Final Results

19 September 2011

Greenko Group plc

("Greenko", "the Company" or "the Group")

Preliminary Financial Results for the year ended 31 March 2011

Greenko Group plc, a clean energy generator and supplier to themainstream Indian energy market, announces its preliminary financial results for the year ended 31 March 2011.

HIGHLIGHTS

Financial

·; Turnover increased by 130% to €44.4 million (2010: €19.3 million)

·; EBITDA substantially increased to €25.2 million (2010: €7.9 million)

·; Profit before tax up 188% at €14.0 million (2010: €4.9 million)

·; Basic EPS 7.44 cents (2010: 3.42 cents)

·; Cash balances and deposits €36.3 million (2010: €72.3 million)

Operational

·; Hydro portfolio strengthened through acquisitions and new concessions

·; Comprehensive strategy for the wind market announced in September 2010

·; Multi-year agreement with GE for supply, installation and maintenance of wind turbines

Post year end

·; Successful placing raising £50 million, before expenses

·; Extension of partnership with GE

·; 650MW of wind concessions added taking wind pipeline beyond 1GW, total pipeline to 1.6GW

Commenting on the results, Anil Chalamalasetty, CEO and Managing Director of Greenko, said:

"The Group has enjoyed a successful twelve months in which we have not only delivered on our strategy to grow our clean energy portfolio overall, but we have also made significant progress in wind, which puts us at the forefront of our sector in India. We continue to deliver financially for our shareholders and have today reported record revenue and earnings. Most pleasingly, our prospects are brighter than ever.

"I am pleased to report that we are on track to meet our 2015 target of having 1GW of operational capacity and that there are considerable further opportunities to scale our business beyond that. Against this backdrop, the Directors have confidence in the development of the Group within the lucrative Indian energy market and look to the future with optimism."

For further information visit www.greenkogroup.com or call;

Chairman's and President's Statement

Introduction

The financial year ended 31 March 2011 was transformational for Greenko, with the foundations being laid for operational capacity to increase significantly, reinforcing our position as one of India's leading clean energy producers. We are delighted to report continued growth as well as a strong set of financial results. Pleasingly, we can also report that our good progress has continued into the new year with a successful placing in June 2011 facilitating the funding of the Group towards its medium term 1GW target.

Clean energy is an increasingly important part of the Indian energy market and is attracting strong regulatory support and a favourable tariff structure. Hydro and wind, which are the focus of Greenko, are already at grid parity which is the point at which power from a renewable source is generated at the same price as conventional power. The Indian government has set a target that 10 per cent of installed capacity will be renewable by March 2012 and these targets are planned to rise to 15 per cent by 2020. In addition, the Indian Private sector has set targets to increase their use of clean energy as a part of global efforts to reduce greenhouse gas emissions. Current supply falls well short of these levels and it is expected that it will continue to do so creating sustainable opportunities for Greenko.

Greenko's strategy is to generate energy from projects which use a range of clean technologies, built and operated across a broad geographic region within India, whilst at the same time, developing projects in a clustered manner which ensures faster implementation and better operational management. Our approach ensures we are able to simultaneously mitigate risk, access multiple revenue streams and seize new opportunities in the marketplace which offer the most potential to enhance shareholder value. The merit and robustness of our strategy has been further validated this year as conventional energy suppliers have continued to wrestle with complex fuel supply issues and permitting challenges. Their ability to secure long term off-take agreements has also been restricted and these issues reinforce the boards' view that our strategy for growth is achievable and sustainable.

During the financial year, Greenko has taken significant strides towards rolling out a comprehensive wind strategy which, together with hydro, will be the driver of the Company's long-term capacity growth. Our decision to make the move into the market for wind assets followed extensive research undertaken both at the desktop level and on-the-ground at multiple sites over a number of years. Having built and designed a model that would deliver superior returns to those achieved by operators relying on tax incentives and turnkey partners, the Company set out its wind strategy in September 2010.

During the period we began work to develop a portfolio of high calibre wind assets of 300MW. In May 2011 the Company announced that it had secured concessions for a further 650MW and extended its strategic partnership with General Electric ("GE"), one of the most respected companies in the world in this area.

At the period end, Greenko had operational capacity of 183MW with a further 124MW due to come on stream during 2012 and a phased capacity roll out thereafter.

Results

The Group recorded an increase in revenues of 130 per cent to €44.4 million (2010: €19.3 million). EBITDA, a key performance indicator for Greenko, more than trebled to €25.2 million (2010: €7.9 million). Profit after tax increased by 164 per cent, to €11.4 million (2010: €4.3 million). Basic EPS was 7.44 cents (2010: 3.42 cents) reflecting the full year impact of shares issued in February 2010 and minority interests. Total cash and current bank deposits at the year-end were €36.3 million (2010: €72.3 million), which will be utilised for the projects under implementation. This position was of course strengthened post the period end with the placing proceeds. As at 31 March 2011, the Company had a stock of 109,177 Certified Emission Reductions ("CERs") (2010: 148,000).

Dividends

In line with our stated policy, earnings will continue to be fully re-invested to finance the on-going growth of our Company. At this stage in Greenko's development it is clear that there are substantial opportunities available to us which will require a combination of equity and debt finance to realise. The Directors therefore do not recommend the payment of a dividend for the year to 31 March 2011. The Company's dividend policy will remain under review and it is anticipated that a progressive dividend payment policy will be put in place in due course.

Outlook

Against a backdrop of ever increasing demand for power in the Indian market and the increasing emphasis being placed on generation from clean energy sources, we are delighted to say that Greenko is positioned very favourably for strong and sustained growth. Furthermore, our hydro assets which have formed the bedrock of our portfolio to date are performing well and we look forward to reporting to you further progress on the portfolio in the coming months. Our progress in hydro, in combination with our plans to develop a portfolio of wind assets which deliver superior returns, demonstrates that there is now real momentum in our work to scale Greenko and create long term value for our shareholders.

