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ContourGlobal PLC

ContourGlobal plc Delivering on strategy, strong operational and financial performance

ContourGlobal plc (LON:GLO), an international owner and operator of contracted electricity generating plants, today announced its half year results for the six months ended 30 June 2019.

KEY HIGHLIGHTS

·      Consolidated revenue growth of 15% to $617.4 million.

·      Income from operations up 27% to $142.6 million.

·      Adjusted EBITDA up 36% to $357.2 million.

·      Proposed quarterly dividend of USD 3.6901 cents per share, equivalent to $24.75 million, reflecting our commitment to 10% year on year dividend growth supported by ContourGlobal’s strong and predictable cash flow generation. 

·      Good progress in regards to achieving our target of doubling Adjusted EBITDA by 2022.

·      Sale of 49% of our 250 MW Concentrated Solar Power portfolio in Spain (“CSP”) for a final consideration of €134 million completed in May 2019, which contributed $52 million to H1 2019 Adj. EBITDA.

·      Subsequent to the end of the half year, €100 million of aggregate principal amount of our 4.125% senior secured notes due 2025 were issued at 106.0 % of par, corresponding to a yield to maturity of 3.024%.

·      Acquisition of two natural gas-fired combined heat and power plants (“CHP”) in Mexico expected to close in the third quarter of 2019 and to generate $110 million of Adjusted EBITDA on a full year basis.

·      Reflecting the timing of the closing of the CHP acquisition, we expect 2019 Adjusted EBITDA to be in the lower half of our previously communicated guidance of $720-770 million for the full year at constant foreign exchange rate[1].

In $ millionsH1 2019H1 2018Change
Revenue617.4535.4+15%
Income from Operations142.6111.9+27%
Adjusted EBITDA357.2261.8+36%
Thermal Adj. EBITDA161.1163.0-1%
Renewable Adj. EBITDA213.7119.8+78%
Corporate and other costs(17.5)(21.0)-17%
Proportionate Adjusted EBITDA299.6225.9+33%
Profit before tax23.26.9236%
Net profit6.02.7+122%
Funds From Operations (FFO)169.8110.8+53% 
Earnings per share ($)0.020.01+110%

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

 “We are pleased to announce strong first-half results, delivering on financial, operational and growth commitments. We successfully integrated the 250MW CSP facilities in the southwest of Spain which contributed to our growth. In May we completed the sale of 49% of the CSP assets to our strategic partner Credit Suisse Energy Infrastructure Partners AG for €134 million in cash consideration. The CHP acquisition in Mexico, signed in January 2019, received shareholder approval and is expected to close in the third quarter of 2019. It will bring high quality contracted cash flows and an expected annual Adjusted EBITDA contribution of $110 million. We continue to see attractive growth opportunities in our core markets in both the acquisition and greenfield segment. We are pleased with our pipeline and our accelerated progress towards achieving our IPO objective of doubling Adjusted EBITDA by 2022 without the need to issue shares or exceed target net leverage.

We are pleased to announce a quarterly dividend of USD 3.6901 cents per share reflecting our commitment to grow our dividend by 10% on an annual basis – this commitment is supported by the Company’s substantial and predictable cash generation.”

Robust financial performance

·      Consolidated revenue up 15% to $617.4 million supported mainly by the full year of ownership impact of the CSP assets and the higher dispatch in the Thermal portfolio.

·      Income from operations is up 27% as a result of the growth of the Renewable portfolio in 2019 and significant acquisition one-off items in 2018 in relation to the acquisition of the CSP assets.

·      Adjusted EBITDA up 36% from $261.8 million to $357.2 million driven by the Renewable portfolio and reflecting the impact of the CSP assets acquisition ($50 million), the cash gain realized on the sell down of minority stakes in the CSP assets ($52 million) and improved resource ($10 million) particularly in wind, partially offset by negative foreign exchange ($24 million).

·      Profit attributable to ContourGlobal plc shareholders was $6.0 million, resulting in basic EPS of 2 cent (USD) per share. The net profit was impacted by one-off breakage fees and write-off of deferred issuance fees of $15 million due to the refinancing at attractive rates of the Slovakian and Italian Solar portfolio in H1 2019 (see below).

·      Strong cashflow generation; funds from operations reached $169.8 million in H1 2019, a 53% increase from H1 2018, mainly explained by the cash generated from the acquired CSP assets and the successful refinancing of the corporate bond in July 2018 leading to lower interest expense; Cash conversion rate defined as FFO / Adjusted EBITDA reached 48% in H1.

·      $445 million of liquidity at the parent level as of 30 June 2019.

·      Net consolidated leverage ratio of 4.0x at 30 June 2019 at the bottom end of our target range.

Successful operational performance and growth of the portfolio

·      Continued industry leader in Health and Safety with no LTI in the first half of 2019

·      Availability Factors remained strong at 94.6% for the Group in H1 2019 (H1 2018: 94.9%), with individual segments shown below

 H1 2019H1 2018
Thermal93.2%93.3%
Hydro98.2%98.5%
Wind96.1%95.8%
Solar PV98.3%99.7%
Solar CSP94.6%96.7%

·      Capacity factors of the Renewable portfolio in H1 2019 were broadly in line with the Group’s expectations for the period with very high level of production at our CSP assets and slightly lower production at our Brazil wind assets, resulting in no significant resource impact compared to company’s expectations during the first half.

Delivering growth and providing value creation to our shareholders

·      The closing of the CHP acquisition is expected to occur in the third quarter of 2019. The commissioning of the largest plant is in its final stage.

·      We acquired an additional 12.4 MW acquisition of PV assets in June 2019.

·      Austria Wind Repowering – Phase 1 (30 MW): Repowering of one of the wind farms (13 MW) reached commercial operations in January 2019; the second repowering (17 MW) is ongoing.

·      Completion of the CSP sell down to Credit Suisse Energy Infrastructure Partners as planned at a 2x equity multiple one year after the acquisition, representing consideration of €134 million.

·      Successful refinancing of our Solar portfolios in Italy and Slovakia in H1 2019, reducing all-in costs by €4 million per annum.

·      In regards to the ContourGlobal’s Kosova e Re Power Plant Project, while the finalization of the EPC contract is progressing according to plan, the timing of the financial close previously anticipated to occur during H2 2019 is likely to be impacted by the uncertainty created by the resignation of the country’s prime minister.

EPS

·      Profit attributable to ContourGlobal was $14.1 million in the first half of 2019 corresponding to EPS of $0.02. Adjusted net income attributable to ContourGlobal plc shareholders was $31.5 million in the first half of 2019 corresponding to an Adjusted EPS of $0.05.

Dividend

·      The Company made the final dividend payment for the year ending December 31, 2018 of $63.3 million (9.4 USD cents per share) on 30 May 2019.

·      The Company started paying quarterly dividends in 2019. The Company paid a first quarterly dividend of $24.75 million (3.6901 USD cents per share) in June 2019 corresponding to one-fourth of an expected yearly dividend of $99 million (14.7604 USD cents per share), representing 10% dividend growth against last year.

·      Today the Company declares a second quarterly dividend for 2019 of $24.75 million corresponding to 3.6901 USD cents per share which is expected to be paid on 6 September 2019 to shareholders on the register at 16 August 2019.

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

Outlook

We expect 2019 Adjusted EBITDA to be in the lower half of our previously communicated guidance of $720-770 million for the full year at constant foreign exchange rate [2] .

Conference call

The Company will host a conference call for analysts and investors at 9:30 GMT, August 8th, 2019

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

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