TIDMGLO
RNS Number : 8255H
ContourGlobal PLC
06 August 2021
ContourGlobal plc
Interim Results Announcement
Strong operational and financial performance, maintaining 10%
annual dividend increase with quarterly dividend of USD 4.465 cents
/ 3.2 03 pence per share
Full-year 2021 Adj EBITDA guidance raised to $780 - $810
million
ContourGlobal plc ("ContourGlobal" or the "Company"), an
international owner and operator of contracted power generation
plants, today announces its half year results for the six months
ended 30 June 2021.
H1 2021 KEY HIGHLIGHTS
-- Strong operational performance across the fleet of 115 power plants
-- Consolidated revenue up 38% to $935m ($680m in H1 2020)
-- Continued strong financial performance with Adjusted EBITDA
of $406m up 16% from $351m in H1 2020, driven by the Western
Generation acquisition (+$32.2m), stronger operational performance
in renewables (+$5.5m) mainly at our Brazilian Wind assets, and a
net positive FX impact of $13.6m mainly driven by EUR:USD
appreciation
-- Income from Operations is up 15% versus H1 2020 to $181m
-- Funds from Operations ("FFO") of $219m, a 27% increase from
$172m in H1 2020 with a cash conversion[1] of 54% significantly
improved from 49% in H1 2020, mainly due to the addition of Western
generation and higher cash conversions in Brazil Wind, Italy Solar,
Vorotan and Mexico CHP in H1 2021 compared to H1 2020
-- Increase of full year guidance of Adjusted EBITDA to $780 - 810m[2]
-- Second quarter dividend of 4.465 cents per share, equivalent
to 3.203 pence per share[3], to be paid on 10 September 2021,
reflecting our commitment to a 10% year-on-year growing dividend
supported by our strong and visible cash flows. Dividend cover
remains strong at 1.9x[4]
-- Positive outlook for future growth, value realization and return of capital to shareholders
Joseph C. Brandt, President and Chief Executive Officer of
ContourGlobal, said :
"We performed very well in the first half of 2021 with better
than plan operating and financial performance across the entire
fleet. EBITDA for H1 2021 was $406 million, up 16% versus the same
period last year. At the same time our cash conversion ratio
increased to 54%.
We are raising our full-year 2021 guidance to $780 - $810
million and are pleased to confirm that we will pay a Q2 2021
dividend of 4.465 USD cents per share, in line with our 10%
year-on-year dividend growth policy. In combination with prior
share buybacks, the Company has returned more than $411[5] million
to our shareholders since IPO and continues to focus on unlocking
value in the portfolio including through farm downs and the
divestitures of our Brazilian renewable portfolio which is
currently underway, progressing well and expected to be announced
later this year. Moreover our renewables portfolio contributed
$226m of Proportionate Adjusted EBITDA in the past twelve months,
representing 36% of total Proportionate Adjusted EBITDA. Applying
current private market transaction and public market trading
multiples for comparable companies, the implied valuation of our
renewables fleet is close to GLO's entire market capitalization. We
are actively evaluating transactions to realize this value and
close the discrepancy between our stock price and our underlying
value.
I am particularly pleased that this performance has been
achieved while maintaining our primary focus, as always, on the
safety and wellbeing of our people. We continue to pursue "Target
Zero", with zero Lost Time Incidents in the 2.2 million hours
worked across our 115 assets in the first six months of the
year.
The integration of our 1.5 GW Western Generation acquisition
continues to advance in line with our expectations and the acquired
assets are performing well operationally and financially.
Impressively, our 604 MW Hobbs flagship CCGT in New Mexico achieved
its best operational performance in 13[6] years, despite the asset
being actively integrated at the same time. We also have
successfully onboarded all on-site employees in the United States
and Trinidad and Tobago. In Europe, we continue to drive our Solar
roll-up strategy in Italy with the announcement of the 18 MW solar
acquisition in June which is expected to close in the second half
of the year. We will continue to execute on operationally led
acquisition opportunities in the low carbon power generation
space.
Looking forward to the second half of 2021, we remain confident
and committed to unlocking value and delivering further attractive
risk adjusted returns for our shareholders."
In US$ millions H1 H1 % YOY
2021 2020 change
Revenue 935 680 + 38 %
------- ------- ---------
Income from Operations 181 158 + 15 %
------- ------- ---------
Adjusted EBITDA* 406 351 +16 %
------- ------- ---------
Thermal Adj. EBITDA 261 213 + 23 %
------- ------- ---------
Renewable Adj. EBITDA 160 155 +4 %
------- ------- ---------
Corporate and other costs (15) (17) - 11 %
------- ------- ---------
Proportionate Adjusted EBITDA* 327 275 + 19 %
------- ------- ---------
Funds from Operations (FFO)* 21 9 172 +2 7%
------- ------- ---------
Net Profit 38 75 -49 %**
------- ------- ---------
Adjusted Net Profit* 25 42 -40%
------- ------- ---------
Net Profit attributable to CG shareholders 38 71 -46 %**
------- ------- ---------
Adjusted Net Profit attributable to
CG shareholders* 25 38 -34%
------- ------- ---------
*Non-IFRS metrics
** Net profit in H1 2020 included a non-cash revaluation of a
derivative in Mexican CHP, of $34m set out below in Adj. EBITDA to
IFRS Net Profit bridge
Robust Financial Performance
-- Consolidated revenue up 38% to $935m ($680m in H1 2020).
Performance supported by acquisition of Western Generation in
February 2021 (+$86.7m), higher CO2 quotas pass-through revenue at
Maritsa (+$63.8m), higher generation with higher prices due to cold
weather at Arrubal (+$36.1m), higher generation and higher gas
sales prices at Mexican CHP (+$30.5m) and favorable FX movements
(+$40.7m). These were partially offset by lower revenue in the
French Caribbean (-$15.9m) due to the Energies Antilles PPA
expiration in June 2020
-- Adjusted EBITDA of $ 406 m, compared to $ 351 m in H1 20 20 ,
primarily driven by the Western Generation acquisition (+$32.2m),
better resource in renewables (+$5.5m) mainly at our Brazilian Wind
assets, and a net positive FX impact of $13.6m driven by EUR:USD
appreciation
-- Strong cashflow generation; funds from operations up to
$219m, a 27% increase from $172m in H1 2020. Cash conversion also
increased to 54% vs 49% in H1 2020
-- Net profit attributable to ContourGlobal plc shareholders was
$38m compared to $75m in H1 2020, mainly driven by a net change in
the fair value of a derivative related to the CHP Mexico fixed
margin swap for H1 2020 (+$37.1m), compared to H1 2021 (+$3.4m),
resulting in basic EPS of $0.06 per share
-- Net consolidated leverage ratio of 5.0 x[7] at 30 June 2021
versus 4.4x at 30 June 2020, with the increase driven by the
Western Generation acquisition
Successful operational performance and growth of the
portfolio
-- Continued industry leader in Health and Safety with Target
Zero achieved in the first half of 2021 (0 LTIs)
-- Successful completion of our Vorotan refurbishment ahead of
schedule without supply chain disruption impacting the
execution
-- Availability Factors remained strong in H1 2021, with
individual segments shown below. Thermal availability factors
remained well above any minimum PPA requirements
Equivalent Availability Factors H1 2021 H1 2020
('EAF') (%)
Thermal 94.8% 97.4%
-------- --------
Hydro 98.3% 96.3%
-------- --------
Wind 93.8% 96.3%
-------- --------
Solar PV 99.6% 99.6%
-------- --------
Solar CSP 94.1% 94.6%
-------- --------
EPS
-- EPS for H1 2021 is down to $0.06 cents from $0.11 cents in H1
2020, due to the movement in net profit above
-- Adjusted EPS down to $0.04 cents from $0.06 cents, primarily
due to higher unrealized FX in H1 2021 of -$14.5m, compared to
-$6.8m in H1 2020
Shareholder returns
-- Second quarter dividend of $29.30m or 4.465 cents per share, to be paid on 10 September 2021
-- Including today's announced dividend, a total of $411m has
been returned to shareholders since listing via dividends and share
buybacks
-- The Directors continue to expect to increase the dividend annually by 10%
Arrubal contract expiration
-- The PPA with our off-taker Naturgy Energy Group S.A for our
Spanish natural gas fired power generation asset Arrubal expired
according to its terms on July 31
-- The Company is pursuing several strategic options related to
the facility and expects to keep the asset uncontracted in the
meantime. Assuming the near-term introduction of a Capacity
Remuneration Mechanism in the Spanish electricity market, the
Company assumes that Arrubal will be contracted and generate
approximately $15 - 20m EBITDA on average over the next 10 - 15
years
Outlook
ü We are increasing our full-year guidance and now expect 2021
Adjusted EBITDA in the range of $780 - 810m(1) for 2021 excluding
potential farm-down gains
Presentation and conference call
The Company will host a conference call for analysts and
investors at 08.30 BST, 6 August 2021
The meeting can be accessed via a live webcast and dial-in.