CEO and Managing Director's Statement

Introduction

I am pleased to present Greenko's results for the year ended 31 March 2011, our fourth operating year as a public company. Revenue growth for the period was significant and pleasingly profitability has been enhanced.

During the year Greenko has built its portfolio to establish itself as a mainstream utility player in the Indian energy market. It has distinguished itself from other players in the market by adopting a strategy which is unconstrained by fuel supplies, environmental permitting issues and power off-take risks. Greenko has now embarked on a roll-out of wind assets, in addition to hydro, which forms a large part of our operational capacity. Following a successful placing of £50 million, before expenses, which closed post the period end, together with capital raising opportunities, we are confident of fully funding our projects as per the Group's targets.

Financial Review

For the full year, the Company's revenue was €44.4 million (2010: €19.3 million) an increase of 130 per cent. Profit after tax attributable to equity shareholders was €8.9 million (2010: €2.5 million) which equates to EPS of 7.44 cents (2010: 3.42 cents). EBITDA for the year was €25.2 million (2010: €7.9 million). Profit after tax of €2.6 million (2010: €1.8 million) was attributed to minority shareholders, mainly Global Environment Emerging Markets Fund III ("GEEMF") which has invested in the Group at the Mauritius subsidiary level in 2009.

The Group's Plant, Property and Equipment and Intangible Assets increased by 44 per cent to €215.2 million primarily due to the acquisitions of operating hydro projects, Astha and Hemavathy during the year. The total borrowings at the end of the year were €82.8 million (2010: €61.9 million). The equity raised during 2009-2010 was deployed during the year in various projects under implementation and the cash balance at the end of the year was €36.3 million.

Market Environment and Group Strategy

The macro environment within India continues to underpin the lucrative opportunities available to Greenko. Around 36 to 40 per cent of the population in India still does not have access to power, and the country's GDP growth is estimated to continue to be in excess of 8 per cent per annum. Given the continued population growth in India, the country's total demand for electricity is expected to surpass 950GW by 2030. Therefore, given India's inability to deliver sufficient incremental power capacity from fossil fuel sources, Greenko is well positioned to become a leading, mainstream Indian power producer.

Our assets also benefit from long term power purchase agreements which are not available to conventional power producers, giving Greenko enhanced revenue visibility. Most of our projects are registered under the Clean Development Mechanism of UNFCCC which provides the Group with CER revenues enabling the Group to deliver de-risked projects with enhanced profitability. Greenko's projects also have the access to the Renewable Energy Certificates ("RECs") Mechanism launched by the Indian Government. Under this mechanism, the generator can sell the local component of electricity at market prices and trade the environmental attribute in the form of RECs separately through an established Power Exchange. These REC revenues are expected to be substantial in the next four to five years based on the present renewable energy capacity shortfall. Our hydro and wind projects are further de-risked as they are not subject to the input costs and fuel supply issues associated with fossil fuels.

Operational and Development review

Greenko divides its secured capacity into two categories; assets already operating and concessions currently under development.

Greenko's total diversified portfolio of operational assets and assets under development is now 1.63GW of which 183MW is already operational. It is expected that over 1GW will be operational by 2015 of which 540MW will be from wind with the balance predominantly from small and medium hydro projects.

Operating Assets

Hydro

The financial year ended 31 March was a busy period with a number of new hydro assets added to our portfolio. Today, we are one of the largest operators of small hydro projects in India and we will continue to add medium sized hydro projects to retain a balance of assets to ensure risk is spread both geographically and across technologies. The hydro operating portfolio currently consists of 104MW and the 2011 monsoon season has resulted in plant load factors being in line with expectations.

As reported in our interim statement, we have completed the acquisition of four operating hydro assets in the early part of the year. The first two assets of 5MW each are in Himachal Pradesh where high plant load factors of over 50 per cent are achieved due to the perennial nature of rivers in the area. The other two assets consist of 16 MW and 8 MW projects located in the Cauvery Basin of Karnataka, one of India's largest rivers with a catchment area of 5,140km². It is expected that these assets will provide long term sustainable cash flows and meet the desired equity returns.

Dikchu (96MW), the Group's largest hydro project, remains on track to be commissioned in January 2014. Infrastructure development activities have been completed and contracts for the major works have been awarded. Debt for the project amounting to €87 million is being provided by an IDBI led banking consortium.

Infrastructure development activities have also begun at Paudital Lassa (24MW), Jeori (10MW) and Ullipu I & II (36MW). The Cauvery Basin cluster projects are also in the advanced stages of development, with most of the approvals expected to be in place by Q4 of the full year 2011.

Wind

As previously announced, 2011 saw Greenko add wind assets to its business portfolio. Whilst we do not currently have operational wind assets, the potential for growth and profitability in this asset class is very substantial. After studying the sector for several years, Greenko announced in September 2010, a comprehensive strategy to enter the Indian wind market based on thorough analysis and research of data and technology. This strategy is proving to be resilient in the current market compared to our competitors in the sector; the roll-out of our wind strategy will substantially increase our capacity growth towards commercial production.

In order to support the Group in executing its wind strategy, Greenko has partnered with GE, one of the world's largest turbine suppliers. The Group has entered into a framework understanding with GE to supply, install and erect their XLE 1.6MW turbines which are designed specifically for Class III (low wind speed) sites. The turbines, which have higher hubs and a larger rotor diameter, will enable Greenko to achieve a relatively low cost per kWh and enhance generation.

The Group's first wind project under development, which is debt financed by IDFC and SBI, is in an advanced stage of execution with all equipment on site and installation in progress. The project had experienced logistical delays due to larger diameter blades being used for the first time in India as well as an extended monsoon season. The project is expected to be commissioned by the last quarter of the current financial year..

