Preliminary Results Announcement

ContourGlobal plc

Preliminary Results Announcement

· Strong financial performance with Adjusted EBITDA +15% to $703 million, Funds from Operations +12% to $338 million and Income from Operations +11.5% to $292 million

· Acquisitions and strong operational performance driving cash generation and growth

· Quarterly dividend of $24.75 million, with dividend cover of 2.2x[1]. Maintaining and reaffirming annual 10% dividend increase

· Kosovo project will not proceed as it cannot be concluded by the 24 May 2020 required project completion date. No further investment in coal

· Mexico acquisition closed in November 2019, adding $110 million of annualized Adjusted EBITDA

ContourGlobal plc ("ContourGlobal" or the "Company"), an international owner and operator of contracted power generating assets, today announces its full year results for the year ended 31 December 2019.

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

"2019 was a strong year in all aspects of our business. Our first priority is always health and safety. In 2019 our Lost Time Incident Rate[2] was an industry leading 0.03 and we passed 442 continuous days without an LTI. These are notable achievements and we remain committed to Target Zero. Health and safety performance is achieved through operating excellence, which is also the key to financial results. In 2019, due to very good operational performance and new business acquisitions, we delivered a 12% increase in Funds from Operations to $338 million and Adjusted EBITDA rose 15% to $703 million.

The consistent, contracted cash generation of our business allows us to continue to deliver our long-term commitment to shareholders, including an annual 10% increase in our dividend. Today we announce a quarterly dividend of $24.75 million, or 3.6901 cents per share.

We maintain our focus on growing the business and efficiently using capital. During the year, we completed an extremely successful 'farm down' of our Spanish Concentrated Solar Power business, and closed the highly attractive acquisition of two gas-fired combined heat and power plants in Mexico.

We announce today that the Kosova e Re project cannot go forward. The political situation in Kosovo since July, the recent formation of a government led by a Prime Minister publicly opposed to the project and the government's inaction have made it impossible for the project to meet the required milestones by its project completion date. As we have stated in the past, Kosovo was to have been our last coal development project. We will not develop or acquire coal power plants in the future and, with only one majority-controlled coal project in our 107 power plant portfolio, we are increasingly reducing our carbon emission intensity.

We are positive about the outlook. Electricity supply requires over $1.5 trillion of annual investment over the next decade. Most of this investment will be in renewable generation and low-carbon base-load generation such as natural gas and combined heat and power. Our skill set and track record makes us well placed to take advantage of this growth.

As an example of low-carbon innovation, last month, we inaugurated a wind, battery and fuel oil system in Bonaire. We are able to reduce cost for the customer, lower carbon emissions and enhance the potential of the renewable content. We see many opportunities for further growth, including organic, greenfield and acquisitions."

KEY HIGHLIGHTS

Dividend - on target with 10% annual dividend increase

· A fourth quarterly dividend of $24.75 million, or 3.6901 cents per share, to be paid on 9 April 2020

· A total of $99 million has been declared for 2019, an increase of 10% on 2018, in line with dividend policy

Project pipeline and strong future growth

· Successfully closed acquisition of Mexican CHP in November 2019. Adding $110 million of Adjusted EBITDA on annual basis. Integration is proceeding according to plan

· The Kosova e Re project cannot proceed, as set out above. The Company will not pursue any other new coal projects, or acquisitions, in the future

· The Company constantly seeks opportunities to optimize its portfolio and recycle capital, creating additional value to investors

o Sold 49% stake in Spanish CSP in May 2019 for €134 million, contributing a $52 million gain to Adjusted EBITDA

Financials - maintaining strong cashflow and balance sheet

· Strong cashflow generation with Funds from Operations up 12% to $338m and cash conversion at 48%.[3]

· Adjusted EBITDA up 15% to $703m, driven by the Renewable division, including the farm-down of the Spanish CSP business and overall good resource. Thermal division EBITDA was stable year-on-year, with growth coming from the Mexican CHP acquisition in November 2019

· Income from operations up 12% to $292m mainly due to the full year impact of the Spanish CSP acquisition and the Mexican CHP acquisition, slightly offset by the acquisition-related costs for the Mexican CHP

· An impairment has been recognized against the Kosovo project of $12 million, recoverable costs of $22 million remain on the balance sheet

· In July 2019 we issued €100 million 4.125% secured notes due 2025 at 106.0% of par corresponding to a yield of maturity of 3.024%, the lowest ever. The proceeds are to be used to fund future growth

· $3.5bn Net Debt as at 31 December 2019. Net Debt to EBITDA ratio[4] unchanged at 4.4x, in line with guidance of 4.0x to 4.5x

· Parent Company Free Cash Flow of $213 million, providing dividend cover of over 2x

Covid-19

· To date we have not experienced meaningful disruption to our operations resulting from COVID-19 and do not currently expect material disruption in 2020

· Our office-based employees have increasingly been working remotely since February 20 when we closed our Milan office. The group has a distributed office strategy rather than a single headquarters and the company's nine senior executives are based in five different cities

· Power plant operations have to date been unaffected by the spread of COVID-19. The company has taken various proactive measures related to power plant shifts, remote monitoring and operating technology and critical spares and inventory. Each of the company's power plants and offices are interconnected with video, audio and data

· The Company does not face any near-term refinancing requirements and has ample liquidity at the parent company and in its projects. The vast majority of our debt, $3.1 billion, is at the project level and amortizes over time. There are only immaterial bullet maturities of our project financing debt due in the next several years. At the parent level the company has issued corporate notes, €450 million maturing in 2023 and €400 million maturing in 2025

Outlook

· The current wider market uncertainty has not impacted our cashflows. Our budgets for the full year remain stable and on the basis of our contracted and regulatory revenues we expect 2020 Adjusted EBITDA to be between $710 million to $745 million[5], benefiting from the full year of the Mexican CHP acquisition, completed on 25 November 2019

· Continuing to see opportunities for further accretive M&A and development in core markets

· Maintaining 10% annual dividend growth target

(Adjusted EBITDA and Funds From Operations are reconciled to profit before tax and operating cash flow respectively in the Financial Review. Adjusted Net Income is reconciled to Net Profit in the Finance Director Review.)

Successful operational performance and growth of the portfolio  

· Industry leader in Health and Safety with 0.03 LTI Rate in 2019. ContourGlobal achieved 442 days without Lost Time Incidents

· 94.3% combined Availability Factor ("AF") across fleet in 2019 (2018: 92.9%). The increase in the AF is linked to the improvement in the technical performance of the fleet and the reduction of the forced outages across the portfolio

o Thermal AF for 2019 was 92.8% (2018: 90.2%). The Thermal fleet AF is steady and consistently above the weighted average PPA minimum availability requirement

o Hydro AF for 2019 decreased to 97.9% vs 98.5% in 2018 due to planned maintenance during the year

o Wind AF for 2019 remained at same level as in 2018 (95.8%) due to stable performance of the wind fleet with an improvement plan being deployed

o Solar PV AF for 2019 was stable at 99.3% vs. 99.2% in 2018

o Solar CSP AF for 2019 decreased to 93.3% vs. 95.3% in 2018 due to two major scheduled outages and one forced outage

Delivered growth as planned through developments and asset acquisitions 

· In May 2019, we completed the 'farm down' of 49% of our 250 MW CSP portfolio in Spain with Credit Suisse Energy Infrastructure Partners ("CSEIP") for close to 2x equity value and a consideration of €134 million

· In June 2019 we acquired an additional 12.4 MW Solar PV asset in Italy continuing our roll-up strategy there

· In H1 2019 we successfully refinanced our Solar portfolios in Italy and Slovakia, reducing all-in costs by €4 million per annum

· Austria Wind Repowering Phase I: Repowering of one of our wind farms (12 MW) reached commercial operations in January 2019. 3 out 5 turbines of the second wind farm of Phase I reached commercial operations in November 2019. In January 2020 we successfully refinanced those two assets

· In November 2019 we reached commercial operations for Phase II of our Bonaire hybrid concept - we replaced HFO engines rented by our client and ensured security of supply and grid stability, while reducing end user tariffs and increasing the share of renewable generation in the supply mix

· In November 2019 we completed the acquisition of 518 MW cogeneration assets in Mexico for a purchase price of approximately $724 million subject to customary adjustments such as for working capital, plus $77 million VAT payment which is expected to be refunded to the Company in full within 12 months of completion. The assets are expected to generate approximately $110 million of Adjusted EBITDA on a full-year basis. To finance the acquisition, ContourGlobal entered into an attractive $535 million amortizing non-recourse project financing with The Bank of Nova Scotia at a debt to EBITDA leverage ratio which is better than that expected when the transaction was first announced

EPS

· Net Profit attributable to ContourGlobal plc shareholders was $27.7 million in 2019 corresponding to an EPS of $0.04. Adjusted Net Profit attributable to ContourGlobal plc shareholders was $75.4 million in 2019 corresponding to an Adjusted EPS of $0.11

Dividend 

· The company paid a dividend of $24.75 million in December 2019 corresponding to the third dividend for the year ended 31 December 2019

· The fourth quarterly dividend of $24.75 million, or 3.6901 cents per share, will be paid on 9 April 2020, to shareholders on the register at 27 March 2020

· A total of $99 million has been declared for 2019, representing a 10% increase on 2018.

· The Directors continue to expect to increase the dividend annually by 10% 

AGM

The Company will host an Annual General Meeting for shareholders on 27 May 2020

Presentation and conference call

 The Company will host a presentation call for analysts and investors 09:30 GMT, 17 March 2020

The meeting can be accessed via a live webcast and dial-in, details available at https://www.contourglobal.com/investors

A copy of the presentation will be made available online ahead of the meeting on our website at https://www.contourglobal.com/investors

 ENQUIRIES

 Investor Relations - ContourGlobal

John Smelt - SVP, Investor Relations

Tel: +44 (0) 203 62690 47

Mob: +44 (0) 7500 129 218

[email protected]

Media - Brunswick

Charles Pretzlik/Simon Maine

Tel: +44 (0) 207 404 5959

[email protected]

Cautionary note regarding forward-looking statements

These results include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "plans", "goal", "target", "aim", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout these results and the information incorporated by reference into these results and include statements regarding the intentions, beliefs or current expectations of the directors or the Company concerning, amongst other things, the results of operations, financial condition, liquidity, prospects, growth, strategies and dividend policy of the Company and the industry in which it operates.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond the Company's ability to control or predict. Forward-looking statements are not guarantees of future performance. The Company's actual results of operations, financial condition, liquidity, dividend policy and the development of the industry in which it operates may differ materially from the impression created by the forward-looking statements contained in these results and/or the information incorporated by reference into these results. In addition, even if the results of operations, financial condition, liquidity and dividend policy of the Company and the development of the industry in which it operates, are consistent with the forward-looking statements contained in these results and/or the information incorporated by reference into these results, those results or developments may not be indicative of results or developments in subsequent periods.

Other than in accordance with its legal or regulatory obligations, the Company does not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise.

Chairman Review

OVERVIEW

I am pleased to report another strong set of annual results in 2019 from both an operational and financial performance perspective. However, our stock price performance was frustrating, with ContourGlobal's stock trading at a meaningful discount to our view of intrinsic value. We are pursuing several key initiatives that we believe will help close this gap in 2020. These include the following:

(a) monetizing the value-gap between private market values for renewable assets and how we are being valued in the public markets by accelerating our strategy of minority sales;

(b) exploring a sale of our Brazilian portfolio - our only meaningful non-hard currency exposure;

(c) not proceeding with any new coal investments; this likely includes Kosovo given opposition from the new government there;

(d) investing in our low-carbon growth pipeline, focusing exclusively on renewable and low-carbon thermal assets in hard currency (US dollar or Euro) markets; and (e) returning excess capital to shareholders.

