Annual Financial Report

Risk Factor

Main Impact

Risk Response (management and mitigation)

R01. Strategy - Impact of governmental actions and regulations

The risk that governmental

actions or changes in (1)

taxes or (2) regulations of our

non-PPA long-term fixed rate

arrangements (i.e. feed-intariffs) and Power Purchase

Agreements (PPAs) including

new adverse policymaking

and investigations by

regulatory or competition

law authorities, as well as

(3) restrictive regulation of

Thermal generation as the

result of climate change

initiatives and transition to

low-carbon economy, without

regulatory risk pass-through

mechanisms will have a

negative impact on our

results of operation and

growth prospects.

Risk unchanged

Included in the sensitivity

analysis on principal risks

for viability and going

concern assessment.

Deterioration of financial performance including loss

of revenue and an increase in expenses (including

fossil fuel cost).

Loss of business/growth opportunities:

Termination of agreements:

• Inability to obtain, maintain or renew required governmental permits/licenses

• Inability to receive permits for extension of existing capacities

Financing impact:

• Limited access to capital for Thermal power generation projects

Major Asset impact:

• Maritsa anticipates that in the near term it will engage

in discussions with the government of Bulgaria related

to the Bulgarian energy regulator's complaint to the

European Commission that the Maritsa PPA contains

elements of state aid and the EC's related review

of the PPA. Separately, Bulgaria has submitted its

proposed energy market reform plan to the EC, which

plan proposes a market-wide capacity remuneration

mechanism and termination of the long-term PPAs,

including that of Maritsa, and foresees discussions

with Maritsa on this subject. We cannot predict the

outcome of such discussions, or of any resolution

by the EC of its review should those discussions

not result in an agreement. Maritsa believes termination of the PPA would not be justified and will take all required actions to protect its rights and

interests. Resolution of the matter could nonetheless

contain terms that adversely affect the Maritsa PPA

and have a material adverse impact on Maritsa's and

ContourGlobal's business.

Impact on other key Assets:

• The Group is subject to changes in laws or regulations or changes in the application or

interpretation of laws or regulations in jurisdictions

where we operate (particularly utilities where electricity tariffs are subject to regulatory review

or approval) which could adversely affect our business. This is the case for instance in Mexico where the current government has engaged in

several attempts to change the regulatory regime under which the Company's plants are operating, and related to Rwanda and Kosovo, where the Company is engaged in arbitrations related to

the interpretation of its and counterparties' contractual obligations.

PPAs are held with state-owned, regulated or other offtakers, the majority of which are rated by Standard & Poor's, with a weighted average credit rating (after Political Risk insurance - PRI) of BBB+ weighted by EBITDA). PRI policies (from commercial insurers) are in place for several projects in case of events that can affect our assets, in particular the loss of invested capital. In some cases, these cover a return on our capital.

These include:

Maritsa, Vorotan, KivuWatt, Togo, Cap des Biches,

TermoemCali, and Kosovo.

Close relationships are maintained with energy

lawyers and associations to anticipate any potential changes in regulation and express our interests. Partnerships are fostered with multilateral development banks for both equity and debt which makes governments reticent to renegotiate. Investment is placed in local communities and hiring locally The business has a sovereign credit rating of BBB+ post-PRI impact (based on the individual sovereign ratings determined by Standard & Poor's).

Close monitoring of global climate change initiatives and taking them into account in our medium- and long-term operations and growth strategy. Proactive engagement and communication.

R02. Strategy - Geopolitical uncertainties and social instability

(including environmental activism, sanctions and trade war)

The risk that geopolitical

instability, increased social

pressure on politics and

increasing activism will

create additional uncertainty

for our multinational business

operation and will affect

our business model or

specific assets.

The risk that sanctions

affect our counterparties

or stakeholders along our

supply chain will have

negative impact on our

cost structure and our

ability to acquire the

required equipment.

The risk that excessive

cross border tariffs or

negative regulation on

foreign capital flow will

have an impact on our supply

chain and limit our flexibility

in cross border investments.

Risk unchanged

Included in the sensitivity

analysis on principal risks

for viability statement and

going concern assessment.