Our existing plans in the wind market will see us develop more than 1GW of wind assets in Maharashtra, Andhra Pradesh, Karnataka and Rajasthan. The Company reported that it had secured concessions to build a 300MW wind farm from the Karnataka state government. This asset is due to be built in two phases. The first phase, which will add 100MW to the Group's operational capacity, is expected to be completed in 2012 whilst the second phase, accounting for the balance of 200MW, is scheduled for completion in 2014.

Discussions relating to further financing to expand the roll-out of our wind strategy are ongoing and a further announcement will be made in due course.

Natural Gas

The 36.8MW liquid fuel plant continues to generate operating profits in line with expectations although the 58.4MW Greenko Godavari plant has experienced some delays, primarily due to uncertainty about the levels of output from the KG-D6 basin. The land and permits for the project have been obtained and financial closure has been completed with IL & FS.

Biomass

The Group's 41.5MW of biomass assets performed broadly in line with expectations during the year, operating at an average plant load factor of 70 per cent and an average tariff realisation of Rs. 4.1/kWh. Whilst biomass power production offers a relatively stable, high plant load factor, it does not offer scope for superior growth. It will therefore remain a valuable part of Greenko's diversified portfolio in its current form but the Group's primary focus will be on those asset classes offering the most substantial growth opportunities.

Business Development

In addition to the 1.6GW already secured, there is a pipeline of potential opportunities to further grow the portfolio. The Company's infrastructure, brand and relationships within the industry provide it with access to deal flow and financing partners. Greenko will continue to pursue a dual strategy assessing both potential acquisitions and new concession tenders. As always, it will be highly selective taking forward only the most attractive opportunities and it is likely therefore that it will more often choose to take new concessions rather than acquire, particularly in wind where its strategy is particularly differentiated. Greenko is increasingly seeing opportunities at greenfield sites, rather than projects which already have concessions and permits in place. Greenfield sites are potentially interesting because of the valuation uplift that can be achieved by securing the deal earlier in the development chain.

In hydro we are seeing huge opportunities to scale our business. The Greenko team is currently analysing in aggregate some 800MW of projects although many of those under review will not be of sufficient quality to meet our expectations. As part of our work to continually improve operationally, we are now working closely with a major European conglomerate involved in the energy generation sector. As with GE in wind, we are considering the potential benefits of a more formal operational partnership, relating in particular to the supply of turbines, as our work with them to date has already proved beneficial.

At the time of our successful fundraising in June 2011, we announced that concessions for a further 650MW of wind assets had been won. These concessions, alongside those previously secured, have the potential to bring transformational value to our portfolio and progress in developing and constructing them remains on track. We expect to begin building the first of these additional sites, in Andhra Pradesh, in November 2011 and expect to provide a comprehensive update in our interim review. Hydro and wind remain our focus as we work to further scale up our company and we will keep under consideration other clean energy generation technologies as they are proven commercially.

Infrastructure

Greenko continues to invest in its central business functions in order to meet the needs of our developing organisation. The Group is moving towards an integrated management system and has implemented SAP across its plants for better monitoring and compliance. Greenko now employs over 750 staff with a further 1,000 people employed indirectly. The Group has its corporate office in Hyderabad along with regional offices in Bangalore and Delhi.

Outlook

The Group has enjoyed a successful twelve months in which we have not only delivered on our strategy to grow our clean energy portfolio overall, but we have also made significant progress in wind, which puts us at the forefront of our sector in India. We continue to deliver financially for our shareholders and have today reported record revenue and earnings. Most pleasingly, our prospects are brighter than ever.

I am pleased to report that we are on track to meet our 2015 target of having 1GW of operational capacity and that there are considerable further opportunities to scale up our business beyond that. Against this backdrop, the Directors have confidence in the development of the Group within the lucrative Indian energy market and look to the future with optimism.

Anil Chalamalasetty

CEO and Managing Director

Greenko Group plc

(All amounts in Euros unless otherwise stated)

Consolidated statement of financial position (Unaudited)

The notes are an integral part of these consolidated financial statements.

Consolidated statement of comprehensive income (Unaudited)

The notes are an integral part of these consolidated financial statements

Consolidated statement of changes in equity (Unaudited)

The notes are an integral part of these consolidated financial statements.

Consolidated statement of changes in equity (Unaudited) (continued)

The notes are an integral part of these consolidated financial statements.

Consolidated statement of cash flow (Unaudited)

The notes are an integral part of these consolidated financial statements

Notes to the consolidated financial statements (Unaudited)

1. General information

Greenko Group plc ("the Company") was originally incorporated on 12 January 2006 as Greenko S.A., a société anonyme (a public company with limited liability), under the laws of the Grand Duchy of Luxembourg, having its registered office at L-1736, Luxembourg, IB, Heienhaff and duly registered with the Registre de Commerce et des Sociétés de Luxembourg (the Luxembourg Trade and Companies Register) under B 113,730. On 31 October 2007, the Company was migrated to the Isle of Man as a company limited by shares under company number 001805V pursuant to the provisions of Part XI of the Isle of Man Companies Act 2006 having its registered office at 4th floor, 14 Athol Street, Douglas, Isle of Man, IM1 1JA. The Company is listed on the London Stock Exchange-Alternative Investment Market ("AIM").

The Company together with its subsidiaries ("the group") is in the business of owning and operating clean energy facilities. All the energy generated from these plants is sold to the State Electricity Boards and other electricity transmission and trading companies in India through long-term power purchase agreements ("PPA"). The group obtained a licence for inter-state trading in electricity in the whole of India except Jammu and Kashmir for trading up to 100 million units of electricity in a year. The group is yet to commence trading in electricity. The group is also a part of the Clean Development Mechanism ("CDM") process and generates and sells Certified Emission Reductions ("CER") and Voluntary Emission Reductions ("VER").