The year yielded an impressive set of results with sustained improvements in business operations, revenue growth and strong cash flows. ContourGlobal has continued to make meaningful operational progress in 2019 whilst maintaining excellent levels of safety and reliability, going 442 days with no Lost Time Incident ("LTI") until late November 2019. Our target remains zero LTIs.

Delivering on our growth strategy

ContourGlobal is a world class operator with an international footprint diversified across geographies and technologies. This profile enables us to deliver robust and resilient financial performance, evidenced by our track record of creating value through acquisitions by improving operational performance.

We announced on 25 November 2019 that we had closed the acquisition in Mexico of two natural gas-fired combined heat and power plants (CHP), together with development rights for a third plant. As of the closing date, approximately 98% of the CHP power together with all the steam generation are under long-term contract, an improvement on the 90% announced at signing. We expect the Mexico CHP business to generate approximately $110 million of Adjusted EBITDA on a full-year basis.

We also completed the acquisition of a 12.4MW add-on rooftop PV solar portfolio in Italy with an average remaining feed in tariff period of 13 years. This portfolio is located near our existing Northern Italy hub. We continue to see attractive add-on solar growth opportunities in Italy.

During the year, the Board reviewed the Company's strategy as it continues to achieve its targets and evolve from the strategy it set at the time of its IPO. We are focused on renewable and low-carbon growth opportunities, and our pipeline remains robust.

Sustainability, compliance, health & safety

We remain equally focused on our sustainability agenda which forms part of our group strategy, and are constantly seeking new ways to further improve our practices. Consistent with our values, we continuously reiterate through internal compliance training and communication our commitment to transparency and responsible corporate behaviour. During the year, we carried out a corporate compliance survey which indicated that the overall Company demonstrates a culture of ethics and integrity and clearly communicates its expectations of ethical behaviour.

Our Group performance on Health and Safety continues to be industry leading and we remain focused on our zero target for LTIs. One of management's key priorities is to provide a safe working place for employees, contractors and sub- contractors as part of our Target Zero (zero harm, zero injuries) operational excellence program which is driven by a culture of continuous improvement. We will continue our efforts to better identify and mitigate risks in key compliance and health and safety areas.

People and culture

Significant effort is put into making ContourGlobal a great place to work, where talent and diversity thrive. The Board attaches high importance to employee engagement and recognizes the challenges in engaging with global employees. Local management engage their employees and keep them informed of business matters. At Group level, management continuously aims to improve communication and employee engagement through activities such as the Compliance Culture Survey, Townhall meetings and the Tuesday Talks when the CEO engages with employees on various issues.

Dividend Policy and dividends

Our dividend policy aims to grow the ordinary dividend per share at 10% annually for the foreseeable future. In 2019 we announced that we would move to paying our dividends in four quarterly installments. This commitment is supported by the Company's substantial and predictable cash generation. The total dividend amount for the full year of 2019 is USD 99 million. The fourth quarter dividend of USD 3.6901 cents per share, equivalent to USD 24.75 million will be paid on 9 April 2020.

The dividend receivable in pounds sterling will be calculated based on the exchange rate on the applicable announcement date.

Board changes

During the year, we announced the appointments of Stefan Schellinger as Global Chief Financial Officer and Executive Director with effect from 15 April 2019, and the strengthening of the Board with an additional independent Non- Executive Director, Mariana Gheorghe, with effect from 30 June 2019. Both appointments bring significant experience and diversity and are making valuable contributions. Following the resignation of Ruth Cairnie, we propose to appoint an additional independent Non-Executive Director. We have retained the services of an external search consultant with the remit to find the best balance of skills, experience and diversity to suit ContourGlobal's requirements.

I am excited by the significant opportunities ahead for ContourGlobal and I am confident that it is well positioned to continue to deliver predictable, sustainable cashflow growth for shareholders.

On behalf of the Board, I would like to thank management, all our staff, our contractors and suppliers for their dedication and hard work in delivering ContourGlobal's excellent performance in 2019.

Craig A. Huff

Chairman

CEO Review

Introduction

ContourGlobal grew well in 2019 and capitalized on opportunities to recycle capital that had started to emerge as the year progressed

Performance Review

Safety First. We had another extraordinary year for our most important objective -to work safely. We equaled our record year in 2018 and 2017 with our key lagging indicator, our Lost Time Incident Rate1, ending the year at 0.03 despite over nearly 6 million hours worked including, as in 2018, at several recently acquired businesses.

We also, for the third year in a row, failed to achieve "Target Zero," our health and safety goal targeting zero LTI, adopted in December 2016. In a cruel and ironic twist(ed back) of fate, our sole LTI of the year occurred in late November, after 442 days and nearly 7.5 million hours worked without a lost time incident, during a emergency drill at one of our sites in Spain. Fortunately the injury was not severe. We "five whys'd" the problem and recommitted to Target Zero for 2020.

Great operating companies lead with great health & safety performance and Contour is no exception. When conducting diligence on potential M&A targets, we first look at the health & safety records and performance of the target company. 99% of the time this H&S diligence tells us all that we need to know about the quality of the target's operations. Not once have we seen a power generation business with poor health & safety performance but great operational performance. They go hand-in-hand. Health & Safety is hard. Get that right and the rest follows. Recognizing our commitment to H&S and our outstanding performance, in 2019 Contour was admitted as a member into the prestigious Campbell Institute, a leading Health and Safety organization dedicated to eliminate workplace injury and which brings together like minded leading companies to share best practices and data to continuously improve operational performance. Everyone at Contour takes great pride in having earned the right to affix the Campbell Institute logo onto our website.

For the second year in a row we were also included in the UK FTSE4Good Index, the responsible investment index of the FTSE group designed to help investors identify companies that meet globally recognized corporate responsibility standards and invest in them. Since 2010, our fifth year of operations and first year as a reporting member of the United Nations Global Compact, we have worked to integrate our sustainability commitments into our business strategy. In the decade since we have become sustainability and ESG leaders. In recent years the "E" has come to overwhelm the "S" and the "G", with the adverse result that most ESG attention paid to the company has narrowly focused on the lignite coal development project in Kosovo, a project which we informed the market during our IPO process would be our last coal project. As a result of the political situation in Kosovo since July, our development project is incapable of reaching its milestones prior to the required project completion date of May 24, 2020.

This past summer the previous government resigned. In October new elections were held but the result produced no new government for four months. The previous government would not engage with us about the project and the new government formed just in February is led by a prime minister who publicly opposes the project. As such, the project will not be realized by us.

One result is that we are able to move rapidly towards our objective of reducing CO2 emissions in our portfolio, a portfolio which consists of only 1.5 coal plants accounting for approximately 17% of Adjusted EBITDA. Many people worked against very difficult odds to enable this project to move forward and with a better set of circumstances we would have brought the project into existence. The reality and paradoxical nature of the Kosovo project was that it would dramatically reduce CO2 emissions in the country (38%), Particulate matter (93%), SOx (85%) and NOx (93%).

We had a very strong operating year in 2019. The year started with a continuation of the lackluster thermal performance that we saw in late 2018 and Karl Schnadt and Quinto di Ferdinando, our Chief Operating Officers for the Group and the Thermal division respectively, led a very impressive turnaround from mid-February such that by year-end we had recovered and then some from the rocky start and achieved better than plan Equivalent Availability Factors ("EAF") across the entire thermal fleet. Cost control and capex management were also excellent in 2019 and better than plan.

Operating performance in the renewable fleet was similarly strong with EAF better than plan on a portfolio basis across the fleet for all technologies with the exception of our Brazil wind farms. Renewable resource performance in 2019 was again mixed, as in 2018, but meaningfully better than last year. Solar resource was extraordinary in Spain with results equivalent to P3, and very strong in Italy and Slovakia. Hydrology resource was good in Brazil and Armenia, and wind was much better than in 2018 at approximately P57 for the wind fleet. Reflecting the strength in the diversification of our portfolio, overall resource detracted less than 1% from adjusted EBITDA. As in the thermal fleet, cost control and capex were excellent and better than plan. In both the renewable and thermal fleet fixed cost control was even better than in 2018 which was itself an excellent year.

Excellent operations would have produced extremely strong financial results in 2019 if our guidance had included only existing operations at a constant FX rate. Because our guidance and budget included a forecast of the acquisition closing date for two combined heat and power plants in Mexico, the delay of the acquisition by five months had a knock-on effect on financial results.

As we did last year, we also did a good job getting cash up to the parent company-the entity that pays dividends, interest and provides capital for new investment. We believe that the cash distributions to the parent, and the ratio of those distributions to the recourse debt that is held there, is the best measure of our financial leverage.

Reflecting the continued strength and resilience of our business model, we opportunistically entered the bond market in July pricing an addition to our 2025 notes with a record low coupon of 3% in Euros.

Growth, Capital and Market Outlook

We continued to execute well on our core strategy of growing well and creating meaningful additional value through the farm-down of minority interests in our plants and as a developer and operator of a diverse portfolio of power generating assets, including those we acquired in our largest ever transaction, the two high efficiency natural gas fired combined heat and power plants in Mexico which we closed in November 2019. This $724 million acquisition was supported by a very attractive project financing provided by a high quality and supportive consortium of banks led by The Bank of Nova Scotia. The larger of the two facilities, located in Altamira, was under construction at the time of the acquisition and we conditioned our obligation to close upon its successful completion of all construction and commissioning activities and its entry into commercial service. Delaying the acquisition until November and holding the seller to the letter of the contract enabled us to ensure that this asset over its 35 year life would perform as expected.

Operations of our plants in Mexico since the acquisition have been excellent and reinforce our expectation that natural gas fired power stations are a critical element of the transition to a lower carbon future. This is particularly the case when, as here, the assets are operated in combined-heat and power mode. It is increasingly recognized that energy efficiency is a key part of attaining medium-term climate goals. For industrial companies like Alpek, power plants like the ones we acquired from them achieve 30% more efficiency than if electricity, steam and heat were acquired from separate systems.

As we've seen with Coca Cola Hellenic who we serve throughout Europe and Africa, natural gas fired generation whether in co, tri or "quad"1 mode materially reduces the carbon footprint of essential businesses. We look forwardto continued low carbon growth in renewables and natural gas fired generation.

Covid-19

As I finalize this letter in mid March 2020, the world anxiously watches the spread of COVID-19. To date we have not experienced meaningful disruption to our operations resulting from COVID-19 and do not currently expect material disruption in 2020.

Our office-based employees have increasingly been working remotely since February 20 when we closed our Milan office. The group has traditionally had a distributed office strategy rather than a single headquarters and the company's nine senior executives are based in five different cities.

Power plant operations have to date been unaffected by the spread of COVID-19. The company has taken various proactive measures related to power plant shifts, remote monitoring and operating technology, and critical spares and inventory. Each of the company's power plants and offices are interconnected with video, audio and data.

We approach this epidemic with no near term refinancing requirements and ample liquidity at the parent company and in our projects. The vast majority of our debt, $3.1 billion, is at the project level and amortizes over time. There are only immaterial bullet maturities of our project financing debt due in the next seven years. At the parent level the company has issued corporate notes, €450 million maturing in 2023 and €400 million maturing in 2025.

Outlook

2019 was a solid year for ContourGlobal and we continue to execute our plan and deliver significant and growing cash generation that simultaneously supports above market dividend growth, a robust credit profile enabling us to access low cost debt and growth investments in our key markets.

