Interim results

15 December 2011

Greenko Group plc

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

Interim results for the six months ended 30 September 2011 ("the period")

Greenko, a clean energy generator and supplier to themainstream Indian energy market, announces its interim results for the six months ended 30 September 2011.

HIGHLIGHTS

Financial

·; Turnover was €19.8 million (2010: €25.8 million)

·; EBITDA was €11.2 million (2010: €11.4 million)

·; Cash balances and deposits €49.75 million (2010: €73.3 million)

Operational

·; Extension of partnership with General Electric ("GE") for a further 200 new turbines

·; Debt finance secured for wind projects in Andhra Pradesh and Karnataka ($180m in total)

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

·; Assets in operation and under development total 1.6GW

Post period end

·; Investment of $50m by GE Energy Financial Services into wind subsidiary

·; New $70m investment by Standard Chartered, now fully funded to 1GW

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

"Greenko continues to make real progress. In addition to our operational assets, our development pipeline is diversified, high quality and now of real scale with over 400MW under various stages of construction. We are bringing new assets on stream and we are finding ourselves in a position of increasing strength and stature with which to secure finance and enter into operational and technical partnerships, such as our agreement with GE and the new commitment from Standard Chartered."

"Given the large power deficit in India, the conditions for renewable power producers are likely to remain favourable for many years to come. We are scaling our business quickly and successfully and we remain very well positioned to achieve our medium term goals and those beyond."

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Chairman's Statement

I am pleased to report Greenko's interim results for the six months ended 30 September 2011. We are a leading clean energy generator and supplier to the mainstream Indian energy market with a geographically diversified portfolio. The Company has existing hydro, biomass and natural gas assets and is on track to begin generating from its new wind assets in the near term. The core foundations have now been put in place for Greenko to progress substantially over the coming years.

During the first half, construction began on a number of our development assets. Of our funded development pipeline of nearly 1GW, projects with an aggregate capacity of more than 400MW are now being built. When taken together with the 183MW of operational assets, the proportion of our financed portfolio either operational or under construction is now nearly 60 per cent. This clearly shows the progress Greenko is making and further demonstrates the ability of our team to overcome the challenges associated with permitting, acquiring land and securing the debt and equity finance to get projects up and running.

We continue to make good progress in wind and were pleased that in October GE Energy Financial Services, the investment arm of General Electric, chose to invest $50 million in our differentiated wind platform. They have endorsed our strategy by making this commitment to Greenko, their only renewable investment in India. Separately, we have entered into an operational partnership agreement with GE Energy, a global leader in wind technology.

More generally, the power sector in India continues to be characterised by ever increasing demand and significant shortages. This is compounded by environmental issues and weak merchant markets whereby large utilities will honour long term purchase agreements but often choose not to buy power in the spot market which can be expensive. Greenko's strategy is designed specifically to respond to these conditions as we have limited fuel supply risk and we use environmentally sustainable methods of power generation. Unlike power generators using fossil fuels, Greenko has access to long term power off-take agreements which allow us to lock in attractive margins and long term shareholder returns. The macro conditions therefore continue to be very favourable for us and our shareholders.

We have today separately announced a commitment for $70 million investment from Standard Chartered, together with additional commitments to provide project level US dollar finance for our wind portfolio. With this level of support from these two leading names in the industry, Greenko is well funded for all its development needs to secure its medium term target of 1GW of operational capacity by 2015.

Dividends

In line with Group policy, earnings will continue to be fully re-invested to finance the ongoing growth of the business. The Directors therefore do not recommend the payment of a dividend for the period. Our dividend policy is reviewed on an annual basis, depending on the profitability and cash requirements of the Group going forward.

Outlook

Despite difficult economic conditions around the world, the Indian economy continues to grow rapidly, with the latest forecasts expecting growth of between 7.25% and 7.75% for the fiscal year to March 2012. As the economy grows, further strain is being placed on India's power generating capacity which is already far below the level demanded of it. To try and tackle the problem, there is a drive to grow reliable power production capacity and new initiatives such as the Renewable Energy Certificates programme, which has now been implemented in India, demonstrating the Indian Government's support. Today, renewable energy is the fastest growing asset class within the Indian power sector.