Details provided below. A copy of the presentation will also be
made available online ahead of the meeting on our website at
https://www.contourglobal.com/reports
Webcast link
https://broadcaster-audience.mediaplatform.com/#/event/60e84e1f394436037b4688af
Conference details
Standard International Access
+44 (0) 33 0551 0200
US +1 212 999 6659
Switzerland
+41 (0) 22 592 7915
Singapore Local
+65 6494 8889
Password: ContourGlobal
Enquiries
Alice Heathcote
SVP, Corporate Strategy & Investor Relations
Email:
Alice.Heathcote@contourglobal.com
Phone:
+44.203.626.9077 / +1.646.386.9901
Media - Brunswick
Charles Pretzlik / Will Medvei
Tel: +44 (0) 207 404 5959
Contourglobal@brunswickgroup.com
Additional Information
Adj. EBITDA to IFRS Net Profit bridge (US$m) H1 2021 H1 2020
Proportionate Adjusted EBITDA 327 275
Minority interests 79 76
Adjusted EBITDA 406 351
Share of adjusted EBITDA in associates (12) (10)
Share of profit in associates 9 7
Acquisition related items (8) (4)
Private incentive plan - (3)
Mexico CHP fixed margin swap 3 (5)
Change in finance lease and financial concession
assets (17) (18)
Other (1) (3)
Depreciation and Amortization (191) (151)
Net finance costs, foreign exchange gains
and losses, and changes in fair value of
derivatives (125) (63)
Income tax (28) (27)
--------------------------------------------------- ------- -------
Net profit 38 75
Mexico CHP fixed margin swap (6) (34)
FX unrealized (15) (7)
Acquisition related items 8 4
Private incentive plan - 3
--------------------------------------------------- ------- -------
Adjusted net profit 25 42
Minorities - 4
Net profit to CG PLC shareholders 38 71
Adj. Net profit to CG PLC shareholders 25 38
Normal EPS ($ cents) $0.06 $0.11
Adjusted EPS ($ cents) $0.04 $0.06
--------------------------------------------------- ------- -------
Adj. EBITDA to Cashflow from Operations H1 2021 H1 2020
Bridge (US$ million)
--------------------------------------------------- ------- -------
Adjusted EBITDA 406 351
--------------------------------------------------- ------- -------
Change in working capital 27 37
--------------------------------------------------- ------- -------
Income tax paid -14 -13
--------------------------------------------------- ------- -------
Share of Adj EBITDA in associates -12 -10
--------------------------------------------------- ------- -------
Contribution received from associates 1 7
--------------------------------------------------- ------- -------
Acquisition related items -7 -
--------------------------------------------------- ------- -------
Restructuring costs - -2
--------------------------------------------------- ------- -------
Cash Flow from Operations 401 370
--------------------------------------------------- ------- -------
Change in working capital -27 -37
--------------------------------------------------- ------- -------
Acquisition related items 7 -
--------------------------------------------------- ------- -------
Interest paid -100 -100
--------------------------------------------------- ------- -------
Maintenance capex -20 -23
--------------------------------------------------- ------- -------
Other distributions received from associates 8 0
--------------------------------------------------- ------- -------
Cash distribution to minorities -50 -38
--------------------------------------------------- ------- -------
Funds from Operations 219 172
--------------------------------------------------- ------- -------
Cash Conversion (Funds from Operations/Adj.
EBITDA) 54% 49%
------- -------
PRINCIPAL RISKS AND UNCERTAINTIES
The Company has reassessed its principal risks, including the
ongoing impact of the COVID -- 19 pandemic. The principal risks and
uncertainties set out at the time of the Annual Report and Accounts
2020 (issued in April 2021) remain unchanged, with the exception of
Information technology - Cyber security and system integrity.
The assessed risk level of the Information technology - Cyber
security and system integrity principal risk has increased since 31
December 2020, following the increased frequency and increased
potential impact of cyber attacks on critical infrastructure
assets. Whilst the assessed level of risk has increased, there has
been no change to the assessment of impact or the risk
response/mitigation as disclosed in the 31 December 2020 annual
report. Other principal risks (that are unchanged) include:
-- Strategy - The impact of Governmental actions and regulations;
-- Strategy - Geopolitical uncertainties and social instability;
-- Strategy - Pandemic virus;
-- Strategy - Disruptive innovation in power generation and storage technologies;
-- Strategy - Supply chain;
-- Operation and execution - Project execution (CAPEX);
-- Operation and execution - Asset integrity (OPEX);
-- Operation and execution - Resources/climate change;
-- Health, safety and environment and food - prevention and regulation;
-- Regulatory and compliance - Fraud, bribery and corruption
-- People and organization - Key people succession planning
RESPONSIBILITY STATEMENT
The directors confirm that these condensed interim financial
statements have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and that the
interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related-party transactions in the first six months
and any material changes in the related-party transactions
described in the last annual report.
By order of the Board,
Chief Executive Officer
Joseph C. Brandt
Unaudited Interim Consolidated Financial Statements
CONTOURGLOBAL PLC and subsidiaries
As of June 30, 2021
CONTOURGLOBAL PLC and subsidiaries
Unaudited interim consolidated statement of income and other
comprehensive income
As of June 30, 2021
Unaudited interim consolidated statement of income and other
comprehensive income
For the six months
ended June 30
-----------------------
In $ millions Note 2021 2020
Revenue 4.2 934.9 680.2
-------------------------------------------------- ----- ----------- ----------
Cost of sales 4.3 (730.8) (494.7)
Gross profit 204.1 185.5
-------------------------------------------------- ----- ----------- ----------
Selling, general and administrative expenses 4.3 (18.1) (19.2)
Other operating income 3.7 3.7
Other operating expenses 4.3 (0.8) (8.1)
Acquisition related items (7.5) (3.8)
Income from Operations 181.4 158.2
-------------------------------------------------- ----- ----------- ----------
Share of profit in associates 8.6 6.5
Finance income 4.4 1.5 3.3
Finance costs 4.4 (149.0) (121.9)
Realized and unrealized foreign exchange
gains and change in fair value of derivatives 4.4 23.0 55.5
65.5 101.6
-------------------------------------------------- ----- ----------- ----------
Income tax expenses 4.5 (27.6) (26.8)
Net profit 37.9 74.8
-------------------------------------------------- ----- ----------- ----------
Profit / (Loss) attributable to
- Equity shareholders of the Company 37.7 71.0
- Non-controlling interests 0.2 3.8
Earnings per share (in $)
- Basic 0.06 0.11
- Diluted 0.06 0.11
Six months ended
June 30
-----------------------
In $ millions 2021 2020
Net profit for the period 37.9 74.8
-------------------------------------------------- ----- ----------- ----------
Gain / (Loss) on hedging transactions 35.1 (62.5)
Cost of hedging reserve (0.1) -
Deferred taxes on gain / (loss) on hedging
transactions (9.3) 17.8
Currency translation differences 23.4 (88.5)
Items that may be reclassified subsequently
to income statement 49.1 (133.2)
-------------------------------------------------- ----- ----------- ----------
Other comprehensive profit/(loss) for
the period net of tax 49.1 (133.2)
-------------------------------------------------- ----- ----------- ----------
Total comprehensive profit/(loss) for
the period 87.0 (58.4)
-------------------------------------------------- ----- ----------- ----------
Attributable to
- Equity shareholders of the Company 83.9 (37.2)
- Non-controlling interests 3.1 (21.2)
CONTOURGLOBAL PLC and subsidiaries
Unaudited interim consolidated statement of financial
position
As of June 30, 2021
Unaudited interim consolidated statement of financial
position
In $ millions Note As of June 30, As of December
2021 31, 2020
Non-current assets 5,158.2 4,375.7
------------------------------------ ----- --------------- ---------------
Intangible assets and goodwill 4.6 565.1 319.7
Property, plant and equipment 4.7 4,058.2 3,517.1
Financial and contract assets 392.0 408.3
Investments in associates 27.9 29.5
Derivative financial instruments 4.9 0.2 1.1
Other non-current assets 50.9 42.5
Deferred tax assets 4.5 63.9 57.5
Current assets 1,044.4 1,995.1
------------------------------------ ----- --------------- ---------------
Inventories 222.3 247.4
Financial and contract assets 29.6 30.0
Trade and other receivables 295.7 264.0
Current income tax assets 18.4 21.3
Derivative financial instruments 4.9 0.3 0.4
Other current assets 43.1 35.1
Cash and cash equivalents 435.0 1,396.9
Total assets 6,202.6 6,370.8
------------------------------------ ----- --------------- ---------------
In $ millions As of June 30, As of December
2021 31, 2020
Total equity and non-controlling
interests 360.0 337.7
------------------------------------ ----- --------------- ---------------
Issued capital 8.9 8.9
Share premium 380.8 380.8
Treasury shares (37.8) (30.4)
Retained earnings and other
reserves (145.6) (176.9)
