TIDMGKO
RNS Number : 7820I
Greenko Group plc
30 March 2015
30 March 2015
Greenko Group PLC
("Greenko", "the Company" or "the Group")
Preliminary Results for the nine months ended 31 December
2014
Greenko, the Indian developer, owner and operator of clean
energy projects, today announces its unaudited preliminary results
for the nine month period ended 31 December 2014 ("the
period").
During the period, the Board decided to change the presentation
currency from the Euro to US Dollars in order to make our
investment model easier to compare with our peers. The Board has
also decided to change the Company's financial year end from 31
March to 31 December, effective in 2014. Hence, these results are
for the nine month period from 1 April 2014 to 31 December 2014,
and are not like-for-like comparable to the results for the
previous twelve month period from 1 April 2013 to 31 March 2014
(FY2014).
Financial Highlights
-- Operational capacity grew 45.6% to 715 MW (FY2014: 491 MW)
-- Generation increased 46.0% to 1,565 GWh (FY2014: 1,072 GWh)
-- Reported revenue increased 41.2% to $100.2 million (FY2014: $71.0 million)
-- EBITDA increased 46.7% to $80.6 million (FY2014: $54.9 million)
-- Profit after tax increased 31.0% to $15.9 million (FY2014: $12.2 million)
-- Property, plant, equipment and intangibles grew 26.6% to
$1,144.9 million (FY2014: $904.5 million)
-- Newly formed Greenko Dutch BV raised 8% 5 year $550 million
Bonds, to reduce the cost of debt
-- New EIG loan of $125 million used to repay the Standard Chartered investment
-- Earnings per share (EPS) for the period 6.10c (FY2014: 5.80c)
Operational Highlights
-- Completion of acquisition of 70 MW Lanco Budhil hydropower
project in Himachal Pradesh, taking hydro operating capacity to 235
MW
-- Completion of 154 MW of wind projects, taking the operating wind capacity to 402 MW
-- 362 MW of wind and 188 MW hydro projects under construction
-- Approximately 1,350 MW of new projects in active development stage
Commenting on the results, Anil Chalamalasetty, CEO and MD of
Greenko, said:
"Our portfolio approach continues to deliver strong results and,
during the nine month period to 31 December 2014, we have added 224
MW of operational capacity. Our ongoing initiatives to reduce our
cost of debt, through our US$550 million Bond issue in August 2014,
and the US$125 million loan from EIG in early October,
significantly helps to improve our long term financial performance.
As the Indian energy market becomes increasingly favourable towards
hydro and wind power, especially with the Government's recent
announcement increasing its target for renewable generation to 175
GW by 2022, we remain very optimistic about the strong
sustainability of our operational and financial performance. We are
well on track to beat our milestone target of owning and operating
1 GW of generating capacity during 2015."
For further information please visit www.greenkogroup.com or
call:
Greenko Group plc
Anil Chalamalasetty / Mahesh Kolli / Vasudeva
Rao Kaipa +44 (0)20 7920 3150
Arden Partners plc +44 (0)20 7614 5917
Steve Douglas
Investec Bank plc +44 (0)20 7597 4000
Jeremy Ellis
Tavistock +44 (0)20 7920 3150
Matt Ridsdale / Mike Bartlett / Niall Walsh
About Greenko
Greenko is a mainstream participant in the growing Indian energy
industry and a market leading owner and operator of clean energy
projects in India utilising a de-risked portfolio of wind,
run-of-river hydropower, natural gas and biomass assets. The Group
is now focused on building new utility scale wind farms and
hydropower projects across India. Greenko intends to increase the
installed capacity it operates by winning concessions to develop
and build new greenfield assets, as well as making selective
acquisitions which enhance shareholder value. Greenko's portfolio
is carefully planned and managed to ensure it offers investors
diversification and spreads its risk across a number of projects
that utilise various well-proven environmental technologies.
The Company's goal is to reach 1,000 MW of operational capacity
in 2015 and approximately 2,000 MW in 2018. With a core belief in
sustainability both operationally and environmentally, Greenko
endeavours to be a responsible business playing an important role
in the community beyond its role in the power generation industry.
The Company maintains a continuous involvement in localised
projects and community programmes which centre on education, health
and wellbeing, environmental stewardship and improving rural
infrastructure. Greenko Group plc was admitted to trading on the
AIM market of the London Stock Exchange (LSE: GKO) in November
2007.
Chairman's Statement
I am pleased to report Greenko's preliminary results for the
nine month period ending 31 December 2014. The Company has
performed well during the period and our robust operating cash
flows and balance sheet will allow us to meet our target of having
1,000 MW of generating assets in 2015.
Growth in our generating portfolio was significant, with several
new wind projects becoming operational during the period, taking
our operating wind portfolio to 402 MW. Our operating hydro
portfolio was increased to 235 MW with the completion of the Budhil
70 MW asset. Our total operating portfolio, including legacy
biomass and other assets, was 715 MW at the period end, a 45.6%
increase since the end of March 2014. Including our on-going
construction work, this resulted in $240.4 million of net assets
being added to the balance sheet during the period.
A number of additional wind projects are under advanced stages
of construction and scheduled to be ready for the next wind season
later this year, while our hydro projects under construction
continued to make good progress and are expected to become
operational in 2015 and 2016.
Clean energy is an important part of the Indian energy market
and the new Government's support is reflected through its plans to
encourage the development of 175 GW of renewable energy assets over
next few years. Of this target, wind accounts for 60 GW, and solar
energy accounts for 100 GW, creating a new opportunity for Greenko.
Given the Company's existing access to substantial grid
connections, coupled with our ability to manage the adjacent land
associated with our wind farms, Greenko is uniquely positioned to
create hybrid "wind-solar" farms, and this is an area that we are
actively investigating.
A major achievement during the period was the formation of a new
structure for our key operating assets ('The Restricted Group').
This allowed the Company access to US Dollar borrowing facilities
at significantly lower interest rates than the former Indian Rupee
borrowings, which have subsequently been repaid. Transaction costs
were incurred when issuing these new facilities and in redeeming
the former borrowings but, in 2015, the first full year of benefits
arising from this refinancing programme will be delivered. Since
all our revenues are denominated in Indian Rupees, the management
have prudently hedged a substantial part of the exposure the
Company has to its US Dollar borrowings and interest repayments.
The Restricted Group represents the core of our cash generating
activities, which will be significantly enhanced as further assets
come on stream in 2015 and future years.
The Company has operating assets of 715 MW and is well on track
to reach the targeted 1,000 MW in 2015. This, together with our
reduced borrowing cost and improved debt repayment profile, will
provide free cash flow to contribute to future growth projects.
However, the Board also recognises that this cash flow should
contribute to improved returns to our shareholders in the coming
years. As a result, when our half year results are announced in
September 2015, and our major construction projects are essentially
complete, we will give active consideration to the most appropriate
routes to return cash to shareholders.
Outlook
In an environment of ever increasing demand for power in India
with an emphasis on generation from clean energy sources, Greenko's
geographically diverse wind and hydro portfolio is able to
profitably produce power below the price of conventional
generation. Over the next fifteen months the shape and size of our
operating portfolio will transform, as the 590 MW of projects
currently under construction are completed.
Despite the many challenges across the power sector, and
exchange rate volatility continuing to distort the accounting
reporting of our results, the Company is well advanced in achieving
significant critical mass in our operating projects. Greenko is
emerging as a leading participator in India's power generation
sector and the Board is confident that we are well positioned to
continue our growth through reinvestment from our operating cash
flows in new renewable energy projects.
Keith Henry
Chairman
Executive Director's Statement
Introduction
I am pleased to present Greenko's unaudited preliminary
financial results for the shortened nine month period ended 31
December 2014, during which we have delivered another good period
of profitable growth.
The Company operates in five distinct sectors of activity:
1. 619 MW of operating assets already producing significant
revenues and EBITDA, which have been set up in a 'Restricted Group'
to secure new, lower cost, borrowings of $550 million. Separate
financial statements for this Restricted Group are made available
to Bond investors, and are also made available to our shareholders
(www.greenkogroup.com/investor/bondholder_info.php).
2. 463 MW of assets currently under construction, and nearing
completion in time for the 2015 snow melt, monsoon and windy
seasons.
These two groups of assets will enable us to reach a total
1,078MW of operating renewable assets in 2015.
3. A further 82 MW of hydro assets under construction which we expect to complete early in 2016.
4. We have biomass and fuel power facilities which, as our
renewable assets increase rapidly in scale, will no longer be part
of our core assets. We have already initiated the disposal of two
of our Biomass plants and in due course expect also to consider
disposing of the other non-core assets.
5. We have a substantial portfolio of potential future renewable
power projects in active consideration and development in hydro and
wind power, and we are in the early stages of considering solar
power projects as the economics of solar become more compelling in
India. This group comprises over 1,300 MW of assets in active early
stage development plus a further, similar scale portfolio, which
have been identified for future consideration.
These five sectors of activity are at different stages of
contribution to revenues and EBITDA. Full details are provided in
the Financial and Operational Reviews, but can be summarised as
follows:
-- Operating Assets, which were operational for the nine month
period (including a part period for some plants which were
commissioned in 2014), and which provided revenues of $90.4 million
and EBITDA of $87.5 million. In 2015 these assets will all operate
for the full year and we expect a significant increase in their
contribution.
-- We expect almost all of the 463 MW of wind and hydro projects
under construction to be operational by mid-2015 and to benefit
from operating for most, if not all, of the 2015 peak operating
season during the monsoon period. These new assets will make a
significant, but part year contribution to operating results in
2015, and a full year's contribution in 2016.
-- The hydro assets currently under construction, and not due
for completion until 2016, will make a contribution for a part year
in 2016, and a full year in 2017.
-- The biomass and fuel projects, which were acquired several
years ago, make a modest contribution to EBITDA, but are no longer
considered as core assets for the group.
-- The Greenko management team is responsible for future
developments and for the financing structure of the Company and is
being continually strengthened as the Group grows and development
activity accelerates. There is a substantial and exciting portfolio
of future projects of which a significant part can be financed from
the enhanced free cash flow from the sectors referred to above, but
will also require further financing for the larger projects if they
are to proceed following approval by the Board.
Operational Review
Greenko has delivered good results in 2014 with good growth in
revenues and EBITDA, and further significant investment in new
power projects. The acquisition of the 70 MW Budhil project in
Himachal Pradesh has increased operating hydro assets to 235 MW,
and the completion of 154 MW of several new wind projects increased
our operating projects to 402 MW by the end of 2014. We have
retained our 78 MW of fuel and biomass plants but, as the scale of
our renewable projects increases, we are considering the future of
these plants.
In the nine month period to 31 December 2014, we reported
overall revenues of $100.2 million from the generation of 1,565 GWh
of electricity, and EBITDA for this shortened period increased by
46.7% to $80.6 million. The key monsoon season started later than
usual but carried on for a little longer than average and, on
balance, was slightly below a normal monsoon season. We continued
our extensive investment programme by adding $240.4 million to our
capital assets, many of which became operational in 2014, and most
of the remainder will become operational in 2015. We now have over
$1.14 billion invested in fixed and intangible assets (arising from
the acquisitions) making us one of India's leading renewable power
companies.
Financing our growth
2014 was a year of significant change in our financial structure
which gives us an excellent base for financing our future growth.
In August 2014 the Company issued US$550 million of new 8% bonds
repayable in 2019. This issue was significantly oversubscribed and
well received by international investors. In October 2014 we also
refinanced a previous investment by Standard Chartered Bank with a
new loan from EIG Global (EIG) of $125 million, which also provided
some additional investment and working capital. The Company has
adopted a conservative approach to hedging in order to reduce our
exposure to this financing structure as all of our revenues are
denominated in Indian Rupees. We have entered into option hedging
arrangements of US$275 million and, together with the cash and bank
balances in hand, we have hedged approximately 55% of Bond
Principal to date.
In 2013 we were pleased to welcome the Government of Singapore
(GIC) as new investors in our subsidiary holding company Greenko
Mauritius (GM) with an investment of GBP100 million in Exchangeable
shares. Both GIC and Global Environment Emerging Markets (GEEMF),
who invested in 2009, have the opportunity to exchange their
investment in GM for shares in the Company in the period 2015 to
2017, which when exchanged will significantly increase the equity
capital base of the Company. Details of these exchangeable
investments are set out in the notes to the balance sheet. These
significant new funds enabled us to repay the majority of our
expensive Indian Rupee borrowings and provide us with the funds we
need to complete our projects currently under construction. This
will take our generating capacity to a total of over 1,200 GW in
2015 and close to 1,300 MW by mid 2016, prior to beginning any
further projects from our development portfolio.
At the end of 2014, as a result of these substantial new
international investments in our Company we had $147 million of net
cash resources, and $176 million of undrawn facilities available
for investment. In addition, as we complete the present portfolio
of assets under construction, we can expect a significant increase
in the internally generated free cash flow to contribute to further
growth and returns to shareholders.
Financial Review
We refer to revenues and EBITDA in our Operational Review and,
after depreciation and finance costs, our profit before tax
increased 34.5% to $23.9 million (for the nine month period). In
2014, the refinancing activities gave rise to new issue costs and
exceptional early termination costs on our previous borrowings, but
in 2015 we shall see a full year of the benefits of the lower
interest costs and improved repayment profiles of our debt. There
is also a part of our profits attributed primarily to the minority
interests held in exchangeable shares held by GEEMF and GIC, which
will cease as and when their investments exchange directly into the
shares in the Company. After these items, in this transitional nine
month period for the financing of the activities of the Company,
profit attributable to our ordinary shareholders was $9.3 million,
compared with $8.7 million in the full year to March 2014.
Operational Asset Review
We are pleased with the operational performance of all of our
renewable assets in 2014, which met or exceeded our expectations,
not least an excellent contribution from our acquisition of
Budhil.
Our diligent approach to new projects, or acquisitions, is
bearing fruit from the sound performance of the projects once they
become operational. We carry out extensive technical, commercial,
financial and legal due diligence before acquisitions, and also
extensive site and wind or water flow data analysis before we
commit to new projects. Our experience on the projects that are now
operating confirms the validity of our pre-project analyses and our
expected internal rates of return on our investments.
Our policy of developing our portfolio through asset clusters
that offer operational economies of scale is proving to be
successful, and has also enabled us to diversify by geography
within India, and by customer off-take and technology supplier.
Construction progress
Our construction of utility scale on-shore wind farms has
continued apace and, taking advantage of the substantial grid
connection capacity established for our first phases, subsequent
phases have and are coming on stream more rapidly. The construction
of a further 300 MW of significant wind farms spread over three
locations is well under way.
We also have 178 MW of hydro assets under construction. These
are longer term construction projects, but potentially with longer
life cycles and higher load factors. Our large 96 MW project at
Dikchu in Sikkim is nearing completion and is expected to be
operating for most of the next snow melt and monsoon season. Our
other hydro investments are smaller in scale and are expected to
become operational in 2016.
Development Opportunities
As referred to in the Chairman's Statement, the Indian power
generation balance remains extremely favourable for investors in
new renewable projects and the Company is exceptionally well placed
to develop these opportunities. We are very active in considering
further new build or acquisition opportunities in wind and hydro
projects, always providing they can meet our required investment
hurdles.
