFinancial Statements O UR STAK EHOLDER EC OSYSTEM
WORK I NG IN
PA RTNERSHIP
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 2021, the Board continued to engage closely through our
ongoing response to the pandemic.
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
EXA MPLES OF PRIN CIPA L DECISIONS F ROM 2 02 1
In January 2022, the Company approved the sale of the
Brazil hydro-electric generation business, at a valuation of
1.73bn BRL, to Patria Investments.
In November 2021, the Company acquired Green Hunter
Group S.p.A., a portfolio of Solar Photovoltaic assets
totalling 18 MW located in Italy, for €45.6 million on a debt
free, cash free basis.
Objective
To unlock value from undervalued assets within the
Company’s portfolio, and to deliver further attractive
risk-adjusted returns for shareholders.
Strategic and stakeholder considerations
The Board considered the long-term success of the
Company in conjunction with the benefits to its key
stakeholders including shareholders, employees, and our
customers and clients. The Board concluded that the sale
was consistent with its objective to unlock value from
undervalued assets, would result in creating compelling
value for shareholders, and would strengthen the
Company’s balance sheet and enable more effective
capital allocation.
Objective
To increase our installed solar capacity in the Italian
market.
Strategic and stakeholder considerations
The Board considered the long-term success of the
Company in conjunction with the benefits to its key
stakeholders including shareholders, employees, and our
customers and clients. The Board concluded that the
acquisition was consistent with its operationally led solar
strategy in Italy, and would result in an increase in our
installed solar capacity in the Italian market by
approximately 24%.
Key themes
• Economic performance
• Growth
• Value creation
24
Key themes
• Economic performance
• Growth
• Value Creation
• Grow Well
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC OU R KEY STAKEHO LDERS
Long-term engagement to social
investment which is aligned to
societal needs
Input – investment in health,
education and social projects
Output – shared value social
investment in areas in which we
operate
s
n iti e
u
m
Co m
G
o
v
e
r
r
e
g
u
n
m
l
e
a
t
n
t
o
s
r
s
a
n
d
Engagement & dialogue to support
energy transition plans and
sustainability pathways in the sector
Input – public policy and regulatory
consultations
Output – informed investor
frameworks based on shared
societal expectations
Customers and c l
s
i e n t
Em
plo
y
e
e
s
Engagement to attract, support and
retain an engaged workforce
Input – career development,
remuneration and health and safety
Output – diverse, high-performing
workplace
Engagement to provide confidence
to our shareholders and investors
Input – strategic direction and
stewardship
Output – sustainable return on
investment
s
r
e
d
n
e
d l
n
,
s
r
e
old
h
investors a
Share
Engagement to ensure delivery of our
commitments and to support supplier needs
Input – customer expectations and
requirements in a commercial environment
Output – operational flexibility and stable
provision of services; highly valued
relationships
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 on the following pages.
We are also keen to continue to develop
ways of encouraging direct Board
engagement with stakeholder groups –
one example being that one or more
Directors can often be involved directly
with a shareholder, employee or
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 81 and 95, the Board
considered that it has complied with its
duties under s172 of the Companies Act
2006 through its active engagement
with stakeholders. The following report
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 ongoing response to the
COVID-19 pandemic.
The Board works hard to ensure
that the expectations and concerns
of stakeholders are taken into
consideration, and is of the view that
their feedback is invaluable in helping
the Board formulate the longer-term
strategy, and the long-term success, of
the Group. The Board also encourages
management to consider s172
matters when presenting to the Board,
particularly where decisions are required.
Examples of principal decisions taken
by the Board during the year are set out
on page 24 and in the pages below:
25
Strategic ReportGovernanceFinancial Statements
O UR STAK EHOLDER EC OSYSTEM (CONTINUED)
OUR KEY
STAKEHOLDERS
EM PLOY EES
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.
We have a number of ways of
engaging with our employees,
including structured career
conversations, internal media
platforms, employee forums and
engagement with trade unions.
Key engagement and activities in 2021:
• The Board regularly receives and
discusses reports from the
designated Non-Executive Director
for workforce engagement, which
outline the issues raised and
outcomes from the engagement.
• The CEO and leadership team
have visited many sites throughout
the year to meet with employees.
Specifically, the newly acquired
sites previously owned by Western
Generation Partners to ensure the
smooth integration of both
employees and operations.
• Site visits by the designated
Non-Executive Director for
workforce engagement to meet
with Bulgarian management,
employees and employee
representatives.
• Post-COVID-19 return to work
forum with the designated Non-
Executive Director for workforce
engagement, with a cross-country
group of management and
employees.
Key themes
• Health and safety
• Support during the pandemic
• Grievance mechanisms
• Labor and human rights
• Training and education
• Freedom of association and
collective bargaining
• Career development
Outcomes of engagement
The Board agreed a workforce
engagement plan for the designated
Non-Executive Director for workforce
engagement, which aims to ensure
that employees, as well as unions
and works councils, will be given the
opportunity to directly feed back their
views to the Board. More detail on
the outcomes from this engagement
can be found on page 87 of this
report, which includes additional
measures to ensure employee safety
during the pandemic, and taking
forward a number of practices
implemented during this time such
as hybrid working to support
employee well-being.
There were regular updates to
employees on return to work following
the ending or changing nature of
COVID-19 restrictions and ongoing
discussions on potential future ways
of working to ensure employee
well-being and safe working.
The health and safety of employees
remains a key priority and the
Company has a regular, detailed
communication process with all
employees, including, in particular,
our power plant-based employees.
We continued to apply our detailed
internal guidelines, and internal
health and safety audits were
carried out using remote technology
where appropriate.
Following regular site visits from the
management team, the integration of
our Western Generation acquisition
continues to advance in line with our
expectations, and the acquired
assets are performing well
operationally and financially. Our 604
MW Hobbs flagship CCGT in New
Mexico achieved its best operational
performance in 13 years, and we
have also successfully onboarded all
on-site employees in the United
States and Trinidad and Tobago. The
acquisition contributed to our robust
financial performance in 2021.
Strategic pillars
26
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC CUSTO MERS AND C LIENT S
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 themes
• Top-tier availability of our power
plants fully meeting our customers’
requirements
• Competitive pricing
• Health and safety
• Compliance, anti-bribery and
anti-corruption
Key engagement activities include
the following matters, all discussed in
depth, reviewed and sanctioned by
the Board:
• A number of site visits took place
during the year, and a hybrid
approach has been undertaken in
2021 dependent on localized
COVID-19 travel restrictions.
Specifically, through meetings in
Maritsa, Bulgaria, the senior
management team has engaged
significantly with the public
supplier.
• At each Board meeting performance
of the operations is reviewed.
• Procurement practices
Outcomes of engagement
A number of operational changes
have been 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 have remained extremely
vigilant and resilient during the
ongoing pandemic, which has led to
minimal disruption to operational
delivery for our customers.
By holding considerable engagement
with Natsionalna Elektricheska
Kompania EAD, the national electric
company in Bulgaria, we were able to
ensure Maritsa provided operational
flexibility to ensure the stability of
supply in line with their needs. A
number of visits were made to our
sites in Senegal and Togo, where we
met with customers, energy ministers
and embassy representatives. In
Mexico, we engaged on a wide
range of commercial matters with
offtakers, and our CEO held meetings
with Alpek, a leading petrochemical
manufacturing company.
Strategic pillars
27
Strategic ReportGovernanceFinancial Statements O UR STAK EHOLDER EC OSYSTEM (CONTINUED)
SHAREHOLD ERS, INVES TO RS AN D LE NDE RS
How we engage
shareholder opinion was central to the
During the course of 2021 the
Company’s decision to increase its
Company undertook its regular
installed solar capacity in the Italian
programme of engagement which
market by c.24% by acquiring, in
included: the full reporting cycle and
partnership, Green Hunter Group S.p.A,
half-year financial results as well as
a portfolio of solar photovoltaic assets.
two quarterly trading statements, and
face to face meetings with investors,
bondholders and lenders through
many channels, including our AGM,
roadshows, conferences and
regular calls.
Engagement with shareholders has
resulted in the Board setting a
dividend policy of 10% year-on-year
growth as a key priority. This is an
important factor for the Board when
determining the strategy and
resulting dividend policy and
recommending each year the
dividend to be paid. We have
continued to grow dividends in line
with our 10% year-on-year dividend
growth policy, and in combination
with our prior share buyback
program, by August 2021 more than
$411 million had been returned to our
shareholders since IPO. Following
meeting with investors and a
presentation from external advisors,
the Audit and Risk Committee and
Board have reviewed our disclosures
in line with the Task Force on
Climate-related Financial Disclosures
to ensure we have built climate risks
and opportunities into our risk
management processes and strategic
planning. We also held calls on wider
ESG matters with a number of
investors throughout the year.
The Board receives regular reports
from our Investor Relations team and
brokers. These reports provide clarity
on the investor landscape and help
to update Directors on our investors’
views.
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.
Key themes
• Economic performance
• Growth
• Value creation
• Environmental, social and
governance (ESG) issues
considered the long-term success of
the Company in conjunction with the
benefits to its key stakeholders. The
Board concluded that the sale would
result in compelling value for
shareholders and would allow for
more effective capital allocation.
We communicated to the market the
appointment of Liberum Capital Ltd
as joint Corporate Broker, together
with Investec Bank plc, to further
enhance our coverage to
shareholders and the market on the
outlook for future growth and return
of capital to shareholders.
We continue to communicate with
shareholders and investors on the
performance of our key assets.
In terms of lenders’ engagement,
the Board reviewed and approved
corporate debt refinancing
transactions.
The Board reviewed the issuance
of a bond, corporate debt and
refinancing of transactions and
concluded it was in the best interest
of shareholders to explore these
options further.
Strategic pillars
Outcomes of engagement
Shareholder views consistently inform
strategic decision-making and
When approving the transaction to
sell our Brazil hydro-electric
generation business, the Board
A friend in need
A friend in need is a friend indeed. The Galabovo
Hospital, which is the only one fully operational within
Maritsa East energy complex, copes with COVID-19 better
equipped thanks to the support of ContourGlobal Maritsa
East 3 TPP.
The municipal hospital in the energy city annually treats
over 3,300 patients and like all medical facilities is faced
with the serious challenges of the pandemic. It is the only
medical institution with a specialized COVID-ward
responsible for 30,000 people in 2 municipalities. Since
the wake of the pandemic ContourGlobal Maritsa East 3
has set aside more than BGN 500,000 to support the
local medical institution. With the first virus wave,
equipment and consumables for treatment were
delivered, including multiparameter intensive care
monitors, a central monitoring station and mobile X-ray
for lung graphs for the COVID-ward, mobile wireless
monitors, an ECG device and biphasic defibrillator for the
ambulance, personal protective kits, disinfectants, and
quick tests. The power plant has also undertaken to
urgently repair the 60-year-old oxygen supply system of
the hospital, investing BGN 70,000 so that the vital gas
can reach the patients in need. In 2021 the local team
again initiated timely discussions with the hospital
management and was thus able to support the medics
when the fifth wave of COVID-19 swept the country,
providing additional equipment worth BGN 100,000,
including emergency respirator apparatus, additional
multi-parameter monitors a second central monitoring
station, remote modules, an ECG, a defibrillator, intensive
care hospital beds, perfusors, pulse oximeters and an
X-ray digitalization system.
28
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC COMM UNITI ES
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 the Modern
Slavery Statement to ensure it
accurately reflected changes in our
portfolio composition and
geographical locations.
As part of our commitment to moving
towards decarbonizing the energy
sector, the management team has
worked with a number of universities
and academic researchers in terms of
ongoing research into reducing
carbon emissions, as well as
preventing the rise of carbon
emissions, through initiatives
involving carbon storage.
Key themes
• Health and safety
• Emissions and biodiversity
• Compliance and anti-bribery and
anti-corruption
• Grievance mechanisms
• Labor and human rights
• Water and waste
Outcomes of engagement
As a result of the management
team’s engagement activities, we
have put in place a Social Investment
Strategy which provides guidance to
our businesses on the successful
implementation of health, education
and social projects. Having focused
our social investment into healthcare
following the pandemic outbreak in
2020, in 2021 we adopted a three-
year plan to help ensure that the
desired outcomes of our projects can
be achieved and are sustainable.
The Board, having considered the
impact of COVID-19 on the
Company’s ability to undertake
anti-slavery risk assessments,
especially in high-risk locations, and
ensured that on-site assessments
were scheduled as soon as local
travel restrictions allowed, approved
the Modern Slavery Statement.
Following engagement with local
community leaders to understand
their needs and what support we can
best provide assistance with, we
undertook to support a hospital local
to our Maritsa plant, more details of
which can be found on page 28.
This support included BGN 97,000
($58,000) invested in medical
equipment for the hospital, where
30,000 people in two local
municipalities were under that
hospital’s care.
Strategic pillars
GO VERNMENTS A ND REGULAT ORS
How we engage
We promote sector development and
laudable business practices by
interacting with governments and
civil society.
Key themes
• Health and safety
• Capacity, reliability and efficiency
• Emissions and biodiversity
• Compliance and anti-bribery and
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).
anti-corruption
• Labor and human rights
• Water and waste
• Training and education
Outcomes of engagement
Following regular dialogue with the EU
and the Bulgarian government on the
proposed market reforms and energy
transition plans, the Company is
working with the American Chamber
of Commerce to support a transition
to green energy, and will work to play
a leading role in developing viable
pathways. We have engaged with
international consultants to produce
studies on the substantiality of such
pathways, and to see which
outcomes could be achieved at the
least cost to society. This has
enabled us to ensure a meaningful
contribution to the public debate
on energy transition plans and to
ensure that public opinion can be
built into our investor framework.
This in turn ensures we are able to
support environmental goals, as
well as security and affordability of
supply as Bulgaria transitions to
low-carbon policies.
In Armenia, we successfully worked
with the regulator on the post-project
work for critical hydro infrastructure,
providing support through periods
of conflict in the region. In addition
we successfully worked together
through the disruption caused by
COVID-19.
At our Bonaire asset in the Dutch
Antilles, we have engaged with the
government, local authorities and
regulator in working towards a
transition to renewable energy whilst
securing the supply chain.
Strategic pillars
29
Strategic ReportGovernanceFinancial Statements STR AT EGY FOR GROWTH
OUR STR ATEGY
FOR G ROWTH
A three-pronged business strategy
Our purpose is to develop, acquire and operate electricity
generation businesses worldwide, creating economic and
social value through better operations, and assisting the
communities where we work.
The four sustainable business principles permeate through
our culture and strategy, ensuring value generation is shared
with a wide range of stakeholders.
STRATE GY DASHBOARD
Our strategy is aligned to our purpose, putting operational
excellence, high growth and financial strength at the core of
our objectives and decisions.
Our values support a culture of continuous improvement and
learning alongside a commitment to transparency and sharing
of information. We operate under a lean and flat organizational
structure, investing in collaboration tools and technology to
support future growth.
Strategic aims
2021 progress
• Achieved EAF of 94.4%, in line with our
target, and EFOR of 1.8%, which was
slightly above our target
• In 2021 we successfully integrated the
assets acquired in the United States
and the Caribbean
• Improved sustainability ratings (MSCI,
CDP and Sustainalytics)
• Failure to achieve Target Zero KPI
OPERA TIONAL
EX CELLENCE
Forward-looking
priorities
KPI
(see pages 38-39
for more details)
• Strong focus on
operational excellence
and recommitment to our
Target Zero LTI policy
• Continued improvement
• Lost Time
Incident (LTI)
• Equivalent
Availability
Factor (EAF)
of sustainability
performance
• Engaged with Bulgarian
government and other
stakeholders involved
in the energy transition
of the country
• Equivalent Forced
Outage
Rate (EFOR)
• CO2 intensity ratio
Link to risk
remuneration
Sustainability principle
• R06. Operation and execution – Project execution (CAPEX)
• R07. Operation and execution – Asset integrity (OPEX)
• R08. Operation and execution – Resources/Climate change
• R09. Health, safety and environment (HSE) and food
– Prevention and regulation
• R11. Information technology – Cyber security and system integrity
See more on pages 62 to 71
Link to
Annual bonus
and LTIP
(LTI and EAF)
See more on page 120
Operate safely
and efficiently
and minimize
environmental
impacts
Manage our
business responsibly
Enhance
our operating
environment
• In 2021 we successfully integrated the
portfolio of assets from Western
Generation Group in the US and
Trinidad and Tobago. We also closed
the acquisition of the solar portfolio
from Green Hunter Group S.p.A. in Italy
• Focus on gas-fired and
cogeneration assets in
Americas region with
carbon capture optionality
• Austria Wind repowering
• Italy solar roll-up strategy
• Adjusted EBITDA
• R01. Strategy – Impact of governmental actions and regulations
Annual bonus
Grow well
growth
• Adjusted
Revenue
• R02. Strategy – Geopolitical uncertainties and social instability
and LTIP
(including environmental activism, sanctions and trade war)
• R03. Strategy – Disruptive innovation in power generation and
(Refurbishments/
repowering and M&A)
See more on page 120
storage technologies
• R04. Operation and execution – Pandemic virus
• R05. Operation and execution – Supply chain
• R12. People and organization – Key people (senior executive
management) succession planning
See more on pages 62 to 71
• Funds From
Operations (FFO)
• Net leverage ratio
• Disciplined capital
allocation seeking
mid-teens risk-adjusted
returns
• Ongoing commitment to
BB rating
• Commercial opportunity in
certain contracted assets
• Continued focus on
closing the valuation gap
in renewable assets
• R01. Strategy – Impact of governmental actions and regulations
Annual bonus
Grow well
• R02. Strategy – Geopolitical uncertainties and social instability
(including environmental activism, sanctions and trade war)
• R06. Operation and execution – Project execution (CAPEX)
• R07. Operation and execution – Asset integrity (OPEX)
• R10. Regulation and compliance – Fraud, bribery and corruption
(Adjusted EBITDA
and Funds From
Operations)
See more on page 120
See more on pages 62 to 71
Operate safely
and efficiently
and minimize
environmental
impacts
• Austria Wind repowering project
remained on track and on budget
• Vorotan refurbishment completed
on schedule and on budget
• Record Adjusted EBITDA of $841.5
million, 17% above 2020
• Funds From Operations of $440 million
• Robust cash conversion ratio of 52.3%
• 10% annual dividend increase
• Net leverage ratio of 4.6x
• Sale of Brazil Hydro assets
HIGH
GROWT H
FINANCIAL
ST RENG TH
30
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC
Strategic aims
2021 progress
Forward-looking
priorities
• Achieved EAF of 94.4%, in line with our
• Strong focus on
target, and EFOR of 1.8%, which was
operational excellence
slightly above our target
• In 2021 we successfully integrated the
and recommitment to our
Target Zero LTI policy
assets acquired in the United States
• Continued improvement
and the Caribbean
• Improved sustainability ratings (MSCI,
of sustainability
performance
CDP and Sustainalytics)
• Engaged with Bulgarian
• Failure to achieve Target Zero KPI
government and other
stakeholders involved
in the energy transition
of the country
OPERATIONAL
EXCEL LENCE
KPI
(see pages 38-39
for more details)
• Lost Time
Incident (LTI)
• Equivalent
Availability
Factor (EAF)
• Equivalent Forced
Outage
Rate (EFOR)
• CO2 intensity ratio
• In 2021 we successfully integrated the
• Focus on gas-fired and
• Adjusted EBITDA
portfolio of assets from Western
Generation Group in the US and
cogeneration assets in
Americas region with
Trinidad and Tobago. We also closed
carbon capture optionality
the acquisition of the solar portfolio
from Green Hunter Group S.p.A. in Italy
• Austria Wind repowering
• Italy solar roll-up strategy
growth
• Adjusted
Revenue
• Austria Wind repowering project
remained on track and on budget
• Vorotan refurbishment completed
on schedule and on budget
• Record Adjusted EBITDA of $841.5
million, 17% above 2020
• Robust cash conversion ratio of 52.3%
• 10% annual dividend increase
• Net leverage ratio of 4.6x
• Sale of Brazil Hydro assets
HIGH
GROWT H
FINANCIAL
STRENG TH
allocation seeking
mid-teens risk-adjusted
• Ongoing commitment to
returns
BB rating
• Commercial opportunity in
certain contracted assets
• Continued focus on
closing the valuation gap
in renewable assets
• Funds From Operations of $440 million
• Disciplined capital
• Funds From
Operations (FFO)
• Net leverage ratio
Link to risk
• R06. Operation and execution – Project execution (CAPEX)
• R07. Operation and execution – Asset integrity (OPEX)
• R08. Operation and execution – Resources/Climate change
• R09. Health, safety and environment (HSE) and food
– Prevention and regulation
• R11. Information technology – Cyber security and system integrity
See more on pages 62 to 71
Link to
remuneration
Annual bonus
and LTIP
(LTI and EAF)
See more on page 120
• R01. Strategy – Impact of governmental actions and regulations
• R02. Strategy – Geopolitical uncertainties and social instability
(including environmental activism, sanctions and trade war)
• R03. Strategy – Disruptive innovation in power generation and
storage technologies
• R04. Operation and execution – Pandemic virus
• R05. Operation and execution – Supply chain
• R12. People and organization – Key people (senior executive
management) succession planning
See more on pages 62 to 71
Annual bonus
and LTIP
(Refurbishments/
repowering and M&A)
See more on page 120
Sustainability principle
Operate safely
and efficiently
and minimize
environmental
impacts
Manage our
business responsibly
Enhance
our operating
environment
Grow well
• R01. Strategy – Impact of governmental actions and regulations
• R02. Strategy – Geopolitical uncertainties and social instability
(including environmental activism, sanctions and trade war)
• R06. Operation and execution – Project execution (CAPEX)
• R07. Operation and execution – Asset integrity (OPEX)
• R10. Regulation and compliance – Fraud, bribery and corruption
Annual bonus
(Adjusted EBITDA
and Funds From
Operations)
See more on page 120
See more on pages 62 to 71
Grow well
Operate safely
and efficiently
and minimize
environmental
impacts
31
Strategic ReportGovernanceFinancial Statements
STR AT EGY FOR GROWTH (CONTINUED)
OPERATIONAL
EXC EL LENCE
Striving to achieve operational
excellence, which includes health and
safety, lies at the heart of all we do.
We have a Target Zero commitment in respect of health and
safety – that is, a target of zero Lost Time Incident (LTIs).
Ensuring a safe working environment is also one of our core
sustainable business principles.
We monitor key operational metrics across our plants every
week, checking how these measure up against internal
targets. We then undertake an analytical review, seeking to
improve performance by learning from what has worked well
and what has not gone according to plan.
Our deep expertise and experience allow us to improve our
operational performance and create economic value. This
operational approach is applied to all plants, developments
and acquisitions.
Metrics
• LTI (annual bonus and LTIP metric)
• Equivalent Availability Factor (annual bonus metric)
• Equivalent Forced Outage Rate
• CO2 intensity reduction
For more information on our Remuneration Report,
see pages 112 to 129
32
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC CREATI NG VALUE BY IMPR OVING TH E PE RFORM A NC E O F O UR
HYDRO ASSETS IN ARME NIA
A major 2021 milestone is the completion of the
Electromechanical Refurbishment of our Vorotan
hydro plants in Armenia -- a 4-year long project
affected by pandemic and military conflict,
fulfilling a key requirement of the assets purchase
agreement with the Government of Armenia.
As a result, we fully refurbished three turbine units
in Tatev and two in Shamb Hydro Power Plants,
modernized the switchyards of all three power
stations and established a joint control room in
our main office in Goris. More importantly, we
achieved a prolongation of the useful life of the
equipment for at least another 40 years, as
well as an increase in operational efficiency
and energy production. All these works were
performed while keeping these critical plants in
Armenia ‘s energy system running.
The project had a significant impact on the
sustainability of operations and the environment.
In particular, we removed 100% of the asbestos
while replacing or repairing any piece of
equipment, small and big.
We did a comprehensive study of the impact of
operations on the aquatic life of the Vorotan river
basin and identified specific measures to be
taken in future to improve the environment.
We pursued our social investment projects to
contribute to the welfare of local communities. A
common project with the contractor companies
on this refurbishment project, Voith Hydro and
EFACEC, led us to establish a regional training
center at the American University of Armenia in
Goris and provide funds to help medical clinics in
two nearby towns – Goris and Sissian – to
upgrade their equipment and facilities.
33
Strategic ReportGovernanceFinancial Statements STR AT EGY FOR GROWTH (CONTINUED)
HI GH
GRO WT H
To achieve high growth, we adopt four core investment
approaches focused on contracted or regulated wholesale
power generation, fostering low- and no-carbon technologies:
1. Greenfield development: when we can take advantage of
cyclical under-supply of capital and create opportunities for
higher returns
2. Strategic acquisitions: when we can improve operations and
have a clear competitive advantage based on, for example,
complexity of process, geography or technology
3. Development of customized projects in partnership: with
governments, utilities and corporations in regions where
there is a need for a reliable supply of power but insufficient
expertise or capital
4. Platform expansion: leveraging existing stakeholder
relationships and replicating the same technology and
structure. This approach tends to result in lower risk and
high returns due to cost synergies
Metrics
• Adjusted EBITDA growth (annual bonus and
LTIP metric)
For more information on our Remuneration Report,
see pages 112 to 129
34
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC AC QUISI TION O F WES TE RN GE NE RAT ION PO RTFO LIO
The acquisition closed in February
2021, adding to our fleet contracted
assets up to 12 years with high-
quality counterparties located in
New Mexico, Texas, California and
Connecticut in the United States and
in Trinidad and Tobago. It increased
adjusted EBITDA by approximately
$85 million for FY 2021 and
represented a meaningful increase
in long-term contracted cash flows in
US$. This, in turn, supports the
current dividend policy of 10%
dividend growth year-on-year and
enhances the dividend coverage.
This acquisition is expected to
generate a risk-adjusted return well
in excess of ContourGlobal’s cost of
capital.
In addition, it provides significant
future potential for ContourGlobal to
create value as a result of its
operational platform and capabilities.
The Company expects to further
invest in these assets and adjacent
spaces for incremental commercial
optimization, battery storage and
hybrid deployment and repowering.
35
Strategic ReportGovernanceFinancial Statements STR AT EGY FOR GROWTH (CONTINUED)
FINANCI AL
STRE NGTH
Strong operational performance
combined with an efficient capital
structure have allowed us to deliver
superior returns at asset level.
Our business model is based on contracted or regulated
revenue streams combined with operational excellence, which
results in stable and predictable cash flow generation. This in
turn allows us both to fund new growth projects and support
our progressive dividend policy.
We seek to maintain a highly efficient capital structure to
support our business, using a two-tier financing structure:
• Majority non-recourse project level debt for power
plants; and
• Attractive bond financing to maximize financial flexibility
for the parent company.
As of 31st December 2021, our cost of capital was
approximately 4%.
Metrics
• Net debt/ adjusted EBITDA
• Funds from operations (annual bonus metric)
For more information on our Remuneration Report,
see pages 112 to 129
36
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC OUTS TANDING FINANC IAL PE RFORM A NC E OF O UR
PLANT I N ARRUBA L
Our Arrubal power plant is an 800
MW Combined-Cycle Gas-Turbine
plant located in Spain’s La Rioja
region. ContourGlobal acquired it
in 2011.
In addition to its base-load
capability, Arrubal also helps
balancing the highly variable output
of the region’s solar and wind-
turbine installations. The plant can
respond quickly to net-load
fluctuations to provide needed
stability.
In July 2021, the power purchase
agreement expired and since then,
the plant has been operating on a
merchant basis. The performance of
the plant in the second half of 2021
was outstanding, driven by the level
of dispatch and the conditions of
the energy market in Spain. The
plant operates in the ancillary
services market providing critical
stability to the energy system.
37
Strategic ReportGovernanceFinancial Statements O UR KPIS
OUR KPI S
We measure our performance against 11 financial and non-financial key performance indicators (KPIs). A new financial metric has
been added in 2021: Adjusted Revenue.
FINANC IAL KPIS
Income from Operations ($m)
2017
2018
2019
2020
2021
269.0
261.9
292.1
307.9
370.1
Income from Operations (IFO) is derived from the
IFRS consolidated statement of income and
corresponds to the sum of the following line items:
Revenue, Cost of sales, Selling, general and
administrative expenses, Other operating income,
Other operating expenses, Acquisition-related items.
This is a measure of profitability that includes
depreciation and amortization expenses as well as
development costs. IFO has increased by 19.2%,
driven by strong performance at Arrubal post PPA
and Mexico CHP, as well as the acquisition of
Western Generation.
Adjusted EBITDA ($m)
2017
2018
2019
2020
2021
513.2
610.1
702.7
722.0
841.5
Adjusted EBITDA is defined as profit for the period
from continuing operations before income taxes, net
finance costs, depreciation and amortization,
acquisition related expenses, plus, if applicable, net
cash gain or loss on sell down transactions (in
addition to the entire full period 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 pro rata portion of
Adjusted EBITDA for such entities.
Adjusted EBITDA grew by 17% compared to last year,
primarily driven the acquisition of Western
Generation and the strong operating performance in
Arrubal in the post PPA period.
Proportionate Adjusted EBITDA ($m)
2017
2018
2019
2020
2021
434.2
536.1
561.6
568.7
692.3
Proportionate Adjusted EBITDA is presented using
Adjusted EBITDA calculated on a proportionally
consolidated basis based on ContourGlobal’s
ownership percentage of assets.
The Proportionate Adjusted EBITDA as well includes
the net cash gain or loss on sell down transactions, if
applicable, as well as the underlying profit from
continuing operations for the business the minority
interest sale relates to, reflecting applicable
ownership percentage going forward from the date
of completion of the sale of the minority interest.
Proportionate Adjusted EBITDA grew by 22% as
compared to 2020, for similar reasons as Adjusted
EBITDA, primarily driven by the acquisition of
Western Generation and the strong operating
performance at Arrubal.
Funds from Operations ($m)
2017
2018
2019
2020
2021
255.9
302.3
337.9
379.6
439.8
Net Leverage ratio (x)
2017
2018
2019
2020
2021
4.1
4.4
4.4
4.8
4.6
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 cash flow.
Strong operational performance and highly
contracted cash flows allowed us to maintain the
Group’s high level of FFO. The growth of 16%
compared to 2020 is mainly driven by the Adjusted
EBITDA growth, as explained above.
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. The leverage ratio also excludes
IFRS16 liabilities.
This is the key credit measure of the Group. The net
leverage ratio has decreased as compared to 2020,
due to an increase in Adjusted EBITDA as explained
above, partially offset by an increase in net debt
during the year.
Adjusted Revenue ($m)
2020
2021
1,252.6
1,724.4
Adjusted Revenue excludes CO2 emission cost
recharges from IFRS revenue and is a key metric as
it provides a more comparable basis for assessing
revenue generating capabilities across the portfolio.
The metric has been added due to the significant
increase in carbon pricing which has resulted in CO2
pass throughs distorting IFRS Revenue. Adjusted
Revenue has increased by 38% during the year
primarily due to completion of the Western
Generation acquisition, higher generation at Maritsa
and higher dispatch and pricing at Arrubal.
1. Maintenance capital expenditure is defined on page 59.
38
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Grow well
Operate safely and
efficiently and minimize
environmental impacts
Manage our business
responsibly
Enhance our operating
environment
High growth
Financial strength
Operational excellence
KPIs entering into executive
remuneration’s determination – more
details can be found on page 120
NON -FINANCIA L KPI S
Lost Time Incident Rate
2017
2018
2019
2020
2021
0.03
0.03
0.03
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 corresponds to two LTIs, of
which there was one fatality. However, we remain
fully committed to Target Zero in the future.
0.07
0.07
94.4
92.9
94.3
95.0
94.4
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 decrease in the EAF from 95% in 2020 to
94.4% in 2021 is linked to a lower budgeted KPI
due to our outage planning, which partially was
shifted from 2020 to 2021 due to COVID
restrictions in 2020.
Availability Factor (%)
2017
2018
2019
2020
2021
Equivalent Forced Outage Rate (%)
2017
2018
2019
2020
2021
1.9
1.7
1.5
1.8
3.6
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.
The increase of EFOR in 2021 is linked to
some longer forced outages in Spain, Togo
and Caribbean.
CO2 emissions intensity (net CO2 emissions tonnes/MWh)
0.66
2017
2018
2019
2020
2021
0.62
0.56
0.57k
0.51
0.57k
0.45k
0.44k
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 2017 and 2018 reflects our historical
CO2 intensity based on electricity production as
variances to energy production are immaterial.
Energy
Electricity
For 2019 to 2020, CO2 emissions intensity for both
electricity and energy production are reflected.
CO2 emissions based on energy production is the
relevant metric for our 2030 climate target and thus
this is the only metric shown for 2021.
Our performance in 2021 reflects the improvement
recognized in 2020 of the addition of our highly
efficient Mexico cogeneration facilities with a slight
improvement in 2021 resulting from the addition of
the Western Generation portfolio1.
Gender diversity (total employees)
2017
2018
2019
2020
2021
407
1,868
1,461
289
273
1,200
1,217
1,120 261
1,241 277
1,489
1,490
1,381
1,518
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 18% of our workforce in 2021
and 50% of senior management.
Male
Female
1
In 2021, we recalculated our 2019 base year using our re-baselining policy as set out in our ContourGlobal Greenhouse Gas Emissions and Thermal Efficiency
Calculation Methodology 2021, which is based on the GHG Protocol. The recalculated CO2 emissions intensity for energy production is 0.43k, including impacts of
acquisitions and disposals. We have also recalculated our 2021 energy intensity figure to include a full year of data for the Western Generation portfolio to ensure
like for like comparison. As acquired in February 2021, this results in no change from the 0.44 reported above. Our CO2 emissions intensity increased compared
with the recalculated 2019 base year, mainly due to increased production of our Maritsa facility.
K ContourGlobal plc engaged KPMG LLP (“KPMG”) to undertake limited assurance under the assurance standard ISAE (UK) 3000 over selected information. KPMG’s
full assurance statements for 2019, 2020 and 2021 can be found on our website at https://www.contourglobal.com/reports
39
Strategic ReportGovernanceFinancial Statements SU STAINAB ILITY
OUR SUSTAI NAB LE
B USINESS PRINCIPLES
ContourGlobal’s Sustainability Strategy has been in place since 2010,
driving its sustainable progress.
Our sustainability strategy is centered
around our four business principles and
advances the Sustainable Development
Goals (SDGs) and the United Nations
Global Compact commitments, to which
we have been a proud signatory
since 2010.
It focuses on the material impacts and
sustainability risks. Such risks are
embedded in our corporate risk register
that is reviewed quarterly by the Audit
and Risk Committee and the Board of
Directors.
CONTO URGLOBAL’S FOUR BUS IN ESS P RINCIPL ES
Operate safely and efficiently and
minimize environmental impacts
We seek to promote the health, safety, well-being, and development of
everyone who works for us, as employees or contractors, as well as visitors.
Safety is our number one priority.
Although in the industrial space in which we operate there are significant risks
to life and health, we believe that all injuries are preventable if we apply a
24/7 approach to health and safety. We therefore have committed to "Target
Zero", striving for zero harm and zero injuries. Further, we include this target
in our performance and remuneration objectives.
By running a power plant efficiently, we maximize electricity output, minimize
environmental impacts and reduce costs. We gauge our operational
performance by benchmarking ourselves against the performance of
comparable peers. Our reliability performance targets are based on two main
metrics: Equivalent Availability Factor % (“EAF %”), which measures the
percentage of time that a generation unit is available to produce electricity if
called upon in the marketplace; and Equivalent Forced Outage Rate (“EFOR”),
which allows us to measure our unplanned forced outages.
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 aligned with UN SDG 12 for responsible consumption and
production.
KPIs
• LTIR of 0.07
• EAF of 94.4%
• EFOR of 1.8%
• CO2 intensity target
of 0.3 by 2030; net
carbon zero by
2040
2021 progress
• Failed to achieve
our LTIR targets
• Achieved EAF in
line with our target
and EFOR slightly
better than our
target
• On track to
achieve our 2030
CO2 intensity
target
40
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Grow well
Growing well means meeting energy needs while reducing the impact on the
climate, promoting energy and economic security, and increasing energy
access. This creates economic wealth for investors, our employees, and,
indirectly, our communities.
KPIs
• Adjusted EBITDA
growth of 17% over
2020
2021 progress
• Record adjusted
EBITDA of $841.5
million
Our strategy is to acquire and develop businesses utilizing low- or no-carbon
technologies. We deploy innovative technologies to increase energy
efficiency and continue to develop businesses that expand power
infrastructure access in underserved parts of the world.
• Funds From
Operations $440
million up 16% over
2020
• Net leverage ratio
Our investment process has yielded strong growth throughout the Company’s
history.
of 4.6x
• Successfully closed
the acquisitions of
Western
Generation Group
and Green Hunter
S.p.A.
• Repowering of
Austria Wind on
track and on
budget
Enhance our operating environment
We promote private sector and market-based solutions to address electricity
sector challenges such as intermittency of renewable resources and
low-carbon alternatives to maintain price stability.
We also focus on strengthening capacity in the sector, and in the supply
chain, by promoting transparent processes and developing sector expertise.
We achieve this through community engagement and social investment.
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 local
and national laws and regulations wherever we operate. This commitment to
transparency and moral integrity is unwavering, and we apply it equally
throughout our supply chain. We commit to communicating transparently,
which helps to cultivate trust and encourages ownership and accountability.
We believe in attracting, developing, and retaining a workforce that reflects
the diversity of the communities in which we operate. Not only does this
provide opportunities to underrepresented groups – particularly females at
power plants – but it also creates a more dynamic and understanding work
environment, resulting in better business decisions.
KPIs
• Approved 3-year
social investment
plans with a value
of $6.2 million
• 29 social
investment plans
with 129 distinct
projects were
approved in 2021
2021 progress
• 86 social
investment
projects were
pursued in 2021,
out of which 47
were completed,
with a total spent
of $1.5 million
2021 progress
• Continued efforts
to attract women
in roles at our
power plants
KPIs
• Group gender
diversity of 18%
broadly in line with
the previous year
• 506 5 Whys
analysis conducted
• 1,041 third-parties
undergoing due
diligence and
subject to our
Supplier Code of
Conduct
• 1,299 employees
receiving online
anti-bribery and
corruption training
• 1,636 employees
acknowledging our
Conflict of Interest
policy
41
Strategic ReportGovernanceFinancial Statements SU STAINAB ILITY (CONTINUED )
HEALTH & SAFE TY
Target Zero
Our global Target Zero program lies at
the heart of our approach to health and
safety. We want to ensure that
‘everyone goes home safe, every day,
everywhere’.
Despite our strong performance against
benchmarks and our intense
commitment to health and safety
excellence, we were not successful in
achieving Target Zero in 2021. Most
regrettably, we experienced a
devastating fatality during the year and
there was one Lost Time Injury, resulting
in two Lost Time Incidents (LTI) for 2021.
Immediately after any adverse safety
event, we conduct a thorough
investigation, communicate the lessons
learned throughout the organization,
and incorporate them into our health
and safety procedures so that we
continuously improve them.
In response to the fatality at one of our
wind farms in Brazil caused by
electrocution, we commissioned a
certified third party to conduct an
in-depth investigation of the accident.
We analyzed every step in our Lock-out
Tag-out (LOTO) programs to understand
whether actions were not correctly
executed and implemented more
rigorous safety permits for people
involved in medium and high voltage
activities. In relation to the LTI, where a
hand fracture occurred when a
contractor slipped on the slope of an
evaporation pond, we stepped up our
procedures to ensure more rigorous
adherence to safety protocols. We put in
place new safeguards for employees
and contractors working around or near
open water and upgraded these
locations to “high risk” environments,
which are audited annually.
LEA RNING FROM FAILURE
In 2021 we had a hard lesson to learn with the fatality at our facility of Chapada.
A deep investigation was carried out including involvement of third party experts to find all possible
gaps that, if removed, would have prevented the occurrence and increase the health and safety
maturity of the businesses.
The scope of the investigation was:
a) Determine the sequence of relevant events leading up to the incident
b) Identify the Immediate, Underlying and Root Causes
c) Make suitable recommendations (SMART actions) to prevent the same or similar events occurring
again
d) The effectiveness of safety critical barriers
e) Any communication, automation and operational safety failures.
Based on these findings we started implementing a fleet wide health and safety improvement
campaign on electrical safety, permits to work and change management. New set up working
groups are updating the health and safety processes related to the above campaign and ensuring
that the new process flows are timely implemented by milestones follow up and audited for quality
focusing the 2022 site audits on electrical procedures and related process flow.
Emergency response
Each of our sites has its own bespoke
Emergency Response Plan, based on
global guidance but considering the
unique attributes of the site and
surrounding community. The Plan covers
all potential risks at each business, from
hospital transportation in a health
emergency to community evacuations in
the case of a more devastating event.
All employees receive training on
emergency response, even if they do
not work in a power plant. They also
receive our Emergency Response and
Reporting instructions, which provide
information on how to handle an
emergency and who to contact when an
emergency arises. Emergency contact
information is updated regularly.
Training
Our commitment to health and safety is
reflected in our intensive training program.
We target investing at least 2% of our total
working hours in safety training. In 2021,
we achieved a training hours rate of
2.89% in our Thermal plants and 3.90% in
our Renewable plants.
Audits and interventions
In 2021, one scheduled external audit,
eight scheduled internal audits and two
unannounced internal audits were carried
out. Two safety interventions were
performed through the year. These audits
and interventions help us to identify gaps
and improve our processes. They are a
logical application of 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”.