Non-controlling interests 153.7 155.3
Non-current liabilities 4,609.3 4,492.2
------------------------------------ ----- --------------- ---------------
Borrowings 4.13 3,967.7 3,895.5
Derivative financial instruments 4.9 98.8 151.0
Deferred tax liabilities 4.5 321.9 269.0
Provisions 84.0 51.8
Other non-current liabilities 136.9 124.9
Current liabilities 1,233.3 1540.9
------------------------------------ ----- --------------- ---------------
Trade and other payables 349.5 333.7
Borrowings 4.13 607.4 934.8
Derivative financial instruments 4.9 34.0 41.0
Current income tax liabilities 29.4 24.3
Provisions 14.5 12.3
Other current liabilities 198.5 194.8
Total liabilities 5,842.6 6,033.1
------------------------------------ ----- --------------- ---------------
Total equity and non-controlling
interests and liabilities 6,202.6 6,370.8
------------------------------------ ----- --------------- ---------------
CONTOURGLOBAL PLC and subsidiaries
Unaudited interim consolidated statement of changes in
equity
As of June 30, 2021
In $ millions Share Share Treasury Currency Hedging Cost Actuarial Retained Total equity Non-controlling Total
capital premium shares Translation reserve of reserve earnings attributable interests equity
Reserve hedging to
reserve shareholders
of the
Company
-------- -------- --------- ------------ -------- -------- ---------- --------- -------------
Balance as of
December
31, 2019 8.9 380.8 - (101.2) (81.5) - (2.3) 180.1 384.8 165.3 550.1
------------------- -------- -------- --------- ------------ -------- -------- ---------- --------- ------------- ---------------- --------
Balance as of
January
1, 2020 8.9 380.8 - (101.2) (81.5) - (2.3) 180.1 384.8 165.3 550.1
------------------- -------- -------- --------- ------------ -------- -------- ---------- --------- ------------- ---------------- --------
Profit for the
period - - - - - - - 71.0 71.0 3.8 74.8
Other
comprehensive
(loss) - - - (64.0) (44.2) - - - (108.2) (25.0) (133.2)
Total
comprehensive
loss
for the period - - - (64.0) (44.2) - - 71.0 (37.2) (21.2) (58.4)
Purchase of
treasury
shares - - (6.8) - - - - - (6.8) - (6.8)
Employee share
schemes - - - - - - - 4.1 4.1 - 4.1
Transaction with
non-controlling
interests - - - - - - - - (3.8) (3.8)
Dividends - - - - - - - (51.8) (51.8) (3.3) (55.1)
Other - - - - - - - (0.1) (0.1) 0.2 0.1
Balance as of
June 30,
2020 8.9 380.8 (6.8) (165.2) (125.7) - (2.3) 203.3 293.0 137.2 430.2
------------------- -------- -------- --------- ------------ -------- -------- ---------- --------- ------------- ---------------- --------
Balance as of
January
1, 2021 8.9 380.8 (30.4) (179.2) (93.0) (1.5) (2.1) 98.9 182.4 155.3 337.7
------------------- -------- -------- --------- ------------ -------- -------- ---------- --------- ------------- ---------------- --------
Profit for the
period - - - - - - - 37.7 37.7 0.2 37.9
Other
comprehensive
profit - - - 21.5 24.8 (0.1) - - 46.2 2.9 49.1
Total
comprehensive
income
/ (loss) for
the period - - - 21.5 24.8 (0.1) - 37.7 83.9 3.1 87.0
Purchase of
treasury
shares - - (7.4) - - - - - (7.4) - (7.4)
Employee share
schemes - - - - - - - 0.9 0.9 - 0.9
Dividends - - - - - - - (55.9) (55.9) (2.5) (58.4)
Other - - - - - - 2.4 2.4 (2.2) 0.2
Balance as of
June 30,
2021 8.9 380.8 (37.8) (157.7) (68.2) (1.6) (2.1) 84.0 206.3 153.7 360.0
------------------- -------- -------- --------- ------------ -------- -------- ---------- --------- ------------- ---------------- --------
In $ millions Share Share Treasury Currency Hedging Cost Actuarial Retained Total equity Non-controlling Total
capital premium shares Translation reserve of reserve earnings attributable interests equity
reserve hedging and to
reserve other shareholders
reserves of the
Company
-------- -------- --------- ------------ -------- -------- ---------- --------- -------------
Balance as of
January
1, 2020 8.9 380.8 - (101.2) (81.5) - (2.3) 180.1 384.8 165.3 550.1
------------------- -------- -------- --------- ------------ -------- -------- ---------- --------- ------------- ---------------- --------
Profit for the
year - - - - - - - 16.0 16.0 12.6 28.6
Other
comprehensive
(loss) - - - (78.0) (11.5) (1.5) 0.2 - (90.8) (19.7) (110.5)
Total
comprehensive
loss
for the period - - - (78.0) (11.5) (1.5) 0.2 16.0 (74.8) (7.1) (81.9)
Purchase of
treasury
shares - - (30.4) - - - - - (30.4) - (30.4)
Employee share
schemes - - - - - - - 8.5 8.5 - 8.5
Contribution
received
from
non-controlling
interest - - - - - - - 3.4 3.4
Transaction with
non-controlling
interests - - - - - - - - - (1.0) (1.0)
Dividends - - - - - - - (105.7) (105.7) (5.4) (111.1)
Balance as of
December
31, 2020 8.9 380.8 (30.4) (179.2) (93.0) (1.5) (2.1) 98.9 182.4 155.3 337.7
------------------- -------- -------- --------- ------------ -------- -------- ---------- --------- ------------- ---------------- --------
CONTOURGLOBAL PLC and subsidiaries
Unaudited interim consolidated statement of cash flows
As of June 30, 2021
Six months ended
June 30
In $ millions 2021 2020
CASH FLOW FROM OPERATING ACTIVITIES
----------------------------------------------------- ---------- ---------
Net profit 37.9 74.8
----------------------------------------------------- ---------- ---------
Adjustment for:
Amortization, depreciation and impairment
expense 191.2 150.5
Change in provisions (1.1) (1.6)
Share of profit in associates (8.6) (6.5)
Realized and unrealized foreign exchange
gains and losses and change in fair value
of derivatives (23.0) (55.5)
Interest expenses - net 101.3 94.5
Other financial items 46.3 24.2
Income tax expense 27.6 26.8
Mexico CHP fixed margin swap (3.1) 5.1
Change in finance lease and financial
concession assets 16.7 18.1
Acquisition related items - 3.8
Other items 1.6 5.5
Change in working capital 27.4 37.0
Income tax paid (14.0) (13.3)
Contribution received from associates 0.4 7.3
Net cash generated from operating activities 400.6 370.7
----------------------------------------------------- ---------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
----------------------------------------------------- ---------- ---------
Purchase of property, plant and equipment (37.8) (37.5)
Purchase of intangibles (2.5) (1.6)
Acquisition of subsidiaries, net of cash
received (622.7) -
Other investing activities (3.4) (0.3)
Net cash used in investing activities (666.4) (39.4)
----------------------------------------------------- ---------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
----------------------------------------------------- ---------- ---------
Dividends paid (55.9) (51.8)
Purchase of treasury shares (7.4) (6.8)
Proceeds from borrowings 416.4 119.3
Repayment of borrowings (835.7) (193.6)
Debt issuance costs - net (11.0) (2.0)
Interest paid (99.8) (91.1)
Cash distribution to non-controlling interests (19.7) (18.3)
Dividends paid to non-controlling interest
holders (1.6) (3.2)
Transactions with non-controlling interest
holders, cash paid (28.0) (26.0)
Other financing activities (32.1) (40.8)
Net cash generated from financing activities (674.8) (314.3)
----------------------------------------------------- ---------- ---------
Exchange gains on cash and cash equivalents (21.3) (27.0)
----------------------------------------------------- ---------- ---------
Net change in cash and cash equivalents (961.9) (10.1)
----------------------------------------------------- ---------- ---------
Cash & cash equivalents at beginning of
the period 1,396.9 558.5
----------------------------------------------------- ---------- ---------
Cash & cash equivalents at end of the
period 435.0 548.4
----------------------------------------------------- ---------- ---------
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 renewables
assets in Europe, Latin America, United States of America and
Africa, and its registered office is:
7th Floor
Park House
116 Park Street
London
W1K 6SS
United Kingdom
Registered number: 10982736
ContourGlobal plc is listed on the London Stock Exchange.
The Group develops, acquires, operates and manages wholesale
power generation businesses on four continents. It focuses on both
underserved or niche markets and developed markets and evaluates
projects based on individual merit pursuing greenfield, brownfield
as well as acquisition opportunities as they arise. The Group
actively collaborates with governments, multilateral financial
institutions, manufacturers, contractors and other power and
non-power industry participants to provide innovative solutions to
the challenge of providing clean, reliable electricity.
The Group consists of a diversified portfolio of operating power
plants, power plants under construction, as well as projects in
pre-construction phase located in four broad geographic areas:
Europe, Latin America, United States of America and Africa. It is
comprised of 100% owned and/or majority controlled subsidiaries as
well as investments in which the Company holds a non-controlling
interest.
The Group's main corporate offices are in London (United
Kingdom), Luxembourg (Luxembourg), New York (United States), Paris
(France), Sao Paulo (Brazil) and Vienna (Austria) and these offices
provide administrative and technical support to operations and
development activities.
CONTOURGLOBAL PLC and subsidiaries
Basis of preparation
As of June 30, 2021
2. 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. There
was no impact or changes in accounting policies from the
transition.