We are also studying the potential of very significant solar
power opportunities in the coming years. With a substantial
portfolio of land rights and grid connections we are well placed to
combine our wind portfolio with new solar projects alongside our
existing assets either alone, or in strategic partnership with
industry or technology leaders, following which a balanced
portfolio of hydro, wind and solar capabilities is a feasible
objective. We are currently considering up to 600 MW of solar
projects on our existing wind sites as part of that possible
opportunity.
Greenko has developed a strong brand and image in India which
enables us to be considered for a wide range of involvements in
renewable power projects throughout India. The process of assessing
and negotiating new concessions, land acquisition, or acquisitions
of existing projects at varying stages of development is
necessarily time consuming, and requires great care, as well as the
need for appropriate future financing structures, but we are
confident we have developed a solid base of operational projects
and the expertise to participate in such opportunities. We will
remain very selective in our approach and only projects which meet
our objectives will proceed, but we are confident that the huge
power shortage in India will provide many suitable opportunities in
the years ahead.
We are experienced in negotiating long term Power Purchase
Agreements (PPAs) with State Electricity Authorities and we are
also extending our pricing strategy into direct merchant supply,
with the potential for improved electricity pricing for some of our
new projects and creating an optimised portfolio of State and
merchant contracts to further enhance returns from existing and
future projects.
Our challenge will be to remain highly selective and financially
disciplined in achieving our required returns so that shareholders
can enjoy improved earnings as our first 1,000 MW multiplies. We
look forward to that challenge.
Anil Chalamalasetty
Consolidated statement of financial position
US$ Notes 31 December 31 March 1 April 2013
2014 2014
(Unaudited) (Restated) (Restated)
-------------- -------------- -------------
Assets
Non-current assets
Intangible assets 8 142,649,773 146,605,275 149,131,451
Property, plant and equipment 9 1,002,281,404 757,892,746 511,566,499
Bank deposits 15 29,115,837 14,354,681 9,649,321
Trade and other receivables 12 7,140,919 7,321,355 5,615,873
Other non-current financial
assets 10 12,911,549 7,445,067 -
-------------- -------------- -------------
1,194,099,482 933,619,124 675,963,144
-------------- -------------- -------------
Current assets
Inventories 13 9,718,485 9,391,530 9,379,093
Trade and other receivables 12 78,442,400 66,088,210 54,727,829
Available-for-sale financial
assets 11 100,965 73,210 77,876
Bank deposits 15 8,201,710 4,904,746 5,515,046
Current tax assets 740,445 542,838 -
Cash and cash equivalents 14 109,852,216 44,322,712 30,611,218
-------------- -------------- -------------
207,056,221 125,323,246 100,311,062
Assets of disposal group
classified as held for
sale 16 12,737,960 15,425,146 -
-------------- -------------- -------------
Total assets 1,413,893,663 1,074,367,516 776,274,206
-------------- -------------- -------------
Equity and liabilities
Equity
Ordinary shares 17.1 1,078,994 1,045,976 1,045,976
Share premium 290,799,067 280,494,895 280,494,895
Other components of equity 17.2 (88,003,290) (44,765,693) (74,623,156)
Retained earnings 50,825,968 41,561,091 39,889,688
-------------- -------------- -------------
Equity attributable to
owners of the Company 254,700,739 278,336,269 246,807,403
Non-controlling interests 173,021,988 175,165,825 93,768,846
-------------- -------------- -------------
Total equity 427,722,727 453,502,094 340,576,249
-------------- -------------- -------------
Liabilities
Non-current liabilities
Retirement benefit obligations 22 794,255 488,876 475,294
Borrowings 19 790,800,851 382,211,439 293,998,691
Other financial liabilities 10 52,379,735 36,301,770 31,365,951
Deferred tax liabilities 20 48,669,248 46,767,436 45,350,264
Trade and other payables 18 4,554,745 3,433,520 2,640,070
897,198,834 469,203,041 373,830,270
-------------- -------------- -------------
Current liabilities
Trade and other payables 18 71,850,115 57,325,555 38,616,071
Current tax liabilities 1,590,898 3,414,002 172,868
Borrowings 19 12,736,358 87,338,753 23,078,748
86,177,371 148,078,310 61,867,687
Liabilities of disposal
group classified as held
for sale 16 2,794,731 3,584,071 -
-------------- -------------- -------------
Total liabilities 986,170,936 620,865,422 435,697,957
-------------- -------------- -------------
Total equity and liabilities 1,413,893,663 1,074,367,516 776,274,206
-------------- -------------- -------------
The notes are an integral part of these consolidated financial
statements.
Consolidated statement of profit or loss
US$ Notes 31 December 31 March 2014
2014
(Unaudited) (Restated)
------------- --------------
Revenue 21 100,206,933 70,992,192
Other operating income 143,105 359,299
Cost of material and power generation
expenses (10,029,831) (7,685,925)
Employee benefits expense 23 (5,652,582) (5,310,489)
Other operating expenses (6,122,021) (6,406,194)
Excess of group's interest in
the fair value of acquiree's
assets and liabilities over cost 30 2,036,236 2,968,303
------------- --------------
Earnings before interest, taxes,
depreciation and amortization
(EBITDA) 80,581,840 54,917,186
Depreciation, amortization and
impairment 8&9 (21,435,766) (18,205,665)
Employee share based payments (1,502,599) (158,312)
------------- --------------
Operating profit before exceptional
items 57,643,475 36,553,209
Exceptional items (net) 26 6,177,759 -
------------- --------------
Operating profit 63,821,234 36,553,209
Finance income 25 1,950,130 6,360,911
Finance cost 25 (41,876,903) (25,148,389)
------------- --------------
Profit before tax 23,894,461 17,765,731
Income tax expense 27 (7,978,254) (5,611,834)
------------- --------------
Profit for the period/year 15,916,207 12,153,897
------------- --------------
Attributable to:
Owners of the Company 9,264,877 8,743,129
Non - controlling interests 6,651,330 3,410,768
------------- --------------
15,916,207 12,153,897
------------- --------------
Earnings per share for profit
attributable to the equity holders
of the Company during the period/year
-Basic (in cents) 6.07 5.80
-Diluted (in cents) 5.84 5.28
The notes are an integral part of these consolidated financial
statements.
Consolidated statement of comprehensive income
US$ 31 December 2014 (Unaudited) 31 March 2014
(Restated)
----------------------------- --------------
Profit for the period/year 15,916,207 12,153,897
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations (8,812,518) (13,791,642)
Items that will be reclassified subsequently to profit or loss
Unrealised losses on available-for-sale financial assets (1,748) (1,840)
Exchange differences on translating foreign operations (44,551,280) (33,623,392)
----------------------------- --------------
Total other comprehensive income (53,365,546) (47,416,874)
----------------------------- --------------
Total comprehensive income (37,449,339) (35,262,977)
Total comprehensive income attributable to:
Owners of the Company (35,288,151) (24,882,103)
Non-controlling interest (2,161,188) (10,380,874)
----------------------------- --------------
(37,449,339) (35,262,977)
----------------------------- --------------
The notes are an integral part of these consolidated financial
statements.
Consolidated statement of changes in equity (Unaudited)
US$ Ordinary Share Other Retained Total Non-controlling Total equity
shares premium components earnings attributable interests
of to
equity owners of
Parent
---------- ------------ ------------- ------------ ------------- ---------------- -------------
At 1 April 2013
(Restated) 1,045,976 280,494,895 (74,623,156) 39,889,688 246,807,403 93,768,846 340,576,249
Transfer from
revaluation
reserve - - (5,407) 33,141 27,734 (27,734) -
Issue of shares to
non-controlling
interests in
subsidiaries - - 63,329,790 (7,104,867) 56,224,923 91,805,587 148,030,510
Employee share
based payments - - 158,312 - 158,312 - 158,312
Transaction with
owners - - 63,482,695 (7,071,726) 56,410,969 91,777,853 148,188,822
---------- ------------ ------------- ------------ ------------- ---------------- -------------
Profit for the year - - - 8,743,129 8,743,129 3,410,768 12,153,897
Other comprehensive
income
Unrealised loss on
available-for-sale
financial assets - - (1,840) - (1,840) - (1,840)
Exchange
differences on
translating
foreign operations - - (33,623,392) - (33,623,392) (13,791,642) (47,415,034)
---------- ------------ ------------- ------------ ------------- ---------------- -------------
Total comprehensive
income - - (33,625,232) 8,743,129 (24,882,103) (10,380,874) (35,262,977)
---------- ------------ ------------- ------------ ------------- ---------------- -------------
At 31 March 2014
(Restated) 1,045,976 280,494,895 (44,765,693) 41,561,091 278,336,269 175,165,825 453,502,094
Transfer from
revaluation
reserve - - (17,351) - (17,351) 17,351 -
Issue of shares
under employee
share option plan 33,018 10,304,172 (10,304,172) - 33,018 - 33,018
Employee share
based payments - - 11,152,970 - 11,152,970 - 11,152,970
Government grants - - 483,984 - 483,984 - 483,984
Transaction with
owners 33,018 10,304,172 1,315,431 - 11,652,621 17,351 11,669,972
---------- ------------ ------------- ------------ ------------- ---------------- -------------
Profit for the
period - - - 9,264,877 9,264,877 6,651,330 15,916,207
Other comprehensive
income
Unrealised loss on
available-for-sale
financial assets - - (1,748) - (1,748) - (1,748)
Exchange
differences on
translating
foreign operations - - (44,551,280) - (44,551,280) (8,812,518) (53,363,798)
---------- ------------ ------------- ------------ ------------- ---------------- -------------
Total comprehensive
income - - (44,553,028) 9,264,877 (35,288,151) (2,161,188) (37,449,339)
At 31 December 2014 1,078,994 290,799,067 (88,003,290) 50,825,968 254,700,739 173,021,988 427,722,727
---------- ------------ ------------- ------------ ------------- ---------------- -------------
The notes are an integral part of these consolidated financial
statements.
Consolidated statement of cash flow
US$ Note 31 December 2014 31 March 2014
(Unaudited) (Restated)
----------------- --------------
A. Cash flows from operating activities
Profit before income tax 23,894,461 17,765,731
Adjustments for
Depreciation, amortization and impairment 8 & 9 21,435,766 18,205,665
Profit on sale of assets - (26,486)
Employee share based payments 1,502,599 158,312
Finance income (1,950,130) (6,360,911)
Finance cost 41,876,903 25,148,389
Exceptional items (6,177,759) -
Excess of Group's interest in the fair value of acquiree's assets and
liabilities over cost 30 (2,036,236) (2,968,303)
Changes in working capital
Inventories (610,225) (1,684,897)
Trade and other receivables (11,632,587) (28,191,070)
Trade and other payables (7,495,511) 19,090,722
----------------- --------------
Cash generated from operations 58,807,281 41,137,152
Taxes paid (4,726,311) (1,505,210)
Net cash from operating activities 54,080,970 39,631,942
----------------- --------------
B. Cash flows from investing activities
Purchase of property, plant and equipment and capital expenditure (175,339,659) (284,627,853)
Proceeds from sale of property, plant and equipment - 56,939
Acquisition of business, net of cash acquired 30 (17,854,375) (6,865,834)
Investment in mutual funds (16,455) -
Advance given for purchase of equity (1,151,884) (2,724,716)
Payment for acquisitions relating to earlier years (192,250) (11,793,072)
Acquisition of licence holding company - (125,671)
Bank deposits (1,089,475) (725,099)
Interest received 930,045 1,600,881
Dividends received from mutual funds 45,615 971
----------------- --------------
Net cash used in investing activities (194,668,438) (305,203,454)
----------------- --------------
C. Cash flows from financing activities
Proceeds from issue of shares 33,018 -
Proceeds from non-controlling interests (net of costs) - 148,267,699
Proceeds from borrowings (net of costs) 786,515,640 220,138,338
Repayment of borrowings (523,926,105) (35,497,187)
Interest paid (56,346,938) (44,404,186)
Net cash from financing activities 206,275,615 288,504,664
----------------- --------------
Net increase in cash and cash equivalents 65,688,147 22,933,152
Cash and cash equivalents at the beginning of the period/year 14 44,322,712 30,611,218
Exchange losses on cash and cash equivalents (158,643) (9,221,658)
----------------- --------------
Cash and cash equivalents at the end of the period/year 14 109,852,216 44,322,712
----------------- --------------
The notes are an integral part of these consolidated financial
statements.
Notes to the consolidated financial statements
1. General information
Greenko Group plc ("the Company" or "the Parent") is a company
domiciled in the Isle of Man and registered 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. The registered
office of the Company is at 4(th) floor, 14 Athol Street, Douglas,
Isle of Man, IM1 1JA. The Company is listed on the Alternative
Investment Market ("AIM") of the London Stock Exchange.
The Company together with its subsidiaries ("the Group") is in
the business of owning and operating clean energy facilities in
India. All the energy generated from these plants is sold to state
utilities, captive consumers, direct sales to private customers and
other electricity transmission and trading companies in India
through a mix of long-term power purchase agreements ("PPA"),
short-term power supply contracts and spot markets of energy
exchanges. The Group holds licence to trade up to 100 million units
of electricity per annum in the whole of India except the state of
Jammu and Kashmir. However, 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 emissions
reduction benefits such as Certified Emission Reductions ("CER"),
Voluntary Emission Reductions ("VER") and Renewable Energy
Certificates ("REC").
Change in fiscal year
In line with its decision to change our reporting currency from
the Euro to the US$, thereby better enabling the Group to be viewed
on par with our global peer groups, the Board has also decided to
change the financial year (presently April to March) to 1 January
to 31 December. As a result, the present consolidated financial
statements are prepared for a period of nine months from 1 April
2014 to 31 December 2014. Accordingly, the comparative amounts for
the income statement, statement of changes in equity, cash flow
statement and related notes are not entirely comparable.
2. Summary of significant accounting policies
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 as stated in note 3.
2.1 Basis of preparation
The consolidated financial statements of the Group 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 6).
2.2 Consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
and its subsidiaries. Control is achieved when the Company:
-- has power over the investee;
-- is exposed, or has rights, to variable returns from its involvement with the investee; and
-- has the ability to use its power to affects its return.
The Company reassesses whether or not it controls an investee if
facts and circumstances indicate that there are any changes to one
or more of the three elements of the control listed above.
When the Company has less than a majority of the voting rights
of an investee, it has power over the investee when the voting
rights are sufficient to give it the practical ability to direct
the relevant activities of the investee unilaterally. The Company
considers all relevant facts and circumstances in assessing whether
or not the Company's voting rights in an investee are sufficient to
give its power, including:
-- the size of the Company's holding of voting rights relative
to the size and dispersion of holdings of the other vote
holdings;
-- potential voting rights held by the Company, other vote holders or other parties;
-- rights arising from other contractual arrangement; and
-- any additional facts and circumstances that indicate that the
Company has, or does not have, the current ability to direct the
relevant activities at the time that decisions need to be made,
including voting patterns at previous shareholders' meetings.