2. Summary of significant accounting policies

2.1 The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented except for the adoption of new standards as of 1 April 2010, noted below:

·; IAS 27 Consolidated and Separate Financial Statements (Revised 2008)

·; IFRS 3 Business Combination (Revised 2008)

The principal effects of these changes are as follows:

IAS 27, Consolidated and Separate Financial Statements (Revised 2008) ("IAS 27R") requires a mandatory adoption of the economic entity model which treats all providers of equity capital as shareholders of the entity. Consequently, a partial disposal of interest in a subsidiary in which the parent company retains control does not result in a gain or loss but in an increase or decrease in equity. Purchase of some or all of the non-controlling interests (also known as minority interests) ('NCI') is treated as a treasury transaction and accounted for in equity. A partial disposal of interest in a subsidiary in which the parent company loses control triggers recognition of gain or loss on the entire interest. A gain or loss is recognised on the portion that has been disposed of; a further holding gain is recognised on the interest retained, being the difference between the fair value of the interest and book value of the interest.

The revised standard requires an entity to attribute their share of net income and reserves to the NCI even if this results in the NCI having a deficit balance. The adoption of IAS 27R did not have a significant impact on the Company.

IFRS 3, Business Combination (Revised 2008) ("IFRS 3R") is applicable for business combinations occurring in reporting periods beginning on or after 1 July 2009 and will be applied prospectively. The new standard introduces changes to the accounting requirements for business combinations, but still requires use of the purchase method. The most significant changes in IFRS 3R that had an impact on the Company's acquisition in the current year are as follows:

·; acquisition-related costs of the combination are recorded as an expense in the income statement. Previously, these costs would have been accounted for as part of the cost of the acquisition

·; the measurement of assets acquired and liabilities assumed at their acquisition-date fair values is retained. However, IFRS 3R includes certain exceptions and provides specific measurement rules.

IFRS 3R has been applied prospectively to business combinations for which the acquisition date is on or after 1 April 2010. For the year ended 31 March 2011, the adoption of IFRS 3R has affected the accounting for the Company's acquisition during the year (see note 25.1) by increasing the group's expenses related to acquisition-related costs by €50,089. Current tax expense has decreased by €9,983. Basic and diluted earnings per share for the current year have decreased by 0.04cents.

Business combinations for which the acquisition date is before 1 April 2010 have not been restated.

2.2 Basis of preparation

The consolidated financial statements of Greenko Group plc have been prepared in accordance with the International Financial Reporting Standards ("IFRS") as adopted by the European Union. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

The preparation of financial information in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial information are disclosed in the critical accounting estimates and judgments section (note 4).

2.2.1 Standards and interpretations not yet applied

Standards and Interpretations adopted by the European Union as at 31 March 2011

The management does not expect the application of the other standards to have any material impact on its financial statements when those Standards become effective. The group does not intend to apply any of these pronouncements early.

Standards and Interpretations issued but not yet adopted by European Union at the closing date

IFRS 9 as issued reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to classification and measurement of financial assets as defined in IAS 39. The standard is effective for annual periods beginning on or after 1 January 2013. In subsequent phases, the IASB will address classification and measurement of financial liabilities, hedge accounting and derecognition. The completion of this project is expected in early 2011. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the group's financial assets. The group will quantify the effect in conjunction with the other phases, when issued, to present a comprehensive picture.

The group has yet to assess the impact of IFRS 9, IFRS 10 and IFRS 11 on the financial statements. However the management does not intend to apply any of these pronouncements early.

Based on the group's current business model and accounting policies, management does not expect the application of the above standards, yet to be endorsed by EU, to have any material impact on its financial statements when those Standards become effective. The group does not intend to apply any of these pronouncements early.

Improvements to IFRSs

Improvements to IFRSs contain amendments to existing standards. The amendments are effective, in most cases for financial periods beginning on or after 1 July 2009 or otherwise for financial period beginning on or after 1 January 2010.

The management does not expect the application of the improvements to have any material impact on its financial statements when those improvements become effective. The group does not intend to apply any of these pronouncements early.

2.3 Consolidation

The consolidated financial statements include the following subsidiaries:

Subsidiaries are all entities over which the group has the power to govern the financial and operating policies so as to obtain economic benefits from its activities, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over the fair value of the group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in profit or loss.

Previously held identifiable assets, liabilities and contingent liabilities of the acquired entity are revalued to their fair value at the date of acquisition, being the date at which the group achieves control of the acquired entity. The movement in fair value is taken to the asset revaluation surplus.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

Non-controlling interests represent the portion of profit or loss and net assets that is not held by the group and are presented separately in the consolidated statements of comprehensive income and within equity in the consolidated statements of financial position, separately from parent shareholders' equity. Acquisitions of additional stake or dilution of stake from/ to non-controlling interests in the group are accounted for using the equity method, whereby, the difference between the consideration paid or received and the book value of the share of the net assets is recognised in 'other reserve' within statement of changes in equity.

2.4 Segment reporting

IFRS 8 establishes standards for the way that public business enterprises report information about operating segments and related disclosures about products and services, geographic areas, and major customers. The group's operations predominantly relate to generation and sale of electricity. The chief operating decision maker evaluates the group's performance and allocates resources based on an analysis of various performance indicators at operating segment level. Accordingly there is only a single operating segment "generation and sale of electricity and related emission reductions".

2.5 Foreign currency translation

a) Functional and presentation currency

Items included in the financial statements in each of the group's entities are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The consolidated financial statements are presented in 'euro' ("€"), which is the Company's functional and presentation currency. The functional currency of the group's subsidiaries in India is Indian Rupees ("INR").

b) Transactions and balances

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 such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

c) Group companies

The results and financial position of all the group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

·; assets and liabilities presented for each reporting date are translated at the closing rate at the reporting date;

·; income and expenses for each statement of comprehensive income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

·; resulting exchange differences are charged/ credited to other comprehensive income and recognised in the currency translation reserve within equity.

