Interim Results

ContourGlobal plc

Interim Results Announcement

Strong operational and financial performance; delivering on our growth strategy

ContourGlobal plc (the "Company"), an international owner and operator of contracted wholesale power generation businesses, today announces its interim results for the six months ended 30 June 2018.

HIGHLIGHTS

· Consolidated revenue growth of 16% to $535.4 million

· Adjusted EBITDA up 12% to $261.8 million

o Thermal energy adjusted EBITDA up 2% to $163.0 million 

o Renewable energy Adjusted EBITDA up 27% to $119.8 million 

· Ahead of plan for achieving target of doubling EBITDA by 2022; we expect 2018 Adj. EBITDA to be in the range of $600-630 million for the full year

· Interim dividend of $26.6 million, 4.0 US cents per share, corresponding to one third of the high end of the previously announced range of $75-80 million

· Subsequent to the end of the half year:

o Sale of minority stake in European PV portfolio at an attractive premium to our cost

o Corporate bond refinancing on attractive terms; reduces our corporate interest costs by $10.0 million per annum

Joseph C. Brandt, President and Chief Executive Officer of ContourGlobal, said:

"We are announcing strong first-half results, our first since our IPO last November, driven by continued excellent power plant operations in our thermal and renewable fleets as well as our recent acquisitions of renewable assets in Europe and Latin America. The integration of our recently closed acquisition in Spain is proceeding as planned and recent regulatory statements about the next rate reset are very positive for the revenue outlook for that business.

We are also pleased to announce the sale at an attractive premium to our cost basis of 49% of our solar business in Italy and Slovakia to funds advised by Credit Suisse Energy Infrastructure Partners AG ("CSEIP"), and the entry into a joint venture with CSEIP to achieve further growth in Italy to further our roll-up strategy there. As noted in our 2017 annual report, we see significant opportunities to become the asset manager of choice for investors looking for opportunities to acquire interests in long-term contracted power assets such as those in our portfolio and, as shown today, we believe that these opportunities exist for both greenfield and acquired assets.

We continue to see attractive growth opportunities in our core markets in both the acquisition and greenfield segment and expect to announce further acquisitions this year. We are pleased with the status of our pipeline and our substantial and accelerated progress towards achieving our IPO objective of doubling Adj. EBITDA by 2022 without the need to issue shares or exceed target leverage.

Including a full-year contribution from the recently acquired Spanish CSP assets, our Pro Forma Adj. EBITDA for the last twelve months ending 30 June 2018 was $643 million, representing a 40% increase over the Adj. EBITDA for the twelve month period ending 30 June 2018. We expect 2018 Adj. EBITDA to be in the range of $600-630 million for the full year.

Our recent successful refinancing of our parent-level bonds at attractive rates and extended maturities will decrease parent interest expense by $10.0 million per annum. Together with the announcement of today's asset sale, cash balances more than support an interim dividend of $26.6 million, 4.0 US cents per share, corresponding to one third of the high end of the previously announced range of $75-80 million."

Strong financial performance

· Consolidated revenue growth of 16% to $535.4 million

· Adjusted EBITDA up 12% to $261.8 million, driven by the full impact of the Brazil hydro and cogeneration acquisition in March 2017 and acquisition of Spanish CSP on May 10, 2018;

o Thermal energy Adjusted EBITDA up 2% to $163.0 million 

o Renewable energy Adjusted EBITDA up 27% to $119.8 million 

· Income from operations down 7% mainly due to one-off acquisition costs related to the recent Spanish acquisition as well as ongoing pipeline development

· Including a full-year contribution from the Spanish CSP assets, our Pro Forma Adj. EBITDA for the last twelve months ending 30 June 2018 was $643 million, which represents a 40% increase vs. Adj. EBITDA for the last twelve months ending 30 June 2017

· Profit attributable to ContourGlobal plc shareholders was $2.7 million, resulting in basic EPS of 1 cent (USD) per share

· Strong cashflow generation and balance sheet; funds from operations reached $110.8 million in H1 2018 and is expected to grow significantly with the Spanish CSP acquisition, other growth projects in the pipeline, and the refinancing of the corporate bond closed in July 2018

o Corporate bond refinancing priced on 19 July 2018: €700 million 5-year bond at a coupon of 5.125% refinanced with a new €450 million 5-year bond at a coupon of 3.375% and €300 million 7-year bond at a coupon of 4.125%

o New bonds have extended the weighted average tenor to 5.8 years and will reduce our corporate interest costs by $10.0 million per annum (corresponding to a reduction of €8.3 million converted at the average EUR:USD exchange rate for the six months ended 30 June 2018) despite the additional €50 million of debt raised