Deterioration of financial performance:

• Increase in operational costs (including additional

costs associated with supply chain disruptions)

• Higher financing transaction costs

• Disruption of operation of one or more of our assets

• Increase in OPEX and CAPEX

• Loss of invested capital

• Adverse effect on results of operation

• Unforeseen additional recurring costs vs. financial model projections (project IRR and cash flow)

• Charges and penalties due to

non-compliance with external

requirements

Loss of business/growth

opportunities:

• Inability to operate effectively

• Termination of agreements

• Fewer opportunities for growth

Business disruption:

• Inability to procure required equipment

• Impact on EAF and EFOR

PRI policies (from commercial insurers) are in place for several projects in case of events that can affect our assets, in particular in Africa and Eastern Europe.

In some cases we can recover a return on our capital:

• Maritsa, Vorotan, KivuWatt, Togo, Cap des Biches, TermoemCali, and Kosovo

• Our diversified operations limit the downside as the

impact of a localized geopolitical effect is unlikely

to have a significant effect on the full portfolio

• Diversification of jurisdictions and technologies

minimizes the risk

• Access to several financial markets allows the

business to choose the most opportune sources

of transactional financing

• Investment in local communities and hiring locally

creates goodwill with local governments and populations

• Reduced risk mitigation in place through diversified

Business

• Regular analysis of suppliers and supply chain - related

business case study on Spain on page 36.

R03. Strategy - Pandemic virus

The risk that global

pandemic(s) will cause

(1) health issues for our

employees, (2) business

disruptions at operational

as well as at corporate level,

(3) disruption of our supply

chain, (4) delays in power

plants' major overhauls, (5)

increase in counterparty risk

given deterioration of our

offtakers' credit strength

as well as (6) slowdown

of economic growth and

thus disruption of global

commodity markets which

will result in adverse financial

impact on results of our

operation as well as growth

targets and long-term

impact on sustainability

of regulated returns/FIT.

New risk

Included in the sensitivity

analysis on principal risks

for viability statement and

going concern assessment.

Direct financial impact:

• Adverse impact on revenue due to force majeure claims, decreasing power demand caused by slowdown of economic growth

• Slow payment of certain of our offtakers/the country system, potential financial distress post-crisis of certain clients, regulatory measures to slow down payments

• Adverse effect on results of operation due to increase of O&M costs and CAPEX expenditures due to supply

chain disruption

Business interruption:

• Disruption to business-as-usual activities caused by restrictions imposed on travel and movement of goods

• Business leaders' distraction from core business activities due to focus on risk prevention and mitigation measures

• Disruption due to employees' illness at plant and corporate level

• Disruption and delays to plants' planned maintenance due to travel restriction of O&M contractors (Impact on EAF and EFOR)

• Potential supply chain disruption resulting in inability to procure important equipment, consumables

or spare parts

Indirect financial impact

(Country/Counterparty):

• Adverse financial impact on the result of Company's operation through the adverse effect of economic growth slowdown on our counterparties, i.e. PPA offtakers and governments' feed-in tariffs

• FX rate exposure due to disruption in countries with weak currencies

Financing and growth impact:

• Inability to get access to financing for new or existing projects due to potential liquidity crunch caused by global economy slowdown

Information and Communication

• Emergency communication online site on the

intranet that contains the most recent communication

regarding Coronavirus to Company's employees in

different languages

• Crisis management task force (COVID-19) consisting of

sub-groups: remote work and internal communication;

operations staffing and OT management; IT readiness;

health, medical and testing

• Regular calls of senior management with business

leaders and global Webinars for all employees

Mobility restriction, remote work and social

distancing

• Employees training (Okta, VPN, zoom) and necessary

IT set-ups in place and tested to ensure seamless

remote operation for corporate functions

• Remote power plant operations in some locations

• Temporary travel business ban during quarantine and strict monitoring of travel situation going forward

• Strict third-party visitors control (contractors, service

providers) screening and authorization process including

online questionnaire

• Issuance of "Temporary home-based employee

guidance" and "Emerging Respiratory Viruses

Prevention Response Guidance"

• Regular check-ins with managers

• Procurement of masks and PPE equipment and

shipment to sites for front-line workers

• Assets operating in isolation mode

Supply chain analysis and contract management

• Global supply chain actions tracker per plant with regular

update in case of potential risks. Calls with sites to review

the status

• Force majeure and termination clauses analysis for key contracts (PPA, facility agreements, supply chain) with

regular communication on potential delivery delays.