When a foreign operation is partially disposed of or sold, exchange differences that were recorded as other comprehensive income are recognised in profit or loss as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

2.6 Property, plant and equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation and any impairment in value. Freehold land is not depreciated. Historical cost includes expenditure that is directly attributable to the acquisition of the items and borrowing cost. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with them will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance expenditure are charged to profit or loss during the period in which they are incurred. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is recognised in profit or loss in the period the item is derecognised.

2.7 Intangible assets

a) Goodwill

Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately recognised. Goodwill represents the excess of the cost of an acquisition over the fair value of the group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose.

b) Other intangibles

Intangible assets acquired individually, with a group of other assets or in a business combination are carried at cost less accumulated amortization and any impairment in value. The intangible assets are amortised over their estimated useful lives in proportion to the economic benefits consumed in each period. The estimated useful lives of the intangible assets are as follows:

Amortisation of intangible assets is included within 'Depreciation and amortisation'.

2.8 Impairment of non-financial assets

Assets that have an indefinite useful life, for example goodwill, are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised 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 to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

2.9 Financial assets

The group classifies its financial assets in the following categories: loans and receivables, and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

a) Loans and receivables

Loans and receivables 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 for maturities greater than 12 months after the reporting date. These are classified as non-current assets. The group's loans and receivables comprise trade and other receivables, investment in bank deposits and cash and cash equivalents in the statement of financial position (note 2.12, 2.13 and 2.14). Loans and receivables are initially recognised at fair value plus transaction costs. Loans and receivables are carried at amortised cost using the effective interest method.

b) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date.

Regular purchases and sales of financial assets are recognised on the trade-date - the date on which the group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets are subsequently carried at fair value.

Changes in the fair value of monetary and non-monetary securities classified as available-for-sale are recognised in other comprehensive income. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised as other comprehensive income are included in the profit or loss as 'gains and losses from investment securities'. Dividends on available-for-sale mutual fund units are recognised in the profit or loss as a part of other income.

The fair value of the mutual fund units is based on the net asset value publicly made available by the respective mutual fund managers.

The group assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired. Impairment testing of trade receivables is described in note 2.12.

The group derecognises financial assets when it transfers substantially all the risks and rewards of ownership of the financial asset. On derecognition of a financial asset the difference between the carrying amount and the consideration received is recognised in profit or loss.

2.10 Derivative financial instruments

a) Forward contracts

The group purchases foreign exchange forward contracts to mitigate the risk of changes in foreign exchange rates associated with its loans denominated in US dollars. These derivative contracts do not qualify for hedge accounting under IAS 39, and are initially recognised at fair value on the date the contract is entered into and subsequently re-measured at their fair value. Gains or losses arising from changes in the fair value of the derivative contracts are recognised in profit or loss.

b) Sale commitments

IAS 39 requires contracts to buy or sell non-financial items to be treated as derivatives and accordingly fair valued on the reporting date, unless the contracts qualify for 'own use' exemption. The group qualifies for the limited 'own use' exemption from derivative accounting on the basis that its emission reduction purchase and sale commitments are entered into and continue to be held for the purpose of the receipt or delivery of emission reductions in accordance with the group's expected purchase and sale requirements. Own use contracts are outside the scope of IAS 39 and are therefore accounted for as executory contracts.

2.11 Inventories

a) Raw material, stores and consumables

Inventories of raw material, stores and consumables are valued at the lower of cost and net realisable value. Cost includes expenses incurred in bringing each product to its present location and condition and is determined on a weighted average basis. Net realisable value is the estimated selling price in the ordinary course of business less any applicable selling expenses.

b) Emission Reductions ("ER")

Inventories of ER are stated at the lower of cost or net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and selling expenses. ER are generated and held for sale in the ordinary course of business. Electricity and ER are treated as joint products, as they are generated simultaneously. Cost of generation is allocated in the ratio of relative net sale value of the products. Cost comprises all production, acquisition and conversion costs and is aggregated on a weighted average basis. To the extent that any impairment arises, losses are recognised in the period they occur. The costs associated with generating inventories are charged to the profit or loss in the same period as the related revenues are recognised.

2.12 Trade and other receivables

Trade receivables are recognized initially at fair value. They are subsequently measured at amortised cost using the effective interest method, net of provision for impairment, if the effect of discounting is considered material. The carrying amounts, net of provision for impairment, reported in the statement of financial position approximate the fair value due to their short realisation period. A provision for impairment of trade receivables is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of receivables. The provision is established at amounts considered to be appropriate, based primarily upon the group's past credit loss experience and an evaluation of potential losses on the receivables. The amount of the provision is recognized in the profit or loss.

2.13 Investment in bank deposits

Investments in bank deposits represent term deposits placed with banks earning a fixed rate of interest. Investments in bank deposits with maturities of less than a year are disclosed as current assets and more than one year as non-current. At the reporting date, these deposits are measured at amortised cost using the effective interest method. Cash and cash equivalents which are pledged with the bankers for availing short term loans are classified as part of investment in bank deposits.

2.14 Cash and cash equivalents

Cash and cash equivalents include cash in hand and at bank, and short-term deposits with an original maturity period of three months or less. Bank overdrafts that are an integral part of cash management and where there is a legal right of set-off against positive cash balances are included in cash and cash equivalents. Otherwise bank overdrafts are classified as borrowings.

2.15 Share capital

Ordinary shares are classified as equity and represent the nominal value of shares that have been issued.

Share premium includes any premiums received on issue of ordinary shares. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

The revaluation reserve within equity comprises gains and losses due to the revaluation of property, plant and equipment.

Foreign currency translation differences arising on the translation of the Group's foreign entities are included in the translation reserve.

Retained earnings include all current and prior period retained profits.

All transactions with owners of the parent are recorded separately within equity.

2.16 Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, if the effect of discounting is considered material.

2.17 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

The fair value of the liability portion of a non-convertible bond with detachable warrants is determined using a market interest rate for an equivalent non-convertible bond without detachable warrants. This amount is recorded as a liability on an amortised cost basis until extinguished on maturity of the bonds. The remainder of the proceeds is allocated to the warrants. This is recognised in shareholders' equity. 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 date.