· $270 million of liquidity at the parent level as of 30 June 2018

· Net consolidated leverage ratio of 4.6x based on our Pro Forma Adj. EBITDA for the last twelve months ending 30 June 2018 (including a full year contribution from our Spanish CSP assets), expected to return to approximately 4.5x through amortisation in the Company's project financings

· We remain committed to maintaining a strong BB credit rating

· Although resource for the Renewable segment remained globally weak in the first six months of 2018, our strategy of asset diversification limited the impact to just a negative 5% on Adjusted EBITDA compared to expectations

o Our first half of the year is typically weaker in resource owing to seasonality and we have recently seen an improvement in resource conditions which we expect to continue

· For the first six months of 2018, the US Dollar has been stronger vs. the Brazilian Real and weaker vs. the Euro, as compared to rates in the first six months of 2017

o Euro appreciation is positive for our Adjusted EBITDA and Brazilian Real depreciation is negative

o The net impact of these foreign currency fluctuations was a positive contribution of approximately $16 million to Adjusted EBITDA for the first six months of 2018

Industry-leading operational performance

· Industry leader in Health and Safety with 0.00 LTIR (Lost Time Incident Rate) in the first 6 months of 2018 and on track to achieve 'Target Zero' in 2018. For the first six months of 2018, our TRIR (Total Recordable Incident Rate) is 0.14 vs. a target of 0.16

· Availability factors remain strong at 94.9% combined average availability across fleet (H1 2017: 96%)

· Thermal production decreased to 3.0 GWh in H1 2018 without, however, impacting the margin of the division due to the power purchase agreements mechanisms in place (H1 2017: 3.9 GWh)

· Renewable production increased by 12% to 2.1 GWh in H1 2018 as part of the overall growth of the Renewable portfolio

· Integration of our new Spanish CSP assets is well-advanced and on-track to be completed ahead of schedule. Our operations and maintenance reorganisation strategy is expected to reduce fixed costs by 15% per annum from Year 3

Driving value creation from our existing portfolio

· Sale of a minority stake in our European PV portfolio at an attractive valuation

o On 6 August 2018, we signed an agreement to sell 49% of our Italian and Slovakian Solar PV portfolio for €63 million, which represents an attractive premium to our cost

o We have signed an asset management and operations agreement as well as a joint development agreement with the minority investor

o We continue to be approached about other potential minority sales across the portfolio

· Recent guidance from regulator about rate reset for Spanish CSP

o Our Spanish CSP assets benefit from a long-term regulated return that is reset every six years - the next reset is due to be announced in summer 2019 and effective from 1 January 2020

o Current rate of return is 7.4% and was set in reference to historical Spanish sovereign bond yields plus a premium of 300 basis points

o In July 2018, the Spanish regulator (CNMC) published a proposed methodology for the upcoming rate reset based on a WACC approach for power generation

o After applying the proposed methodology, CNMC has recommended a return rate of 7.04% for the regulatory period 2020-2025

Delivering on our growth strategy

· Acquisition of the 250 MW Spanish CSP portfolio of five plants in south-west Spain from Acciona Energia for total enterprise value of €962 million including €806 million payable to Acciona and existing net debt of €156 million. Adj. EBITDA for the Spanish CSP portfolio reached €110 million for the year ended 31 December 2017

· A transaction closed during the period for a combined 24 MW of solar photovoltaic and biogas plants in Italy and Romania for a total consideration of €30 million. These transactions were first announced on 23 December 2017

· Large M&A pipeline with opportunities at historically achieved returns

o Ongoing negotiation for >500 MW cogeneration assets acquisition in Mexico (highlighted as part of our M&A pipeline at during the IPO)

· Continued development of existing greenfield portfolio

o Kosovo Project EPC tender underway with formal request for proposal to be released on 23 August 2018 and selection of EPC Contractor to happen by end of year

o Phase I of Austria Wind Repowering commenced, with planned COD in H1 2019, increasing generation by 81% compared to the earlier installation (based on a P65 generation scenario)

o Good progress on the development of Austria Repowering Phase 2 that will increase generation by 46% compared to the earlier installation (based on a P65 generation scenario)

o Positive developments on the Sochagota expansion in Colombia, with a capacity auction expected to happen in Q1 2019 following the draft announcement of the auction in June this year

· Our Spanish CSP acquisition advances our strategy of diversification. Our thermal and wind group now contribute roughly equal EBITDA (based on Pro Forma Adj. EBITDA for the last twelve months ending 30 June 2018) and we remain highly diversified in terms of technology with no technology contributing more than 23% to our Pro Forma Adj. EBITDA for the last twelve months ending 30 June 2018

Dividend

· The Board of Directors is declaring an interim dividend of $26.6 million, 4.0 US cents per share, corresponding to one third of $80 million (the high end of the previously announced range of $75-80 million)

· The dividend will be paid on 7 September 2018 to shareholders on the register on 17 August 2018. The dividend will be paid in UK pounds sterling based on the prevailing USD:GBP exchange rate on 21 August 2018

· Consistent with our strategy articulated at the IPO, directors continue to expect to increase the dividend by a high single digit growth rate each year

Outlook

We expect 2018 Adj. EBITDA to be in the range of $600-630 million for the full year.