Consolidation of a subsidiary begins when the Company obtains
control over the subsidiary and ceases when the Company loses
control of the subsidiary. Specifically, income and expenses of a
subsidiary acquired or disposed of during the period are included
in the consolidated statement of profit or loss and other
comprehensive income from the date the Company gains control until
the date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income
are attributed to the owners of the Company and to the
non-controlling interests. Total Comprehensive income of
subsidiaries is attributed to the owners of the Company and to the
non-controlling interests even of this result in the
non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financials
statements of subsidiaries to bring their accounting policies into
line with the Group's accounting policies.
All intragroup assets and liabilities, equity, income, expenses
and cash flows relating to transactions between the members of the
Group are eliminated in full on consolidation.
Changes in the Group's ownership interests in exiting
subsidiaries
Changes in the Group's ownership interest in subsidiaries that
do not result in the Group losing control over the subsidiaries are
accounted for as equity transactions. The carrying amounts of the
Group's interests and the non-controlling interests are adjusted to
reflect the changes in their relative interest in the subsidiaries.
Any difference between the amount by which the non-controlling
interest are adjusted and the fair value of the consideration paid
or received is recognized directly in equity and attributed to the
owners of the Company.
When the Group loses control of a subsidiary, a gain or loss is
recognized in profit or loss and is calculated as the difference
between (i) the aggregate of the fair value of the consideration is
received and the fair value of any retained interest and (ii) the
previous carrying amount of the assets (including goodwill), and
liabilities of the subsidiary and any non-controlling interests.
All amounts previously recognized in other comprehensive income in
relation to that subsidiary are accounted for as if the Group had
directly disposed of the related assets or liabilities of the
subsidiary (i.e., reclassified to profit or loss or transferred to
another category of equity as specified/permitted/ by applicable
IFRSs). The fair value of any investment retained in the former
subsidiary at the date when control is lost is regarded as the fair
value of initial recognition for subsequent accounting under IAS
39, when applicable the cost on initial recognition of an
investment in an associate or a joint venture.
2.3 Business combination
The acquisition method of accounting is used to account for the
acquisition of businesses 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. Acquisition related costs
are expensed as incurred.
If the business combination is achieved in stages, 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 recognized in
profit or loss.
When the consideration transferred by the Group in the business
combination included asserts or liabilities resulting from a
contingent consideration arrangement, the contingent consideration
is measured at its acquisition-date fair value and included as part
of the consideration transferred in a business combination.
The subsequent accounting for changes in the fair value of the
contingent consideration depends on how the contingent
consideration is classified. Contingent consideration that is
qualified as equity is not re-measured at subsequent reporting
dates and its subsequent settlement is accounted for within equity.
Contingent consideration that is classified as an asset or
liability is re-measured at subsequent reporting dates in
accordance with IAS 39, or IAS 37 Provisions, Contingent
Liabilities and Contingent Assets, as appropriate, with the
corresponding gain or loss being recognized in the profit or
loss.
2.4 Segment reporting
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, related emission rights and
benefits".
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"). During the period, the Group has changed its
presentation currency from 'Euro' to 'US Dollar' ("US$"). While the
functional currency of the Parent is Euro, the functional currency
of the Group's subsidiaries in India is Indian Rupees ("INR").
Considering the guidance in IAS 21 and changes in statement of
financial position and cash flows, resulting from significant
increase in US$ denominated debt and related payments, effective 1
April 2014, Greenko Mauritius, prospectively changed its functional
currency from Euro to US$.
b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the date of the
transaction. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss
except for exchange differences arising on monetary items that form
part of a net investment in a foreign operation (i.e., items that
are receivable from or payable to a foreign operation, for which
settlement is neither planned, nor likely to occur in the
foreseeable future), which are recognized in the 'currency
translation reserve' component of equity. Foreign exchange gains
and losses that relate to financial liabilities are presented in
the income statement within 'Finance costs'.
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 profit or loss 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.
On disposal of a foreign operation, the cumulative amount of the
exchange differences relating to that foreign operation that are
attributable to the non-controlling interests is derecognised and
is not reclassified to profit or loss.
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:
Asset category Useful life
---------------------------------- --------------
Buildings 30 - 35 years
Plant and machinery 20 - 36 years
Furniture, fixtures and equipment 15 - 20 years
Vehicles 10 years
---------------------------------- --------------
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefit is 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.
Capital work-in-progress comprises costs of property, plant and
equipment that are under construction and not yet ready for their
intended use at the reporting date and the outstanding advances
given for construction of such property, plant and equipment.
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:
Asset category Useful life
-------------------------- --------------
Licences 20 - 40 years
Power purchase agreements 4 - 10 years
-------------------------- --------------
Amortisation of intangible assets is included within
'Depreciation, amortization and impairment'.
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 for
impairment annually, or more frequently when there is an indication
that the asset may be impaired. 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, financial assets at fair value
through profit and loss (FVTPL) and available for sale. The
classification depends on the purpose for which the financial asset
was acquired. Management determines the classification of its
financial assets at initial recognition.
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.
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 2.13.
The Group derecognises financial assets when it transfers
substantially all the risks and rewards of ownership of the
financial asset. On de-recognition of a financial asset the
difference between the carrying amount and the consideration
received is recognised in profit or loss.
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, bank deposits and cash and
cash equivalents in the statement of financial position (notes
2.13, 2.14 and 2.15). 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) Financial assets at FVTPL
Financial assets at FVTPL include financial assets that are
either classified as held for trading or that meet certain
conditions and are designated at FVTPL upon initial recognition.
All derivative financial instruments fall into this category.
Assets in this category are measured at fair value with gains or
losses recognised in profit or loss. The fair values of financial
assets in this category are determined by reference to active
market transactions or using a valuation technique where no active
market exists.
c) 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.
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.
2.10 Financial liabilities and equity instruments
2.10.1 Classification as debt or equity
Debt and equity instruments issued by the group entity are
classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangements and
the definitions of a financial liability and an equity
instrument.
2.10.2 Equity instruments
An equity instruments is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Group entity is
recognized at the proceeds received, net of direct issue costs.
2.10.3 Compound instruments
The compound parts of compound instruments (convertible notes)
issued by the Group are classified separately as financial
liabilities and equity in accordance with the substance of the
contractual arrangements and the definition of a financial
liability and an equity instrument. Conversion options that will be
settled by the exchange of a fixed amount of cash or another
financial asset for a fixed number of the Company's own equity
instruments are equity instruments.
At the date of issue, the fair value of the liability component
is estimated using the prevailing market interest rate for similar
non-convertible instruments. This amount is recorded as a liability
on an amortized cost basis using the effective interest method
until extinguished upon conversion or at the instrument's maturity
date.
The conversion option classified as equity as determined by
deducting the amount of the liability component from the fair value
of the compound instrument as a whole. This is recognized and
included in equity, net of income tax effects, and is not
subsequently re-measured. In addition, the conversion option
classified as equity will remain in equity until the conversion
option is exercised, in which case, the balance recognized in
equity will be transferred to share capital/share premium. When the
conversion option remains unexercised at the maturity date of the
convertible note, the balance recognized in equity will be
transferred to other reserves in equity. No gain or loss is
recognized in profit or loss upon conversion or expiration of the
conversion option.
Transaction costs that relate to the issue of the convertible
notes are allotted to the liability and equity components in
proportion to the allocation of the gross proceeds. Transaction
costs relating to the equity component are recognized directly in
equity. Transaction costs relating to the liability component are
included in the carrying amount of the liability component and are
amortized over the lives of the convertible notes using the
effective interest method.
2.10.4 Financial liabilities
Financial liabilities are classified as either financial
liabilities at 'Fair value through profit and loss (FVTPL)' or
'other financial liabilities'.
Financial Liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the
financial liability is designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with
any gains or losses arising on re-measurement recognized in profit
or loss. The net gain or loss recognized in profit or loss
incorporates any interest paid on the financial liability. Fair
value is determined in the manner described in note 10.
Other financial liabilities
Other financial liabilities (including borrowings and trade and
other payables) are subsequently measured at amortized cost using
the effective interest method.
The effective interest method is a method of calculating the
amortized cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is
the rate that exactly discounts the estimated future cash payments
(including all fees and points paid or received that form an
integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the
financial liability, to the net carrying amount on initial
recognition.
De-recognition of financial liabilities
The Group derecognizes financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire. The difference between the carrying amount of the financial
liability derecognized and the consideration paid and payable is
recognized in profit or loss.
2.10.5 Options with non-controlling interests in subsidiaries
The Group has entered into put and call options over certain
non-controlling interests in subsidiaries. The option exercise
price is fixed and the options are exercisable within a fixed
timeframe. The potential cash payments related to options issued by
the Group over the equity of subsidiary companies are accounted for
as financial liabilities at the present value of the redemption
amount in line with the requirements of IAS 32 and 39. The amount
that may become payable under the option on exercise is initially
recognised at fair value with a corresponding debit to 'Option
Reserve' under equity. Such financial liabilities are subsequently
measured at amortized cost, using the effective interest rate
method. Derivatives embedded in the options with non-controlling
interests in subsidiaries are accounted as derivative financial
instruments (refer note 2.11) and are presented under other
financial assets/liabilities.
2.11 Derivative financial instruments
The Group enters into derivative financial instruments to manage
its exposure to interest rate and foreign exchange risks, including
foreign exchange forward contracts. Further details of derivative
financials instruments are disclosed in note 10.
Derivatives are initially recognized at fair value at the date
the derivative contracts are entered into and are subsequently
re-measured to their fair value at the end of each reporting
period. The resulting gain or loss is recognized in profit or loss
immediately unless the derivative is designated and effective as a
hedging instrument, in which event the timing of the recognition in
profit or loss depends on the nature of the hedge relationship.
2.12 Embedded derivatives
Derivatives embedded in non-derivative host contracts are traded
as separate derivatives when they meet the definition of a
derivative, their risks and characteristics are not closely related
to those of the host contracts and the contracts are not, measured
at FVTPL.
2.13 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") and Renewable Energy Certificates ("REC")
Inventories of ER and REC 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 ERs/RECs
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.
2.14 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 measured as the difference
between the asset's carrying amount and the present value of
estimated future cash flows (excluding future credit losses that
have not been incurred) discounted at the receivables' original
effective interest rate. The amount of the provision is recognized
in the profit or loss.
2.15 Bank deposits
Bank deposits represent term deposits placed with banks earning
a fixed rate of interest. bank deposits with maturities of less
than a year are disclosed as current assets and more than one year
as non-current assets. 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 banks for
availing short-term loans are classified as part of bank
deposits.
2.16 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.
2.17 Assets and liabilities classified as held for sale
Non-current assets/liabilities (or disposal groups) are
classified as 'assets held for sale' when their carrying amount is
to be recovered principally through a sale transaction and a sale
is considered highly probable. Assets and liabilities are stated at
the lower of carrying amount and fair value less costs to sell.
However, some 'held for sale assets' such as financial assets or
deferred tax assets, continue to be measured in accordance with the
Group's relevant accounting policies for those assets. Once
classified as 'held for sale', the assets are not subject to
depreciation or amortisation.
2.18 Equity
Ordinary shares are classified as equity and represent the
nominal value of shares that have been issued.
Share premium includes any premiums received on the 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.
Retained earnings include all current and prior period retained
profits.
All transactions with owners of the Parent are recorded
separately within equity.
Other components of equity include the following:
-- Share-based payment reserve - represents fair value of
employee services received in consideration for the equity
instruments (options) of the Group.
-- Revaluation reserve - comprises gains and losses due to the
revaluation of intangible assets.
-- Currency translation reserve - represents foreign currency
translation differences arising on the translation of the Group's
foreign entities.
-- Other reserves - includes all other transaction with the
owners in their capacity as owners, impact of changes in the
ownership interest in subsidiaries that do not result in loss of
control and government grants accounted under capital approach.
-- Option reserve - represents fair value of non-controlling
interests put option on initial recognition.
2.19 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 are 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.
2.20 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 also operates retirement benefit plans for its employees.
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. 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 that have terms to maturity approximating to
the terms of the related gratuity liability.
Re-measurement, comprising actuarial gain and losses, the effect
of changes to the return on plan assets (excluding interest), is
reflected immediately in the statement of financial position with a
charge or credit recognized in other comprehensive income in the
period in which they occur. Service cost on the net defined benefit
liability is included in employee benefits expense. Net interest
expense on the net defined benefit liability is included in finance
costs.
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 accounted as cost of employee benefits
based on efforts and time utilization of the employee. 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. If the terms of an
equity-settled award are modified, at a minimum an expense is
recognised as if the terms had not been modified. An additional
expense is recognised for any modification that increases the total
fair value of the share-based payment arrangement, or is otherwise
beneficial to the employee, as measured at the date of
modification.
2.21 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 profit or loss 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.
2.22 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 with transmission companies at the rates
prevailing on the date of export as determined by the power
purchase agreement/feed-in-tariff policy/market rates as applicable
less the wheeling and banking charges applicable if any. Claims for
delayed payment charges and other claims, if any, are recognised as
per the terms of power purchase agreements.
b) Sale of emission reductions
Revenue from sale of 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 billing to a customer.
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 billed VER to the customers.
c) Sale of REC
Revenue from sale of RECs is recognized after registration of
the project with central and state government authorities,
generation of power and execution of a contract for sale through
recognised energy exchanges in India.
d) Generation Based Incentive (GBI)
Revenue from GBI is recognized based on the number of units
exported and if the eligibility criteria is met in accordance with
the guidelines issued by regulatory authority for GBI Scheme.
e) 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.
2.23 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.
2.24 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 period
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.
2.25 Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of a qualifying asset are capitalised
during the period of time that is necessary to complete and prepare
the asset for its intended use or sale. Other borrowing costs are
expensed in the period in which they are incurred and reported in
finance costs.
3. Change in accounting policies
Change in presentation currency
Consequent to issue of US$550 million Senior Notes by Greenko
Dutch B.V. and borrowing of US$125 million Notes by Greenko
Mauritius ('GM'), the Group's exposure to US$ denominated funds and
to global investor base has significantly increased. Hence,
effective 1 April 2014, the Group has decided to present the
consolidated financial statements in US Dollars.
A change in presentation currency is a change in accounting
policy which is accounted for retrospectively. Statutory financial
information included in the Group's consolidated financial
statements for the year ended 31 March 2014 previously reported in
Euros has been restated into US Dollars using the procedures
outlined below:
-- assets and liabilities of foreign operations where the
functional currency is other than US$ were translated into US$ at
the relevant closing rates of exchange. Non-US Dollar operating
results were translated into US$ at the relevant average rates of
exchange. Differences arising from the retranslation of the opening
net assets and the results for the year have been taken to the
currency translation reserve;
-- Share capital, share premium and other reserves were
translated at the historic rates prevailing at the dates of
transactions; and
-- all exchange rates used were extracted from the Group's
underlying financial records. The exchange rates used in previous
three years were as follows:
31 March 2014 31 March 2013 31 March 2012
-------------- -------------- --------------
Euro/US$ exchange rate
Closing rate 1.3752 1.2816 1.3338
Average rate 1.3402 1.2882 1.3784
US$/INR exchange rate
Closing rate 60.10 54.39 51.16
Average rate 60.50 54.45 47.95
-------------- -------------- --------------
Presentation of 'EBITDA' on the statement of profit or loss
During the period, the Group has included a new sub-total
'Earnings before interest, tax, depreciation and amortisation'
(EBITDA) in the consolidated statement of profit or loss.