Lost Time Incident
Rate:
Level of Safety inspection
per working hours (based
on average headcount):
Hazard Identification
Rate:
0.073
(target: 0)
84%
(target 25% - O&M; 30%
- Construction)
79%
(target 40%)
Reported Corrective
and Preventive
Actions (CAPA)
closed:
93.4%
(target 85%)
Number of
ContourGlobal
employees Working
hours dedicated to
safety training:
2.8%
(target: 2%)
42
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC
SAFE TY AWARDS
As tribute to our value “We care about our people’s health, safety, well-being, and development”, ContourGlobal
maintains an award system to recognize businesses that have the highest level of health and safety performance. The
awards, Mont Blanc, Denali and Everest, recognize that ensuring a healthy and safe workplace is a climb, with each
step requiring increasing and long-lasting performance. We are proud of seeing over the years more and more of our
plants and teams receiving recognition through the awards program.
Everest – 8848m
2021
2020
2019
• 3 years 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**
• Galheiros & SDII
Brahma Rio
Cap des Biches
• Cupisnique
Galheiros & SDII
KivuWatt
• Knockmore Hill
• Maritsa
• Mogi Guaçu
• Rio PCH
• Talara
Goias Sul
KivuWatt
Maritsa
TermoemCali
Saint Martin
Denali – 6194m
• 2 years 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**
2021
• Austria Wind
O&M
• Bahia PCH
• Balsa Nova
• Asa Branca
• Ploiesti
• Orellana
Mont Blanc – 4807m
2021
• 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**
• Arrubal
• Benin
• Cap des
Biches
• CGA Altamira
• Hobbs
• Ikeja
• Majadas
• Solar Slovakia
• Togo
• Vorotan
• Waterside
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
2020
Cupisnique
Italy Solar
Knockmore Hill
Mogi Guaçu
Rio PCH
Solar Slovakia
Talara
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
* 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.
43
Strategic ReportGovernanceFinancial Statements
SU STAINAB ILITY (CONTINUED )
OUR PEOP LE
Our people-the heart of
our business
We aim to recruit and retain the best
people, ensuring we deliver our strategy
and run our operations safely and
productively. Around 1,518 employees
and contractors work for us globally;
they are the foundation of our business.
We create and promote an inclusive and
diverse environment where the safety
and well-being of our people is the
highest priority. To enable our people to
perform at their best, we continue to
invest in technology and innovative
ways to manage risk, streamline
processes, and improve productivity. We
offer competitive remuneration that
rewards expertise and we invest in the
development of our people to build
capability and improve performance.
Developing our capabilities
The people we employ around the
world are central to our success. To
drive continuous improvement, we
respect people’s differences and
encourage self-accountability, a hunger
to learn, and a commercial mindset.
In 2021, we focused on building
capability to position the organization for
the next phase of growth, recruiting at
all tiers of leadership below the most
senior level. We also moved towards a
regional operating model, creating an
Africa region and planning similar
structures for the Americas and Europe,
in order to keep close to our customers
and to our businesses.
We put greater focus on objectives and
key results within our performance
management system, to encourage
longer-term thinking and alignment to
our business strategy. By building
capability and improving performance in
this way, we will be able to transform our
business, deliver our strategy, and
realize our vision.
Worker Exchange Program
ContourGlobal believes that sharing
knowledge within the organization is
critical to achieving our goal of
operational excellence. We also believe
that professional development must
include a cultural component. It’s good
for our people to appreciate the benefits
of working in a global environment and
they can learn this best by immersion
into another business’s daily work life.
With the easing of travel restrictions in
the second half of 2021, we worked on
revamping our Worker Exchange
Program. Founded on the belief that our
success depends upon creating a
multinational workforce “from within”,
the program emphasizes experiential
learning for professionals and emerging
leaders to prepare them to manage
our assets.
44
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Employee profile
At the end of 2021, we employed 1,518
people (2020: 1,381), an increase of 10%
on the prior year. Employee turnover in
2021 (10.1%) was slightly higher than in
2020 (8.0%), notably as a result of
people reviewing their roles and moving
in the post pandemic era.
Approximately 79% of our workforce are
employed in our operating plants with
the largest concentration of employees
by far in Bulgaria. None of the countries
in which we operate feature on the UK
Government’s Foreign, Commonwealth
and Development Office list of priority
countries for human rights concerns,
published in November 2021.
Information on our employee profile is
illustrated in the graphs on page 47
while our gender diversity is detailed on
page 39.
Pay and reward
To attract and retain the best talent, and
reward our colleagues for their work,
we regularly review pay and benefits
in the context of competitiveness,
sustainability, and fairness. For all
ContourGlobal employees eligible for
a bonus, we use a combination of a
Group-wide and localized scorecard
with a mix of financial and non-financial
measures. In this way, our bonuses
match our strategic priorities and
stakeholder responsibilities.
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: 987 employees participated
in collective bargaining agreements in
2021. 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.
Information systems
To enable our people to perform at their
best, we continue to invest in
technology and innovative ways to
manage risk, streamline processes, and
improve productivity.
Over the course of the year, we
simplified and automated our HR
processes, bringing together information
from disparate systems into a single
platform – our Human Resources
Information System (SuccessFactors).
We now have one unified source of truth
on all employee data and have the
platform to enable all people-related
processes through it.
We completed a full cycle of our annual
performance management process in
2021 using this system. Streamlined HR
figures are now readily available to
inform management decisions about
human resources. An important priority
for ContourGlobal in the year ahead will
be to continue to leverage the system
capabilities, so that we can quickly and
cost-effectively start up and deliver HR
services to smooth employee transitions
in further acquisitions.
Our policies
Our people policies are designed to
provide equal opportunities and create
an inclusive culture, in line with our
values and in support of our long-term
success. They also reflect relevant
employment law, including the
provisions of the Universal Declaration
of Human Rights and ILO Declaration on
Fundamental Principles and Rights at
Work. We expect our people to treat
each other with dignity and respect, and
do not tolerate discrimination, bullying,
harassment, or victimization on any
grounds.
We are committed to paying our people
fairly and equitably relative to their role,
skills, experience, and performance – in
a way that balances the needs of all
our stakeholders. That means our
remuneration policies reward sustainable
performance that is in line with our values
as well as our risk expectations. We
encourage our people to benefit from
ContourGlobal’s performance.
“ WE CREATE AND PROMOTE AN INCLUSIVE AND DIVERSE
ENVIRONMENT WHERE THE SAFETY AND WELL-BEING OF OUR
PEOPLE IS THE HIGHEST PRIORITY. TO ENABLE OUR PEOPLE TO
PERFORM AT THEIR BEST, WE CONTINUE TO INVEST IN
TECHNOLOGY AND INNOVATIVE WAYS TO MANAGE RISK,
STREAMLINE PROCESSES, AND IMPROVE PRODUCTIVITY.”
Sean McGrath
Chief Human Resources Officer
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Strategic ReportGovernanceFinancial Statements SU STAINAB ILITY (CONTINUED )
Our culture
Our Company culture and sustainable
business principles embrace the
well-being and development of our
people and a commitment to continuous
learning. They drive our passion to
provide a safe and healthy work
environment and to learn from our
mistakes – we encourage employees to
be curious, to experiment, and to share
things they learn.
As a learning organization, we
conducted 506 “5 Whys” investigations
this year, where employees work
together to analyze why things do not
always go according to plan and to
propose how to make processes better.
We publish these and disseminate them
widely to achieve continuous
improvement.
Our culture is encapsulated by the
ContourGlobal Way – a system of
leading and working that focuses on the
safety of our people, value for our
customers and a mindset of zero waste.
This approach has helped us become
more empathetic toward our colleagues
and enabled us to work together as a
team – particularly during the past year
of disruption and transformation. And it
underlies our approach to diversity
and inclusion.
When we completed our Western
Generation acquisition of assets in the
United States and Trinidad and Tobago
in 2021, we hired approximately 120
people in key operational and support
function roles and introduced our
internal policies and practices, setting
the foundation for the ContourGlobal
Way of working.
“ OUR CULTURE IS ENCAPSULATED BY THE
CONTOURGLOBAL WAY – A SYSTEM OF
LEADING AND WORKING THAT FOCUSES ON
THE SAFETY OF OUR PEOPLE, VALUE FOR OUR
CUSTOMERS AND A MINDSET OF ZERO WASTE.”
Sean McGrath
Chief Human Resources Officer
Equality, diversity and inclusion
We are committed to developing an
inclusive and diverse workforce, and
one that provides equal opportunities
for all in the long term. This promotes
safety, productivity, and well-being, and
underpins our ability to attract new
employees. The more representative we
are of the communities where we live
and work, the better we become at truly
serving people and society.
We were delighted in 2021 to be
recognized for our efforts to increase
the representation of women in senior
leadership positions. In the independent
Hampton-Alexander Review, supported
by the UK Government, we ranked fifth
out of the 350 largest companies listed
on the London Stock Exchange for the
proportion of women in roles on the
Board or the two leadership layers
below it.
Failure
event
5 Whys
discussed and
draft created
5 Whys
published
Actions
assigned
Actions
completed
5 Whys shared
internally
46
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC However, gender diversity is much more
challenging at the power plants. We are
committed to actively attracting women
into these roles. We believe that hiring
women in leadership positions in a
largely male-dominated workplace is
vital to drive innovation and inclusivity.
We celebrated International Women’s
Day to promote the role of women in the
workplace and we will continue to strive
for increased gender diversity
throughout the Company.
Flexible working
After successfully working remotely due
to the COVID-19 pandemic, most
employees returned to the office in
2021. However, we introduced a pilot
hybrid working model for corporate
office-based employees, allowing them
to work from home for 40% of the week
depending on the nature of their work.
While many site-based employees are in
roles that by their very nature cannot be
performed remotely, we will continue to
seek to provide flexible working through
part-time and job-share arrangements,
flexible rosters, and career breaks.
Looking ahead to 2022
We have all witnessed an at-scale shift
to remote work, the dynamic reallocation
of resources, and the acceleration of
digitization and automation to meet
changing individual and organizational
needs. We have by and large met the
challenges of this crisis moment. But as
we move towards a post-pandemic era,
we will continue to build a model that is
more agile and responsive, built around
interrelated trends of more connections,
more automation, lower transaction costs,
and continued demographic shifts.
Organizations that can reallocate talent
in step with their strategic and
operational plans are more likely to
outperform their peers. The best talent
should be shifted into critical value-
driving roles. We will therefore build an
analytics capability to mine data which
will be used to influence decisions on
hiring, developing, and retaining the
best employees.
A tidal wave of change positions the
human resources organization to
transform, lead the employee
experience, and shape the workforce
into the form that the business needs for
its future growth. The HR function will
position themselves as business
partners, who consider themselves
internal service providers who ensure
high returns on human-capital
investments. Over the course of 2022
we will continue to make hiring better,
faster, and more diverse, focusing on
talent that can best drive value in our
business, and build processes that will
give us opportunities to better plan
mission-critical capabilities for the future.
Senior leadership
During the year we welcomed Mr. Stuart
Altman as our Chief Compliance Officer
and Executive Vice President to further
strengthen our compliance agenda and
our senior management team.
Gender diversity in numbers
Board
Executive
management*
Executive management
and their direct reports
Total Group
Male
Female
89% (8)
11% (1)
Male
Female
50% (5)
50% (5)
Male
Female
61% (25)
39% (16)
Male
Female
82% (1,241)
18% (277)
* 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 on the Board
of Directors.
47
Strategic ReportGovernanceFinancial Statements SU STAINAB ILITY (CONTINUED )
ENVIR ONMENT
Strategic framework
Our policy on environmental
sustainability, which provides the
framework under which we work, is
aligned both with the targets in UN SDG
12 and with the International Finance
Corporation (IFC) performance
standards. Our environmental impacts
are intensively regulated in all our
markets and reported publicly.
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.
Carbon emissions
The importance of growing well by
investing in low- and no-carbon
technologies drives our efforts to
combat climate change and its impact.
Our long-term target is to achieve net
zero carbon by 2050 and, in the interim,
to reduce the CO2 intensity of total
energy production to 0.30 by 2030
(a 40% reduction from the 2019 value of
0.51). We have expanded assurance of
our carbon emissions and have
bolstered our reporting to CDP. On
pages 50 to 53 we present the Group’s
disclosures relating to the Task Force on
Climate-related Financial Disclosures.
Our growth in low-carbon technologies,
notably through our significant acquisition
in the United States and Trinidad and
Tobago of 1,502 MW of contracted,
flexible gas-fired generation that
completed in 2021, is part of our
sustainability strategy and is critical to the
climate transition. Investments in efficient,
low-carbon technology ensures reliability
and base-load power, supporting the new
renewable loads on the grid.
Over the last 12 years we have increased
our renewable energy from zero to 1,816
MW of installed capacity across wind, solar
and hydro (including 168MW of hydro in
Brazil currently held for sale and 596MW
of wind in Brazil subject to an ongoing
sale process). We use battery storage at
our Bonaire business to smooth the
intermittency of solar and wind power and
are investigating further opportunities
48
elsewhere to use battery storage as a
no-carbon method of maintaining a
reliable flow of electricity.
oxide (NOx), sulfur oxide (SOx), and
particulate matter (PM), to reduce health
risks and environmental impacts.
Additionally, continued growth in
renewable technologies and further
development of hybrid technologies is
also core to our strategy. In 2021, we
announced the expansion by c. 24% of
our solar portfolio in Italy, with the
acquisition, in partnership, of 18MW of
photovoltaic assets. Additionally, at our
Bonaire business, where we use batteries
to smooth the intermittency of wind power,
we are developing new solar capacity.
On 19th January 2022 we agreed to the
sale of our hydro assets in Brazil, in
accordance with our strategy to realize
value from our undervalued renewable
businesses, where appropriate
opportunities are available to do so, in
order to unlock value for shareholders.
Carbon capture technology also continues
to play an integral role in our climate
strategy. Our European Solutions plants
continue to utilize carbon capture
technology.
The carbon emissions of our coal plant in
Bulgaria are the most significant in our
portfolio. Our regulatory and engineering
teams are investigating ways to convert
the plant to operate on low- and no-
carbon fuels, such as low-carbon gas or
renewable biomass combined with carbon
capture technology. The timing of exiting
coal completely will depend in large part
on geopolitical events and pressures
related to commodity pricing and
availability and, in particular, the timing of
the implementation of the energy
transition in Bulgaria. Additionally, exiting
coal will take into consideration the need
for a “just transition”, protecting the
interests of our employees and the
community, balanced by the impact
on climate.
Our greenhouse gas (GHG) emissions
are reported according to the GHG
Protocol guidelines. The majority of
these are generated from our thermal
electricity and steam production, with
CO2 emissions representing 99% of total
emissions. In addition to carbon
emissions, we carefully manage other
atmospheric emissions, such as nitrogen
Using water responsibly
Our businesses, most of which are
intensively regulated, undertake
extensive monitoring and risk mitigation
activities related to water withdrawal,
use, and discharge, as well as
biodiversity impacts.
In 2021, we have undertaken high level
assessments of water stressed areas
and of water impacts to the business as
part of our environmental management
process and water was a key physical
risk assessed in our TCFD requirements.
Where water is a primary fuel source
– in hydro-electric generation – we
ensure we utilize it in the most efficient
manner possible; we also manage other
impacts, including sedimentation,
drainage, vegetation, and biodiversity.
At our Vototan business in Armenia,
our hydroelectric complex utilizes dams
to generate electricity. We undertook
a large-scale refurbishment of the
facility from 2018-2022 to increase its
generating capacity while maintaining
the size and impact of the dams
and increasing the efficiency of
water resources.
“ THE IMPORTANCE OF
GROWING WELL BY
INVESTING IN LOW-
AND NO-CARBON
TECHNOLOGIES DRIVES
OUR EFFORTS TO
COMBAT CLIMATE
CHANGE AND ITS
IMPACT.”
Sarah Flanigan
EVP Special Projects
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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,
such as at our KivuWatt business in
Rwanda, we replenish the sources from
which it came with equivalent volumes,
properly treated. Where we can, we
recycle water – for example, as in other
plants, at our Cap des Biches plant in
Senegal, we now recover water used in
plant operations to use for cleaning and
sanitary purposes.
Limiting waste
We minimize waste as far as possible
through planned reuse and recycling.
However, some waste – including
hazardous waste – is unavoidable during
power plant operations. We ensure this is
properly handled and treated.
We have several hazardous waste
initiatives at our plants. At our Maritsa
plant, for example, we have a long-term
project to replace all fluorescent lighting
containing mercury with LED lights.
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. Each time a spillage
occurs, we conduct a full root cause
analysis to learn from our mistakes.
Grievances are also reported in monthly
management reports and action plans
are developed to address them.
Biodiversity
To achieve sustainable resource
management, we manage the use,
development and protection of renewable
natural resources in a way, or at a rate,
which enables people and communities to
provide for their present social, economic,
and cultural well-being while also
sustaining the potential of those resources
to meet the reasonably foreseeable
needs of future generations and
safeguarding the life-supporting capacity
of air, water, and soil ecosystems.
Vorotan, Armenia
We take a proactive and systematic
approach to local threats to biodiversity
beyond our business activities. We
adopt biodiversity plans after
consultation with impacted stakeholders,
including governments, non-
governmental organizations, and
communities. We seek to prevent and
protect ecosystems from unwanted
impacts, but where we cannot achieve
that objective entirely, we seek to
rehabilitate, restore, and offset, in line
with best-practice mitigation hierarchy.
Our track record on protecting and
promoting biodiversity has generally
been good. One area we continue to
monitor is the effect on fish of the dams
used at our Brazil hydro plants, where
we are seeking to mitigate variations in
river water levels.
For further details on our environmental
impact, please refer to our Sustainability
Report, available on our website at:
https://www.contourglobal.com/
our-principles-values.
While we endeavour to include as much information as possible on the methods
we have used to calculate our GHG measures in the annual report, the
ContourGlobal Greenhouse Gas Emissions and Thermal Efficiency calculation
Methodology 2021 document offers a more comprehensive disclosure. It can be
found on our website at:
https://www.contourglobal.com/environmental-responsibility
Scope 1 CO2e tonnes *
Scope 2 CO2e tonnes - Location based
Scope 2 CO2e tonnes - Market based
Electricity production (MWh)
Energy production (MWh)
Total Energy Input (MWh) **
Scope 1 CO2 emissions intensity –
electricity produced (tCO2e/MWhe)
Scope 1 CO2 emissions intensity –
energy produced (tCO2e/MWhe)
2021
12,396,842k
29,903k
22,968k
21,357,862
27,889,630
46,225,154
0.58k
0.44k
2020
8,522,809k
19,957k
15,321k
14,966,706
18,810,716
29,133,980
0.57k
0.45k
* 0.1% 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 selected information. KPMG’s full assurance statements
for 2019, 2020 and 2021 can be found on our website at https://www.contourglobal.com/reports
49
Strategic ReportGovernanceFinancial Statements
SU STAINAB ILITY (CONTINUED )
TA SK FORCE ON CLIMATE-
RE L ATED FI NANCIA L
DISCL OSURES
in accordance with PPA terms and
ensuring new investments include
protection against climate risks is an
essential risk management strategy.
In the post PPA periods (which is
typically the medium or longer term) the
business assesses exposure to climate
risks, including but not limited to
possible changes in market prices. Our
Arrubal business, for example, is
currently operating without a PPA and
contributes 1.7% of total assets and 9.8%
of Adjusted EBITDA. Here, as with other
assets in the post-PPA periods, our
strategy is to closely monitor merchant
exposure to capture upsides and
mitigate unplanned risks.
Our physical risks, including impacts
related to extreme weather or shifts in
weather patterns such as droughts,
floods, changes in wind speed and
unplanned irradiation, largely impact our
renewable portfolio. While our scenario
analysis indicates these are low to
medium risks, we manage these through
carefully planning around resource
assumptions. Geographical
diversification also mitigates the risk of
concentrated impacts to the global
portfolio.
Included below are the Group’s
disclosures relating to the Task Force on
Climate-related Financial Disclosures
(“TCFD”). The disclosures made are
compliant with the TCFD requirements.
Refer to page 62 for further details on
our approach to risk management. Refer
also to the Corporate Governance
report on page 85 regarding the Board’s
oversight of sustainability matters.
Governance
The Board of Directors is ultimately
responsible for the oversight of climate-
related risks and opportunities.
ContourGlobal’s processes to identify,
assess, and respond to climate-related
risks and opportunities are critical for
executing our sustainability strategy. At
the highest level, our processes for
identifying climate risks are embedded
in our corporate risk register. The risk
register is reviewed quarterly by the
Audit and Risk Committee and the Board
of Directors, and explicitly incorporates
climate change as an operational and
execution risk. Refer to page 76-78 and
96-98 for the skills and experience of
the Board and their responsibilities.
The senior management team plays a
key role in managing, reviewing and
responding to climate-related risks and
the day-to-day impact on the business.
A focus group of key senior
management members reviews and
updates the risk register on an ongoing
basis throughout the year, which
includes consideration of climate-related
risks. The impacts of identified climate
risks and opportunities are monitored
and reviewed by management on a
monthly basis through integration into
internal management reporting
processes. The Board of Directors and
the Audit and Risk Committee review
management reporting which includes
various climate-related operational risks
on a quarterly basis and the complete
risk register is reviewed and approved
on an annual basis.
The senior management team is also
responsible for the delivery of our aim to
reduce Scope 1 GHG emissions intensity
of energy production by 40% by 2030
(against a 2019 baseline), and achieve
net zero carbon emissions by 2050.
Strategy
The three core elements to our strategy
as set out on page 30 are: operational
excellence, high growth and financial
strength. All three of our strategic aims
are impacted by the climate transition
and the associated risks and
opportunities. Given the typical life
spans of the assets in our portfolio, we
define time horizons as, short term 5
years, medium term 6 – 15 years and
long term 15+ years.
Our transition risks, those related to
changes in climate policy and regulation
during the transition to a low-carbon
impact, are largely mitigated by the fact
most of our power plants have long-term
power purchase agreements (“PPAs”) or
operate under regulated pricing
mechanisms, limiting exposure to
changes in power pricing. Critically, our
PPAs generally ensure we have no
obligation to provide replacement
power and allow us to pass through
climate-related costs as well as fixed
costs. However, these same contractual
protections also limit our ability to
capture pricing and demand
opportunities in a dynamic market and
where we do have limited opportunities,
regulatory authorities may cap potential
upsides. Thus, managing our businesses
50
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC The climate-related risks and opportunities we have identified over the operational life of our asset portfolio and their link to our
strategic aims are as follows:
Climate-related risks
Time horizon
Principal risk
Our PPAs, which differ at each
asset, typically protect against
these transition impacts over the
duration of the agreement, which
is typically the short and medium
term
These risks are inherent in our
principal risks R01, R02 and R03
on pages 65-66
Link to
strategic aims
• High growth
• Financial strength
Physical risks are more relevant
over the medium and long term
These risks are inherent in our
principal risk R08 on page 69
• Operational excellence
Transition impacts, including policy
and regulatory changes related to
the transition to a low-carbon
economy:
• Change in fuel prices
• Carbon pricing
• Change in demand
• Change in power pricing
• Change in labor costs
Physical impact, including extreme
weather or shifts in wind patterns:
• Extreme heat
• Drought
• Flood
Opportunities
• Growth in no- and low-carbon technologies
• Exiting coal as part of the Bulgarian energy transition
• Carbon capture
• Energy storage
• Repowering and refurbishment
• Green hydrogen
Link to strategic aims
• Operational excellence
• High growth
• Financial strength
For more details of our strategic aims, progress and links to risk and sustainability principles, refer to pages 30-31.
Given transition risks are able to be largely mitigated during the PPA contracted period, our financial modeling and strategic
planning is focused on potential impacts and sensitivities in the post PPA period, whether that be in the short, medium or long
term for a particular asset.
Impact of climate-related risks
and opportunities
Scenario analysis
We performed scenario analysis on a
selection of six assets to assess the
impact of identified climate-related risks
and opportunities under 4°C and 1.5°C
scenarios. These six assets are across a
broad range of both thermal and
renewable assets (gas, coal, solar and
hydro) and represent approximately 55%
and 60% of Adjusted EBITDA and
Revenue respectively. The Thermal
assets selected cover the geographies
which contribute most significantly to
our results. Given the representative mix
of fuels and geographies, we consider
the assets included in the scenario
analysis to be representative of our
wider portfolio. The scenario analysis
covers the remaining economic life of
each of the assets modeled.
We engaged a third party to provide
climate scenario modeling expertise and
assist us in performing the analysis.
They utilized an Integrated Assessment
Model and combined climate science,
macroeconomics and financial
information in generating scenarios.
The scenario analysis separately
considered both transition and physical
risks and was developed using a scenario
analysis model considering a number of
factors from atmospheric changes and
societal behavioral changes to assumed
new government policies under the
different temperature pathways. A
summary of the results of our scenario
analysis is presented below.
Transition risks
Two gas assets were assessed in North
America and the extent of exposure
between the 4°C and 1.5°C scenarios
showed upside for one asset and
insignificant downside for the other.
These impacts were due to movements
in energy and carbon prices in the post
PPA periods.
Our Bulgarian coal asset was assessed
and noted to have insignificant
downside risk from 2024 when the PPA
ends due to energy and carbon pricing.
However there are also opportunities in
the post PPA period to participate in the
Bulgarian energy transition.
We also modeled two solar and one
hydro assets, all of which had limited
impact from transition risks due to the
PPA arrangements in place.
There are various mitigating actions
available for consideration of risks in the
post PPA period, including ongoing
monitoring of price and demand forecasts
and evaluation of opportunities such as
carbon capture or hydrogen, which could
extend the period over which thermal
assets are able to remain competitive.
51
Strategic ReportGovernanceFinancial Statements SU STAINAB ILITY (CONTINUED )
Physical risks
We performed physical risk scenario
analysis on the same selection of six
assets, taking into account extreme
heat, drought and flood (riverine and
surface water) under both 4°C and 1.5°C
scenarios. These specific hazards were
chosen for scenario analysis based on
the location and resource dependencies
of the assets within our portfolio.
The analysis performed indicates that
the physical climate risk is lower as
compared to transition risks, with the
greatest physical risk being potential
impact from flooding given the proximity
of our sites to sources of water which
are used in operations.
The result of the analysis was that there
is insignificant exposure to riverine
flood, surface water flood, extreme
heat and drought under either 4°C or
1.5°C scenarios.
Scenario analysis findings
The transition risks identified and the
associated impacts highlight the
importance of our long-term PPAs which
protect against fuel, carbon pricing and
elements of demand risk during the
contracted period.
As noted in the scenario analysis, there
are risks and opportunities in our gas
generation assets. We continue to see a
key role for our gas assets as part of the
energy transition beyond the next
decade. Our Group sustainability
strategy will also help to mitigate risks
and provide opportunities in our thermal
portfolio, particularly in relation to our
commitments to: increase investment in
carbon capture technology, reduce our
CO2 emissions intensity of energy
generated by 40% by 2030 compared
with 2019 levels, and achieve carbon
neutrality by 2050. We are also
exploring opportunities to use hydrogen
as an alternative fuel to gas.
Regarding our Bulgarian coal asset, there
is downside risk in a 1.5°C scenario,
however given the current status of the
energy transition in Bulgaria and the high
reliance on coal in the current energy
mix, we do not consider a 1.5°C scenario
to be likely over the remaining period of
forecast production from plant. There are
also opportunities in Bulgaria to
proactively participate in the energy
transition, with our commercial and
engineering teams investigating ways to
convert the plant to operate on low- and
no-carbon fuels, such as low-carbon gas
or renewable biomass combined with
carbon capture technology.
In terms of the renewable assets, there
is limited exposure to risks based on our
scenario analysis. Renewable assets are
critical to the climate transition and will
continue to play an important role in our
strategy and our commitment to a future
portfolio of low- and no-carbon assets.
There are also opportunities present
across our existing portfolio associated
with repowering, refurbishment, battery
storage and efficiency improvement.
52
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Physical risks are and will continue to
be monitored by the site operational
management on an ongoing basis in
order to mitigate relevant impacts
wherever possible as part of our
operational excellence strategy.
These findings are not only relevant to
those assets included within the
scenario analysis. The risks and
opportunities identified are evaluated
across all of our assets on an ongoing
basis. As part of our future scenario
analysis under the TCFD framework, we
intend to expand the number of assets
over which we perform scenario
analysis, both in terms of physical and
transition risks and to also include a
wind asset.
Risk management
Most of our identified climate-related
opportunities are associated with future
acquisitions or capital investments on
existing assets or projects and hence
the importance of growing well and
taking advantage of climate-related
opportunities by investing in low- and
no-carbon technologies drives our
efforts to combat climate change and
its impact.
In terms of assessing opportunities and
risks, we have embedded processes to
assess carbon impacts for all new
investments. Our Investment Committee,
Executive Management, and Board of
Directors ensure carbon impacts of new
investments are aligned with our climate
strategy. As part of this assessment,
financial models project both financial
and climate impacts by considering the
sensitivity of key assumptions and
impact on the businesses’ key metrics,
including our CO2 intensity.
Regarding the climate-related risks
identified above, none of the impacts
result in significant downside to the
specific assets modeled within the
scenario analysis. In terms of the risks
on a stand-alone basis, whilst
individually a risk may have a significant
impact, the use of PPAs mitigates our
exposure to many of the pricing risks.
Also certain risks (such as increasing
electricity prices) provide benefits to the
organization and offset the impact of
those from changes in the cost of inputs.
As such we do not consider any of the
risks above to be individually significant
and our principal risks as identified in
Our Approach to Risk Management
remain appropriate.
On a forward-looking basis, through our
existing risk management framework
we will continue to monitor, update and
respond to the identified climate-related
risks as circumstances change in
the future.
Metrics and targets
Our key climate reduction target is our
commitment to achieve net carbon zero
GHG emissions by 2050, with an interim
target to reduce our CO2 intensity for
energy produced by 40% by 2030 from
a base year of 2019. Our CO2 intensity
metric is the most meaningful metric for
the short and medium term and most
effectively demonstrates our climate
impacts, given the nature of our
business. We are a growth company
and, as such, our carbon emissions will
increase when we grow – even when
we are investing in low-carbon
technologies. Further, our power plants
are generally contracted with long-term
PPAs where we are responsible for
being available, but we do not control
when we are dispatched and thus
cannot predict with any certainty our
carbon emissions. The intensity metric
reveals whether we have incrementally
reduced our climate impacts while
continuing to grow our portfolio
without being distorted by years of
varying dispatch.
Our path to achieving net zero assumes
a reasonable period for climate
transition. Absent an unforeseen
technological breakthrough in energy
storage, reliable base-load and
mid-merit generation will remain critical
in the long term. Given this, it is critical
to focus on delivering the required
generation in a responsible manner,
focusing on operational excellence and
efficiency. Further competition, slow-
downs in permitting, and under-
appreciated risks in the renewable
power sector (such as replacement
power obligations and supply chain
risks) may adversely impact returns on
renewable investments to the point it is
difficult to fulfill commitments to
shareholders to generate returns.
Prior to making a new investment, in
accordance with our strategy the
investment case considers the CO2
intensity of the target business and the
impact that the target business would
have on the Group’s overall CO2 intensity.
Refer to Our KPIs for our CO2 intensity
performance during 2021.
In 2021, we engaged KPMG LLP
(“KPMG”) to undertake limited assurance
using the assurance standards ISAE (UK)
3000 and ISAE 3410 over selected
information as listed below1:
• Total Scope 1 emissions (tCO2e):
12,396,842
• Total Scope 2 emissions – market
based (tCO2e): 22,968
• Total Scope 2 emissions – location
based (tCO2e): 29,903
• Emissions intensity – electricity
produced (electricity produced
(tCO2e/MWhe)): 0.58
• GHG emissions intensity – energy
produced (energy produced (tCO2e/
MWhe)): 0.44
We are also aiming to assure our Scope
3 emissions that will be reported in our
2021 Sustainability Report.
1. KPMG’s full assurance statements for
2021 can be found on our website at
https://www.contourglobal.com/reports
53
Strategic ReportGovernanceFinancial Statements SU STAINAB ILITY (CONTINUED )
COMM UNITI ES
A core part of ContourGlobal’s mission
is to make the places where we work
better because we are there. We
achieve this by engaging with our
communities to identify opportunities to
make high-impact social investments in
the areas of education, health and
safety, the environment, human rights,
and anti-corruption. Our investments
align with United Nations Sustainable
Development Goals, our Social
Responsibility and Environmental
Sustainability Policy, our Anti-Corruption
Policy and Guide and other
ContourGlobal policies.
In 2021, we focused intensely on
improving the long-term impact of our
social investments with each business
developing a new three-year social
investment plan. The three-year plans are
approved by our Sustainability Committee,
a group of 5 senior executives, and
include stakeholder assessment,
expected outcomes, project KPIs, project
implementation strategy, and budgets for
each project. During the year, the
Committee approved 29 social investment
plans with 129 unique projects and a total
budget over the three-year period of
$6.24m.
Examples of projects commenced in
2021 are the following:
CAP DE S BICHES – T ALIBOU DABO C EN TE R
At our Cap des Biches plant in Senegal, we are providing
children with physical disabilities new opportunities to
learn by providing learning tools and transportation. The
Talibou Dabo Center benefits 200 children aged 6 to 16
and is the only center in Senegal that rehabilitates and
treats children with neurological conditions. Our three-
year plan includes donations of educational equipment,
medical assessment devices, and an accessible van to
transport students. Our total planned investment to the
Center is $96k.
54
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC SOLAR SLOVAKIA – C YC LING PROJ ECT
Providing safe opportunities for
cycling and walking benefits
physical health and safety in an
environmentally friendly way. Our
solar business in Slovakia
recognized that many local
residents would benefit from a
pedestrian and bicycle path to
connect the villages in our
community and has undertaken a
three-year project to construct the
path in Dolne Lefantovce. As part of
the project, we will also install wind
breakers in Rohov, further
protecting the natural habitat.
OUR
PERFO RMAN CE IN
NUMBE RS
$6.24m
Value of social investment
over the three-year period
2021-2023
$1.5m
Value of social investment
spent in 2021
86
Number of social
investment projects pursued
(with 47 projects completed in
2021)
709,000
Beneficiaries of social projects
completed in 2021
CELCSA - RAFAEL HERNANDEZ O CH OA S CH OO L
Providing a safe and clean
environment for children to learn is
essential for youth. In Mexico, our
CELCSA plant has committed over
$50k to elementary schools in two
local communities near our facility.
Together the projects will benefit 111
students directly with capital
improvements to the schools. At the
Rafael Hernandez Ochoa primary
school, we will provide electricity to
four classrooms and renovate the
bathrooms and dining area. At the
Mia Paria es Primero school, we will
construct bathrooms and a dining
area. At both schools, we will provide
ongoing maintenance for the schools
in the future.
55
Strategic ReportGovernanceFinancial Statements F IN ANCIA L REV IEW
A STR ONG FINANCIAL
PERFOR MANCE
Revenue ($m)
2,151.9
2020: 1,410.7
Adjusted Revenue ($m)
1,724.8
2020: 1,252.6
Income from Operations ($m)
370.1
2020: 307.9
Adjusted EBITDA ($m)
841.5
2020: 722.0
Proportionate Adjusted
EBITDA ($m)
692.3
2020: 568.7
Cash flow from
Operations ($m)
810.3
2020: 719.6
Funds from
Operations ($m)
439.8
2020: 379.6
Leverage ratio
4.6x1
2020: 4.8x
Stefan Schellinger
Global Chief Financial Officer
ContourGlobal continued to deliver very
strong financial results in 2021 and we
met all of our financial commitments. In
particular, we increased our full year
adjusted EBITDA guidance in December
from $780 - $810 million to $810 - 840
million reflecting our strong financial
performance. This is a testament of
ContourGlobal’s 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 per annum. In
addition, during H1 2021 ContourGlobal
continued its share buyback program
which started in early 2020 to support
long-term shareholder value and was
successfully executed with 2,624,774
million shares bought back in 2021 in
addition to the 12,374,731 million shares
bought back in 2020.
Revenue
Revenue continued to grow in 2021 to
reach $2,151.9 million (+$741.2 million or
+52.5%) resulting from the impact of the
acquisition of the Western Generation
assets in the United States and Trinidad
and Tobago (“Western Generation”)
completed in February 2021 (+$206.9
million), as well as increased revenue from
our Maritsa plant (+$275.6 million) driven
by higher generation and higher CO2
emission cost recharges (+$252.9 million),
from our natural gas-fired power plant in
Arrubal (+$129.2 million) benefiting from
high dispatch, higher power prices and an
optimized commercial strategy in the post
PPA period from August to December, new
interconnected load points and higher
gas pass through for Mexico CHP
(+$84.6 million) and higher generation and
pass-through revenue at Cap de Biches
(+$22.3 million). These increases were
partially offset by lower revenue in the
French Caribbean (-$16.7 million) following
the expiry of the Energy Antilles PPA in
mid-2020 and at CSP Spain assets
(-$13.9 million) due to movements in power
price. In addition, Group revenue was
positively impacted by year over year
foreign exchange movements by
$39.3 million primarily driven by a higher
average level of Euros / USD.
Adjusted Revenue
Adjusted Revenue excludes CO2
emission cost recharges from IFRS
revenue and is a key metric as it
provides a more comparable basis for
assessing revenue generating
capabilities across the portfolio. The
metric has been added due to the
significant increase in carbon pricing
which has resulted in CO2 pass
throughs distorting IFRS Revenue.
During 2021 adjusted revenue was
$1,724.8 million (+$1,252.6 million in
2020 or an increase of +38%) primarily
driven by the Western Generation
acquisition, high dispatch and power
prices at Arrubal and new load points
and higher pass throughs in Mexico, as
noted above. The three most significant
contributors to Adjusted Revenue are
Mexico CHP, Maritsa and Arrubal
contributing 17.1%, 16.7% and 15.4%
respectively in 2021 (16.9%, 20.4% and
10.3% respectively in 2020). The
reconciliation of Adjusted Revenue to
statutory Revenue is as follows:
1. Including the net indebtedness in Brazil Hydro, which is classified in the balance sheet as held for sale at year end and pro forma adjustment to include a full year
of Adjusted EBITDA for the Western Generation and Green Hunter acquisitions.
56
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 2021
2,151.9
427.1
1,724.8
2020
1,410.7
158.1
1,252.6
2021
541.3
334.7
-34.5
841.5
2020
Var %
Var
420.9
332.0
-30.9
722.0
29% 20.4
1%
2.7
11% (3.6)
17% 119.5
The IFO has been driven by the same
key contributors as the Adjusted EBITDA
detailed thereafter, positively impacted
by the acquisition of Western
Generation (+$84.6 million), an
optimized commercial strategy in the
post PPA period at Arrubal (+$20.4
million), and improved resource and
commissioning of the refurbishment
project improving availability at Vorotan
(+$13.7 million), offset by movements in
power price at CSP Spain (-$8.7 million).
This is offset by the increase in
depreciation during the year of $87.6
million, primarily due to the acquisition of
Western Generation.
Adjusted EBITDA
In 2021, we saw another year of strong
Adjusted EBITDA performance with an
increase of 17% to $841.5 million.
Adjusted EBITDA benefited from the
Western Generation acquisition which
contributed $84.6 million of Adjusted
EBITDA in addition to a strong
performance of our existing power
generation assets of $756.9 million (net
of corporate and other costs) compared
to $722.0 million in 2020, including a
positive foreign exchange variance of
$8.8 million primarily due to the Euro
appreciation versus the US dollar. The
Green Hunter acquisition of Solar assets
Adjusted Revenue
In $ million
Revenue
CO2 passthrough revenue
Adjusted Revenue
Adjusted EBITDA
In $ million
Thermal
Renewable
Corporate & Other
Adjusted EBITDA
Income from Operations (IFO)
IFO is a measure taken from the IFRS
audited consolidated statement of
income. IFO increased in 2021 by $62.2
million or +20.2% to reach $370.1 million
as compared to $307.9 million in 2020,
mainly as a result of the following
effects:
• Increase in gross margin in 2021 by
$44.2 million to reach $421.4 million as
compared to $377.2 million in 2020,
driven by the increase in Revenue of
$741.2 million partially offset by the
increase in Cost of sales of $697.0
million. The gross margin decrease
from 27% in 2020 to 20% in 2021
following the acquisition of Western
Generation reflect the proportionately
higher costs of sales as a percentage
of revenue compared to the average
of the Group.
• Other operating expenses, Selling,
general and administration and
acquisition related items decreased
from $69.3 million in 2020 to $51.3
million. The decrease was primarily
due to exceptional restructuring costs
incurred in 2020 of $5.2m (nil in 2021)
and $6.6 million of cost incurred in
relation to the Private Incentive Plan
that ended in 2020. In addition,
acquisition related items decreased
by $6m, offset by Selling, general and
administrative expenses increase of
$3.7m as compared to 2020 driven
mainly by higher professional fees
(+$2.0 million) and employee costs
(+$1.7 million).
57
Strategic ReportGovernanceFinancial Statements F IN ANCIA L REV IEW (C ONTINUED)
in Italy was also completed in November
2021 and adds to the existing
Renewable portfolio, contributing $0.4m
to Adjusted EBITDA since acquisition.
Thermal Adjusted EBITDA increased by
$120.4 million, or 29%, to $541.3 million
for the year ended 31st December 2021
from $420.9 million for the previous year.