This condensed interim consolidated financial statements for the
half-year reporting period ended 30 June 2021 has been prepared in
accordance with the UK-adopted IAS 34, "Interim Financial
Reporting" and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority. In
accordance with IAS 34, interim financial information is prepared
in order to update the most recent annual consolidated financial
statements prepared by ContourGlobal plc, placing emphasis on new
activities, occurrences and circumstances that have taken place
during the six months ended June 30, 2021 and not duplicating the
information previously published in the annual consolidated
financial statements for the year ended December 31, 2020.
Therefore, the condensed interim consolidated financial statements
do not include all the information that would be required in
complete consolidated financial statements. In view of the above,
for an adequate understanding of the information, these condensed
interim consolidated financial statements must be read together
with ContourGlobal plc consolidated financial statements for the
year ended December 31, 2020. The report of the auditors on those
accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under section 498 of
the Companies Act 2006.
In preparing these condensed interim consolidated financial
statements, the accounting policies, the significant judgments made
by management in applying ContourGlobal plc accounting policies and
the key sources of estimation uncertainty were the same as those
that applied to ContourGlobal plc consolidated financial statements
for the year ended December 31, 2020. In accordance with IAS34,
taxes on income in interim periods are accrued using the weighted
average effective income tax rate that would be applicable to the
expected total annual taxable profit or loss.
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.
The financial information is prepared in accordance with IFRS
under the historical cost convention, as modified for the
revaluation of certain financial instruments. The financial
information is presented in millions of U.S. Dollars, with one
decimal. Thus numbers may not sum precisely due to rounding.
The Directors have formed a judgement, at the time of approving
the condensed interim consolidated financial statements, that there
is a reasonable expectation that the Group 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 and having
reassessed the principal risks disclosed in the annual report for
the year ended December 31, 2020 and the ongoing risk related to
the Covid 19 pandemic, the Directors continue to adopt the going
concern basis in preparing the condensed interim consolidated
financial statements.
Impact of Covid-19:
The Group continues to experience no material financial impact
as a result of the coronavirus ('COVID-19' or 'the virus'),
consistent with the position at 31 December 2020. As such, there
has been no change in accounting implications under IFRS, on
non-financial assets, financial instruments, leases, revenue
recognition, non-financial obligations, going concern or events
after the reporting period.
Foreign currency translation
The assets and liabilities of foreign undertakings are
translated into US dollars, the Group's presentation currency, at
the period-end exchange rates. The results of foreign undertakings
are translated into US dollars at the relevant average rates of
exchange for the period. Foreign exchange differences arising on
retranslation are recognized directly in the currency translation
reserve.
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of transactions and from the translation of monetary
assets and liabilities denominated in foreign currencies are
recognized at period end exchange rates in the 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:
CLOSING RATES AVERAGE RATES
------------------------- ------------------------
At June 30 At December Six months ended June
31 30
----------- ------------ ------------------------
Currency 2021 2020 2021 2020
EUR / USD 1.1858 1.2216 1.2050 1.1018
BRL / USD 0.1999 0.1925 0.1861 0.2061
BGN / USD 0.6063 0.6246 0.6161 0.5633
MXN / USD 0.0505 0.0501 0.0496 0.0468
Seasonality of operations
The impact of seasonality on our Thermal operations is minimal
as our Thermal assets are generally operated under Power Purchase
Agreements ("PPAs") where we are compensated on the basis of
electrical capacity or availability whether or not the off-taker
requests the electrical output (capacity payments). We do have a
seasonal related impact on our Renewable operations. The amount of
electricity our renewable assets produce is dependent in part on
the amount of sunlight, or irradiation, wind and hydrology where
the assets are located. Because shorter daylight hours in winter
months results in less irradiation, the generation of particular
solar assets will vary depending on the season. Adjusted EBITDA for
the two first quarters of the year is typically lower than for the
two last quarters for both wind assets in Latin America (high wind
season in the second part of the year) and for solar assets in
Europe (higher irradiation in the second part of the year).
New and revised accounting standards and interpretations
On 1 January 2021 a number of accounting standard amendments to
IFRS 9, IAS 39 and IFRS 7 Financial Instruments: Disclosures -
Interest rate benchmark reform became applicable as a result of
IBOR reforms (phase two). The Group continues to communicate with
its counterparty bank's regarding any possible future changes to
the Group's EURIBOR and USD LIBOR based financial instruments. To
date no changes to these instruments have taken place which would
impact on the 30 June 2021 financial statements.
There are no standards that are issued but not yet effective
that would be expected to have a material impact on the entity in
the current or future reporting periods and on foreseeable future
transactions.
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 $642.1 million, and an
additional estimated $3.4 million of working capital adjustment is
expected to be paid in 2021.
On a consolidated basis, had this acquisition taken place as of
1 January 2021, the Group would have recognized consolidated
revenue of $963.8 million and consolidated net profit of $38.5
million for the six months ended 30 June 2021.
The preliminary determination of fair value of assets acquired
and liabilities assumed at acquisition date are:
In $ millions
Intangible assets 267.5
Property, plant and
equipment 688.4
Other assets 69.0
Cash and cash equivalents 19.4
Total assets 1,044.3
------------------------------ --------
Borrowings 262.5
Deferred tax liabilities 40.8
Other liabilities 95.5
Total liabilities 398.8
------------------------------ --------
Total net identifiable
assets 645.5
------------------------------ --------
Net purchase consideration 645.5
------------------------------ --------
Goodwill -
The Group has performed a preliminary determination of 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:
-- An increase in the book value of intangible assets of $26.1
million representing the incremental fair value of the power
purchase agreements and tolling agreements in place in the US
assets. The valuation of the power purchase agreements and tolling
agreements of $267.9 million are 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 $386.6 million
to reflect the fair value of these assets at acquisition based on
an income approach method.
-- 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 $22.6
million and a net increase in deferred tax liability of $14.7
million.
In the second half of 2021, the Group will continue its
assessment of the acquisition accounting and fair value of assets
acquired and liabilities assumed.
From the acquisition date on 18 February 2021 to June 30, 2021,
this acquisition contributed to consolidated revenue and net profit
of $86.7 million and $1.9 million respectively.
Acquisition of a Solar portfolio in Italy
On June 4, 2021 the Group announced it has reached an agreement
with a group of private shareholders to acquire up to 100% of the
shares in Green Hunter Group S.p.A., a portfolio of Solar
Photovoltaic assets totaling 18 MW located in Italy for EUR49.7
million ($59.1 million) on a debt free, cash free basis. The
acquired business will contribute approximately EUR 8 million ($9.5
million) of Adjusted EBITDA on an annual basis. The transaction is
expected to complete in the second half of 2021, subject to the
completion of certain customary closing conditions.
CONTOURGLOBAL PLC and subsidiaries
Notes to the consolidated financial statements
As of June 30, 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. Renewables plants include Asa Branca, Chapada I, II,
III, Inka, Vorotan, Austria Portfolio 1 & 2, Spanish
Concentrated Solar Power and our other European and Brazilian
plants.
The Corporate & Other category primarily reflects costs for
certain centralized functions including executive oversight,
corporate treasury and accounting, legal, compliance, human
resources, IT and facilities management and certain technical
support costs that are not allocated to the segments for internal
management reporting purposes.
The 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
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, management
considers quantitative as well as qualitative factors such as the
frequency or predictability of occurrence.
The Group as well presents the Proportionate Adjusted EBITDA
which is the Adjusted EBITDA calculated on a proportionally
consolidated basis based on applicable ownership percentage. The
Proportionate Adjusted EBITDA as well includes the net cash gain or
loss on sell down transactions as well as the underlying profit
from continuing operations for the business in which the minority
interest sale relates to reflecting applicable ownership percentage
going forward from the date of completion of the sale of a minority
interest.
The Group considers that the presentation of Adjusted EBITDA and
Proportionate Adjusted EBITDA enhances the understanding of
ContourGlobal's financial performance, in regards to understanding
its ability to generate stable and predictable cash flows from
operations. The cash gain on sell down is also included to
demonstrate the ability of the Group to sell down assets at a
significant premium, which is a distinct activity from operational
performance of the power plants. The Group also believes Adjusted
EBITDA is useful to investors because it is frequently used by
security analysts, investors, ratings agencies and other interested
parties to evaluate other companies in our industry and to measure
the ability of companies to service their debt.
The Chief Operating Decision-Maker does not review nor is
presented a segment measure of total assets and total
liabilities.
All revenue is derived from external customers.