We are a strong and agile business which continues to demonstrate success with its operations led business model and shareholder value driven capital allocation. We expect 2020 to continue to reflect our meaningful growth and increase in shareholder remuneration.

Joseph C. Brandt.

Chief Executive Officer

Financial Review

Revenue

Revenue continued to grow in 2019 to reach $1,330.2 million (+6%) mainly resulting from the full year impact of the acquired Spanish CSP assets in 2018 (+$63.7 million) and the impact of the Mexican CHP acquisition completed in November 2019 (+$23.4 million), as well as increased revenue from higher dispatch of some of our thermal power plants (+$42.2 million) partially offset by negative foreign exchange impact of $67.9 million mainly due to higher average level of Eur/USD (1.12) in 2019 than in 2018 (1.18).

Income from Operations (IFO)

IFO is a measure derived from the IFRS audited consolidated statement of income.

IFO increased in 2019 by $30.2 million or 12% to reach $292.1 million as compared to $261.9 million in 2018, mainly as a result of the following effects:

· Full year impact of the acquisition of the Spanish CSP assets (+$22.5 million), and the impact of the acquisition of the Mexican CHP assets in November 2019 (+$5.4 million).

· Partially offset by a non-cash $9.1 million charge in 2019 ($4.1 million in 2018) related to the Private Incentive Plan which does not constitute a liability for the Company.

· One-off exceptional restructuring costs in 2018 related to the reorganization of the corporate offices in the Group ($6.7 million).

· Increased acquisition related costs of $3.6m as a result of the closing of the Mexican CHP transaction in 2019.

Adjusted EBITDA

In 2019, we saw another year of strong Adjusted EBITDA growth with an increase of 15% to $702.7 million. Adjusted EBITDA benefited from the strong performance of our existing assets at $620.5 million (+$10.4 million), to which we added the full year impact of the acquisition of Spanish CSP assets (+$48.2 million), the impact of the acquisition of the Mexican CHP in November 2019 (+$10.2 million), a net gain of $51.9 million from the sale of a stake in our Spanish CSP asset, and $8.3m positive impact of IFRS 16 implementation, partially offset by a negative foreign exchange impact of $36.4 million mainly due to higher average level of Eur/ USD (-$25.0 million) and a weaker Brazilian real/USD (-$10.1 million).

Thermal Adjusted EBITDA increased by $8.8 million, or 3%, to $335.9 million for the year ended 31 December 2019 from $327.1 million for the previous year. The scope of the Thermal segment demonstrates the stability of the underlying earnings and cash flows of the portfolio, based on its contracted business model protecting the segment from fluctuations in demand, fuel prices, electricity prices and CO₂ prices. The Thermal fleet is also highly diversified in terms of geography and technology, which significantly limits its overall market exposure. The Thermal fleet reached an average annual availability factor of 92.8% in 2019 (90.2% in 2018) demonstrating a meaningful improvement in its operational performance during the year.

Renewable Adjusted EBITDA increased by $87.6 million, or 28%, to $397.0 million for the year ended 31 December 2019 from $309.4 million for the year ended 31 December 2018. In 2019, we benefited from the full-year impact of the acquisition of Spanish CSP in 2018, as well as from the small Interporto acquisition, a portfolio of photovoltaic solar assets in Italy in 2019. The CSP plants contributed +$48.2 million to Adjusted EBITDA growth in 2019, while Italian and Romanian solar and biogas plants contributed +$3.8 million to Adjusted EBITDA growth in 2019.

In 2019, the Renewable segment also benefited from the performance of our Wind assets in Brazil, Peru and Austria which contributed a total of $120.9 million to 2019 Adjusted EBITDA as compared to $108.6 million in 2018. This growth was mainly due to better resource than in 2018, as well as improved operational management despite a weakening of the Brazilian real against the US dollar. The remaining negative foreign exchange on the Renewable impact totals $15.0 million on the Renewable portfolio, mainly due to higher average level of Eur/USD.

In 2019, we closed the sell-down of a 49% stake in our Spanish CSP portfolio at a substantial premium to our original investment. The sell-down resulted in a $51.9 million gain recorded directly in equity under IFRS rules and contributed to 2019 Renewable Adjusted EBITDA for the same amount. Sell downs demonstrate the underlying fundamental value of our portfolio, optimize the efficiency of our capital deployment process and we will seek further opportunities in the future. In 2018, the sell-down of a 49% stake in our Slovakia and Italy solar assets portfolio of $20.9 million gain, subsequently adjusted for $(5.8) million3 in 2019.

ContourGlobal's business model does not only generate stable and predictable earnings and cash flows it is also based on significant risk mitigation as a result of various key components:

· Limited currency exposure: 80% of 2019 Adjusted EBITDA is denominated either in Euros or US dollars, and a portion of the small Brazilian reais exposure is hedged.

· Regional and technology diversification: No technology cluster represents more than 25% of 2019 Adjusted EBITDA, and the acquisition of a 518 MW concentrated heat power ('CHP') portfolio in Mexico further diversifies the technology and regional profile.

· Long term contracts with strong and creditworthy counterparties: Approximately 85% of 2019 Adjusted EBITDA is generated under PPA concluded with Investment Grade offtakers or non- Investment Grade offtakers under political risk insurance.

We believe that the presentation of Adjusted EBITDA enhances the understanding of ContourGlobal's financial performance, in regards to understanding our ability to generate stable and predictable cash flows from operations.

'Adjusted EBITDA' is defined as combined profit from continuing operations for all controlled assets before income taxes, net finance costs, depreciation and amortization, acquisition-related expenses, plus profit on sale of minority interest and specific items which have been identified and adjusted by virtue of their size, nature or incidence, less ContourGlobal's share of profit from unconsolidated entities accounted for on the equity method, plus ContourGlobal's pro rata portion of Adjusted EBITDA for such entities.

In determining whether an event or transaction is specific, ContourGlobal's management considers quantitative as well as qualitative factors such as the frequency or predictability of occurrence. Adjusted EBITDA is not a measurement of financial performance under IFRS.

Proportionate Adjusted EBITDA

Considering the decision to strategically sell down minority stakes of certain of our assets at a significant premium, we have included Proportionate Adjusted EBITDA as part of our core financial metrics since 2018.

Proportionate Adjusted EBITDA is calculated using Adjusted EBITDA calculated on a proportionally consolidated basis based on applicable ownership percentage. Proportionate Adjusted EBITDA increased from $536.1 million in 2018 to $561.6 million in 2019 (+5%), a lower increase than Adjusted EBITDA mostly explained by the sell down of 49% of the Spanish CSP portfolio.

The following table reconciles net profit before tax to Proportionate Adjusted EBITDA and Adjusted EBITDA for each period presented:

1 Refer to note 4.26 of the consolidated financial statements

2 Refer to note 4.1 of the consolidated financial statements

In relation to the 2019 and 2018 financial years, these adjustments included non-recurring and non-cash items. They also included a cash gain on the sale of minority interests in the Slovakia and Italy solar assets portfolio in 2018 of $20.9 million, and the sale of minority interests in the Spanish CSP assets in 2019 of $51.9 million together with an adjusted related to the 2018 Slovakian and Italy portfolio sell-down of $(5.8) million3, all booked directly in equity under IFRS.

Funds from Operations

Funds from Operations is a non-IFRS measure that is calculated as follows:

1 Maintenance capital expenditures is defined as funds employed by us to maintain the operating capacity, asset base and/or operating income of the existing power plants. It excludes growth and development capital expenditures, which are discretionary investments incurred to sustain our revenue growth (including construction capital expenditures).

Funds from operations is a key metric for ContourGlobal and gives and indication of the strength and predictability of our cash generation and how much of our Adjusted EBITDA we convert into cash flow.

Funds from operations significantly improved in 2019 to $337.9 million, a 12% growth rate compared to 2018. This performance is the consequence of the continuous growth of Adjusted EBITDA explained above earlier and a results of the efficient capital structure implemented by ContourGlobal through a mix of deleveraging project financing debt and refinanced corporate level debt at lower cost of capital.

The cash conversion rate, which compares FFO to Adjusted EBITDA, slightly decreased at 48% in 2019 (50% in 2018) due to the increase of the cash distributions to minorities and maintenance capital expenditure in 2019.

Leverage ratio

1 Including pro forma adjustment for full year of Spain CSP acquisition.

2 Including pro forma adjustment for full year of Mexican CHP acquisition.

The Group leverage ratio is measured as total net indebtedness (reported as the difference between 'Borrowings' and 'Cash and Cash Equivalent' under IFRS statement of financial position) to Adjusted EBITDA. Whenever the impact would be significant, such a ratio is adjusted to reflect full-year impact of acquisitions or for financial debt of projects under construction which do not generate EBITDA.

In 2019, the Mexican CHP acquisition contributed $10 million to 2019 Adjusted EBITDA from 25th November 2019 to 31st December 2019 as compared to an expected $110 million full year contribution. In 2018 the Spanish CSP acquisition contributed $89 million to 2018 Adjusted EBITDA from 10 May 2018 to 31 December 2018 as compared to an expected $130 million full year contribution.

Adjusted for the full year contribution of Spanish CSP in 2018 and Mexican CHP in 2019, leverage ratio reached 4.4x in 2019 as compared to 4.4x in the previous year. The leverage ratio is in our indicated target range of 4.0-4.5x Net debt / Adjusted EBITDA in spite of the recent completion of the Mexican CHP acquisition.

As of 31 December 2019, ContourGlobal has a total of $558.5 million of cash and cash equivalents, with around 32% of which at corporate level and available to finance the future growth of the Group.

Finance costs - net

Finance costs - net increased from $236.6 million in 2018 to $243.8 million in 2019 (-3%).

Interest expense decreased to $201.2 million in 2019 from $202.0 million in 2018 (-$0.8 million), largely due to the decrease of interest on the corporate bond refinanced in 2018 (-$7.4m), the natural deleveraging of the project financings (mainly in Brazil -$9.7m) at asset level offset by the Spanish CSP full year impact (+$19.1 million).

One off impacts include premium paid in July 2018 to prior bondholders of $21.9 million, and the impact of the Italian refinancing (+$4.0m of deferred financing costs) and the incremental interest from the EUR 100m add on bond issuance in July 2019 ($1.9 million).

The Realized and unrealized foreign exchange gains and (losses) and change in fair value of derivatives decreased by -$18.6 million primarily attributable to a negative impact in fair value of derivatives (-$13.4 million in 2019 as compared to a gain of $11.4 million in 2018) partially offset by a favorable change of the US dollar against the Euro which resulted in a positive revaluation of cash amounts held in USD.

Profit before tax

Profit before tax increased by $31.6 million to $59.4 million in 2019 as a result of the factors previously explained.

Taxation

The Group recognized a tax charge of $36.3 million in 2019 as compared to $17.4 million in 2018. This increase in the tax charge between periods was driven by the profit mix between territories with different income tax rates. The main jurisdictions contributing to the income tax expense in 2019 are Bulgaria, Brazil and Spain.

Adjusted Net Income

Adjusted Net Income is defined as Net income excluding one-off items for the year. Reconciliation of Net income to Adjusted Net Income is as follows:

(1) Exceptional premium paid to previous bondholders in relation to the refinancing of the corporate bond in July 2018;

(2) Includes pre-acquisition costs and other incremental costs incurred as part of completed or contemplated acquisitions. ContourGlobal incurred exceptional high amounts of such costs in 2019 and 2018 while signing and/or closing acquisitions in Mexico, Italy and Spain in particular.

(3) Costs incurred as part of corporate offices ongoing reorganization;

(4) Non-cash impact of the Private Incentive Plan implementation, which does not constitute a liability for the Company as it is issued through existing Reservoir Capital shares.