Management believes that EBITDA is meaningful for investors because
it provides an analysis of our operating results, profitability and
ability to service debt and because EBITDA is used by our chief
operating decision makers to track our business evolution,
establish operational and strategic targets and make important
business decisions. EBITDA is calculated as operating profit before
depreciation, amortization and Impairment.
EBITDA is not a measure of financial performance under IFRS. The
calculation of EBITDA by the Group may be different from the
calculations of similarly labelled measures used by other companies
and it should therefore not be used to compare one company against
another or as a substitute for analysis of the Group's operating
results as reported under IFRS. EBITDA is not a direct measure of
the Group's liquidity, nor is it an alternative to cash flows from
operating activities as a measure of liquidity, and it needs to be
considered in the context of the Group's financial commitments.
EBITDA may not be indicative of the Group's historical operating
results, nor is it meant to be predictive of the Group's potential
future results.
Presentation of 'Other components of equity'
The Group earlier presented all components of equity separately
on the statement of financial position and their movement in the
statement of changes of equity. During the period, the Group has
replaced the following constituents of equity viz. share-based
payment reserve, revaluation reserve, currency translation reserve,
other reserves and option reserve, with a single item 'other
components of equity'. The Group now presents these components of
equity in the notes to the financial statements. In view of the
management, this would present more clearly the overall equity and
changes in equity.
Presentation of 'Exceptional items' on the statement of profit
or loss
During the period, the Group has included a new line item
'Exceptional items' in the consolidated statement of profit or
loss. Exceptional items are material items which individually, or
of a similar type, in aggregate, need to be disclosed separately by
virtue of their size, nature or incidence in order to better
understand the Group's financial performance. Management believes
that 'exceptional items' is meaningful for users of the
consolidated financial statements as it helps the investors in
analysing operating results and profitability.
New and revised standards on consolidation, joint arrangements,
associates and disclosures:
In May 2011, a package of five standards on consolidation, joint
arrangements, associates and disclosures was issued comprising IFRS
10 Consolidated Financial Statements, IFRS 11 Joint Arrangements,
IFRS 12 Disclosure of Interests in Other Entities, IAS 27 (as
revised in 2011) Separate Financial Statements and IAS 28 (as
revised in 2011) Investments in Associates and Joint Ventures.
Subsequent to the issue of these standards, amendments to IFRS 10,
IFRS 11 and IFRS 12 were issued to clarify certain transitional
guidance on the first-time application of the standards.
In the current period, the Group has applied for the first time
IFRS 10, IFRS 11, IFRS 12 and IAS 28 (as revised in 2011) together
with the amendments to IFRS 10, IFRS 11 and IFRS 12 regarding the
transitional guidance. IAS 27(as revised in 2011) is not applicable
to the Group as it deals only with separate financial
statements.
The Impact of the application of these standards is set out
below.
IFRS 10 'Consolidated Financial Statements' (IFRS 10)
IFRS 10 replaces the parts of IAS 27 Consolidated and Separate
Financial Statements that deal with consolidated financial
statements and SIC-12 Consolidation - Special Purpose Entities.
IFRS 10 changes the definition of control such that an investor has
control over an investee when a) it has power over the investee; b)
it is exposed, or has rights, to variable returns from its
involvement with the investee and c) has the ability to use its
power to affect its returns. All three of these criteria must be
met for an investor to have control over an investee. Previously,
control was defined as the power to govern the financial and
operating policies of an entity so as to obtain benefits from the
activities. Additional guidance has been included in IFRS 10 to
explain when an investor has control over an investee. Some
guidance included in FRS 10 that deals with whether or not an
investor that owns less than 50% of the voting rights in an
investee has control over the investee is relevant to the
Group.
Management has reviewed its control assessments in accordance
with IFRS 10 and has concluded that there is no effect on the
classification (as subsidiaries or otherwise) of any of the Group's
investees held during the period or comparative periods covered by
these financial statements.
IFRS 11 'Joint Arrangements' (IFRS 11)
IFRS 11 supersedes IAS 31 'Interests in Joint Ventures' (IAS 31)
and SIC 13 'Jointly Controlled Entities- Non-Monetary-Contributions
by Venturers'. IFRS 11 revises the categories of joint arrangement,
and the criteria for classification into the categories, with the
objective of more closely aligning the accounting with the
investor's rights and obligations relating to the arrangement. In
addition, IAS 31's option of using proportionate consolidation for
arrangements classified as jointly controlled entities under that
Standard has been eliminated. IFRS 11 now requires the use of the
equity method for arrangements classified as joint ventures (as for
investments in associates).
As the Group does not hold any investment in joint ventures,
this amendment has no effect on the consolidated financial
statements for any period presented.
IFRS 12 'Disclosure of Interests in Other Entities' (IFRS
12)
IFRS 12 is a new disclosure standard and is applicable to
entities that have interest in subsidiaries, joint arrangement,
associate and/or unconsolidated structured entities. In general,
the application of IFRS 12 has resulted in more extensive
disclosures in the consolidated financial statements (please see
note 7 for details).
IFRIC 21 'Levies'
The Group has applied IFRIC 21 Levies for the first time in the
current period. IFRIC 21 addresses the issue as to when to
recognise a liability to pay a levy imposed by a government. The
interpretation defines a levy, and specifies that the obligating
event that gives rise to the liability is the activity that
triggers the payment of the levy, as identified by legislation. The
interpretation provides guidance on how different levy arrangements
should be accounted for, in particular, it clarifies that neither
economic compulsion nor the going concern basis of financial
statements preparation implies that an entity has a present
obligation to pay a levy that will be triggered by operating in a
future period.
IFRIC 21 has been applied retrospectively. The application of
this Interpretation has had no material impact on the disclosures
or on the amounts recognised in the Group's consolidated financial
statements.
Offsetting Financial Assets and Financial Liabilities
(Amendments to IAS 32)
These amendments clarify the application of certain offsetting
criteria in IAS 32, including:
-- the meaning of 'currently has a legally enforceable right of set-off'
-- that some gross settlement mechanisms may be considered equivalent to net settlement.
The amendments have been applied retrospectively in accordance
with their transitional provisions. As the Group does not currently
present any of its financial assets and financial liabilities on a
net basis using the provisions of IAS 32, these amendments had no
material effect on the consolidated financial statements for any
year presented.
Recoverable Amount Disclosures for Non-Financial Assets
(Amendments to IAS 36)
These amendments clarify that an entity is required to disclose
the recoverable amount of an asset (or cash generating unit)
whenever an impairment loss has been recognised or reversed in the
period. In addition, they introduce several new disclosures
required to be made when the recoverable amount of impaired assets
is based on fair value less costs of disposal, including:
-- additional information about fair value measurement including
the applicable level of the fair value hierarchy, and a description
of any valuation techniques used and key assumptions made
-- the discount rates used if fair value less costs of disposal
is measured using a present value technique.
As the Group has not recognized any impairment loss during the
period/years presented, these amendments had no impact on the
disclosures in the consolidated financial statements for any
period/years presented.
4. New standards and interpretations not yet adopted
At the date of authorisation of these financial statements,
certain new standards, amendments and interpretations to existing
standards have been published by the IASB and but are not yet
effective or endorsed by European Union, and have not been adopted
early by the Group.
IFRS 9 'Financial Instruments' (2014)
The IASB recently released IFRS 9 'Financial Instruments'
(2014), representing the completion of its project to replace IAS
39 'Financial Instruments: Recognition and Measurement'. The new
standard introduces extensive changes to IAS 39's guidance on the
classification and measurement of financial assets and introduces a
new 'expected credit loss' model for the impairment of financial
assets. IFRS 9 also provides new guidance on the application of
hedge accounting.
The Group's management have yet to assess the impact of IFRS 9
on these consolidated financial statements. The new standard is
required to be applied for annual reporting periods beginning on or
after 1 January 2018.
IFRS 15 'Revenue from Contracts with Customers'
IFRS 15 presents new requirements for the recognition of
revenue, replacing IAS 18 'Revenue', IAS 11 'Construction
Contracts', and several revenue-related Interpretations. The new
standard establishes a control-based revenue recognition model and
provides additional guidance in many areas not covered in detail
under existing IFRSs, including how to account for arrangements
with multiple performance obligations, variable pricing, customer
refund rights, supplier repurchase options, and other common
complexities.
IFRS 15 is effective for reporting periods beginning on or after
1 January 2017. The Group's management have not yet assessed the
impact of IFRS 15 on these consolidated financial statements.
Annual Improvements to IFRSs 2010-2012 Cycle
The Annual Improvements to IFRSs2010-2012 cycle include a number
of amendments to various IFRSs, which are summarised below.
The amendments to IFRS 3 clarify that contingent consideration
that is classified as an asset or a liability should be measured at
fair value at each reporting date, irrespective of whether the
contingent consideration is a financial instrument within in the
scope of IFRS 9 or IAS 39 or a non-financial asset or liability.
Changes in fair value (other than measurement period adjustments)
should be recognised in profit or loss. The amendments to IFRS 3
are effective for business combinations for which the acquisition
date is on or after 1 July 2014.
The amendments to IFRS 8 (i) require an entity to disclose the
judgements made by management in applying the aggregation criteria
to operating segments, including a description of the operating
segments aggregated and the economic indicators assessed in
determining whether the operating segments have 'similar economic
characteristics'; and (ii) clarify that a reconciliation of the
total of the reportable segments assets to the entity's assets
should only be provided if the segment assets are regularly
provided to the chief operating decision-maker.
The amendments to the basis for conclusion of IFRS 13 clarify
that the issue of IFRS 13 and consequential amendments to IAS 39
and IFRS 9 did not remove the ability to measure short-term
receivables and payables with no stated interest rate at their
invoice amounts without discounting, if the effect of discounting
is immaterial. As the amendments do not contain any effective date,
they are considered to be immediately effective.
The amendments to IAS 16 and IAS 38 remove perceived
inconsistencies in the accounting for accumulated
depreciation/amortisation when an item of property, plant and
equipment or an intangible asset is revalued. The amended standards
clarify that the gross carrying amount is adjusted in a manner
consistent with the revaluation of the carrying amount of the asset
and that accumulated depreciation/amortisation is the difference
between the gross amount and the carrying amount after taking into
account accumulated impairment losses.
The amendments to IAS 24 clarify that a management entity
providing key management personnel services to a reporting entity
is a related party to the reporting entity. Consequently, the
reporting entity should disclose as related party transaction the
amounts incurred for the service paid or payable to the management
entity for the provision of the key management personnel services.
However, disclosure of the components of such compensation is not
required.
The directors of the company do not anticipate that the
application of these amendments will have a significant impact on
the group's consolidated financial statements.
Annual Improvements to IFRSs 2011-2013 Cycle
The Annual improvements to IFRSs 2011-2013 cycle include a
number of amendments to various IFRSs, which are summarised
below.
The amendments to IFRS 3 clarify that the standard does not
apply to the accounting for the formation of all types of joint
arrangement in the financial statements of the joint arrangement
itself.
The amendment to IFRS 13 clarify that the scope of the portfolio
exception for measuring the fair value of a group of financial
assets and financial liabilities on a net basis includes all
contracts that are within the scope of, and accounted for in
accordance with, IAS 39 or IFRS 9, even if those contracts do not
meet the definitions of financial assets or financial liabilities
within IAS 32.
The directors of the company do not anticipate that the
application of these amendments will have a significant impact on
the Group's consolidated financial statements.
5. Financial risk management
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, short-term bank deposits, trade and other
receivables, available for sale investments, trade and other
payables.
5.1 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 operations of the Group are
conducted in functional currency of its subsidiaries and further,
the foreign currency assets/liabilities as at 31 December 2014 are
not significant. Accordingly, the Company considers the impact of
foreign exchange risk on the statement of profit or loss as not
material.
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. A significant portion the Group's
borrowing carry fixed rate of interest, however, as these debts are
carried at amortized cost, there is no fair value interest rate
risk to the Group. The Group's interest rate risk arises from
borrowings. Borrowings issued at variable rates expose the Group to
cash flow interest rate risk.
If interest rates on borrowings had been 50 basis points higher
or lower with all other variables held constant, post-tax profit
for the period would have been lower or higher by US$709,407 mainly
as a result of the higher or lower interest expense on variable
rate borrowings. The sensitivity analysis is based on a reasonably
possible change in the market interest rates computed from
historical data.
5.2 Credit risk
Credit risk is the risk that a 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 sales to customers. In respect of
trade and other receivables, the Group is not exposed to any
significant credit risk exposure to any single counterparty
(non-government) or any group of counterparties having similar
characteristics. Significant portion of the Group's revenue is
derived from sales to state owned utilities and corporations under
long-term power purchase agreements and hence, potential risk of
default is predominantly a governmental one. The Group's also has
trade receivables due from private parties. The Group is paid
monthly by the customers for electricity sales. The Group assesses
the credit quality of the purchaser based on its financial position
and other information.
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.
5.3 Liquidity risk
Prudent liquidity risk management implies maintaining sufficient
cash and cash equivalents and maintaining adequate credit
facilities.
The Group intends to be 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. The
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.
At 31 December 2014 Less than Between Between Over
1 year 1 and 2 and 5 years
2 years 5 years
------------ ----------- ------------ ------------
Borrowings
- Principal 12,736,358 14,255,485 582,654,604 193,890,763
- Interest 67,826,667 67,561,151 187,780,608 87,227,876
Other financial liabilities - - 98,548,524 -
Trade and other payables 71,850,115 4,554,745 - -
Other liabilities 1,590,897 - - -
------------ ----------- ------------ ------------
Total 154,004,037 86,371,381 868,983,736 281,118,639
------------ ----------- ------------ ------------
At 31 March 2014 (Restated) Less than Between Between Over
1 year 1 and 2 and 5 years
2 years 5 years
------------ ----------- ------------ ------------
Borrowings
- Principal 88,740,354 31,276,139 125,171,634 233,760,595
- Interest 62,502,825 51,425,540 125,112,523 247,705,658
Other financial liabilities - - 98,548,524 -
Trade and other payables 57,325,555 3,433,520 - -
Other liabilities 3,414,001 - - -
------------ ----------- ------------ ------------
Total 211,982,735 86,135,199 348,832,681 481,466,253
------------ ----------- ------------ ------------
5.4 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 aggregate of equity as shown in the consolidated
statement of financial position and net debt. 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 period under review is summarised
as follows:
US$ 31 December 31 March 2014
2014
(Restated)
-------------- --------------
Total borrowings 803,537,209 481,407,311
Less: Cash and cash equivalents
and bank deposits (147,169,763) (63,582,139)
-------------- --------------
Net debt 656,367,446 417,825,172
Total equity 427,722,727 453,502,094
Total capital 1,084,090,173 871,327,266
-------------- --------------
Gearing ratio 61% 48%
6. Critical accounting judgements and key sources of estimation uncertainty
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.