Whilst the aggregate deficit at a national level is well known, there are particularly pronounced regional deficits in areas enjoying strong economic development which are outpacing the regional development of grid capacity. Karnataka, a state in the South of India which is home to more than 50 million people, is one such example and an area where we have substantial assets under development. It is one of the most industrial states in the country and yet has insufficient coal or gas for power. Greenko is already a mainstream energy provider in Karnataka and, once our wind projects in the state are completed, we expect to be the largest independent power producer in the state. With such significant demand, prices and market conditions more generally are likely to be increasingly attractive.

Our portfolio is dominated by hydro and wind and we are confident that this puts Greenko in a strong, commercially sustainable position,. Because of the rare combination of factors at play in the Indian energy market - from the low quality of India's natural resources to the high prices paid for power in a market where demand hugely outstrips supply - both these technologies have reached grid parity. In reaching the point where power is generated at the same cost as the most competitive alternatives including fossil fuels, our business model is substantially de-risked as Greenko is no longer reliant on regulatory support. Although it was always very unlikely that regulatory support for power generated from renewable sources would be withdrawn or reduced, it provides even greater certainty and in fact makes the economics of power generation from hydro and wind superior to other methods as tools such as long term power purchase agreements. This allows us to lock-in rates of returns available only to generators using sustainable means. We can therefore be confident of our future prospects.

From next year, the contribution from our wind portfolio will start becoming financially significant and, when combined with the cash flows from our operational hydro assets, will provide a growing platform for the further development of our portfolio.

Our strategy remains to grow our portfolio through a combination of fast track development, green field expansion and selective late-stage project acquisitions, thereby operating a diversified set of small and medium scale projects to reduce risk and enhance shareholder value. We remain confident that we are on track to reach our target of 1GW of operational capacity by 2015 and that we are well positioned to be a clear leader in both hydro and wind in India's burgeoning renewable power generation industry.

Y. Harish Chandra Prasad

Chairman

Chief Executive's Review

During the first half, we made good operational progress in securing finance and a technical partnership with GE which will support our wind platform. Revenues in the first half have however been impacted by a number of factors including currency movements, a weak market for CERs and a smaller contribution from biomass. A particular highlight of the period has been the record performance of our hydro power plants which have contributed substantially to EBITDA and, with no fuel supply risks, are contributing at margins in excess of 90 per cent. In the six months ended 30 September 2011, we also continued to make significant progress in wind, exemplified by our $50 million strategic partnership with the General Electric subsidiary, GE Energy Financial Services. In addition, the Company raised £50 million in new equity funding from predominantly institutional investors.

Equity and debt funding rounds have been successfully completed; substantially de-risking the portfolio. With the announcement today of a $70 million commitment from Standard Chartered, we are now fully financed to our medium term target of 1GW. I am pleased to report that most of our development assets are now under construction, taking us closer to unlocking the cash flow potential of the portfolio.

Over the last three years, Greenko has invested substantially in recruiting talent to manage its interests both at a corporate level, where we now have 200 employees, and across the group where our team is now 800 strong. The executive team of 30, which includes the Board of Directors and the management team as well as those senior executives that support them, is extremely experienced.

Financial Review

Revenue for the period was €19.8 million, down from €25.8 million this time last year. The reduction relates mainly to our decision to warehouse CERs generated by our projects, which last year contributed some €3.1 million to interim revenues. Market prices for CERs were weak in anticipation of an unfavourable outcome to on-going international climate change discussions. During the period under review the CER market saw prices falling from the long term average. A strategic decision was therefore taken to not sell any CERs until prices stabilise. As at 30 September 2011, the Group had a stock of 264,717 CERs.

Revenue was also negatively impacted by foreign currency movements in the Rupee to Euro exchange rate and by the reduced contribution from our biomass assets where the input costs rose substantially.