(5) Costs incurred as part of the Slovakian and Italian refinancings which required early settlement of the existing swaps and immediate recycling to profit and loss of deferred financing costs.

Non-current assets

Non-current assets mainly comprised property, plant and equipment and financial and contract assets. The increase of non-current assets by $732.0 million to $4,701.8 million as of 31 December 2019 was mainly due to the acquisition of the Mexican CHP, impact of IFRS 16 implementation, partially offset by depreciation, change in foreign exchange during the period.

Borrowings

Current and non-current borrowings increased by $530.5 million to $4,090.5 million as of 31st December 2019, mainly as a result of new or acquired borrowings (+$947.5 million, including financing drawn as part of the Mexican CHP acquisition in November 2019 for $535 million, the bond tap in July 2019 for $118.1 million, and refinancing of the Italian and Slovakian portfolio for $280.1 million), partially offset by project financing repayment (-$428.2 million, incuding -$180.7 million scheduled repayment and -$247.5 million for Slovakian, Italian and Bonaire repayments) and currency translation differences and other ($71.9 million).

Equity and non-controlling interests

Equity and non-controlling interests decreased by $130.4 million to $550.1 million as of 31 December 2019 mainly due to the following factors: dividends paid to shareholders (-$137.6 million), dividends paid to non-controlling interests (-$24.5 million) and negative change in hedging and actuarial reserves (-$48.8 million). These decreases were partially offset by the positive contribution of the sell-down of 49% of Spanish CSP net of the Italy and Slovakia photovoltaic portfolio adjustment recorded directly in equity ($46.1 million), Private Incentive scheme ($9.1 million) and profit for the period ($23.1 million).

Dividend

The Board recognizes the importance of paying a regular dividend to shareholders. The underlying business generates secure, highly visible, long term cashflows, and it is the Board's intention that dividends will be paid quarterly, at the beginning of April and the end of June, September, and December.

Reflecting the growth potential of the business, since listing in 2017 the Board has targeted a high single digit annual dividend increase, which was raised to a 10% annual target in 2019. At times the Board may approve additional returns of capital, arising from surplus generation of cash or corporate transactions.

The Board periodically reviews the dividend policy, considering overall prospects, conditions and capital requirements of the Group.

The Company paid a dividend of $63.3 million in May 2019 corresponding to the final dividend for the year ended 31 December 2018 and three interim dividends for the year ended 31 December 2019 of $24.75 million in June, September and December 2019. The Directors expect to pay a total dividend of approximately $99.0m for the year ended 31 December 2019.

The Parent Company free cash flow totals $213 million ($251 million CFADS as defined in the Corporate Bond indenture, less $38 million Corporate Bond interest costs), 2.2x the total declared dividend for the year ended 31 December 2019.

Outlook

We remain heavily focused on developing, acquiring and operating power generation assets under long-term contracts providing significant protection from the risks associated with volumes, commodity prices or merchant energy prices. As we continue to pursue our growth strategy, we are active on both construction and acquisition projects.

Looking ahead, we see further opportunities to develop and acquire new projects which will deliver attractive shareholder returns.

Annual General Meeting (AGM)

The 2020 AGM will be held on 27th May 2020. At the AGM, shareholders will have the opportunity to ask questions of the Board, including the Chairmen of the Board Committees.

Full details of the AGM, including explanatory notes, are contained in the Notice of the AGM. The Notice sets out the resolutions to be proposed at the AGM and an explanation of each resolution.

All documents relating to the AGM will be available on the Company's website at www.contourglobal.com.

Year ended December 31, 2019

The financial information set out in this Preliminary Results Announcement does not constitute the Group's statutory accounts for the years ended 31 December 2019 or 2018, but is derived from those accounts. The statutory accounts for the year ended 31 December 2018 have been delivered to Companies House and those for 2019 will be delivered in due course. The Auditor has reported on those accounts: its Reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying its Report and did not contain a statement under s498(2) or (3) of the Companies Act 2006. The financial information included in this preliminary announcement has been prepared on the same basis as set out in the Annual Report 2019.

CONTOURGLOBAL PLC and subsidiaries

Consolidated statement of income and other comprehensive income

Consolidated statement of income and other comprehensive income

CONTOURGLOBAL PLC and subsidiaries

Consolidated statement of financial position

nancial position

The financial statements were approved by the Board of Directors and authorized for issue on 16 March 2020 and signed on its behalf by Joseph C. Brandt, Chief Executive Officer .

Consolidated statement of changes in equity

CONTOURGLOBAL PLC and subsidiaries

Consolidated statement of changes in equity

CONTOURGLOBAL PLC and subsidiaries

Consolidated statement of cash flows

The prior year comparative transactions with non-controlling interests have been restated to present separately the dividends paid to non-controlling interests, transaction with non-controlling interest holders, cash received and transactions with non-controlling interest holders, cash paid.

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:

7th Floor

Park House116 Park StreetLondonW1K 6SSUnited Kingdom

Registered number: 10982736

ContourGlobal plc is listed on the London Stock Exchange.

Basis of preparation

The consolidated financial statements have been prepared in accordance with International 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. The consolidated financial statements have been prepared on the going concern basis under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

The financial information is presented in millions of U.S. dollars, with one decimal. Thus numbers may not sum precisely due to rounding.

The principal accounting policies applied in the preparation of the consolidated financial statements are set out in note 2.3. These policies have been consistently applied to the periods presented, unless otherwise stated. In particular, as the Group adopted IFRS 16 "Leases" retrospectively with the cumulative effect of initially applying the Standard recognized at the date of initial application of January 1, 2019, related amounts in the consolidated statement of income and comprehensive income and the consolidated statement of financial position for 2019 are not comparable with the corresponding amounts in 2018. (See note 2.1 for further details).

The financial information presented is at and for the financial years ended 31 December 2019 and 31 December 2018. Financial year ends have been referred to as 31 December throughout the consolidated financial statements as this is the accounting reference date of ContourGlobal plc. Financial years are referred to as 2019 and 2018 in these consolidated financial statements.

The preparation of the IFRS financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the year. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results may differ from those estimates, as noted in the critical accounting estimates and judgements in note 2.4.

2. Summary of significant accounting policies

2.1. Application of new and revised International Financial Reporting Standards (IFRS)

IFRS 16 Leases

The Group adopted IFRS 16 "Leases" by applying the modified retrospective approach with the cumulative effect of initially applying the Standard recognized at the date of initial application of January 1, 2019.

IFRS 16 primarily changes lease accounting for lessees; lease agreements give rise to the recognition of an asset representing the right to use the leased item, and a loan liability for future lease payables. Lease costs are recognized in the form of depreciation of the right of use asset and interest on the lease liability. Lessee accounting under IFRS 16 is similar in many respects to existing IAS 17 accounting for finance leases, but is substantively different to existing accounting for operating leases where rental charges are currently recognized on a straight-line basis and no lease asset or related lease creditor is recognized.

On adoption of IFRS 16, the group recognised lease liabilities in relation to leases which had previously been classified as 'operating leases' under the principles of IAS 17, 'Leases'. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1 January 2019.

For leases previously classified as finance leases the entity recognised the carrying amount of the lease asset and lease liability immediately before transition as the carrying amount of the right of use asset and the lease liability at the date of initial application.

The Group also reviewed its power purchase agreements and whether such arrangements contain a lease (with the Group acting as a lessor), considering IFRS 16 introduced new criteria. Under such analysis, the Vorotan (Armenia) contract is deemed to no longer contain a lease (previously it contained an operating lease as of 1 January 2019). This has not resulted in a change in the asset value or revenue recognition methodology, however revenues are now presented as Revenue from power sales line rather than Revenue from operating leases as described in note 4.2 Revenue.

(i) Practical expedients applied

In applying IFRS 16 for the first time, the group has used the following practical expedients permitted by the standard:

- applying a single discount rate to a portfolio of leases with reasonably similar characteristics

- relying on previous assessments on whether leases are onerous as an alternative to performing an impairment review - there were no onerous contracts as at 1 January 2019

- accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-term leases

- excluding initial direct costs for the measurement of the right-of-use asset at the date of initial application, and

- using hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

(ii) Measurement of lease liabilities

(1) Operating lease commitments disclosed as at 31 December 2018 under IAS 17 'Leases' included estimated commitments for variable future lease payments over the life of the lease. These arise mainly on long-term land leases in our Renewables division. Prior to transition to new IFRS 16 'Leases' standard, lease commitments was restated by -$198.3 million to exclude estimated commitments. Operating lease commitments as restated amounts to $40.9 million. Under IFRS 16, no lease liability is recognised relating to variable lease payments.

 (2) The weighted average lessee's incremental borrowing rate applied to the lease liabilities at 1 January 2019 was 5.2%.

(iii) Adjustments recognized in the balance sheet on 1 January 2019

The impacts of IFRS 16 implementation are described below.

(1) As a result of the adoption of IFRS 16, $31.0 million of right of use assets and $27.5 million of lease liabilities have been included in the Group statement of financial position as of January 1, 2019. $35.4 million of right-of-use assets and $33.3 million of lease liabilities have been included in the Group statement of financial position as of December 31, 2019.

(2) An increase in depreciation of $8.3 million from recognizing right of use assets and interest of $1.0 million on the lease liabilities.

(3) In prior years, operating lease payments were presented as operating cash flows in the consolidated statement of cash flows. Lease payments are now recorded as cash flows from financing activities reflecting the repayment of lease liabilities (borrowings) and related interest and amount to $7.8 million.

(iv) Measurements of right of use of assets

The associated right of use assets for property leases were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the balance sheet as at 31 December 2018. There were no onerous lease contracts that would have required an adjustment to the right of use assets at the date of initial application.

IFRIC 23 Uncertainty Over Income Tax Treatments

IFRIC 23 uncertainty over Income Tax Treatment has no material impact on the Group accounts.

2.2. New standards and interpretations not yet mandatorily applicable

A number of additional new standards and amendments and revisions to existing standards have been published which will apply to the Group's future accounting periods. None of these are expected to have a significant impact on the consolidated results, financial position or cash flows of the Group when they are adopted.

The Group has early adopted the amendments to IFRS 9 'Financial Instruments', IAS 39 'Financial Instruments: Recognition and Measurement' and IFRS 7 'Financial Instruments': Disclosures'. These relate to IBOR reform and were endorsed by the EU on 6 January 2020. The replacement of benchmark interest rates such as LIBOR and other interbank offered rates ('IBOR') is a priority for global regulators. The amendments provide relief from applying specific hedge accounting requirements to hedge relationships directly affected by IBOR reform and have the effect that IBOR reform should generally not cause hedge accounting to terminate. There is no financial impact from early adoption of these amendments.

The Group has IFRS 9 designated hedge relationships that are potentially impacted by IBOR reform. These include interest rate swap contracts and cross currency swap qualified as cash-flow hedge with a nominal value amounted to $1,231.1 million as of December 31, 2019, used to hedge a proportion of our external borrowings. These swaps reference six-month EURIBOR, three-month USD LIBOR and six-month USD LIBOR and uncertainty arising from the Group's exposure to IBOR reform will cease when these swaps matures by 2030, 2031 and 2034 respectively. The implications on the wider business of IBOR reform will be assessed during 2020.

2.3. Summary of significant accounting policies

Principles of consolidation

The consolidated financial statements include both the assets and liabilities, and the results and cash flows, of the Group and its subsidiaries and the Group's share of the results and the Group's investments in associates.

Inter-company transactions and balances between Group companies are eliminated.

(a) Subsidiaries

Entities over which the Group has the power to direct the relevant activities so as to affect the returns to the Group, generally through control over the financial and operating policies, are accounted for as subsidiaries. Interests acquired in subsidiaries are consolidated from the date the Group acquires control.