6.1 Critical judgments in applying the accounting policies
a) Application of business combination accounting rules,
including identification and valuation of intangible assets
acquired in a business combination
The Group allocates the purchase price of the acquired companies
to 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.
b) 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, management has exercised judgment to
evaluate customer's 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 whether the arrangements meet the criteria under IFRIC
4.
c) 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 period. 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 recognition as service concession
arrangements.
d) Classification and measurement of disposal group held for sale
The Group has classified certain assets as disposal group held
for sale. Significant judgment is required to apply the principles
relating classification and measurement of disposal group as laid
under IFRS 5 'Non-current Assets Held for Sale and Discontinued
Operations'.
e) 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 or liability instrument.
f) Assessment of long-term receivables from foreign operations
The Group has considered its investment in non-convertible
debentures of Indian subsidiaries as part of its net investment in
foreign operation. The Group has considered these receivables as
long-term receivables from foreign operations, as in view of the
management, the settlement of these receivables is neither planned,
nor likely to occur in the foreseeable future. Accordingly, all
exchange differences on translation of these receivables are
recognized in other comprehensive income.
g) Assessment of functional currency
Note 2.5 describe the change in functional currency of Greenko
Mauritius during the year. Consequent to significant amount of fund
raise during the year, the management was required to re-assess the
functional currency of Greenko Mauritius. In line with the Group's
general policy on determination of functional currency in
accordance with IAS 21 and based on consideration of various
factors such as currency of debts, funding transactions, expenses
etc., the management has determined US$ as functional currency of
Greenko Mauritius.
6.2 Key sources of estimation uncertainty
a) 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.
b) 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.
c) 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 including future operating margins and
discount rates (note 8).
d) 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 9. Actual results,
however, may vary due to technical obsolescence, particularly
relating to software and IT equipment.
7. Subsidiaries
7.1 Principal subsidiaries
Set out below are the details of the Group's material
subsidiaries at the end of reporting period. Unless otherwise
stated, the subsidiaries as listed below have share capital
consisting solely of ordinary shares, which are held directly by
the Group and the proportion of ownership interests held equals to
the voting rights held by Group. The country of incorporation or
registration is also their principal place of business.
Country Principal business Holding Holding
of incorporation as at as at
31 December 31 March
2014 2014
------------------- -------------------- ------------- ----------
Intermediate
Greenko Mauritius# Mauritius holding company 68.53% 68.53%
Greenko Dutch B.V. Netherlands Intermediate 100% -
financing company
Greenko Energies Generation
Private Limited India of power 100% 100%
Greenko Wind Projects
Private Limited#
(note 19.8) ('Greenko Generation
Wind') India of power 75.85% 79.24%
AMR Power Private Generation
Limited India of power 100% 100%
Fortune Five Hydel
Projects Private Generation
Limited India of power 100% 100%
Greenko Budhil Hydro India Generation 100% -
Power Private Limited of power
Hemavathy Power & Generation
Light Private Limited India of power 100% 100%
LVS Power Private Generation
Limited India of power 100% 100%
Mangalore Energies Generation
Private Limited India of power 99.13% 99.13%
Matrix Power (Wind) Generation
Private Limited India of power 74% 74%
Ratnagiri Wind Power
Projects Private Generation
Limited India of power 100% 100%
Rayala Wind Power Generation
Company Private Limited India of power 100% 100%
Rithwik Energy Generation Generation
Private Limited India of power 100% 100%
Sneha Kinetic Power
Projects Private Generation
Limited India of power 99.97% 99.96%
Tejassarnika Hydro
Energies Private Generation
Limited India of power 100% 100%
# Entities have preferential shares in addition to ordinary
shares.
7.2 Composition of the Group
In addition to above material subsidiaries, the Group has 49 (31
March 2014: 43) subsidiaries based in India and 5 (31 March 2014:
5) subsidiaries incorporated and based in Mauritius. The principal
activity of Indian subsidiaries is owning, developing,
constructing, operating and maintaining power projects. The
Mauritian subsidiaries are primarily intermediate holding
companies.
7.3 Details of non-wholly owned subsidiaries that have material non-controlling interests
The table below shows details of non-wholly owned subsidiaries
that have material non-controlling interests:
Greenko Mauritius Greenko Wind
--------------------------- --------------------------
US$ 31 December 31 March 31 December 31 March
2014 2014
2014 (Restated) 2014 (Restated)
------------ ------------- ------------ ------------
Proportion of ownership
interests and voting
rights held by non-controlling
interests 31.47% 31.47% 24.15% 20.76%
Profit / (loss) allocated
to non-controlling
interests (2,143,837) (19,928,284) 312,805 -
Accumulated non-controlling
interests 173,021,988 175,165,825 44,407,549 44,094,743
------------ ------------- ------------ ------------
Summarised financial information in respect of each of the
Group's subsidiaries that has material non-controlling interest is
set out below. The summarised financial information below
represents amounts before inter-company eliminations.
Summarised balance sheet
Greenko Mauritius Greenko Wind
------------------------------- --------------------------
US$ 31 December 31 March 31 December 31 March
2014 2014
2014 (Restated) 2014 (Restated)
--------------- -------------- ------------ ------------
Non-current assets 1,175,925,520 926,815,803 532,474,060 431,113,656
Current assets 201,056,142 122,239,292 44,782,684 20,691,733
--------------- -------------- ------------ ------------
Total assets 1,376,981,662 1,049,055,095 577,256,744 451,805,389
--------------- -------------- ------------ ------------
Non-current liabilities 856,138,860 432,626,616 359,328,341 192,117,818
Current liabilities 85,116,764 147,238,514 39,349,851 37,824,199
--------------- -------------- ------------ ------------
Total liabilities 941,255,624 579,865,130 398,678,192 229,942,017
--------------- -------------- ------------ ------------
Equity attributable
to owners of the entity 262,704,050 294,024,140 134,158,604 177,756,229
Non-controlling interests 173,021,988 175,165,825 44,419,948 44,107,144
--------------- -------------- ------------ ------------
Total equity 435,726,038 469,189,965 178,578,552 221,863,373
--------------- -------------- ------------ ------------
Summarised income statement
Greenko Mauritius Greenko Wind
---------------------------- ----------------------------
US$ 31 December 31 March 31 December 31 March
2014 2014
2014 (Restated) 2014 (Restated)
------------- ------------- ------------- -------------
Revenue 100,206,933 70,992,192 57,232,726 17,374,663
Expenses (including
income taxes) (87,594,589) (63,122,017) (49,850,541) (15,344,634)
Excess of group's interest
in the fair value of
acquiree's assets and
liabilities over cost 2,036,236 2,968,303 - -
Exceptional Items (Net) 6,177,759 - - -
------------- ------------- ------------- -------------
Profit for the period/year 20,826,339 10,838,478 7,382,185 2,030,029
Other comprehensive
income (28,002,917) (54,480,149) - -
------------- ------------- ------------- -------------
Total comprehensive
income/(loss) (7,176,578) (43,641,671) 7,382,185 2,030,029
------------- ------------- ------------- -------------
Total comprehensive
income allocated to
non-controlling interests (2,143,837) (19,928,284) - -
Dividends paid to non-controlling - - - -
interests
------------- ------------- ------------- -------------
Summarised cash flows
Greenko Mauritius Greenko Wind
------------------------------ --------------------------------
US$ 31 December 31 March 31 December 31 March
2014 2014
2014 (Restated) 2014 (Restated)
-------------- -------------- --------------- ---------------
Net cash from operating
activities 60,727,000 39,680,878 38,918,560 25,493,695
Net cash used in investing
activities (193,798,293) (299,883,703) (157,611,465) (174,043,412)
Net cash flow from
financing activities 198,800,981 288,621,132 140,638,438 153,928,019
Net cash inflow 65,729,688 28,418,307 21,945,533 5,378,302
-------------- -------------- --------------- ---------------
Cash and cash equivalents
at the beginning of
the period/year 44,158,732 31,246,322 7,283,278 1,904,976
-------------- -------------- --------------- ---------------
Effect of exchange
rate changes on cash
and cash equivalents (143,082) (15,505,897) - -
-------------- -------------- --------------- ---------------
Cash and cash equivalents
at the end of the period/year 109,745,338 44,158,732 29,228,811 7,283,278
-------------- -------------- --------------- ---------------
7.4 Restrictions
The Group has assets and liabilities in multiple jurisdictions
held by various subsidiaries. There are certain restrictions on
inter-se transfer/settlement of liabilities and movement of funds
among subsidiaries in India. Further as per governmental
regulations, there are certain restrictions on transfer of assets
outside India.
8. Intangible assets
US$ Licences Electricity Goodwill Total
PPAs
-------------- ------------- ------------- --------------
Cost
At 1 April 2013 (Restated) 117,664,568 16,587,902 23,105,497 157,357,967
Additions 497,532 - - 497,532
Acquisition on business
combination (note: 30.2) 15,553,677 - - 15,553,677
Asset classified as held
for sale (146,423) (307,820) (693,763) (1,148,006)
Exchange differences (11,421,657) (1,575,989) (2,195,215) (15,192,861)
-------------- ------------- ------------- --------------
At 31 March 2014(Restated) 122,147,697 14,704,093 20,216,519 157,068,309
Acquisition on business
combination (note: 30.1) 5,832,361 - - 5,832,361
Adjustments - (1,459,235) - (1,459,235)
Exchange differences (6,535,615) (675,523) (1,031,097) (8,242,235)
-------------- ------------- ------------- --------------
At 31 December 2014 121,444,443 12,569,335 19,185,422 153,199,200
-------------- ------------- ------------- --------------
Accumulated amortization
and impairment
At 1 April 2013 (Restated) 1,602,722 6,623,794 - 8,226,516
Charge for the year 691,434 2,620,616 689,177 4,001,227
Asset classified as held
for sale (57,521) (258,468) (693,763) (1,009,752)
Exchange differences (147,670) (611,873) 4,586 (754,957)
-------------- ------------- ------------- --------------
At 31 March 2014(Restated) 2,088,965 8,374,069 - 10,463,034
Charge for the period 934,375 1,139,997 - 2,074,372
Adjustments - (1,459,235) - (1,459,235)
Exchange differences (143,060) (385,684) - (528,744)
-------------- ------------- ------------- --------------
At 31 December 2014 2,880,280 7,669,147 - 10,549,427
-------------- ------------- ------------- --------------
Net book value
At 31 December 2014 118,564,163 4,900,188 19,185,422 142,649,773
At 31 March 2014(Restated) 120,058,732 6,330,024 20,216,519 146,605,275
At 1 April 2013(Restated) 116,061,846 9,964,108 23,105,497 149,131,451
-------------- ------------- ------------- --------------
Amortization and impairment charges are included under
'Depreciation, amortization and impairment' in the statement of
profit or loss. The average remaining amortization period for
licences is 27.7 years and for electricity PPA is 2.1 years.
Impairment tests for goodwill
Goodwill acquired through business combinations have been
allocated to each individual power generation unit as cash
generating unit ("CGU"). A CGU level summary of goodwill is
presented below:
US$ 31 March Exchange 31 December
2014
(Restated) difference 2014
------------ ------------ ------------
Hemavathy Power & Light Private
Limited - HLBC unit 4,634,248 (236,359) 4,397,889
LVS Power Private Limited 3,194,567 (162,932) 3,031,635
Hemavathy Power & Light Private
Limited - HRB unit 2,464,149 (125,678) 2,338,471
Tejassarnika Hydro Energies Private
Limited 2,238,440 (114,167) 2,124,273
Astha Projects (India) Private
Limited - Dehar unit 1,248,971 (63,701) 1,185,270
Astha Projects (India) Private
Limited - Awa unit 1,123,026 (57,277) 1,065,749
Cimaron Constructions Private
Limited 946,652 (48,282) 898,370
Roshni Powertech Private Limited 846,551 (43,176) 803,375
Tarela Power Limited 724,576 (36,955) 687,621
Multiple units without significant
goodwill 2,795,339 (142,570) 2,652,769
------------ ------------ ------------
20,216,519 (1,031,097) 19,185,422
------------ ------------ ------------
The recoverable amount of a CGU is determined based on
value-in-use calculations. As the Group has long-term power
purchase agreements with customers, these calculations use pre-tax
cash flow projections prepared by management based on balance life
of the license. The growth rate does not exceed the long-term
average growth rate for the business in which the CGU operates. The
recoverable amount of significant CGUs is set out below:
US$ 31 December 31 March 2014
2014
(Restated)
------------ --------------
Hemavathy Power & Light Private
Limited - HLBC unit 16,848,255 24,475,515
LVS Power Private Limited 46,676,141 49,622,674
Hemavathy Power & Light Private
Limited - HRB unit 9,158,377 10,983,362
Tejassarnika Hydro Energies Private
Limited 24,759,198 22,796,404
------------ --------------
The key assumptions used for value-in-use calculations are as
follows:
31 December 2014 31 March 2014
-------------------- --------------------
US$ Budgeted Discount Budgeted Discount
Gross rate gross rate
margin margin
--------- --------- --------- ---------
Hemavathy Power & Light Private
Limited - HLBC unit 87.10% 19.60% 89.00% 23.00%
LVS Power Private Limited 25.30% 21.30% 24.80% 20.00%
Hemavathy Power & Light Private
Limited - HRB unit 92.00% 19.80% 92.80% 22.10%
Tejassarnika Hydro Energies
Private Limited 84.50% 15.70% 85.80% 19.50%
--------- --------- --------- ---------
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.