2.18 Current and deferred income tax

Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity.

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

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for 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/loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

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

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future.

2.19 Employee benefits

Wages, salaries, bonuses, social security contributions, paid annual leave and sick leave are accrued in the period in which the associated services are rendered by employees of the group. The group operates two retirement benefit plans.

a) Gratuity plan

The Gratuity Plan is a defined benefit plan that, at retirement or termination of employment, provides eligible employees with a lump sum payment, which is a function of the last drawn salary and completed years of service. The liability recognised in the statement of financial position in respect of the gratuity plan is the present value of the defined benefit obligation at the reporting date less the fair value of plan assets, if any, together with adjustments for unrecognised past-service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of Government of India securities and that have terms to maturity approximating to the terms of the related gratuity liability.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to the profit or loss in the period in which they arise.

b) State administered Provident Fund

Under Indian law, employees are entitled to receive benefits under the Provident Fund, which is a defined contribution plan. Both the employee and the employer make monthly contributions to the plan at a predetermined rate (currently 12.0 per cent.) of the employees' basic salary. The group has no further obligation under the Provident Fund beyond its contribution, which is expensed when accrued.

c) Share-based compensation

The group operates an equity-settled, share-based compensation plan, under which the entity receives services from employees as consideration for equity instruments (options) of the group. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted, including the impact of market conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total amount expensed is recognised on a graded vesting basis over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At each reporting date, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

2.20 Provisions

Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Where the group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of comprehensive income net of any reimbursement. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as other finance expense.

2.21 Revenue recognition

a) Sale of electricity

Revenue from the sale of electricity is recognised on the basis of the number of units of power exported in accordance with joint meter readings undertaken on a monthly basis by representatives of the buyer and the group at the rates prevailing as on the date of export as determined by the power purchase agreement.

b) Generation of emission reductions

In order for the group or a supplier to the group to produce a CER, a number of steps must be performed, as follows:

·; either the group enters into a contract with a supplier relating to a project that produces CER or the group enters into an agreement with an energy, agricultural or industrial company to either jointly or solely develop a facility that will generate emission reductions;

·; where the project does not use an existing approved baseline and monitoring methodology, approval of that new methodology by the Clean Development Mechanism - Executive Board ("CDM-EB") and recommendation by the Methodologies Panel must occur;

·; written approval of voluntary participation from the host country designated national authority of the parties involved is obtained

·; written confirmation from the host country that the project achieves a sustainable development objective is obtained;

·; submission for public and CDM-EB review, and approval of a formal Project Design Document;

·; project validation by an approved designated operating entity ("DOE");

·; project registration, which requires both designated national authority and CDM-EB approval; and

·; verification of the emission reductions by an approved DOE

·; When the CDM-EB receives the verification report, which constitutes a request to the CDM-EB to issue and distribute CER, the CDM Registry administrator issues CER in a temporary CDM account. In order for these CER to be transferred to the registered accounts of parties and project participants, the International Transaction Log must be created by the CDM-EB.

c) Sale of emission reductions

Revenue from sale of Certified Emission Reduction (CER) is recognized after registration of the project with United Nations Framework Convention on Climate Change (UNFCCC), generation of emission reductions, execution of a firm contract of sale and billed to the customers.

VER are emission reductions achieved by the power generation plants before the effective date of registration by the UNFCCC. The quantity of the VER is based on the estimation of the management, verification by an independent assessor and subject to the satisfaction of the buyer. Revenue is recognized upon execution of a firm contract of sale and on delivery VER to the customers.

d) Interest income

Interest income is recognised as the interest accrues to the net carrying amount of the financial asset using the net effective interest rate method.

2.22 Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the profit or loss on a straight-line basis over the period of the lease.

2.23 Government grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the group will comply with all attached conditions. The group follows the capital approach under which a grant is credited directly to equity when the grants received by the group represent incentives provided by government, unrelated to costs, to promote power generation based on certain renewable energy sources.

Other government grants are recognised as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognised in profit or loss in the period in which they become receivable.

3. Financial risk management

3.1. Financial risk factors

The group's activities expose it to a variety of financial risks; market risk, credit risk and liquidity risk. The group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the group's financial performance. The financial instruments of the group, other than derivatives, comprise loans from banks and financial institutions, non-convertible bonds, demand deposits and short-term bank deposits.

3.1.1 Market risk

Market risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because of volatility of prices in the financial markets. Market risk can be further segregated as: a) Foreign exchange risk and b) Interest rate risk

a) Foreign exchange risk

Foreign exchange risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The group prepares consolidated financial statements in Euros and conducts substantially all its business in Indian rupees ("INR"). As a result, it is subject to foreign currency exchange risk arising from exchange rate movements which will affect the group's translation of the results and underlying net assets of its foreign subsidiaries.

In addition, the group has a US dollar ("$") denominated loan in respect of which it is exposed to foreign currency exchange risk. During the previous years the group has hedged the foreign currency exposure on the quarterly repayments of this loan by entering into forward foreign currency purchases of $.

If INR had weakened or strengthened by 5 percent against $, with all other variables held constant, post-tax profit for the year ended 31 March 2011 would have been lower or higher by €12,872 as a result of foreign exchange gains or losses on translation of the $ denominated borrowings.

If INR had weakened or strengthened by 5 percent against $, with all other variable held constant, post-tax profit for the year would have been lower or higher by €16,051 as a result of mark to market losses or gains on forward contracts.

If INR had weakened or strengthened by 3 percent against Euro, with all other variables held constant, post-tax profit for the year would have been higher or lower by €4,923 as a result of foreign exchange gains or losses on translation of intercompany balances.