(b) Associates

Where the Group has the ability to exercise significant influence over entities, generally from a shareholding of between 20% and 50% of the voting rights, they are accounted for as associates. The results and assets and liabilities of associates are incorporated into the consolidated financial statements using the equity method of accounting. The Group's investment in associates includes goodwill identified on acquisition.

The Group determines at each reporting date whether there is objective evidence that the investment in the associate is impaired. If there is evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the investment in the associate and its carrying value and recognizes this amount as a reduction to the amount of 'Share of profit of associates' in the consolidated statement of income.

Business combinations

The acquisition consideration is measured at fair value which is the aggregate of the fair values of the assets transferred, the liabilities incurred or assumed and the equity interests in exchange for control. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration are recognized in the consolidated statement of income. Where the consideration transferred, together with the non-controlling interest, exceeds the fair value of the net assets, liabilities and contingent liabilities acquired, the excess is recorded as goodwill. Acquisition related costs are expensed as incurred and classified as "Acquisition related items" in the consolidated statement of income.

Goodwill is capitalized as a separate item in the case of subsidiaries and as part of the cost of investment in the case of associates. Goodwill is denominated in the currency of the operation acquired.

Changes in ownership interests in subsidiaries without change of control

In line with IFRS 10 "Consolidated financial statements", transactions with non-controlling interests that do not result in a gain or loss of control are accounted for as equity transactions - that is, as transactions with the owners in their capacity as owners.

In the case of an acquisition of non-controlling interest that do not result in a gain of control, the difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity.

In the case of a sale of non-controlling interests that do not result in a loss of control ("sell-down"), the net cash gain on sale of these assets are recorded as an increase in the equity attributable to owners of the parent and corresponds to the difference between the consideration received for the sale of shares and of the carrying amount of non-controlling interest sold. Consistent with this approach, subsequent true-ups to earn-outs in the context of sell-down transactions are also recorded in equity. The net cash gain or loss on sell-down is presented in Adjusted EBITDA, as disclosed in the note 4.1, since such sell-down transactions are part of the core strategy of the Group going forward.

Functional and presentation currency and currency translation

The assets and liabilities of foreign undertakings are translated into US dollars, the Group's presentation currency, at the year-end exchange rates. The results of foreign undertakings are translated into US dollars at the relevant average rates of exchange for the year. Foreign exchange differences arising on retranslation of opening net assets, and the difference between average exchange rates and year end exchange rates on the result for the year are recognised directly in the currency translation reserve.

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized at period end exchange rates in the consolidated statement of income line which most appropriately reflects the nature of the item or transaction.

The following table summarizes the main exchange rates used for the preparation of the consolidated financial statements of ContourGlobal:

Operating and reportable segments

The Group's reporting segments reflect the operating segments which are based on the organizational structure and financial information provided to the Chief Executive Officer, who represents the chief operating decision-maker ("CODM"). The Group's organizational structure reflects the different electricity generation methods, being Thermal and Renewables. A third category, Corporate & Other, primarily reflects costs for certain centralized functions including executive oversight, corporate treasury and accounting, legal, compliance, human resources, IT, political risk insurance and facilities management and certain technical support costs that are not allocated to the segments for internal management reporting purposes.

The principal profit measure used by the CODM is "Adjusted EBITDA" as defined in note 4.1. A segmented analysis of "Adjusted EBITDA" is accordingly provided in the notes to the consolidated financial statements (see note 4.1).

Revenue recognition

IFRS 15, Revenues from contracts with customers, revenue recognition is based on the transfer of control, i.e. notion of control is used to determine when a good or service is transferred to the customer. In accordance with this, the Group has adopted a single comprehensive model for the accounting for revenues from contracts with customers, using a five-step approach for revenue recognition: (1) identifying the contract; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when the Group satisfies a performance obligation.

Based on this recognition model, sales are recognised when goods are delivered to the customer and have been accepted by the customer, even if they have not been invoiced, or when services are rendered, and it is probable that the economic benefits associated with the transaction will flow to the entity. Revenue for the year includes the estimate of the energy supplied that has not yet been invoiced.

When determining the transaction price, the Group consider the effects of the variable consideration, the constraining estimates of variable consideration, the existence of a significant financing component in the contract, the non-cash consideration and consideration payable to a customer.

If the consideration promised in a contract includes a variable amount, the Group estimates the amount of consideration to which it will be entitled in exchange for transferring the promised goods or services to a customer. An amount of consideration can vary because of discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties or other similar items.

The Group revenue is mainly generated from the following:

(i) revenue from power sales;

(ii) revenue from operating leases;

(iii) revenue from financial assets (concession and finance lease assets); and

(iv) other revenue such as environmental, operational and maintenance services rendered to offtakers.

Certain of the Group power plants sell their output under Power Purchase Agreements ("PPAs") and other long-term arrangements. Under such arrangements it is usual for the Group to receive payment for the provision of electrical capacity or availability whether or not the offtaker requests the electrical output (capacity payments) and for the variable costs of production (energy payments). In such situations, revenue is recognized in respect of capacity payments as:

a) Service income in accordance with the contractual terms, to the extent that the capacity has been made available to the contracted offtaker during the period. This income is recognized as part of revenue from power sales;

b) Financial return on the operating financial asset where the PPA is considered to be or to contain a finance lease or where the contract is considered to be a financial asset under interpretation IFRIC 12: "Service Concession Arrangements".

c) Service income related to environmental, operational and maintenance services rendered to offtakers are presented as part of Other revenue.

Under finance lease arrangements, those payments which are not included within minimum lease payments are accounted for as service income (outlined in (a) above).

Energy payments under PPAs are recognized in revenue in all cases as the contracted output is delivered.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.

Concession arrangements

The interpretation IFRIC 12 governs accounting for concession arrangements. An arrangement within the scope of IFRIC 12 is one which involves a private sector entity (known as "an operator") constructing infrastructure used to provide a public service, or upgrading it (for example, by increasing its capacity) and operating and maintaining that infrastructure for a specified period of time.

IFRIC 12 applies to public-to-private service concession arrangements if:

(a) The "grantor" (i.e. the public sector entity - the offtaker) controls or regulates what services the operator must provide with the infrastructure, to whom it must provide them, and at what price, and

(a) The grantor controls through ownership, beneficial entitlement or otherwise any significant residual interest in the infrastructure at the end of the term of the arrangement. Infrastructure used in a public-to-private service concession arrangement for its entire useful life (a whole of life asset) is within the scope of IFRIC 12 if the conditions in a) are met.

Under concession arrangements within the scope of IFRIC 12, which comply with the "financial asset" model requirements, the operator recognizes a contract asset, attracting revenue in consideration for the services it provides (design, construction, etc.), to the extent that it has an unconditional contractual right to receive cash or another financial asset from or at the direction of the grantor for the construction services; the grantor has little, if any, discretion to avoid payment, usually because the agreement is enforceable by law. The Group has an unconditional right to receive cash if the grantor contractually guarantees to pay the Group (a) specified or determinable amounts or (b) the shortfall, if any, between amounts received from users of the public service and specified or determinable amounts, even if payment is contingent on the Group ensuring that the infrastructure meets specified quality or efficiency requirements. This model is based on input assumptions such as budgets and cash flow forecasts. Any change in these assumptions may have a material impact on the measurement of the recoverable amount and could result in reducing the value of the asset. Such contract assets are recognized in the consolidated statement of financial position in an amount corresponding to the fair value of the infrastructure on first recognition and subsequently at amortized cost. The receivable is settled by means of the grantor's payments being received. The financial income calculated on the basis of the effective interest rate, equivalent to the project's internal rate of return, is reflected within the "Revenue from concession and finance lease assets" line in the note 4.2 "Revenue" to the consolidated financial statements. Cash outflows relating to the acquisition of contract assets under concession agreements are presented as part of cash flow from investing activities. Net cash inflows generated by the contract assets' operations are presented as part of cash flow from operating activities.

Under arrangements within the scope of IFRIC 12 which complies with the "intangible asset" model requirements, the operator recognizes an intangible asset in accordance with IAS 38 to the extent that it has a right to charge users of the public service. Such intangible asset is recognized in the consolidated statement of financial position at cost on first recognition and subsequently measured over its useful economic life at cost less accumulated amortization and impairment losses. Net cash inflows generated by the intangible asset's operations are presented as part of Cash Flow from operating activities.

Government grants

Grants from the government are recognized where there is reasonable assurance that the conditions associated with the grants have been complied with and the grants will be received.

Acquisition related items

Acquisition related items include pre-acquisition costs such as various professional fees and due diligence costs, earn-outs and other related incremental costs incurred as part of completed or contemplated acquisitions.

Finance income and finance costs

Finance income primarily consists of interest income on funds invested. Finance costs primarily comprise interest expense on borrowings, unwinding of the discount/step up on financial and contract assets and provisions, interests and penalties that arise from late payments of suppliers or taxes, swap margin calls, bank charges, changes in fair value of the debt payable to non-controlling interests in our Bulgarian power plant, changes in the fair value of derivatives not qualifying for hedge accounting and unrealized & realized foreign exchange gains and losses.

Intangible assets and goodwill

Goodwill

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units ("CGUs"), or groups of CGUs that is expected to benefit from the synergies of the combination. Each unit or group of units represents the lowest level within the entity at which the goodwill is monitored for internal management purposes.

The reporting units (which generally correspond to power plants) or group of reporting units have been identified as its cash-generating units.

Goodwill impairment reviews are undertaken at least annually.

Intangible assets

Intangible assets include licenses and permits when specific rights and contracts are acquired. Intangible assets separately acquired in the normal course of business are recorded at historical cost, and intangible assets acquired in a business combination are recognized at fair value at the acquisition date. When the power plant achieves its commercial operations date, the related intangible assets are amortized using the straight-line method over the life of the PPA, generally over 15 to 20 years (excluding software). Software is amortized over 3 years. A different amortization method may be used if it better reflects the pattern of economic benefits derived from the asset over time.

Property, plant and equipment

Initial recognition and subsequent measurement

Property, plant and equipment are stated at historical cost, less depreciation and impairment, or at fair value if acquired in the context of a business combination. Historical cost includes an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, when the entity has a present legal or constructive obligation to do so.

Property, plant and equipment recognised as right-of-use assets under IFRS 16 are measured at cost less depreciation, impairment and adjustments to certain remeasurements of the lease liability.

Costs relating to major inspections and overhauls are capitalized. Minor replacements, repairs and maintenance, including planned outages to our power plants that do not improve the efficiency or extend the life of the respective asset, are expensed as incurred.

The Group capitalizes certain direct pre-construction costs associated with its power plant project development activities when it has been determined that it is more likely than not that the opportunity will result in an operating asset. Factors considered in this determination include (i) the availability of adequate funding, (ii) the likelihood that the Group will be awarded with the project or the barriers are not likely to prohibit closing the project, and (iii) there is an available market and the regulatory, environmental and infrastructure requirements are likely to be met. Capitalized pre-construction costs include initial engineering, environmental and technical feasibility studies, legal costs, permitting and licensing and direct internal staff salary and travel costs, among others. Pre-construction costs are charged to expense if a project is abandoned or if the conditions stated above are not met. Construction work in progress ("CWIP") assets are transferred out of CWIP when construction is substantially completed and the power plant achieves its commercial operations date ("COD"), at which point depreciation commences.

Borrowing costs directly attributable to construction of a qualifying assets are capitalized during the period of time that is required to complete and prepare the asset for its intended use.