Local assets were advised to avoid or to require

protection for advance payments

O&M optimization and inventory management

• Review of annual maintenance program to reschedule any maintenance activities that would require third-party interventions on site

• Inventory requirement in place for spares and

consumables at least through the end of 2020

(6-12 months' stock)

Health, Insurance and Testing

• PRC testing of front-line workers

• COVID insurance policy for infected employees (in addition to existing health benefits)

• Strict protocols for maintaining physical distance,

disinfection of premises, masks and gloves use when required physical distance cannot be kept. In addition,

screenings for temperature are conducted

R04. Strategy - Disruptive innovation in power generation and storage technologies

The risk that technological

breakthrough in renewable

generation, storage

technologies and/or energy

trading and financial markets

(i.e. blockchain) will reduce

our ability to be competitive in

the new investments or could

result in stranded assets.

Note: this risk is regarded

as an emerging risk but one

unlikely to impact in the next

three years.

New risk

Deterioration of financial

performance:

• Loss of revenue

• Decrease in operating cashflow

Loss of business/growth

opportunities:

• Renegotiation/termination of existing contracts

• Inability to expand in strategically important regions

Strong PPAs drafted to protect ContourGlobal from non-payments PRI policies, several of which provide protection against non-honoring of arbitration award Diversification of ContourGlobal's portfolio (Thermal and Renewable) and installing the most modern

technologies (where possible) in order to remain as competitive as possible

Innovation monitoring and using internal capabilities

to capitalize on emerging technologies and innovative

solutions already implemented within the Group

R05. Strategy - Supply Chain

Increased supply chain risk,

with the identification and

management of supply

requiring greater efforts to

maintain resilience. This may

be due to a more competitive

landscape among the

Company's peers increasing

costs; or due to a shrinking

of available supply due to

suppliers going out of

business during economic

downturn; or politically

motivated restrictions (such

as trade restrictions e.g.

quotas, tariffs, additional

screening or sanctions)

following from heightened

geopolitical tensions.

New risk

Included in the sensitivity

analysis on principal risks

for viability statement and

going concern assessment.

Business disruption:

• Inability to procure required equipment or parts

• Impact on EAF and EFOR

Deterioration of financial

performance:

• Increase in Opex and Capex

Potential breach of loan agreements

• Supply chain analysis and contract management: global

supply chain actions tracker per plant with regular update

in case of risks, regular reviews

• Monitoring of force majeure and termination clauses and

communication of potential termination

R06. Operation and execution - Project execution (CAPEX)

The risk that inefficient

contractors' selection,

contracting, project

management and execution

of greenfield construction or

refurbishment investment

projects will result in delays

or unanticipated cost

overruns.

Risk unchanged

Included in the sensitivity

analysis on principal risks

for viability and going

concern assessment.

Financial impact e.g.:

• Overrun of project costs (including financing fees) vs. investment case impacting projected cash flows and IRR

• Liquidated damages/penalties/litigation

• Reduced revenue due to construction delays

• Potential defaults on financing and debt repayment before COD

• Image and reputation impact

resulting from a loss of credibility with counterparties, lenders and other stakeholders

• Controlling methodology: specific internal resource

is dedicated to provide guidance and best practice to

ensure strict and real-time project cost control, enabling

cost overruns to be identified early and mitigation actions

put in place

• Minimizing the risk of exceeding construction budgets by entering into fixed price contracts with engineering, procurement and construction (EPC) contractors with proven track records

• EPC contracts contain back-to-back liquidated damages

provisions which protect ContourGlobal against

construction delays and other breaches by EPC contractors

• Contract monitoring and management with legal support

• External support to obtain permits

• Project Review Procedure: monthly review of the

projects organized by the Project Management Team

(including the Group COO) and presented to the Project

Steering Committee

• Regular analysis of suppliers and supply chain

R07. Operation and execution - Asset integrity (OPEX)

The risk that asset

maintenance processes

are not managed in line

with the O&M plan and

quality standards will

prevent the power plants

from delivering electricity

and ensuring availability

at the levels defined in

the long-term PPAs.

Risk unchanged

Deterioration of operational

performance:

• Business interruption and power outages

• Performance below expected

efficiency and output levels

• Inability to deliver electricity or ensure availability defined in long-term PPAs

Reduced profitability and cash flows:

• Increase of expenses (OPEX & CAPEX)

• Unplanned O&M and capital

Expenditures

• Loss of revenue and PPA penalties

• Liquidated damages

• Reduction in distribution and inability to service debt

• Reputational impact

Business interruption insurance O&M strategy focusing on HSE, O&M organization, O&M performance management, benchmarks and KPIs

Maintenance strategy including hydro and civil structures.

O&M IT systems (including remote monitoring control room) Maintenance activities with regular KPIs for control, and timely corrective actions

Daily KPIs and improvement meetings between local plant

managers and operators

Regular analysis of suppliers and supply chain

R08. Operation and execution - Resources/Climate change

The risk that climate change (e.g. changes in temperature, wind patterns and hydrological conditions) will affect the certainty of forecasts, will impact our operations and adversely affect our financial

performance.

Risk unchanged

Included in the sensitivity

analysis on principal risks

for viability and going

concern assessment.

• Deterioration of financial performance including a loss of revenue and/or an increase in expenses (O&M costs)

• Impact on the operational performance with a strong deviation of actual renewable generation vs. projections in the investment case specifically for wind and hydro

• Read more about how we managed this risk in Armenia this year on page 19.

• Diversified geographical and technological portfolio

of assets

• Extensive weather phenomena studies and due

diligence before acquisitions

• Sign-off on all investment case assumptions by

a reputable advisory firm

• Scenario analysis carried out across the portfolio

• StormGeo forecasting service has been implemented

that provides medium- to long- range prognostics for LATAM assets

• Retina Performance Management platform for Renewable businesses to improve data analytics and forecasting, enabling predictive analysis for medium- to long- range maintenance planning and downtime reduction

• Review of weatherization planning for extreme

temperatures

R09. Health, safety and environment (HSE) and food - prevention and regulation

The risk that failure to prevent major health, safety, environmental and food (CO2 production for human consumption) incidents and/ or comply with relevant regulations due to inherent

risks related to our activities

(fuel types, technology,

equipment in more than

20 countries) will have a

material adverse impact on

our operations, financing

conditions and reputation.

Risk unchanged

Human and environmental

impact:

LTIs (Lost Time Incidents) and

fatalities of ContourGlobal

employees, contractors or

people in local communities

around the facilities due to

incidents at the power plants

Environmental accidents on

site and in local communities

Contamination of food supply

Reputational impact

Financial and operational

impact:

Increase in liabilities and

compliance costs Business interruption Loss of efficiency/productivity Breach of loan covenants Non-compliance with applicable HSE legal requirements and

potential sanctions

Health and Safety Policy reviewed annually and communicated Company-wide

• Health and Safety and Environmental management system is aligned with H&S 18001, ISO 14001 standards, and also with World Bank guidelines, namely the IFC Performance Standards

• Monitoring of reactive indicators (such as responses to accidents) and proactive indicators (including known hazards, inspection quality and number of training hours)

• Intense regular training

• Continuous improvement and failure analysis (like 5 whys

and lessons learned) to prevent incident recurrence

• Strong environmental policies and procedures:

• Each business's compliance with applicable policies, local laws and permit requirements is managed directly by the business

• Oversight and audit through operations, environmental, health and safety departments

• Third-party contractors' environmental audits, including Coca- Cola audits of food grade CO2

• Arrubal, Togo and Knockmore Hill have achieved ISO 14001 Certification

• Adherence to a Company-wide environmental policy, reflecting the business commitment to the United Nations Global Compact

R10. Regulation and compliance - Fraud, bribery and corruption

The risk that lack of

transparency, threat of fraud,

public sector corruption,

money laundering and other

forms of criminal activity

involving government officials

or suppliers will result in a

failure to comply with

anti-corruption legislation,

including the UK Bribery Act

2010 and other international

anti-bribery laws.

Risk unchanged

Included in the sensitivity

analysis on principal risks for

viability and going concern

assessment.

Financial impact:

• Financial losses as a result

of fraudulent activities

• Violations of anti-corruption

or other laws

• Criminal and/or civil sanctions

against individuals and/or the

Company

• Loss of trust by key stakeholders

• Debarment by multilateral

development banks and

international financial institutions

• Reputation impact and loss

of trust

• Exclusion from government

funding programs

• A strong anti-bribery compliance program that reflects the components of an 'effective ethics and compliance program'

as set forth by various international conventions and

enforcement authorities, which is reviewed at least quarterly

• Policies and procedures include:

• Code of Conduct and Business Ethics

• Anti-Corruption Policy

• Anti-Corruption Compliance Guide

• Policy for Engaging Suppliers and Third-Party Service

Providers

• Gifts & Hospitality Policy

• Compliance Transactional

Due Diligence Protocol

• Business Development Consultant Compliance Protocol

• Regular certification by employees

• Risk-based due diligence, including for third parties and

transactions

• Pre-approval by Compliance of gifts and hospitality offered

to Governmental Officials

• Online portals:

• EthicsLine

• Regular checks and audits:

• Bi-annual combined

Compliance and Finance Audits, internal audits

• Internal spot checks

• Tailored, risk-based training according to a yearly training plan

• Anti-Corruption e-learning course for new joiners and regular refresh course for existing employees

R11. Information technology - Cyber security and system integrity

The risk that insufficient IT

security or maintenance

of systems will expose the

Company to data corruption.

This could have a negative

impact on information

systems as well as electronic

control systems used at the

generating plants, and could

disrupt business operations,

resulting in loss of service to

customers, expense to repair

security breaches and/or

system damage.

Risk unchanged

Included in the sensitivity

analysis on principal risks

for viability statement and

going concern assessment.

Organizational and operational

impact:

• Disruptions to business operations

• Compromise of data integrity in core systems

Financial impact:

• Potential for fraudulent activity due to segregation of duties conflicts

• Penalties related to non-compliance with data-related laws and regulations

• Loss of revenue due to disruptions to operations

• Impact on reputation due to breach of confidentiality

• Dedicated IT security function established for corporate

and Operations

Plants

• Physical access controls

• Dedicated plant IT functions established to consolidate

IT management approach in the plants under a global

framework of IT/OT security policies and procedures.

This local, segregated approach to the management

of plants minimizes risk

Corporate

• Security governance controls in place (including security policies, security training, security reviews)

• Security systems implemented (e.g. anti-virus, web filtering, firewalls, multifactor authentication, encryption)

• Security information and event management system

(SIEM)

• Infrastructure hosting security in place (ISO-27001 compliant data centers)

• User provisioning process for key financial accounting

and reporting systems, and segregation of duties

where applicable

• Governance processes in place (e.g. change management, incident management)

• Restricted USB access

• Centralized administrative access restricting any changes introduced by individual users

• Annual external audits of financial systems and IT security

R12. People and organization - Key people (senior executive management) succession planning

The risk that a combination

of key people's (senior

executive management)

departure at short notice

may affect the Company's

ability to deliver its strategic

objectives and the overall

Company performance

and the availability of

talent to support long-term

growth plans.

Risk decreased

The risk assessment was

re-evaluated due to set

of measures implemented

earlier in 2020 related

to succession planning.

Removal or departure of key

individuals could result in operational disruption, while competition for employees could lead to higher than expected increases in the cost of recruitment, training and employee costs

• Loss of key management members could have a reputational impact

Focused action to attract, retain and develop high-caliber

Employees Managing organizational capability and capacity to meet our customers' needs Effective remuneration arrangements to promote effective employee behaviours Clear succession plans in place