Presentation and conference call

The Company will host a presentation for analysts and investors at 09:00am (UK time) in London at J.P. Morgan, 60 Victoria Embankment, London EC4Y 0JP.

The meeting can also be accessed remotely via a dial-in, as detailed below.

Dial-in: +44 (0) 203 0095710

Conference ID: 4994434

Replay facility (available for 24 hrs after the call)

Dial-in: +44 (0) 333 3009785

Conference ID: 4994434

If you would like to attend the presentation in person, please RSVP to Natasha Moudarres

[email protected]).

A copy of the presentation will be made available online ahead of the meeting on 7 August

at: http://www.contourglobal.com/reports.

ENQUIRIES

Investor Relations - ContourGlobal

Gregory Johnson

Tel: +44 (0) 207 355 7321

Laurent Hullo

Tel: +33 1 53 83 96 45

[email protected]

Media - Brunswick

Charles Pretzlik/Simon Maine

Tel: +44 (0) 207 404 5959

[email protected]

ADDITIONAL INFORMATION

Reconciliation of Adj. EBITDA to Profit before tax

Reconciliation of FFO to Cash flow from operating activities

Corporate Governance

On 6 August 2018, the Board of Directors of ContourGlobal plc approved the appointment of Ruth Cairnie, independent Non-Executive Director, and Alejandro Santo Domingo, Non-Executive Director, as additional members of the Nomination Committee with immediate effect. Ruth Cairnie and Alejandro Santo Domingo join Alan Gillespie and Daniel Camus as members, and Craig Huff as Chair of the Committee.

Principal risks and uncertainties

The principal risks and uncertainties set out at the time of the Annual Report and Accounts 2017 (issued in April 2018) remain valid at the date of this report. The risk register will be subsequently updated for the year end. In summary, the principal risks include governmental regulations, project execution capital expenditures, asset integrity (operating expenditure), resources climate change, health and safety (H&S) and environmental compliance and regulations, fraud, bribery and corruption, cyber security and system integrity, availability of information and control systems, constrained staffing model and succession planning.

Glossary

Adj. EBITDA: is defined as profit from continuing operations for all controlled assets before income taxes, net finance costs, depreciation and amortisation, acquisition related-expenses and specific items adjusted for their size, nature or incidence, less our share of profit from unconsolidated entities accounted for using the equity method, plus our pro rata portion of Adjusted EBITDA for such entities.

Pro Forma Adj. EBITDA: reflects a full year contribution from Spanish CSP (calculated as ContourGlobal's LTM H1 2018 Adj. EBITDA less the actual Adj. EBITDA contribution from Spanish CSP plus the FY2017 Adj. EBITDA of Spanish CSP)

Funds From Operations (FFO): refers to Cash Flow from Operating Activities excluding changes in working capital, less interest paid, less maintenance capital expenditure, less distribution to minorities.

LTIR: measures recordable lost time incident rate on the basis of labour hours

TRIR: measures total recordable incident rate on the basis of labour hours

RESPONSIBILITY STATEMENT

We confirm that to the best of our knowledge:

(a) the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

(b) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events and their impact during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

(c) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

By order of the Board,

Chief Executive Officer

Joseph C. Brandt

7 August 2018

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

CONTOURGLOBAL PLC and subsidiaries

Unaudited interim consolidated statement of income and other comprehensive income

As of June 30, 2018

CONTOURGLOBAL PLC and subsidiaries

Unaudited interim consolidated statement of financial position

As of June 30, 2018

Unaudited interim consolidated statements of changes in equity and non-controlling interests

CONTOURGLOBAL PLC AND SUBSIDIARIES

General information as of June 30, 2018

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 and Africa, and its registered office is:

6th Floor

15 Berkeley Street

London

W1J 8DY

United Kingdom

Registered number: 10982736

ContourGlobal plc is listed on the London Stock Exchange.

The Company develops, acquires, operates and manages wholesale electric power generation businesses on three continents. It focuses on both underserved or niche markets and developed markets but it evaluates projects based on individual merit and pursues greenfield, brownfield as well as acquisition opportunities as they arise. The Company 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 Company 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: South America, Europe, Caribbean 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 Company's main corporate offices are in New York (United States), Paris (France), Luxembourg (Luxembourg), Sao Paulo (Brazil), Vienna (Austria) and Lome (Togo) and these offices provide administrative and technical support to operations and development activities.