Depreciation

Property, plant and equipment are depreciated using the straight-line method over the following estimated useful lives:

See below for depreciation policy on right-of-use assets.

The range of useful lives is due to the diversity of the assets in each category, which is partly due to acquired assets and from assets groupings.

The residual values and useful lives are reviewed at least annually and if expectations differ from previous estimates, the remaining useful lives are reassessed and adjustments are made. The remaining useful lives are assessed when acquisitions are made by performing technical due diligence procedures.

Leases

Until 1 January 2019, leases of property, plant and equipment were classified as either finance leases or operating leases, see note 4.31 of the 2018 financial statements for details. From 1 January 2019, the Group adopted IFRS 16 "Leases" and leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group.

Accounting for a lease as a lessee - Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

- fixed payments (including in-substance fixed payments), less any lease incentives receivable

- variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date

- amounts expected to be payable by the group under residual value guarantees

- the exercise price of a purchase option if the group is reasonably certain to exercise that option, and

- payments of penalties for terminating the lease, if the lease term reflects the group exercising that option

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

To determine the incremental borrowing rate, the group applied a single discount rate to a portfolio of leases with reasonably similar characteristics.

The Group is exposed to potential future increases in variable lease payments which are linked to gross revenues or based on an index or rate. No right of use assets or corresponding lease liability is recognized in respect of variable consideration leases which are linked to gross revenues. Variable lease payments that depend on gross revenues are recognized in the statement of income in the period in which the related revenue is generated.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the following:

- the amount of the initial measurement of lease liability

- any lease payments made at or before the commencement date less any lease incentives received

- any initial direct costs, and

- restoration costs.

Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life.

Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in the statement of income.

Accounting for arrangements that contain a lease as lessor - Power purchase arrangements ("PPA") and other long-term contracts may contain, or may be considered to contain, leases where the fulfilment of the arrangement is dependent on the use of a specific asset such as a power plant and the arrangement conveys to the customer the right to use that asset. Such contracts may be identified as either operating leases or finance leases.

(i) Accounting for finance leases as lessor

Where the Group determines that the contractual provisions of a long-term PPA contain, or are a lease and result in the offtaker assuming the principal risks and rewards of ownership of the power plant, the arrangement is a finance lease. Accordingly the assets are not reflected as PP&E and the net investment in the lease, represented by the present value of the amounts due from the lessee is recorded within financial assets as a finance lease receivable.

The capacity payments as part of the leasing arrangement are apportioned between minimum lease payments (comprising capital repayments relating to the plant and finance income) and service income. The finance income element is recognized as revenue, using a rate of return specific to the plant to give a constant rate of return on the net investment in each period. Finance income and service income are recognized in each accounting period at the fair value of the Group's performance under the contract.

(ii) Accounting for operating leases as lessor

Where the Group determines that the contractual provisions of the long-term PPA contain, or are, a lease, and result in the Group retaining the principal risks and rewards of ownership of the power plant, the arrangement is an operating lease. For operating leases, the power plant is, or continues to be, capitalized as property, plant and equipment and depreciated over its useful economic life. Rental income from operating leases is recognized on a straight-line basis over the term of the arrangement.

The Group did not need to make any adjustments to the accounting for assets held as lessor as a result of adopting the new leasing standard.

Impairment of non-financial assets

Assets that are subject to depreciation or amortization are reviewed for impairment whenever events or changes in circumstances indicate that carrying values may not be recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal (market value) and value in use determined using estimates of discounted future net cash flows of the asset or group of assets to which it belongs. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units).

Financial assets

Classification of financial assets

The Group classifies its financial assets in the following categories: at fair value through statement of income and loans and receivables.

a) Financial assets at fair value through statement of income

Financial assets have been acquired principally for the purpose of selling, or being settled, in the short term. Financial assets at fair value through statement of income are "Cash and cash equivalents" which includes restricted cash and derivatives held for trading unless they are designated as hedges.

b) Financial assets at amortised costs

Financial assets at amortised costs are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except those that mature greater than 12 months after the end of the reporting period, which are classified in non-current assets. The Group's Financial assets and amortised costs comprise "Trade and other receivables" and "Financial and contract assets" in the consolidated statement of financial position.

The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows.

Recognition and measurement

Purchases and sales of financial assets are recognised on trade date (that is, the date on which the Group commits to purchase or sell the asset).

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through income, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through income are expensed in the consolidated statement of income and other comprehensive income. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

a) Financial assets at fair value through statement of income

Gains or losses on financial assets at fair value through statement of income are recognised in the consolidated statement income and other comprehensive income. These are presented within finance income and finance costs respectively.

b) Loans and receivable

These financial assets are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, and are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on de-recognition is recognised directly in profit or loss and presented in finance income.

Impairment

The Group assesses, on a forward-looking basis, the expected credit losses associated with its financial assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

Allowances for expected credit losses are made based on the risk of non-payment taking into account ageing, previous experience, economic conditions, existing insurance policies and forward looking data. Political risk insurance (PRI) policies are factored into this assessment due to being closely related insurance policies for which cash flows have been factored into the expected credit loss calculations (including risk of default on insurance provider) and presented on a net basis. Such allowances are measured as either 12-months expected credit losses or lifetime expected credit losses depending on changes in the credit quality of‑the counterparty.

While the financial assets of the Company are subject to the impairment requirements of IFRS 9, the identified impairment loss was immaterial.

The group has three types of financial assets that are subject to the expected credit loss model:

(1) Trade and other receivables

(2) Financial and contract assets

(3) Loans

While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, no impairment loss has been identified.

Derivative financial instruments and hedging activities

Derivative instruments are measured at fair value upon initial recognition in the consolidated statement of financial position and subsequently are re-measured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged.

Derivative instruments are presented according to their maturity date, regardless of whether they qualify for hedge accounting under IFRS 9 (hedging instruments versus trading instruments). Derivatives are classified as a separate line item in the consolidated statement of financial position.

As part of its overall foreign exchange and interest rate risk management policy, the Group enters into various hedging transactions involving derivative instruments.

The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.

In connection with the Group's hedging policy, the Group uses forward exchange contracts for currency risk management as well as foreign exchange options.

The Group as well hedges particular risks associated with the cash flows of recognized assets and liabilities and highly probable forecast transactions (cash flow hedges). Notably, the Group uses interest rate swap contracts for interest rate risk management in order to hedge certain forecasted transactions and to manage its anticipated cash payments under its variable rate financing by converting a portion of its variable rate financing to a fixed rate basis through the use of interest rate swap agreements, and a cross currency swap contract for both currency and interest rate risk management.

Items qualifying as hedges

The Group formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategies for undertaking hedge transactions and the method used to assess hedge effectiveness. Hedging transactions are expected to be highly effective in achieving offsetting changes in cash flows and are regularly assessed to determine that they actually have been highly effective throughout the financial reporting periods for which they are implemented.

When derivative instruments qualify as hedges for accounting purposes, as defined in IFRS 9 "Financial instruments", they are accounted for as follows:

a) Cash flow hedges that qualify for hedge accounting

- The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in the cash flow hedge reserve within equity and through the consolidated statement of other comprehensive income ("OCI"). The gain or loss relating to the ineffective portion is recognized immediately within the consolidated statement of income. Amounts recognized directly in OCI are reclassified to the consolidated statement of income when the hedged transaction affects the consolidated statement of income.

- If a forecast transaction or firm commitment is no longer expected to occur, amounts previously recognized in OCI are reclassified to the consolidated statement of income as finance income or finance costs.

If a hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognized in OCI remain in accumulated OCI until the forecast transaction or firm commitment occurs, at which point they are reclassified to the consolidated statement of income.

b) Derivatives that do not qualify for hedge accounting

Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognised immediately in profit or loss and are included in finance income / finance costs.

In connection with the Group's hedging policy, the Group uses forward exchange contracts for currency risk management as well as foreign exchange options, interest rate swap contracts for interest rate risk management in order to hedge certain forecasted transactions and to manage its anticipated cash payments under its variable rate financing by converting a portion of its variable rate financing to a fixed rate basis through the use of interest rate swap agreements, and a cross currency swap contract for both currency and interest rate risk management.

Inventories

Inventories consist primarily of power generating plant fuel, non-critical spare parts that are held by the Group for its own use and Emission quotas (see below). Inventories are stated at the lower of cost, using a first-in, first-out method, and net realizable value, which is the estimated selling price in the ordinary course of business, less applicable selling expenses.

Emission quotas

Some companies of the Group emit CO2 and have as a result obligations to buy emission quotas on the basis of local legislation. The emissions made by the Company emitting CO2 which are in excess of any allocated quotas are purchased at free market price and shown as inventories before their effective use. If emissions are higher than allocated quotas, the Company recognises an expense and respective liability for those emissions. At the end of each reporting period, CO2 quotas that remain available to the Company are revalued at the lower of costs or prevailing market value.

Trade receivables

Trade receivables are recognized initially at fair value, which is usually the invoiced amount, and subsequently carried at amortized cost using the effective interest method, less provision for impairment. Details about the Group's impairment policies on financial assets and the calculation of the provision for impairment are provided on note 4.13.

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and current balances with banks and similar institutions and short-term investments, all of which are readily convertible to cash and are subject to insignificant risk of changes in value and have an original maturity of three months or less. Bank overdrafts are included within current borrowings. Cash and cash equivalents also includes cash deposited on accounts to cover for short-term debt service of certain project financings and which can be drawn for short term related needs.

Maintenance reserves held for the purpose of covering long-term major maintenance and long-term deposits kept as collateral to cover decommissioning obligations are excluded from cash and cash equivalents and included in non-current assets.

Share capital and share premium

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds.

The premium received on the issue of shares in excess of the nominal value of shares is credited to the share premium account and included within shareholders' equity.

Financial liabilities

a) Borrowings

Borrowings are recognized initially at fair value of amounts received, net of transaction costs. Borrowings are subsequently measured at amortized cost using the effective interest method; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the consolidated statement of income over the period of the borrowings using the effective interest method.

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

b) Trade and other payables

Financial liabilities within trade and other payables are initially recognized at fair value, which is usually the invoiced amount, and subsequently carried at amortized cost using the effective interest method.

Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period.

Unless otherwise stated, carrying value approximates to fair value for all financial liabilities.

Provisions

Provisions principally relate to decommissioning, maintenance, environmental, tax and legal obligations and which are recognised when there is a present obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated.

Provisions are re-measured at each statement of financial position date and adjusted to reflect the current best estimate. Any change in present value of the estimated expenditure attributable to changes in the estimates of the cash flow or the current estimate of the discount rate used are reflected as an adjustment to the provision. The increase in the provisions due to passage of time are recognised as finance costs in the consolidated statement of income.

Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognized in the consolidated statement of income, except to the extent that it relates to items recognized in other comprehensive income. In this case, the tax is also recognized in other comprehensive income.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial position date in the countries where the Group and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognized on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not recognized if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Restatements

The prior year comparatives have been restated in the following notes to further disaggregate certain line items within the note:

- Other expenses within the expenses by nature note have been further disaggregated into transmission charges and other consumables and supplies

- Other within the finance costs - net note have been further split out into Amortisation of deferred financing costs and unwinding effects

- Other within inventories have been further split out into emission allowance

- Other receivables within the trade and other receivables note have been further split into income tax receivables and other taxes receivables

- Within the provision note, an amount of $9.6m in the current liabilities balance as at 31 December 2018 has been reclassified from the legal and other category to the decommissioning, environmental and maintenance provision.

The total of the above notes remain unchanged.