9. Property, plant and equipment
US$ Land Buildings Plant and Furniture Vehicles Capital Total
machinery and work-in
equipment progress
----------- ------------- ------------- ---------- ---------- -------------- --------------
Cost
At 1 April 2013
(Restated) 4,215,306 128,192,061 112,215,627 1,882,205 1,434,144 288,030,975 535,970,318
Additions 6,910,075 5,491,155 258,714,056 1,030,245 385,574 281,728,780 554,259,885
Acquisition through
business combination - - - 378 - 1,538,430 1,538,808
Disposals/capitalisation (8,649) - - - (40,248) (256,691,954) (256,740,851)
Asset classified as held
for sale (339,886) (1,453,408) (11,022,756) (116,445) (7,796) (3,331) (12,943,622)
Exchange differences (56,287) (11,912,019) 2,012,336 (120,494) (119,113) (22,416,922) (32,612,499)
----------- ------------- ------------- ---------- ---------- -------------- --------------
At 31 March 2014
(Restated) 10,720,559 120,317,789 361,919,263 2,675,889 1,652,561 292,185,978 789,472,039
Additions 4,653,241 1,629,360 144,199,043 375,748 110,655 199,293,677 350,261,724
Acquisition through
business combination 130,295 9,458,007 97,909,932 102,483 33,328 - 107,634,045
Disposals/capitalisation - - - - - (141,242,819) (141,242,819)
Exchange differences (742,061) (6,702,202) (29,125,207) (113,998) (143,478) (18,470,053) (55,296,999)
----------- ------------- ------------- ---------- ---------- -------------- --------------
At 31 December 2014 14,762,034 124,702,954 574,903,031 3,040,122 1,653,066 331,766,783 1,050,827,990
----------- ------------- ------------- ---------- ---------- -------------- --------------
Accumulated depreciation
and impairment
At 1 April 2013
(Restated) - 7,666,182 15,747,752 545,017 444,868 - 24,403,819
Charge for the year - 3,845,239 9,865,893 337,488 155,818 - 14,204,438
Disposal - - - - (13,357) - (13,357)
Asset classified as held
for sale - (296,391) (4,497,875) (65,018) (6,593) - (4,865,877)
Exchange differences - (706,288) (1,367,034) (37,150) (39,258) - (2,149,730)
----------- ------------- ------------- ---------- ---------- -------------- --------------
At 31 March 2014
(Restated) - 10,508,742 19,748,736 780,337 541,478 - 31,579,293
Charge for the period - 3,027,269 15,664,193 448,302 221,630 - 19,361,394
Exchange differences - (657,541) (1,631,715) (34,242) (70,603) - (2,394,101)
----------- ------------- ------------- ---------- ---------- -------------- --------------
At 31 December 2014 - 12,878,470 33,781,214 1,194,397 692,505 - 48,546,586
----------- ------------- ------------- ---------- ---------- -------------- --------------
Net book value
At 31 December 2014 14,762,034 111,824,484 541,121,817 1,845,725 960,561 331,766,783 1,002,281,404
At 31 March 2014
(Restated) 10,720,559 109,809,047 342,170,527 1,895,552 1,111,083 292,185,978 757,892,746
At 1 April 2013
(Restated) 4,215,306 120,525,879 96,467,875 1,337,188 989,276 288,030,975 511,566,499
----------- ------------- ------------- ---------- ---------- -------------- --------------
Certain borrowings which are at project level are secured
against the present and future moveable and immovable assets of the
project. During the period, the Group has capitalised borrowing
costs amounting to US$23,408,741 (31 March 2014: US$24,790,281) on
qualifying assets during construction. The weighted average of the
borrowing costs applicable to general borrowings is 13.14 per cent.
Note 29 (g) provide details of asset purchase commitments
outstanding as at 31 December 2014.
10. Financial assets and liabilities
The accounting policies for financial instruments have been
applied to the line items below:
31 December 2014
US$ Loans and Financial Available Total
receivables assets for-sale
at FVTPL
------------- ----------- ---------- ------------
Financial assets
Non-current
Other non-current financial
assets - 12,911,549 - 12,911,549
Bank deposits (note 15) 29,115,837 - - 29,115,837
Trade and other receivables
(note 12) 7,140,919 - - 7,140,919
Current
Available-for-sale financial
assets (note 11) - - 100,965 100,965
Bank deposits (note 15) 8,201,710 - - 8,201,710
Trade and other receivables
(note 12) 75,626,042 - - 75,626,042
Cash and cash equivalents
(note 14) 109,852,216 - - 109,852,216
Total 229,936,724 12,911,549 100,965 242,949,238
------------- ----------- ---------- ------------
US$ Liabilities Liabilities Total
at measured
FVTPL at
amortised
cost
------------ ------------ ------------
Financial liabilities
Non-current
Borrowings (note 19) - 790,800,851 790,800,851
Other financial liabilities 11,562,519 40,817,216 52,379,735
Trade and other payables (note
18) - 4,554,745 4,554,745
Current
Borrowings (note 19) - 12,736,358 12,736,358
Trade and other payables (note
18) - 71,850,115 71,850,115
Total 11,562,519 920,759,285 932,321,804
------------ ------------ ------------
31 March 2014 (Restated)
US$ Loans and Financial Available Total
receivables assets for-sale
at FVTPL
------------- ---------- ---------- ------------
Financial assets
Non-current
Other non-current financial
assets - 7,445,067 - 7,445,067
Bank deposits (note 15) 14,354,681 - - 14,354,681
Trade and other receivables
(note 12) 7,321,355 - - 7,321,355
Current
Available-for-sale financial
assets (note 11) - - 73,210 73,210
Bank deposits (note 15) 4,904,746 - - 4,904,746
Trade and other receivables
(note 12) 65,112,977 - - 65,112,977
Cash and cash equivalents
(note 14) 44,322,712 - - 44,322,712
Total 136,016,471 7,445,067 73,210 143,534,748
------------- ---------- ---------- ------------
US$ Liabilities Liabilities Total
at FVTPL measured
at amortised
cost
------------- -------------- ------------
Financial liabilities
Non-current
Borrowings (note 19) - 382,211,439 382,211,439
Other financial liabilities - 36,301,770 36,301,770
Trade and other payables (note
18) - 3,433,520 3,433,520
Current
Borrowings (note 19) - 87,338,753 87,338,753
Trade and other payables (note
18) - 57,325,555 57,325,555
Total - 566,611,037 566,611,037
------------- -------------- ------------
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
Financial assets and financial liabilities measured at fair
value in the statement of financial position are grouped into three
levels of a fair value hierarchy. The three Levels are defined
based on the observability of significant inputs to the
measurement, as follows:
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 the fair value hierarchy of assets
and liabilities measured at fair value on a recurring basis as of
31 December 2014 and 31 March 2014:
31 December 2014
US$ Level 1 Level 2 Level 3 Total
-------- ----------- -------- -----------
Financial assets
Available- for- sale financial
asset 100,965 - - 100,965
Other non-current financial
assets - 12,911,549 - 12,911,549
Financial liabilities
Other financial liabilities - 11,562,519 - 11,562,519
-------- ----------- -------- -----------
31 March 2014 (Restated)
US$ Level 1 Level 2 Level 3 Total
-------- ---------- -------- ----------
Financial assets
Available- for- sale financial
asset 73,210 - - 73,210
Other non-current financial
assets - 7,445,067 - 7,445,067
-------- ---------- -------- ----------
Measurement of fair value of financial instruments
The Group's finance team performs valuations of financial items
for financial reporting purposes in consultation with third party
valuation specialists for complex valuations. Valuation techniques
are selected based on the characteristics of each instrument, with
the overall objective of maximising the use of market-based
information.
The valuation techniques used for instruments categorised in
Level 2 are described below:
Other non-current financial assets (Level 2)
The estimated fair value of options on non-controlling interests
and option hedging arrangements for repayment of principal of
Senior Notes are categorised within Level 2 of the fair value
hierarchy. The fair value estimate has been determined considering
inputs that include other than quoted prices of similar
assets/industry that are observable like interest rates, yield
curves, implied volatilities and credit spreads.
Other financial liabilities (Level 2)
The estimated fair value of the warrants issued by the Company
is categorised within Level 2 of the fair value hierarchy. The fair
value of share purchase warrants issued during the period was
calculated using the Black--Scholes option pricing model. The
inputs for this model include stock price, exercise price, expected
term, volatility, risk free rates etc.
11. Available-for-sale financial assets
US$ 31 December 2014 31 March 2014
(Restated)
----------------- --------------
Beginning of the period/year 73,210 77,876
Additions 8,244,199 -
Dividend reinvestment 18,669 -
Redemption (8,227,744) -
Exchange differences (5,621) (2,826)
Unrealized losses transferred
to equity (1,748) (1,840)
----------------- --------------
End of the period/year 100,965 73,210
Less: Non-current portion - -
----------------- --------------
Current portion 100,965 73,210
----------------- --------------
During the period ended 31 December 2014, dividend income
aggregating to US$45,615 (31 March 2014: US$971) was earned on
investment in units of mutual funds.
There are no impairment provisions on available-for-sale
financial assets during the period. None of the financial assets is
either past due or impaired. Available-for-sale financial assets
include the following:
US$ 31 December 2014 31 March 2014
(Restated)
----------------- --------------
Unlisted securities:
- Units of open-ended mutual
funds 100,965 73,210
----------------- --------------
100,965 73,210
----------------- --------------
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.
12. Trade and other receivables
US$ 31 December 2014 31 March 2014
(Restated)
----------------- --------------
Trade receivables 57,567,451 43,613,666
Less: Provision for impairment
of trade receivables (315,806) (332,779)
----------------- --------------
Net trade receivables 57,251,645 43,280,887
----------------- --------------
Other receivables 19,170,632 22,899,636
Less: Provision for impairment
of other receivables (726,354) (765,391)
----------------- --------------
18,444,278 22,134,245
Pre-payments 2,816,358 975,233
Advance for expenses 181,314 205,321
Sundry deposits 704,246 476,234
Advance for purchase of equity 6,185,478 6,337,645
----------------- --------------
Total trade and other receivables 85,583,319 73,409,565
Less: Non-current portion (7,140,919) (7,321,355)
----------------- --------------
Current portion 78,442,400 66,088,210
----------------- --------------
Advance for purchase of equity represents interest free amounts
paid under memorandum of understanding with various parties which
have been identified as potential entities to be acquired in the
future. These advances do not provide the Group with additional
rights and are adjusted against the purchase consideration when the
transaction is consummated else these amounts are refunded by the
parties. Other receivables include advances against purchase of raw
materials, advances for expenses, and other advance
recoverable.
Trade receivables include unbilled revenue of US$6,056,146 (31
March 2014: US$1,241,180)
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 December 2014, trade receivables of
US$45,086,477 (31 March 2014: US$27,504,454) were past due but not
impaired. Receivables aggregating to US$34,562,885 (31 March 2014:
US$29,668,237) have been considered as fully recoverable based on
management's assessment of their recoverability based on its
evaluation of terms implicit in the contracts with the customers,
legal opinions and other pertinent factors.
The ageing analysis of past due but not impaired trade
receivables as at the reporting date is as follows:
US$ 31 December 2014 31 March 2014
(Restated)
----------------- --------------
1 to 6 months 15,159,628 9,230,400
6 to 9 months 2,272,683 6,006,718
9 to 12 months 4,141,648 2,679,635
Beyond 12 months 23,512,518 9,587,701
----------------- --------------
45,086,477 27,504,454
----------------- --------------
The carrying amounts of trade receivables are denominated in the
following currencies:
US$ 31 December 2014 31 March 2014
(Restated)
----------------- --------------
Indian rupee 54,806,792 40,429,254
Euro 2,444,853 2,851,633
57,251,645 43,280,887
----------------- --------------
Movements in provision for impairment of other receivables are
as follows:
US$ 31 December 2014 31 March 2014
(Restated)
----------------- --------------
Beginning of the period/year 765,391 846,678
Exchange difference (39,037) (81,287)
End of the period/year 726,354 765,391
----------------- --------------
Movements in provision for impairment of trade receivables are
as follows:
US$ 31 December 2014 31 March 2014
(Restated)
----------------- --------------
Beginning of the period/year 332,779 368,121
Exchange difference (16,973) (35,342)
End of the period/year 315,806 332,779
----------------- --------------
The creation and release of provisions 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.
13. Inventories
US$ 31 December 2014 31 March 2014
(Restated)
----------------- --------------
Stores and consumables 2,944,198 2,813,795
Raw materials 3,301,895 3,043,517
Emission reductions 2,357,829 2,824,500
Renewable energy certificates 1,114,563 709,718
----------------- --------------
9,718,485 9,391,530
----------------- --------------
Cost of material consumed during the period aggregated to
US$4,793,009 (31 March 2014: US$5,000,367) which includes
US$2,541,354 (31 March 2014: Nil) attributable to adjustment for
net realizable value.
14. Cash and cash equivalents
US$ 31 December 2014 31 March 2014
(Restated)
----------------- --------------
Cash on hand 391,375 375,194
Cash at bank 109,460,841 43,947,518
109,852,216 44,322,712
----------------- --------------
Cash at bank includes US$55,525,772 (31 March 2014:
US$3,656,391) in currencies other than INR (i.e., in US$, GBP and
EURO).
15. Bank deposits
The Group holds balances in deposit accounts with banks. All
fixed deposits with original maturity of more than three months are
classified as 'bank deposits'. Deposits with maturity date beyond
12 months from the balance sheet date are disclosed under
non-current assets. The Group can redeem these deposits with a
short notice. Bank deposits aggregating to US$37,104,254 (31 March
2014: US$15,726,639) are restricted.
Bank deposits includes US$24,659,836 (31 March 2014:
US$2,659,755) in currencies other than INR (i.e., in US$).
16. Assets and liabilities classified as held for sale
The assets and liabilities related to two biomass units viz. ISA
Power Private Limited and Ecofren Power & Projects Private
Limited continues to be classified as held for sale following the
intention of the Group's management to sell these entities in the
near future. The management is committed to the plan to dispose
these entities and is taking active steps, including obtaining firm
commitments from potential buyers, to complete the disposal of
these entities.
(a) Assets of disposal group classified as held for sale
US$ 31 December 2014 31 March 2014
(Restated)
----------------- --------------
Intangible assets 98,605 138,254
Property, plant and equipment 7,205,480 8,067,623
Inventories 935,367 1,106,600
Other current assets 4,498,508 6,112,669
12,737,960 15,425,146
----------------- --------------
(b) Liabilities of disposal group classified as held for sale
US$ 31 December 2014 31 March 2014
(Restated)
----------------- --------------
Borrowings 1,725,266 2,501,579
Deferred tax liabilities 977,645 938,085
Other liabilities 91,820 144,407
2,794,731 3,584,071
----------------- --------------
In accordance with IFRS 5, the assets and liabilities held for
sale were written down to their fair value less costs to sell. This
is a non-recurring fair value which has been measured using agreed
prices with prospective buyer and is therefore falls within level 3
of the fair value hierarchy.
17. Equity
17.1 Share capital
US$ 31 December 2014 31 March 2014
(Restated)
----------------- --------------
Authorised capital
- 300,000,000 (31 March 2014:
300,000,000) ordinary shares
of EUR0.005 each 2,065,050 2,065,050
Issued and fully paid
- 155,761,606 (31 March 2014:
150,661,606) ordinary shares
of EUR0.005 each 1,078,994 1,045,976
----------------- --------------
17.2 Other components of equity
The details of other components of equity are as follows:
US$ Share based Revaluation Currency Other reserves Option reserve Total
payment reserve translation
reserve reserve
-------------- --------------- -------------- --------------- --------------- -------------
At 1 April 2013
(Restated) - 22,758 (49,771,365) (4,888,603) (19,985,946) (74,623,156)
Transfer from
revaluation
reserve - (5,407) - - - (5,407)
Issue of shares to
non-controlling
interests in
subsidiaries - - 4,930,085 58,399,705 - 63,329,790
Employee share
based payments 158,312 - - - - 158,312
Transaction with
owners 158,312 (5,407) 4,930,085 58,399,705 - 63,482,695
-------------- --------------- -------------- --------------- --------------- -------------
Other comprehensive
income
Unrealised loss on
available-for-sale
financial assets - - - (1,840) - (1,840)
Exchange
differences on
translating
foreign operations - - (33,623,392) - - (33,623,392)
-------------- --------------- -------------- --------------- --------------- -------------
Total comprehensive
income - - (33,623,392) (1,840) - (33,625,232)
At 31 March 2014
(Restated) 158,312 17,351 (78,464,672) 53,509,262 (19,985,946) (44,765,693)
-------------- --------------- -------------- --------------- --------------- -------------
Transfer from
revaluation
reserve - (17,351) - - - (17,351)
Issue of shares (10,304,172) - - - - (10,304,172)
Employee share
based payments 11,152,970 - - - - 11,152,970
Government grants - - - 483,984 - 483,984
-------------- --------------- -------------- --------------- --------------- -------------
Transaction with
owners 848,798 (17,351) - 483,984 - 1,315,431
-------------- --------------- -------------- --------------- --------------- -------------
Other comprehensive
income
Unrealised loss on
available-for-sale
financial assets - - - (1,748) - (1,748)
Exchange
differences on
translating
foreign operations - - (44,551,280) - - (44,551,280)
-------------- --------------- -------------- --------------- --------------- -------------
Total comprehensive
income - - (44,551,280) (1,748) - (44,553,028)
At 31 December 2014 1,007,110 - (123,015,952) 53,991,498 (19,985,946) (88,003,290)
17.3 Share-based payment reserve
During the period, the Company has granted 5,100,000 share
options under its Long Term incentive Plan to ACMK Enterprises
Limited ("ACMK"), a company wholly owned by the executive
directors, Anil Kumar Chalamalasetty and Mahesh Kolli. These shares
have been vested and exercised at a nominal price of EUR0.005 per
share on successful achievement of vesting condition linked to
completion of construction or acquisition of specified assets. The
total cost of the grant US$9,887,044 has been accounted under
property, plant and equipment and operating expenses based on
management estimates of its efforts and time.