Earnings before interest, tax, depreciation and amortisation were €11.2 million. Net profit was €1.88 million, down from €7.85 million as interest rates on borrowings increased and, more significantly, because the CERs sold in the 2010 interim period attracted a 100 per cent margin.

Net profit attributable to shareholders of the Group was 1.51 million. Earnings per share were 1.15 cents. At the period end, cash at bank was €49.75 million versus €36.32 million at the full year as the Company generated cash and strengthened its balance sheet with an equity fund raising of £50 million.

The Group's Property Plant & Equipment and Intangible Assets increased by 21.4% to €244.06 million. Total borrowings at the balance sheet date were €93.32 million, a reduction of €19.1 million.

Operational Review

Hydro

Our 104 MW portfolio of operating hydro plants performed very well during the period under review with capacity levels that exceeded our initial expectations. A further 359MW of hydro assets are under development and remain on track with Dikchu (96MW), the Group's largest hydro project, due to be commissioned early in 2014.

As disclosed in our 2011 Annual Report in September, infrastructure development activities has begun at Paudital Lassa (24MW), Jeori (10MW) and Ullipu 1 & 2 (36MW). The cluster of projects in the Cauvery basin is also in the advanced stages of pre-construction development with most of the approvals due to be in place by the end of this financial year.

Wind

Over the last six months Greenko has made real progress with its wind development assets, with over 500MW of projects either under construction or brought to an advanced stage of development, pre-construction.

Our technology and execution partnership with GE is enabling us to target returns not previously possible in India. This is in part because of the use of turbines specifically designed for use in environments with slower wind speeds, commonplace in India.

The Group's first wind project, Ratnagiri (65MW), is at an advanced stage of execution although as previously reported there have been some delays due to the logistics involved in delivering larger diameter blades that are being used for the first time in India, as well as the extended monsoon season in the region. The Group expects all 65MW to be commissioned in time for the 2012 monsoon season.

Our other wind projects remain on track which will see 1GW developed across the states of Andhra Pradesh, Maharashtra, Karnataka and Rajasthan.

For the first 100MW phase of our 300MW project in Karnataka, the Company has secured $90 million of debt funding with Infrastructure Lending & Financial Services which accounts for 70% of the phase I project cost. Greenko has also entered into an execution and supply agreement with GE to fully commission phase I by November 2012. This is similarly the case with the first 100 MW phase of the 200MW Andhra Pradesh project which also has $90 million debt funding secured through the Infrastructure Development Finance Company, again accounting for 70% of the phase I project cost. The Company is entering a supply and execution agreement with GE for commissioning by March 2013. Both projects have required approvals in place.

Natural Gas

The existing 38.8MW liquid fuel plant is operating below the levels we had forecast as higher fuel costs have caused the government to stop drawing down on the power agreement we have in place. The contract guarantees Greenko a fixed margin over input costs and, during the period, prices were too high to make supply economic. We believe this situation to be temporary and expect to begin generating again in the second half of the financial year.

Due to the well-publicised production issues within the Krishna Godavari D6 basin, the 58.4MW Greenko Godavari project is awaiting final clearance from the state and it is now expected that it will be operational by the second quarter of the 2012 financial year.

Biomass

The group has six biomass power plants with a combined output of 41.5MW. Due to an extended monsoon season, our biomass plants performed at a level below what had been expected but these conditions were clearly beneficial for our hydro assets. In the monsoon season, transportation of agricultural waste is more difficult resulting in higher biomass prices which means that biomass assets are less competitive.

Production at our only plant on a merchant power agreement was suspended for a period of three months because it was not cost effective to export power on the tariff available at that time. Whilst the contribution from biomass in the first half was disappointing, indications so far are that it will improve during the second half.

Business Development

The strength of Greenko's infrastructure, brand reputation and supply relationships provide it with excellent access to potential opportunities and financing partners. Our strategy remains to develop the existing portfolio whilst reviewing further potential acquisitions and new concessions.