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)
Six months ended June
30,
--------------------------
In $ millions 2021 2020
Revenue
---------------------------------------------------- ------------ ------------
Thermal Energy 715.8 466.5
Renewable Energy 219.1 213.7
Total revenue 934.9 680.2
---------------------------------------------------- ------------ ------------
Adjusted EBITDA
---------------------------------------------------- ------------ ------------
Thermal Energy 260.9 213.0
Renewable Energy 160.5 154.7
Corporate & Other (1) (15.3) (16.6)
Total adjusted EBITDA 406.1 351.2
---------------------------------------------------- ------------ ------------
Proportionate adjusted EBITDA 327.0 274.8
---------------------------------------------------- ------------ ------------
Non controlling interests 79.1 76.4
---------------------------------------------------- ------------ ------------
Total adjusted EBITDA 406.1 351.2
---------------------------------------------------- ------------ ------------
Reconciliation to profit before income
tax
---------------------------------------------------- ------------ ------------
Depreciation, amortization and impairment
(note 4.3) (191.2) (150.5)
Net finance costs, foreign exchange gains
and losses, and changes in fair value of
derivatives (note 4.4) (124.5) (63.1)
Share of adjusted EBITDA in associates
(2) (11.7) (9.5)
Share of profit in associates 8.6 6.5
Acquisition related items (7.5) (3.8)
Restructuring costs (3) - (1.9)
Private incentive plan (4) - (3.3)
Mexico CHP fixed margin swap (5) 3.1 (5.1)
Change in finance lease and financial concession
assets (6) (16.7) (18.1)
Other (0.8) (0.7)
Profit before income tax 65.5 101.6
---------------------------------------------------- ------------ ------------
(1) Corporate costs correspond to selling, general and
administrative expenses before depreciation and amortization of
$2.8 million (June 30, 2020: $2.4 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 share-based compensation plan of the annual accounts. 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".
Cash outflows on capital expenditure
Six months ended June
30,
--------------------------
In $ millions 2021 2020
Thermal Energy 10.7 12.4
Renewable Energy 26.8 23.9
Corporate & Other 0.3 1.2
Total capital expenditure 37.8 37.5
----------------------------- ------------ ------------
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:
Six months ended June
30,
--------------------------
In $ millions 2021 2020
Europe (1) 551.9 405.7
Latin America (2) 239.1 216.2
United States 78.1 -
Africa 65.9 58.2
Total revenue 934.9 680.2
--------------------- ------------ ------------
(1) Revenue generated in 2021 in Bulgaria and Spain amounted to
$296.9 million and $175.5 million respectively (June 30, 2020:
$207.7 million and $127.8 million respectively).
(2) Revenue generated in 2021 in Brazil and Mexico amounted to
$69.9 million and $129.3 million respectively (June 30, 2020: $69.1
million and $98.8 million respectively).
Six months ended June
30,
--------------------------
In $ millions 2021 2020
Europe (1) 223.3 205.3
Latin America (2) 124.9 123.8
United States of America 32.2 -
Africa 41.0 38.7
Corporate & Other (15.3) (16.6)
Total adjusted EBITDA 406.1 351.2
---------------------------- ------------ ------------
(1) Adjusted EBITDA generated in 2021 in Bulgaria and Spain
amounted to $70.4 million and $99.0 million respectively (June 30,
2020: $68.5 million and $89.3 million respectively).
(2) Adjusted EBITDA generated in 2021 in Brazil and Mexico
amounted to $44.1 million and $51.8 million respectively (June 30,
2020: $43.2 million and $46.4 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:
Six months Year ended
ended June December 31
30,
-------------- ---------------
In $ millions 2021 2020
Europe 2,024.3 2,151.1
Latin America 1,890.6 1,761.6
United States 789.6 -
Africa 389.5 405.4
Total non-current assets 5,094.0 4,318.1
---------------------------- -------------- ---------------
4.2. Revenue
Six months ended June
30,
--------------------------------------------- ------------------------
In $ millions 2021 2020
Revenue from power sales (1) 812.1 570.2
Revenue from operating leases (2) 38.1 49.0
Revenue from concession and finance lease
assets (3) 16.7 17.7
Other revenue (4) 68.0 43.3
Total revenue 934.9 680.2
--------------------------------------------- ----------- -----------
Revenue from power sales and Other revenue are recognised under
IFRS 15 and total $880.1 million in June 30, 2021 (June 30, 2020:
$613.5 million). Revenue from operating leases and revenue from
concession and finance lease assets are recognised under IFRS 16
and IFRIC 12 respectively.
(1) The increase in Revenue from power sales from $570.2 million
to $812.1 million is mainly due to the February 2021 acquisition of
the US and Trinidad and Tobago assets contributing $80.6 million,
higher CO(2) emissions revenue in in our Maritsa plant for $89.2
million, higher production due to cold weather increasing revenue
by $36.1 million in Arrubal and higher production and higher gas
pass throughs at Mexico CHP contributing $30.5 million.
(2) Revenue from operating leases mainly includes $24.5 million
relating to our Solutions plants, $13.6 million relating to our
Bonaire plant and nil million relating to our Energie Antilles
plant in June 30, 2021 (June 30, 2020: $21.4 million, $11.6 million
and $16.0 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 and CO2 quota
recharges to customers.
The Group has one customer contributing more than 10% of Group's
revenue (June 2020: one customer).
Six months ended June
30,
--------------------------
2021 2020
Customer A 31.8% 30.5%
4.3. Expenses by nature
Six months ended June
30,
--------------------------------------------- ------------------------
In $ millions 2021 2020
Fuel costs 205.3 128.5
Depreciation, amortization and impairment 191.2 150.5
Operation and maintenance costs 50.2 34.4
Employee costs 52.3 46.1
Emission allowance utilized (1) 154.0 73.2
Professional fees 9.1 9.1
Purchased power 18.7 18.1
Transmission charges 18.9 15.0
Operating consumables and supplies 8.6 9.9
Insurance costs 15.9 11.5
Other expenses (2) 24.7 17.6
Total cost of sales and selling, general
and administrative expenses 748.9 513.9
--------------------------------------------- ----------- -----------
(1) Emission allowances utilized corresponds mainly to the costs
of CO2 quotas in Maritsa which are passed through to its offtaker,
and includes any write-downs to net realizable value.
(2) Other expenses include facility costs of $6.8 million in
June 30, 2021 (June 30, 2020: $6.2 million).
Six months ended June
30,
---------------------------------- ------------------------
In $ millions 2021 2020
Private Incentive Plan (1) - 3.3
Restructuring costs (2) - 1.9
Other 0.8 2.9
Total other operating expenses 0.8 8.1
---------------------------------- ----------- -----------
(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. Net finance costs, foreign exchange gains and losses, and
changes in fair value of derivatives
Six months ended June
30,
------------------------------------------------- ------------------------
In $ millions 2021 2020
Finance income 1.5 3.3
Net change in fair value of fixed margin
derivative (1) 4.8 53.0
Net change in fair value of other derivatives
(2) 3.9 22.9
Net realized foreign exchange differences
(3) (0.2) (27.2)
Net unrealized foreign exchange differences
(3) 14.5 6.8
Realized and unrealized foreign exchange
gains and (losses) and change in fair
value of derivatives 23.0 55.5
Interest expenses on borrowings (102.7) (97.8)
Amortization of deferred financing costs (10.7) (5.2)
Unwinding of discounting (4) (15.9) (8.4)
Other (5) (19.7) (10.5)
Finance costs (149.0) (121.9)
Net finance costs, foreign exchange
gains and losses, and changes in fair
value of derivatives (124.5) (63.1)
------------------------------------------------- ----------- -----------
(1) Net change in fair value of derivative related to the CHP Mexico fixed margin swap.
(2) The Group recognized a profit of $1.7 million in the six
months ended June 30, 2021 in relation to its interest rate, cross
currency, financial swaps, options, foreign exchange options and
forward contracts (June 30, 2020: profit of $12.9 million) and a
profit of $2.2 million in the six months ended June 30, 2021 in
relation with settled positions (June 30, 2020: profit of $10.0
million). Change in fair value of derivatives relates primarily to
interest rate swaps, options and forward contracts.
(3) Net realized foreign exchange differences include realized
foreign exchange gains and losses related to conversion of foreign
currency denominated cash balances recorded as fair value through
profit or loss. Unrealized foreign exchange differences primarily
relate to subsidiaries and loans in subsidiaries that have a
functional currency different to the currency in which the loans
are denominated.
(4) Unwinding of discounting mainly relates to Maritsa debt to
non-controlling interests and other long-term liabilities in the
six months ended June 30, 2021 and 2020.
(5) Other mainly includes costs associated with other financing,
finance costs of leases, as well as income and expenses.
4.5. Income tax expense and deferred income tax
General accounting policies
The current and deferred income tax are 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. The income tax was calculated using the
effective tax rate expected to apply to each taxing jurisdiction of
the Group in the period ending December 31, 2021. The estimated
effective tax rate is determined on a tax group basis and applied
to the profit before tax of each taxing jurisdiction.
Income tax expense and deferred income tax
Six monts ended June
30,
----------------------- -----------------------
In $ millions 2021 2020
Current tax (21.7) (19.9)
Deferred income tax (5.9) (6.9)
Income tax expense (27.6) (26.8)
----------------------- ----------- ----------
Effective Tax Rate 42% 26%
----------------------- ----------- ----------
In the six months ended June 30, 202 1, the tax charge is
broadly comparable to the charge in the six months ended June 30,
2020. The tax charge now includes a tax charge attributable to the
Togo asset, which is now subject to 15% income tax following the
end of a previously agreed tax exemption period, and has the impact
of the U.S. and Trinidad assets acquired in the period. The
effective tax rate of the group mainly differs to the UK statutory
rate of 19% due to the impact of the geographical composition of
the profit before tax, and tax losses arising on certain group and
financing costs on which no deferred tax asset is recognised. The
group rate is also impacted by tax only adjustments relating to
forex and inflation, and the profit mix of Brazilian entities where
the headline tax rate is 34% whereas some entities have elected
into a simplified corporate tax regime whereby the tax calculation
is driven by revenue.