The Company has also granted a further performance related award
to ACMK 3,100,000 new ordinary shares exercisable at a nominal
price of EUR0.005 per share which may vest and becomes exercisable
over the period 2016 to 2018 subject to achieving certain agreed
key performance indicators.
17.4 Preference Shares in GM
Global Environment Emerging Markets Fund III L.P., through its
wholly owned subsidiary GEEMF III GK Holdings MU, ("GEEMF") owns
36,369,551 Preference Shares ("PS") in Greenko Mauritius ("GM")
representing 14.09% of the voting power of GM at 31 December 2014.
PS will be redeemable in the event of a sale or delisting but not
eligible for interest payments or any right to a fixed dividend.
GEEMF has certain affirmative rights on management reserved matters
and shareholder reserved matters along with its right to appoint
two directors to the GM board. GEEMF has right but not obligation
to exchange PS, subject to final adjustment based on certain
protective returns, for a minimum of 29,124,371 ordinary shares of
the Company, anytime between 1 July 2015 and 30 June 2017 and under
certain specified circumstances at a period earlier than 1 July
2015.
17.5 'A Exchangeable Shares' in GM
Government of Singapore Investment Corporation Pte Limited
("GIC") through its affiliate Cambourne Investments Private Limited
("CIPL") owns 74,074,074 "A Exchangeable Shares" ("AES") in GM
representing 17.38% of the voting rights of GM at 31 December 2014.
Pursuant to the terms of adjustment deed, CIPL has the right,
subject to final adjustment based on certain protective returns as
per the terms of agreements, for a minimum of 44,861,538 ordinary
shares of the Company, anytime between 1 July 2015 and 30 June 2017
and under certain specified circumstances at a period earlier than
1 July 2015, on a one to one basis.
If CIPL does not exercise this right, the AES shall be
automatically exchanged into ordinary shares at the expiry of the
Exchange Period 1 July 2017. However, the shareholding of CIPL in
the Company, including any shares already held, shall not exceed
29.99% and the remaining AES, if any, shall remain at GM.
17.6 Other reserves - government grants
Government of India ("GoI") has been providing cash grants to
grid-interactive power generation projects based on renewable
energy sources. The quantum of cash grant is linked to the power
generation capacity of the project. In respect of projects which
are financed by a financial institution, the request for the cash
grant has to be placed by the financial institution. The financial
institution directly receives the cash grant from GoI towards
reduction of loan.
18. Trade and other payables
US$ 31 December 31 March 2014
2014
(Restated)
-------------- --------------
Trade payables 1,474,383 1,939,099
Capital creditors 35,339,009 35,853,334
Interest accrued but not due
on borrowings 19,416,508 11,857,119
Other payables 15,540,495 6,323,958
Cost of acquisition payable 3,939,643 4,558,541
Issue expenses payable 694,822 227,024
-------------- --------------
Total 76,404,860 60,759,075
Less: Non-current portion - Trade
and other payables 4,554,745 3,433,520
-------------- --------------
Current portion - Trade and other
payables 71,850,115 57,325,555
-------------- --------------
Other payables include accruals for expenses, statutory
liabilities and other liabilities. All amounts are short term and
the carrying values of trade and other payables are considered a
reasonable approximation of fair value.
19. Borrowings
The carrying amount of the Group's borrowings, net of
unamortised transaction costs/issue expenses, are as follows:
US$ 31 December 2014 31 March 2014
(Restated)
----------------- --------------
Non-current - Financial liabilities
measured at amortised cost
Bank borrowings 82,609,508 176,462,567
Term loans from financial institutions 69,549,570 205,668,363
Senior Notes 528,320,396 -
Notes 110,291,511 -
Equipment and vehicle loans 30,866 80,509
790,800,851 382,211,439
----------------- --------------
Current - Financial liabilities
measured at amortised cost
Bank borrowings 1,637,049 10,312,137
Term loans from financial institutions 11,038,232 76,923,318
Equipment and vehicle loans 61,077 103,298
12,736,358 87,338,753
----------------- --------------
Total borrowings 803,537,209 469,550,192
----------------- --------------
19.1. Borrowings from banks and financial institutions mature
over 2015 to 2031 and bear floating rates of interest in the range
of 13.30% to 15.75% (31 March 2014: 11.55% to 16%). The fair value
of borrowings from bank and financial institutions approximates
their carrying value as these borrowings carry a floating rate of
interest.
19.2. Borrowings from banks and financial institutions are
secured against first charge by way of hypothecation of all
immovable properties including plant and machinery and all other
movable properties both present and future of respective
subsidiary. Some of the loans are also secured by personal
guarantees of directors and pledge of shares. Working capital loans
are secured by inventory and trade receivables. Additionally, the
borrowings are also secured by a lien on bank deposits amounting to
US$31,007,832 (31 March 2014: US$13,782,838).
19.3. The maturity profile of the Group's borrowings at the
reporting dates is as follows:
US$ 31 December 2014 31 March 2014
(Restated)
----------------- --------------
1 year or less, or on demand 12,736,358 87,338,753
1 to 2 years 14,255,485 30,595,761
2 to 5 years 585,801,573 122,947,008
Over 5 years 190,743,793 228,668,670
803,537,209 469,550,192
----------------- --------------
19.4. The carrying amounts and fair value of the borrowings are
as follows:
US$ 31 December 2014 31 March 2014(Restated)
-------------------------- --------------------------
Carrying Fair value Carrying Fair value
amount amount
------------ ------------ ------------ ------------
Bank borrowings 84,246,557 84,246,557 186,774,704 186,774,704
Loans from financial institutions
and others 80,587,802 80,587,802 282,591,681 282,591,681
Senior Notes 528,320,396 528,320,396 - -
Notes 110,290,511 110,290,511 - -
Equipment and vehicle loans 91,943 91,943 183,807 183,807
------------ ------------ ------------ ------------
19.5. The carrying amounts of the Group's borrowings are
denominated in the following currencies:
31 December 31 March 2014
2014
(Restated)
-------------- --------------
Indian rupee 164,283,554 400,680,886
US dollar 639,253,655 68,869,306
803,537,209 469,550,192
-------------- --------------
19.6. In December 2014, GM raised funds to the tune of US$125
million by issuing Notes to EIG Greenko Holdings S.À R.L. ("EIG").
The investment by EIG is through a long term 6-year instrument with
a cash coupon of 5% per annum payable on a semi-annual basis and a
payment-in-kind ("PIK") coupon of 6% per annum payable on maturity.
As part of the transaction, the Company has entered into a separate
agreement to create and confer 13,688,300 warrants to EIG. Each
warrant is convertible into one equity share of the Company at GBP
240 per share between fourth and sixth years from the date of
agreement and under certain specified circumstances at a period
earlier than 1 July 2015. EIG may pay warrant share subscription
amount in cash or by settling off some or all of the PIK amount
which is payable on or before the settlement date. These notes are
secured by pledge of 131.64 million equity shares of GM held by the
Company.
19.7. In August 2014, Greenko Dutch B.V. ("Greenko Dutch"), a
subsidiary of the Group, raised funds to the tune of US$550 million
by issuing 8% US$ Senior Notes (the Senior Notes) to institutional
investors. The Senior Notes are listed on Singapore Exchange
Securities Trading Limited (SGX-ST). In accordance with the terms
of the issue and as permitted under law, Greenko Dutch invested
issue proceeds, net of issue expenses and interest reserve, in
non-convertible debentures of Indian subsidiaries to enable
repayment of existing Rupee debt. For this purpose, Greenko Dutch
is duly registered as Foreign Portfolio Investor under the Indian
law. The interest on the Senior Notes is payable on a semi-annual
basis in arrears and the principal amount is payable on 31 July
2019. The Senior Notes are secured by corporate guarantee of the
Company and pledge of shares of Greenko Dutch owned by GM. Further,
the assets of Indian subsidiaries have been pledged to secure
non-convertible debentures through an Indian trustee.
During the period, the Greenko Dutch has entered into option
hedging arrangements in relation to principal repayment of the
Senior Notes to the extent of US$55 million and the option is fair
valued and recognised through profit or loss.
19.8. In 2012-13, GE Equity International Mauritius (GE) has
made an investment of US$50 million in the Group to indirectly
acquire Class A equity shares and compulsorily convertible
cumulative preference shares ('CCPS') of Greenko Wind. GE has
certain preferential rights as to payment of dividends and on
liquidation in Greenko Wind. The Company has an option to call on
GE to buy CCPS between February 2016 to February 2017 while GE has
an option to put any of the Class A equity shares and CCPS to the
Company between February 2017 to February 2018 or earlier on the
occurrence of certain events as mentioned in the agreements. The
options should be exercised at such prices which would provide GE
with certain protective returns as per the terms of the agreements.
The mandatory dividends on preference shares have been recognized
as a liability valued at US$7,109,472 (31 March 2014: US$6,606,052)
as at 31 December 2014. The options have been valued in accordance
with the group accounting policy (note 2.10.5).
20. Deferred income tax liabilities
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets and
current tax liabilities from the same taxation authority. The
offset amounts are as follows:
US$ 31 December 2014 31 March 2014
(Restated)
----------------- --------------
Deferred income tax liabilities
- to be recovered after more
than 12 months 48,669,248 46,767,436
- to be recovered within 12 - -
months
----------------- --------------
48,669,248 46,767,436
----------------- --------------
The movement in deferred income tax liabilities during the
period is as follows:
US$ Tangible assets Intangible Others Total
assets
---------------- ------------ --------- ------------
At 1 April 2013 (Restated) 12,109,055 33,208,895 32,314 45,350,264
Recognised in profit
or loss 1,090,646 558,955 12,939 1,662,540
Acquisition of subsidiary 1,097 5,046,391 - 5,047,488
Assets held for sale (924,282) (13,795) - (938,077)
Exchange difference (1,120,625) (3,231,170) (2,984) (4,354,779)
---------------- ------------ --------- ------------
At 31 March 2014
(Restated) 11,155,891 35,569,276 42,269 46,767,436
Recognised in profit
or loss 5,896,821 (612,605) (62,820) 5,221,396
Acquisition of subsidiary (1,531,773) 880,484 - (651,289)
Exchange difference (835,683) (1,833,230) 618 (2,668,295)
---------------- ------------ --------- ------------
At 31 December 2014 14,685,256 34,003,925 (19,933) 48,669,248
---------------- ------------ --------- ------------
Deferred income tax assets are recognised for tax loss carry
forwards to the extent that the realisation of the related tax
benefit through the future taxable profits is probable.
The Company is subject to Isle of Man corporate tax at the
standard rate of zero percent. Further, dividends are not taxable
in India in the hands of the recipient. However, the Indian
subsidiaries will be subject to a 'dividend distribution tax'
currently at the rate of 18.5% (plus applicable surcharge and
education cess) on the total amount distributed as dividend. As at
31 December 2014 and 31 March 2014, there was no recognised
deferred tax liability for taxes that would be payable on the
unremitted earnings of certain of the Group's subsidiaries, the
Group has determined that undistributed profits of its subsidiaries
will not be distributed in the foreseeable future as the Group
earnings will continue to be fully re-invested to finance the
on-going growth of the Group.
21. Revenue
US$ 31 December 2014 31 March 2014 (Restated)
----------------- -------------------------
Sale of power 96,789,968 68,860,931
Sale of renewable energy certificates 263,153 886,814
Generation based incentive 3,153,812 1,244,447
100,206,933 70,992,192
----------------- -------------------------
22. Retirement benefit obligations
US$ 31 December 2014 31 March 2014
(Restated)
----------------- --------------
Statement of financial position
obligation for
Gratuity 443,145 288,202
Compensated absences 351,110 200,674
794,255 488,876
----------------- --------------
Expense recognised in the
profit or loss
Gratuity 138,483 27,709
Compensated absences 110,793 29,136
249,276 56,845
----------------- --------------
The principal actuarial assumptions used were as follows:
31 December 2014 31 March 2014
----------------- --------------
Discount rate 8.00% 8.70%
Future salary increases 7% 7%
Return on plan assets 8% 8%
Retirement age 60 years 60 years
The Group makes annual contributions under a group gratuity plan
to Life Insurance Corporation of India ("LIC") of an amount advised
by LIC. The Group is not informed by LIC of the investments made by
the LIC or the break-down of plan assets by type of investments.
The expected rate of return on plan assets is based on the
expectation of the average long-term rate of return expected on the
insurer managed funds during the estimated term of the obligation.
The Group expects to contribute US$28,750 towards the gratuity plan
in the year ended 31 December 2015.
23. Employee benefit expense
US$ 31 March 2014
31 December 2014 (Restated)
----------------- --------------
Salaries and wages 4,908,091 4,659,060
Employee welfare expenses 285,046 388,206
Retirement benefits-defined
contribution plans 210,169 206,378
Retirement benefits-defined
benefit plans (note 22) 138,483 27,709
Compensated absences (note
22) 110,793 29,136
5,652,582 5,310,489
----------------- --------------
24. Other operating expenses include directors' fee of
US$249,724 (31 March 2014: US$384,232) and auditor's remuneration
of US$184,170 (31 March 2014: US$187,628).