The sensitivity analysis is based on a reasonably possible change in the underlying foreign currencies computed from historical data.

b) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. As the group has no significant interest-bearing assets other than investment in bank deposits, the group's income and operating cash flows are substantially independent of changes in market interest rates. The Company considers the impact of fair value interest rate risk on investment in bank deposits as not material. The group's interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the group to cash flow interest rate risk. Borrowings issued at fixed rates expose the group to fair value interest rate risk. During the year, the group's borrowings at variable rate were largely denominated in the functional currency of its Indian entities, being INR, although one loan was denominated in $.

If interest rates on borrowings had been 50 basis points higher or lower with all other variables held constant, post-tax profit for the year would have been lower or higher by €303,728 mainly as a result of the higher or lower interest expense on long term floating rate borrowings.

The sensitivity analysis is based on a reasonably possible change in the market interest rates computed from historical data.

3.1.2 Credit risk

Credit risk is the risk that counter-party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The group's credit risk arises from accounts receivable balances on sale of electricity and CER. The Indian entities have entered into PPA with transmission companies incorporated by the Indian State Government and other electricity transmission and trading companies to export the electricity generated. The group is therefore committed to sell power to these customers and regards any potential risk of default as being predominantly a governmental one. The group is paid monthly by the transmission companies for the electricity it supplies. The CER are sold under contractual emission reduction purchase agreements ("ERPA") concluded with the purchaser of the CER. The group assesses the credit quality of the purchaser based on its financial position and other information. In addition, the group requires the purchaser under the ERPA to open an irrecoverable stand-by letter of credit with a reputable bank. If the purchaser defaults on payment the group is entitled to claim for the full amount owed under the letter of credit.

The group maintains banking relationships with only creditworthy banks which it reviews on an on-going basis. The group enters into derivative financial instruments where the counter-party is generally a bank. Consequently, the credit risk on the derivatives and bank deposits is not considered material.

3.1.3 Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents and maintaining adequate credit facilities.

The group intends to be highly acquisitive in the immediate future. In respect of its existing operations, the group funds its activities primarily through long-term loans secured against each power plant. In addition, each of the operating plants has working capital loans available to it which are renewable annually, together with certain intra-group loans. The group's objective in relation to its existing operating business is to maintain sufficient funding to allow the plants to operate at an optimal level and in particular purchase the necessary raw materials required.

In respect of each acquisition, the group prepares a model to evaluate the necessary funding required. The group's strategy is to primarily fund such acquisitions by assuming debt in the acquired companies or by borrowing specific long-term funds secured on the power plant to be acquired. In relation to the payment towards equity component of companies to be acquired, the group ordinarily seeks to fund this by the injection of external funds by debt or equity.

The group has identified a large range of acquisition opportunities which it is continually evaluating and which are subject to constant change. In respect of its overall business the group therefore does not, at the current time, maintain any overall liquidity forecasts. The table below analyses the group's financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. Group manages its liquidity needs by monitoring scheduled debt servicing payments for long-term financial liabilities and the data used for analysing these cash flows is consistent with that used in the contractual maturity analysis below.

The amounts disclosed in the table are the contractual undiscounted cash flows.

3.2. Capital risk management

The group's objective when managing capital is to safeguard the group's ability to continue as a going concern in order to provide returns for shareholders and benefits for stakeholders. The group also proposes to maintain an optimal capital structure to reduce the cost of capital. Hence, the group may adjust any dividend payments, return capital to shareholders or issue new shares. Total capital is the equity as shown in the consolidated statement of financial position. Currently, the group primarily monitors its capital structure in terms of evaluating the funding of potential acquisitions. Management is continuously evolving strategies to optimize the returns and reduce the risks. It includes plans to optimize the financial leverage of the group.

The Capital for the reporting year under review is summarised as follows:

3.3. Fair value estimation

The fair value of financial instruments that are not traded in an active market (for example, forward contracts) is determined by using valuation techniques. The group uses its judgment to determine an appropriate method and make assumptions that are based on market conditions existing at each reporting date. The fair value of forward foreign exchange contracts is determined using quoted forward exchange rates at the reporting date.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to the short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the group for similar financial instruments.

4. Critical accounting estimates and judgements

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial information and the reported amounts of revenue and expenses during the reporting period. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily available from other sources.

The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

a) Income taxes

The group is subject to income taxes in a number of jurisdictions. Significant judgment is required in determining provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The group recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

b) Estimated impairment of goodwill

In accordance with the accounting policy stated in note 2.7, the group tests annually whether goodwill has suffered any impairment. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates (note 6). No impairment charge was accounted during the year.

c) Application of business combination accounting rules, including identification of intangible assets acquired in a business combination:

The group allocates the purchase price of the acquired companies towards the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The group engages third-party external appraisal firms to assist in determining the fair values of the acquired assets and liabilities. Such valuation requires the group to make significant estimate and assumptions, especially with respect to identification and valuation of intangible assets.

d) Uncollectability of trade receivables:

Analysis of historical payment patterns, customer concentrations, customer credit-worthiness and current economic trends. If the financial condition of a customer deteriorates, additional allowances may be required.

e) Useful life of depreciable assets

Management reviews the useful life of depreciable assets at each reporting date, based on the expected utility of the assets to the group. The carrying amounts are analysed in note 5. Actual results, however, may vary due to technical obsolescence, particularly relating to software and IT equipment.

f) Application of lease accounting rules

Significant judgment is required to apply lease accounting rules under IFRIC 4 Determining whether an Arrangement contains a Lease and IAS 17 Leases. In assessing the applicability to arrangements entered into by the Group the management has exercised judgment to evaluate customers right to use the underlying assets, substance of the transaction including legally enforced arrangements and other significant terms and conditions of the arrangement to conclude that the arrangements do not meet the criteria under IFRIC 4 and consequently not classified as leases.