Any new acquisitions will have to meet our stringent investment criteria and, in this regard, it is unlikely that acquisitions will be made in wind where Greenko's strategy is clearly differentiated and other, already operating wind assets are unlikely to meet our criteria. We however continue to evaluate new greenfield wind sites where significant valuation uplift can be gained by securing deals early in the development chain. We also continue to see opportunities to scale our hydro business and are in the process of analysing over 800MW of potential new projects.

Market Environment & Group Strategy

The widely reported power deficit in India continues to grow and, as a result, the environment for power generators at a macro level remains very favourable.

The industrial and social ramifications of India's energy deficit are becoming increasingly apparent. As the country continues to miss its targets for energy generation capacity, development and progression is being held up. A significant proportion of people in India do not have regular access to power, and businesses are working around power outages which constrain economic development. However, the political will to address the problem is strong and is likely to manifest itself in continued government support for companies intending to build and operate power generation facilities, primarily in the form of favourable planning and application processes rather than tax breaks or other incentives.

India benefits from hydro and wind grid parity, meaning that the cost of generating electricity from these sources is the same per megawatt as generation from fossil fuels. This is unusual in both the developed and developing world and is a product of the poor quality of fossil fuels in India and the rapidly improving efficiency of renewable technologies. This past year has seen a rise in coal supply issues in India so extreme that one third of new generating capacity that had been planned to use coal has now been scrapped. This reinforces our strategy to focus primarily on our hydro and wind assets which both have minimal supply risk and strengthens our position to realise our potential as both a mainstream and renewable independent power producer.

Anil Kumar Chalamalasetty

CEO and Managing Director

Greenko Group plc

(All amounts in Euros unless otherwise stated)

Interim condensed consolidated statement of financial position

Greenko Group plc

(All amounts in Euros unless otherwise stated)

Interim condensed consolidated statement of comprehensive income

*Earnings per share both basic and diluted have been computed based on profit for the period/year attributable to the equity shareholders.

** The currency translation difference was on account of adverse change in Euro/Indian Rupee exchange rate since the Company's operating assets are in Indian Rupee and the financial statements presentation currency is Euro.

Greenko Group plc

(All amounts in Euros unless otherwise stated)

Interim condensed consolidated statement of changes in equity

Greenko Group plc

(All amounts in Euros unless otherwise stated)

Interim condensed consolidated condensed statement of cash flow

1. Basis of preparation

These financial statements are the un-audited interim condensed consolidated financial statements (hereafter 'the Interim Financial Statements') of Greenko Group plc, a company incorporated in the Isle of Man, and its subsidiaries (hereafter 'the Group' or 'the Greenko Group') for the six-month period ended 30 September 2011 (hereafter 'the interim period').

The interim condensed consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union.

The Interim Financial Statements have been prepared in accordance with International Accounting Standard 34 (IAS 34) 'Interim Financial Reporting'. They should be read in conjunction with the Consolidated Financial Statements for the year ended 31 March 2011 (hereafter 'the Annual Financial Statements'), as they provide an update of previously reported information. The Interim Financial Statements were approved for issue by the Board of Directors on 14 December, 2011.

The Interim Financial Statements have been prepared in accordance with the accounting policies and methods of computation set out in the Annual Financial Statements, except for the accounting policy changes described below made after the date of the Annual Financial Statements. The presentation of the Interim Financial Statements is consistent with the Annual Financial Statements, except where noted below. Where necessary, comparative information has been reclassified or expanded from the previously reported Interim Financial Statements to take into account any presentational changes made in the Annual Financial Statements or in these Interim Financial Statements.

The preparation of the Interim Financial Statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and the disclosure of contingent liabilities at the date of the Interim Financial Statements. If in the future such estimates and assumptions, which are based on management's best judgments at the date of the Interim Financial Statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change.

In the opinion of the Board of Directors, the Interim Financial Statements present fairly the financial position of operations and cash flows in conformity with IAS 34.