2.4. Critical accounting estimates and judgments

The preparation of the consolidated financial statements in line with the Group's accounting policies set out in note 2.3 involves the use of judgment and/or estimation. These judgments and estimates are based on management's best knowledge of the relevant facts and circumstances, giving consideration to previous experience, and are regularly reviewed and revised as necessary. Actual results may differ from the amounts included in the consolidated financial statements. The estimates and judgments that have the most significant effect on the carrying amounts of assets and liabilities are presented below.

Critical accounting judgements

Accounting for long-term power purchase agreements and related revenue recognition

When power plants sell their output under long-term power purchase agreements ("PPA"), it is usual for the operator of the power plant to receive payment (known as a capacity payment) for the provision of electrical capacity whether or not the offtaker requests electrical output. There is a degree of judgement as to whether a long-term contract to sell electrical capacity constitutes a service concession arrangement, a form of lease, or a service contract. This determination is made at the inception of the PPA, and is not required to be revisited in subsequent periods under IFRS, unless the agreement is renegotiated.

Given that the fulfilment of the PPAs is dependent on the use of a specified asset, the key judgement in determining if the PPA contains a lease is the assessment of whether the PPA conveys a right for the offtaker to obtain substantially all the power output from the asset and whether the offtaker has the right to direct the use of the asset throughout the period of use.

In assessing whether the PPA contains a service concession, the Group considers whether the arrangement (i) bears a public service obligation; (ii) has prices that are regulated by the offtaker; and (iii) the residual interest is transferred to the offtaker at an agreed value.

All other PPAs are determined to be service contracts.

Concession arrangements - For those agreements which are determined to be a concession arrangement, there are judgements as to whether the infrastructure should be accounted for as an intangible asset or a financial asset depending on the nature of the payment entitlements established in the agreement.

Concession arrangements determined to be a financial asset - The Group recognises a financial asset when demand risk is assumed by the grantor, to the extent that the contracted concession holder has an unconditional right to receive payments for the asset. The asset is recognised at the fair value of the construction services provided. The fair value is based on input assumptions such as budgets and cash flow forecasts, future costs include maintenance costs which impact the overall calculation of the estimated margin of the project. The inputs include in particular the budget for fixed and variable costs. Any change in these assumptions may have a material impact on the measurement of the recoverable amount and could result in reducing the value of the asset. The financial asset is subsequently recorded at amortized cost calculated according to the effective interest rate method. Revenue for operating and managing the asset is recorded as revenue in each period.

Leases - For those arrangements determined to be or to contain leases, further judgement is required to determine whether the arrangement is finance or operating lease. This assessment requires an evaluation of where the substantial risks and rewards of ownership reside, for example due to the existence of a bargain purchase option that would allow the offtaker to buy the asset at the end of the arrangement for a minimal price.

Assessing property, plant and equipment for impairment triggers

The Group's property, plant and equipment are reviewed for indications of impairment (an impairment "trigger"). Judgement is applied in determining whether an impairment trigger has occurred, based on both internal and external sources. External sources may include: market value declines, negative changes in technology, markets, economy, or laws. Internal sources may include: obsolescence or physical damage, or worse economic performance than expected, including from adverse weather conditions for renewable plants.

The Group considers the end date of the power purchase agreements as part of the analysis and assesses if the market conditions are significantly adverse that it would be considered as an impairment trigger.

In the current year, impairment triggers were noted for Brazilian wind power plants (see note 4.10).

Provisions for claims

The Group receives legal or contractual claims against it from time to time, in the normal course of business. The Group considers external and internal legal counsel opinions in order to assess the likelihood of loss and to define the defense strategy. Judgments are made as to the potential likelihood of any claim succeeding when making a provision or disclosing a contingent liability. The timeframe for resolving legal or contractual claims may be judgmental, as is the amount of possible outflow of economic benefits.

Functional currency of the assets

The Group operates in different countries and performs an analysis of the functional currency of each operating asset considering the IAS21 standard requirements. In some countries, the functional currency of the operating asset may differ from the local currency when the primary indicators (such as sales and cash inflows and expenses and cash outflows) are influenced by a currency which is not the local currency. This is for example the case of the CHP Mexico assets acquired in November 2019 that have an USD functional currency despite being located in Mexico.

Cash generating units ("CGUs")

A cash generating unit ("CGU") is defined as the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets. Judgments are made as to allocate each reporting units (which generally correspond to power plants) or group of reporting units to the CGUs and group of CGUs. Are notably considered the independence of cash flows that will be indicated by various factors, including but not limited to individual locations, energy categories, level at which prices are determined, the business transactions or financing relationship between the reporting units, or how management makes decisions about continuing or disposing of the entity's assets and operations.

Critical accounting estimates

Estimation of useful lives of property, plant and equipment

Property, plant and equipment represents a significant proportion of the asset base of the Group, primarily due to power plants owned, being 63.9% (2018: 63.2%) of the Group's total assets. Estimates and assumptions made to determine their carrying value and related depreciation are significant to the Group's financial position and performance. The annual depreciation charge is determined after estimating an asset's expected useful life and its residual value at the end of its life. The useful lives and residual values of the Group's assets are determined by management at the time the asset is acquired and reviewed annually for appropriateness. The Group derives useful economic lives based on experience of similar assets, which may exceed the period covered by contracted power purchase agreements. A decrease in the average useful life by one year in power plant assets would result in a decrease in the net book value by $10.8 million (2018: $10.7 million).

Recoverable amount of property, plant and equipment

Where an impairment trigger has been identified (see critical accounting judgements section), the Group makes significant estimates in its impairment evaluations of long-lived assets. The determination of the recoverable amount is typically the most judgmental part of an impairment evaluation. The recoverable amount is the higher of (i) an asset's fair value less costs of disposal (market value), and (ii) value in use determined using estimates of discounted future net cash flows ("DCF") of the asset or group of assets to which it belongs.

The Group generally uses value in use to derive the recoverable amount of property, plant and equipment. Management applies considerable judgment in selecting several input assumptions in its DCF models, including discount rates and capacity / availability factors. These assumptions are consistent with the Group's internal budgets and forecasts for such valuations. Examples of the input assumptions that budgets and cash-flow forecasts are sensitive to include macroeconomic factors such as growth rates, inflation, exchange rates, and, in the case of renewables plants, environmental factors such as wind, solar and water resource forecast. Any changes in these assumptions may have a material impact on the measurement of the recoverable amount and could result in impairing the tested assets. See note 4.10 for further information on the impairment tests performed, and relevant sensitivity analysis.

Provisions

The Group makes provisions when an obligation exists, resulting from a past event and it is probable that cash will be paid to settle it, but the exact amount of cash required can only be estimated on a reliable basis. Major provisions are detailed in note 4.25. The main estimates relate to site decommissioning and maintenance costs, and environmental remediation for various sites owned.

Site decommissioning, maintenance and environmental provisions are recognized based on management's assessment of future costs which would need to be incurred in accordance with existing legislation or contractual obligations to restore the sites or make good any environmental damage. These costs are measured at the present value of the future expenditures expected to be required to settle the obligation using a pre-tax discount rate which reflects current market assessments of the time value of money and the risks specific to the obligation. Management apply judgement in the estimation of future cash flows to settle these obligations and in the estimation of an appropriate pre-tax discount factor. The pre-tax discount rate used varies from 2.0% to 11.0%. If this was to decrease by 1% it would increase decommissioning, environmental and maintenance provisions by $2.8 million and $3.5 million for the years ended December 31, 2019 and December 31, 2018.

Fair value of assets acquired and liabilities assumed in a business combination

Business combinations are recorded in accordance with IFRS 3 using the acquisition method. The Group estimates the excess purchase price in accordance with IFRS3 as the difference of the consideration paid for the acquisition (including potential contingent consideration) and the net asset of the target company at the acquisition date.

Under this method, the identifiable assets acquired and the liabilities assumed are recognized at their fair value at the acquisition date.

Therefore, through a number of different approaches and with the assistance of external independent valuation experts for acquisitions as considered appropriate by management, the Group identifies what it believes is the fair value of the assets acquired and liabilities assumed at the acquisition date. These valuations involve the use of judgement and include a number of estimates. Judgement is exercised in identifying the most appropriate valuation approach which is then used to determine the allocation of fair value. The group typically uses one of the cost approach, the income approach and the market approach.

Each of these valuation approaches involve the use of estimates in a number of areas, including the determination of cash flow projections and related discount rates, industry indices, market prices regarding replacement cost and comparable market transactions. While the Group believes that the estimates and assumptions underlying the valuation methodologies are reasonable, different assumptions could result in different fair values.

As an example, as of 31 December 2019, an income approach based method has been used to estimate the Fair Value of the main intangible asset (Legado rights) allocated as per the purchase price allocation of the CHP Mexico. A 1% increase in the discount rate used in the valuation of the Legado right would result in a $22.6 million decrease in the fair value of the intangible asset and a corresponding increase in the PPE step up.

3. Significant changes in the reporting period

3.1. 2019 transactions

Sale of non-controlling interest which did not result in a change of control

Spanish CSP portfolio

In December 2018, the Group signed an agreement to sell 49% minority interest of the Spanish CSP portfolio with Credit Suisse Energy Infrastructure Partners for an amount of €134.2 million ($150.5 million). The sale closed on 20 May 2019 and the cash received amounted to €128.4 million or $144.0 million (net of €5.8 million or $6.5 million pre-closing distribution), €51.0 million ($57.1 million) was for the sale of shares and €77.4 million ($86.9 million) was for the sale of existing shareholder loans.

In line with IFRS 10 "Consolidated financial statements", this transaction is considered as an equity transaction as it does not result in a loss of control. Therefore, the net cash gain on sale of these assets, which represented an amount of €46.3 million or $51.9 million, was recorded as an increase in the equity attributable to owners of the parent. It corresponds to the difference between the consideration received for the sale of shares (€51.0 million or $57.1 million) and of the carrying amount of non-controlling interest sold (€4.7 million or $5.2 million).

Solar portfolio acquisition - Italy

In February 2019, the Group entered into an agreement for the acquisition of Interporto, a 12.4 MW Solar Photovoltaic portfolio in northern Italy.

This transaction closed on June 11, 2019. The total consideration amounted to €28.3 million ($32.0 million) including €21.1 million ($23.9 million) for the acquisition of 100% of the shares and €7.2 million (or $8.1 million) for the repayment of shareholders loans.

The Group and Credit Suisse Energy Infrastructure Partners have a 51% and a 49% interest in the shares of the acquired entity respectively, and have paid their share of the consideration.

On a consolidated basis, had these acquisitions taken place as of January 1, 2019, the Group would have recognized 2019 consolidated revenue of $1,331.1 million and consolidated net profit of $25.5 million.

Determination of fair value of assets acquired and liabilities assumed at acquisition date are:

From the acquisition date to December 31, 2019, this acquisition contributed to consolidated revenue and net result of $3.5 million and $0.2 million respectively.

Acquisition of two CHP plants in Mexico

On 6th January 2019, the Group signed the acquisition of two natural gas-fired combined heat and power ('CHP') plants, together with development rights and permits for a third plant, in Mexico from Alpek. The CHP plants have a gross installed capacity of 518 MW. The transaction closed on 25 November 2019.

The total consideration amounted to $815.9 million, including $233.4 million for the shares and $582.5 million for the plants assets.

The acquisition generated a $77 million value added tax credit that is expected to be refunded in full within 12 months of closing.

On a consolidated basis, had these acquisitions taken place as of January 1, 2019, the Group would have recognized 2019 consolidated revenue of $1,568.9 million and consolidated net profit of $52.4 million.

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

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 intangible asset of $232.5 million representing the fair Value of the Legado rights based on an income approach based method.