These condensed interim consolidated financial statements have been prepared under ContourGlobal plc management's responsibility and authorized for issue by the Board of Directors on 6 August 2018.

CONTOURGLOBAL PLC AND SUBSIDIARIES

Basis of preparation as of June 30, 2018

2. Basis of preparation

The condensed interim consolidated financial statements have been prepared in accordance with IAS 34, "Interim Financial Reporting". In accordance with IAS 34, interim financial information is prepared solely 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, 2018 and not duplicating the information previously published in the annual consolidated financial statements for the year ended December 31, 2017. Therefore, the condensed interim consolidated financial statements do not include all the information that would be required in complete consolidated financial statements prepared in accordance with the International Financial Reporting Standards ("IFRS") as endorsed by and adopted for use by the European Union (EU), IFRS Interpretation Committee (IFRS IC) interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. 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, 2017.

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, 2017, with the exception of changes in estimates that are required in determining the provision for income taxes and the first application of IFRS 15, IFRS 9 and IFRIC 22 which entered in full force as of January 1, 2018 (see below). IFRS 9 application did not have any material impact on the H1 2018 financial statements. IFRIC 22 application did not have any material impact on the H1 2018 financial statements. Taxes on income in the interim periods are accrued using the 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.

As the group capital reorganization occurred in 2017, a proforma calculation of earnings per share as at June 30, 2017 has been disclosed using the weighted average number of shares in issue as at June 30, 2018.

These condensed interim consolidated financial statements should be read in conjunction with the annual report for the year ended December 31, 2017.

IFRS 15 Revenue from contract with customers

The Group adopted IFRS 15, Revenue from Contracts with Customers, from January 1, 2018. The Group used the modified retrospective approach for the first application. To determine the impact of IFRS 15 on the Group, management grouped power purchase agreements with similar contractual terms, and performed a detailed revenue accounting assessment for each group. This exercise identified the following main impacts for the Group as being:

i) An increase in revenue from grossing up certain costs that were previously netted down: the Group recognized an increase of costs of sales to match the fair value of the gas supplied to its Arrubal plant from its main client and corresponding increase in revenue; this resulted in an increase of revenue by $6.6 million for the six months ended June 30, 2018;

ii) Additional performance obligations identified for service concession contracts which resulted in a decrease of revenue by $7.3 million for the six months ended June 30, 2018; and

iii) A modification to a contract in Maritsa that is recognised prospectively from the contract modification; this resulted in an increase of revenue by $0.7 million for the six months ended June 30, 2018;

The table below summarizes impacts of IFRS 15 implementation on the statement of income for the six-months ended June 30, 2018:

The table below summarizes impacts of IFRS 15 implementation on the statement of financial position as of January 1, 2018:

(1) The Group has assessed the potential performance obligations ("POs") as defined under IFRS 15 for all its power plants under concession agreement, namely Kivuwatt in Rwanda, Togo and Cap des Biches in Senegal. The identification of the following POs resulted in adjusting the value of the financial assets, contract assets, contract liabilities, provisions and related deferred tax assets and liabilities:

- Construction and transfer of the power plant: no change in initial values. The margin recognized during the construction period is immaterial as engineering of the project is largely outsourced.

- Significant financing component: revenue is represented by interest generated on the funding of the total construction costs, and is recognized over the period of the contract consistent with the previous model. Under IFRS 15, the interest rate corresponds to the last USD bonds issued by the country representing the financing rate that the local government could have obtained at the time of the construction (vs incremental rate of the contract for the previous model). These changes resulted in significantly reducing the value of the line item Financial and contract assets as of January 1, 2018 for the 3 assets.

- Operation, maintenance and major maintenance activities: Such activities are part of the services rendered to the client during the concession period. A margin is applied which falls into a reasonable range for such activities in such countries. The major maintenance is considered as a distinct PO rendered after pre-defined thresholds and operating hours. As such, a revenue and a margin is applied to this PO when incurred under IFRS 15, which resulted in removing the gross maintenance initially constituted on those assets on the line item Provisions.

 (2) As a result of (1), the identification of new POs and change in methodology resulted in adjusting the financial asset value, but also in recognizing:

- Contract assets (within line item Financial and contracts assets): the value of contract assets and liabilities is dependent in particular on the timing of Operation and maintenance activities as well as major maintenance activities, for which revenue is recognized as incurred.

- Deferred tax assets and liabilities resulting from a different revenue recognition in local GAAP in Togo and Cap des Biches. The changes incurred by the implementation of IFRS 15 triggered adjustment of historical deferred taxes recognized as a result.

(3) The Maritsa power purchase agreement ("PPA") was amended in April 2016. IFRS 15 requires recognizing the effect of such amendment prospectively (vs retroactively to the initial PPA date under the previous standard). This change resulted in particular in deferring revenue recognition over time (recognition of a $6.8 million deferred revenue as of January 1, 2018 under line item Other current liabilities).