The growth in Adjusted EBITDA is mainly
driven by the Western Generation
acquisition which contributed +$84.6
million, a strong performance in the
post PPA period at Arrubal driving year
over year Adjusted EBITDA growth
of +$20.4 million and a change in
commercial strategy at Sochagota of
+$13.3 million. This demonstrates not only
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 but also demonstrates the
Company can benefit from a strong
market environment in certain countries
including Spain. 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 Equivalent Availability
Factor of 94% in 2021 (94% in 2020)
demonstrating a consistently strong
operational performance during the year.
Renewable Adjusted EBITDA amounted
to $334.7 million for the year ended 31st
December 2021, as compared to $332.0
million for the year ended 31st December
2020. The most significant impacts in
Adjusted EBITDA for the year are
improved resource and commissioning
of the refurbishment project improving
availability at Vorotan (+$13.7 million), the
impact of the concession extension and
commercial strategy optimisation at our
Brazil Hydro assets (+$9.4 million), offset
by the movements in power price at
CSP Spain (-$8.7 million), lower resource
and lower realized power prices at Peru
Wind (-$6.3 million), and one-off events
impacting the availability of some of our
plants as well as negative FX impact in
Brazil Wind and Hydros (-$4.6 million).
58
ContourGlobal’s business model
generates stable and predictable
earnings and cash flows, and benefits
from the following factors that mitigate
the risk of fluctuations in the results:
• Long-term contracts with strong and
creditworthy counterparties:
Approximately 89% of 2021 Adjusted
EBITDA is generated under PPAs
concluded with investment-grade
offtakers or non-investment-grade
offtakers under political risk insurance.
During 2021 our cash collections from
our offtakers continued to be
unaffected by the COVID-19 pandemic
and remained stable and in line with
agreed payment terms.
• Limited currency exposure: 86% of
2021 Adjusted EBITDA is
denominated in either Euros or US
dollars. In addition, a portion of the
small Brazilian reals exposure in
regards to distributions is hedged.
This exposure will be further reduced
going forward with the completion of
the sale of our Brazil Hydro assets
expected to be completed in Q2
2022.
• Geographical and technology
diversification: No technology cluster
represents more than 21% of 2021
Adjusted EBITDA; in addition
ContourGlobal is present on four
continents.
• Ability within long-term contracts to
pass through fuel and CO2 quotas:
during the year there have been
significant increases in the cost of
CO2 quotas and certain assets have
also experienced an increase in the
cost of fuel. The ability to pass these
costs through ensures that margins
are not eroded and provides stability
in earnings.
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, if
applicable, net cash gain or loss on sell
down transactions (in addition to the
entire full period 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 (of which there
has been none during 2021 and 2020)
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 $568.7 million in 2020 to
$692.3 million in 2021 (+22%), broadly in
line with the increase than Adjusted
EBITDA, primarily driven by the
acquisition of Western Generation
during 2021 and for which there is no
minority interest.
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC The following table reconciles Proportionate Adjusted EBITDA
and Adjusted EBITDA to net profit before tax for each year
presented:
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
Restructuring costs
Private incentive plan
Mexico CHP fixed margin swap1
Brazil Hydro concession extension3
Change in finance lease and
financial concession assets2
Other
Income from Operations
Net finance costs, foreign
exchange gains and losses, and
changes in fair value of derivatives
Share of profit in associates
Other
Profit before income tax
2021
692.3
149.2
841.5
2020
568.7
153.3
722.0
-399.2
-311.6
-27.0
-14.2
–
–
5.5
5.5
-37.9
-4.1
370.1
-19.9
-20.2
-5.2
-6.6
-15.6
–
-31.7
-3.3
307.9
-249.2
-247.8
16.2
5.8
142.9
12.3
–
72.3
1. 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)
2. Adjustment of the revenue and expenses recognized under Service
Concession Arrangement accounting in Togo, Senegal and Rwanda with the
cashflows generated during the year.
3. Reflects the non-cash gain recognized due to Generating Scaling Factor
(“GSF”) settlement in Brazil Hydro whereby a concession extension has been
granted to compensate for historical GSF liability payments made prior to
acquisition of the assets by ContourGlobal.
In relation to the 2021 and 2020 financial years, these
adjustments mainly include non-recurring and non cash items.
Cash flow from operations and Funds From
Operations
Cash flow from operations is presented in the Consolidated
statement of cashflows of the financial statements and
increased from $719.6 million to $810.3 million, mainly driven
by the increase in Adjusted EBITDA ($119.5 million).
Funds from Operations is a non-IFRS measure that is
calculated as follows:
In $ millions
Cash flow from operations
Change in working capital
Acquisition-related items
Interest paid
Maintenance capital
expenditure1
Other distribution from
associates
Cash distribution to minorities2
Funds from Operations (FFO)
Cash conversion rate
2021
810.3
-45.9
14.2
2020
719.6
-52.8
–
-192.9
-175.8
-62.8
-50.5
7.9
-91.2
13.0
-74.0
439.8
379.6
52%
53%
1. 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 (including construction capital
expenditure). It excludes growth and development capital expenditure, which
are discretionary investments incurred to sustain our revenue growth.
2. Cash distributions to minorities as per consolidated cash flow statement
(excluding $11m distribution to Energy Infrastructure Partners related to the
refinancing proceeds of the Green Hunter portfolio acquired in November
2021).
Funds from operations significantly improved in 2021 to
$439.8 million, a 16% growth rate compared to 2020. This
performance is the consequence of the continuous growth of
Adjusted EBITDA explained above partially offset by higher
interest paid primarily due to interest on debt acquired in
Western Generation (reflecting a higher coupon rate on this
debt compared to the average rate across the rest of the
group), increased maintenance capex costs due to the
Western Generation acquisition and cash distributions to
minorities due to increased distributions during the year.
Funds from operations is a key measure 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.
As a result the cash conversion rate, which compares FFO to
Adjusted EBITDA, remained strong in 2021 at 52% (2020: 53%).
59
Strategic ReportGovernanceFinancial Statements F IN ANCIA L REV IEW (C ONTINUED)
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 IFRS
16 liabilities ($30 million as Dec. 31, 2021
and $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 Adjusted EBITDA.
The leverage ratio as of 31st December
2020 was 4.8x, and is 4.6x as of 31st
December 2021 (including the net
indebtedness in Brazil Hydro, which is
classified in the balance sheet as held for
sale and a pro forma adjustment for a full
year of Adjusted EBITDA of Western
Generation and Green Hunter
acquisitions).
• The Net parent company leverage is
3.4x as of 31 December 2021 as
compared to 3.0x as 31 December
2020, reflecting the refinancing of the
corporate bond in December 2020 and
the impact of the Western generation
acquisition in 2021. The Net parent
company leverage is defined as:
• net debt at corporate level was $1,301
million as of 31 December 2021,
compared to $830 million as of 31
December 2020. This comprises the
net debt of the group corporate holding
entities (excluding non-recourse
financing), which includes Corporate
Bonds, drawn bridge loans, less cash
and cash equivalent in corporate
holding entities;
• divided by CFADS (cashflows available
for debt service) as defined in the
Corporate Bond Indenture ($367 million
for 2021, $274 million for 2020).
CFADS as defined in the Bond indenture
is the net Cash distributions from Group
subsidiaries (notably including
dividends, equity distributions, or
intercompany loans) to the parent
company (the entity that pays dividends,
interest and provides capital for new
investment), less corporate costs.
CFADS is a key financial measure for the
company as it reflects all of the cash
60
received by the parent company which
is then allocated according to our
strategy (notably for M&A, construction
and other development costs or return
of capital to shareholders). CFADS is
also used to calculate the Debt service
coverage ratio which is the main
covenant of the Group’s corporate
bonds (CFADS over the Debt service of
the corporate debts).
There is no reconciliation of the Net
parent company leverage or CFADS to
statutory measures because they do not
derive from the statutory measures.
Finance costs – net
Finance costs – net increased from
$247.8 million in 2020 to $249.2 million
in 2021 (1%).
Interest expense increased in 2021 from
$195.0 million in 2020 to $205.5 million,
largely due to the impact of the Western
Generation acquisition ($15.5m) and the
corporate bonds ($7.9m) partially offset
by the natural deleveraging of the
project financing.
The Realized and unrealized foreign
exchange gains and (losses) and change
in fair value of derivatives increased by
$31.8 million to a net gain of $42.5
million primarily attributable to:
• a positive impact in the fair value of
derivatives of $25.3 million in 2021, as
compared to $70.5 million in 2020.
The decrease is mainly due to the
$13.6 million non-cash net change in
the fair value of the Mexican CHP
fixed margin swap compared to $56.1
million in 2020 and
• A $18.4 million net realized and
unrealized foreign exchange gain in
2021 compared to a $59.8 million
foreign exchange loss in 2020 driven
by favourable exchange rate
movements of the US dollar against
the Euro and the Armenian dram.
Profit before tax
Profit before tax increased by $70.6
million to $142.9 million in 2021 as a
result of the factors previously
explained.
Taxation
The Group recognized a tax charge of
$63.2 million in 2021 as compared to
$43.7 million in 2020 which represents a
movement in effective tax rate from 60%
in 2020 to 44% in 2021. The decrease in
effective tax rate is due to the increase
in profit before tax primarily attributable
to Spain, Armenia and a reduction in
pre-tax loss in Luxembourg. The
effective tax rate was also impacted by
unrecognized tax losses in Luxembourg
and Brazil. The main jurisdictions
contributing to the income tax expense
in 2020 are Mexico, Bulgaria, Spain
and Brazil.
Net income, EPS and Adjusted
Net Income
Net income increased from $28.6 million in
2020 to $79.7 million in 2021. Considering
the average number of shares outstanding
in 2021 of 656.3 million (666.6 million in
2020), and a profit attributable to
shareholders of $73.8 million in 2021 ($16
million in 2020) the Earnings per share
(basic) increased from $0.02 to $0.12.
Adjusted net income is defined as net
income excluding specific items which in
2021 included such items as unrealised
FX, acquisition related expenses, the fair
value impact of the Mexico fixed margin
swap, Brazil Hydro concession
extension and refinancing costs which
are non recurring in nature and are not
reflective of the ability to generate
profits by the Group. 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 (losses)/
gains3
Brazil Hydro concession
extension
Restructuring costs4
Private Incentive Plan5
Refinancing costs6
Adjusted Net Income
Adjusted Net Income
attributable to
shareholders
2021
2020
79.7
28.6
(13.3)
14.2
(28.4)
20.2
(23.7)
26.5
(13.4)
-
-
12.8
56.3
-
5.2
6.6
8.9
67.4
54.9
54.8
1. Change in fair value of the Mexican CHP fixed
margin swap of -$13.6m net of $5.5m impact in Adj.
EBITDA and net of 30% income tax impact -$5.7m.
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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 2021 and 2020 while
signing and/or closing acquisitions in the US and Italy
in particular.
3. Includes FX unrealized losses as reported in the
consolidated financial statements, and represent
non-cash unrealized losses recognized during the
year. 2021 was notably impacted by the
strengthening of the local currency in Armenia
(AMD), generating unrealized FX gains for the USD
denominated project financing debt totalling $21.7m.
4. Costs incurred as part of the reorganization of our
corporate offices in 2020.
5. Non-cash impact of the Private Incentive Plan in
2020.
6. Relates to costs incurred in refinancing debt
throughout the business.
Non-current assets
Non-current assets mainly comprise
property, plant and equipment (”PP&E”),
financial and contract assets, and
intangible assets and goodwill. The
increase in non-current assets by $373.8
million to $4,749.5 million as of 31
December 2021 was mainly due to the
increase of PPE by $408.3 million
relating to Western Generation
acquisition (+$900.1 million including
purchase price allocation) and the Green
Hunter acquisition (+$56.5m including
preliminary purchase price allocation),
capex additions (+$95.6m) during the
period mainly in Austria Wind (+$25.3
million), Vorotan ($13.5 million), Maritsa
($9.4 million) and Mexico CHP ($17.6
million), partially offset by depreciation
(-$360.1 million), Brazil Hydro assets
reclassified in asset held for sale
(-$124.0 million) and CTA FX impact
(-$149.9m).
Working capital
Inventory increased by $238.3 million
during 2021, primarily due to the
increase in value of emission allowances
held in inventory at Maritsa (+$235.6
million) and Arrubal (+$23.9 million),
partially offset by the impact of foreign
exchange (-$25.2 million). Trade and
other payables increased by $263.3
million to $597.0 million, also primarily
due to the increase the increase in
emission allowance payables in Maritsa
by $240.9 million.
The increase in Trade and other
receivables of $35.1 million to $299.1
million is primarily attributed to the
acquisitions of Western Generation
(+$24.5 million) and Green Hunter (+$5.0
million).
Borrowings
Current and non-current borrowings
decreased by $654.2 million to $4,176.1
million as of 31 December 2021, mainly
as a result of scheduled repayments
(-$287.1 million), repayment of the 2023
bond in January 2021 (-$532.5 million),
Arrubal debt repayments (-$73.7m) and
the CTA FX impact due to increase of
the Euro against the USD for our Euro
denominated debt (-$234.1m). This was
partially offset by the debt acquired in
Western Generation (+$263.3m), new
borrowings represented primarily by
Alvarado net refinancing (+$25.5m),
Western Generation bridge loan net of
repayments (+$40.0m), Green Hunter
debt acquired and subsequently
refinanced (+$36.0m), Asa Branca net
refinancing (+$3.8m), Caribbean
refinancing (+$120.0m) and RCF
drawdown (+$47.3m). The Brazil Hydro
debt was also refinanced (+$51.9m) and
subsequent was reclassified to held for
sale at year end (-$136.5m).
Equity and non-controlling
interests
Equity and non-controlling interests
increased by $32.8 million to $370.5
million as of 31st December 2021 mainly
due to the following factors: net income
of the year (+$79.7 million), change in
hedging reserves (+$41.0 million) and
currency translation adjustment (+$33.2
million), partially offset by dividends paid
to shareholders (-$114.5 million) and
dividends paid to non-controlling
interests (-$3.6 million).
Dividend
The Board recognizes the importance of
paying a regular dividend to
shareholders. The underlying business
generates secure, highly stable,
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 $26.6
million in April 2021 corresponding to
the final dividend for the year ended 31st
December 2020 and three interim
dividends for the year ended 31
December 2021 in total of $87.9 million
in June, September and November
2021.
The Directors expect to pay a total
dividend of approximately $117.2 million
for the year ended 31 December 2021,
including a quarterly dividend of 4.465
USD cents per share (around $29.3
million) to be paid in April 2022.
Our dividend cover remains strong at
2.8x (2020: 2.2x). Dividend cover is
measured as “Parent Company free
cash flow” of $318 million in total ($367
million CFADS as defined in the
Corporate Bond indenture, less $49
million Corporate Bond interest costs),
relative to the total dividends paid for
the year ended 31 December 2021. In
2020 the Parent Company free cashflow
was $234 million ($274 million CFADS
less $40 million Corporate Bond
interest).There is no reconciliation of the
Dividend cover to statutory measures
because it does not derive from
statutory measures.
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. Our
ability to successfully execute and
integrate such acquisitions was
demonstrated during the year with our
Western Generation acquisition and we
will look to the same for Green Hunter
acquisition during 2022. Where it is
financially attractive to do so we will also
seek to monetize assets, such as the
sale of our Brazil Hydro business, which
we expect to complete in 2022 in order
to create shareholder value and returns.
Stefan Schellinger
Global Chief Financial Officer
61
Strategic ReportGovernanceFinancial Statements MANA GING OUR PRINCIPAL RISKS
OUR APP ROACH
TO R ISK MAN AGE ME NT
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 111.
Risk review
We follow a robust process to review
current risks and to identify emerging
risks. In 2021, as part of this process, we
held a webinar hosted by Control Risks,
a global risk consultancy provider, in
early January followed by a risk update
survey of key stakeholders in June.
While no new risks were identified, it
was decided to raise the cyber security
risk assessment from medium to high.
This was due to the recent increased
frequency of attacks on critical
infrastructure assets and the
concomitant increase in potential
impact. Hackers were becoming more
sophisticated, and some malware and
ransomware attacks had resulted in
business interruptions in utilities around
the world. According to IBM’s Cost of
Data Breach report, the average cost of
a data breach in the energy sector had
risen between 2020 and 2021 by about
one-third to $6.39 million. We have
launched a number of initiatives to
62
strengthen controls and risk mitigation to
control the risk at an acceptable level.
Working with consultants, we also
reviewed our internal risk control
framework. Relevant documentation was
checked, a series of interviews were held
with senior stakeholders, and dedicated
workshops were conducted to identify the
controls associated with each risk. This led
to a series of recommendations, including
(but not limited to):
• Reinforcing controls concerned with
payment, inventory and financial
closings
• Increasing the frequency of risk
review workshops to improve risk
assessment at a business and asset
level
• Using the newly implemented
HighBond Governance Risk and
Compliance (GRC) platform to improve
reporting and monitoring
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 serve 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.
COVID-19 pandemic
The risk related to COVID-19 remains one
of the top risks in the risk register
‘Pandemic virus’ risk (R04), and is
monitored through our new Governance
Risk and Compliance platform
implemented from the fourth quarter of
2021. However, this year we re-classified
Pandemic virus and Supply chain risks
from strategy to operation and execution.
The COVID Committee continues to be
responsible for taking key decisions and
coordination of implementation of
measures across the Group.
Geopolitical risk
As part of the ongoing emerging risks
identification process, we are closely
monitoring the situation related to
military actions launched by Russia in
Ukraine on 24th February and the
potential impact on the Group.
Despite having no assets in these two
countries, we are conducting reviews of
our banking relationships and supply
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC chain to identify supplier risk and to
minimize potential impact on the
company’s operations notably
considering the introduced sanctions
targeting Russia. Therefore, risk R2 -
Geopolitical uncertainties and social
instability (including environmental
activism, sanctions and trade war) has
been increased to High. During 2022,
the risk register will be constantly
reviewed and the relevant risks re-
assessed following additional
developments.
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.
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 eight
audits in 2021, including inventory
management (Spanish CSP and Maritsa),
cyber and operational technology (OT)
security follow-up, review of outage
management (Spanish CSP and Brazilian
businesses), deep dive on a specific piece of
operational software (Togo and Mexican
CHP), anti-bribery and corruption (Brazilian
businesses), supply chain risk deep dive,
overall asset review (Vorotan), CG Italy 231
compliance model implementation and core
labor controls.
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, and compliance with the
Company’s processes and procedures at
asset level.
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
Assisting the Board
with developing and
monitoring the risk
management
framework, identifying
and monitoring areas
of risk and reducing
control weaknesses
Assessing
the effectiveness and
efficiency of the
internal control and
risk management
systems
Reviewing
the Company’s
internal control, risk
management
systems and risk
register
Senior
management
team
Monitoring
the risk management
governance framework
and policy
First line of
defense
Second line of
defense
Reviewing and
updating
the Company’s risk
register in a working
group of key senior
management
members
Third line of
defense
Internal Audit
In December 2020, the Audit & Risk
Committee approved the 2021 Internal
Audit risk-based plan.
Business operations
Policies, organization,
risk assessment
procedures
Compliance, Legal, IT,
Internal Control, Quality
Further information can be found in the
Audit & Risk Committee report on pages
101 to 111.
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
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 the Company’s
business risks
Monitoring and compliance
regarding risk control systems
and processes implemented
by the business
Independent assurance of risk
management, internal controls
and governance
63
Strategic ReportGovernanceFinancial Statements MANA GING OUR PRINCIPAL RISKS (CONTINUED)
Risk map
c i a l
r
o m m e
d c
n
e a
c
n
a
F i n
n
tio
a
niz
a
g
r
d o
ple a
n
o
e
P
12
11
Strategy
1
2
3
4
5
6
7
8
O
p
e
r
a
t
i
o
n
a
l
a
n
d
e
x
e
c
u
t
i
o
n
I
n
f
o
r
m
a
ti
o
n
t
e
c
h
n
o
l
o
g
y
9
10
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.
Impact of governmental actions and
regulations
Geopolitical uncertainties and social
instability (including environmental activism,
sanctions and trade war)
Disruptive innovation in power generation
and storage technologies
Pandemic virus
Supply chain
Project execution (CAPEX)
Asset integrity (OPEX)
Resources/Climate change
Health, Safety and Environment (HSE)
and food: prevention and regulation
Fraud, bribery and corruption
Cyber security and systems integrity
Key people (senior executive management)
succession planning
R01
R02
R03
R04
R05
R06
R07
R08
R09
R10
R11
R12
64
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.
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC
Risk factor
Main impact
Risk response (management and mitigation)
R01. Strategy – Impact of governmental actions and regulations
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 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.
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
could 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.
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 it will engage in discussions with
the newly formed government of Bulgaria to find a
mutually agreeable resolution related to the Bulgarian
energy regulator’s complaint to the European Commission
(EC) that the Maritsa PPA contains elements of state aid
and the EC services’ related review of the PPA. We cannot
predict the outcome of such discussions, or of any
resolution by the EC services of its review should those
discussions not result in an agreement. Maritsa believes
early termination of the PPA without adequate
compensation for ContourGlobal 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
Operational excellence
High growth
Financial strength
PRI policies (from commercial insurers) are in
place for several projects in case of events that
could 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
65
Strategic ReportGovernanceFinancial Statements MANA GING OUR PRINCIPAL RISKS (CONTINUED)
Risk factor
Main impact
Risk response (management and mitigation)
R02. Strategy – Geopolitical uncertainties and social instability
(including environmental activism, sanctions and trade war) (continued)
• 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
• Continuous monitoring of the geopolitical situation in relation
with conflict between Ukraine and Russia to assess potential
impact on our businesses
• Unforeseen additional recurring costs
vs. financial model projections (project
Internal Rate of Return (IRR) and cash
flow)
• Charges and penalties due to non-
compliance with external requirements
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 a 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 increased
Included in the sensitivity
analysis on principal risks for
viability statement and going
concern assessment.
R03. Strategy – Disruptive innovation in power generation and storage technologies
Deterioration of financial
performance:
• Loss of revenue
• Decrease in operating cash flow
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.
Risk unchanged
66
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Risk factor
Main impact
Risk response (management and mitigation)
R04. Operation and execution – 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.
Risk reclassified from
strategy to operation
Risk unchanged
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 an increase of Operations and
Maintenance (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
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
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
• COVID Committee managing key decisions and coordinating
relevant measures across the Group. Regular calls by senior
management with business leaders and global webinars for
all employees
Mobility restriction, remote work and social distancing
• Employee 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
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
for the next 6-12 months
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, use of masks and gloves when required physical
distance cannot be kept. In addition, screenings for
temperature are conducted
67
Strategic ReportGovernanceFinancial Statements MANA GING OUR PRINCIPAL RISKS (CONTINUED)
Risk factor
Main impact
Risk response (management and mitigation)
R05. Operation and execution – 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 updates in
case of risks, regular reviews
• Monitoring of force majeure and termination clauses and
communication of potential termination
• Regular vendor risk assessment, particularly of strategic and
bottleneck vendors
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 heightened
geopolitical tensions.
Risk reclassified from
strategy to operation
Risk unchanged
Included in the sensitivity
analysis on principal risks for
viability statement and going
concern assessment.
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 Commercial
Operations Date (COD)
• Image and reputation impact resulting
from a loss of credibility with
counterparties, lenders and other
stakeholders
• 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
68
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Risk factor
Main impact
Risk response (management and mitigation)
R07. Operation and execution – Asset integrity (OPEX)
• 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
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 and
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
R08. Operation and execution – Resources/Climate change
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.
• 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
• 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
• 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 in Brazil
• Review of weatherization planning for extreme temperatures
69
Strategic ReportGovernanceFinancial Statements MANA GING 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
• Health and Safety Policy reviewed annually and
communicated Company-wide
of ContourGlobal employees,
contractors or people in local
communities around the facilities due to
incidents at the power plants
• 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
• Environmental accidents on site and in
• Monitoring of reactive indicators (such as responses to
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
accidents) and proactive indicators (including known hazards,
inspection quality and number of training hours)
• Intense regular training
• Continuous improvement and failure analysis (such as 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
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 of trust
• Exclusion from government funding
programs
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.
Risk unchanged
Included in the sensitivity
analysis on principal risks for
viability and going concern
assessment.
• 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
• Conflict of Interest Policy
• Compliance Transactional Due Diligence Protocol
• Business Development Consultant Compliance Protocol
• 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 conducted by external providers led by the
internal audit team
• 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
70
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Risk factor
Main impact
Risk response (management and mitigation)
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 increased
Included in the sensitivity
analysis on principal risks for
viability statement and going
concern assessment.
• Dedicated IT security function established for corporate and
operations
• Project Musket, aiming at strengthening cyber security
controls
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 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
• Focused action to attract, retain and develop high-caliber
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 unchanged
The risk assessment was
re-evaluated due to a set of
measures implemented in
2020 related to succession
planning.
71
Strategic ReportGovernanceFinancial Statements VIA BILITY STATEMENT
VIAB ILITY STATEMENT
AND GOI NG CONC ERN DISC LOSURES
Each of the risks presented on pages 65
to 71 has been considered in terms of
their significance and relevance for
inclusion in scenario analysis. Out of
those, the severe but plausible
scenarios (individual or combination) are
presented in the table below.
After reviewing all of these
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 the three-year viability
assessment period.
The results of the risk scenarios
modeled showed that neither an
individual risk nor a combination of the
plausible risk events would have a
significant enough financial impact to
endanger the viability of the Company
over the period assessed.
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.
Risk scenario tested
Changes in governmental regulations, and commercial market conditions
Financial impact of no post-PPA business for two material assets ($178m cash impact).
Construction and refurbishment activities
Financial impact of significant delay in refurbishment activities due to supply chain
($15m 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
($55m cash impact)
Significant compliance breach
Financial impact in the form of hypothetical fines and associated reputational damage
($40m cash impact)
Link to the principal risk
R01 Impact of governmental actions
and regulations
R02 Geopolitical uncertainties and
social instability
R04 Pandemic virus
R05 Supply chain
R06 Project execution (CAPEX)
R08 Resource/climate change
R10 Fraud, bribery and corruption
Cyber-attack stopping a major asset for two weeks
Financial impact of Adj EBITDA loss from a major asset in that period ($9m cash impact)
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 65 to 71, the likelihood
of them arising and the mitigating
actions available.
Viability statement
In accordance with paragraph 31 of the
UK Corporate Governance Code 2018
(”the Code”), the Board has assessed
the viability of the Company over a
period of three years. The Board
believes that an assessment period of
three years is appropriate based on the
period over which management has a
reasonable expectation of the position
and performance of the Group and
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. There are a
number of key factors inherent in our
portfolio and our growth strategy that
provide a natural hedge to principal
risks over the longer term:
• 73% of revenue and 84% of Adj.
EBITDA are fully contracted or
regulated over the next 3 years;
• the geographical spread of the
Group, present in 20 countries with
138 operating plants, and the
significant portion of non-recourse
financing arrangements at the asset
level; and
• technological spread of our assets
with 62% of total Ad. EBITDA
generated across thermal assets
(coal, natural gas, liquid fuels) and
38% from renewable assets (solar,
wind, hydro).
ii. the assessment of the viability of the
Company through the preparation of
the severe but plausible scenarios
applied to relevant 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.
72
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC NON-FINANCIA L 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 Page 10-11 Who we are
Relevant information
Page 16-17 Business Model
Page 62-71 Our approach
to Risk Management
Page 72 Viability
statement
Principal risk
and impact
of business
activity
Environmental
Matters
Policies, Standards and Commitments
Our values:
• To care about our people’s health, safety, well-being 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.
• Risk Management Framework
Page 48-49 Environment 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.
Employees
Page 44-47 Our People
Social Matters
Page 54-55 Communities
Human Rights
Page 44-47 Our People
Page 54-55 Communities
Anti-Corruption
and anti-bribery
Page 110 Whistleblowing
mechanism
Page 111 Bribery and anti-
corruption policy
Page 70 Risk Factor
– Regulation and
Compliance – Fraud,
bribery and corruption
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
• Signatory of the United Nations Global Compact
• Code of Conduct and Business Ethics*
• Supplier Code of Conduct*
• ContourGlobal Modern Slavery Statement 2020*
• Human Rights Policy Statement
• 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
• ContourGlobal Modern Slavery Statement 2020*
* Available at https://www.contourglobal.com/compliance-ethics
73
Strategic ReportGovernanceFinancial Statements CONTOURGLOBAL
IN O UR PEOPLE’S EYES
Every year, we organize a photography contest, encouraging our employees
around the world to share their own ContourGlobal story. This selection is a
tribute to the value and commitment they bring everyday on the ground.
Borger, United States
Angeghakot reservoir, Vorotan, Armenia
Cupisnique, Inka, Peru
Palma Del Rio, CSP Spain
Shamb Spandaryan, Vorotan, Armenia
Austria Wind
Kivuwatt, Rwanda
74
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Participants
Aaron Reynolds
Ana Paula Fernandez
Cesar Chujutalli
Marcelo
Jaime Rodriguez
Paez
Ana Quiroga
Andres Gonzales
Martin
Christian Diaz Vargas
Javiez Diaz
Daniel Fernandez
Kajal Seevaparsaid
David Wafula
Laurent Hullo
Anna Sendal
Eulogio Arias Castro
Leandro Costa
Antonio Chagas
Fred Milburn
Aram Arekhtsyan
Ian Farias
Lee Goshorn
Leslie Wills
Lester Kirby
Lisa Tonis
Mark Holt
Matthew Isaac
Michael Schaeffer
Miguel Perez
Cerqueda
Olivier Mahire
Rasheed Moonah
Rocky Lovato
Sonia Maria Romero
Escolar
Tadeu Fayad
Tatiana Ciganikova
Nigel Chevillair
Yazmin Rodriguez
Scharndorf, Austria
Waterside, United States
Scharndorf, Austria
Hobbs, United States
Redwood, United States
Alvarado, CSP Spain
Talara, Inka, Peru
Majadas, CSP Spain
75
Strategic ReportGovernanceFinancial Statements B O ARD OF D IRECTORS
EXPERI ENCED LEADERSHIP
N
N
Craig A. Huff
Chairman
Joseph C. Brandt
President and
Chief Executive Officer
Stefan Schellinger
Chief Financial Officer
and Executive Director
R
N
R
N
A
Alejandro Santo Domingo
Non-Executive Director
Mariana Gheorghe
Independent Non-Executive Director
Dr. Alan Gillespie
Senior Independent Director
A
R
N
A
Ronald Trächsel
Independent Non-Executive Director
Daniel Camus
Independent Non-Executive Director
Gregg M. Zeitlin
Non-Executive Director
Committee
membership:
76
Chair
R
Remuneration
N
Nomination
A
Audit & Risk
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Craig A. Huff
Mr. Huff co-founded ContourGlobal in 2005
and has served as the Chairman of the Board
of Directors since 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.
Contributions to the Company: Mr. Huff has
over 25 years of management and leadership
experience, and his background and broad
experience provides a valuable perspective
to the Board. Mr. Huff provides a valuable
role in supporting the Company’s relationship
with its major shareholder, and, through his
private equity and hedge fund experience is
invaluable in meeting the challenges facing
the Company and the wider sector.
Alejandro Santo Domingo
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. He is Chairman
of the Board of Valorem, a company which
manages a diverse portfolio of industrial and
media assets in Latin America. He is also a
director of JDE (Jacobs Douwe Egberts),
Florida Crystals, the world’s largest sugar
refiner, Caracol TV, Colombia’s leading
broadcaster, El Espectador, a leading
Colombian daily, and Cine Colombia’s
leading film distribution and movie
theater company.
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 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.
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.
Contributions to the Company: Ms.
Gheorghe’s experience as a CEO and her
previous work, both in the energy and
not-for-profit sector, provides valuable insight
for Board discussions. As the designated
Non-Executive Director for workforce
engagement, Ms. Gheorghe provides the
Board with a comprehensive understanding
of the views of employees and the wider
culture of the Company.
Stefan Schellinger
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.
Prior to joining, Mr. Schellinger 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, Mr. Schellinger
spent eight years with Danaher Corporation,
as Corporate Development Director and as
Finance Director – Emerging Markets at
Gilbarco Veeder Root. Mr. Schellinger 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.
Mr. Schellinger 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.
Contributions to the Company: Mr. Schellinger
has broad financial and accounting experience
obtained over his career, with significant
experience in listed companies. Mr. Schellinger
has contributed to the financial performance of
the Group, and his appointment strengthens
the Board’s financial expertise.
Mr. Santo Domingo is a graduate of Harvard
College.
Contributions to the Company: Mr Santo
Domingo has extensive knowledge in the
investment sector, and his broad board
experience enables him to contribute to the
Board’s continuing focus on performance
and business strategy.
Joseph C. Brandt
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.
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. At AES, Mr. Brandt’s
responsibilities included management of the
company’s global utility operations. He
served on the board of directors of many of
AES’s key subsidiaries, including AES Gener
in Chile where he was Chairman of the Board.
Mr. Brandt received a B.A. from George
Mason University, an 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.
Contributions to the Company: Mr. Brandt
has broad and extensive experience in
leadership and management with the energy
sector globally and has been instrumental in
the development of the Group’s strategy and
successful performance.
Mariana Gheorghe
Ms. Gheorghe has served as Non-Executive
Director on ContourGlobal’s Board of
Directors since 30th June 2019.
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.
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.
77
Strategic ReportGovernanceFinancial Statements Mr. Trächsel also serves on various boards of
directors, including the board of Swissgrid
AG, and KWO AG.
Gregg M. Zeitlin
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.
Mr. Zeitlin graduated with Highest Honors
from the University of Texas at Austin with a
BBA in Finance.
Contributions to the Company: Mr Zeitlin
brings strong experience in the investment
sector, and his extensive knowledge and
experience allows him to support and
contribute to the Company in the development
and promotion of its business strategy.
Mr. Trächsel received an MBA from the
University of Bern.
Contributions to the Company: As a serving
CFO, Mr. Trächsel brings strong financial
understanding and experience to the Board,
and his accounting experience makes him
ideally suited to chair the Group’s Audit and
Risk Committee.
Daniel Camus
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
MediAccess Guarantee (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.
Contributions to the Company: Mr. Camus
brings a wealth of experience globally of the
energy supply and generation sectors, and
his experience of working across different
national cultures affords him an
understanding of many of the regions within
which the Company operates. In his role of
Remuneration Committee Chair, he brings his
valuable and considerable listed company
and governance board experience to the
Board.
BOARD OF DIRECTORS (C ONTINUED)
Dr. Alan Gillespie
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.
Contributions to the Company: Dr. Gillespie
wide-ranging experience of working in different
corporate cultures affords him a strong
understanding of many of the challenges facing
the Board. His sector and geographical
experience, being in electricity generation
transmission in emerging markets, enables him
to contribute to, and challenge, the business
strategy. In his role as senior independent
director, Dr. Gillespie brings his valuable and
considerable listed company and governance
board experience to the Board.
Ronald Trächsel
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.
78
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC SENIOR MANA G EMENT
SENI OR MANAGEMENT
Alessandra Marinheiro
Executive Vice President for Business
Development Latin America
Sarah Flanigan
Executive Vice President, Sustainability and
Special Projects
Alessandra joined ContourGlobal in August
2009 and serves as Executive Vice-President
and CEO for Brazil.
Sarah joined ContourGlobal in 2007 and
serves as an Executive Vice-President of
Sustainability and Special Projects.
Ms. Marinheiro leads our Brazilian business
and is responsible for implementing several
operational improvement initiatives,
refinancing our assets in the local capital
market and recently lead the sale of our
hydro portfolio in Brazil. Before 2020,
Ms Marinheiro was responsible for
implementing our growth strategies for
the Latin America region where she leads
several greenfield project developments,
acquisitions, project finance and corporate
finance transactions.
Before joining ContourGlobal, she worked
for 12 years at The AES Corporation in Brazil
as Business Development Director and
Commercial Director at AES’s generation
business. Ms. Marinheiro has a Bachelor in
Business Administration from the Pontífica
Universidade de São Paulo (PUC-SP) with
an Executive MBA from COPPEAD-UFRJ.
She leads the sustainability function and
integration activities of large acquisitions,
chairs the Sustainability Committee and is a
member of our Senior Executive Committee,
Information Technology Committee, Health
and Safety Committee and Project Steering
Committees.
Before joining ContourGlobal, Ms. Flanigan
worked for 14 years at The AES Corporation
in the U.S., U.K. and Cameroon in finance and
taxation leadership roles and prior to that at
PWC and Deloitte. Ms. Flanigan has a
Bachelor's degree in accounting and finance,
a Juris Doctorate, and a Masters in Laws
in Taxation. She is a CPA and admitted to the
Illinois bar.
Amanda Schreiber
Executive Vice President, General Counsel
Amanda joined ContourGlobal in April 2012
and serves as the Company’s General
Counsel. Ms. Schreiber leads the global
legal organization and is responsible for
all Company legal matters, including
transactional, M&A, development, capital
markets, corporate finance, governance,
litigation, and regulatory matters, including
international trade, sanctions, and
competition laws.
Before joining ContourGlobal, Ms. Schreiber
served as Chief Compliance Counsel at
Colgate-Palmolive Company and practiced at
the law firms of Covington & Burling LLP and
Sullivan & Cromwell LLP in New York. She
began her career as a law clerk to the
Honorable Barrington D. Parker of the United
States Court of Appeals for the Second
Circuit. Ms. Schreiber received her A.B. from
Brown University and her J.D. from Columbia
Law School, where she was a Harlan Fiske
Stone Scholar.
Karl Schnadt
Executive Vice President and Chief Operating
Officer
Karl was hired as the Executive Vice President
and Chief Operating Officer in December of
2011 and is located in Vienna, Austria.
He is responsible for all technical functions
at ContourGlobal including power plant
operations, engineering and construction
and health, environment and safety. He is a
member of our Senior Executive Committee,
Information Technology Committee, Health
and Safety Committee and Sustainability
Committee.
Prior to joining ContourGlobal he worked at
Steag GmbH (“STEAG”), one of Germany’s
largest power generation companies. Mr.
Schnadt worked with Steag for 24 years,
holding a variety of positions at the company,
including serving as a project manager and
plant manager. From 2000 to 2006, he
served as the Chief Executive Officer for
Iskenderun Enerji Üretim ve Tic. A.S. (Isken),
Ankara, in Turkey, which is a 51% subsidiary
of Steag. Isken is the project company of a
$1.5 billion coal-fired power plant investment
where he was responsible for construction
and later operation. As a Member of the
Board of Executive Officers at Steag, he was
responsible for all operation assets. Mr.
Schnadt received his degree in Mechanical
Engineering and Energy technology from
RuhrUniversitat Bochum in Germany.
79
Strategic ReportGovernanceFinancial Statements SE NIO R MA NA GEMENT (C ONTINUED)
Stuart Altman
Executive Vice President & Chief Compliance
Officer
Nadia Dosio
Executive Vice President, Head of Assurance
and Internal Audit
Stuart joined ContourGlobal in April 2021 and
currently serves as Executive Vice President,
Chief Compliance Officer. In this role, he is
responsible for the Company’s global
compliance program.
Before joining ContourGlobal, Stuart served
as Senior Vice President and Global Chief
Compliance Officer for Las Vegas Sands
Corp. and was the first director of corporate
legal investigations at Intel Corp. He was
previously a partner in the Washington, D.C.
office of Hogan Lovells and served as an
Assistant United States’ Attorney in the
Eastern District of New York. He started his
career as a law clerk to the Honorable Carol
B. Amon. Stuart received his BA from Case
Western Reserve University and his JD from
Columbia Law School, where he was a James
Kent Scholar.
Nadia joined ContourGlobal in December
2018 and serves as Executive Vice President,
Head of Assurance and Internal Audit.
She is a member of the Executive
Management Board, reporting to the Audit &
Risk Committee and administratively to the
CEO. Ms. Dosio leads the global audit
organization and is responsible for all internal
audit matters, including the internal audit
strategy and plan.
Before joining ContourGlobal, Ms. Dosio led
anti-fraud globally from 2015 until 2018 at
Maersk, based in Copenhagen. Prior to this,
Nadia gained extensive international
experience of audit, compliance and
corporate governance in technology and
manufacturing industries, including senior
leadership roles at Oracle Inc., Fiat and Sun
Chemical Inc. She started her career in
external auditing in Italy at KPMG. Nadia
received her executive MBA from the London
Business School, holds a degree in
Economics from the University of Bologna,
Italy and multiple professional qualifications
(CIA, CISA, CFE and CCEP).
80
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC COR PORA TE G OVERNANCE REPORT
CHAI R MAN’S
INTR ODUCTION
Dear Shareholders,
On behalf of the Board, I am pleased to introduce
the Group’s corporate governance statement for 2021.
The Board is responsible for the
long-term success of the Company
and our governance framework
helps to ensure that success.
Governance highlights for 2021
Total announced dividend of $117m
million for the year 2021 – in line
with our progressive dividend policy
of 10% growth p.a.;
During 2020, 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 was
actively engaged on the task force’s
activities. During 2021 there has been
continuous monitoring and
engagement with key stakeholders
both internally and externally as the
pandemic has continued;
Appointed a designated Non-
Executive Director for workforce
engagement; and
A detailed externally 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 92.
Corporate strategy setting and
monitoring
The Board has overseen significant
developments in our strategic delivery
over the course of 2021. At the forefront
of these has been the continued
development of unlocking value in the
portfolio through exploring transactions
that unlock intrinsic value for
shareholders including our acquisition of
solar power plants in Italy, the sale of
our Brazil hydro business announced on
20th January 2022, and our commitment
to achieve net zero carbon emissions by
2050. In addition, the successful
integration of our newly acquired
Western Generation business in the US
and Trinidad and Tobago has
contributed to our growth development.
As we reflect throughout this report, this
has all been against the challenging
backdrop of the ongoing COVID-19
pandemic.
Stakeholder engagement
A key area of focus has been growth,
divestiture and new business
integration.
The Board approved the sale of its Brazil
hydro-electric business as part of its
long-term plan to monetize its
renewable business in Brazil, and to
create compelling value for
shareholders. The integration of our
Western Generation acquisition
continues to advance in line with our
expectations, and the acquired assets
are performing well operationally and
financially. We continue to progress with
our multi-year projects including Austria
repowering, Solar Italy and the
refurbishment of Vorotan. In 2021 the
Board approved the appointment of
Mariana Gheorghe as the designated
Non-Executive Director for workforce
engagement and she commenced the
role in the second half of the year. The
engagement undertaken to date is set
out on pages 24 to 29 and page 87.
The Board also received presentations
on workforce issues from executive
management, including a people,
organisation and culture review.
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. The health and
safety of our employees remains a key
priority, and more details on the ways in
which we engaged with employees, and
our wider stakeholders, and factored
such engagement into our decision-
making over the year are set out in the
“Our key stakeholders” (pages 26 to 29)
and “s172 statement” (page 88) sections
of this report.
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Strategic ReportGovernanceFinancial Statements CO R PORA TE GOVERNANCE REPORT (CONTINUED)
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 111, and the
Directors’ Remuneration report on pages 112 to 129,
provide a description of how the main principles of the UK
Corporate Governance Code 2018 (“the Code”) have
been applied by the Company during 2021. 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 2021,
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.” Craig A. Huff was a
co-founder of ContourGlobal in 2005, and appointed as
Chairman of the Board in October 2017 when the
Company was admitted to trading. We consulted with the
major shareholders of the Company to clearly explain the
reasons behind this decision ahead of the Company’s IPO
in 2017. The Board recognises that the UK Corporate
Governance Code states that, ordinarily, the chair should
be independent on appointment, however given his
in-depth knowledge of the Company, the Board
considered it in the best interests of the Company that he
serves as Chair. The Board confirms its view that the
Chairman's continued service is in the best interests of
the Company and its stakeholders. We were pleased to
see that 91.7% of our shareholders were in agreement
with this view, as shown in the 2021 AGM results. 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 on page 92.
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 130 to 134.
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.
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
(AGM) on 12th May 2022, all of which
are supported by the Board. Further
details on the AGM are set out in the
Notice of AGM, which has been
circulated to shareholders separately.
Craig A. Huff
Chairman
Succession planning
Although there were no changes to the
Board throughout 2021, 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. In 2020 the Board
adopted a diversity policy, and during
2021 has spent time focusing on the
desired skills and diversity mix that are
needed for the Board to develop the
Company’s long-term strategic goals.
We have previously reported that we
are in the process of recruiting another
independent Non-Executive Director,
and the recruitment for this vacancy is
ongoing. Diversity is an important
strategic area for the Group and our
approach is informed also by our
presence in numerous geographical
regions.
Board effectiveness
This year we conducted an externally
facilitated evaluation of the Board. This
evaluation was led by the Chair with the
assistance of Lintstock, a board advisory
firm providing objective and
independent counsel to companies. We
have welcomed both the evaluation
process and its findings, which we
believe have identified a significant
82
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC BOAR D L EADERSHIP
AND C OMPANY PURPOSE
An effective Board
Our Board is composed of highly skilled
professionals who bring a range of skills,
perspectives and corporate experience
to our Boardroom (Directors’
biographies are on pages 76 to 78). 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
management team and Company
Secretary, as and when required.
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:
Role
Description
Strategic objective
Key stakeholders
Purpose,
values and
culture
Corporate
strategy
setting and
monitoring
Organization
and
leadership
effectiveness
Operational
and financial
performance
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 employees, customers, regulators, suppliers
and investors.
Further details of our purpose, values and culture are set out on
pages 10 and 11.
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
30 and 31. Our key performance indicators are set out on pages
38 and 39.
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 79
and 80. 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
56 to 61.
Shareholder
and
stakeholder
engagement
We put the balance of stakeholder interests and the long-term
interests of the Group at the heart of all of our decision-making.
Further details of how we have engaged with stakeholders over
2021 and how we have taken stakeholders into account in our
decision-making process are set out on pages 24 to 29.
Shareholders, investors
and lenders
Customers and suppliers
Employees
Governments and
regulators
Communities
Shareholders, investors
and lenders
Customers and suppliers
Employees
Governments and
regulators
Communities
Shareholders, investors
and lenders
Customers and suppliers
Employees
Shareholders, investors
and lenders
Customers and suppliers
Employees
Shareholders, investors
and lenders
Customers and suppliers
Employees
Governments and
regulators
Communities
High growth
Operational excellence
Financial strength
83
Strategic ReportGovernanceFinancial Statements CO R PORA TE GOVERNANCE REPORT (CONTINUED)
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 May 2021 and is available on our website at:
https://www.contourglobal.com/corporate-governance.
Board activities
Areas of focus
Strategy
• Strategic updates on the acquisition of solar power plants Italy
• Strategic updates on the sale of our Brazil hydro-electric business
• Growth pipeline
• Approval of the Company’s revised refinancing arrangements
Operations
• Update on the implementation of the acquisition of US and Trinidad and Tobago Portfolio
Leadership and Employees
• Externally facilitated Board evaluation
• Workforce engagement feedback
• People, organisation and culture review
• Performance and compensation process update
Health and Safety
• Review and update of Modern Slavery statement
• Regular HSE reviews and updates
Stakeholders
• Approval of an extension to the share buyback programme
• Investor Relations updates
Governance
• Legal and Regulatory updates
• Review of terms of reference
Risk
• Review of principal risks
Financial
• Preliminary results
• Approval of the Annual Report
• Q1 update and FY outlook
• Q2 update and FY outlook
• Approval of Interim Results
• Q3 update and FY outlook
• Review of 2022 budget
High growth
Operational excellence
Financial strength
Strategic goals
Principal risks
Strategy
Operational and
execution
People and
organization
People and
organization
OSHA and
environment
Strategy
Regulation and
compliance
All Risks
Finance and
commercial
84
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC
Sustainability
Sustainability and ESG considerations
continued to be a key area of discussion
for the Board over 2021. Sustainability is
at the very core of our corporate
strategy, and we report our work in this
area further throughout this Annual
Report, through our website and in our
Sustainability Report.
In respect of ESG, the Board recognizes
and is supportive of ESG factors and
their importance to investors. ESG will
increasingly impact upon companies’
ability to access capital, capital
allocation and portfolio composition. The
Board therefore dedicated time in 2021
both to building our understanding of
investor expectations around ESG
strategies and disclosures, and to
embedding 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.
We recognize shareholder, investor
body and government expectations in
terms of corporate disclosure on climate
change and welcome the change in
listing requirements in the UK that
mandate certain disclosures against the
Task Force on Climate-related Financial
Disclosures (TCFD) recommendations.
Details of our reporting against the
TCFD recommendations can be found
on pages 50 to 53 of this Annual Report.
For further information on our
sustainability activities, please see our
Company Sustainability Report available
on our website, www.contourglobal.com.
Corporate strategy setting and
monitoring
The Board holds dedicated strategy
sessions to undertake a careful review
of our strategic positioning, with the last
such session being held in August 2021.
Further details of that session are set out
below.
As set out in the strategic report on
page 30, we have delivered excellent
progress on our growth strategy. The
acquisition of solar power plants in Italy
and the sale of our Brazil hydro business
were key areas of discussion for the
Board in 2021, as well as the integration
of our acquired Western Generation
business in the US and Trinidad and
Tobago.
The Board remains confident that our
acquisitions and divestiture 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.
The strategic activity of 2021 was
undertaken against the ongoing
backdrop of the COVID-19 pandemic
and this has remained a focal area of
Board discussions over the course of
the year, not just in respect of potential
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 24 to 29 and in our s172
statement (page 88).
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
Purpose and values
The Board has established the Group’s
purpose and values which are set out in
detail on page 11. The Group’s purpose
was last reviewed by the Board during
its strategy day in August 2021. Further
details of that session are set out
subsequently on pages 85 and 86.
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 and compliance
performance. Our culture is described
on page 46 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 health and
safety 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.
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 2021.
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Strategic ReportGovernanceFinancial Statements 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.
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
previously reported on in this Annual
Report, we bitterly regret experiencing
one fatality and one Lost Time Injury,
resulting in two Lost Time Incidents,
failing to meet our Target Zero
objectives. We have learned important
lessons for the future about how to
avoid such accidents.
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 111. Further information on
the going concern and viability
statements can be found on page 72.
CO R PORA TE GOVERNANCE REPORT (CONTINUED)
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 82 and 93 and in the Nomination
Committee report on pages 96 to 100;
and
Implementation of a diversity policy for
the Board and a refresh of the
Company’s Modern Slavery Statement.
Operational and financial
performance
The diversity of our businesses
demands highly tailored operating and
financial performance management.
A 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, and it concluded on 30th
March 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 $117m for the year 2021,
in line with our revised and progressive
dividend policy. In 2021, 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 2021, we made progress on
further developing our risk management
and internal control systems and
processes, working in collaboration with
our internal auditors. The Board and
Audit and Risk Committee have spent
significant time considering the
Company’s principal risks and
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 the
Group in the short and medium term
(further information on our principal risks
is on pages 62 to 71).
The Board met in August 2021 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 to improve organizational and
leadership effectiveness over the course
of 2021. A number of those steps are
detailed below:
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;
Undertaken an external evaluation of
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 detail
on the evaluation is set out on pages 93
to 95;
86
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Workforce engagement
mechanisms
We are mindful of the provisions in the
Code around workforce engagement,
and in 2021, the Board decided to
appoint Mariana Gheorghe as the
designated workforce representative
Director, with effect from H2 2021; more
information on her activities can be
found below. During 2021, 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 2021,
in our stakeholder engagement section
on page 26.
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 effective. The
Board is mindful of the need to remain in
line with developing good practice in
this area and will continue to review the
effectiveness of our engagement
mechanisms on an annual basis.
our global operations. The topics discussed covered
global experiences of keeping the work environment
safe, hybrid working policies, growth and development,
and workforce remuneration. In addition, to mark
International Women’s Day, Ms. Gheorghe hosted a
round table discussion, attended by women across
various positions and geographic locations within the
Company, and where various topics were discussed
including the opportunities for growth and development
at the Company.
The main themes emerging from the workforce
engagement carried out by Ms. Gheorghe in 2021
included employees’ pride in how they, and the
Company, had managed the pandemic. The Board noted
that the additional measures implemented to ensure
employee safety had helped maintain employee’s
personal well-being during the challenging period. The
Board will continue to ensure that lessons learned and
practices implemented during the pandemic, such as
hybrid working, will be taken forward to ensure ongoing
employee well-being. Diversity and Inclusion has been
discussed, with many employees expressing the view
that ContourGlobal actively demonstrated its commitment
to these matters, which had not always been employees’
experiences at other companies.
WORKFORCE ENGA GEMENT
In H2 2021, Mariana Gheorghe began her role as the
designated Non-Executive Director for workforce
engagement. Ms. Gheorghe works closely with the Chief
Human Resources Officer and Company Secretary on an
activity portfolio designed to support her in fulfilling her
role, and to ensure that best practice in the area of
workforce engagement is considered regularly.
Following each activity, Ms. Gheorghe reports back to
the Board directly, to discuss and consider culture across
the business, and to consider any themes arising from
the various engagements, and for these to be factored
into the decision-making process.
Ms. Gheorghe has considered employee surveys and
themes ahead of meeting with employees. In addition,
throughout the pandemic, there has been a concerted
effort to communicate with employees across the
Company, and employee well-being and safety has been
of utmost importance to our COVID-19 response. During
the pandemic, we have held town halls with the CEO on
matters relating to COVID-19 and introduced COVID-19
specific health and safety measures. Ms. Gheorghe’s
programme of engagement with employees is designed
to provide the Board with a balanced picture of
workforce views, obtained from a variety of sources. This
programme includes: site visits and plant tours; town hall
meetings; meeting with union and works council
members; gathering feedback from HR managers;
participating in panel discussions; holding focus groups
across different levels of employment; attending
employee events; participating in health and well-being
workshops; and responding to employee’s questions.
During 2021, Ms. Gheorghe undertook a site visit to our
Bulgaria operations, where she met with the
management team and employee groups, including
women in leadership roles, women in operations, and
young engineers. She further held talks with the union
representatives at Maritsa. During this visit, employees
were encouraged ask questions, and subsequently
discussed operational conditions, remuneration matters,
the macro-environment, and future strategies. Later in
the year Ms. Gheorghe hosted a post-COVID-19/back to
work round table discussion, attended by a cross-
representation of managers and employees from across
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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 24 to 29, 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.
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 our Board, strategy or
remuneration policies. Further
information is set out in our stakeholder
engagement section on pages 24 to 29
on how we have engaged with
shareholders over 2021, 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 2021 AGM was held on 12th May
2021 and we were delighted to receive
in excess of 90% of votes in favor of all
our resolutions. We were pleased that
engagement from shareholders
remained strong, and in total, 93.81% of
our shareholders (voting capital) voted at
the 2021 AGM.
The 2022 AGM is to be held on 12th May
2022. The Board is keen to ensure 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 224.
88
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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 page 94).
Methods used by the Board to
fulfill its 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 30);
• The Board’s procedures have 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 11);
• Direct and indirect stakeholder
engagement, alongside details of the
themes emerging from such
engagement (see pages 24 to 29);
• External assurance is received
through audits, stakeholder surveys
The table below sets out where relevant disclosure against each s172 factor can be found.
The likely consequences of any decision in the long term
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
Maintaining a reputation for high standards of business conduct
Business model (pages 16 and 17)
Strategy for growth (pages 30 to 37)
Our people (pages 44 to 47)
Health and safety (pages 42 to 43)
KPIs (pages 38 and 39
Business review (pages 40 to 55)
Our sustainability principles (pages 40 and 41)
Environment (pages 48 and 49)
Communities (pages 54 and 55)
Managing our principal risks (pages 62 to 71)
Business review (pages 40 to 55)
Engaging with our stakeholders (pages 24 to 29)
Acting fairly between members of the Company
Engaging with our stakeholders (pages 24 to 29)
Major Board decisions during 2021
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 2021 include:
• The Company’s ongoing 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 14, 18, 25 to 29, 47, 58, 62, 81, 85, 87, 93, 102, 106, 110 and 112);
• Review of sustainability strategy (see pages 40, 48 and 50);
• Approval of the Company’s revised refinancing arrangements (see pages 28 and 84);
• Acquisition of solar power plants in Italy (see pages 24, 28, 30, 40 and 57); and
• Sale of our Brazil hydro business (see pages 14, 15, 20, 24, 28, 48 and 58).
The impact on stakeholders was part of these decisions, and the way in which stakeholder engagement is considered more
broadly is set out above and in our stakeholder engagement section of the Annual Report (see pages 24 to 29).
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DIVISI ON OF
RE SP ONSIBILIT IES
Board roles
There is a 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 2021, are set out in the Committee reports.
Board of Directors
Chairman: Craig A. Huff
Chief Executive Officer
Senior Management Team
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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ANNUAL REPORT 2021 | CONTOURGLOBAL PLC
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
Company Secretary
LDC Nominee Secretary Limited was
appointed as the Company Secretary in
August 2021. The responsibilities of the
Company Secretary include:
• 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
Chief Executive Officer
• 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
• 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.
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Strategic ReportGovernanceFinancial Statements CO R PORA TE GOVERNANCE REPORT (CONTINUED)
Board members and attendance
Total number of meetings
Craig A. Huff
Joseph C. Brandt
Stefan Schellinger
Alejandro Santo Domingo
Mariana Gheorghe
Dr. Alan Gillespie
Ronald Trächsel
Daniel Camus
Gregg M. Zeitlin
Board
Audit and Risk
Committee
Nomination
Committee
Remuneration
Committee
7
7
7
7
6*
7
7
7
7
7
5
–
–
–
–
–
5
5
5
–
4
4
–
–
4
4
4
–
4
–
7
–
–
–
–
7
7
–
7
–
In addition to the scheduled Board meetings, there was 1 written resolution.
* Mr. Santo Domingo was unable to attend one Board meeting, however, he provided full comments on the materials discussed at the Board ahead of the meeting.
Board independence
Chairman
As a representative of the Company’s
largest shareholder, our Chairman,
Craig A. 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. Further details
regarding the independence criteria of
the Chair can be found on page 82 of
this Report.
Non-Executive Directors
Together with the Chairman, two other
Non-Executive Directors (Alejandro
Santo Domingo and Gregg M. 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 2021. 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 A. Huff,
Alejandro Santo Domingo and Gregg M.
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 2021, 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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ANNUAL REPORT 2021 | CONTOURGLOBAL PLC COMP OSITION,
SU CC ESSION
AND EV ALUA TION
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 2021.
Succession
We have used this year to focus upon
the desired skills and diversity mix that
we need, both on the Board and for
senior management, to develop our
long-term strategic goals. The
implementation and embedding of our
Board diversity policy (further details of
which are below) is an important step in
ensuring diversity considerations are
appropriately taken into account in our
succession planning activity.
The Committee reported in the 2019
Annual Report that we were in the
process of recruiting an additional
independent Non-Executive Director,
with a view in particular to having further
independent Director representation on
the Board. Further details on the skills
and competencies sought for this
representation can be found on page
97 of the Nomination Committee report.
No appointments to the Board were
made in 2020-2021, due to the
unprecedented events that took place
over the course of the year arising from
the COVID-19 pandemic. 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 2022.
Board diversity policy
The Board approved a Board diversity policy in December
2020. The policy is available to view via: www.
contourglobal.com
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.
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 2021, we have
50% female representation on the Executive Management
Board, and we remain mindful of the targets set by the
Hampton-Alexander Review, and the ongoing work of the
FTSE Women Leaders Review.
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
We have not currently set timeframes in which we might
achieve those targets. Nonetheless, we recognize that
both Board diversity in respect of 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 2022 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 46 and 47.
Gender diversity across our business is set out on page
39.
93
Strategic ReportGovernanceFinancial Statements CO R PORA TE GOVERNANCE REPORT (CONTINUED)
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,
technological and social considerations,
and cyber security. 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.
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.
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 individual’s needs
considering their previous experience
and knowledge.
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 2021 is set
out in the Nomination Committee report
on page 96. As part of the Board’s
annual effectiveness review, described
on page 82, the Nomination 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.
94
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 2020 Board evaluation
The 2020 Board evaluation was conducted by the Chairman and the Company Secretary, with support from Independent Audit
Limited, a board evaluation specialist with no other connections to the Company. The recommendations arising from the 2020
internal Board evaluation together with the actions implemented in response were:
Recommendations
Action taken and outcome
Continued focus on the Company’s people strategy and succession planning
Educational sessions on cyber and data security in respect of the Company and
its industry
The Nomination Committee has considered the Group’s
people and its strategy, and will continue to focus on
this, as well as succession planning, in 2022.
The Board received a number of educational updates on
cyber and data security, both from internal and external
expert advisors.
2021 Board evaluation
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. In 2021 the Board engaged Lintstock, an externally facilitated
performance review specialist, to conduct a comprehensive review of its expertise, dynamics, management, focus of meetings,
culture, and oversight. Lintstock do not have any other connections with either the Company or individual Directors of the Board.
Process steps for the 2021 Board evaluation
Step 1
Step 2
Step 3
Step 4
Step 5
The Chairman and
Company Secretary
worked with Lintstock
and undertook initial
scoping and
consultation on the
process to be
undertaken.
Lintstock designed a
survey appropriate to the
Company’s needs and
tailored to its specific
circumstances, and the
Chairman reviewed and
agreed all the questions
to be asked.
Lintstock liaised with
Directors to complete
the Board and
Committee reviews.
Lintstock agreed a report
of the evaluation with the
Chairman and Company
Secretary for discussion
at the Board and each of
the Committees.
Additionally, pertinent
information was provided
to the Chairman only.
Lintstock subsequently
finalized the
questionnaires 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.
Outcomes from the 2021 Board
evaluation
Feedback on the performance of the
Board was positive overall, and
Directors felt that the Board is
discharging its responsibilities
effectively. The Board was seen to
include an appropriate mix of skills and
experience, and the relationships on the
Board - and between the Board and
management - were positively rated.
The information that the Board receives
was felt to be high-quality, and Board
meetings are well-managed, including in
terms of agenda coverage and Director
participation.
Focus areas in 2022
The review also identified a number of
areas for continued focus and
development in 2022. The reports were
considered by each Committee and the
Board, and as a result of these reviews,
the Board agreed to:
Continue its focus on the Company’s
people strategy and succession
planning;
Build on and develop the programme of
work undertaken by the Non-Executive
Director for workforce engagement; and
Continue to engage with, and unlock
value for, shareholders.
95
Strategic ReportGovernanceFinancial Statements R E PORT OF THE NOMINATION COMMITTEE
RE PORT OF THE
NOMINATION COMMIT TEE
Dear Shareholders,
In 2021, the Committee’s main focus was on Board and
senior management succession planning and the
review of the composition of the Board and its
Committees in respect of skills and diversity. During
the year the Committee undertook a full review and
refresh of its skills matrix to ensure that the right skills,
experience and knowledge were captured. We also
maintained focus on our Board diversity policy,
ensuring we further embed diversity and inclusion in
succession planning discussions. In 2021, we planned
to recruit an additional female independent Non-
Executive Director, and interviews were ongoing with
potential candidates. As part of our workforce
engagement arrangements, Mariana Gheorghe, our
designated Director for workforce engagement, has
begun a programme of engagement, more details on
which are outlined on page 87.
Roles and responsibilities
The role of the 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 Committee is also responsible
for making recommendations to the
Board concerning succession planning.
Meetings
The Committee will normally meet at
least twice per year and otherwise as
required in order to discharge its duties.
It met four times in 2021.
Craig A. 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.
Members of the Committee
• Craig A. Huff
(Chairman of the Committee)
• Daniel Camus*
• Mariana Gheorghe*
• Dr. Alan Gillespie*
• Alejandro Santo Domingo
Meeting attendance shown
on page 92
*
Independent Director.
96
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Main responsibilities of the 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
experience of working in one of the
Group’s key growth regions; global
power sector knowledge; and
experience in mergers and acquisitions.
Further to this, the Committee did not
recommend any changes to the
membership of the Board Committees
in 2021. The Committee will continue to
review this at least annually.
The Committee’s current assessment of
the current skills and competencies on
the Board is set out in this report on
page 98.
The Committee is authorized to seek
outside legal or other independent
professional advice as required.
to the Board, as well as reviewing the
current and expected Board and Board
Committee composition.
Board and Committee
composition, skills and
competencies mix
Over the course of 2021, the Committee
continued to review the current structure
and composition of the Board and its
Committees to ensure a good balance
of skills, expertise, industry knowledge
and independence. 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. The Committee frequently
considers a skills matrix for the Board,
and during 2021 refreshed its skills
matrix, set out later in this report, 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
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.
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.
On the basis of these reviews, the
Committee continued to support the
appointment of a Non-Executive Director
with the following specific skills and
competencies: knowledge and
97
Strategic ReportGovernanceFinancial Statements R E PORT OF THE NOMINATION COMMITTEE (CONT INUED)
Board skills matrix 2021
Name
Gender
(as filed at Companies House)
Nationality
Executive
and M&A
experience
Financial
and banking
experience
Risk
oversight
Knowledge of
power and
energy sectors
FTSE UK
governance
International
expertise
Environmental
knowledge
Craig A. Huff (Chairman)
Joseph C. Brandt (CEO)
Daniel Camus
Mariana Gheorghe
Dr. Alan Gillespie
Alejandro Santo Domingo
Stefan Schellinger (CFO)
Ronald Trächsel
Gregg M. Zeitlin
M
M
M
F
M
M
M
M
M
American
American
French, Canadian
Romanian, British
British
Colombian, Spanish and American
British
Swiss
American
* The skills and competencies included in this matrix are a non-exhaustive overview of the range of skills and competencies that the Board had prior to joining
ContourGlobal plc, and provides our stakeholders with an overview of the competencies that the Company considers to be the most relevant to its stakeholders.
Sufficient relevant knowledge/experience in the area
Was accountable and (had) executed over several years
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 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 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 93.
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 Committee as well
as members of senior management.
The 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.
98
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 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.
In 2020 the Board adopted a diversity
policy as recommended by the
Committee. During 2021 the Committee
has worked to fully implement and embed
this policy, and a review of progress
against the policy’s objectives can be
found below. 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.
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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.
We continue to strengthen the pipeline of senior female
executives within the business, and our initiatives to support
senior management diversity are outlined on pages 82, 93
and 96 to 98.
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.
In its search for candidates, to engage with executive
search firms which are signatories to the Voluntary Code
of Conduct for Executive Search Firms.
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.
Report annually on the outcome of the Board evaluation,
and the composition and structure of the Board.
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% 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 2021, female representation on
the Board represents 11% 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. Our current Board composition is mindful
of the need to be representative of our multinational position.
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.
The Board recognizes the importance of diversity and that it
is a wider issue than gender. Our diversity initiatives are
outlined on pages 41, 46, 93 and 96 to 98.
The Board continues to commit to reporting annually on the
outcome of the Board evaluation, and the composition and
structure of the Board.
99
Strategic ReportGovernanceFinancial Statements R E PORT OF THE NOMINATION COMMITTEE (CONT INUED)
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-
2021, due to the unprecedented
events that took place over the
course of the year arising from the
COVID-19 pandemic.
A key activity for the Committee
during the reporting period was to
lead the search for an independent
Non-Executive Director, making sure
that the provisions and aims set out
within the Board diversity policy
agreed in 2020 informed the
process and future appointments.
The Committee and the Board fully
understand and appreciate the
benefits of diversity in all its forms in
promoting balanced and considered
decision-making which aligns with
ContourGlobal’s purpose, values
and strategy.
Committee evaluation
As described in more detail on page 95,
an externally facilitated evaluation of the
Committee’s effectiveness was
undertaken during 2021 as part of the
wider Board evaluation. The findings
of the review were considered by the
Board as a whole, and the results
demonstrated that members of the
Committee ensured that core skills were
covered and there was good discussion
and debate. The Committee remains
mindful of the need to ensure continued
focus is given to the talent management
and executive succession process, as
well as continuing the review of the
composition of the Board.
Priorities for 2022
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, and a focus on adding a
further member to the Board to
address the additional skills identified
as being of benefit to the Board as
a whole.
• An enhanced focus on people
matters, and supporting management
in strategy and how it relates to
employees more widely.
Craig A. Huff
Chairman of the Committee
17th March 2022
Directors’ independence and
re-appointment
The Board keeps the independence of
the Non-Executive Directors under
continuous review. In March 2021, 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 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 fulfill the role and manage
their commitments accordingly. The
Board is satisfied that none of its
Directors is overcommitted and unable
to fulfill 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.
100
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC R EP OR T OF T HE AUDIT & RISK COMMITTEE
REP ORT OF THE
AUD I T & RI SK COMMITT EE
Members of the Committee
• Ronald Trächsel
(Chairman of the Committee)
• Daniel Camus
• Dr. Alan Gillespie
Meeting attendance shown
on page 92
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 2021 Annual Report
and Financial Statements.
During the year the Committee focused on the
Company’s financial performance and integrity of the
annual 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 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. Further
to a recommendation from the
outsourced internal auditor, we
reviewed the principal risks and
uncertainties and agreed that ‘Pandemic
virus’ and ‘Supply chain’ risks should be
moved from a strategic domain to an
operational and execution domain.
The Committee, along with management
and the external auditor, considered the
recommendations issued from the
consultation from the UK Government's
department for Business, Energy and
Industrial Strategy on corporate
governance, reporting, regulation, and
potential audit reform, as well as the
new accounting and reporting
requirements introduced by International
Financial Reporting Standards (IFRS).
The Committee, with the support of the
external auditor, considered the
consultation to reform the corporate
governance, reporting and audit system
in the UK, and the potential impact of
these on audit and governance quality
for the Company. Together, the
Committee provided a collective
response to BEIS on this consultation.
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 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 auditor. We took
the FRC’s feedback into consideration
and, following engagement with the FRC
to ensure all points were satisfactorily
covered, enhanced disclosures in the
2020 Annual Report and Financial
101
Strategic ReportGovernanceFinancial Statements R E PORT OF THE AUDIT & RISK COMMITTEE (CONTIN UED)
“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.”
Committee evaluation
Following the evaluation of the
Committee’s performance, undertaken
in 2019 by Independent Audit, the
Committee agreed to focus on
increasing the number of deep dives
into the business to further build upon
its knowledge of risks within the
business. The Committee has received a
number of such updates, including a
deep dive on cyber security risk, and
further deep dives are scheduled into its
program of work for 2022.
The Committee’s performance was
evaluated by Lintstock and the key
priorities for 2021-22 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
17th March 2022
Statements. This reflected most notably
in purchase price allocation, non-
controlling interests and alternative
performance measures.
During the year, the Committee
considered the findings of a stakeholder
engagement exercise, facilitated by
KPMG, to improve the impact of the
Internal Audit function. As part of this
work, the Committee oversaw the
transition to a new, integrated
Governance, Risk Management and
Compliance system during the year, and
this platform is designed to support
Internal Control, Risk, Debt Compliance,
and Internal Audit activities. In 2022 the
Committee will continue to address the
recommendations from the exercise,
including increasing understanding of
why controls matter across the
organization.
During 2021, Stuart Altman was
appointed as the new Chief Compliance
Officer. Under his guidance, the
Committee undertook to refresh the
Code of Conduct to ensure that it is
user-friendly and enhances alignment to
the Company’s values and principles.
Our aim is to further promote a culture of
compliance reporting and problem
solving across the Company.
We also undertook a thorough review of
our Modern Slavery Statement and
revised this to ensure it accurately
reflected changes in our portfolio
composition and geographical locations.
We further considered the impact of
COVID-19 on our ability to undertake
anti-human slavery risk assessments,
especially in high-risk locations, and
ensured on-site assessments were
scheduled as soon as local travel
restrictions allowed.
On behalf of the Board, the Committee
has also continued to focus on the
impact of climate change and reporting
against the Task Force on Climate-
related Financial Disclosures (TCFD) to
support our work in that regard. The
Committee has discussed the TCFD
reporting framework with management
and the external auditor, in order to
develop our disclosures to align with the
recommendations.
102
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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
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.
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 134.
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 136
to 145.
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 107. 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.
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Strategic ReportGovernanceFinancial Statements R E PORT OF THE AUDIT & RISK COMMITTEE (CONTIN UED)
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 78.
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 from
PricewaterhouseCoopers LLP (PwC), the
external auditor, are invited to 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 five times
during 2021 and attendance at those
meetings can be found on page 92. All
meetings were held remotely and were
effective.
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.
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ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Audit and Risk Committee activity
Financial
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.
Reviewing the quality, appropriateness and integrity of the interim and full-year financial statements.
Monitoring 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 ongoing COVID-19 pandemic on
the global economy.
Ensuring the consistency and appropriateness of the financial control and reporting environment.
Reviewing the dividend policy.
Reviewing the alternative performance measures and the related disclosures.
Reviewing the draft Annual Report and Financial Statements as a whole, and approval of this Committee
report.
Reviewing the comments included in the letter from the 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,
and address and satisfactorily close the points of the FRC review.
Considered and responded on the consultation to reform the corporate governance, reporting and audit
system in the UK, and the potential impact of these on audit and governance quality for the Company.
Reviewing the TFCD disclosures.
Reviewing the fair, balanced and understandable assessment of the Annual Report (and any other financial
statements such as the half-yearly statement).
Financial
Accounting
Matters
Conducting an annual review of the effectiveness of the external audit process.
Review of potential impairment triggering events during 2021.
Update on Kosovo recoverability of development 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.
Update on Mexico energy sector regulatory developments.
KivuWatt arbitration with Energy Utility Corporation Limited.
Other matters related to litigation and claims.
Finalization of the US and Trinidad and Tobago acquisition purchase price allocation and fair value of
assets and liabilities acquired.
Consideration of the announced disposal of the Brazilian Hydro assets on financial reporting in 2021
financial statements.
Reviewing the appropriateness of significant accounting judgments and estimates made in connection with
the financial statements as set out on pages 108 and 109.
Significant
Accounting
Judgments
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Audit and Risk Committee activity (continued)
Risk
Management
and internal
control
Monitoring the outbreak impacts 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.
Transition to a new integrated Governance, Risk Management and Compliance system, Galvanize, to
support Internal Control, Risk, Debt Compliance, and Internal Audit activities.
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 2021
which included a mid-year review, an internal self-assessment and any recommendations arising from the
PwC external audit.
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 adequacy and effectiveness of the Group’s internal control and risk management processes.
The review of principal risks and uncertainties and the risk register top risks.
Internal
audit
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.
Undertook 8 internal audits, including an anti-bribery and anti-corruption audit in Brazil.
Monitor the resolution of internal audit findings.
Risk-based internal audits of specific Group companies, business units and processes.
A stakeholder engagement exercise to improve the impact of Internal Audit, and recommendations from
this exercise taken forward appropriately.
External
audit
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 and oversight of the transition of a new audit partner for
2022 following the required rotation of the existing audit partner after 2021.
Reviewing and approving the non-audit services and related fees provided by the external auditor.
Consideration of the findings of the external audit and any implications for the financial reporting of the
group, or the effectiveness of internal control.
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.
Refresh of the Code of Ethics.
Refresh of the onboarding anti-bribery eLearning.
Refresh and approval of the Modern Slavery Statement.
Compliance planning for 2022.
Compliance
and other
matters
compliance
and other
matters
Financial
management
Reviewing reports to the Committee on exposure, counterparty and credit risks.
Cash and debt balances, debt covenants and headroom, and the liquidity available to the Group.
Taxation
Review of the Tax Strategy and policy.
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ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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
control 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 considered 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.
Objectivity and independence
Effectiveness of the external audit
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 mitigating actions taken to
safeguard PwC’s independent status,
including the operation of policies
designed to safeguard threats arising
from the non-audit services provided
by PwC and the employment of former
PwC employees;
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; and
• The objectivity of the external
• The tenure of the audit partner and
quality review partner (such tenure not
being greater than five and seven
years respectively); and
auditor’s views on the controls around
the Group and the robustness of
challenge and findings on areas which
required management judgment.
• The internal performance and
• The application of professional
effectiveness review of PwC referred
to above.
Taking the above review into account,
the Committee concluded that PwC
remained objective and independent in
their role as external auditor.
scepticism by the auditor.
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.
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Strategic ReportGovernanceFinancial Statements R E PORT OF THE AUDIT & RISK COMMITTEE (CONTI NUED)
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
In February 2021 the Group completed the Western Generation
acquisition of a portfolio of six power plants located in the United States
and Trinidad and Tobago. In November 2021 the Group completed the
Green Hunter acquisition of a portfolio of solar assets in Italy.
For both the Western Generation and Green Hunter
acquisitions the Committee considered the
appropriateness of the items to which the purchase
price has been allocated, in addition to the main
assumptions primarily relating to discount rates and
future cash flows.
Impairment of property, plant and equipment, and financial
and contract assets
As at 31st December 2021, the Group had $3,923.2 million of
property, plant and equipment, the majority of which related to
power plant assets, and $387.3 million of financial and contract
assets, the majority of which related to concession arrangements.
The assessment of indicators of impairment requires judgment.
Provisions for claims and contingent liabilities
As at 31st December 2021, 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 include sales tax and interest or
penalties associated with taxes. Legal and other provisions have
some uncertainty over the timing of cash outflows.
Brazil held for sale assessment
During 2021 a sale process was initiated for the Brazil renewable
assets (Hydro and Wind). Judgment is required in determining
whether or not the Hydro and Wind portfolios were classified as
held for sale at year end and whether they should be reported as
discontinued operations.
Kosovo development costs
On 24th 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 has reviewed the assessment
indicators of impairment and concur with the
conclusion that there are no indicators in the
current year.
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.
The Committee reviewed the held for sale
classification of the Hydro portfolio and were in
agreement that the conditions were met at year end.
Regarding Wind, given the planned sale was not
highly probable at year end, the Committee agreed
that the Wind portfolio should not be presented as
held for sale. The committee agreed that neither the
Hydro or Wind portfolios should be reported as
discontinued operations.
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 judgment. 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 judgment
that supports the recognition of the asset.
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ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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
In 2020, 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.
The non-audit fees paid to PwC for 2021
were $1.7 million ($1.0 million in 2020),
including $0.4 million for the half-yearly
review ($0.3 million in 2020).
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, having taken over this
position in 2017. 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
has worked with PwC to address this
requirement during the 2021 financial
year. Matthew Mullins will be taking over
as lead audit partner following the
completion of audit for the year ended
31 December 2021. 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 Committee
Responsibilities) Order 2014 for the
2021 financial year.
Audit fee
The fees payable to PwC for the 2021
audit are $3.1 million ($2.3 million in
2020).
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 2022 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 2021 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.
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Strategic ReportGovernanceFinancial Statements R EP OR T OF T HE AU DIT & RISK COMMITTEE (CONTI NUED)
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 ongoing
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.
Taking the above into account, together
with the views expressed by PwC, the
Committee recommended, and in turn
the Board confirmed, that the 2021
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.
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 have 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 the violations of the Company’s
policies. The arrangements also form
part of the induction program for new
employees.
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 2021, has
also included consideration of the
ongoing 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
110
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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.
• Specific controls over financial reporting with clear allocation of
responsibilities to ensure reporting is effective and accurate.
• 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.
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
2021 and actions for 2022
The Committee has continued to focus
on and has enhanced its reporting in
respect of its activities and increasing
the number of deep dives into the
business. The Committee agreed that
the focus for 2022 should be: to work
with management to improve the detail
and focus of reporting; to continue to
challenge management to ensure the
Committee promotes continuous
improvements towards excellence; and
to increase the monitoring of operating
performance.
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
2021.
Ronald Trächsel
Chairman of the Committee
17th March 2022
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Strategic ReportGovernanceFinancial Statements R E PORT OF THE REMUNE RATION COMMITTEE
RE PORT OF THE
RE MU NERATION COMMIT TEE
Dear Shareholders,
It is my pleasure to present the Directors’ Remuneration Report for 2021.
In a year when COVID continued to challenge us all the company has continued to
deliver and our employees have continued to meet the challenge and provide
electricity to our customers with minimal disruption. During the year we acquired a
portfolio of assets from Western Generation Partners in the United States and
Trinidad and Tobago and we welcome the employees at those sites to the company
as we integrate them into our team. The health and safety of our employees remains
our absolute priority. We have continued to support them with appropriate measures
such as flexible shift patterns to allow employees to work in less densely populated
spaces and using remote control technology.
Performance in 2021
Throughout 2021, our performance
across the business was strong. Our
robust financial performance in the
second half of the year meant that for FY
2021, we achieved a record Adjusted
EBITDA of $841.5 million while
maintaining our 10% year-on-year
dividend growth policy and a solid cash
conversion ratio of 52.3%. We also
delivered record CFADS of $367 million
up 34% over the previous year. This
performance is borne out in the maximum
achievement on the proportion of annual
bonus that relates to Adjusted EBITDA
and Funds from Operations.
The financial performance of the
business was overshadowed by the
death of a contractor at one of our
Brazilian sites, an event which featured
strongly in the conversations of the
Committee. I would like to recognize the
leadership of the President and Chief
Executive in volunteering to waive his
annual bonus for 2021. More broadly, in
terms of the annual scorecard for
leaders and managers across the
business, the Committee exercised
discretion to zero the amount in relation
to the Health and Safety measure. The
Committee also determined to reduce
the amount of shares vesting from the
2019-2021 Long Term Incentive Plan
where they relate to the Health and
Safety metric, along with targeted
downward discretion in the
management hierarchy relating to
the incident.
Key areas of focus in the year
Incentive arrangements
• Reviewed and approved annual bonus pay-outs 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
Members of the Committee
• Daniel Camus
(Chairman of the Committee)
• Mariana Gheorghe
• Dr. Alan Gillespie
Meeting attendance shown
on page 92
112
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC CEO service contract
Following a review undertaken during
the year of existing terms agreed and
implemented on Admission, we wish to
outline the fact that while the CEO’s
letter of appointment as a Director
provides for 6 months’ notice by either
side, his service contract provides for 30
days’ notice rather than 6 months as
previously reported. The Directors’
Remuneration Report has therefore
been updated to reflect this. Our policy
for new appointments is for a six month
notice period to apply to both parties.
Conclusion
Our report will be subject to an advisory
vote at the upcoming Annual General
Meeting, and I hope that I can rely on
your continued support. We believe that
remuneration outcomes continue to
align with business performance and the
values of the company and to drive the
right behaviours for all of our
stakeholders.
Yours sincerely
Daniel Camus
Chairman of the Committee
Vesting of 2019-2021 LTIP
The second of our long term incentive
plans to vest delivered 51.8% of the
maximum potential vesting. The plan
was again based on adjusted EBITDA,
Health and Safety and growth (as
measured by the IRR of growth projects
and key project milestones).
Looking forward
There will be no salary increases for
Executive Directors in 2022.
Incentive opportunity levels remain
unchanged. The annual bonus
framework will remain broadly consistent
with prior years, with 70% based on
corporate objectives and 30% on
individual performance. In respect of the
2022 Long Term Incentive Plan, the
Committee is still reviewing its approach
in order to best align with corporate
objectives and strategy. The current
intention is to make a website disclosure
in relation to the proposed approach
prior to the 2022 Annual General
Meeting.
Legacy arrangements
On 20th January 2022 we announced
the sale of the Brazilian Hydro assets
which is expected to complete during
the second quarter of 2022. This may
trigger a payment under the legacy
carried interest arrangement for the
President & Chief Executive, subject to
the requirements of the relevant
contractual arrangements. Disclosure of
the value of any payment will be made
in the 2022 Annual Report when the
amounts are known. The Company is
not party to the carried interest and has
no financial obligation in relation to the
interest.
Index to the Remuneration
Report
Part 1: Remuneration at a
glance
Summary of Remuneration
Policy and implementation
for 2022
Alignment of remuneration
strategy with our core
principles
Part 2: Annual Report on
Remuneration
Governance
Total remuneration
Annual bonus for 2021
Long-term incentive awards
vesting in respect of 2021
Long-term incentive awards
granted in 2021
Deferred bonus awards
granted in 2021
Implementation of Non-
Executive Director
Remuneration Policy
Directors’ 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
114
116
118
119
120
122
123
123
124
124
125
125
125
126
126
126
127
127
127
128
129
113
Strategic ReportGovernanceFinancial Statements R E PORT OF THE REMUNE RATION COMMITTEE (CON TINUED)
R EMU NERATION
A T A GLANCE
Summary of Remuneration Policy and implementation for 2022
Our Remuneration Policy for Executive and Non-Executive Directors was presented and approved by shareholders at our 2021
AGM. The below summarizes the key elements of the Remuneration Policy and how it will be implemented for 2022. The full
Remuneration Policy can be found in the 2020 Annual Report available on our website at www.contourglobal.com.
Remuneration
component
Summary of Remuneration Policy
Remuneration for Executive Directors for 2022
Salary
• 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.
President & CEO
Chief Financial Officer
Base salary
effective
1st January 2022
$1,200,000
£375,000
Increase
from 2021
0%
0%
Pension and
benefits
Annual
performance
bonus
• 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.
• No changes for 2022.
• The current President & CEO does not 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).
• Executive Directors receive benefits in line with the
Remuneration Policy.
• Maximum opportunity is:
• The overall annual bonus framework for 2022 remains
• 100% of base salary for the current President &
consistent with 2021.
CEO.
• 150% of base salary for any other Executive
Director (including any future CEO)
• The maximum opportunity will be 100% of salary for the
President & CEO and 115% of salary for the Chief Financial
Officer.
• Subject to stretching performance conditions,
normally set by the Committee at the start of each
financial year.
• Bonus will be based on achievement of corporate objectives
(70%) and individual objectives (30%). Performance measures
for 2022 are:
• 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.
Performance metrics
Adjusted EBITDA
FFO
Operational metrics
Growth metrics
Individual objectives
% of opportunity
17.5%
17.5%
17.5%
17.5%
30%
• Targets and performance against these will be disclosed
retrospectively.
114
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Remuneration
component
Long-Term
Incentive Plan
(LTIP)
Summary of Remuneration Policy
Remuneration for Executive Directors for 2022
• In respect of the 2022 Long Term Incentive Plan, the Committee
is still reviewing its approach in order to best align with
corporate objectives and strategy. The maximum opportunity will
be 100% of salary for the President & CEO and 200% of salary
for the Chief Financial Officer.
• 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.
• No changes for 2022.
• 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.
• 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.
115
Strategic ReportGovernanceFinancial Statements R E PORT OF THE REMUNE RATION COMMITTEE (CON TINUED)
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.
Remuneration component
Summary of Remuneration Policy
Clarity
• The Committee is committed to providing open and transparent disclosures with regards to executive
remuneration arrangements.
Simplicity
• 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.
• 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.
Predictability
• 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.
Proportionality
• 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 20 countries. When determining remuneration arrangements for Executive
Directors the Committee considers broader workforce remuneration and related policies across the global
business. The Group has 16 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 to culture
• The metrics used within our incentive arrangements for Executive Directors are aligned to ContourGlobal’s core
principles, with the aim of driving behaviours consistent with the Company’s purpose, values and strategy.
• One of our key values relates to our employees’ 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.
116
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Alignment of performance measures with core principles
Our core principles are aligned with the metrics used under our remuneration approach for Executive Directors, as illustrated below.
Measures used in incentive schemes
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
X Annual bonus metric
X LTIP metric
ContourGlobal – our core business principles
Operate safely
and efficiently
and minimize
environmental
impact
X
XX
X
X
X
X
X
Grow well
XX
X
X
X
X
X
X
X
Manage our
business
responsibly
Enhance our
operating
environment
XX
XX
X
X
X
X
X
117
Strategic ReportGovernanceFinancial Statements R E PORT OF THE REMUNE RATION COMMITTEE (CON TINUED)
A NNU AL REPORT
ON REM UNERATION
Governance
Membership of the 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:
Link Company Matters Limited (until 6th August 2021), and LawDeb Corporate Secretarial Services (from 7th August
2021).
External advisors:
Deloitte, appointed by the Committee following a competitive tender, has been advisor to the Committee from
November 2018.
Internal advisors:
Joseph C. Brandt (President & CEO), Sean McGrath (Executive Vice President, Chief Human Resources Officer) and,
from his appointment in November 2021, Richard Windmill (SVP Compensation & Benefits) 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 seven meetings during 2021. See page 92 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 2021 and 31st December 2021 and also describes the operation of the Committee.
This Annual Report on Remuneration will be proposed for an advisory vote by shareholders at the 2022 AGM. Where required,
data has been audited and this is indicated where appropriate.
118
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Total remuneration (audited information)
The table below sets out total remuneration received by the Executive Directors and Non-Executive Directors for the year 1st
January to 31st December 2021.
Base salary
and fees1
$000
Taxable
benefits2,3
$000
Annual
bonus
$000
Long-term
incentives4,5
$000
Pension
plan
$000
2021
2020 2021 2020
2021
2020
2021 2020 2021 2020
2021
Total fixed
pay
Total variable
pay
Total (excluding
legacy awards)
Legacy
awards – PIP6
$000
2020
$000
2021
2020
2021
$000
2020
$000
2020
2021
Executive
Directors
Joseph C. Brandt
Stefan Schellinger
Total
Non-Executive
Directors
Craig A. Huff
Daniel Camus
Mariana Gheorghe
Dr. Alan Gillespie
Ronald Trächsel
Alejandro Santo
Domingo
Gregg M. Zeitlin
Total
Grand Total
1,200 1,200
479
1,716 1,679
516
28
18
46
30
– 1,024 658 635
–
471 521
11 363
41 363 1,495 1,179 635
–
57
57
– 1,228 1,230 658 1,659
471
52
52 1,819 1,772 1,543 2,130
542 885
591
344
92
76
103
92
319
86
70
96
86
76
76
859
70
70
797
2,575 2,476
–
–
–
–
–
–
–
–
46
–
1
–
10
9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
10
30
–
–
71 363 1,495 1,179 635
–
–
–
–
–
–
–
–
–
–
–
57
–
–
–
–
–
344
92
76
103
92
319
87
70
106
95
–
–
–
–
–
–
–
–
–
–
–
–
–
76
76
859
–
70
–
80
–
827
52 2,678 2,599 1,543 2,130
–
–
–
1,886 2,889
1,476 1,013
3,362 3,902
– 19,866
–
–
– 19,866
344
92
76
103
92
319
87
70
106
95
76
76
859
70
80
827
4,221 4,729
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 19,866
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 2021 of $1.375854:£1. The average exchange rate used for 2020 was $1.276733:£1. There was no change in the base salary or fees of the Chief Financial
Officer or Non-Executive Directors in local currency, any movement is solely due to the movement in exchanges rates.
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. In accordance with the Remuneration Policy, the Company will reimburse Non-Executive Directors for any tax
thereon.
4. The 2019 LTIP award will vest in 2022 based on performance to 31st December 2021. The award will vest at 51.8% of maximum as described on page 122. The
award value for the Executive Directors included in the table above is based on a share price of 191.6p, being the three-month average share price to 31st
December 2021. The Executive Directors will also receive additional shares in relation to dividends accrued on the shares vesting during the vesting period, the
value of which are included in the figures above. Given the fall in share price since grant, none of the value is attributable to share price growth.
5. The 2018 LTIP award vested in 2021 based on performance to 31st December 2020. The award value for the President & CEO included in the 2020 figure above
has been restated based on a share price of 195.4p, being the share price at the date of vesting and using an exchange rate of US$1,3789:£1. None of the value is
attributable to share price growth. The amount also includes 44,650 additional shares in lieu of dividends payable during the vesting period.
6. 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 27th 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 December 2020. Further information on the PIP is provided on page 128.
The Committee considers that the Remuneration Policy operated as intended during the year and that remuneration outcomes
were consistent with overall Company performance and the shareholder experience.
119
Strategic ReportGovernanceFinancial Statements R E PORT OF THE REMUNE RATION COMMITTEE (CON TINUED)
Annual bonus for 2021 (audited information)
In 2021, the bonus opportunity depended on achievement of corporate objectives (70%) and individual objectives (30%).
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 (EAF), Equivalent Forced Outage Rate (EFOR), and NFOM/MW (NonFuel 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.
In recognition of the fatality in the year, the Committee determined that there would be no pay-out under the Health and Safety
element (10% weighting) of the scorecard.
Group scoreboard (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
Financial metrics (50%)
Adjusted EBITDA
Funds From Operations
Operations metrics (30%)
Health and safety – Lost
Time Incident Rate
Total Fleet Availability
Factor
Equivalent Forced Outage
Rate
Vorotan refurbishment
schedule
Vorotan refurbishment
budget
Austria Wind
Mexico CO2 capture
NFOM/MW
Growth metrics (20%)
M&A related milestones
Financing activities
Total
25%
25%
Less than
$751m
Less than
$384m
10%
0.09
2.5%
2.5%
2.5%
2.5%
2.5%
2.5%
Less than
target
Less than
target
Milestone
not met
Milestone
not met
Milestone
not met
Milestone
not met
$763.5m
$776m
$788.5m
$801m
$842m
$391.5m
$399m
$406.5m
$414m
$440m
25%
25%
0.03
0.06
0.00
Based on the average achievement against individual
EAF targets for each of the sectors. The weighted
average target is 94.9%
Based on the average achievement against individual
EFOR targets for each of the sectors. The weighted
average target is 1.4%
– 2
0%
See below
1.25%
See below
1.25%
100% awarded if completed on schedule
100% awarded if completed on budget
100% awarded if Scharndorf (4&5) and Berg
delivered on schedule and on budget
100% awarded if EPC contract signed and
construction started
2.5%
2.5%
2.5%
0%
2.5%
2.5%
2.5%
0%
5%
Less than
target
Based on the average achievement against
individual NFOM/MW targets for each of the sectors.
The weighted average target is 60.8
See below
4.4%
15%
5%
Milestones
not met
100% awarded if relevant milestones met:
Close acquisition contributing in excess of
$150 million of EBITDA run rate
0%
0%
100% awarded if relevant milestones met:
Refinance Caribbean and African portfolios
0
and the 2025 Corporate Bond
1.7%
1.7%
66.1% of
Group
element
1. Performance achieved against the financial metrics is stated at 2021 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.
2. The committee exercised discretion to determine no bonus would be payable in respect of the LTIR element for 2021.
120
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Sector performance – Total Fleet Availability, Equivalent Forced Outage Rate and NFOM/MW
Based on the achievement (100% of element) or not (0% of element) of individual EAF, EFOR and NFOM/MW targets for each sector.
EAF achievement by sector
(% of element)
EFOR achievement by
sector (% of element)
NFOM/MW achievement by sector
(% of element)
Turbines
Engines
Solutions
Hydro
Wind
Solar
Overall outcome
100%
0%
0%
100%
0%
100%
50%
100%
CCGT
0%
Coal-fired
100%
100%
0%
0%
50%
Engines
Solutions
Hydro
Wind
CSP
Solar PV
Overall outcome
100%
100%
100%
100%
100%
0%
100%
100%
87.5%
Personal performance (30% of bonus opportunity)
The remaining 30% of the bonus is based on the delivery of key individual objectives. Achievement for the year was assessed
by the Committee based on the following performance.
President & CEO
Performance areas
Newly acquired United
States and Trinidad &
Tobago portfolio
Strategic and
operational excellence
Key achievements
• Successful integration with acquired assets performing well operationally and financially, in particular the 604 MW
Hobbs flagship CCGT in New Mexico achieved its best operational performance in 13 years in 2021.
• Refinancing of the Caribbean portfolio, including assets in Trinidad & Tobago, completed on attractive terms,
leading to a cash distribution to the parent company of $110 million.
• Strong focus on positioning the organization for the next phase of growth through recruiting at all tiers of leadership
below the most senior level and progressing towards a regional operating model, including creating an Africa
region and planning similar structures for the Americas and Europe.
• Following expiration of its contract, the Arrubal (Spain) plant operated on a merchant basis in the ancillary services
market providing critical stability to the energy system in a challenging volatile market. Overall, the plant achieved
98% availability and delivered an outstanding financial performance in 2021.
• Immediate response to the fatality in the year, including the commissioning of a third-party in-depth investigation.
In response to incidents in the year, safety protocols were stepped up and new safeguards were put in place.
Long-term shareholder
value
• Agreed the sale of the Brazil hydro-electric generation business in line with long-term plan to monetize the
renewable business in Brazil and create compelling value for shareholders.
• Completion of the Green Hunter Group S.p.A. acquisition –a portfolio of solar assets in Italy.
• Continuation of growth in ordinary dividend per share at 10% annually a result of strength of earnings and
predictable cash flows.
ESG
• Introduction of Social Investment Strategy to ensure successful implementation of health, education, and social
projects. Approval of 29 social investment plans and 129 unique projects in 2021 with a total approved social
investment of $6.2 million over a three-year period.
• Meaningful improvement in ESG ratings (MSCI, CDP and Sustainalytics).
Chief Financial Officer
Performance areas
Strategy, operational
excellence and
long-term value
Finance function
Shareholder relations
Key achievements
• Created value from the successful re-financing of the Caribbean portfolio and completed refinancing of several
other assets resulting in a $62m distribution to the parent company.
• Completion of the Green Hunter Group S.p.A. acquisition – a portfolio of solar assets in Italy.
• Further identified a range of other refinancing opportunities.
• Managed successful annual credit rating agency process.
• Over the year continued to position the financial function for the next phase of growth by implementing a new
treasury management system including a new payment approval system as well as an integrated and enhanced
internal controls, risk management, debt compliance system.
• Member of the steering committee for the successful roll out of a new integrated contract management and
procurement platform.
• Aligned succession planning with development and hiring plans for key roles in the Finance function.
• Integration of our newly acquired United States and Trinidad & Tobago portfolios.
• Steering committee member for review and improvement of our Cyber security program.
• Managed all aspects of our equity and debt investor engagement program.
• Led process for the selection of a new corporate broker.
Taking into account the above performance the Committee determined that 50% of this element of the annual bonus was
achieved for the Chief Financial Officer.
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Strategic ReportGovernanceFinancial Statements R E PORT OF THE REMUNE RATION COMMITTEE (CON TINUED)
Overall bonus award
The President & CEO waived his annual bonus for 2021 in light of the fatality in the year.
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)
Waived bonus for 2021
66.1%
50%
61.3%
Total bonus
earned
$0
£264,226
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 2021, this means that £48,601 of the total bonus earned will be deferred for the Chief Financial Officer. Deferred 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 2022.
Long-term incentive awards with performance periods ending in 2021 (audited information)
On 17th June 2019, the President & CEO was granted an LTIP award equal to 100% of base salary and the Chief Financial Officer
was granted an LTIP award equal to 200% of base salary.
These awards will vest in 2022 following completion of the three-year performance period to 31st December 2021. Achievement
against performance targets is as set out below. The Committee reviewed the performance against the targets and in light of
the fatality in the year made a downwards adjustment to the score for Health and Safety by adjusting the Lost Time Incident
Rate for 2021 to be below threshold.
Performance target
Weighting
0% of element
25% of element
100% of element
Performance
achieved
LTIP award
Compound annual growth
rate in Adjusted EBITDA / share
Health and safety performance
– Lost Time Incident Rate (average
over three-year performance period)
Growth – IRR1
Growth – Milestones1
Overall vesting
50%
Below 10% p.a.
10% p.a.
25% p.a. and
above
12.1% p.a.
17.8%
25%
12.5%
Above 0.09
IRR for qualifying
projects below 90%
Less than 90% of
milestones for
12.5%
qualifying projects met
0.09
IRR for qualifying
projects at 90%
90% of milestones
for qualifying
projects met
Zero
IRR for qualifying
projects met
All milestones
for qualifying
projects met
0.06
11.7%
100.0%2
12.5%
78.6%3
9.8%
51.8% 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.
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.
In line with the Remuneration Policy, a two-year additional holding period will apply.
122
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Long-term incentive awards granted in 2021 (audited information)
In line with the Remuneration Policy, the President & CEO and Chief Financial Officer were granted performance share awards
under the Long-Term Incentive Plan of 100% and 200% of base salary respectively in 2021.
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
Value %
of salary1
17th May 2021
17th May 2021
Conditional
award
Nil-cost
option
442,186
$1,200,000
100%
389,408
£750,000
200%
Performance period
1st Jan 2021 –
31st Dec 2023
1st Jan 2021 –
31st Dec 2023
1. The award value and number of shares was calculated by reference to the closing price of ContourGlobal shares of 192.6p on 17th May 2021 and base salary
converted where appropriate to GBP using the exchange rate on that date of $1.4090:£1.
LTIP awards granted during 2021 were subject to the following performance conditions.
Weighting
100% vesting
25% vesting
0% vesting
Adjusted EBITDA per
share growth % p.a.
Health and safety Lost
Time Incident Rate
Growth Internal Rate of
Return (IRR)1
50%
25% and above
10%
25%
Zero
0.09
Below 10%
Above 0.09
25%
IRR for qualifying
projects met
IRR for qualifying
projects at 90%
IRR for qualifying
projects below 90%
1. Qualifying projects means such projects approved by the Board during the performance period and in respect of which the Board has specified a target IRR 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 2021 (audited information)
During the year, the Company also granted deferred bonus awards to the Executive Directors in respect of the 2020 bonus.
These awards are not subject to performance conditions and are only forfeited in the event that the individual is dismissed for
serious misconduct.
Executive Director
Joseph C. Brandt, President & CEO
Stefan L. Schellinger, Chief Financial Officer
Date of award
Form of award
17th May 2021
17th May 2021
Deferred
bonus award
Deferred
bonus award
Number of
shares awarded1
Value of awards
at date of grant1
Vesting date
156,091
$423,600
10th March 2023
79,040
£152,231
10th March 2023
1. The award value and number of shares was calculated by reference to the closing price of ContourGlobal shares of 192.6p on 17th May 2021 and base salary
converted where appropriate to GBP using the exchange rate on that date of $1.4090:£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.
123
Strategic ReportGovernanceFinancial Statements R E PORT OF THE REMUNE RATION COMMITTEE (CON TINUED)
Implementation of Non-Executive Director Remuneration Policy in 2022
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 2022.
Chairman
Non-Executive Director
Additional fees
Senior Independent Director
Audit & Risk Committee Chairman
Committee Chairman
Fees effective
from 1st January
2021
Fees effective
from 1st January
2022
£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.
A post-employment shareholding guideline applies such that Executive Directors 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 apply to shares delivered via deferred bonus and
performance share awards from 2020 onwards.
The share interests of the Executive Directors and their connected persons as at 31st December 2021 are as follows:
Executive Director
Joseph C. Brandt,
President & CEO
Stefan Schellinger,
Chief Financial Officer
Total number of
beneficially owned
shares at
31st December 2021
Shares held in
Contour Management
Holdings LLC¹
Unvested interests in
share schemes
awarded without
performance
conditions as at
31st December 2021
Unvested interests in
share incentive
schemes awarded
subject to performance
conditions as at
31st December 20212
1,995,425
7,403,453
210,757
1,383,933
–
–
96,619
1,146,670
Shareholding
requirement
(% of base salary)
Current shareholding
(% of base salary)3
250%
250%
2,039%
0%4
1. Mr Brandt holds 7,403,453 shares through Contour Management Holdings LLC following the vesting of the Class S units under the Private Incentive Plan, a legacy
equity arrangement established by Reservoir Capital Group in connection with its original investment in the business. Further shares may be delivered through the
Class B and Class C units. Further details of the plan can be read on page 128.
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 & 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 192.4p on 31st December 2021
and base salary converted where appropriate to GBP using the exchange rate on that date of $1.35381:£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
Remuneration Policy, 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.
There were no changes to the Executive Directors’ interests in the Company’s shares during the period between 31st December
2021 and 17th March 2022.
124
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Non-Executive Directors’ shareholdings (audited information)
The share interests of the Non-Executive Directors and their connected persons as at 31st December 2021 are as follows:
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 2021
–
35,000
–
200,0003
–
24,0003
–
1. Craig A. Huff and Gregg M. Zeitlin each has 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.
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
Notice period
9th November 2017
6 months from the
Company, 30 days
from the Executive
15th April 2019 12 months either party
Joseph C. Brandt’s letter of appointment as a Director, dated 8th November 2017, provides for 6 months’ notice by either party.
All Non-Executive Directors have letters of appointment with the Company for a three-year term. 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 2021 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 the Executive Directors 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.
125
Strategic ReportGovernanceFinancial Statements R E PORT OF THE REMUNE RATION COMMITTEE (CON TINUED)
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
2020 to 2021, 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 remuneration from 2020 to 2021
Percentage
change in
salary / fees
Percentage
changes
in benefits
Percentage
change in
annual bonus
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%
–
–
–
–
–
–
–
40%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
-7%
64%
0%
-100%
0%
-100%
-100%
0%
-100%
64%
-100%
-23%
–
–
–
–
–
–
–
-23%
1. The figures shown for average parent company employee are the average percentage increase/decrease for employees employed for the whole of 2020 and
2021 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 reflective 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 16 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 2021. 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.
126
ANNUAL REPORT 2021 | 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.
140
120
100
80
60
40
20
14 Nov 2017
31 Dec 2021
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.
CountourGlobal plc
FTSE 250
Source: Datastream (Thomson Reuters)
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%
2021
$1,886
0%5
51.8%
1. The figure for 2017 represents the remuneration earned in the period from 14th November 2017, being the date of listing, to 31st December 2017.
2. The President & CEO voluntarily agreed to a cap of 100% on his annual bonus for 2017.
3. There were no LTIP awards vesting based on a performance period ending in 2017, 2018 or 2019.
4. The total remuneration figure for 2020 excludes legacy payments.
5. The President & CEO waived his annual bonus for 2021.
Relative importance of the spend on pay
The following table shows the Company’s total spend on pay for all employees compared to Group performance and dividend
distribution in 2020 and 2021.
Employee costs ($m)
Average number of employees
Adjusted EBITDA ($m)1
Share buyback ($m)
Dividend distributions ($m)
1. Adjusted EBITDA is the principal profit measure used by the Group.
2020
88.7
1,435
722
30.4
105.7
2021
107.9
1,491
842
7.4
114.5
% change
20.6%
3.9%
16.6%
-75.7%
8.3%
External advisors to the Committee
Deloitte LLP were appointed as advisors to the 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
Area of advice/services provided
Deloitte LLP
As independent advisor, advice included consideration of corporate governance developments, best practice in remuneration
arrangements, increased transparency relating to legacy arrangements, remuneration disclosures and shareholder
communications. Deloitte LLP received fees of £125,500 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 2021. The lead
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 2021 AGM voting result for our Remuneration Policy and Annual Report on Remuneration.
Remuneration Policy (2021 AGM)
Annual Report on Remuneration (2021 AGM)
% of votes
cast in favor
% of votes
cast against
Number of
votes withheld
99.34%
99.82%
0.66%
0.18%
2,286,295
1,252,426
127
Strategic ReportGovernanceFinancial Statements R E PORT OF THE REMUNE RATION COMMITTEE (CON TINUED)
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
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. The class S units vested in 2020 and only Class C and B units remain outstanding.
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.
Additional information on Class S unit vesting
In 2020 7,403,453 ordinary shares were transferred to Contour Management Holdings LLC for the benefit of the President
and Chief Executive, Mr Brandt as a result of the Class S units meeting the associated performance conditions. 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 L.P.
Additional information on Class C and Class 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.
128
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Illustration of value receivable under the PIP for Joseph C. Brandt
Following the testing of the financial performance condition on 27th 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
is an illustration of the value to Joseph C. Brandt under various sale price scenarios, assuming Reservoir Capital Group
disposed of its shareholdings within three years following Admission.
Average sale price
£3.00
£3.50
£4.00
£5.00
£5.50
Shares related to
Class C units and
Class B units
(m)1
Total value
(£m)2
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 were 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.
Carried interest in Brazilian assets
On 30th June 2008, Joseph C. Brandt was awarded a carried interest, to be funded by any distribution realized via Aguila
Ltd, a minority shareholder in Kani LP, which is an entity formed to develop and acquire hydro-electric 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, to be funded by any distribution realized via 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.
On 20th January 2022 the sale of these assets was announced. The value to the President & CEO will depend on a
number of factors, including the timing of completion, the sale price achieved and the extent to which the IRR 9% hurdle
has been met. This value will be computed and finalized upon completion of the transaction. Full disclosure of the final
amounts will be made in the 2022 Annual Report.
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 Committee, on 17th March 2022, and signed
on its behalf by:
Daniel Camus
Chairman of the Committee
17th March 2022
129
Strategic ReportGovernanceFinancial Statements DI R EC TORS’ 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 2021.
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 2021
that it expected to maintain its annual
dividend increase at 10% per year, in line
with the Company’s operational scale.
With the 10% annual increase, the total
dividend for the year ended 31st
December 2021 was $117 million
equating to four quarterly payments of
4.465 cents per share. Quarterly
dividends for 2021 were paid/shall be
paid (as applicable) on 21st May 2021, 10th
September 2021, 19th November 2021
and 14th April 2022.
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.
130
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 2021, the
Company’s issued share capital
consisted of 670,712,920 ordinary
shares of £0.01 each of which
14,572,065 shares are held in treasury.
Therefore, the total number of voting
rights in the Company is 656,140,855.
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.
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.
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 cancelled
immediately upon completion of the
purchase.
Authority was given at a General
Meeting of the Company on 12th May
2021 for the Company to make market
purchases (as defined in section 693(4)
of the Companies Act 2006) of up to
65,571,342 shares. This authority will
expire at the conclusion of the
Company’s AGM in 2022 (scheduled for
12th May 2022) or, if earlier, the close of
business on 11th August 2022.
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 three extensions to the share
buyback program, in accordance with
the terms of the general authority
granted by shareholders at the 2021
General Meeting, with the first such
extension being on 30th June 2020, the
second being on 22nd September 2020,
and the third being on 11th January 2021,
with this extending the program to 31st
March 2021.
As at 31st December 2021, the Company
has repurchased 14,999,505 shares
under the share buyback program, at an
average price of 191.95 pence and total
cost of £28.9 million, with all such shares
being held in treasury. 656,140,855
shares remained in issue.
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
cancelled.
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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.
Directors’ re-appointment and
appointment
The Board has the power at any time to
elect any person to be a Director.
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 132.
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
2022.
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 124
and 125.
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.
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.
Stakeholder and workforce
engagement
We set out further details of our
stakeholder engagement activity over
2021, and the outcomes of such activity,
on pages 24 to 29. Our workforce
engagement is set out on page 87.
Sustainable development
The Business review section of this
report, on pages 40 to 55, 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.
Political donations
It is the Company’s policy not to make
political donations. No political donations
were made in 2021 (2020: £nil).
Charitable donations
Please refer to pages 54 and 55.
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 2021 and 17th March 2022.
Shareholder
Date of notification
No. of ordinary shares
ordinary share capital
RCGM, LLC1
FIL Limited
13th December 2017
3rd July 2019
478,932,408
36,594,082
71
5.45
% 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.
131
Strategic ReportGovernanceFinancial Statements 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 out of which €80
million remains undrawn as of 31st
December 2021.
Annual General Meeting (AGM)
The 2022 AGM will be held on 12th May
2022. 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.
DI R EC TORS’ REPORT (C ONTINUED)
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 in 2023 and €300 million of 4.125%
Senior Secured Notes due in 2025. On
30th July 2019, CG Power Holdings
completed an add-on offering of €100
million of 4.125% Senior Secured Notes
due in 2025.
On 17th December 2020, a new Euro
Bond 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 in
2023.
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 on
the date of the redemption.
132
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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
Employee information
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)
Location
Page 44 to 47
Notes 4.13, 4.14 and 4.16 to the
consolidated financial statements
Strategic report pages 25, 32,
50, and 53
Strategic report page 72
Strategic report page 49
Corporate governance report
page 82
page 134
Note 4.35 to the consolidated
financial statements
page 49
Diversity policy
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 115 and 122 and Note
4.27 to the consolidated financial
statements
Relationship Agreement
on page 143
Relationship Agreement
on page 143
Strategic report on pages 24 to 29
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 2021
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 78.
The strategic report, comprising the inside front cover and
pages 1 to 75, and the Directors’ report, comprising pages 76
to 133, 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 behalf of
the Board by:
Joseph C. Brandt
President, Chief Executive Officer and Executive Director
ContourGlobal plc
17th March 2022
133
Strategic ReportGovernanceFinancial Statements DI R EC TORS’ REPORT (C ONTINUED)
Statement of directors’ responsibilities in respect of 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
UK-adopted international accounting
standards and the 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 UK-adopted
international accounting standards
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 judgments 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 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 also 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 Directors’ Report
confirm that, to the best of their
knowledge:
• the group financial statements, which
have been prepared in accordance
with UK-adopted international
accounting standards, 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 and financial
position 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
17th March 2022
134
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC CON TOURGLOBAL PLC AND SUBSIDIARIES
Year ended December 31, 2021
Independent auditors' report to the members of ContourGlobal plc
Consolidated statement of income and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
General information
1.
Summary of significant accounting policies
2.
Application of new and revised International Financial Reporting Standards (IFRS)
2.1.
New standards and interpretations not yet mandatorily applicable
2.2.
Summary of significant accounting policies
2.3.
Critical accounting estimates and judgments
2.4.
Significant changes in the reporting period
3.
2021 Transactions
3.1.
Notes to the consolidated financial statements
4.
Segment reporting
4.1.
Revenue
4.2.
Expenses by nature
4.3.
Employee costs and numbers
4.4.
Acquisition related items
4.5.
Net finance costs, foreign exchange gains and losses, and changes in fair value of derivatives
4.6.
Income tax expense and deferred income tax
4.7.
Earnings per share
4.8.
Intangible assets and goodwill
4.9.
Property, plant and equipment
4.10.
Financial and contract assets
4.11.
Investments in associates
4.12.
Management of financial risk
4.13.
Derivative financial instruments
4.14.
Fair value measurements
4.15.
Financial instruments by category
4.16.
Other non-current assets
4.17.
Inventories
4.18.
4.19.
Trade and other receivables
4.20. Other current assets
4.21.
4.22.
4.23. Non-controlling interests
4.24.
4.25. Other non-current liabilities
4.26.
4.27.
4.28.
4.29. Other current liabilities
4.30. Group undertakings
4.31.
4.32.
4.33. Guarantees and letters of credit
Statutory auditors’ fees
4.34.
Subsequent events
4.35.
Provisions
Share-based compensation plans
Trade and other payables
Related party disclosure
Financial commitments and contingent liabilities
Cash and cash equivalents
Equity
Borrowings
The accompanying notes are an integral part of these consolidated financial statements.
136
146
147
148
149
150
151
151
151
151
163
168
168
170
170
173
174
174
175
175
176
178
179
180
182
183
184
190
191
192
193
193
193
193
194
194
195
198
202
203
204
205
205
206
213
213
216
217
217
135
Strategic ReportGovernanceFinancial Statements I NDEP ENDENT AUDITORS’ REPORT TO THE MEMBERS OF CONTOURGLOBAL PLC
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 2021 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 UK-adopted international accounting standards;
• 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 2021; 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.
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.
Other than those disclosed in 4.34, we have provided no non-audit services to the company or its controlled undertakings in the
period under audit.
Our audit approach
Overview
Audit scope
• We conducted our audit work over 11 components in 10 countries
• 8 components were subject to an audit of their complete financial information due to their size
• 3 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
• Accounting for business combinations (group)
• Assessment of significant judgements relating to litigation and claims (group)
• Impairment of property, plant and equipment and intangible assets (group)
• Impairment of investment in subsidiary companies (company)
Materiality
• Overall group materiality: US$21,000,000 (2020: US$18,000,000) based on approximately 2.5% of Adjusted EBITDA.
• Overall company materiality: US$21,500,000 (2020: US$16,500,000) based on 1% of total assets.
• Performance materiality: US$15,750,000 (2020: US$13,500,000) (group) and US$16,125,000 (2020: US$12,400,000) (company).
136
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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.
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.
Accounting for business combinations is a new key audit matter this year. Impact of Covid-19, which was a key audit matter last
year, is no longer included because of the limited impact from the pandemic on the operations and financial results of the group
and company. Otherwise, the key audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Accounting for business combinations (group)
(note 2.4 Critical accounting estimates and judgments
and 3.1 2021 transactions)
During the year, the group acquired shares and assets in
a portfolio of 6 operating power plants in USA and
Trinidad for consideration of $646.1 million, and a
portfolio of assets in Italy for consideration of $33.9
million. Accounting for acquisitions can be complex, with
judgement required in both the identification of assets
acquired (including any intangible assets), and the
valuation of those assets and liabilities assumed, in
accordance with IFRS 3 ‘Business Combinations’.
The calculation of fair value is subjective due to the
inherent uncertainty involved in the valuation of assets
and liabilities, and this requires the application of
judgement by management and technical expertise. In
particular the method of valuation, future forecasts
(including cash-flow forecasts) and underlying
assumptions may all have a material impact on the
valuation of assets and liabilities, notably on the valuation
of property, plant and equipment and intangible assets,
which typically represents the most significant assets
acquired.
Following acquisition, the group’s power plants typically
sell their output under Power Purchase Agreements
(‘PPAs’) and/or other long-term arrangements. Accounting
for PPAs can be complex, with a number of judgements
required to assess the accounting standards applicable
to each agreement. These include whether the
arrangement contains a lease under IFRS 16 ‘Leases’ or
constitutes a service concession to be accounted for
under IFRIC 12 ‘Service concession arrangements or
contains derivatives under IFRS 9 ‘Financial instruments’.
These judgements impact the measurement and
classification of assets, the basis for revenue recognition
under the PPA, and the related disclosures in the financial
statements. Once the basis of accounting has been
initially determined, this does not change over time.
We read the sale and purchase agreements (“SPAs”) associated
with the acquisitions in USA, Trinidad and Italy and performed audit
procedures over both the identification of assets acquired
(including any potential intangible assets) and the valuation of
assets acquired and liabilities assumed. We have agreed the
consideration paid to bank statements and reconciled to the sale
and purchase agreements.
We considered the completeness of the intangible assets identified
by management with reference to the specific legal and contractual
rights associated with the SPAs. From our review and assessment
of the SPAs, and audit procedures performed over the valuation
and classification of assets acquired and liabilities assumed, we
found that the judgements made surrounding the identification and
final classification of assets and liabilities acquired were
appropriate.
We involved our specialists in our audit of the valuation of assets
acquired and liabilities assumed. Our work included assessment of
the appropriateness of the valuation models used, assessment of
the discount rate used in the models by reference to comparable
assets, and the evaluation of future cash flow forecasts for each of
the power plants acquired. We found that the valuation models
used, and the judgements and estimates made surrounding the
valuation of assets and liabilities acquired to be reasonable.
We assessed the completeness of disclosures for each acquisition
against the requirements of the relevant accounting standards and
found that there were no omissions of disclosures.
We challenged management’s assessment of the PPAs/ tariff
arrangements in USA, Trinidad and Italy and agreed key terms to
the contractual arrangements. In particular, management noted that
certain of the US asset PPAs and the Trinidad PPA contained
operating leases based on the contractual terms.
From our audit procedures over the PPAs we found that the
judgements made in determining the appropriate accounting
framework for the PPAs were reasonable, and the associated
measurement and final classification of related balances and
disclosures in the financial statements were consistent with the
requirements of the relevant accounting standards.
137
Strategic ReportGovernanceFinancial Statements I NDEP ENDENT AUDITORS’ REPORT TO THE MEMBERS OF CONTOURGLOBAL PLC (CONTINUED)
Key audit matter
How our audit addressed the key audit matter
Assessment of significant judgements relating
to litigation and claims (group)
(note 2.4 Critical accounting estimates and
judgements and 4.32 Financial commitments and
contingent liabilities)
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), offtakers and suppliers. Power
Purchase Agreements (PPAs) are held with state
owned, regulated bodies and other offtakers. 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.
Impairment of property, plant and equipment
and intangible assets (group)
(note 2.4 Critical accounting estimates and judgments,
4.9 Intangible assets and goodwill and 4.10 Property,
plant and equipment)
The group has $3.9 billion of property, plant and
equipment, the majority of which relates to power
plant assets, and $0.3 billion of intangible assets, the
majority of which relates to legado rights in Mexico.
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.
138
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 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 within the financial statements.
We have evaluated management’s assessment of impairment triggers
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 the potential impact of emerging risks such as
climate change.
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 has proposed certain changes to the
legado regime (which would result in significant increases to wheeling
charges) and energy sector reforms. 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 relation to the wider energy sector reforms,
management has obtained an injunction against these where they
could adversely impact the group, which is in turn subject to legal
challenge from the authorities. In evaluating these matters:
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Key audit matter
How our audit addressed the key audit matter
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.
No impairment indicators were identified in the
current year.
In addition, whilst the expiry of PPAs is not
considered an impairment trigger, management
also performed an assessment of the forecast
cash flows for the Bulgaria Maritsa plant given that
the existing power purchase agreement for this
plant is due to expire in early 2024. This
assessment took account of expected cash flows
through to the expiry of the current PPA in 2024,
as well as the most likely scenarios after the
expiry of the PPA. The PPA period to February
2024 covers the significant majority of the year
end balance sheet value. The period after the
expiry of the current PPA involves greater
judgement in estimating future cash flows, and
could be adversely impacted by a number of
factors, including climate related risks (for
example the risk of increased future costs of CO2
quotas that may not be reflected in market prices).
This supports the assessment that there is no
impairment trigger.
• We reviewed the external legal opinion obtained by management which
confirms management’s view that the proposed changes are considered
unconstitutional under Mexican laws and sets out details of injunctions
received by the group; and
• We consulted with our own local energy sector specialists regarding
their opinion on whether or not the changes in wheeling charges and
energy reform proposals are likely to be sustained.
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.
In relation to the Bulgaria Maritsa plant, we have evaluated management’s
assessment which considers the contracted future cash flows up until 2024
and the likely scenarios after the expiry of the PPA in 2024. Our assessment
over the post PPA period has taken account of the increased climate related
risks for this lignite plant, including the potential impact of the gradual shift to
cleaner sources of energy in the EU, expected costs of CO2 emissions, and
the alternative energy options available in the local market.
We have tested the forecast cash flows prepared by management. A
significant proportion of the year end carrying value of the Bulgaria Maritsa
plant is supported by cash flows under the contracted PPA, limiting the
estimation uncertainty to the post PPA period. 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 the plant. We used
valuations specialists to independently calculate the discount rate using
independent sources of evidence. Based on our audit procedures performed
we found the methodology and assumptions used in the assessment and the
conclusion that there is no impairment to be reasonable.
We also assessed the critical accounting judgements and estimates
associated with impairment of property, plant equipment and intangible
assets and have found these to be appropriate.
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Strategic ReportGovernanceFinancial Statements I NDEP ENDENT AUDITORS’ REPORT TO THE MEMBERS OF CONTOURGLOBAL PLC (CONTINUED)
Key audit matter
How our audit addressed the key audit matter
Impairment of investment in subsidiary companies
(parent)
(note 6 Investments in Subsidiaries)
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; and
• 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.
We agreed with management’s conclusion that the market
capitalisation compared to the carrying value of investments
constitutes an impairment trigger.
We assessed the audit evidence supporting the recoverable
value of the group based on fair value less costs to sell, and
agreed with management’s conclusion that no impairment
was required.
We also assessed the disclosures surrounding critical
accounting judgements and estimates associated with
impairment of investments and have found these to be
appropriate.
The company has an investment of $2,148.0 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.
In assessing whether or not there were any impairment triggers
management considered a number of factors including the
underlying financial performance of the group, the market
capitalisation of the group and other available evidence to
support the fair value of the group.
The market capitalisation of the group at 31 December 2021
was approximately $1.7 billion. This was significantly lower than
the carrying value of investments. Based on this, management
concluded that there was an impairment trigger.
The carrying value of investments was assessed by calculating
the recoverable amount of the investments in subsidiary
undertakings. The recoverable amount was estimated by
reference to fair value less cost to sell, and based on this
assessment the directors concluded that there was no
impairment in value.
140
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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 eight components that, in our view, required an
audit of their complete financial information due to their size and contribution to the group and/or specific risk criteria, including
emerging risks such as from climate change. A further three 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. Given the size and
risk, the parent company reporting component is an out of scope component for the purpose of the group audit.
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 one physical visit to our
component team in the USA and virtual "site visits" for the remaining 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 the audit work. 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 attended clearance calls with all component teams, at
which we discussed the audit findings with the local component audit team, local management and group management. We
remotely reviewed certain working papers from the audit files of all component teams at the conclusion of their audit work.
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:
Overall
materiality
How we
determined it
Rationale for
benchmark
applied
Financial statements - group
Financial statements - company
US$21,000,000 (2020: US$18,000,000).
US$21,500,000
(2020: US$16,500,000).
Approximately 2.5% of Adjusted EBITDA
1% of total assets
We applied Adjusted EBITDA as the benchmark for materiality. 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 uses 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 assets. Further details of the use of Adjusted
EBITDA are set out in note 4.1 Segment reporting.
We believe that total assets is an
appropriate benchmark for the
company as the entity is principally
a holding company.
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Strategic ReportGovernanceFinancial Statements
I NDEP ENDENT AUDITORS’ REPORT TO THE MEMBERS OF CONTOURGLOBAL PLC (CONTINUED)
For each component in the scope of our group audit, we allocated a materiality that was less than our overall group materiality.
The range of materiality allocated across components was between $1 million and $13 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 75% (2020: 75%) of overall materiality, amounting to US$15,750,000
(2020: US$13,500,000) for the group financial statements and US$16,125,000 (2020: 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.
We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit above
$1.0 million (group audit) (2020: $1.0 million) and $1.0 million (company audit) (2020: $0.8 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 within the next 12 months and
the impact this may have on management's cash flow forecast
• Reviewing the debt agreements to confirm the terms and conditions and amounts available from committed facilities
• 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 evaluated the going concern basis at the component level and where
any risks were 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 directors’ 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.
142
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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, which includes reporting based on the Task Force on
Climate-related Financial Disclosures (TCFD) recommendations. 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.
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 2021 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 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.
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Strategic ReportGovernanceFinancial Statements I NDEP ENDENT AUDITORS’ REPORT TO THE MEMBERS OF CONTOURGLOBAL PLC (CONTINUED)
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.
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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, 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 financial statements such as the
Companies Act 2006 and relevant tax legislation. 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 and relevant tax legislation by each component audit team and the
group audit team, as applicable
• 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
• Meeting with group head of tax to confirm any known instances of non-compliance with tax legislation
• 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
144
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC • 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
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.
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 members 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 five years, covering the years ended 31 December 2017 to 31 December 2021.
Other matter
As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements
form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct
Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance
over whether the annual financial report has been prepared using the single electronic format specified in the ESEF RTS.
Matthew Hall (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
18th March 2022
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Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
CONSOLIDATED STATEMEN T OF INC OM E
AND OTHER COM PREHEN SIVE IN C OME
Year ended December 31, 2021
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
Other income
Share of profit in associates
Finance income
Finance costs
Net foreign exchange gains and (losses) and change in fair value of derivatives
Profit before income tax
Income tax expenses
Net profit for the period
Profit for the period attributable to
• Equity shareholders of the Company
• Non-controlling interests
Earnings per share (in $)
• Basic
• Diluted
In $ millions
Net profit for the period
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
Gain / (Loss) on hedging transactions
Cost of hedging reserve
Deferred taxes on gain / (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 profit/(loss) for the period net of tax
Total comprehensive profit/(loss) for the period
Attributable to
• Equity shareholders of the Company
• Non-controlling interests
The accompanying notes are an integral part of these consolidated financial statements.
146
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
2021
2,151.9
(1,730.5)
421.4
(40.5)
6.8
(3.4)
(14.2)
370.1
5.8
16.2
3.9
(296.8)
43.7
142.9
(63.2)
79.7
78.3
1.4
0.12
0.12
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
Years ended December 31
2021
79.7
(0.3)
–
(0.3)
55.0
(0.2)
(14.4)
–
28.9
69.3
69.0
148.7
146.9
1.8
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)
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC CONSO LI DATED STATEM EN T
OF FINA NC I AL POSI TION
Year ended December 31, 2021
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
Assets held for sale
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
Liabilities held for sale
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
3.1
4.22
4.22
4.23
4.24
4.14
4.7
4.26
4.25
4.28
4.24
4.14
4.26
4.29
3.1
December 31,
2021
December 31,
2020
4,749.5
305.4
3,925.4
370.5
33.5
9.9
55.1
49.7
1,267.7
485.7
32.3
299.1
15.0
6.1
60.4
369.1
175.2
6,192.4
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,
2021
December 31,
2020
370.5
8.9
380.8
(37.8)
(142.9)
161.5
4,451.5
3,809.1
71.5
325.2
77.7
168.0
1,217.3
597.0
367.0
26.3
29.1
12.9
185.0
153.1
5,821.8
6,192.4
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
1540.9
333.7
934.8
41.0
24.3
12.3
194.8
–
6,033.1
6,370.8
The financial statements on pages 146 to 217 were approved by the Board of Directors and authorized for issue on 17 March
2022 and signed on its behalf by Joseph C. Brandt, President & CEO
The accompanying notes are an integral part of these consolidated financial statements.
147
Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
CONSOLIDATED STATEMEN T
OF CHANG ES I N EQU I TY
Year ended December 31, 2021
In $ millions
Balance as of December 31, 2019
Balance as of January 1, 2020
Profit for the period
Other comprehensive loss
Total comprehensive loss
for the period
Purchase of treasury shares
Employee share schemes
Contribution received from non-
controlling interests
Transaction with non-controlling
interests
Dividends
Balance as of December 31, 2020
Balance as of January 1, 2021
Profit for the period
Other comprehensive profit
Total comprehensive income /
(loss) for the period
Purchase of treasury shares
Employee share schemes
Acquisition and contribution of
non-controlling interest not resulting
in a change of control
Dividends
Transaction with non-controlling interest
Other
Balance as of December 31, 2021
Share
capital
Share
premium
Treasury
shares
Currency
translation
reserve
Hedging
reserve
Cost of
hedging
reserve
Actuarial
reserve
Retained
earnings
8.9
8.9
–
–
–
–
–
–
–
–
8.9
8.9
–
–
–
–
–
–
–
–
–
8.9
380.8
380.8
–
–
–
–
–
–
–
–
–
–
–
(30.4)
–
(101.2)
(101.2)
–
(78.0)
(78.0)
–
–
(81.5)
(81.5)
–
(11.5)
(11.5)
–
–
–
–
–
(1.5)
(1.5)
–
–
–
–
–
–
–
–
–
–
(30.4)
380.8
380.8 (30.4)
–
–
–
–
–
–
(179.2)
(179.2)
–
29.2
–
–
–
–
(7.4)
–
29.2
–
–
–
–
–
–
380.8
–
–
–
–
(37.8)
–
–
–
–
(150.0)
–
–
(93.0)
(93.0)
–
38.7
38.7
–
–
–
–
–
–
(54.3)
–
–
(1.5)
(1.5)
–
(0.2)
(0.2)
–
–
–
–
–
–
(1.7)
(2.3)
(2.3)
–
0.2
0.2
–
–
–
–
–
(2.1)
(2.1)
–
(0.3)
(0.3)
–
–
–
–
–
–
(2.4)
180.1
180.1
16.0
–
16.0
–
8.5
–
–
(105.7)
98.9
98.9
78.3
1.2
79.5
–
1.9
(2.7)
(114.5)
–
2.4
65.5
Total equity
attributable to
shareholders
of the
Company
Non-
controlling
interests
384.8
384.8
16.0
(90.8)
(74.8)
(30.4)
8.5
165.3
165.3
12.6
(19.7)
(7.1)
–
–
Total
equity
550.1
550.1
28.6
(110.5)
(81.9)
(30.4)
8.5
–
3.4
3.4
–
(105.7)
182.4
182.4
78.3
68.6
146.9
(7.4)
1.9
(2.7)
(114.5)
–
2.4
209.0
(1.0)
(5.4)
155.3
155.3
1.4
0.4
1.8
–
–
(1.0)
(111.1)
337.7
337.7
79.7
69.0
148.7
(7.4)
1.9
1.1
(3.6)
9.5
(2.6)
161.5
(1.6)
(118.1)
9.5
(0.2)
370.5
The accompanying notes are an integral part of these consolidated financial statements.
148
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC CONSO LI DATED STATEM EN T
OF CASH F LOWS
Year ended December 31, 2021
In $ millions
CASH FLOW FROM OPERATING ACTIVITIES
Net profit
Adjustment for:
Amortization, depreciation and impairment expense
Change in provisions
Share of profit in associates
Net 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 and derivatives
Net cash generated from financing activities
Exchange (losses) / gains on cash and cash equivalents
Net change in cash and cash equivalents
Cash & cash equivalents at beginning of the period
Cash & cash equivalents at end of the period
Included in cash and cash equivalents in the balance sheet
Included in the assets held for sale
The accompanying notes are an integral part of these consolidated financial statements.
Years ended December 31
2021
2020
79.7
28.6
399.2
(1.6)
(16.2)
(43.7)
201.6
91.3
63.2
(5.5)
37.9
–
(5.7)
45.9
(36.6)
0.8
810.3
(104.4)
(16.1)
(654.6)
(2.6)
(777.7)
(114.5)
(7.4)
790.7
(1,304.2)
(26.7)
(192.9)
(19.3)
(3.5)
17.5
(79.2)
(51.0)
(990.5)
(57.6)
(1,015.4)
1,396.9
381.5
369.1
12.4
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
1,396.9
–
149
Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
GENE RAL INFORMATIO N
Year ended December 31, 2021
1. General information
ContourGlobal plc (the “Company”) is a public listed company, limited by shares, domiciled in the United Kingdom and
incorporated in England and Wales. 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 renewable assets in Europe, Latin America, United
States of America and Africa, and its registered office is:
55 Baker Street
London
W1U 8EW
United Kingdom
Registered number: 10982736
ContourGlobal plc is listed on the London Stock Exchange.
Basis of preparation
On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK-adopted
International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board.
ContourGlobal plc transitioned to UK-adopted International Accounting Standards in its consolidated financial statements on 1
January 2021. This change constitutes a change in accounting framework. However, there is no impact on recognition,
measurement or disclosure in the period reported as a result of the change in framework.
The consolidated financial statements have been prepared in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and UK-adopted International Accounting Standards. 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 US 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 2021 and 31 December 2020. 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 2021 and 2020 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.
150
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC SUM MARY OF SI GNIFIC ANT ACC OUNT I N G P O L I CIES
Year ended December 31, 2021
2. Summary of significant accounting policies
2.1. Application of new and revised International Financial Reporting Standards (IFRS)
The Group has applied the following amendments for the first time for their annual reporting period commencing 1 January 2021.
There was no material impact from the application of these amendments.
• COVID-19-Related Rent Concessions – amendments to IFRS 16; and
• Interest Rate Benchmark Reform – Phase 2 – amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16.
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.
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 in the consolidated statement of
income.
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.
151
Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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 note 4.1.
Non-current assets and disposal groups held for sale and discontinued operations
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use and a sale is considered highly probable. An impairment loss is
recognized for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. Assets and
liabilities of a disposal group classified as held for sale are presented separately on the balance sheet.
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that
represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose
of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of
discontinued operations are presented separately in the statement of profit or loss.
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 year 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
2021
1.1373
0.1792
0.5815
0.0486
2020
1.2216
0.1925
0.6246
0.0501
2021
1.1833
0.1857
0.6049
0.0493
2020
1.1413
0.1960
0.5835
0.0469
When a foreign undertaking is sold, the associated exchange differences are reclassified to profit or loss, as part of the gain or
loss on sale.
152
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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 Renewable. 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 provided in note 4.1 to the consolidated financial statements.
Revenue recognition
The Group revenue is mainly generated from the following:
(i) revenue from power sales;
(ii) revenue from operating leases;
(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.
Revenue recognition in accordance with IFRS 15, ‘Revenues from contracts with customers’, is based on the transfer of control,
i.e. the 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 considers 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 the 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’s 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.
153
Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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.
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 note 4.2. 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.
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.
154
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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, bank charges, differences between the historically estimated and actual dividends 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 net foreign exchange gains and losses.
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, contracts, project development rights when specific rights are acquired and software.
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, licenses and contracts 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 at the acquisition
date 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 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 expensed if a project is abandoned or if the conditions stated above are not met.
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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.
Depreciation
Property, plant and equipment are depreciated to their estimated residual value using the straight-line method over the
following estimated useful lives:
Power plant assets
Lignite, coal, gas, oil, biomass power plants
Hydro plants and equipment
Wind farms
Tri and quad-generation combined heat power plants
Solar plants
Other
Useful lives as of December 31, 2020 and 2021
3 to 32 years
24 to 40 years
16 to 25 years
15 to 23 years
11 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.
See below for the Group’s 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. In the case of assets
acquired as part of a business combination, the remaining useful lives are assessed at the acquisition dates by performing
technical due diligence procedures.
Where a power purchase agreement (“PPA”) acquired as part of business combination is deemed to contain an operating lease,
the company depreciates separately the amounts reflected in the acquired fair value of that Property Plant & Equipment that are
attributable to favorable or unfavorable lease terms relative to market terms. Such amounts are depreciated over the term of the
related PPA (2 to 12 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:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the
commencement date;
• amounts expected to be payable by the Group under residual value guarantees;
• the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
• payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
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ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease incentives received;
• any initial direct costs; and
• 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 (less than 12 months) 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 – PPA’s 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 property, plant and equipment 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 an output basis over the term of the arrangement.
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Impairment of non-financial assets
Assets that are subject to depreciation or amortization are reviewed annually for indicators of impairment where 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
Classification of financial assets
The Group classifies its financial assets in the following categories: at fair value through statement of income and at amortized
cost.
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” when held in money market funds and derivatives held
for trading unless they are designated as hedges.
b) Financial assets held at amortized cost
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. 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”, “Financial and contract assets” and “Cash and cash
equivalents” that are not required to be carried at fair value through statement of income 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 statement of income, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction
costs of financial assets carried at fair value through the statement of 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) Financial assets held at amortized cost
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 derecognition is recognized directly in profit or loss
and presented in finance income or finance costs.
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ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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 Group 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) Other financial assets
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.
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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
• 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.
• 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 net foreign exchange
(losses) and gains and change in fair value of derivatives.
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 inventory 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 12 months after the
year end.
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Trade receivables are recognized initially at transaction cost, 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
for financial assets and the calculation of the provision for impairment are provided in note 4.13.
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 investments 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.
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.
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, canceled or
expires.
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.
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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. Any 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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ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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 economic
benefit 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.
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.
The accounting for long-term power purchase agreements was considered during the year for the acquisition of the Western
Generation portfolio. Three assets PPA’s were identified as containing operating leases and have been accounted for
accordingly.
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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 also considers the end date of the PPAs as part of the impairment indicator analysis and assesses if the market
conditions are significantly adverse such that the expiry of the PPA 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 these do not constitute an impairment indicator considering the current economic conditions in their respective
market. This conclusion was reached on Maritsa taking into consideration the forecast cash flow during the remaining PPA
period to February 2024 which covers the significant majority of the year end balance sheet value. As such only an immaterial
amount of net cash inflows are needed in the post PPA period for the carrying value of PP&E to be supported, resulting in no
impairment indicators identified. For Arrubal, the performance of the business in the post PPA period has been such that no
impairment indicators are noted.
In the current year the Group performed climate change scenario analysis as part of the TCFD disclosures on a selection of
assets across the portfolio, covering 55% and 60% of the Group’s Adjusted EBITDA and Revenue respectively. A detailed risk
assessment was performed, after which scenarios were modelled to consider the potential impact of climate related risks over
the life of the assets. We considered whether any of the results of the TCFD scenario analysis could result in an indicator of
impairment, including whether factors driven by climate change could result in a change in the useful life. Whilst there are a
number of assumptions inherent in long term economic forecasting that underpins the scenario analysis, the Group’s PPA
arrangements typically provide mechanisms to protect against movements in market prices for energy and carbon over the
duration of the PPA. Beyond the PPA period, the scenario analysis indicated that there was also not a material impact to any of
the assets modelled. As such, no indicators of impairment were identified.
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. Judgments 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, such as the Kivuwatt arbitration, and the Togo claim,
and as disclosed below related to Mexico.
Functional currency of the assets
The Group operates in various countries and performs an analysis of the functional currency of each operating asset
considering the IAS 21 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.
Cash generating units (“CGUs”)
A 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 considers that the assessment of the independence of cash flows involves consideration of the
business transactions or financing relationship between the reporting units and 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.
164
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Regulatory changes in Mexico
Change in wheeling charges
During June 2020 the Mexican government 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, which was upheld in May 2021. An appeal has been filed which is subject to review of the higher court. If the
final judgement approves these changes to Legado rights, then under the majority of the current PPAs in place, these increased
charges would be passed through to offtakers, resulting in limited impact to the cashflows of the Company during the PPA
period. However, such increases in charges would impact the cash flows generated in Mexico during the post PPA period or
from renewal of PPAs. The Company has analyzed these potential changes to the Legado rights, and, based on the successful
granting of Amparo in May 2021 and 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, 2021. The Group will continue to monitor future changes in regulation in Mexico and the potential
impact on its operations.
Amendment to permit modification
In 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 offtakers and the load points in the “Legado” permits. The Company filed an Amparo against these changes, claiming them
to be unconstitutional which was successfully granted in June 2021. Given the Amparo remains in place and having taken legal
advice the Company has concluded that those changes do not constitute an indication of impairment as at December 31, 2021.
Power industry law (Ley de la Industria Eléctrica – LIE)
On 10 March 2021, the Mexican Government enacted reform of the Electricity Sector Act (Ley de la Industria Eléctrica the “LIE
reform”). One of the proposed changes under the LIE reform is to modify the order in which electricity produced by power plants
such as our assets in Mexico (“CGA” and “CELCSA”) is dispatched to the National Electricity System (“Dispatch Order”), which
would favor the state-owned or operated power plants and may have an adverse impact on future revenues and profits of
ContourGlobal’s Mexican assets. CGA and CELCSA both filed an Amparo lawsuit against this LIE reform. The Mexican First
District Court has granted CGA and CELCSA an injunction against the LIE. This injunction prevents the application and
implementation of the challenged provisions by the relevant authorities. As of the Latest Practicable Date, the appeals file by the
Mexican authorities against the admission of the Amparo claim and injunction of CGA are pending decision of the court. For
CELCSA the appeal against admission of the Amparo claim is pending, but the Mexican Second Specialized Circuit Court
revoked the definitive injunction on 15 July 2021 on the grounds that there was no immediate harm to it as a result of the LIE
reform; any harm would be by subsequent acts of CRE to try to revoke the cogeneration self-supply permit, and/or by the
relevant authorities to change the dispatch order; both of which are uncertain and have not occurred yet.
Given there has been no direct impact of the LIE reform to date and that there are a number of legal matters that are still to be
resolved, management has concluded that these potential changes do not constitute an indication of impairment (impairment
“trigger”) as per IAS 36 as of December 31, 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
costs incurred to date, as anticipated and set out in the project contract document and capped at €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 ongoing.
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Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
As of 31 December 2021, €19.7 million ($22.4 million) of recoverable development costs are presented in Other non-current
assets. 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.
Assets held for sale and discontinued operations
Where a disposal group is undergoing a sale process, we consider whether or not the disposal group meets the definition of
assets held for sale and discontinued operations. During the second half of 2021 a sale process was initiated for the Brazil Hydro
and Brazil Wind asset portfolios. At year end we assessed whether these asset portfolios should be classified as held for sale.
At year end the Brazil Hydro portfolio sale had progressed to a stage where it was considered to be available for sale in its
present condition and the sale is highly probable and as such was classified as held for sale. The Brazil Hydro portfolio however
does not represent a major line of business or geographical area of operations and as such is not a discontinued operation.
Refer to note 4.35 for further developments subsequent to year end.
The Brazil Wind portfolio was not classified as held for sale at year end. This was due to the uncertainties associated with the
structure of the transaction resulting in the highly probable criteria not being met.
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 63.2% (2020: 55.3%) 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 are also considered when reviewing the appropriateness of useful economic lives, including
whether asset life assessments could be impacted by factors arising from climate transition or other regulatory and market
factors. This includes consideration of government energy transition policies, and how our thermal assets are expected to be
used, in particular to provide a secure supply during a medium to long-term transition to renewable. During the year, the useful
life of two assets was revised, one increased and one decreased as a result of consideration of the expected economic life.
A decrease in the average useful life by one year in power plant assets would result in a decrease in the net book value of
$21.1 million (2020: $13.8 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 renewable 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.
Emerging governmental policies are also considered when determining the recoverable amount of property, plant and
equipment and intangible assets including the impact on DCF models arising from climate transition or other regulatory and
166
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC market factors. We consider future forecasts of the key inputs to the cashflow models, such as energy, fuel and carbon pricing
and whether these result in a change in useful life. Typically, during the PPA period our assets are insulated from these market
risks through fixed energy pricing and the ability to pass through variations in fuel and carbon costs, hence where relevant we
consider the impact on cash flows in the post PPA period
In 2021 no indicators of impairment have been identified and as such no impairment evaluation has been performed.
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. In the current year fair valuation assessments for business combination purposes have been performed in
relation to the Western Generation and Green Hunter acquisitions in Note 3.1.
Therefore, through a number of different approaches and with the assistance of independent external 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. Depending on which is most appropriate for the transaction, the Group typically uses one of the cost
approach, the income approach and the market approach.
Judgement is exercised in identifying intangible assets, separately from property plant and equipment taking into consideration
the intangible asset recognition criteria within IAS 38. Such an intangible was identified in the Western Generation acquisition,
related to a purchase price agreement in place which met the definition of an intangible asset. Refer to note 3.1 for further
details.
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. For the Western Generation acquisition, such estimates
were made for each of the assets acquired which also impacted on how much of the acquisition value was allocated to each
asset.
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
data points, which includes both factual inputs and estimates. Refer to note 4.15 for sensitivity analysis of this instrument.
167
Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
SIGNIFICAN T CHANG ES I N THE REPORTIN G PERI OD
Year ended December 31, 2021
3. Significant changes in the reporting period
3.1. 2021 transactions
Acquisition of a portfolio located in the United States 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 transaction
closed on 18 February 2021.
The total consideration paid amounted to $646.1 million.
On a consolidated basis, had this acquisition taken place as of 1 January 2021, the Group would have recognized consolidated
revenue of $2,181.5 million, Adjusted EBITDA of $849 million and consolidated net profit of $81.2 million for the year ended 31
December 2021. From the acquisition date on 18 February 2021 to December 31, 2021, this acquisition contributed to
consolidated revenue, Adjusted EBITDA and net profit of $206.9 million, $84.5 million and $10.3 million respectively.
The determination of fair value of assets acquired and liabilities assumed at acquisition date are:
In $ millions
Property, plant and equipment
Intangible assets
Goodwill
Other assets
Cash and cash equivalents
Total assets
Borrowings
Deferred tax liabilities
Other liabilities
Total liabilities
Total net identifiable assets
Net purchase consideration
Acquired book
values
Fair value
adjustments
Fair value of
assets and
liabilities acquired
284.4
214.0
27.8
95.4
19.4
641.0
222.5
19.5
85.2
327.2
615.7
(182.6)
(24.3)
(4.4)
–
404.4
40.8
9.2
22.0
72.0
900.1
31.4
3.5
91.0
19.4
1,045.4
263.3
28.7
107.2
399.2
646.1
646.1
The Group has determined the fair value of assets acquired and liabilities assumed at acquisition date with the support of an
external independent valuation expert leading to the following recognition:
• A decrease in the book value of intangible assets of $182.6 million due to the fair value of the power purchase agreements
and tolling agreements under operating leases being classified as property, plant and equipment. The valuation of the power
purchase agreements and tolling agreements recognized as intangible assets of $31.4 million at one US asset is based on a
with or without method which reflects the benefit of having the agreements in place. For the asset in Trinidad and Tobago, the
power purchase agreement is not separately identifiable from the tangible asset and therefore does not qualify as a separate
identifiable intangible asset.
• An increase in the book value of PP&E of $615.7 million to reflect the fair value of these assets at acquisition based on an
income approach method. This includes $235.8 million relating to the incremental fair value of power purchase agreements
classified as operating leases.
• An increase in the book value of the Senior Secured Notes in Lea Power of $40.8 million to reflect the fair value of this liability
at acquisition based on an income approach method.
• An increase in the asset retirement obligation of $22.0 million and a net increase in deferred tax liability of $9.2 million.
Acquisition of a Solar portfolio in Italy
On June 4, 2021 the Group entered into an agreement with a group of private shareholders to acquire a 100% of shares of
Green Hunter Group Sarl, the parent entity of a portfolio of solar photovoltaic assets totaling 18 MW located in Italy. The
transaction completed on November 23 2021. The Group’s effective shareholding of the Green Hunter Group is 51%.
The total consideration paid amounted to €30.1 million ($33.9 million).
168
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC On a consolidated basis, had this acquisition taken place as of 1 January 2021, the Group would have recognized consolidated
revenue of $2,161.6 million, Adjusted EBITDA of $850.7 million and consolidated net profit of $81.6 million for the year ended 31
December 2021. From the acquisition date on 23 November 2021 to 31 December 2021, this acquisition contributed to
consolidated revenue, Adjusted EBITDA and net profit of $0.7 million, $0.3 million and $nil million respectively.
The preliminary determination of the 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
Borrowings
Deferred tax liabilities
Other liabilities
Total liabilities
Total net identifiable assets
Net purchase consideration
Goodwill
0.3
56.5
5.3
6.1
68.2
14.1
5.2
15.0
34.3
33.9
33.9
–
The Group has performed a preliminary determination of fair value of assets acquired and liabilities assumed at acquisition date
leading to the following recognition:
• An increase in the book value of PP&E of €19.0 million ($21.4 million) to reflect the fair value of these assets at acquisition
based on an income approach method.
• A net increase in deferred tax liability of €4.6 million ($5.2 million).
Brazil Hydro portfolio held for sale
As at 31 December 2021, given the advanced state of the sale negotiations the Brazil Hydro business, which is part of our
Renewable segment, was classified as held for sale. The major classes of assets and liabilities within the disposal group are:
In $ millions
Intangible assets
Property, plant and equipment
Cash and cash equivalents
Trade and other receivables
Total assets
Borrowings non current
Borrowings current
Provisions non current
Other current liabilities
Total liabilities
23.0
123.9
12.4
15.9
175.2
121.8
14.7
5.1
11.5
153.1
On 20 January 2022 a definitive agreement was signed with Infraestutura Brasil Holding XVII S.A for the sale of the Group’s
Brazilian Hydro power plants for a total enterprise value of BRL 1.73 billion ($313 million). The Group expects to generate a gain
from the disposal of these assets. The transaction is expected to complete during the second quarter of 2022, subject to
completion of certain conditions under the sale agreement.
The entities relating to the Group’s Brazilian Hydro disposal group are:
• ContourGlobal do Brasil Participacoes SA
• Galheiros Geração De Energia S.A.
• Santa Cruz Power Corporation Usinas Hidroelétricas S.A
• Goias Sul Geração De Energia S.A.
• Rio PCG I S.A.
• Bahia PCH I S.A.
• Afluente Geração de Energia Eletrica S.A.
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Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CON SOLIDATED
FINANCIAL STATEMEN TS
Year ended December 31, 2021
4. Notes to the consolidated financial statements
4.1. Segment reporting
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”).
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, US and
Trinidad & Tobago assets 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. Renewable 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 CODM assesses the performance of the operating segments based on Adjusted EBITDA which is defined as profit for the
period from continuing operations before income taxes, net finance costs, depreciation and amortization, acquisition related
expenses, plus, if applicable, net cash gain or loss on sell down transactions (in addition to the entire full period 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 under the equity method, plus the Group’s pro rata 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 also 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 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. Where applicable, 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 CODM does not review nor is presented a segment measure of total assets and total liabilities.
All revenue is derived from external customers.
Geographical information
The Group also presents revenue in each of the geographical areas in which it operates as follows:
• Europe (including our operations in Austria, Armenia, Northern Ireland, Italy, Romania, Poland, Bulgaria, Slovakia and Spain)
• Latin America which includes South America (including Brazil, Peru, Colombia), Mexico and Caribbean Islands (including Dutch
Antilles, French Territory and Trinidad and Tobago)
• United States of America
• Africa (including Nigeria, Togo, Senegal and Rwanda)
170
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC In $ millions
Revenue
Thermal Energy
Renewable Energy
Total revenue
Adjusted EBITDA
Thermal Energy
Renewable Energy
Corporate & Other1
Total Adjusted EBITDA
Proportionate Adjusted EBITDA
Non controlling interests
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 associates2
Share of profit in associates (note 4.12.)
Acquisition related items (note 4.5.)
Restructuring costs (note 4.3.)3
Private incentive plan4
Mexico CHP fixed margin swap5
Change in finance lease and financial concession assets6
Brazil Hydro concession extension7
Other
Profit before income tax
Years ended December 31
2021
2020
1,708.3
443.7
2,151.9
963.3
447.4
1,410.7
541.3
334.7
(34.5)
841.5
692.3
149.2
841.5
(399.2)
(249.2)
(27.0)
16.2
(14.2)
–
–
5.5
(37.9)
5.5
1.7
142.9
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
1. Corporate costs correspond to selling, general and administrative expenses before depreciation and amortization of $6.1 million (December 31, 2020: $5.3
million).
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 redundancy and staff-related restructuring costs.
4. Represents the private incentive plan as described in note 4.27. The private incentive plan ended 31 December 2020.
5. Reflects an adjustment to align the recognized earnings with the cash flows generated under the CHP Mexico fixed margin swap during the period as presented
in the consolidated statement of cash flow as “Mexico CHP fixed margin swap”.
6. Reflects an adjustment to align the recognized earnings with the cash flows generated under finance lease and financial concession arrangements which is
presented in the consolidated statement of cash flow as “Change in finance lease and financial concession assets”.
7. Reflects the non-cash gain recognized due to Generating Scaling Factor (“GSF”) settlement in Brazil Hydro whereby a concession extension has been granted to
compensate for historical GSF liability payments made prior to acquisition of the assets by ContourGlobal.
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Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
Cash outflows on capital expenditure
In $ millions
Thermal Energy
Renewable Energy
Corporate & Other
Total capital expenditure
Years ended December 31
2021
43.2
57.8
3.4
104.4
2020
27.2
47.4
2.4
77.0
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
Europe1
Latin America2
United States
Africa
Total revenue
Years ended December 31
2021
1,302.5
530.5
183.0
136.0
2,151.9
2020
840.9
444.5
–
125.3
1,410.7
1. Revenue generated in 2021 in Bulgaria and Spain amounted to $706.9 million and $426.9 million respectively (December 31, 2020: $406.3 million and $296.9
million respectively).
2. Revenue generated in 2021 in Brazil and Mexico amounted to $140.2 million and $296.1 million respectively (December 31, 2020: $142.0 million and $211.5 million
respectively).
In $ millions
Europe1
Latin America2
United States
Africa
Corporate & Other
Total Adjusted EBITDA
Years ended December 31
2021
438.1
273.0
84.6
80.3
(34.5)
841.5
2020
402.5
273.2
–
77.2
(30.9)
722.0
1. Adjusted EBITDA generated in 2021 in Bulgaria and Spain amounted to $127.8 million and $200.5 million respectively (December 31, 2020: $121.6 million and
$189.0 million respectively).
2. Adjusted EBITDA generated in 2021 in Brazil and Mexico amounted to $93.8 million and $110.5 million respectively (December 31, 2020: $94.7 million and $104.9
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
United States
Africa
Total non-current assets
172
December 31
2021
1,941.3
1,614.0
773.8
370.3
4,699.6
2020
2,151.1
1,761.6
–
405.4
4,318.1
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 4.2. Revenue
In $ millions
Revenue from power sales1
Revenue from operating leases2
Revenue from concession and finance lease assets3
Other revenue4
Total revenue
Years ended 31st December
2021
1,801.3
184.9
33.9
131.8
2,151.9
2020
1,191.4
85.6
34.6
99.1
1,410.7
Revenue from power sales and Other revenue are recognized under IFRS 15 and total $1,933.1 million in the year to December 31, 2021 (December 31, 2020:
$1,290.5 million). Revenue from operating leases and revenue from concession and finance lease assets are recognized under IFRS 16 and IFRIC 12 respectively.
1. The increase in Revenue from power sales from $1,191.4 million to $1,801.3 million is mainly due to the February 2021 acquisition of the US and Trinidad and
Tobago assets contributing $101.8 million, higher CO2 emissions revenue in our Maritsa plant for $300.6 million, revenue increase in Arrubal for $138.9 million
mainly due to trading optimization and positive spreads for burning additional gas and higher production and higher gas pass throughs at Mexico CHP
contributing $84.6 million.
2. Revenue from operating leases mainly includes $55.1 million relating to our Solutions plants, $31.7 million relating to our Bonaire plant, $98.1 million relating to the
acquisition of the US and Trinidad and Tobago assets and $nil million relating to our Energie Antilles plant in the year to December 31, 2021 (December 31, 2020:
$43.2 million, $25.9 million, $nil and $16.6 million respectively).
3. Some of our main plants are operating under specific arrangements for which certain other accounting principles are applied as follows:
• Our Togo, Rwanda (Kivuwatt) and Senegal (Cap des Biches) plants are operating pursuant to concession agreements that are under the scope of IFRIC 12.
• Our Energies Saint Martin plant is operating pursuant to power purchase agreements that are considered to contain a finance lease.
4. Other revenue primarily relates to environmental, operational and maintenance services rendered to offtakers in our power plants in Bulgaria, Togo, Rwanda and
Senegal.
The Group has one customer contributing more than 10% of Group’s revenue (2020: one customer).
Customer A
Years ended December 31
2021
32.8%
2020
28.8%
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Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
4.3. Expenses by nature
In $ millions
Fuel costs
Depreciation, amortization and impairment
Operation and maintenance costs
Employee costs
Emission allowance utilized1
Professional fees
Purchased power
Transmission charges
Operating consumables and supplies
Insurance costs
Other expenses2
Total cost of sales and selling, general and administrative expenses
Years ended December 31
2021
541.3
399.2
95.5
107.9
449.5
22.0
30.6
34.7
21.2
33.1
36.0
1,771.0
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
1. Emission allowances utilized corresponds mainly to the costs of CO2 quotas in Maritsa which are passed through to its offtaker and purchases of CO2 allowances
in Arrubal, and includes the write-down of CO2 quotas held in inventory at year end to their net realizable value.
2. Other expenses include facility costs of $15.2 million at December 31, 2021 (December 31, 2020: $12.7 million).
In $ millions
Private Incentive Plan1
Restructuring costs2
Other
Total other operating expenses
Years ended December 31
2021
–
–
3.4
3.4
2020
6.6
5.2
7.9
19.7
1. Represents the private incentive plan as described in note 4.27 share-based compensation plan of the annual accounts. The private incentive plan ended at the
end of December 2020.
2. Represents redundancy and staff-related restructuring costs.
4.4. Employee costs and numbers
In $ millions
Wages and salaries
Social security costs
Share-based payments1
Pension and other post-retirement benefit costs
Other
Total employee costs before private incentive plan
Private incentive plan1
Total employee costs
Monthly average number of full-time equivalent employees
• Thermal
• Renewable
• Corporate
1. See note 4.27 for a description of the private incentive plan and long term incentive plan.
174
Years ended December 31
2021
(85.0)
(14.4)
(1.9)
(0.8)
(5.8)
(107.9)
–
(107.9)
1,491
868
413
210
2020
(67.8)
(14.1)
(1.9)
(0.9)
(4.0)
(88.7)
(6.6)
(95.3)
1,435
822
425
188
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 4.5. Acquisition related items
In $ millions
Acquisition costs1
Acquisition related items
Years ended December 31
2021
(14.2)
(14.2)
2020
(20.2)
(20.2)
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 2021, costs incurred primarily related to completed acquisitions in the United States and Italy. In 2020
costs incurred primarily related to a contemplated acquisition in the United States (subsequently completed on February 18, 2021).
4.6. Net finance costs, foreign exchange gains and losses, and changes in fair value of derivatives
Years ended December 31
In $ millions
Finance income
Net change in fair value of fixed margin derivative1
Net change in fair value of other derivatives2
Net foreign exchange differences3
Net foreign exchange gains and (losses) and change in fair value of derivatives
Interest expenses on borrowings
Amortization of deferred financing costs
Unwinding of discounting4
Other5
Finance costs
Net finance costs, foreign exchange gains and losses, and changes in fair value of derivatives
2021
3.9
13.6
11.7
18.4
43.7
(205.5)
(20.8)
(26.0)
(44.5)
(296.8)
(249.2)
2020
4.4
56.1
14.4
(59.8)
10.7
(195.0)
(13.2)
(15.9)
(38.8)
(262.9)
(247.8)
1. Net change in fair value of derivative related to the CHP Mexico fixed margin liability.
2. The Group recognized a profit of $8.1 million in the 12 months ended 31 December 2021 in relation to its interest rate, cross currency, financial swaps, options,
foreign exchange options and forward contracts (December 31, 2020: profit of $5.6 million) which relates to fair value changes on derivatives not hedge
accounted and amounts reclassified from the cash flow hedge reserve.
3. Net foreign exchange differences include foreign exchange gains and losses related to conversion of foreign currency denominated cash balances and 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 relates to Maritsa debt to non-controlling interests and other long-term liabilities in the 12 months ended 31 December 2021 and
2020.
5. Other mainly includes costs associated with other financing, finance costs of leases, income and expenses related to interest and penalties for late payments.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
4.7. Income tax expense and deferred income tax
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,
2021
2020
(45.1)
(2.0)
(47.1)
(19.5)
3.4
(16.1)
(63.2)
(33.7)
0.9
(32.8)
(17.9)
7.0
(10.9)
(43.7)
The main jurisdictions contributing to the income tax expense for the year ending December 31, 2021 are i) Mexico, ii) Spain and
iii) Bulgaria.
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 (2021: 19%, 2020: 19%) to the results of the consolidated entities as follows:
Effective tax rate reconciliation
In $ millions
Profit before income tax
Profit before income tax at UK statutory tax rate
Tax effects of:
Differences between statutory tax rate and foreign statutory tax rates1
Changes in unrecognized deferred tax assets2
Reduced rate and specific taxation regime3
Foreign exchange movement4
Prior year adjustment - current tax
Prior year adjustment - deferred tax
Permanent differences and other items5
Income tax expense
Effective rate of income tax
Years ended December 31,
2021
142.9
(27.2)
(1.8)
(18.6)
3.2
4.7
(2.0)
3.4
(25.0)
(63.2)
44.2%
2020
72.3
(13.7)
(0.4)
(19.5)
6.2
(3.7)
0.9
7.0
(20.4)
(43.7)
60.4%
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 is composed of tax impacts of inflationary adjustments (2021: $13.0 million, 2020: $6.4 million) and a number of individually immaterial items such as
non-deductible Group costs or withholding taxes.
176
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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
Including net deferred tax assets balance of:
Deferred tax liabilities balance of:
December 31,
2021
(211.4)
(16.1)
(14.4)
(35.7)
2.1
(275.5)
49.7
(325.2)
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, 2020 (restated)
Statement of income
Other comprehensive income
Acquisitions
Currency translations and other
As of December 31, 2020
Statement of income
Other comprehensive income
Acquisitions / disposals4
Currency translations and other5
As of December 31, 2021
Tax losses
Property, plant
and equipment
Intangible
assets1
Derivative
financial
instruments2
28.1
88.7
–
–
0.8
117.6
20.5
–
1.3
(0.6)
138.8
(240.8)
(95.1)
–
–
(13.5)
(349.4)
(40.3)
–
(117.0)
8.9
(497.8)
(59.9)
9.6
(0.1)
–
0.8
(49.5)
4.3
–
64.7
(0.9)
18.6
7.7
(1.4)
28.0
–
0.8
35.1
(2.9)
(14.4)
(2.7)
(0.1)
14.9
Other3
46.3
(12.6)
–
–
1.1
34.7
2.3
–
18.0
(5.2)
50.0
2020
(218.5)
(10.9)
27.9
–
(9.9)
(211.4)
57.5
(268.9)
Total
(218.5)
(10.9)
27.9
–
(10.0)
(211.4)
(16.1)
(14.4)
(35.7)
2.1
(275.5)
1. Mainly relates to assets acquired through business combinations.
2. $(9.9) million of the current year movement through other comprehensive income represents the movement in the year of hedging expenses in Mexico. $25.8
million of the movement in the prior year related to the recognition of deferred tax assets on these hedging expenses incurred in both 2019 and 2020 following
conclusion that such derivative costs should be deductible under Mexican tax rules.
3. This category is made up of various items, the largest being deferred financing costs of $26.8 million (2020: $20.0 million), with $8.6 million being acquired in the
period and currency translations of $1.8 million. Other significant items include finance lease capitalization of $(13.7) million (2020: $(16.0) million) and Mexico fixed
margin swap provision of $7.3 million (2020: $13.0 million).
4. Mainly includes opening balance sheet deferred tax assets and liabilities relating to the US and Trinidad assets acquired in February 2021.
5. The Other movement relates to a reclassification of a deferred tax liability in Rwanda of $5.4 million which was previously netted against other receivables. An
equal and opposite asset is contained in other receivables as the tax liability in Rwanda is passed through to the local offtaker.
Deferred tax assets recognized in the consolidated statement of financial position
The Group recognizes deferred tax assets to the extent that it is probable that sufficient future taxable profits will arise against
which these deductible temporary differences can be utilized. The Group has performed an assessment of the recovery of
deferred tax assets which has involved the use of budgets and forecasts.
There is a deferred tax asset in Spain of $20.9 million (2020: $24.6 million) which relates predominately to intangible assets.
The relevant tax group is profitable, and the reversal of the deferred tax asset is scheduled to be within four years. In the US,
there was an operating loss in the current year due to acquisition costs and the amortization of intangible assets. There is an
amount of deferred tax assets on tax losses that are dependent on future taxable profits not arising from the reversal of existing
deferred tax liabilities of $16.2 million ($3.5 million in 2020), which is scheduled to be reversed within 13 to 15 years. This
utilization horizon takes into account management's best estimate of risks to which the operations may be exposed and is
considered appropriate given the long term nature of the acquired assets.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
Analysis of the deferred tax position unrecognized in the consolidated statement of financial position
Unrecognized deferred tax assets amount to $300.2 million as of December 31, 2021 (December 31, 2020: $268.2 million) and
can be broken down as follows:
In $ millions
Unrecognized deferred tax assets on tax losses1
Unrecognized deferred tax assets on deductible temporary differences
Total unrecognized deferred tax assets
December 31,
2021
276.0
24.2
300.2
2020
245.9
22.3
268.2
The total amount of deductible temporary differences and unused tax losses for which no deferred tax asset is recognized
amounts to $1,179.6 million (2020: $1,067.0 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,
2021
1,060.3
119.3
1,179.6
2020
969.7
97.3
1,067.0
Deferred tax assets that have not been recognized mainly relate to tax losses in Luxembourg and Brazil where it is not probable
that future taxable profit will be available against which the tax losses can be utilized. The amounts unrecognized for deferred
tax purposes generally do not expire with the exception of Luxembourg.
With respect to Luxembourg, tax losses of $279.9 million 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 $51.2 million, $95.9 million, $147.5
million, $168.3 million and $64.7 million expire on December 31, 2034, 2035, 2036, 2037 and 2038, respectively.
The Group accrues deferred tax liabilities for the withholding tax that will arise on the future repatriation of undistributed
earnings. There are no temporary differences on undistributed earnings with material unrecognized deferred tax liabilities.
4.8. Earnings per share
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,
2021
Basic
78.3
656.3
0.12
Diluted
78.3
656.3
3.0
659.3
0.12
2020
Basic
16.0
666.6
0.02
Diluted
16.0
666.6
2.3
668.9
0.02
There was no dilutive impact from the Private Incentive Plan (PIP) on the earnings per share for the year ended 31 December
2020 as the shares were settled in full by existing shares held by Reservoir Capital Group.
178
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 4.9. Intangible assets and goodwill
In $ millions
Cost
Accumulated amortization and impairment
Carrying amount as of January 1, 2020
Additions
Disposals
Currency translation differences
Reclassification
Amortization charge
Closing net book amount
Cost
Accumulated amortization and impairment
Carrying amount as of December 31, 2020
Additions
Disposals
Acquired through business combination1
Assets recognized as held for sale2
Currency translation differences
Reclassification
Amortization charge
Closing net book amount
Cost
Accumulated amortization and impairment
Carrying amount as of December 31, 2021
Goodwill
progress Legado rights
Contracts
Work in
Permits, licenses
and other project
development
rights
Software
and Other
0.5
–
0.5
–
–
0.1
–
–
0.6
0.6
–
0.6
–
–
3.5
–
–
–
–
4.1
4.1
–
4.1
–
–
–
–
–
–
1.5
–
1.5
1.5
–
1.5
1.4
–
–
–
–
(2.8)
–
0.1
0.1
–
0.1
233.3
(1.1)
232.2
–
–
–
–
(13.7)
218.4
233.3
(14.9)
218.4
–
–
–
–
–
–
(13.7)
204.7
233.3
(28.6)
204.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
31.4
–
–
–
(8.1)
23.3
31.4
(8.1)
23.3
145.8
(44.3)
101.5
2.2
–
(16.6)
(1.1)
(6.4)
79.4
122.8
(43.4)
79.4
14.5
–
0.3
(22.7)
(4.8)
1.4
(13.6)
54.5
89.0
(34.5)
54.5
34.6
(16.1)
18.4
3.5
–
–
3.8
(6.0)
19.7
40.9
(21.1)
19.7
1.6
–
–
(0.2)
(0.2)
1.4
(3.6)
18.7
50.3
(31.6)
18.7
Total
414.2
(61.6)
352.6
5.7
–
(16.5)
4.2
(26.2)
319.7
399.1
(79.4)
319.7
17.5
–
35.2
(22.9)
(5.0)
–
(39.0)
305.4
408.2
(102.8)
305.4
1. Assets acquired through business combination relate to our United States of America and Trinidad and Tobago portfolio, detailed in note 3.1.
2. Assets recognized as held for sale relate to our Brazil Hydro portfolio, detailed in note 3.1.
Contracts relate to the fair valuation on acquisition of power purchase agreements in the United States of America, detailed in
note 3.1. Contracts are subsequently measured at amortized cost.
Permits, licenses and other project development rights relate to licenses acquired from the initial developers for our wind parks
in Peru and Brazil. Legado rights were recognized on acquisition of Mexico CHP.
Amortization included in “cost of sales” in the consolidated statement of income amounted to $35.6 million in the year ended
December 31, 2021 (December 31, 2020: $24.2 million) and amortization included in “selling, general and administrative
expenses” amount to $3.4 million in the year ended December 31, 2021 (December 31, 2020: $2.0 million).
179
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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, asset retirement obligations and other buildings.
Other assets mainly include IT equipment, furniture and fixtures, facility equipment and vehicles, and project development costs.
Assets acquired through business combinations are explained in note 3.1.
Assets held for use in operating leases as a lessor included within Property, Plant and Equipment below are set out in note 4.32.
In $ millions
Cost
Accumulated depreciation and impairment
Carrying amount as of January 1, 2021
Additions
Disposals
Reclassification
Acquired through business combination1
Assets recognized as held for sale2
Currency translation differences
Depreciation charge
Closing net book amount
Cost
Accumulated depreciation and impairment
Carrying amount as of December 31, 2021
Land
72.2
(0.6)
71.6
–
–
–
14.4
(5.2)
(4.8)
(0.1)
75.9
76.7
(0.8)
75.9
Power plant
assets
Construction work
in progress
Right of use of
assets
5,172.5
(1,988.5)
3,184.0
33.7
(5.2)
114.6
918.3
(79.5)
(135.7)
(339.7)
3,690.5
5,842.0
(2,151.5)
3,690.5
76.8
–
76.8
48.6
(0.1)
(97.2)
–
–
2.2
–
30.3
30.3
–
30.3
47.6
(13.1)
34.5
3.2
(0.5)
–
2.8
(0.1)
(1.8)
(5.7)
32.4
50.1
(17.7)
32.4
Other
285.2
(135.0)
150.2
9.2
(2.0)
(19.4)
21.0
(39.1)
(8.9)
(14.7)
96.3
198.8
(102.5)
96.3
Total
5,654.4
(2,137.3)
3,517.1
94.7
(7.8)
(2.0)
956.5
(123.9)
(149.0)
(360.1)
3,925.4
6,197.9
(2,272.5)
3,925.4
1. Assets acquired through business combination relate to our United States of America and Trinidad and Tobago and Solar Italy portfolios detailed in note 3.1.
2. Assets recognized as held for sale relate to our Brazil Hydro portfolio, detailed in note 3.1.
Construction work in progress as of December 31, 2021 predominantly relates to our ongoing Austria Wind repowering project,
Vorotan refurbishment project, and projects at Maritsa. Reclassification from Construction work in progress to Power plant assets
primarily relates to completed phases of the Vorotan refurbishment project ($56.9 million), Austria Wind repowering project
($13.8 million) and projects at Maritsa ($12.1 million).
As of December 31, 2021, the Other category mainly related to $53.6 million of instruments and tools, $22.2 million of critical
spare parts.
Depreciation included in “cost of sales” in the consolidated statement of income amounted to $357.5 million in the year ended
December 31, 2021 (December 31, 2020: $282.0 million) and depreciation included in “selling, general and administrative
expenses” amount to $2.7 million in the year ended December 31, 2021 (December 31, 2020: $3.3 million).
In the year ended December 31, 2021, the Group capitalized $2.8 million of borrowing costs in relation to project financing.
180
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC In $ millions
Cost
Accumulated depreciation and impairment
Carrying amount as of January 1, 2020
Restatement for finalization of fair values on
acquisition1
Carrying amount as of January 1, 2020 (restated)
Additions
Disposals
Reclassification2,3
Currency translation differences
Depreciation charge
Closing net book amount
Cost
Accumulated depreciation and impairment
Carrying amount as of December 31, 2020
Land
68.6
(0.5)
68.1
–
68.1
–
–
–
3.6
(0.1)
71.6
72.2
(0.6)
71.6
Power
Construction
plant assets
work in progress
Right of use
of 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
61.5
–
61.5
–
61.5
59.3
(4.6)
(36.9)
(2.4)
–
76.8
76.8
–
76.8
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
(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.
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 de-recognized 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 asset 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 year ended
December 31, 2020 and depreciation included in “selling, general and administrative expenses” amounted to $3.3 million in the
year ended December 31, 2020.
In the year ended December 31, 2020, the Group capitalized $1.1 million of borrowing costs in relation to project financing.
181
Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
4.11. Financial and contract assets
In $ millions
Contract assets - Concession arrangements1
Finance lease receivables2
Other
Total financial and contract assets
Total financial and contract assets non-current portion
Total financial and contract assets current portion
December 31
2021
378.0
9.9
14.9
402.8
370.5
32.3
2020
416.5
15.2
6.6
438.3
408.3
30.0
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 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 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 13.8 years as of December 31, 2021 (December 31, 2020: 14.8 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 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 1.3 years as of December 31, 2021 (December 31, 2020: 2.3 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, 2021 and 2020.
Net cash inflows generated by the financial assets under concession agreements amounted to $66.8 million as of December 31,
2021 (December 31, 2020: $70.6 million).
182
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 4.12. Investments in associates
Set out below are the associates of the Group as of December 31, 2021:
Operational plant
Sochagota
Termoemcali
Evacuacion Villanueva del Rey, S.L.
Country of
incorporation
Colombia
Colombia
Spain
Associate
Associate
Associate
Ownership interests
2021
2020
49.0%
37.4%
39.9%
49.0%
37.4%
39.9%
Date of
acquisition
2006 and
2010
2010
2018
Set out below is the summarized financial information for the investments which are accounted for using the equity method
(presented at 100%):
Current assets
assets Current liabilities
Non-current
Non-current
liabilities
Revenue
Net income
In $ millions
Year ended December 31, 2020
Sochagota
Termoemcali
Evacuacion Villanueva del Rey, S.L.
Year ended December 31, 2021
Sochagota
Termoemcali
Evacuacion Villanueva del Rey, S.L.
79.1
24.4
0.1
76.1
21.2
0.1
33.8
48.4
3.0
28.6
49.3
2.6
22.9
17.0
0.2
27.2
16.2
0.2
35.8
35.9
2.9
21.0
26.7
2.5
The reconciliation of the investments in associates for each year is as follows:
In $ millions
Balance as of January 1,
Share of profit
Dividends
Other
Balance as of December 31,
93.7
27.8
0.3
101.9
29.9
0.3
2021
29.5
16.2
(8.3)
(3.9)
33.5
16.4
11.5
–
25.4
10.1
-
2020
26.6
12.3
(7.8)
(1.6)
29.5
183
Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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 10.2% of
the Group’s existing external debt obligations (excluding Brazil Hydro debt reclassified as held for sale) carry variable interest
rates in 2021 (2020: 11.5%) (after 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 match, 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.
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 reserve1
Years ended December 31
2021
(127.5)
62.0
(7.2)
(72.7)
2020
(86.0)
(40.8)
(0.7)
(127.5)
1. The above table show pre-tax cash flow hedge positions, including non-controlling interest. The amounts on the balance sheet include $17.0 million deferred tax
(2020: $31.4 million).
The debit value adjustment on the interest rate swaps and cross currency swaps in the interest rate hedge amounts to $1.9
million (2020: $3.7 million). These amounts are recognized on the financial statements against the fair value of derivative (note
4.14). Aside from the IFRS 13 credit/debit risk adjustment, cash-flow hedges generated immaterial ineffectiveness in 2021 which
was recognized in the income statement through finance costs.
184
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC The following tables set out information regarding the cumulative 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
Hedged exposure
Hedging instrument
Change in value of hedged
item for calculating
ineffectiveness
Change in value of hedging
instrument for calculating
ineffectiveness
As of December 31, 2020
Cash flows payable on a proportion of borrowings
Cash flows payable on a proportion of borrowings
Interest rate risk
Interest rate risk and
foreign currency risk
Interest rate swaps
Cross currency
swaps
As of December 31, 2021
Cash flows payable on a proportion of borrowings
Cash flows payable on a proportion of borrowings
Interest rate risk
Interest rate risk and
foreign currency risk
Interest rate swaps
Cross currency
swaps
113.0
14.5
65.6
7.1
(113.0)
(14.5)
(65.6)
(7.1)
Hedged cash flows are contractual such that the maturity dates on the interest rate swaps are aligned to the hedged item,
except for hedged cash flows on $475.4 million principal, with a swap maturing in 2031, in relation to CHP assets in Mexico that
are subject to refinancing after 2026. Refinancing for an additional five years to match the term of the swap is considered highly
probable since the Group will continue to maintain significant levels of US$ 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 which are not hedged through interest rate swaps (refer to note 4.24). A change of
0.5% of those floating rates would result in an increase in interest expenses by $2.1 million in the year ended December 31, 2021
(2020: $2.8 million).
The replacement of benchmark interest rates such as LIBOR and other interbank offered rates (IBORs) is ongoing globally. At
the end of 2021, the polled publication of JPY, CHF and GBP LIBORs ceased, while certain USD LIBORs (overnight, 1-, 3-, 6- and
12-month tenors) polled publication will likely continue until June 2023 (if current regulatory plans do not change). Issuance of
new floating-rate loans referencing USD LIBOR are no longer permitted after the end of 2021, and new LIBOR-based swaps
traded after 2021 are only permitted if they demonstrably reduce an entity’s LIBOR-based risk. The European Central Bank
(“ECB”) has disclosed no plans for the elimination of EURIBORs, and they will remain in existence (unless the ECB decides
otherwise) alongside the ECB’s new overnight index ESTR (Euro short-term rate).
The Group has borrowings and IFRS 9 designated hedge relationships that are impacted by IBOR reform including interest rate
swap contracts and a cross currency swap that qualify as cash-flow hedges, used to hedge a proportion of our external
borrowings. These swaps reference six-month EURIBOR, three-month USD LIBOR and six-month USD LIBOR. None of these
borrowings or derivatives have transitioned to alternative rates to date.
In $ millions
Borrowings nominal outstanding - EURIBOR
Borrowings nominal outstanding - USD LIBOR
Derivatives – EURIBOR
Derivatives – USD LIBOR
Measurement basis
Amortized cost
Amortized cost
Cash flow hedge
Cash flow hedge
Assets carrying value
31 December 2021
Liabilities carrying value
31 December 2021
Notional
–
–
2.3
1.4
593.6
885.5
2.8
71.6
452.3
778.9
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Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
The risk for the Group regarding this transition is ensuring that the alternative rates are consistent between borrowings and
derivatives so that the hedging relationships remain effective in managing interest rate exposure. The Group is managing this
risk by ongoing engagement with the counterparties to our borrowings and derivatives regarding the proposed transition.
Foreign currency risk
Foreign exchange risk arises from various currency exposures, primarily with respect to the Euro, Brazilian Real and Bulgarian
Lev (which is pegged to the Euro). 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 acquisitions; 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
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:
• if the US dollar had weakened/strengthened by 10% against the Euro, post-tax profit for the year ended December 31, 2021
would have been $0.5 million higher/lower (2020: $4.7 million higher/lower); and
• if the US dollar had weakened/strengthened by 10% against the Brazilian Real, post-tax profit for the year ended December 31,
2021 would have been $0.1 million higher/lower (2020: $0.5 million higher/lower).
The Bulgarian Lev is pegged to the Euro, therefore the Group’s exposure to the LEV is consistent with the Euro. The exposure
to the Mexican Peso is limited due to the fixed margin swap derivative which fixes the underlying gas price in USD, refer to
sensitivity as disclosed in note 4.15. The Group’s hedge policy states that the exposure between US Dollar and Euros will not be
hedged, as both currencies are considered as more stable currencies.
Commodity and electricity pricing risk
Apart from the Arrubal plant, 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 honour 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). Financial assets are generally
considered to be credit impaired when they are past their contractual due date, or in some jurisdictions outside of historical
payment timeframes.
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, Rwanda, Togo,
Senegal and Kosovo.
186
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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 2021 or 31 December 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:
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
2021
65.7
19.0
0.3
18.4
103.4
2020
68.9
17.3
2.1
19.7
108.0
As of December 31, 2021, $30.8 million (December 31, 2020: $31.1 million) of trade receivables were outstanding in connection
with our Bulgarian power plant, Maritsa East 3. The trade receivables include around €17.3 million ($19.6 million) as of December
31, 2021 to be received from NEK that the Group considers recoverable under the terms of the PPA-signed contract
amendments and the tribunal award in an ad hoc arbitration under the arbitration rules of the United Nations Commission on
International Trade Law (UNCITRAL) between Maritsa and its offtaker NEK in relation to environmental capex reimbursement in
February 2022.
The trade receivables include an expected credit loss of $3.3 million (December 31, 2020: $3.1 million) on the Past due over 180
days category with an increase in allowance recognized in profit and loss of $2.6 million in 2021, (December 31, 2020: $0.4
million).
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.
187
Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
Liquidity risk
Liquidity risk arises from the possibility of 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 bonds issued in the corporate Luxembourg
holdcos and project financing arrangements at the assets level. All significant asset level 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.
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 analyzes 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, 2020
Borrowings1
Trade and other payables
Derivative financial instruments
IFRS 16 lease liabilities
Other current liabilities3
Other non current liabilities3
Year ended December 31, 2021
Borrowings2
Trade and other payables
Derivative financial instruments
IFRS 16 lease liabilities
Other current liabilities3
Other non current liabilities3
Less than 1 year
1 and 5 years
Over 5 years
Between
1,429.0
899.7
333.7
41.0
4.3
150.3
–
1,107.2
349.1
597.0
26.3
3.9
130.8
–
1,576.9
1,379.6
–
106.2
17.2
–
73.9
2,303.1
2,132.8
–
43.7
15.8
–
110.8
2,667.2
2,592.5
–
44.8
11.4
–
18.5
1,776.2
1,710.3
–
27.8
10.4
–
27.7
Total
5,673.1
4,871.8
333.7
192.0
32.9
150.3
92.4
5,186.5
4,192.2
597.0
97.8
30.2
130.8
138.5
1. Borrowings represent the outstanding nominal amount (note 4.24). Short-term debt of $899.7 million as of December 31, 2020 related to the short-term portion of
long-term financing that matured within the next 12 months, that was repaid using cash on hand and cash received from operations.
2. Borrowings represent the outstanding nominal amount (note 4.24). Short-term debt of $349.1 million as of December 31, 2021 relates to the short-term portion of
long-term financing that matures within the next 12 months, that we expect to repay using cash on hand and cash received from operations.
3. Other current liabilities and Other non current liabilities as presented in notes 4.29 and 4.25 respectively excludes IFRS 16 lease liabilities and has been updated
to exclude taxes payable and deferred revenue.
188
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC The table below analyzes the Group’s forecasted interest to be paid into relevant maturity groupings based on the interest’s
maturity date:
Year ended December 31, 2020
In $ millions
Forecast interest expense to be paid
Year ended December 31, 2021
In $ millions
Forecast interest expense to be paid
Between
Less than 1 year
1 and 5 years
Over 5 years
196.0
634.3
444.6
Total
1,274.9
Between
Less than 1 year
1 and 5 years
Over 5 years
Total
176.0
533.6
339.6
1,049.2
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 a 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 12 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 program (note 4.22). It may
also increase debt provided that the funded venture provides adequate returns so that the overall capital structure remains
supportable.
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Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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 the 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 hedge1
Cross currency swaps – Cash flow hedge2
Foreign exchange forward contracts – Trading3
Option contracts – not in hedge relationships4
Financial swap on commodity5
Fixed margin swap6
Other7
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
Other
Total non-current portion
Current portion
December 31,
2021
December 31,
2020
Assets
Liabilities
Assets
Liabilities
3.7
–
0.8
-
0.6
–
10.8
16.0
3.7
–
0.1
–
0.3
–
5.8
9.9
6.1
63.3
11.1
–
–
–
23.4
–
97.8
45.5
10.1
–
–
–
15.8
71.5
26.3
–
–
–
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
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 fair value of the interest rate
swaps mostly relate to contracts in Mexico for $51.2 million (December 31, 2020: $83.4 million) maturing in November 2031 and in Armenia for $10.2 million
(December 31, 2020: $16.8 million) maturing in November 2034. Interest rate swaps are hedge accounted and as a result changes in fair value are recognized in
other comprehensive 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, 2021
amounts to $11.6 million (December 31, 2020: $27.4 million) maturing in July 2033. Credit value adjustment amounts to $0.5 million as of December 31, 2021
(December 31, 2020: $1.2 million). Currency swaps are hedge accounted and as a result changes in fair value are recognized in other comprehensive 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
BRL-denominated distributions have been hedged using forward exchange contracts with a fair value of asset $0.8 million and maturity between March 2022 and
January 2024 (December 31, 2020: liability $0.1 million). The COP-denominated distributions were economically hedged in 2020 using a forward which was
closed in January 2021 (December 31, 2020: liability $0.5 million). Hedge accounting is not applied to BRL/USD and COP/USD foreign exchange forward
contracts, as a result changes in fair value are recognized in the consolidated statement of income.
4. The Group 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 were protected in 2020 against material depreciation of the BRL using
option contracts in place (December 31, 2020: $1.6 million). The MXN-denominated distributions were protected in 2020 against material depreciation of the MXN
using an option contract in place (December 31, 2020: asset $0.4 million maturing in November 2021). The Group entered in 2020 into an option to protect the
Group against changes in interest rates for our financing projects. This contract was terminated in 2021 (December 31, 2020: asset $1.1 million).
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 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 $40 million of annual revenue over the next 8 years.
7. Contract derivative recognized on acquisition of Western Generation in 2021.
The notional principal amount of derivative financial instruments:
• the outstanding interest rate swap contracts and cross currency swap qualified as cash-flow hedge amounted to $1,231.2
million as of December 31, 2021 (December 31, 2020: $1,213.4 million), bearing interest ranging between 0.15% and 4.58% as
of December 31, 2021 (December 31, 2020: 0.16% and 5.07%);
• the outstanding foreign exchange forward and option contracts amounted to $16.5 million as of December 31, 2021
(December 31, 2020: $161.8 million). In 2020, the outstanding option allowing the possibility to enter into an underlying swap
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ANNUAL REPORT 2021 | CONTOURGLOBAL PLC with the objective to protect the Group against changes in interest rates on our financing projects amounted to $200.0
million. This contract was cancelled in 2021 (December 31, 2020: asset $1.1 million); and
• the commodity swap (gas) relates to one PPA in our Mexican CHP amounted to $2.1 million as of December 31, 2021
(December 31, 2020: $3.0 million).
The Group recognized in Net Finance costs a gain in respect of changes in fair value of derivatives listed above of $21.7 million
in the 12 months ended December 31, 2021 (December 31, 2020: profit $61.7 million) and a gain of $2.4 million in the 12 months
ended December 31, 2021 in relation to settled positions (December 31, 2020: profit of $8.8 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:
• 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.
• 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.
• Level 3 inputs are unobservable inputs for the asset or liability.
There were no transfers between fair value measurement levels between December 31, 2021 and 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, 2021 and December 31, 2020, we have measured these at level 2 in the fair value
hierarchy with the exception of the fixed margin swap and contract derivative 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 it’s 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, contract derivative recognized on
acquisition of Western Generation 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 $19.2 million is driven by the movement of
market inputs, in particular the natural gas price, accounting for $20.2 million of the total variance.
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 would decrease/increase by $7.1 million (December 31, 2020: 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 $4.1 million (December 31, 2020: decrease/increase by $5.7 million), (iii) for an increase/decrease of 25%
in discount rates, the fixed margin swap liability will decrease/increase by $0.9 million (December 31, 2020: decrease/increase
by $1.3 million), and (iv) and for an increase/decrease of 5% in the CFE tariff, the fixed margin swap liability will increase/decrease
by $8.8 million (December 31, 2020: increase/decrease by $13.7 million). For the other level 3 derivative, the contract derivative
recognized on acquisition of Western Generation, there are no reasonably possible sensitivities that could have a material
impact.
Money market funds (see note 4.16) 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.
191
Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
4.16. Financial instruments by category
In $ millions
As at December 31, 2020
Derivative financial instruments
Financial and contract assets
Trade and other receivables1
Other non-current assets1
Cash and cash equivalents2
Total
In $ millions
As at December 31, 2021
Derivative financial instruments
Financial and contract assets
Trade and other receivables1
Other current assets
Other non-current assets1
Cash and cash equivalents
Total
In $ millions
As at December 31, 2020
Borrowings
Derivative financial instruments
Trade and other payables
Other current liabilities1
Other non current liabilities
Total
In $ millions
As at December 31, 2021
Borrowings
Derivative financial instruments
Trade and other payables
Other current liabilities1
Other non current liabilities
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
–
438.3
228.0
41.1
385.0
1,092.4
1.5
–
–
–
1,011.9
1,013.4
–
–
–
–
–
–
1.5
438.3
228.0
41.1
1,396.9
2,105.8
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
–
402.7
264.2
30.9
52.6
369.1
1,119.5
0.8
–
–
–
–
–
0.8
15.2
–
–
–
–
–
15.2
16.0
402.7
264.2
30.9
52.6
369.1
1,135.5
Financial liability category
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
–
44.8
–
–
–
44.8
4,830.3
–
333.7
154.6
124.9
5,443.5
–
147.2
–
–
–
147.2
4,830.3
192.0
333.7
154.6
124.9
5,635.5
Financial liability category
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
–
23.4
–
–
–
23.4
4,176.1
–
597.0
134.8
164.7
5,072.6
–
74.4
–
–
–
74.4
4,176.1
97.8
597.0
134.8
164.7
5,170.4
1. These balances exclude receivables and payables balances in relation to taxes and deferred revenue balance. Refer to note 4.19 for further details regarding
Trade and other receivables. Other non-current assets is disclosed in note 4.17 and excludes Vorotan VAT receivable amounting to $2.6 million. Refer to note
4.28 for further detailed of Trade and other payables. Other current liabilities is disclosed in note 4.29 and excludes deferred revenue amounting $6.4 million.
Other non-current liabilities is disclosed in note 4.25 and excludes deferred revenue amounting to $3.3 million.
2. These balances include money market funds, which comprise investment in funds that are subject to an insignificant risk of changes in fair value. The comparative
figure has been adjusted to include in the fair value through profit and loss cash balances that were held in money market funds and reclassify the remaining cash
balances of $385 million to amortized cost.
192
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 4.17. Other non-current assets
In $ millions
Kosovo receivables1
Advance to supplier2
Other
Total other non-current assets
December 31
2021
22.4
–
32.7
55.1
2020
24.1
1.4
17.0
42.5
1. Mainly relates to project development costs in Kosovo. 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 related to Vorotan EPC (engineering, procurement and construction) contract as part of the refurbishment program. This program
ended in 2021.
4.18. Inventories
In $ millions
Emission allowance
Spare parts
Fuel
Other
Total
Provision
Total inventories
December 31
2021
404.8
55.5
14.2
15.7
490.2
(4.5)
485.7
Increase in inventories mainly relates to our Maritsa plant and the increase in emission allowances during the year.
4.19. Trade and other receivables
In $ millions
Trade receivables - gross
Accrued revenue (unbilled)
Provision for impairment of trade receivables
Trade receivables - net
Other tax receivable
Other receivables
Trade and other receivables
December 31
2021
106.8
152.6
(3.4)
256.0
34.9
8.1
299.1
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 financing.
2020
165.8
54.6
14.8
17.0
252.2
(4.8)
247.4
2020
111.0
113.1
(3.1)
221.0
36.0
7.0
264.0
4.20. Other current assets
In $ millions
Prepaid expenses
Advances to suppliers
Other1
Other current assets
1. Primarily corresponds to deposits in our Arrubal and Mexico CHP plants.
December 31
2021
19.7
4.2
36.5
60.4
2020
17.4
7.9
9.8
35.1
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Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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. 77.1% of our cash and cash equivalents as of December 31, 2021
is pledged as security in relation with the Group’s project financings (December 31, 2020: 22.0%); cash and cash equivalents
includes $81.8 million as of December 31, 2021 (December 31, 2020: $117.3 million) of cash balances relating to debt service
reserves required by project finance agreements and $nil in money market funds (December 31, 2020: $1,011.9 million).
4.22. Equity
Issued capital
Issued capital of the Company amounted to $8.9 million as at 31 December 2021, with no changes since the year ended 31
December 2020.
Allotted, authorized, called up and fully paid
As at 31 December 2020
As at 31 December 2021
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 $114.5 million (2020: $105.7 million).
In $ millions
Declared during the financial year:
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
Final dividend for the year ended 31 December 2020: 4.0591 US cents per share
Interim dividends for the year ended 31 December 2021: 13.3950 US cents per share
Total dividends provided for or paid
Years ended December 31
2021
2020
24.8
80.9
105.7
26.6
87.9
114.5
Share repurchases
On 1 April 2020 ContourGlobal announced a buyback program 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, then
further extended to December 31, 2020 and to March 31, 2021.
During the year ended December 31, 2021, the Company repurchased 2,624,774 treasury shares at an average price of 208.4
pence per share for an aggregate amount of £5.5 million ($7.4 million), representing 0.40% of its share capital and used 427,440
shares in respect with the 2018 Long Term Incentive Plan. Since the beginning of the buyback program, the Company
repurchased a net amount of 14,572,065 treasury shares, representing 2.17% of its share capital and a cumulative consideration
paid of $37.8 million.
194
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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.
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%)
EIP Energy Infrastructure Holding (49%)
EIP Energy Infrastructure Holding (49%)
Energie Burgenland and DH Energie (38%) Deutsch Haslau (Austria Wind)
Other
Total
Chapadas I (Wind Brazil)
Chapadas II (Wind Brazil)
Maritsa (Bulgaria)
Brazil Hydro and Brazil Solution
Italy Solar
CSP Spain
Acc. NCI
21.5
37.3
53.3
13.7
(4.5)
20.0
6.8
7.2
155.3
Year ended December 31, 2020
(Loss)/Profit
allocated
to NCI
Dividends
paid to NCI
Distribution
paid to NCI
Contribution
received
from NCI
Proportionate
adjusted
EBITDA NCI1
(2.7)
(1.1)
–
4.5
2.6
4.1
0.1
5.1
12.6
–
–
–
–
–
–
0.2
5.2
5.4
–
–
18.52
2.6
8.4
46.2
0.3
–
76.0
3.4
–
–
–
–
–
–
–
3.4
6.6
8.7
32.8
11.5
17.0
61.9
1.5
13.3
153.3
1. Represents the non-controlling interest portion included in the Adjusted EBITDA, i.e., 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 note 4.25.
In $ millions
Non-controlling interest
CG assets
Year ended December 31, 2021
(Loss)/Profit
allocated to
NCI
Acc. NCI
Dividends
paid to NCI
Distribution
paid to NCI
Contribution
received
from NCI
Proportionate
adjusted
EBITDA NCI1
Electrobras (49%)
Electrobras (49%)
NEK (27%)
CG Aguila Holdings (20%)
EIP Energy Infrastructure Holding (49%)
EIP Energy Infrastructure Holding (49%)
Energie Burgenland and DH Energie (38%) Deutsch Haslau (Austria Wind)
Other
Total
Chapadas I (Wind Brazil)
Chapadas II (Wind Brazil)
Maritsa (Bulgaria)
Brazil Hydro and Brazil Solution
Italy Solar
CSP Spain
15.0
32.0
53.3
10.5
18.1
17.0
6.9
8.7
161.5
(5.2)
(2.8)
–
6.6
–
(2.0)
0.3
4.5
1.4
–
–
–
1.0
–
–
0.1
2.4
3.5
–
–
19.32
–
15.0
55.8
0.4
8.0
98.5
–
–
–
–
17.5
–
–
–
17.5
5.2
6.9
34.5
12.3
17.1
57.6
1.7
13.9
149.2
1. Represents the non-controlling interest portion included in the Adjusted EBITDA, i.e., 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.
195
Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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
Year ended December 31, 2020
Non-current
assets
Current
assets
Non-current
liabilities
Current
liabilities
Revenue
Profit or
(Loss)
Electrobras (49%)
Electrobras (49%)
NEK (27%)
CG Aguila Holdings (20%)
EIP Energy Infrastructure Holding (49%)
EIP Energy Infrastructure Holding (49%)
Energie Burgenland and DH Energie (38%)
Chapadas I (Wind Brazil)
Chapadas II (Wind Brazil)
Maritsa (Bulgaria)
Brazil Hydro and Brazil Solution
Italy Solar
CSP Spain
Deutsch Haslau (Austria Wind)
151.6
165.1
333.1
212.9
225.6
1,120.5
24.8
25.8
22.3
330.8
27.7
39.4
77.6
3.2
97.4
80.5
99.6
126.7
237.8
1,087.1
21.1
37.5
30.4
264.4
55.1
30.5
65.9
3.5
20.1
27.0
406.3
64.2
40.7
161.8
4.6
(5.6)
(2.3)
58.5
18.1
5.5
8.4
0.3
In $ millions
Non-controlling interest
CG assets
Year ended December 31, 2021
Non-current
assets
Current
assets
Non-current
liabilities
Current
liabilities
Revenue
Profit or
(Loss)
Electrobras (49%)
Electrobras (49%)
NEK (27%)
CG Aguila Holdings (20%)
EIP Energy Infrastructure Holding (49%)
EIP Energy Infrastructure Holding (49%)
Energie Burgenland and DH Energie (38%)
Chapadas I (Wind Brazil)
Chapadas II (Wind Brazil)
Maritsa (Bulgaria)
Brazil Hydro and Brazil Solution
Italy Solar
CSP Spain
Deutsch Haslau (Austria Wind)
137.0
148.9
253.1
165.8
268.6
981.0
20.8
21.0
20.0
509.2
22.3
47.5
88.3
3.3
86.5
71.6
55.7
131.1
246.5
997.2
17.1
42.2
31.5
481.7
22.1
36.8
33.1
3.4
18.5
23.2
706.9
67.1
41.2
152.9
5.1
(10.5)
(5.7)
49.6
24.9
0.1
(4.1)
0.8
196
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC In $ millions
Non-controlling interest
CG assets
Electrobras (49%)
Electrobras (49%)
NEK (27%)
CG Aguila Holdings (20%)
EIP Energy Infrastructure Holding (49%)
EIP Energy Infrastructure Holding (49%)
Energie Burgenland and DH Energie (38%)
Chapadas I (Wind Brazil)
Chapadas II (Wind Brazil)
Maritsa (Bulgaria)
Brazil Hydro and Brazil Solution
Italy Solar
CSP Spain
Deutsch Haslau (Austria Wind)
Year ended December 31, 2020
Net cash generated by
operating activities
Net cash generated by
investing activities
Net cash generated by
financing activities
16.5
17.6
80.2
43.6
30.2
115.4
3.9
(3.6)
(1.9)
(11.3)
(4.5)
(0.4)
(6.9)
–
(9.5)
(16.1)
(79.4)
(38.3)
(39.7)
(113.6)
(4.2)
In $ millions
Non-controlling interest
CG assets
Electrobras (49%)
Electrobras (49%)
NEK (27%)
CG Aguila Holdings (20%)
EIP Energy Infrastructure Holding (49%)
EIP Energy Infrastructure Holding (49%)
Energie Burgenland and DH Energie (38%)
Chapadas I (Wind Brazil)
Chapadas II (Wind Brazil)
Maritsa (Bulgaria)
Brazil Hydro and Brazil Solution
Italy Solar
CSP Spain
Deutsch Haslau (Austria Wind)
Year ended December 31, 2021
Net cash generated by
operating activities
Net cash generated by
investing activities
Net cash generated by
financing activities
16.6
16.5
97.4
14.1
35.8
140.5
4.0
(3.2)
(2.8)
(11.3)
(17.9)
(23.0)
(4.6)
–
(15.5)
(14.3)
(90.9)
1.4
(6.1)
(111.0)
(4.1)
Considering the different nature of cash transactions with Non controlling interests (“NCI”), different categories are presented in
the Consolidated statement of cash flows:
• 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.
• Dividends paid to NCI: reflects the payments to NCI in the form of dividends payments.
• Transactions with NCI (cash received): reflects the cash received from NCI usually in the form of capital contributions and
proceeds from sell down transactions.
• 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).
Transactions with NCI are presented as financing activities in accordance with IAS 7.
197
Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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 $4,192.2 million in total as of December 31, 2021
(December 31, 2020: $4,871.8 million) primarily relate to the following:
Outstanding
nominal amount
December 31,
2021 ($ million)
Outstanding
nominal amount
December 31,
2020 ($ million)
Rate
807.5
867.3
2.75%, 3.125%
Type of borrowing
Currency
Project Financing
Issue
Maturity
Corporate bond1
Corporate bond1
Loan Agreement
Loan Agreement
Loan Agreement
Loan Agreement2
Loan agreement
Project bond
Loan Agreement3
Loan Agreement
Loan Agreement4
Loan Agreement /
Debentures5
EUR
EUR
USD
EUR
EUR
USD
EUR
USD
EUR
USD
USD
Corporate
Indenture
Corporate
Indenture
Mexican CHP
Spanish CSP
Spanish CSP
US and Trinidad
and Tobago
Solar Italy
Inka
Spanish CSP
Vorotan
French Caribbean
BRL
Chapada I
2020
2018
2019
2018
2018
2007
2019
2014
2021
2016
2021
2015
2026
2028
2025
2026
2026
2038
2036
2033
2030
2034
2028
2034
2034
2026
2032
2029
454.9
475.4
338.8
305.2
186.5
181.7
165.8
159.1
116.2
115.3
103.7
Loan Agreement
EUR
Austria Wind
2013
2020
2027
2033
109.6
105.2
Loan Agreement
Loan Agreement
Loan Agreement
Loan Agreement5
Loan Agreement5 6
Loan Agreement
Loan Agreement
Loan Agreement
Other Credit facilities
(individually < $50 million)
Total
USD
EUR
USD
BRL
BRL
EUR
USD
EUR
Cap des Biches
Maritsa
Togo
Chapada II
Asa Branca
Vorotan
KivuWatt
Arrubal
Various
Various
2015
2006
2008
2016
2021
2016
2033
2023
2028
2032
2032
2034
2011
2011
2012
– 2019
2026
2021
2021
– 2034
91.0
69.2
72.3
72.1
58.9
51.4
47.6
–
96.3
109.1
80.8
84.8
58.5
46.1
57.2
98.9
210.0
4,192.2
201.9
4,871.8
1,038.4
508.5
4.125%
LIBOR +2.5%
392.5
348.4
Fixed 5.8% and 6.7%
3.438%
–
215.5
173.2
152.2
121.5
–
115.5
Fixed 6.6%
EURIBOR 6M +1.7%
6.0%
EURIBOR +1.8%
Fixed +2.5%
LIBOR +4.625%
LIBOR + 3.5%
TJLP + 2.18% /
IPCA +8%
EURIBOR 6M + 2.45%
and 4.305% / EURIBOR
3M +1.95% and 4.0% /
EURIBOR 6M +1.55%
USD-LIBOR BBA (ICE)
+3.20%
EURIBOR +0.125%
7.16% (Weighted
average)
TJLP +2.18%
TJLP +6.25%
0.75% -4.12%
LIBOR plus 5.50% and
mix of fixed rates
4.9%
Mix of fix and
variable rates
1. Corporate bond issued by ContourGlobal Power Holdings S.A. in July 2018 for €750 million dual-tranche, 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 bonds 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 February 18, 2021, the Group acquired a Thermal portfolio in the United States of America and Trinidad and Tobago representing a total of 1,502 MW. The
legal entity Lea Power acquired as per this transaction issued 6.595% Senior Secured Notes under an indenture dated July 24, 2007 which are due to mature in
June 2033.
198
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 3. On May 14, 2021, Termosolar Alvarado entered into a €161.6 million ($195.2 million) facilities agreement with Unicredit Bank AG, Banco De Crédito Social
Cooperativo, S.A., Rivage Euro Debt Infrastructure 3, Rivage Richelieu 1 Fcp, L7 Investment Holdings LP, refinancing the Alvarado facility. The Facility bears interest
at EURIBOR plus 1.8% and fixed 2.5% per year and matures in 2028 and 2034.
4. On September 29, 2021, ContourGlobal Luxembourg Sarl entered into a $120.0 million loan agreement with the Bank of Nova Scotia refinancing the Caribbean
assets. The agreement bears interest at LIBOR plus 3.5% and matures in 2026.
5. Taxa de Juros de Longo Prazo (“TJLP”) represents the Brazil Long Term Interest Rate, which was approximately 5.32% at December 31, 2021 (December 31, 2020:
4.55%).