- A financial asset of $12.9 million representing the tax savings asset (the "TSA") arising from the time value of the tax shield related to the accelerated depreciation of the plant assets allowed under Mexican tax regulations.

- A step-up to the book value of the PP&E of $194.7 million, as part of the allocation of the excess purchase price.

In 2020, as the Group finalises its assessment of the acquisition accounting and determines the final fair value of assets acquired and liabilities assumed, it intends to perform more work around the cash flows related to property, plant and equipment and how these interact with cash flows from other regulatory rights, before concluding on the purchase price allocation.

From the acquisition date to December 31, 2019, this acquisition contributed to consolidated revenue and net loss of $23.4 million and $11.3 million respectively.

3.2. 2018 transactions

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 $3.0 million. This asset was presented as an asset held for sale as of 31 December 2017. The sale has no material impact on the 2018 financial statements.

Solar portfolio acquisition - Italy and Romania

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 two 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 (or $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 1st January 2018, the Group would have recognized 2018 consolidated revenue of $1,256.1 million and consolidated net profit of $14.5 million.

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

From the acquisition date to December 31, 2018, these acquisitions contributed to consolidated revenue and net result respectively of $8.4 million and $0.3 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 ("CSP") in South-West Spain. The total enterprise value amounts to €962.8 million, including an amount payable to Acciona Energía of approximately €806.8 million ($956.6 million) and existing net debt (including adjustment for working capital) of €156.0 million ($184.4 million). The acquisition agreement also includes earn-out payments to Acciona Energía of up to €27 million ($32 million). As of December 31, 2018 a €9.4 million ($10.8 million) earn-out liability was recognized. Following the announcement in 2019 of the regulatory rate of return in Spain, this earn-out liability was trued up to €12.0 million ($13.5 million).

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

The acquisition closed on May 10, 2018.

On a consolidated basis, had this acquisition taken place as of 1st January 2018, the Group would have recognized 2018 consolidated revenue of $1,316.8 million and consolidated net profit of $16.0 million.

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

From the acquisition date to December 31, 2018, this acquisition contributed to consolidated revenue and net loss respectively of $112.8 million and $6.6 million.

Sale of non-controlling interests which did not result in a change of control

Solar Italy and Slovakia portfolio

In October 2018, the Group completed the sale of 49% minority interest of the Italian and Slovakian portfolio with Credit Suisse Energy Infrastructure Partners for an amount of €63.4 million ($73.1 million), of which €3.3 million ($3.8 million) consists of working capital adjustments. Cash amount received at closing amounted to €60.1 million ($69.3 million), of which €42.4 million ($48.9 million) was for the sale of shares and €17.7 million ($20.4 million) was for the repayment of existing shareholder loans. The acquisition agreement also included earn-out payments paid in advance by Credit Suisse and recognized as of December 31, 2018.

In line with IFRS 10 "Consolidated financial statements", this transaction is considered as an equity transaction as it does not result in a loss of control. Therefore, the net cash gain on sale of these assets, which represented an amount of €18.2 million or $20.9 million, was recorded as an increase in the equity attributable to owners of the parent. It corresponds to the difference between the consideration received for the sale of shares (€42.4 million or $48.9 million) and of the carrying amount of non-controlling interest sold (€24.2 million or $28.0 million). During the period ended December 31, 2019, the earn-out calculation has been updated down by $5.8 million, recorded as a decrease in the equity attributable to owners of the parent.

3.3. Other accounting matters

Change in the classification of the Bonaire power purchase agreement

The Bonaire power purchase agreement is considered to be an arrangement containing a lease (with the group acting as lessor). Historically, this lease has been classified as a finance lease. During the first quarter of 2019, modifications were agreed to the power purchase price agreement which included the Group investing to enhance the asset. Under IFRS 16, the terms of this modification are not considered to be a separate lease and so the entire agreement has been treated as a new lease from the date of modification. This new lease is classified as an operating lease from 1 January 2019 due to the significant remaining life of the asset and significant remaining net book value at the end of the agreement. As a result, during the year ended 31st December 2019, the group has recognised property, plant and equipment with a value of $42.1 million and derecognised a finance lease asset of the same amount. There was no impact on profit for the period.

4. Notes to the consolidated financial statements

4.1. Segment reporting

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

Thermal Energy for power generating plants operating from coal, lignite, natural gas, fuel oil and diesel. Thermal plants include Maritsa, Arrubal, Togo, Kramatorsk (sold in February 2018), Cap des Biches, KivuWatt, Energies Antilles, Energies Saint-Martin, Bonaire, Mexican CHP and our equity investees (primarily Termoemcali and Sochagota). Our thermal segment also includes plants which provide electricity and certain other services to beverage bottling companies and other industries.

Renewable Energy for power generating plants operating from renewable resources such as wind, solar and hydro in Europe and South 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 Chief Operating Decision-Maker 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, 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 specific, management considers quantitative as well as qualitative factors such as the frequency or predictability of occurrence.

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. Finally, the Group considers that the presentation of 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 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, Spain and Ukraine)

- South America (including Brazil, Peru, Colombia and Mexico) and Caribbean Islands (including Dutch Antilles and French Territory)

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

CONTOURGLOBAL PLC and subsidiaries

Notes to the consolidated financial statements

(1) Includes corporate costs of $30.0 million (December 31, 2018: $26.9 million) and other costs for $0.2 million (December 31, 2018: other income of $0.5 million). Corporate costs correspond to selling, general and administrative expenses before depreciation and amortization of $4.6 million (December 31, 2018: $1.4 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 in the year ended 31 December 2017. Costs associated with this project were separately analyzed by our CODM.

(4) Represents in 2019 the cash gain on the divestment of 49% stake of our CSP Portfolio in Spain and the adjustment to the earn-out calculation on the divestment of 49% stake of our Italian and Slovakian solar portfolio. Represents in 2018 the cash gain on the divestment of 49% stake of our Italian and Slovakian solar portfolio.

(5) Represents redundancy and staff-related restructuring costs.

(6) Represents the private incentive plan as described in note 4.26 share-based compensation plan.

(7) Mainly reflects an adjustment to recognized profits earned under finance lease and financial concession arrangements in line with the cashflows generated by these assets.

Cash outflows on capital expenditure

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:

(1) Revenue generated in 2019 in Bulgaria and Spain amounted to $403.0 million and $351.5 million respectively (December 31, 2018: $383.0 million and $333.8 million respectively).

(2) Revenue generated in 2019 in Brazil amounted to $164.3 million (December 31, 2018: $163.4 million).

(1) Adjusted EBITDA generated in 2019 in Bulgaria and Spain amounted to $120.4 million and $193.9 million respectively (December 31, 2018: $120.5 million and $152.2 million respectively). This line as well includes the $46.1 million of cash gain on the divestment of 49% stake of our CSP Portfolio in Spain and adjustment to the earn-out calculation on the divestment of 49% stake of our Italian and Slovakian solar portfolio that occurred in 2018.

(2) Adjusted EBITDA generated in 2019 in Brazil amounted to $118.4 million (December 31, 2018: $112.9 million).

4.2. Revenue

Revenue from power sales and Other revenue are recognised under IFRS 15 and total $1,183.7 million (2018: $1,088.5 million). Revenue from operating leases and revenue from concession and finance lease assets are recognised under IFRS 16 and IFRIC 12 respectively.

(1) Revenue from power sales includes $29.5 million relating to Vorotan for the year ended 31 December 2019 following IFRS 16 "Leases" adoption, for which $28.5 million was recognised within Revenue from operating leases in the year ended 31 December 2018. See Note 2 Basis of preparation for further details.

Revenue from operating leases includes $26.1 million relating to Bonaire for the year ended 31 December 2019, for which $19.7 million was recognised within Revenue from concession and finance lease assets in the year ended 31 December 2018. See Note 2 Basis of preparation for further details.

 (2) 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

(3) Other revenue primarily relates to environmental, operational and maintenance services rendered to offtakers in our Bulgaria, Togo, Rwanda and Senegal power plants.

The Group has two customers contributing more than 10% of Group's revenue.

4.3. Expenses by nature

(1) Emission allowances utilized corresponds mainly to the costs of CO2 quotas in Maritsa which are passed through to its offtaker, as well as changes in fair value of CO2 quotas in the period.

(2) Other expenses include facility costs of $13.2 million in December 31, 2019 (December 31, 2018: $16.5 million). Facility costs include certain operating leases expenses of $0.3 million in December 31, 2019 (December 31, 2018: $4.1 million) which have decreased following the implementation of IFRS 16 in the period.

(1) Represents the private incentive plan as described in note 4.26 share-based compensation plan.

(2) Represents redundancy and staff-related restructuring costs.

The other operating income totals $7.3 million in December 31, 2019 (December 31, 2018 $6.9 million).

In the current year, the other operating income and the other operating expenses have been presented gross on the consolidated statement of income and other comprehensive income. The comparatives have been restated accordingly.

4.4. Employee costs and numbers

(1) See note 4.26 Share-based compensation plans for a description of the private incentive plan and long term incentive plan.

4.5. Acquisition related items

(1) Acquisition costs include notably pre-acquisition costs such as due diligence costs and professional fees and other related incremental costs incurred as part of completed acquisitions or contemplated acquisitions. In 2019, costs incurred primarily related to completed acquisition in Mexico. In 2018, costs incurred primarily related to completed acquisitions in Spain and Italy and contemplated acquisition in Mexico.

(2) Earn-out related to adjustments to previously estimated earn-outs.

4.6. Finance costs - net

(1) The Group recognized a loss of $0.4 million in the year ended December 31, 2019 in relation to its interest rate, cross currency swaps, foreign exchange options and forward contracts (December 31, 2018: profit of $23.9 million) and a loss of $13.0 million in the year ended December 31, 2019 in relation with settled positions (December 31, 2018: loss of $12.5 million). The $0.4 million loss includes a $5.4 million loss related to hedged cash flows no longer expected to occur on an interest swap on the CHP Mexico acquisition financing.

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

(3) Fees in conjunction with the refinancing of our initial €750 million bond in July 2018.

(4) Unwinding effects mainly related to Maritsa debt to non-controlling interests and other long-term liabilities.

(5) Other mainly includes costs associated with other financing, fair valuation of debt to non-controlling interests, finance costs of leases, as well as income and expenses related to interests and penalties for late payments.

4.7. Income tax expense and deferred income tax

Income tax expense

The main jurisdictions contributing to the income tax expense for the year ending December 31, 2019 are i) Spain, ii) Bulgaria and iii) Brazil. The tax on the Group's profit before income tax differs from the theoretical amount that would arise from applying the statutory tax rate of the parent company applicable to the results of the consolidated entities as follows:

Effective tax rate reconciliation

Net deferred tax movement

The gross movements of net deferred income tax assets (liabilities) were as follows:

Analysis of the net deferred tax position recognized in the consolidated statement of financial position

The net deferred tax positions and their movement can be broken down as follows:

(1) Mainly relates to property, plant and equipment and acquired intangible assets

(2) This category mainly includes deferred financing costs, investment tax credits and foreign currency differences.

Analysis of the deferred tax position unrecognized in the consolidated statement of financial position

Unrecognized deferred tax assets amount to $242.3 million as of December 31, 2019 (December 31, 2018: $190.9 million) and can be broken down as follows:

(1) The increase mainly relates to current year losses in Luxembourg and Brazil, prior year adjustments reflecting updates to tax estimates, and Luxembourg tax impact of a group internal restructuring.

4.8. Earnings per share

There is no dilutive impact from the Private Incentive Plan (PIP) on the earnings per share as the shares are settled in full by existing shares held by Reservoir Capital Group.

4.9. Intangible assets and goodwill