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:

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). 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 assets will vary depending on the season. Additionally, to the extent more of our renewable assets are located in the northern or southern hemisphere, overall generation of our entire asset portfolio could be impacted by seasonality. In particular, Adjusted EBITDA for the two first quarters of the year is typically lower than for the two last quarters for wind assets in South America (high season in the second part of the year) and for solar assets in Europe (higher irradiation).

CONTOURGLOBAL PLC AND SUBSIDIARIES

Major events and changes in the scope of consoldiation

3. Major events and changes in the scope of consolidation

Sale of Ukrainian assets

On 26th February 2018, the Group sold 100% of its stake in Ukrainian power plant Kramatorsk representing a total of 120 MW for a cash amount of $3 million. This asset was presented as an asset held for sale as of 31 December 2017. The sale has no material impact on the H1 2018 financial statements.

Additional solar portfolio acquisition

On 23rd December 2017, the Group signed the acquisition of a 23 MW renewable portfolio consisting of 10 photovoltaic plants in Italy (15 MW), one photovoltaic plant in Romania (7 MW) and 2 biogas plants in Italy (2 MW).

The transaction closed on March 22, 2018 for the Italian plants. The total consideration amounts to €22.6 million ($27.7 million) including €17.0 million ($20.8 million) for the acquisition of 100% of the shares and €5.6 million ($6.9 million) for the repayment of shareholders loans.

The transaction closed on June 26, 2018 for the Romania plant. The total consideration amounts to €7.7 million (or $9.0 million) including €0.3 million ($0.4 million) for the acquisition of 100% of the shares and €7.4 million (or $8.6 million) for the repayment of shareholders loans.

On a consolidated basis, had these acquisitions taken place as of January 1, 2018, the Group would have recognized 2018 six-month consolidated revenue of $538.7 million and six-month consolidated net profit of $3.3 million.

Preliminary determination of fair value of assets acquired and liabilities assumed at acquisition date of:

These acquisitions contributed to consolidated revenue and net result for respectively $3.6 million and $0.7 million.

Acquisition of Spanish CSP portfolio

On February 27, 2018, the Group signed the acquisition of Acciona Energia's 250 MW portfolio of five 50 MW Concentrating Solar Power plants in South-West Spain. The total enterprise value amounts to €962 million, including an amount payable to Acciona Energía of approximately €806.1 million ($955.7 million) and existing net debt (including adjustment for working capital) of €156 million ($184.4 miilion). The acquisition agreement also includes earn-out payments to Acciona Energía of up to €27 million ($32 million). Based on the preliminary assessment performed, management consider the probability of payment of these earn-outs to be remote and therefore no liability has been recognised.

The acquisition combines the Group's solar and Spanish thermal operating expertize into a sizable portfolio of assets enabling synergies with existing European operations.

The acquisition closed on May 10, 2018.

With the assistance of an independent expert, the Group is currently in the early stages of performing the preliminary valuation studies necessary to estimate the fair values as of May 10, 2018 of the assets acquired and liabilities assumed. As of June 30, 2018, the difference between the net assets acquired and the purchase consideration has been allocated on a preliminary basis to goodwill. The book value of the acquired assets and liabilities as stated below are subject to change, for a maximum 12 month period from the acquisition date, based upon management's final determination of the fair values of assets acquired and liabilities assumed.

On a consolidated basis, had this acquisition taken place as of January 1, 2018, the Group would have recognized 2018 six-month consolidated revenue of $596.9 million and six-month consolidated net profit of $17.1 million.

Preliminary determination of fair value of assets acquired and liabilities assumed at acquisition date of:

The acquisition contributed to consolidated revenue and net loss for respectively $27.6 million and $2.7 million.

CONTOURGLOBAL PLC AND SUBSIDIARIES

Notes to the unaudited condensed interim consolidated financial statements

4. Notes to the unaudited condensed interim consolidated financial statements

4.1. Segment reporting

The Group's reportable segments are the operating segments overseen by distinct segment managers responsible for their performance with no aggregation of operating segments.

Thermal Energy for power generating plants operating from coal, lignite, natural gas, fuel oil and diesel. Thermal plants include Maritsa, Arrubal, Togo, Cap des Biches, KivuWatt, Energies Antilles, Energies Saint-Martin, Bonaire 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.

Renewable Energy for power generating plants operating from renewable resources such as wind, solar and hydro in Europe and South America. Renewables plants include Asa Branca, Chapada I, II, III, Inka, Vorotan, Austria Wind, concentrating solar plants in Spain 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, political risk insurance 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 and specific items which have been identified and adjusted by virtue of their size, nature or incidence. In determining whether an event or transaction is specific, management considers quantitative as well as qualitative factors such as the frequency or predictability of occurrence.

The CODM does not review nor is presented a segment measure of total assets and total liabilities.

All revenue is derived from external customers.

Geographical information

The Group also presents revenue in each of the geographical areas in which it operates as follows:

- Europe (including our operations in Austria, Armenia, Northern Ireland, Italy, Romania, Poland, Bulgaria, Slovakia, Czech Republic, Spain and Ukraine)

- Latin America (including Brazil, Peru and Colombia)

- Africa (including Nigeria, Togo, Senegal and Rwanda)

- Caribbean islands (including Dutch Antilles and French Territory)

(1) Includes Corporate costs for $20.9 million (June 30, 2017: $19.1 million) and other costs for $0.1 million (June 30, 2017: $0.1 million). Corporate costs correspond to SG&A before depreciation and amortization (June 30, 2018: $0.7 million; June 30, 2017: $1.2 million).

(2) Corresponds to our share of Adjusted EBITDA of plants accounted for under the equity method (Sochagota, Termoemcali and Productora de Energia de Boyaca) which are reviewed by our CODM as part of our Thermal Energy segment.

(3) The Group successfully completed the Initial Public Offering in the United Kingdom of ContourGlobal Plc. Costs associated with this project were separately analyzed by our CODM.

(4) Mainly reflects the non-cash impact of finance lease and financial concession payments and in 2017 the long term overhaul provision in relation to our Togo and Senegal power plants under a concession arrangement. The overhaul program is expected to start in 2021 in Togo and 2019 in Senegal. 'Other' increased mainly as a result of the increased operations of our Cap des Biches I and II power plants in Senegal.

Capital expenditures

Geographical information

The geographic analysis of revenue, based on the country of origin in which the group's operations are located, and Adjusted EBITDA is as follows:

(1) Revenue generated in 2018 in Bulgaria and Spain amounted to $149.2 million and $123.7 million respectively (June 30, 2017: $138.9 million and $72.7 million respectively).

(2) Revenue generated in 2018 in Brazil amounted to $77.1 million (June 30, 2017: $73.7 million).

The geographic analysis of non-current assets, excluding derivative financial instruments and deferred tax assets, based on the location of the assets, is as follows:

CONTOURGLOBAL PLC AND SUBSIDIARIES

Notes to the unaudited condensed interim consolidated financial statements

As of June 30, 2018

4.2. Revenue

(1) Other revenue primarily relates to environmental, operational and maintenance services rendered to offtakers in our Maritsa, Togo, Kivuwatt and Cap des Biches power plants. Other revenue increased mainly as a result of IFRS 15 Revenue from contract with customer application.

The Group has one customer contributing more than 10% of Group's revenue.

4.3. Expenses by nature

(1) Operation and maintenance costs include ongoing costs associated with the operation and maintenance of all plants.

(2) Emission allowance utilized corresponds mainly to the costs of CO2 quotas in Maritsa which are passed through to its off-taker as well as changes in fair value of CO2 quotas in the period.

(3) Other expenses include operating consumables and supply costs of $6.5 million in June 30, 2018 (June 30, 2017: $7.4 million) and facility costs of $8.3 million in June 30, 2018 (June 30, 2017: $7.0 million). Facility costs include operating leases expenses of $2.1 million in June 30, 2018 (June 30, 2017: $1.8 million).

CONTOURGLOBAL PLC AND SUBSIDIARIES

Notes to the unaudited condensed interim consolidated financial statements

As of June 30, 2018

4.4. Finance costs - net

(1) Change in fair value of derivatives relates primarily to interest rate swaps and interest rate options. In the six months ended June 30, 2018, the Group entered into interest rate swap agreements as part of the closing of a Spanish acquisition to hedge its exposure to an increase in interest rates in Europe that would have impacted the related project financing interest rate. The fair value of those instruments was positive by $4.7 million as of June 30, 2018.

(2) Unrealized and realized foreign exchange differences primarily relate to cash and loans in subsidiaries that have a functional currency different to the currency in which the loans are denominated.

(3) Other mainly includes costs associated with other financing, the unwinding effect of certain liabilities as well as income and expenses related to interests and penalties for late payments.

4.5. Income tax expense and deferred income tax

In the six months ended June 30, 2018, the tax charge amounted to $4.2 million compared to $18.7 million in the six months ended June 30, 2017. The reduction in the tax charge between periods was driven by the profit mix between territories with different income tax rates and discrete events such as securing additional tax incentives and changes to deferred tax asset recognition. In both periods, the tax charge is increased due to the impact of territories with accounting losses but no recognition of deferred tax assets and by Brazilian entities being taxed by reference to revenue rather than accounting profits. This is offset by the availability of local tax incentives.

CONTOURGLOBAL PLC AND SUBSIDIARIES

Notes to the unaudited condensed interim consolidated financial statements

As of June 30, 2018

4.6. Property, plant and equipment

Assets acquired through business combinations are explained in Note 3 Major events and changes in the scope of consolidation.

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.

(1) The Group decided to sell its Kramatorsk Ukrainian power plant and signed a share purchase agreement on December 22, 2017. The Group classified the asset as Assets held for sale in conformity with IFRS 5 and tested the asset for impairment on the basis of the share purchase price less costs to sell. As a result, the Group recorded an impairment charge of $3.3 million in 2017.

In relation to this, as of December 31, 2017, $13.7m of assets were classified as Assets held for sale and $12.9m of liabilities were classified as Liabilities held for sale. Of the $13.7 million, $4.3 million related to Property, plant and equipment, $8.0 million related to working capital and $1.4 million related to cash and cash equivalents. Of the $12.9m, $0.9m related to provisions, $9.2 million related to working capital and $2.8 million related to borrowings.

Construction work in progress in 2017 predominantly relates to our Maritsa plant and Austria Wind project repowering.

Depreciation included in 'cost of sales' in the consolidated statement of income amount to $171.8 million in the year ended December 31, 2017 whereas depreciation included in 'selling, general and administrative expenses' amount to $0.7 million in the year ended December 31, 2017.

Assets acquired through business combination relate to the acquisition of a thermal and renewable portfolio in Brazil and Italy.

In 2017, the Group did not capitalise any borrowing costs in relation to project financing.

Construction work in progress in the period ended June 30, 2018 predominantly relates to our Maritsa plant and Austria Wind project repowering.

Depreciation included in 'cost of sales' in the consolidated statement of income amount to $101.3 million in the period ended June 30, 2018 whereas depreciation included in 'selling, general and administrative expenses' amount to $0.2 million in the period ended June 30, 2018.

Assets acquired through business combination relate to the acquisition of an additional solar portfolio in Italy and a CSP portfolio in Spain.

In the period ended June 30, 2018, the Group did not capitalise any borrowing costs in relation to project financing.

4.7. 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, 2017. 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, 2017.

CONTOURGLOBAL PLC AND SUBSIDIARIES

Notes to the unaudited condensed interim consolidated financial statements

As of June 30, 2018

4.8. Derivative financial instruments

The Group uses interest rate swaps to manage its exposure to interest rate movements on our borrowings, a foreign exchange forward contract to mitigate its currency risk 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:

(1) Interest rate swaps - Cash flow hedge relates to the hedging of the variable elements for certain project financing.

(2) The Group has also executed a series of offsets to protect the value, in USD terms, of the BRL-denominated expected distributions from the thermal and renewable portfolio in Brazil. The first two years of BRL-denominated distributions have been hedged using a series of forward exchange contracts and the distributions expected in years three to five have been protected against material depreciation of the BRL using option contracts. Hedge accounting does not apply, change in fair value is recognized in the consolidated statement of income.

The notional principal amount of:

- the outstanding interest rate swap contracts and cross currency swap qualified as cash-flow hedge amounted to $688.0 million as of June 30, 2018 (December 31, 2017: $572.0 million).

- the outstanding foreign exchange forward and option contracts amount to $79.6 million as of June 30, 2018 (December 31, 2017: $92.8 million).

The Group also entered in 2015 into a cross currency swap in our Cap des Biches project in Senegal. The fair value of the instrument as of June 30, 2018 amounts to $15.0 million (December 31, 2017: $20.9 million).

The Group recognized a profit of $4.3 million in June 30, 2018 in relation with its interest rate and cross currency swaps within Finance costs net (June 30, 2017: loss of $7.4 million).

CONTOURGLOBAL PLC AND SUBSIDIARIES

Notes to the unaudited condensed interim consolidated financial statements

As of June 30, 2018

4.9. Fair value measurements

The Group's only derivatives are interest rate swaps, foreign exchange forward contracts, foreign exchange option contracts and cross currency swap contracts in our Cap des Biches project in Senegal.

All the assets (liabilities) that are measured at fair value on a recurring basis are using level 2 inputs, with the exception of the debt to non-controlling interests which is level 3.

The Group uses a market approach as part of its available valuation techniques to determine the fair value of derivatives. The market approach uses prices and other relevant information generated from market transactions.

There were no transfers between fair value measurement levels between December 31, 2017 and June 30, 2018.

CONTOURGLOBAL PLC AND SUBSIDIARIES

Notes to the unaudited condensed interim consolidated financial statements

As of June 30, 2018

4.10. Financial instruments by category

(1) These balances exclude receivables and payables balances in relation to taxes.

CONTOURGLOBAL PLC AND SUBSIDIARIES

Notes to the unaudited condensed interim consolidated financial statements

As of June 30, 2018

4.11. 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. 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 amount to $3,669.3 million in total as of June 30, 2018 (December 31, 2017: $2,926.1 million) and primarily relate to the following:

(1) On May 10, 2018, the Group acquired a renewable portfolio in Spain representing a total of 250 MW, including a pre-existing debt due in 2029 with an outstanding nominal of €151.1m ($176.5m) at June 30, 2018 and a new debt issued in 2018 and due in 2036 with an outstanding nominal of €652.0m ($761.8m) at June 30, 2018.

(2) Taxa de Juros de Longo Prazo ("TJLP") represents the Brazil Long Term Interest Rate, which was approximately 6.6% at June 30, 2018 (December 31, 2017: 7.0%).

(3) On March 22, 2018, the Group acquired a renewable portfolio in Italy representing a total of 15 MW.

With the exception of our corporate bond and revolving credit facility, all external borrowings relate to project financings. Such project financings are generally non-recourse (subject to certain guarantees).

4.12. Share-based compensation plans

On 28 June 2018, the following awards over a total of 1,818,441 ordinary shares of 1 pence in ContourGlobal plc were granted under the ContourGlobal plc Long Term Incentive Plan to members of the senior management team. Included in this total are the following awards made to persons discharging managerial responsibilities:

The awards will ordinarily vest on the third anniversary of grant subject to the grantee's continued service and to the extent to which the performance conditions (as detailed below) set for the award are satisfied.

Each award is subject to four distinct performance conditions measuring: (i) as to 50% of each award, compounded annual growth in the Company's adjusted EBITDA; (ii) as to a further 12.5% of each award, the Company's internal rate of return on qualifying Company projects; (iii) as to a further 12.5% of each award, the number of corporate milestones completed in respect of qualifying Company projects; and (iv) as to the final 25% of each award, the Company's health and safety performance (measured by the Company's Lost Time Incident Rate). The performance conditions shall each be measured over a three-year period ending on 31 December 2020.

4.13. Financial commitments and contingent liabilities

ContourGlobal plc has 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, 2017. Since December 31, 2017, the status of our contingent liabilities has not changed.

4.14. Guarantees and letters of credit

As of June 30, 2018, there have been no significant additional guarantees and letter of credits as compared to those disclosed in the consolidated financial statements for the year ended December 31, 2017.

4.15. Subsequent events

Senior notes refinancing

On July 19, 2018 the Group announced the pricing of its offering of €450 million aggregate principal amount of 3.375% senior secured notes due 2023 and €300 million aggregate principal amount of 4.125% senior secured notes due 2025 in a private offering to eligible purchasers. The offering closed on July 26, 2018.

The Group intends to use the net proceeds from the offering to refinance its senior secured notes due 2021, pay related fees and expenses and for general corporate purposes.

Sale of a minority stake in the Solar Europe business

On 6th of August 2018, the Company signed the sale of a 49% non-controlling stake in ContourGlobal’s solar photovoltaic portfolio in Italy and Slovakia to funds advised by Credit Suisse Energy Infrastructure Partners AG (“CSEIP”) for approximately €63 million and entered into a strategic partnership with CSEIP where ContourGlobal will provide operation and maintenance under a long term agreement and develop and acquire new photovoltaic assets in Italy and Slovakia for the partnership under a development agreement which will provide further value creation to the Company. The transaction is expected to close mid-September 2018. CSEIP is one of the European leaders in direct infrastructure investments dedicated to the energy sector. It is a subsidiary of banking group Credit Suisse AG and advises pension and insurance companies for investments in energy infrastructure. CSEIP has c. €1.5 billion of committed capital under management from institutional investors and has a hold-to-maturity investment approach.

The purchase price of €63 million includes the benefit of the refinancing of the Italian portfolio planned in Q4 2018. In addition, the Company agreed earn-outs in relation to future performance of the business.

Independent review report to ContourGlobal plc

Report on the condensed interim consolidated financial statements

Our conclusion

We have reviewed ContourGlobal plc's condensed interim consolidated financial statements (the "interim financial statements") in the Interim Results Announcement of ContourGlobal plc for the 6 month period ended 30 June 2018. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’, as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom’s Financial Conduct Authority.

What we have reviewed

The interim financial statements comprise:

the Unaudited Interim Consolidated Statement of Financial Position as at 30 June 2018;

the Unaudited Interim Consolidated Statement of Income and Other Comprehensive Income for the period then ended;

the Unaudited Interim Consolidated Statement of Cash Flows for the period then ended;

the Unaudited Interim Consolidated Statements of Changes in Equity and Non-Controlling Interests for the period then ended; and

the explanatory notes to the interim financial statements.

The interim financial statements included in the Interim Results Announcement have been prepared in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’, as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom’s Financial Conduct Authority.

As disclosed in note 2 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.