2. Changes in accounting policies

2.1 Overall considerations

The Group has adopted the following new interpretations, revisions and amendments to IFRS issued by the International Accounting Standards Board, which are relevant to and effective for the Group's financial statements for the accounting period beginning 1 April 2011:

·; Amendments to IAS 34 Interim Financial Reporting

·; Improvements to IFRSs 2010

Significant effects on current period or prior periods arising from the first time application of these new requirements are described below.

2.2 Amendments to IAS 34 Interim Financial Reporting

The amendments clarified certain disclosures relating to events and transactions that are significant to an understanding of changes in the Group's circumstances since the last annual financial statements. The Group's interim financial statements as of 30 September 2011 reflect these amended disclosure requirements, where applicable

2.3 Improvements to IFRSs 2010

The Improvements to IFRSs 2009 ('2009 Improvements') made several minor amendments to IFRSs. None of the amendments are relevant to the Group.

3. Earnings per share

Both the basic and diluted earnings per share have been calculated using the profit attributable to shareholders of the parent company (Greenko Group plc) as the numerator, i.e. no adjustments to profits were necessary during the six months period to 30 September 2011 and 2010.

The weighted average number of shares for the purposes of the calculation of diluted earnings per share can be reconciled to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows:

4. Related party transactions

The group is not controlled by any single individual or group or entity. Aloe Environment Fund and Aloe Environment Fund II (which are both managed by Aloe Private Equity S.A.S.) together with a share holding of 11.87 percent (9.85 percent considering dilution with GEEMF options for 29.12 million ordinary shares) and GEEMF holder of 17.06 percent shareholding in Greenko Mauritius and options for 17.06 percent ordinary shares in exchange for its shareholding in Greenko Mauritius with substantial management reserved rights as at 30 September 2011 have significant influence over the group. 

The following transactions were carried out with related parties:

5. Property, plant and equipment

6. Intangible assets

7. Duringthe period ended 30 September, 2011, Termination Notices under the respective Power Purchase Agreements were served by AMR Power, Jasper Power in order to negotiate for a higher tariff. These Notices are being adjudicated by the Regulatory Commission and accordingly power continues to be supplied to the concerned State Utilities pending the legal process. Action for wheeling and banking of Power to third parties for Merchant Sale from Rithwik Projects is also pending in due process of Law. If the cases are settled in favor of the Companies, group is expected to gain in realizing a better tariff.

8. Commitments and contingencies

Capital expenditure contracted for at 30 September 2011 but not yet incurred aggregated to 105,529,550 (31 March 2011: 134,679,176).

9. Events after the reporting period

(a) The group has entered into a conditional share subscription agreement with a division of GE Energy Financial Services ("GE"), which is a subsidiary unit of General Electric whereby GE has agreed to invest US$ 50 million to support the development of the initial 500 MW out of group's planned development of 1GW of wind energy projects across India.

(b) As set out in the group's audited accounts for the year ended 31 March 2011, the group has amended and restated the put option it has in place with Global Environment Emerging Markets Fund III L.P, ("GEEMF") which was originally entered into in November 2009 (the "Put Option"). The preference shares in group's subsidiary Greenko Mauritius ("Preference Shares") held by Global are continue to be treated in group's accounts under IFRS as equity rather than debt. Closing documentation for the amendment to the Put Option and the issue of certain warrants to GEEMF enabling GEEMF to subscribe for additional Preference Shares pursuant to the terms of the Warrant Instrument (together the "Transaction") has been completed. 

(c) The group has formalized its agreement ("the Agreement") with GE Energy ("GE"), for the supply and erection of further wind turbine generators ("WTGs") and closing documentation has been completed. The Agreement replaces the previously announced Memorandum of Understanding on the framework agreement, entered into with GE in May 2011. The core features of the Agreement are for the supply and commissioning of 200 WTGs on a phased basis over the next 3 years. This is in addition to the 65MW already under construction. Further WTGs can be supplied on similar terms by mutual consent.