Net deferred tax movement
The gross movements of net deferred income tax assets
(liabilities) were as follows:
June 30, December
In $ millions 2021 31, 2020
Net deferred tax assets (liabilities) as
of January, 1 (211.4) (218.5)
--------------------------------------------- --------- ----------
Statement of income (5.9) (10.9)
Deferred tax recognized directly in other
comprehensive income (9.6) 27.9
Acquisitions (34.2) -
Currency translation differences 3.1 (9.9)
Net deferred tax assets (liabilities) at
closing date (258.0) (211.4)
--------------------------------------------- --------- ----------
Including net deferred tax assets balance
of: 63.9 57.5
Deferred tax liabilities balance of: (321.9) (268.9)
The net deferred tax liabilities increase in 2021 is mainly in
relation with the Trinidad & Tobago asset acquired in February
2021. No increase in deferred tax is seen on acquisition of U.S.
assets due to the fact that the acquisition was structured as an
asset deal for U.S. tax purposes. The residual increase is driven
by the utilisation of tax losses which are currently offset against
deferred tax liabilities.
Analysis of the deferred tax position unrecognized in the
consolidated statement of financial position
Unrecognized deferred tax assets amount to $271.8 million as of
June 30, 2021 (December 31, 2020: $268.2 million).
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 unrecognised for deferred tax
purposes generally do not expire with the exception of Luxembourg,
for which the tax losses generated after January 1, 2017 expire
after 17 years.
The group accrues deferred tax liabilities for the withholding
tax that will arise on the future repatriation of undistributed
earnings. There are no undistributed earnings with material
unrecognized temporary differences.
4.6. Intangible assets and goodwill
Goodwill Work Legado Contracts Permits, Software Total
in progress rights licenses and Other
and other
project
development
In $ millions rights
Cost 0.5 - 233.3 - 145.8 34.6 414.2
Accumulated amortisation
and impairment - - (1.1) - (44.3) (16.1) (61.6)
Carrying amount
as of December 31,
2019 0.5 - 232.2 - 101.5 18.4 352.6
---------------------------- --------- ------------- -------- ---------- ------------- ----------- --------
Additions - - - - 2.2 3.5 5.7
Disposals - - - - - - -
Currency translation
differences 0.1 - - - (16.6) - (16.5)
Reclassification - 1.5 - - (1.1) 3.8 4.2
Amortisation charge - - (13.7) - (6.4) (6.0) (26.2)
Closing net book
amount 0.6 1.5 218.4 - 79.4 19.7 319.7
---------------------------- --------- ------------- -------- ---------- ------------- ----------- --------
Cost 0.6 1.5 233.3 - 122.8 40.9 399.1
Accumulated amortisation
and impairment - - (14.9) - (43.4) (21.1) (79.4)
Carrying amount
as of December 31,
2020 0.6 1.5 218.4 - 79.4 19.7 319.7
---------------------------- --------- ------------- -------- ---------- ------------- ----------- --------
Additions - 0.6 - - 0.7 1.0 2.3
Disposals - - - - - - -
Acquired through
business combination - - - 267.5 - - 267.5
Currency translation
differences - - - - 1.8 - 1.8
Reclassification - 0.1 - - 0.4 0.5 1.0
Amortisation charge - - (6.8) (11.1) (7.7) (1.5) (27.1)
Closing net book
amount 0.6 2.2 211.6 256.4 74.6 19.7 565.1
---------------------------- --------- ------------- -------- ---------- ------------- ----------- --------
Cost 0.6 2.2 233.3 267.5 127.1 42.3 673.0
Accumulated amortisation
and impairment - - (21.7) (11.1) (52.5) (22.6) (107.9)
Carrying amount
as of June 30, 2021 0.6 2.2 211.6 256.4 74.6 19.7 565.1
---------------------------- --------- ------------- -------- ---------- ------------- ----------- --------
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.
Amortisation included in 'cost of sales' in the consolidated
statement of income amounted to $25.6 million in the six months
period ended June 30, 2021 (June 30, 2020: $10.9 million) and
amortization included in 'selling, general and administrative
expenses' amount to $1.5 million in the six months period ended
June 30, 2021 (June 30, 2020: $0.8 million).
4.7. Property, plant and equipment
The power plant assets predominantly relate to wind farms,
natural gas plants, fuel oil or diesel plants, coal plants, hydro
plants, solar plants and other buildings.
Other assets mainly include IT equipment, furniture and
fixtures, facility equipment, asset retirement obligations and
vehicles, and project development costs.
Assets acquired through business combinations are explained in
Note 3 Significant changes in the reporting period.
Land Power plant Construction Right of Other Total
assets work in use of
In $ millions progress assets
Cost 72.2 5,172.5 76.8 47.6 285.2 5,654.4
Accumulated depreciation
and impairment (0.6) (1,988.5) - (13.1) (135.0) (2,137.3)
Carrying amount
as of January 1,
2021 71.6 3,184.0 76.8 34.5 150.2 3,517.1
---------------------------- ------ ------------ ------------- --------- -------- ----------
Additions - 4.8 42.3 1.6 2.7 51.4
Disposals - (1.5) (7.6) - - (9.1)
Reclassification - 66.4 (68.5) - 1.8 (0.3)
Acquired through
business combination(1) 14.3 653.6 - 1.4 19.0 688.4
Currency translation
differences (1.7) (25.6) 3.5 (0.7) (0.5) (25.0)
Depreciation charge (0.1) (154.7) - (3.0) (6.3) (164.1)
Closing net book
amount 84.1 3,727.0 46.5 33.8 166.9 4,058.2
---------------------------- ------ ------------ ------------- --------- -------- ----------
Cost 84.9 5,826.0 46.5 49.5 305.5 6,312.3
Accumulated depreciation
and impairment (0.8) (2,099.0) - (15.7) (138.6) (2,254.1)
Carrying amount
as of June 30,
2021 84.1 3,727.0 46.5 33.8 166.9 4,058.2
---------------------------- ------ ------------ ------------- --------- -------- ----------
(1) Assets acquired through business combination relate to our
United States of America and Trinidad and Tobago portfolio,
detailed in note 3.1.
Construction work in progress as of June 30, 2021 predominantly
relates to our ongoing Austria Wind repowering project, Vorotan
refurbishment project, and projects at Maritsa, United States of
America and Mexico plants. Reclassification from Construction work
in progress to Power plant assets primarily relates to completed
phases of the Vorotan refurbishment project ($47.8 million) and,
Austria Wind repowering project ($13.5 million).
As of June 30, 2021, the Other category mainly related to $57.9
million of instruments and tools, $48.8 million of facility
equipment, $29.3 million of assets retirement obligations, $26.4
million of critical spare parts.
Depreciation included in 'cost of sales' in the consolidated
statement of income amounted to $161.3 million in the period ended
June 30, 2021 (June 30, 2020: $136.3 million) and depreciation
included in 'selling, general and administrative expenses' amount
to $2.8 million in the period ended June 30, 2021 (June 30, 2020:
$2.4 million).
In the period ended June 30, 2021, the Group capitalised $0.6
million of borrowing costs in relation to project financing.
Land Power plant Construction Right of Other Total
assets work in use of
In $ millions progress assets
Cost 68.6 5,187.1 61.5 43.7 325.8 5,686.7
Accumulated depreciation
and impairment (0.5) (1,736.7) - (8.3) (131.4) (1,876.9)
Carrying amount
as of January 1,
2020 68.1 3,450.5 61.5 35.4 194.4 3,809.8
---------------------------- ------ ------------ ------------- --------- -------- ----------
Restatement for
finalisation of
fair values on
acquisition (1) - (37.5) - - - (37.5)
Carrying amount
as of January 1,
2020 (restated) 68.1 3,413.0 61.5 35.4 194.4 3,772.3
---------------------------- ------ ------------ ------------- --------- -------- ----------
Additions - 17.4 59.3 4.2 9.8 90.6
Disposals - (5.8) (4.6) (1.1) - (11.5)
Reclassification
(2) (3) - 42.7 (36.9) - (30.7) (24.9)
Currency translation
differences 3.6 (20.1) (2.4) 2.0 (7.2) (24.1)
Depreciation charge (0.1) (263.1) - (6.0) (16.1) (285.3)
Closing net book
amount 71.6 3,184.1 76.8 34.5 150.2 3,517.1
---------------------------- ------ ------------ ------------- --------- -------- ----------
Cost 72.2 5,172.5 76.8 47.6 285.2 5,654.4
Accumulated depreciation
and impairment (0.6) (1,988.5) - (13.1) (135.0) (2,137.3)
Carrying amount
as of December
31, 2020 71.6 3,184.0 76.8 34.5 150.2 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
EUR19.7 million ($22.5 million). Given the termination of the
Kosovo project agreements in May 2020, the recoverable costs have
been de-recognised from Property, plant and equipment and
recognised 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 period ended
December 31, 2020 and depreciation included in 'selling, general
and administrative expenses' amount to $3.3 million in the period
ended December 31, 2020.
In the period ended December 31, 2020, the Group capitalised
$1.1 million of borrowing costs in relation to project
financing.
4.8. Management of financial risk
The condensed interim consolidated financial statements do not
include all financial risk management information and disclosures
required in the annual financial statements; they should be read in
conjunction with the ContourGlobal plc consolidated financial
statements for the year ended December 31, 2020. There has been no
material change in financial risk factors since the year end and
there have been no changes in the risk management department or in
any risk management policies since December 31, 2020.
4.9. Derivative financial instruments
The Group uses interest rate swaps to manage its exposure to
interest rate movements on borrowings, foreign exchange forward
contracts and option contracts to mitigate currency risk, a
financial swap in our Mexican CHP business to protect power
purchase agreements and cross currency swap contracts in Cap des
Biches project in Senegal to manage both currency and interest rate
risks. The fair value of derivative financial instruments are as
follows:
June 30, December 31,
--------------------- ---------------------
2021 2020
--------------------- ---------------------
In $ millions Assets Liabilities Assets Liabilities
Interest rate swaps - Cash flow
hedge (1) 0.1 77.4 - 120.9
Cross currency swaps - Cash
flow hedge (2) - 18.4 - 26.2
Foreign exchange forward contracts
- Trading (3) - 0.2 - 0.6
Option contracts - not in hedge
relationships (4) - 2.3 1.5 1.6
Financial swap on commodity
(5) 0.4 - - 0.1
Fixed margin swap(6) - 34.6 - 42.6
Total 0.5 132.8 1.5 192.0
-------------------------------------- ------- ------------ ------- ------------
Less non-current portion:
--------------------------------------
Interest rate swaps - Cash flow
hedge 0.1 57.0 - 92.7
Cross currency swaps - Cash
flow hedge - 16.7 - 24.2
Foreign exchange forward contracts
- Trading - 0.2 - 0.1
Option contracts - not in hedge
relationships - - 1.1 -
Financial swap on commodity 0.1 - - 0.1
Fixed margin swap - 25.0 - 33.9
Total non-current portion 0.2 98.8 1.1 151.0
-------------------------------------- ------- ------------ ------- ------------
Current portion 0.3 34.0 0.4 41.0
(1) Interest Rate swaps are used to hedge floating rate
borrowings to a fixed interest rate. The decrease in fair value of
the liability is attributed to favourable movements in LIBOR
floating rates over the period to June 30, 2021. The fair value of
the interest rate swaps mostly relate to contracts in Mexico for
$61.8 million (December 31, 2020: $83.4 million) maturing in
November 2031 and in Armenia for $12.3 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 June 30, 2021 amounts to $19.2 million (December
31, 2020: $27.4 million) maturing in July 2033. Credit value
adjustment amounts to $0.8 million as of June 30, 2021 and $1.2
million as of December 31, 2020. 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 and of the COP-denominated
distributions from the Colombian portfolio. The BRL-denominated
2022 distributions have been hedged using a forward exchange
contract with a fair value of liability $0.2 million and maturity
in December 2022 (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 has executed a series of offsets to protect the
value, in USD terms, of the BRL-denominated expected distributions
from the Brazilian portfolio and the MXN-denominated expected
distributions from the Mexican portfolio. The distributions
expected in 2021 have been protected against material depreciation
of the BRL using option contracts with fair values of liability
$2.3 million maturing in December 2021 (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 allowing
the possibility to enter into an underlying swap with the objective
to protect the Group against changes on the interest rates over our
financing projects. This contract was cancelled 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.
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 $1,076.0
million as of June 30, 2021 (December 31, 2020: $1,213.4
million).
- the outstanding foreign exchange forward and option contracts
amounted to $154.8 million as of June 30, 2021 (December 31, 2020:
$161.8 million). In 2020, the outstanding option allowing the
possibility to enter into an underlying swap with the objective to
protect the Group against changes on the interest rates over our
financing projects amounted to $200.0 million. This contract was
cancelled in 2021 (December 31, 2020: asset $1.1 million).
- the commodity swap (gas) relates to one PPA in our Mexican CHP
amounted to $2.6 million as of June 30, 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 $6.5 million
in the six months ended June 30, 2021 (June 30, 2020: profit $65.9
million) and a gain of $2.2 million in the six months ended June
30, 2021 in relation to settled positions (June 30, 2020: profit of
$10.0 million).
4.10. Fair value measurements
Fair value measurements of financial instruments are presented
through the use of a three-level fair value hierarchy that
prioritises the valuation techniques used in fair value
calculations. The Group's policy is to recognise 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, 2020 and June 30, 2021.
When measuring our interest rate, cross currency swaps and
foreign exchange forward and option contracts at fair value on a
recurring basis at both June 30, 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 which are level 3. The fair
value of those financial instruments is determined by using
valuation techniques. These valuations techniques maximise the use
of observable data where it is available and rely as little as
possible on entity specific estimates.
The Group uses a market approach as part of their available
valuation techniques to determine the fair value of derivatives.
The market approach uses prices and other relevant information
generated from market transactions.
The Group's finance department performs valuation of financial
assets and liabilities required for financial reporting purposes as
categorized at levels 2 and 3. The Group's only derivatives are
interest rate swaps, foreign exchange forward contracts, option
contracts, commodity swap contract, fixed margin swap in our
Mexican CHP business and cross currency swap contracts in our Cap
des Biches project in Senegal.
The change in the fair value of the fixed margin swap since June
30, 2021 of $4.8 million is driven by the movement of market
inputs, in particular the natural gas price and CFE tariff,
accounting for $4.6 million of the total.
The sensitivity calculations on the CHP Mexico fixed margin swap
liability show that (i) for an increase/decrease of 5% in the
USD/MXN exchange rate, the fixed margin swap liability will
decrease/increase by $9.5 million, (ii) for an increase/decrease of
5% in the Natural Gas cost, the fixed margin swap liability will
decrease/increase by $5.2 million (iii) for an increase/decrease of
25% in discount rates, the fixed margin swap liability will
decrease/increase by $1.5 million, (iv) and for an
increase/decrease of 5% in the CFE tariff, the fixed margin swap
liability will increase/decrease by $11.8 million.
Money market funds comprise investment in funds that are subject
to an insignificant risk of changes in fair value. The fair value
of money market funds is calculated by multiplying the net asset
value per share by the investment held at the balance sheet date,
we have measured these at level 2 in the fair value hierarchy.
4.11. Financial instruments by category
In $ millions Financial asset category
---------------------------------------------------------
Financial Assets at Derivative Total net
assets at fair value used for book value
As at December 31, amortised through profit hedging per balance
2020 costs and loss sheet
-------------------------------
Derivative financial
instruments - 1.5 - 1.5
Financial and contract
assets 438.3 - - 438.3
Trade and other receivables
(1) 228.0 - - 228.0
Other non-current assets
(1) 41.1 - - 41.1
Cash and cash equivalents
(2) - 1,396.9 - 1,396.9
Total 707.4 1,398.4 - 2,105.8
------------------------------- ----------- ---------------- ----------- -------------
In $ millions Financial asset category
---------------------------------------------------------
Financial Assets at Derivative Total net
assets at fair value used for book value
amortised through profit hedging per balance
As at June 30, 2021 costs and loss sheet
-------------------------------
Derivative financial
instruments - 0.5 - 0.5
Financial and contract
assets 421.5 - - 421.5
Trade and other receivables
(1) 295.7 - - 295.7
Other non-current assets
(1) 50.2 - - 50.2
Cash and cash equivalents
(2) - 435.0 - 435.0
Total 767.4 435.5 - 1,202.9
------------------------------- ----------- ---------------- ----------- -------------
In $ millions Financial liability category
-------------------------------------------------------------
Liabilities Other financial Derivative Total net
at fair liabilities used for book value
value through at amortised hedging per balance
As at December 31, profit and cost sheet
2020 loss
---------------------------------
Borrowings - 4,830.3 - 4,830.3
Derivative financial
instruments 44.8 - 147.2 192.0
Trade and other payables - 333.7 - 333.7
Other current liabilities
(1) - 154.6 - 154.6
Other non current liabilities - 124.9 - 124.9
Total 44.8 5,443.5 147.2 5,635.5
--------------------------------- --------------- ---------------- ----------- -------------
In $ millions Financial liability category
-------------------------------------------------------------
Liabilities Other financial Derivative Total net
at fair liabilities used for book value
value through at amortised hedging per balance
profit and cost sheet
As at June 30, 2021 loss
---------------------------------
Borrowings - 4,575.1 - 4,575.1
Derivative financial
instruments 37.0 - 95.8 132.8
Trade and other payables - 349.5 - 349.5
Other current liabilities
(1) - 153.0 - 153.0
Other non current liabilities - 136.9 - 136.9
Total 37.0 5,214.5 95.8 5,347.3
--------------------------------- --------------- ---------------- ----------- -------------
(1) These balances exclude receivables and payables balances in
relation to taxes and deferred revenue balance of $6.6 million in
June 30, 2021 ($5.6 million in December 31, 2020).