6. On July 12, 2021, Asa Branca Holding S.A. entered into a R$315.0 million ($59.9 million) debentures agreement refinancing the Asa Branca loan agreement. The
loan agreement bears interest at TJLP plus 6.25% and matures in 2032.
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
Euros1
Brazilian Reals
Total
Non-current borrowings
Current borrowings
Total
Years ended December 31
2021
1,295.9
2,625.3
254.9
4,176.1
3,809.1
367.0
4,176.1
2020
1,056.1
3,382.2
392.0
4,830.3
3,895.5
934.8
4,830.3
1. €450 million corporate bond maturing in 2023 ($549.7 million) was shown as current in the prior period as a result of the refinancing in December 2020 which
resulted in a commitment to repay these bonds in January 2021. The amounts were repaid on January 6, 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, 2021 and 2020 is as follows:
In $ millions
Cash and cash equivalents
Borrowings - repayable within one year
Borrowings - repayable after one year
Interest payable, deferred financing costs and other
IFRS 16 liabilities
Net debt
Cash and cash equivalents
Borrowings - fixed interest rates1
Borrowings - variable interest rates
Interest 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.
Carrying amount
Fair value
Years ended December 31,
Years ended December 31,
2021
2,750.6
1,425.5
4,176.1
2020
2,720.2
2,110.1
4,830.3
2021
2,876.6
1,456.8
4,333.4
2020
2,817.9
2,191.3
5,009.2
Years ended December 31
2021
2020
369.1
(349.0)
(3,843.2)
16.1
(30.2)
(3,837.2)
369.1
(3,762.6)
(429.6)
16.1
(30.2)
(3,837.2)
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)
199
Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
In $ millions
As of January 1, 2020
Cash-flows
Acquisitions / disposals
Proceeds of borrowings
Repayments of borrowings
Repayments of borrowings and interests to NCI1
Currency translations differences and other
IFRS 16 liabilities net movement2
As of December 31, 2020
Cash-flows
Acquisitions / disposals
Proceeds of borrowings
Repayments of borrowings
Repayments of borrowings and interests to NCI1
Liabilities held for sale
Currency translations differences and other
IFRS 16 liabilities net movement2
As of December 31, 2021
Cash and cash
equivalents
Borrowings
IFRS 16 liabilities
Total net debt
558.5
810.6
–
–
–
–
27.8
–
1,396.9
(995.7)
25.5
–
–
–
–
(57.6)
–
369.1
(4,090.5)
–
–
(938.9)
323.4
49.5
(173.8)
–
(4,830.3)
–
(277.4)
(790.7)
1,304.2
60.4
136.5
221.2
–
(4,176.1)
(33.3)
–
–
–
–
–
–
0.4
(32.9)
–
–
–
–
–
–
–
2.7
(30.2)
(3,565.3)
810.6
–
(938.9)
323.4
49.5
(146.0)
0.4
(3,466.3)
(995.7)
(251.9)
(790.7)
1,304.2
60.4
136.5
163.6
2.7
(3,837.2)
1. 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).
2. IFRS 16 liabilities net movement includes -$1.4 million for assets acquired through business combinations (note 3.1), -$1.4 million lease additions (2020: -$3.6
million), $6.0 million lease payments (2020: $6.8 million), -$0.3 million for assets recognized as held for sale (note 3.1) and -$0.2 million currency translation
adjustment (2020: -$2.8 million).
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.
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 $85.5 million of debt is presented as non current
in line with the contracted repayment schedule.
Securities given
The Corporate bond, Revolving Credit Facility, HSBC LC facility and UniCredit LC 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.
Guarantees are also given 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 to the hedging instruments existing at
ContourGlobal Power Holdings S.A.
200
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Project financing
Facility
Maturity
Security / Guarantee given
CSP Spain
(excluding Alvarado)
Long Term
Facility
2036
Alvarado 2021
Long Term
Facility
Asa Branca 2021
Austria Wind
Refinancing 2020
Debentures
Long Term
Facility
2034
2033
2033
Berg 2021
Long Term
Facility
2035
Borger
Brazil Hydro 2021
Caribbean 2021
Inka
Chapada I
Maritsa
Vorotan
Chapada II
Long Term
Facility
2022
2029
Debentures
Long Term
Facility
Senior
secured notes 2034
2026
Long Term
Facility
2032
Credit Facility 2023
Long Term
Facility
Long Term
Facility
2032
2034
Cap des Biches
Credit Facility 2033
Togo
Loan
agreement
2028
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.
Pledge over all the shares of the Borrower, Pledge over the Borrower's Accounts, Pledge over
all credit rights of the Borrower under Major Project Documents and the Hedging Agreements
to which it is a party, Promissory mortgage over the Project assets.
ContourGlobal plc guarantee in case of Tax Group Exit.
Chattel mortgage of shares of the Issuer and the SPE, fiduciary assignment of all dividends as a
result of Issuer's and the SPE's shares.
Share pledge on the Borrower and each Obligor, pledge of receivables, pledge over accounts,
step in rights agreements in Project Contracts.
First ranking security over the shares held in the Borrower, Assignment over the Borrower's
rights under Project Documents, pledge over project accounts, pledge over the windfarm
superstructures (Superädifikate).
Pledge of shares of the issuer, Pledge of governmental approvals, Pledge of all accounts and
Letters of Credit, Pledge of assets and project contracts, Pledge of insurance policies, Pledge of
all tangible and intangible property of the Partnership, Pledge of rights to withdraw from the
Steam Escrow Account.
Fiduciary sale of all shares issued by the Issuer and the Suretors, Fiduciary assignment of all
dividends.
Pledge of shares, Pledge over project accounts, Pledge of Receivables
ContourGlobal Plc guarantee on Debt service reserve facility and Working Capital facility.
Pledge of shares of Energia Eolica SA, EESA assets, accounts, assignment of receivables of the
project contracts and insurances.
Pledge of shares of Chapada I SPVs and Holding, SPVs assets, accounts, assignment of
receivables of the project contracts and insurances.
ContourGlobal plc guarantee to LC providers in case Chapada I cannot serve debt.
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.
• 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 PPA and Gas
• Concession to the Government of Rwanda and to Electrogaz (outside of the loan guarantee).
• $8.5 million UK Plc guarantee to cover Debt Service Reserve Account as of 31 December
2019.
Kivuwatt
Chapada III
Hobbs
Mexican CHP
Raiffeisen Windparks
Financing
Arrangement 2026
Long Term
Facility
Long Term
Facility
Long Term
Facility
Long Term
Facility
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 over shares of the borrower, pledge over the project accounts, charge over the assets,
assignment of receivables and the insurance policies, direct agreement on the project
contracts. Pledge of right to terminate the Operating Agreement.
Pledge of the CGA I and CELCSA shares, assets and accounts, assignment of receivables and
insurance policies. $32.4 million ContourGlobal plc guarantee for the Debt Service Reserve
Account.
2032
2033
2026
2026
Pledge of Project Accounts. Pledge of shares. Pledge of rights under Project Contracts.
201
Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
Project financing
Facility
Maturity
Security / Guarantee given
Sao Domingos II
Solar Italy
Solar Slovakia
Waterside
WGP
Zistersdorf
Debentures
Long Term
Facility
Long Term
Facility
Long Term
Facility
Long Term
Facility
Long Term
Facility
2027
2030
2025
2024
2023
2027
Trust assignment of credit rights. Chattel mortgage of shares. Chattel mortgage of machines and
equipment.
Pledge over Project Accounts. Pledge over shares. Assignment of Receivables of Borrower and
CG Energetica.
Pledge over receivables. Pledge over movables. Pledge of ownership interest. Mortgage over
real estate property.
Assignment of membership interests. Assignment of rights under the Operating Agreement.
Assignment of Additional membership interests. Assignment of rights appurtenant to property.
Assignment of proceeds from collateral.
Pledge of stock. Pledge of Debt Securities. Pledge of receivables. Pledge of shares. Mortgage
of property.
Pledge of shares. Pledge of Project property or Trumpet Area. Pledge of DSRA. Assignment of
the retention of title to the privileged portions of the Wind Turbine Systems. Assignment of
rights under Project Agreements.
4.25. Other non-current liabilities
In $ millions
Debt to non-controlling interest1
Deferred payments on acquisitions2
IFRS 16 lease liabilities
Other3
Total other non-current liabilities
December 31
2021
21.8
47.9
26.2
72.1
168.0
2020
28.6
33.5
28.6
34.2
124.9
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 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.
2. As of 31 December 2021, deferred payments and earn-outs on acquired entities relate to deferred payments to be made to initial developers of certain Brazil
Wind assets for $14.7 million (31 December 2020: $15.2 million) and Spain CSP previous owner for $17.1 million (31 December 2020: $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. Mainly relates to $33.5 million at 31 December 2021 (31 December 2020: $0.8 million) in relation to CSP Spain, which represents the excess cash received based
on the net market price compared to the pre-established prices for the current regulatory period, which will be settled over future regulatory periods. Also
includes contractual obligations in Brazil, including shortfall and penalties when wind asset generation falls below contracted PPA for $14.7 million at 31 December
2021 (31 December 2020: $15.4 million).
The change in the debt to Maritsa non-controlling interest is presented below:
In $ millions
Beginning of the year
Dividends
Unwinding of discount
Additional dividend paid
Currency translation adjustments
End of the year
Current liabilities
Non-current liabilities
As of December 31, 2021
202
December 31
2021
46.3
(19.3)
0.9
7.4
(2.7)
32.6
10.8
21.8
32.6
2020
58.1
(18.9)
0.1
3.0
4.0
46.3
17.7
28.6
46.3
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 4.26. Provisions
In $ millions
As of January 1, 2020
Acquired through business combination
Additions
Unused amounts reversed
Amounts used during the period
Currency translation differences and other
As of December 31, 2020
Acquired through business combination
Additions
Unused amounts reversed
Amounts used during the period
Assets held for sale
Currency translation differences and other
As of December 31, 2021
Provisions have been analyzed between current and non-current as follows:
In $ millions
Current liabilities
Non-current liabilities
As of December 31, 2020
Current liabilities
Non-current liabilities
As of December 31, 2021
Decommissioning
/ Environmental /
Maintenance
provision
Legal and other
43.9
–
2.1
(3.1)
–
2.9
45.8
32.8
0.7
(2.7)
(1.1)
(2.6)
(0.6)
72.3
17.1
–
3.7
(1.4)
(1.3)
0.2
18.3
3.1
3.3
(1.9)
(0.7)
(2.6)
(1.3)
18.3
Decommissioning
/ Environmental /
Maintenance
provision
Legal and other
1.9
43.9
45.8
1.2
71.1
72.3
10.4
7.9
18.3
11.7
6.6
18.3
Total
61.0
–
5.8
(4.5)
(1.3)
3.1
64.1
35.9
4.0
(4.6)
(1.8)
(5.2)
(1.9)
90.6
Total
12.3
51.8
64.1
12.9
77.7
90.6
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 32 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.
203
Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
4.27. Share-based compensation plans
ContourGlobal long-term incentive plan
On 17 May 2021, a fourth grant of performance shares was made under the long term incentive plan (“LTIP”) with awards over a
total of 2,606,267 ordinary shares of 1 pence in ContourGlobal plc granted to eligible employees (the “participants”). These
shares will vest on 17 May 2024 subject to the participants’ continued service and to the extent to which the performance
conditions set for the awards are satisfied over the period of three years commencing on 1 January 2021 and, ordinarily, ending
on 31 December 2023 (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: 25.0 % 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.
The LTIPs are considered to be equity-settled share-based incentives, presented within Selling, general and administrative
expenses in the consolidated statement of income.
The likelihood of these conditions has 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 likelihood will be
reassessed each year.
Awards granted during the period included dividend equivalents and hence their fair value was estimated as being equal to the
share price ($2.72) on grant date with no other assumptions being incorporated into the valuation
Including this grant, restricted shares were granted under the LTIP with awards over a total of 129,735 ordinary shares of 1 pence
in ContourGlobal plc to eligible employees (the “participants”). These shares will vest on 17 May 2024 subject to the participants’
continued service.
The Group’s total charge for equity-settled share-based incentives for the year of $1.9 million (2020: $1.9 million) has been
included within Selling, general and administrative expenses in the consolidated statement of income.
The movements on awards made under the LTIP are as follows:
Outstanding as of December 31, 2019
Granted during the year
Forfeited
Vested
Outstanding as of December 31, 2020
Granted during the year
Forfeited
Vested
Outstanding as of December 31, 2021
Number of
shares
3,624,452
2,137,665
(334,551)
–
5,427,566
2,606,267
(1,293,090)
(302,712)
6,438,031
Deferred bonus
Certain employees of the Group are eligible to receive 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 17 May 2021, a total of 331,627 deferred bonus
shares were awarded to employees with a vesting date of 10 March 2023.
204
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 4.28. Trade and other payables
In $ millions
Trade payables
Accrued expenses
Trade and other payables
The increase mainly comes from Maritsa CO2 liabilities.
4.29. Other current liabilities
In $ millions
Deferred revenue
Deferred payment on acquisition1
Other taxes payable
IFRS 16 lease liabilities
Other2
Other current liabilities
December 31
2021
92.8
504.2
597.0
2020
67.6
266.1
333.7
December 31
2021
6.4
–
43.9
3.9
130.8
185.0
2020
5.6
1.2
34.6
4.3
149.1
194.8
1. Relates to the deferred payment of the renewable portfolio in Brazil as of December 31, 2020.
2. Mainly relates to contractual obligations in Brazil, including shortfall and penalties when wind asset generation falls below contracted PPA for $69.4 million at 31
December 2021 (31 December 2020: $47.1 million), other regulatory obligations for hydro assets related to the Generation scaling factor (GSF) for $nil million at 31
December 2021 (31 December 2020: $18.2 million), Maritsa current portion of the non-controlling interest debt for $10.8 million at 31 December 2021 (31 December
2020: $17.7 million); Maritsa CO2 quota for $8.6 million at 31 December 2021 (31 December 2020: $28.0 million) and Arrubal CO2 quota for $22.5 million at 31
December 2021 (31 December 2020: $8.2 million).
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, the actual power generated.
205
Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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
55 Baker Street. London, United Kingdom, W1U 8EW
Consolidated subsidiaries
Ownership
Country of
incorporation
Registered address
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 Beteiligung GmbH
ContourGlobal Maritsa East 3 AD
ContourGlobal Operations Bulgaria AD
ContourGlobal Management Sofia EOOD
Galheiros Geração de Energia Elétrica S.A.
Santa Cruz Power Corporation Usinas Hidroelétricas
S.A.
100%
100%
95%
95%
62%
100%
100%
100%
100%
100%
100%
100%
100%
100%
73%
73%
100%
80%
80%
Armenia
Austria
Austria
Austria
Austria
Austria
Austria
Austria
Austria
Austria
Austria
Austria
Austria
Austria
Bulgaria
Bulgaria
Bulgaria
Brazil
Brazil
Contour Global Do Brasil Holding Ltda
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.
51%
Brazil
Calcedônia Geração de Energia Ltda.
100%
Brazil
Ventos de Santa Joana X Energias Renováveis S.A.
Ventos de Santa Joana XI Energias Renováveis S.A
51%
51%
Brazil
Brazil
Ventos de Santa Joana XII Energias Renováveis S.A.
51%
Brazil
Ventos de Santa Joana XIII Energias Renováveis S.A.
51%
Brazil
Ventos de Santa Joana XV Energias Renováveis S.A.
51%
Brazil
206
AGBU building; 2/2 Meliq-Adamyan str.,0010 Yerevan,
Armenia
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
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
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Consolidated subsidiaries
Ownership
Country of
incorporation
Registered address
Ventos de Santa Joana XVI Energias Renováveis S.A.
51%
Brazil
Asa Branca Holding S.A.
100%
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.
Ventos de Santa Joana III Energias Renováveis S.A.
51%
51%
Brazil
Brazil
Ventos de Santa Joana IV Energias Renováveis S.A.
51%
Brazil
Ventos de Santa Joana V Energias Renováveis S.A.
51%
Brazil
Ventos de Santa Joana VII Energias Renováveis S.A.
51%
Brazil
Ventos de Santo Augusto IV Energias Renováveis S.A.
51%
Brazil
Chapada do Piauí I Holdings S.A.
51%
Brazil
Ventos de Santo Augusto III Energias Renováveis S.A.
100%
Brazil
Ventos de Santo Augusto V Energias Renováveis S.A.
100%
Brazil
ContourGlobal Desenvolvimento S.A.
100%
Brazil
Chapada do Piauí II Holding S.A.
51%
Brazil
Chapada do Piauí III Holding S.A.
100%
Brazil
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.
80%
80%
56%
80%
100%
Brazil
Brazil
Brazil
Brazil
Colombia
ContourGlobal Solutions Holdings Ltd
100%
Cyprus
ContourGlobal Solutions Ltd
100%
Cyprus
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 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, Brazil
Praia do Flamengo, 70 - 1º andar Rio de Janeiro - RJ,
Brazil
Praia do Flamengo, 70 - 2º andar, parte. Rio de Janeiro
- RJ, Brazil
Praia do Flamengo, 70 - 4º andar Rio de Janeiro - RJ,
Brazil
Praia do Flamengo, 70 - 6º andar, parte. Rio de Janeiro
- RJ, Brazil
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
207
Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
Consolidated subsidiaries
Ownership
Country of
incorporation
Registered address
Selenium Holdings Ltd
100%
Cyprus
ContourGlobal La Rioja, S.L
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
100%
100%
51%
51%
51%
51%
51%
100%
100%
100%
Spain
Spain
Spain
Spain
Spain
Spain
Spain
Spain
France
France
ContourGlobal Saint-Martin SAS
100%
France
ContourGlobal Management France SAS
ContourGlobal Worldwide Holdings Limited
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
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
Solar 6 S.R.L.
BS Energia New S.R.L.
ContourGlobal Management Italy S.R.L.
ContourGlobal Horus srl
Green Hunter Group Spa
Green Hunter Spa
Actasol 5 S.R.L.
Actasol 6 S.R.L.
Cinque S.R.L.
Marche Solare 1 Srl
Spf Energy Uno Srl
Spf Energy Due Srl
Spf Energy Tre Srl
ContourGlobal Kosovo L.L.C.
100%
100%
51%
51%
100%
100%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
100%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
100%
France
Gibraltar
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
ContourGlobal Luxembourg S.àr.l.
100%
Luxembourg
208
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.
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, France
8, Avenue Hoche 75008 Paris, France
5 Rue du Gal de Gaulle, 8 Immeuble le Colibri Marigot,
97150 Saint-Martin, France
Immeuble Imagine 20-26 boulevard du Parc 92200
Neuilly-sur-Seine, France
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
Contrada Piana del Signore s.n.c. 93012 Gela (CL), 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 T. Grossi 2, Milan 20121, Italy
Via T. Grossi 2, Milan 20121, Italy
Via T. Grossi 2, Milan 20121, Italy
Via T. Grossi 2, Milan 20121, Italy
Via T. Grossi 2, Milan 20121, Italy
Via T. Grossi 2, Milan 20121, Italy
Via T. Grossi 2, Milan 20121, Italy
Via T. Grossi 2, Milan 20121, Italy
Via T. Grossi 2, Milan 20121, Italy
Via T. Grossi 2, Milan 20121, Italy
Anton çeta 5a 1000 Pristina Republic of Kosovo
35-37 Avenue de la Liberté L-1931 Luxembourg, Grand
Duchy of Luxembourg
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Consolidated subsidiaries
Ownership
Country of
incorporation
Registered address
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
ContourGlobal Mirror 4 S.à.r.l
100%
Luxembourg
ContourGlobal Africa Topoco S.à.r.l
100%
Luxembourg
ContourGlobal Africa Energy S.à.r.l
100%
Luxembourg
Aero Flash Wind, S.A.P.I. DE C.V.
75%
Mexico
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
5 Rue de Strasbourg, L-2561 Luxembourg, Grand Duchy
of Luxembourg
5 Rue de Strasbourg, L-2561 Luxembourg, Grand Duchy
of Luxembourg
Mexico City, Mexico / Tax Address : Ciudad de Tecate,
Baja California
209
Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
Ownership
Country of
incorporation
Registered address
100%
100%
100%
100%
Mexico
Mexico
Mexico
Mexico
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
Consolidated subsidiaries
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
ContourGlobal Solutions (Nigeria) Ltd
Contourglobal Bonaire B.V.
Energía Eólica S.A.
ContourGlobal Peru SAC
100%
Mexico
100%
Mauritius
100%
100%
Nigeria
Netherlands
100%
Peru
100%
Peru
Energía Renovable Peruana S.A.
100%
Peru
Energía Renovable del Norte S.A.
ContourGlobal Solutions (Poland) Sp. Z o.o.
100%
100%
Peru
Poland
ContourGlobal Solutions (Ploiesti) S.R.L.
100%
Romania
Petosolar S.R.L.
Kivu Watt Ltd
RENERGIE Solarny Park Holding SK I a.s.
PV Lucenec S.R.O.
RENERGIE Solárny park Rimavské Jánovce s.r.o.
RENERGIE Solárny park Dulovo s.r.o.
RENERGIE Solárny park Gemer s.r.o.
RENERGIE Solárny park Hodejov s.r.o.
RENERGIE Solárny park Jesenské s.r.o.
RENERGIE Solárny park Nižná Pokoradz s.r.o.
RENERGIE Solárny park Riečka s.r.o.
RENERGIE Solárny park Rohov s.r.o.
RENERGIE Solárny park Starňa s.r.o.
RENERGIE Solárny park Včelince 2 s.r.o.
RENERGIE Solárny park Hurbanovo s.r.o.
AlfaPark s.r.o.
210
100%
100%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
Romania
Rwanda
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
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
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
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
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC Consolidated subsidiaries
Ownership
RENERGIE Druhá slnečná s.r.o.
SL03 s.r.o.
51%
51%
RENERGIE Solárny park Bánovce nad Ondavou s.r.o.
51%
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.
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 Trinity Power Ltd
ContourGlobal Solutions Ukraine LLC
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
100%
80%
100%
100%
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
100%
100%
100%
100%
100%
100%
Country of
incorporation
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Slovak
Republic
Senegal
Togo
Trinidad and
Tobago
Ukraine
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
US
US
US
Registered address
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
Pribinova 25, 811 09 Bratislava, Slovakia
2, Place de L'Indépendance, Dakar, BP 23607, Senegal
Route D'Aného, Baguida, BP 3662 , Lomé - Togo
P.O. BAG 498, Railway Road, Dow Village, Couva,
Trinidad and Tobago, W.I.
32, Konstantiniska street, 04071 Kiev, Ukraine
6th Floor Lesley Tower, 42-26 Fountain Street, Belfast
BT1 5EF, Ireland
55 Baker Street, London, W1U 8EW, United Kingdom
55 Baker Street, London, W1U 8EW, United Kingdom
55 Baker Street, London, W1U 8EW, United Kingdom
1209 Orange Street, Corporation Trust Center,
Wilmington, Delaware 19801, USA
1209 Orange Street, Corporation Trust Center,
Wilmington, Delaware 19801, USA
650 Fifth Ave - 17th Fl., New York, New York 10019, USA
211
Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
Consolidated subsidiaries
ContourGlobal Togo LLC
ContourGlobal Senegal Holdings LLC
ContourGlobal Senegal LLC
CG Solutions Global Holding Company LLC
Lea Power Partners, LLC
Borger Energy Associates, LP
Waterside Power, LLC
Badger Creek Limited
Bear Mountain Limited
Chalk Cliff Limited
Live Oak Limited
McKittrick Limited
Kern Front Limited
Double C Generation Limited
High Sierra Limited
WCAC Operating Company California, LLC
Carib Holdings, LLC
WGP Holdings II, LLC
WG Partners Holdings, LLC
WG Partners Acquisition, LLC
ContourGlobal Hummingbird US HoldCo Inc.
Ownership
Country of
incorporation
Registered address
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
2711 Centerville Road, Suite 400, Wilmington, Delaware
19808, USA
2711 Centerville Road, Suite 400, Wilmington, Delaware
19808, USA
1209 Orange Street, Corporation Trust Center,
Wilmington, Delaware 19801, USA
1209 Orange Street, Corporation Trust Center,
Wilmington, Delaware 19801, USA
12 Timber Creek Lane, Universal Registered Agents,
County of New Castle, Newark, Delaware 19711, USA
12 Timber Creek Lane, Universal Registered Agents,
County of New Castle, Newark, Delaware 19711, USA
12 Timber Creek Lane, Universal Registered Agents,
County of New Castle, Newark, Delaware 19711, USA
12 Timber Creek Lane, Universal Registered Agents,
County of New Castle, Newark, Delaware 19711, USA
12 Timber Creek Lane, Universal Registered Agents,
County of New Castle, Newark, Delaware 19711, USA
12 Timber Creek Lane, Universal Registered Agents,
County of New Castle, Newark, Delaware 19711, USA
12 Timber Creek Lane, Universal Registered Agents,
County of New Castle, Newark, Delaware 19711, USA
12 Timber Creek Lane, Universal Registered Agents,
County of New Castle, Newark, Delaware 19711, USA
12 Timber Creek Lane, Universal Registered Agents,
County of New Castle, Newark, Delaware 19711, USA
12 Timber Creek Lane, Universal Registered Agents,
County of New Castle, Newark, Delaware 19711, USA
12 Timber Creek Lane, Universal Registered Agents,
County of New Castle, Newark, Delaware 19711, USA
12 Timber Creek Lane, Universal Registered Agents,
County of New Castle, Newark, Delaware 19711, USA
12 Timber Creek Lane, Universal Registered Agents,
County of New Castle, Newark, Delaware 19711, USA
12 Timber Creek Lane, Universal Registered Agents,
County of New Castle, Newark, Delaware 19711, USA
12 Timber Creek Lane, Universal Registered Agents,
County of New Castle, Newark, Delaware 19711, USA
12 Timber Creek Lane, Universal Registered Agents,
County of New Castle, Newark, Delaware 19711, USA
12 Timber Creek Lane, Universal Registered Agents,
County of New Castle, Newark, Delaware 19711, USA
Investments in associates accounted under the equity method:
Ownership
TermoemCali I S.A. E.S.P.
Compañía Eléctrica de Sochagota S.A. E.S.P.
Evacuacion Villanueva des Rey, S.L.
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
212
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 4.31. Related party disclosure
ContourGlobal L.P. and Reservoir Capital Group
As of December 31, 2021 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 $9.6 million in
December 31, 2021 (December 31, 2020: $15.2 million).
In $ millions
Salaries and short term employee benefits
Termination benefits
Post employment benefits
Profit-sharing and bonus schemes
Private incentive plan1
Non-Executive Directors' emoluments
Other share based payments
Total
1. The private incentive plan ended 31 December 2020.
Years ended December 31
2021
5.1
–
0.2
2.0
–
0.9
1.4
9.6
2020
4.6
–
0.1
2.0
6.6
0.8
1.1
15.2
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, 2021, the Group has completed its Maritsa construction projects and had $0.2 million of firm purchase
commitments of property plant and equipment outstanding in connection with its facilities. The Group also has contractual
arrangements with Operating and Maintenance (O&M) providers and transmission operators in relation 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 12,890 thousand standard
tons, equal to $123.7 million at December 2021 prices ($9.59 per standard ton), as compared to 19,077 thousand standard tons
equal to $196.6 million at the end of 2020 ($10.31 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.
The Group also has agreements related to our Austria Wind project repowering started in 2017. As of December 31, 2021 we are
committed to purchase €48.3 million ($54.9 million) worth of equipment and installation during 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.
213
Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
Kivuwatt arbitration (KivuWatt Ltd)
REG, which replaced its subsidiary Energy Utility Corporation as the claimant in an ad hoc arbitration under the arbitration rules
of the United Nations 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 31 December 2021 in relation to the above claims as the Group considers that it is less
than probable that liabilities will arise from these claims.
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 $56.6 million as of December 31, 2021.
As an unfavorable outcome is considered unlikely, a contingent liability has been disclosed in relation to the guarantees as
opposed to a provision. Further, in the unlikely event that the wheeling fees increase is confirmed in the final judgment, the
Company will recharge most of the increased fees to the related offtakers and will incur additional wheeling fees below $12
million in relation to the years ended 31 December 2020 and 2021.
Togo
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 $58 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
2021.
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.
c) Leasing activities
Operating lease as a lessor
The Group is lessor under non-cancelable 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
2021
20201
166.5
537.6
513.8
1,217.9
76.6
253.7
27.7
358.0
1. The comparative has been updated to include $110.2 million aggregate minimum lease payments receivable under non-cancellable operating lease relating to
Bonaire and to use forecasted future revenue as a basis of minimum lease payments receivable.
214
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC The property, plant and equipment related to the assets as the operating lease as a lessor relates to Solutions plants, Energie
Antilles, Bonaire, Hobbs, Five Brothers and Trinity for the year ended December 31, 2021 as follows.
In $ millions
Cost
Accumulated depreciation and impairment
Carrying amount as of January 1, 2021
Additions
Disposals
Reclassification
Acquired through business combination1
Currency translation differences
Depreciation charge
Closing net book amount
Cost
Accumulated depreciation and impairment
Carrying amount as of December 31, 2021
Land
0.1
–
0.1
–
–
–
5.5
–
–
5.6
5.6
–
5.6
Power plant
assets
Construction
work in progress
Right of use
assets
263.5
(169.2)
94.3
2.1
(1.0)
1.2
240.8
(2.7)
(28.7)
306.0
502.4
(196.4)
306.0
1.6
–
1.6
2.3
–
(1.4)
–
(0.1)
–
2.4
2.4
–
2.4
0.9
(0.5)
0.4
–
–
0.1
0.9
–
(0.3)
1.1
1.8
(0.7)
1.1
Other
9.3
(8.0)
1.3
2.0
–
0.1
1.2
0.1
(1.6)
3.1
5.2
(2.1)
3.1
Total
275.4
(177.7)
97.7
6.4
(1.0)
–
248.4
(2.7)
(30.6)
318.2
517.4
(199.2)
318.2
1. Assets acquired through business combination relate to the operating leases of our United States of America and Trinidad and Tobago portfolios, detailed in
note 3.1 and 4.2.
The property, plant and equipment related to the assets as the operating lease as a lessor relates to Solutions plants, Energie
Antilles and Bonaire 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, 20201
Land
Power plant
assets
Construction
work in progress
Right of use
assets
0.1
–
0.1
–
–
–
–
–
0.1
0.1
–
0.1
270.6
(159.3)
111.3
1.5
(1.1)
2.6
(6.0)
(14.0)
94.3
263.5
(169.2)
94.3
2.6
–
2.6
2.0
–
(3.0)
–
–
1.6
1.6
–
1.6
0.8
(0.2)
0.6
–
–
0.1
–
(0.3)
0.4
0.9
(0.5)
0.4
Other
8.3
(5.4)
2.9
0.6
–
0.5
(0.2)
(2.5)
1.3
9.3
(8.0)
1.3
Total
282.4
(164.9)
117.5
4.1
(1.1)
0.2
(6.2)
(16.8)
97.7
275.4
(177.7)
97.7
1. Property, plant and equipment related to the assets as the operating lease as a lessor have been updated to include $57.2 million relating to Bonaire,
$16.5 million relating to Solutions Brazil and to exclude $94.0 million relating to Brazil Hydro for the year ended December 31, 2020.
215
Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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
2021
2020
5.6
5.6
–
11.2
(1.3)
9.9
6.0
12.1
–
18.1
(2.9)
15.2
Years ended December 31
2021
2020
5.2
4.7
–
9.9
5.6
9.6
–
15.2
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.
216
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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
2021
2020
1.7
1.5
0.4
1.3
–
–
–
4.9
1.3
1.0
0.4
0.6
–
–
–
3.3
4.35. Subsequent events
In January 2022, Kani Lux Holdings S.à r.l., a majority-owned subsidiary of ContourGlobal plc signed a definitive agreement with
Infraestrutura Brasil Holding XVII S.A to sell the Brazil Hydro portfolio. Refer to note 3.1.
217
Strategic ReportGovernanceFinancial Statements NO TES TO TH E COMPANY FINANCIAL STATEMENT S
NOTES TO THE COMPANY FINANCIAL STATEMENTS
Year ended December 31, 2021
Company balance sheet
At 31st December 2021
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
2021
2020
6
7
8
9
10
2,148.0
1,642.1
4.2
0.7
4.9
(2.9)
2.0
2,150.0
8.9
380.8
(37.8)
1,798.1
2,150.0
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
The Company’s profit for the year ended 31 December 2021 was $622.7 million (2020: $124.2 million).
The financial statements on pages 218 to 223 were approved and authorized for issue by the Board and were signed on its
behalf by:
Joseph C. Brandt
Director
17th March 2022
Registered Number: 10982736
Company statement of changes in equity
For the year ended 31 December 2021
In $ millions
At January 1, 2020
Share based payments(1)
Dividends distribution(2)
Treasury shares(3)
Profit for the year
At December 31, 2020
Share based payments(1)
Dividends distribution(2)
Treasury shares(3)
Profit for the year
At December 31, 2021
Called-up
share capital
Share premium
account
Treasury
shares
Retained
earnings and
other reserves
8.9
–
–
–
–
8.9
–
–
–
–
8.9
380.8
–
–
–
–
380.8
–
–
–
–
380.8
–
–
–
(30.4)
–
(30.4)
–
–
(7.4)
–
(37.8)
1,267.6
1.9
(105.7)
–
124.2
1,288.0
1.9
(114.5)
–
622.7
1,798.1
Total
1,657.3
1.9
(105.7)
(30.4)
124.2
1,647.3
1.9
(114.5)
(7.4)
622.7
2,150.0
1. Includes CEO deferred bonus award and Long Term Incentive Plan impact on equity.
2. During the year ended 31 December 2021 the Group paid dividends of $26.6 million on 19 April 2021, $29.3 million on 11 June 2021, $29.3 million on 10
September 2021 and $29.3 million on 19 November 2021. During the year ended 31 December 2020 the Group paid dividends of $24.8 million on 9 April 2020,
$27.1 million on 26 June 2020, $27.0 million on 25 September 2020 and $26.8 million on 29 December 2020. For further details on dividends paid, refer to page
194 of the Group’s financial statements.
3. See note 10.
218
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC
Notes to the Company financial statements
1. General information
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.
2. Statement of compliance
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.
3. Summary of Significant Accounting Policies
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 2021, and the comparative year financial information presented is for
the year ended 31 December 2020.
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:
• The requirements of Section 4 Statement of Financial Position 4.12 (a) (iv);
• The requirements of Section 7 Statements of Cash Flows;
• The requirements of Section 3 Financial Statement Presentation paragraph 3.17 (d); and
• 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)(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.
219
Strategic ReportGovernanceFinancial Statements NO TES TO TH E COMPANY FINANCIAL STATEMENT S
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
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 fair value less costs of disposals or value in use. If this is the case, an impairment charge is recorded to
reduce the carrying value of the related investment.
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.
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 equity.
Treasury shares
The Company 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.
At year end, treasury shares are included under “Treasury shares” in the statement of financial position and are measured at cost.
The gains and losses obtained on disposal of treasury shares are recognized in “Retained earnings and other reserves” in the
statement of financial position. There has been no disposal of treasury shares during the years ended 31 December 2021 and 2020.
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.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. A deferred tax
asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can
be utilized. Unrecognized deferred tax assets as at 31 December 2021 were $6.2 million ($3.6 million in 2020).
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 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.
220
ANNUAL REPORT 2021 | CONTOURGLOBAL PLC 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 payables 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.
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. Interim dividends are
recognized in the period in which they are paid.
3.9. Critical accounting judgments 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 judgment in the process of applying the Company’s accounting policies. The area involving a
higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements is:
• Carrying value of investments.
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.
As at December 31, 2021 the market capitalization was $1.7 billion, which is below the carrying value of investments of $2.1 billion and as
such was identified as an indicator of impairment. An impairment assessment was performed on a fair value less costs of disposal basis
by taking into account certain market information, including Adjusted EBITDA multiples of market transactions from comparable entities
within the energy sector. The implied multiple for the Company, based on the year end market capitalization, was significantly less than
the Adjusted EBITDA multiples for comparable market transactions, indicating that the carrying value of investments is recoverable. This
judgement was also confirmed by other information and support seen by the directors.
4. Directors’ Emoluments and employees
The Company had nine Directors and an average of two employees in the year to 31 December 2021 (the Company had nine Directors
and an average of four employees in the year to 31 December 2020). In each period, 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 employee charges, including
Directors, recognized in the Company’s profit and loss statement in 2021 amounted to $3.4 million (2020: $3.7 million).
In $ millions
Wages and salaries
Social security costs
Other pension costs
Share-based payments
Total employee costs
2021
1.3
0.2
-
1.9
3.4
Full details of the Directors’ remuneration and interests are set out in the Directors’ remuneration report on page 112 to 129.
2020
1.4
0.3
0.1
1.9
3.7
221
Strategic ReportGovernanceFinancial Statements NO TES TO TH E COMPANY FINANCIAL STATEMENT S
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
5. Auditors’ fees
The amount payable to the Company’s auditors in respect of the statutory audit were $24,000 (2020: $24,000).
6. Investments in subsidiaries
In $ millions
At 1 January
Creation of CG Hummingbird UK Holdco I limited
At 31 December
2021
1,642.1
505.9
2,148.0
2020
1,642.1
-
1,642.1
In 2021 the Company received $628.4 million of dividends from ContourGlobal Worldwide Holdings SARL (2020: $137.9 million).
The Company’s directly wholly owned subsidiaries are ContourGlobal Worldwide Holdings S.à.r.l and ContourGlobal
Hummingbird UK Holdco I limited that was created in 2021 for the acquisition of the Western Generation portfolio in February
2021. A full list of indirect subsidiaries and other undertakings as required by Section 409 of the Companies’ Act 2006 is shown
on pages 206 to 212 of the Group’s financial statements.
7. Debtors
In $ millions
Amounts owed by Group undertakings
VAT recoverable
Prepayments and accrued income
2021
3.2
0.4
0.6
4.2
2020
2.9
0.5
0.5
3.9
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
2021
0.4
1.9
0.4
0.2
2.9
2020
0.7
2.4
0.4
0.2
3.7
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 2021 and 31 December 2020.
As of 31 December 2021 and 2020, 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 either year.
10. Treasury shares
On 1 April 2020 ContourGlobal Plc announced a buyback program 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 then
further extended to December 31, 2020 and then to March 31, 2021.
During the year ended December 31, 2021, the Company repurchased 2,624,774 treasury shares at an average price of 208.4 pence
per share for an aggregate amount of £5.5 million ($7.4 million), representing 0.40% of its share capital and used 427,440 shares in
respect of the 2018 Long Term Incentive Plan. Since the beginning of the buyback program, the Company repurchased a net amount of
14,572,065 treasury shares, representing 2.17% of its share capital and a cumulative consideration paid of $37.8 million.
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ANNUAL REPORT 2021 | CONTOURGLOBAL PLC
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:
• $8.5 million guarantee to cover Kivuwatt debt service reserve account;
• Guarantee on cash shortfall for debt service in ContourGlobal Togo; the loan balance as at 31 December 2021 is $72.3 million;
• 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 2021 this related to instruments with a nominal value of $16.5 million and a fair value
as at year-end of $0.8 million;
• Parent guarantor (as defined in the indenture) under the €850 million bond indenture dated 19 July 2018 (out of which €400
million is outstanding) and under the €710 million bond indenture dated 17 December 2020;
• Guarantor under the $40 million Western Generation portfolio acquisition in North America bridge facility dated 10 December
2020;
• Guarantor under the corporate level revolving credit facility of €120 million dated 10 December 2020 (€40 million was drawn
against this credit facility as of 31 December 2021);
• Guarantor under the corporate level letter of credit facility of €75.75 million dated 29 March 2019;
• Guarantor under the corporate level letter of credit facility of €50 million dated 10 March 2020;
• BRL 74.5 million guarantee to Chapada I letters of credit providers corresponding to 25% of the debt;
• Mexican CHP. $35 million letter of credit signed on February 5, 2021 which replaced the letter of credit previously issued
under the UniCredit facility released for $32 million on May 5, 2021 at the corporate level. Maturity is in February 2023; and
• $12.0 million guarantee to cover Caribbean refinancing debt service reserve letter of credit.
12. Related parties
In 2020 and 2021 none of the Company or its subsidiaries have contracted with related parties. As of 31 December 2021 and 31
December 2020, the Company has no balance due to or receivables from related parties other than amounts due to and from
subsidiary undertakings.
The directors’ emoluments are disclosed on page 118 to 127 within the Annual Report on Remuneration for the years ended 31
December 2021 and 2020.
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 Relationship Agreement is disclosed on page 132 within the Annual Report on Directors’ report for the year ended 31
December 2021.
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Strategic ReportGovernanceFinancial Statements CO NTOURGLOBAL PLC AND SUBSIDIARIES
SH A REHOLDER
INFO RM ATION
Year ended 31st December 2021
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
organisation 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 and 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
LDC Nominee Secretary Limited
contourglobalcosec@lawdebenture.com
Investor relations contact
Jose Cano
jose.cano@contourglobal.com
Registered office
5th Floor
55 Baker Street
London
W1U 8EW
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. Lines are open 8.30am to 5.30pm Mondays to Fridays, excluding Bank Holidays in England and Wales.
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ContourGlobal plc
55 Baker Street
5th Floor
London
W1U 8EW
United Kingdom
www.contourglobal.com