25. Finance income and costs
US$ 31 December 2014 31 March 2014 (Restated)
----------------- -------------------------
Finance income
Foreign exchange gain 325,963 5,153,616
Interest on bank deposits
and others 1,578,552 1,206,351
Dividend from units of mutual
funds 45,615 944
-----------------
1,950,130 6,360,911
----------------- -------------------------
Finance cost
Interest on borrowings 41,256,098 22,674,770
Bank charges 620,805 2,473,619
41,876,903 25,148,389
----------------- -------------------------
26. Exceptional items
US$ 31 December 2014 31 March 2014
(Restated)
----------------- --------------
Loan restructuring costs (11,072,202) -
Gain on change in the value 17,249,961 -
of contingent consideration
Net Income 6,177,759 -
----------------- --------------
Loan restructuring costs
During the period, the Group raised US$ denominated Senior Notes
and invested the same as Non-convertible debentures. Loan
restructuring costs represents the cost of prepayment and
unamortized transaction costs of existing Rupees Loans. Refer note
19.7 for further details of US$ Senior Notes.
Gain on change in value of contingent consideration
The consideration payable to the seller of Greenko Budhil Hydro
Power Private Limited (Greenko Budhil) included additional
consideration contingent upon the vendor securing lucrative
customer contract on a long term basis. As at 31 December 2014, the
fair value of this additional consideration is considered Nil as
the sellers have not fulfilled obligation of securing the said
customer contract within the agreed period and has been recognized
in profit or loss. Refer note 30 for further details.
27. Income tax expense
US$ 31 December 2014 31 March 2014
(Restated)
----------------- --------------
Current tax 2,756,859 3,949,294
Deferred tax (note 20) 5,221,395 1,662,540
7,978,254 5,611,834
----------------- --------------
The tax on the Group's profit before tax differs from the
theoretical amount that would arise using the weighted average tax
rate applicable to profits of the Company as follows:
US$ 31 December 2014 31 March 2014
(Restated)
----------------- --------------
Profit before income tax 23,894,461 17,765,731
Domestic tax rate for Greenko
Group plc 0% 0%
Expected tax expense - -
Adjustment for tax differences
in foreign jurisdictions 7,978,254 5,611,834
Tax charge 7,978,254 5,611,834
----------------- --------------
The tax rates used in computing the weighted average tax rate is
the substantively enacted tax rate. In respect of the Indian
entities this was 32.45% (31 March 2014: 32.45%).
The Indian subsidiaries of the Group engaged in power generation
currently benefit from a tax holiday from the standard Indian
corporate taxation for the period/year ended 31 December 2014 and
31 March 2014. The tax holiday period under the Indian Income Tax
Act is for 10 consecutive tax assessment years out of a total of 15
consecutive tax assessment years from the tax assessment year in
which commercial operations commenced. However, these companies are
still liable for Minimum Alternate Tax which is calculated on the
book profits of the relevant entity and is currently at a rate of
20.01% (31 March 2014: 20.01%).
28. Earnings per share
a) Basic
Basic earnings per share, is calculated by dividing the profit
attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the period.
US$ 31 December 31 March 2014
2014
(Restated)
------------ --------------
Profit attributable to equity holders
of the Company 9,264,877 8,743,129
Weighted average number of ordinary
shares in issue 152,608,879 150,661,606
Basic earnings per share (in cents) 6.07 5.80
------------ --------------
b) Diluted
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares.
US$ 31 December 31 March 2014
2014
(Restated)
------------ --------------
Profit attributable to equity holders
of the Company 9,264,877 8,743,129
Increase in non-controlling interests
share of Group profit 3,258,048 1,878,162
------------ --------------
Total profit attributable to equity
holders of the Company 12,522,925 10,621,291
Reconciliation of number of shares
Weighted average number of equity
shares
-For basic earnings per equity share 152,608,879 150,661,606
Add: Shares deemed to be issued against
swap option issued to PS holders 16,984,771 9,671,795
Add: Adjustment for assumed conversion
of AES 44,861,538 40,559,747
Add: Stock option to be exercised 149,995 149,995
-For diluted earnings per equity
share 214,605,183 201,043,143
Diluted earnings per share (in cents) 5.84 5.28
------------ --------------
29. Commitments and contingencies
a) GEPL and Roshni Powertech Private Limited operate biomass
power plants located in the State of Andhra Pradesh, India. These
entities through the Biomass Energy Developers Association have
challenged the order of Andhra Pradesh Electricity Regulatory
Commission ("APERC") effecting a downward revision in billing
rates. The Supreme Court of India has upheld the original billing
mechanism as binding on the customer and has remanded the case back
to APERC to determine the final tariff per unit. During the
previous year, APERC has issued the final tariff along with
interest vide orders dated 22 June 2013 and 6 August 2013. At the
request of state utilities, the Court directed state utilities to
make immediate payment of 50% of the tariff difference amount which
was received by the Group. Further orders are awaited for balance
amounts receivable from state utilities.
b) A few of the Group's power generating units in India have
income tax disputes with the tax authorities. The Group has
appealed against the orders of the income tax officer/authority at
appropriate levels. The Group has been successful in obtaining
favourable orders in few cases. The tax authorities have appealed
against these orders. Based on assessment of these claims, the
management is confident of ultimate favourable outcome.
c) In December 2010, Sai Spurthi Power Private Limited (SSPPL),
an entity acquired by the Group in March 2010, received a letter
from a bank informing SSPPL that three corporate guarantees
aggregating to US$7,457,960 were given by SSPPL in respect of loans
availed by Sagar Power (Neerukatte) Limited, a company promoted and
owned by erstwhile management of SSPPL. On verification of records
and discussions with the erstwhile management, the management
believes that only one corporate guarantee of US$699,371 was
provided to the bank. The management is confident that the
contingent liability of SSPPL under the corporate guarantees issued
will not exceed US$699,371. Further, as per the terms of the share
purchase agreement with the promoters/erstwhile seller-shareholders
of SSPPL, the promoters/erstwhile seller-shareholders of SSPPL are
required to have the corporate guarantee(s) released without any
liability to SSPPL or the Group.
During 2012-13, SSPL received a communication from IREDA
informing that SSPL had given a corporate guarantee of US$1,195,505
for the credit facilities availed by Bhadragiri Power Private
Limited. On verification of records and discussions with the
erstwhile Managing Director, SSPL came to an opinion that the said
corporate guarantee was not executed on behalf of SSPL and hence
SSPL is not responsible for any liability under those documents.
This is a matter of dispute which needs to be finally settled. The
promoters/erstwhile seller-shareholders are responsible and
obligated to the Group to settle this.
d) Prior to acquisition by the Group, Greenko Budhil had
received demand notices aggregating to US$7,030,244 from various
government authorities in relation to duty drawback, construction
cess and entry tax. Greenko Budhil has contested these demands at
various levels. Pending disposal of these matters, in view of the
management no provision is required to be made in the books of
account. Further, the promoters/erstwhile seller-shareholders are
responsible and obligated to the Group to settle these
disputes.
e) Greenko Budhil terminated Power Purchase Agreement (PPA)
entered with PTC India Limited (PTC). Haryana Power Generation
Corporation Limited (HPGCL), the ultimate beneficiary (as PTC
entered into a power supply agreement with HPGCL), disputed the
termination. HPGCL approached the Haryana Electricity Regulatory
Commission (HERC) seeking inter alia that (i) the termination of
the PPA to be declared illegal and invalid and (ii) that both the
Greenko Budhil and PTC be directed to comply with their obligations
qua HPGCL ("HPGCL Petition"). Appellate Tribunal for Electricity
(APTEL) has held that HERC does not have jurisdiction over the
dispute. HPGCL and PTC both have challenged the decision of APTEL
separately with Hon'ble Supreme Court of India. Petitions have been
admitted by Hon'ble Supreme Court. The matter is pending with
Hon'ble Supreme Court for hearing. Based on the legal opinion of an
independent counsel, the Group is confident of a favourable outcome
in this matter. Further, the promoters/erstwhile
seller-shareholders are responsible and obligated to the Group to
settle this.
f) Him Kailash Hydro Power Private Limited (HKHPPL) has given
corporate guarantee in respect of a term loan of US$2,289,594
sanctioned to Madhava Vasistha Hydro Power Private Limited, a
company owned by erstwhile owners of HKHPPL. Pursuant to the terms
of share purchase agreement with erstwhile owners of HKHPPL,
erstwhile owners of HKHPPL are required to get the corporate
guarantee released without any liability to HKHPPL or the
Group.
g) Capital commitments
Capital expenditure contracted for at 31 December 2014 but not
yet incurred aggregated to US$136,766,141 (31 March 2014:
US$98,205,621).
30. Business combinations
30.1 Acquisitions of business during the period ended 31
December 2014
On 15 June 2014, the Group acquired 100% of the equity
instruments of Greenko Budhil Hydro Power Private Limited (earlier
known as Lanco Budhil Hydro Power Private Limited) (Budhil
Project). The acquisition was made to enhance the generating
capacity of the Group from clean energy assets. Budhil Project has
an operating hydro power plant with installed capacity of 70MW in
the state of Himachal Pradesh in north India. Details of this
acquisition are set out below:
Details of consideration transferred and net assets acquired are
as follows:
US$ Amount
------------
Purchase consideration
Cash 18,058,657
Consideration payable 2,296,514
Contingent consideration arrangement 18,210,298
------------
Total Purchase consideration 38,565,469
Fair value of net asset acquired 40,601,705
------------
Excess of Group's interest in fair value of
acquirees' assets and liabilities (2,036,236)
------------
Pursuant to the terms of share purchase agreement, the Group is
required to pay the vendors an additional consideration up to
US$19,996,667 if they are able to secure a long-term power purchase
agreement (long-term PPA) at favourable prices. The amount of
additional consideration would be based on the selling price under
the new long-term PPA. As the vendors had made good progress in
discussions with potential customers and the Group had given
guarantee to secure payment of additional consideration, the
management has considered payment of additional consideration as
probable on the acquisition date. US$18,210,298 represents the
present value of the Group's probability weighted estimate of cash
outflow at the acquisition date.
The excess of the Group's interest in the fair value of
acquiree's assets and liabilities over cost represents value which
the Group gained due to strong negotiating skills of the Group.
Fair value of the assets acquired and liabilities recognized at
the date of acquisition are as follows:
US$ Amount
-------------
Property, plant and equipment 107,634,044
Inventories 111,441
Licence 5,832,361
Trade and other receivables 825,638
Cash and cash equivalents 204,282
Trade and other payables (14,022,545)
Deferred income tax assets 651,289
-------------
101,236,510
Borrowings 60,634,805
-------------
Net assets 40,601,705
-------------
Purchase consideration settled in cash 18,058,657
Cash and cash equivalents acquired (204,282)
-------------
Cash outflow on acquisition 17,854,375
-------------
Impact of acquisition on results of the Group
Greenko Budhil generated revenues of US$8,314,414 and made
profit of US$243,884 from the acquisition date to the date of
balance sheet.
If Greenko Budhil had been acquired on 1 April 2014, revenue of
the Group would have been higher by US$3,286,266 whereas the profit
for the period would have been lower by US$88,392.
30.2 Acquisitions of business during the year ended 31 March 2014
During the year ended 31 March 2014, the Group acquired the
following companies to enhance the generating capacity of the Group
from clean energy assets. Details of these acquisitions are set out
below:
Effective Date of Percentage
acquisition acquired
------------------- -----------
Harsar Hydro Projects Private Limited (HHPPL) 1 July 2013 100.00%
Bharmour Hydro Projects Private Limited (BHPPL) 1 July 2013 100.00%
------------------- -----------
HHPPL and BHPPL hold licenses to develop 75MW and 40MW of hydel
projects in the state of Himachal Pradesh, India respectively.
These projects had obtained significant approvals to implement the
projects and these projects were under various stages of
development at the date of acquisition. These projects are
hereinafter collectively referred as 'Himachal Projects'.
Generally, the total gestation period, starting from obtaining a
licence till commencement of commercial operations, for these types
of hydro power projects is four to five years. Hence, the projects
have significant value embedded in them, which is generally not
reflected in the books of account, and captured in the fair value
of licences. The excess of the Group's interest in the fair value
of an acquiree's assets and liabilities over cost resulted from the
time value which the Group gained, the value in readiness for
implementation and the negotiating skills of the Group.
Details of net assets acquired are as follows:
US$ Himachal Projects
------------------
Purchase consideration:
- Cash paid 6,903,488
- Amounts paid as advance in earlier year 650,385
------------------
Total Purchase consideration 7,553,873
Fair value of net asset acquired 10,522,176
------------------
Excess of Group's interest in fair value of
acquirees' assets and liabilities (2,968,303)
------------------
Fair value of the acquiree's assets and liabilities arising from
the acquisition are as follows:
US$ Himachal Projects
------------------
Property, plant and equipment 378
Work in progress 1,538,430
Licence 15,553,677
Trade and other receivables 1,673
Cash and cash equivalents 37,654
Trade and other payables (1,545,031)
Deferred income tax liabilities (5,064,604)
------------------
Net assets 10,522,177
------------------
Purchase consideration settled in cash 6,903,488
Cash and cash equivalents (37,654)
------------------
Cash outflow on acquisition 6,865,834
------------------
Since the above companies were in the construction phase, they
did not generate revenue and profits for the Group for the year
ended 31 March 2014.
31. Related-party transactions
The Group is not controlled by any single individual or group or
entity. GIC and GEEMF with their substantial shareholding in
Greenko Mauritius and certain management reserved rights have
significant influence over the Group. Further, ACMK Enterprises
Limited, in which Anil Kumar Chalamalasetty and Mahesh Kolli have a
beneficial interest, holds 17.17% in the Company.
The following transactions were carried out with related
parties:
a. Key management compensation
US$ 31 December 2014 31 March 2014 (Restated)
----------------- -------------------------
Short-term employee benefits
Anil Kumar Chalamalasetty 227,910 309,586
Mahesh Kolli 227,910 309,586
John Rennocks 49,952 64,745
Keith Nicholas Henry 99,904 129,490
Vivek Tandon - 60,531
Hari Kiran Vadlamani 49,934 64,733
Vinodka Murria 49,934 64,733
Vasudeva Rao Kaipa 151,273 134,020
Bonus/arrears to Executive
Directors 443,975 321,648
----------------- -------------------------
Total short-term employee
benefits 1,300,792 1,459,072
Share-based payments
Keith Nicholas Henry 116,547 158,312
ACMK Enterprises Limited 10,681,742 -
----------------- -------------------------
Total remuneration 12,099,081 1,617,384
----------------- -------------------------
b. The management has provided towards the performance bonus of
US$363,949 (31 March 2014: US$321,648) for the period. The balance
payable as at period-end is US$822,483 (31 March 2014:
US$660,096).
c. Anil Kumar Chalamalasetty and Mahesh Kolli have given
personal guarantees in respect of certain loans availed by Indian
subsidiaries of the Group.
32. Segment reporting
The Group has adopted the "management approach" in identifying
the operating segments as outlined in IFRS 8. The Group operations
predominantly relate to generation and sale of electricity. The
chief operating decision maker evaluates the Group performance and
allocates resources based on an analysis of various performance
indicators at operational unit level. Accordingly there is only a
single operating segment "generation and sale of electricity and
related emission reductions". Consequently no segment disclosures
of the Group are presented.
The Group has majority of its non-current assets (other than
financial assets) located within India, and earn its revenues from
customers located in India.
Revenues from four major customers relating to power generating
activities represent US$51,878,497 (31 March 2014: US$45,757,353)
of the total revenue.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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