(2) These balances include money market funds, which comprise
investment in funds that are subject to an insignificant risk of
changes in fair value.
4.12. Equity
Share repurchases
On 1 April 2020 ContourGlobal announced a buyback programme of
up to GBP30 million of ContourGlobal plc ordinary shares of GBP0.01
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 period ended June 30, 2021, the Company repurchased
2,624,774 treasury shares at an average price of 208.4 pence per
share for an aggregate amount of GBP5.5 million ($7.4 million),
representing 0.40% of its share capital. Since the beginning of the
buyback programme, the Company repurchased 14,999,505 treasury
shares, representing 2.24% of its share capital.
4.13. 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 $4,580.9 million in total as of June 30, 2021 (December
31, 2020: $4,871.8 million) primarily relate to the following:
Type of borrowing Currency Project Issue Maturity Outstanding Outstanding Rate
Financing nominal nominal
amount amount
June 30, December
2021 31, 2020
($ million) ($ million)
Corporate Corporate
bond (1) EUR Indenture 2020 2026 486.2 500.9 2.750%
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
Corporate Corporate
bond (1) EUR Indenture 2018 2025 474.3 1,038.4 4.125%
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
Corporate Corporate
bond (1) EUR Indenture 2020 2028 355.7 366.5 3.125%
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
Mexican
Loan Agreement USD CHP 2019 2026 489.7 508.5 LIBOR + 2.5%
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
Spanish 2026 Fixed 5.8%
Loan Agreement EUR CSP 2018 2038 365.5 392.5 and 6.7%
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
Spanish
Loan Agreement EUR CSP 2018 2036 330.7 348.4 3.438%
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
EURIBOR 6M
Loan agreement EUR Solar Italy 2019 2030 196.1 215.5 + 1.7%
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
Loan Agreement USD US and 2007 2033 187.5 - Fixed 6.6%
(2) Trinidad
and Tobago
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
Loan Agreement USD US and 2021 2021 175.0 - Fixed 2.5%
(2) Trinidad to 4.5%
and Tobago
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
EURIBOR +
Loan Agreement Spanish 1.8% Fixed
(3) EUR CSP 2021 2028 175.0 152.2 + 2.5%
2034
--------------------------------------------------------------- ------------- ------------- ------------------
Project bond USD Inka 2014 2034 170.2 173.2 6.0%
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
Loan Agreement USD Vorotan 2016 2034 119.5 121.5 LIBOR + 4.625%
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
Loan Agreement TJLP + 2.18%
/ Debentures Chapada 2032 / IPCA +
(4) BRL I 2015 2029 117.7 115.5 8%
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
EURIBOR 6M
+ 2.45% and
4.305% /
EURIBOR 3M+1.95%
and 4.0%
Austria 2013 2027 / EURIBOR
Loan Agreement EUR Wind 2020 2033 100.2 105.2 6M +1.55%
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
Cap des USD-LIBOR
Loan Agreement USD Biches 2015 2033 93.7 96.3 BBA (ICE)+3.20%
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
EURIBOR +
Loan Agreement EUR Maritsa 2006 2023 89.2 109.1 0.125%
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
Loan Agreement Chapada
(4) BRL II 2016 2032 84.2 84.8 TJLP + 2.18%
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
7.16% (Weighted
Loan Agreement USD Togo 2008 2028 76.6 80.8 average)
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
Loan Agreement EUR Arrubal 2011 2021 73.9 98.9 4.9%
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
Loan Agreement
(4) BRL Asa Branca 2011 2030 57.5 58.5 TJLP+ 1.92%
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
LIBOR plus
5.50% and
mix of fixed
Loan Agreement USD KivuWatt 2011 2026 52.4 57.2 rates
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
Other Credit
facilities 2012 2021 Mix of fix
(individually - - and variable
< $50 million) Various Various 2019 2034 310.0 248.0 rates
------------------- ---------- ------------- ------- ---------- ------------- ------------- ------------------
Total 4,580.9 4,871.8
------------------------------------------------------------------- ------------- ------------- ------------------
(1) Corporate bond issued by ContourGlobal Power Holdings S.A.
in July 2018 for EUR750 million dual-tranche, it includes EUR450
million bearing a fixed interest rate of 3.375% maturing in 2023
and EUR300 million bearing a fixed interest rate of 4.125% maturing
in 2025. In July 2019, a new EUR100 million corporate bond tab was
added to the EUR300 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 EUR410 million aggregate principal amount of 2.75% senior
secured notes due in 2026 and EUR300 million aggregate principal
amount of 3.125% senior secured notes due in 2028. On January 6,
2021 the Group redeemed the EUR450 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 group entered into a term
loan facility agreement in December 2020, and the loan was issued
in February 2021 with an outstanding nominal amount of $175.0
million, bearing incremental fixed 2.5% to 4.5% rate, maturing in
December 2021 (with option to extend to June 2022). 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 June 2033. The remaining nominal amount is $187.5
million as of June 30, 2021.
(3) On May 24, 2021, Termosolar Alvarado entered into a EUR162.0
million ($197.3 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) Taxa de Juros de Longo Prazo ("TJLP") represents the Brazil
Long Term Interest Rate, which was approximately 4.61% at June 30,
2021 (December 31, 2020: 4.55%).
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).
4.14. 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 participant's 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: 12.5 % of award to the internal rate of
return on qualifying Company projects over the Performance
Period.
iii) LTIR condition: 25.0 % of award to the lost time incident
rate of the Company over the Performance Period.
iv) Project milestones condition: 12.5 % of award to the number
of corporate milestones completed on qualifying projects conditions
over the Performance Period.
The long term incentive plans are considered as equity-settled
share-based incentives, presented within selling, general and
administrative expenses in the consolidated statement of
income.
4.15. Financial commitments and contingent liabilities
ContourGlobal plc has no new financial commitments and no new
contingent liabilities in respect of legal claims arising in the
ordinary course of business as compared to those disclosed in the
consolidated financial statements for the year ended December 31,
2020.
Since December 31, 2020, the status of our contingent
liabilities has not changed, except for as mentioned below:
Operation & Maintenance contractor litigation (Energies
Antilles): In April 2021, the Court of Appeal ruled in favor of
Energies Antilles by overturning the decision of the tribunal of
first instance rendered in September 2018. The contractor did not
appeal the judgment at the Supreme Court.
Power industry law (Ley de la Industria Eléctrica - LIE): On 29
January 2021, the president of the United Mexican States submitted
before the Mexican Chamber of Representatives (Cámara de Deputados)
a preferential initiative to modify several provisions of the Power
Industry Law (Ley de la Industria Eléctrica) ("LIE") which was
enacted on 10 March 2021. One of the proposed changes is to modify
the order in which electricity is dispatched to the system, which
would favor the State-owned power plants and may have an adverse
impact on future revenues and profits in our Mexican assets. The
Group filed Amparo claims to challenge the reform in April 2021 and
the First District Court granted our assets in Mexico ("CELCSA" and
"CGA") definitive injunction against the amendment to the LIE in
April 2021. This injunction was granted with general effects,
preventing the application and implementation of the challenged
provisions by the relevant authorities. Certain Mexican authorities
and regulators ("CRE") submitted a revision appeal against the
definitive injunctions and the granting of the amparos in May
2021.
On 15 July 2021, the Second Specialized Circuit Court revoked
the definitive injunction for CELCSA 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. The Group is evaluating available recourse
against this revocation.
4.16. Guarantees and letters of credit
As of June 30, 2021, there have been additional guarantees and
letter of credits related to our acquisition in the United States
and Trinidad and Tobago and Mexico CHP as compared to those
disclosed in the consolidated financial statements for the year
ended December 31, 2020.
-- 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.
-- United States and Trinidad and Tobago. Letter of credit
extension for 7 years signed on June 17, 2021 for an amount of $91
million issued for Debt Service Reserve Accounts and performance
guarantees. Maturity is in 2028.
-- United States and Trinidad and Tobago. Letter of credit
facility for a total of $45 million of which $31.5 million were
issued. Maturity is in 2023.
[1] Defined as Funds From Operations divided by Adjusted EBITDA
[2] Based on constant exchange rates from 2020 of EUR/USD 1.12 and BRL/USD 0.25
[3] USD:GBP of 1.39 as of 5 August 2021
[4] Dividend cover of 1.9x, defined as LTM Parent Company Free
Cash Flow divided by declared dividend
[5] Includes Q2 2021 dividend to be paid in September
[6] Best 12 month rolling Capacity Availability Factor in June
2021
[7] Net debt at corporate level including the Corporate Bonds
less the cash held in the group corporate holdings, divided by
CFADS (Cash flows available for debt service) as defined in the
Corporate Bond Indenture; Pro forma for full year expected EBITDA
of Western Generation of $92m
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IR ZQLBBFVLXBBZ
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August 06, 2021 02:00 ET (06:00 GMT)
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