g) Application of interpretation for service concession arrangements

Management has assessed applicability of IFRIC 12: Service Concession arrangements for certain arrangements that are part of business combinations acquired during the year. In assessing the applicability the management has exercised significant judgement in relation to the underlying ownership of the assets, the ability to enter into power purchase arrangements with any customer, ability to determine prices etc in concluding that the arrangements don't meet the criteria for service concession arrangements.

h) Classification of financial instruments as equity or liability

Significant judgment is required to apply the rules under IAS 32: Financial Instruments: Presentation and IAS 39: Financial Instruments: Recognition and Measurement to assess whether an instrument is equity or a financial liability. The management has exercised significant judgment to evaluate the terms and conditions of certain financial instruments with reference to the applicability of contingent settlement provisions, evaluation of whether options under the contract will be derivative or a non-derivative, assessing if certain settlement terms are within the control of the Company and if not whether the occurrence of these events are extremely rare, highly abnormal and very unlikely, clarifications between the parties to the agreement subsequent to the date of the agreement etc to conclude that the instruments be classified as an equity instrument.

5. Property, plant and equipment

Borrowing costs on specific borrowings capitalised during the year at a rate of 12.5 percent (2010: 11.75 percent) aggregated to €1,300,744 (2010: €3,513,785).

Borrowings as at 31 March 2011 aggregating to €80,834,194 (2010: €58,040,932) (excluding non-convertible bond) are secured against all of the group's present and future moveable and immovable assets, including the property, plant and equipment shown above. These loans are also secured by the personal guarantees of certain Directors and pledge of shares of the Indian subsidiaries.

6. Intangible assets

Additions to licences represent consideration paid on acquisition of companies that hold licences for power generation and licenses acquired through business combinations. 

The average remaining amortization period for licences is 24.4 years and for electricity PPA is 5.3 years.

Impairment tests for goodwill

Goodwill is allocated to the group's cash-generating units ("CGU"). Management has identified the acquired entities as individual CGU.

A CGU level summary of goodwill is presented below:

The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use pre-tax cash flow projections prepared by management. The growth rate does not exceed the long-term average growth rate for the business in which the CGU operates.

The key assumptions used for value-in-use calculations are as follows:

Management has determined gross margins based on industry trends and the existing PPA with the transmission companies. The PPA is a long-term contract with agreed price per unit of power sold, and the growth rates used are consistent with those contracts. The discount rate used is pre-tax and reflects the specific risks associated with the entity.

7. Financial instruments by category

The accounting policies for financial instruments have been applied to the line items below:

Investment in bank deposits as at 31 March 2011 include restricted balances aggregating to €9,987,364 (2010: €10,740,425).

The carrying amounts reported in the statement of financial position for cash and cash equivalents, trade and other receivables, trade and other payables and other liabilities approximate their respective fair values due to their short maturity.

Fair value hierarchy

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as of 31 March 2011:

8. Available-for-sale financial assets

During the year ended 31 March 2011, dividend income aggregating to €1,612 (2010: €420) has been earned on investment in units of mutual funds.

There were no impairment provisions on available-for-sale financial assets during the year. None of the financial assets is either past due or impaired. Available-for-sale financial assets include the following:

Available-for-sale financial assets are denominated in Indian rupees. The maximum exposure to credit risk at the reporting date is the fair value of the units of mutual funds classified as available-for-sale.

9. Derivative financial instruments

The notional principal amounts of the outstanding forward foreign exchange contracts at 31 March 2011 were €412,500 (2010: €611,876).

10. Trade and other receivables

Advance for equity represents amount paid under memorandum of understanding with various parties which have been identified as potential entities to be acquired in the future. Other receivables include advances against purchase of raw material, advances for expenses on new projects, and insurance claims receivable.

Borrowings of €1,005,924 (2010: €407,726) are secured against inventory and trade receivables.

With the exception of the non-current portion of trade and other receivables all amounts are short-term and their carrying values are considered a reasonable approximation of fair values.

Trade receivables that are due for more than one month are considered past due. As at 31 March 2011, trade receivables of €4,269,335 (2010: €4,311,000) were past due but not impaired. €457,394 (2010: €2,792,744) relate to power tariff differences that are subject to judicial orders, and in the opinion of the management there is a reasonable certainty of realisation {note 24(b)}.

The ageing analysis of past due trade receivables as at the reporting date is as follows:

The carrying amounts of the group's trade receivables are denominated in the following currencies:

Movements on the group provision for impairment of other receivables are as follows:

Movements on the group provision for impairment of trade receivables are as follows:

During the year, the group has assigned trade and other receivables aggregating €2,512,970 for an amount of €1,976,597 with the difference of €536,373 being recognised as finance costs.

The creation and release of provision for impaired receivables have been included in 'other operating expenses' in the profit or loss. Amounts charged to the allowance account are generally written off, when there is no expectation of recovering additional cash.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The group does not hold any collateral as security except in respect of receivables under ERPA (refer note 3.1.2).

11. Inventories

Borrowings of €1,005,924 (2010: €407,726) are secured against inventory and trade receivables. Cost of material consumed during the year aggregated to €14,709,834 (2010: €9,978,621). There is no write down of inventories in current and previous year.

12. Cash and cash equivalents

13. Equity

13.1 Share capital

13.2 Share-based payment reserve

In a meeting held on 22 April 2008, the board of directors approved the Greenko Group plc 2008 Long Term Incentive Plan for all the employees of the group. The scheme is administered by the remuneration committee of the Company. Options over 6,798,924 ordinary shares were granted to the Chief Executive Officer and the President of the Company. One-third of the options are subject to a graded vesting over a period of three years with a service condition. The remaining options are subject to a market condition that vesting is allowed in full only if the market value of a share is at any time during three years from the date of grant equal to or greater than a stated price. The exercise price was set at the average of the closing market prices for the ordinary shares of the Company on AIM over the ten dealing days prior to the date of grant but not less than the nominal value of the share.

Movements in the number of share options outstanding and their related weighted average exercise prices are as follows: