Kedco PLC Annual Report 2012

Kedcoplc

ANNUAL REPORT AND ACCOUNTS

2012

Contents -

Our Business 01

Chairman’s Statement 06

Chief Executive’s Report 07

Board of Directors 10

Directors’ Report 11

Statement of Directors’ Responsibilities 14

Corporate Governance Report 15

Independent Auditors’ Report 16

Consolidated Statement of Comprehensive Income 18

Consolidated Statement of Other Comprehensive Income 19

Consolidated Statement of Financial Position 20

Consolidated Statement of Changes in Equity 21

Consolidated Statement of Cash Flows 22

Company Statement of Financial Position 23

Company Statement of Changes in Equity 24

Company Statement of Cash Flows 25

Notes to the Consolidated Financial Statements 26

Advisers and Other Information 73

Our Business - Who We AreOur stated aim is to be one of the UK and Ireland’s largest

independent renewable energy companies, with a diverse

portfolio of operating and developing assets across various

renewable energy technologies.

Our business strategy is to identify, develop, build, own and

operate renewable power plants in the UK and Ireland.

We identify seven stages in the development of a renewable

power generation project. These are; initial evaluation, sign

letter of intent, secure site, obtain planning and permitting,

secure financial closure, construction and finally operation.

Value is created as we move from one stage of a renewable

power project to the next. When we secure a site, value is

created; when we secure planning and permitting further

value is created. Moving to financial close on projects and

actual construction and operation in our view increases

project value substantially.

Why Renewable Energy?� The UK and Irish Governments view the Renewable

Energy Sector as an opportunity for economic rejuvenation,

driving industry growth and job creation

� The Renewable Energy Sector in the UK and Ireland is

driven by clear economic and political factors such as rising

energy costs, growing concerns over climate change and

increasingly supportive Government policy and regulation.

� Bound by targets under the EU Renewable Energy

Directive both Governments must ensure that 15% of

energy consumption is from renewables by 2020.

� The Renewable Energy market in the UK is estimated to

be worth £120 billion, making it the world’s sixth largest low

carbon economy. By 2014/15 this growing sector is

expected to be worth £150 billion.

Kedco PLC - Annual Report and Accounts 2012

KKeeddccoo ppllcc’’ss rreenneewwaabbllee eenneerrggyyppoorrttffoolliioo iinncclluuddeess iinntteerreessttss iinn tthhee UUnniitteedd KKiinnggddoomm aanndd IIrreellaanndd

Kedco plc’s 4MW biomass electricity and heat generatingplant, Newry, Northern Ireland

p1

Operational Highlights -

The company achieved its objective of transitioning from a

clean energy project developer to an operational project

owner with the commencement of generation of electricity

at the 4MW Newry Biomass project in Northern Ireland.

�

Significant progress has been made in relation to the ready

to construct 12MW Enfield Biomass project in London which

has included detailed discussions with EPC contractors and

with potential debt and equity partners.

�

Pre planning consultation phase for the Clay Cross Biomass

project is now complete with a full planning application to be

submitted by the end of Q1 2013.

�

Successfully negotiated the proposed acquisition of Reforce

Energy Limited a project developer with 60 active projects

with a capacity in excess of 40MW at various stages of

development in the UK and Ireland which will be completed

shortly

p2

Financial Highlights – Year ended 30th June 2012

�

� Revenue from continuing operations of e10.1m (FY 2011

restated: e0.9m)

�

� Administrative costs reduced to e0.9m (FY 2011 restated:

e3.6m)

� Loss before tax from continuing operations for the period

reduced to e1.6m (FY 2011 restated: Loss before tax

e5.3m)

�

� Total loss for the period reduced to e2.5m (FY 2011

restated: Loss for period e4.5m) includes one-off

impairment cost of e1.4m arising on the revaluation of the

Group’s Latvian subsidiary, SIA Vudlande

� 0.6 cent loss per share for continuing operations (FY 2011

restated: loss per share 2.3 cent)


p3

Debt Restructuring – � Successfully negotiated balance sheet restructuring with

various lenders, resulting in the conversion of debt to equity

and a reduction of balance sheet debt by approximately

e10.8m.

�

� Material reduction in ongoing annual interest of

approximately e1.5m.

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Asset Disposal -� Completed the disposal of a further non-core asset being

the entire interest in Latvian subsidiary for e3m, as part of

debt restructuring.

Share Placing / Funding -� Successful placings of shares to new investors in February

2012, May 2012 and November 2012 raising approximately

e1.5m.

�

� Negotiated and agreed term sheet for the provision of

£1.5m in VCT funding for the Newry Biomass project.


p5

I am pleased to present the 2012Annual Report, which provides anupdate on a year which has beenone of significant development forthe Company. This financial year haswithout doubt been the mostimportant in the Group’s history.

In September 2012 the Companyannounced that its biomasselectricity and heat generation plantin Newry, Northern Ireland,commenced the exportation ofpower to the grid. This marked theCompany’s transition from a puredevelopment company to anoperator of renewable energy assets.

Operationally the Companycompleted the refocusing of thebusiness portfolio towards its core,renewable energy power generationactivities. Cost savings have beendelivered through the exit from non-core and non-profitable businesssegments, creating a leaner, moreefficient business structure with thefocus purely on the renewableenergy power generation business.

Since 30th June 2012, the Company has carried out arestructuring process, with the objectives of stabilising theCompany’s financial affairs, positioning the Company in amanner which will enable it to raise further capital, andenabling the Company to adopt a more appropriate capitalstructure. This will facilitate the advancement of itsdevelopment project line through the planning andpermitting process. At the Extraordinary General Meetingheld on 5th October 2012, shareholders approvedresolutions regarding the restructuring process. The Board ishappy to report that this process in now complete.

The Board took the opportunity to reposition the Companyas a ‘technology neutral’ renewable energy business with acore focus on developing and delivering operationalelectricity and heat generation projects. The Company willfocus on both large and small-scale projects, providingflexibility to maximise existing land positions whilstdiversifying development and technology risks. This flexiblebusiness model will deploy capital where it can achieve thebest return for shareholders whilst still keeping the focus onthe generation of clean energy from either electricity or heat.

With this in mind the Company entered into negotiations toacquire Reforce Energy Limited (‘Reforce’), a renewableenergy development company focused on small-scalerenewable projects across various technologies. Reforce’skey markets are the UK, Ireland and Northern Ireland whereit already has an active pipeline of over 60 projects with acapacity of in excess of 40MW at various stages ofdevelopment. We expect to complete the acquisition shortly.

The Company’s ultimate aim is to be one of the UK andIreland’s largest independent renewable energy companies,with a diverse portfolio of operating and development assetsacross various renewable energy technologies. To this end,the Company will focus on developing its existing portfolioas well as considering strategic bolt-on acquisitionopportunities that add generating potential to its projectportfolio.

On behalf of my colleagues on the Board, we wish toexpress our thanks to the management and staff who haveworked so diligently over the past year. I look forward toupdating shareholders further on the Company’s progress atour Annual General Meeting in December.

Dermot O’ConnellNon-Executive Chairman

Chairman’s Statement -

‘NNeewwrryy pprroojjeeccttmmaarrkkss tthheeCCoommppaannyy’’ssttrraannssiittiioonn ttoo aannooppeerraattoorr ooffrreenneewwaabbllee eenneerrggyyaasssseettss ffrroomm aa ppuurreeddeevveellooppmmeennttccoommppaannyy

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Operational ReviewThe Company’s stated aim is to beone of the UK and Ireland’s largestindependent renewable energycompanies, with a diverse portfolioof operating and development assetsacross various renewable energytechnologies.

The Company currently has 67MWof potential power at various stagesof development as set out below:

Newry Biomass – 4MW Biomasscombined heat and power (‘CHP’)The Company recently announcedthat its plant in Newry, NorthernIreland, commenced the exportationof power to the grid. This marks theCompany’s transition to an operatorof renewable energy assets from apure development company. Theelectricity generated by the plant isbeing sold to Bord Gáis Eireann

under a Power Purchase Agreement (‘PPA’). The Companynow intends to move towards the completion of the next2MW phase of the project, which is expected to come onlinein Q4 2013. The civil and on-site works for this additional2MW have already been completed and a deposit has beenpaid to secure the expansion of the grid infrastructure forthe project. Kedco has invested £6m through a combinationof equity and loan notes in the project corporate entity andowns 50 per cent of the ordinary equity and 92 per cent ofthe economic return from the project. Our majorshareholder, Farmer Business Developments plc, owns theremaining 50 per cent of the ordinary equity but is onlyentitled to eight per cent of the economic return from theproject. The balance of the project funding was arrangedthrough a financing deal with RBS Ulster Bank, whichcommitted project finance facilities of up to £8m. Furtherupdates will be provided in the near future as the projectmoves towards full commissioning of the first phase.

We intend to complete the planning process for a further4MW extension to the Newry Biomass project, bringing thecapacity up to 8MW in the coming year.

Enfield Biomass – 12MW Biomass CHPThe Company’s other key asset is the 12MW EnfieldBiomass project located in Enfield, London. This project hasfull planning and permitting to convert 60,000 tonnes perannum of waste wood and has entered into advanceddiscussions in relation to an offer to connect to the nationalgrid. The Company has already entered into a 20 year leasein relation to the site. The Company has various optionsavailable in relation to feedstock sourced locally for theplant. The Directors believe that this project is one of themost advanced biomass development projects located in theLondon region and the Company intends to progress theproject towards financial close and commencement ofconstruction. Advanced discussions are currently takingplace with potential debt and equity partners in relation tothe project. We intend to complete the financing andstarting construction of the 12MW Enfield Biomass projectin the coming year. A further update will be provided asappropriate.

Cork and Kerry Anaerobic Digestion (‘AD’) projects The Company has full planning and permitting for two siteslocated in the South of Ireland which could convert 40,000tonnes of agricultural and food waste per annum into up to1.5MW of electricity and 1.4MW of heat. These projects willqualify for the Irish Government support scheme forrenewable energy under REFIT III, which covers biomasstechnologies for the period 2010 to 2015. This schemeprovides for a fixed feed in tariff rate of between e0.10-e0.13 per kilowatt hour (‘kWh’) produced, depending onthe use of heat generated from the plant. A strategicdecision regarding the development of these two projects iscurrently being undertaken.

Clay Cross Biomass CHP and AD and Rutland ADThe Company has also invested heavily in planning andpermitting over the last 18 months and it is currentlyengaged in the consenting process for an 8MW site inDerbyshire and 1.3MW AD site in East Anglia, both in theUK.

Chief Executive’s Report -


‘TThhee ccoonnssttrraaiinniinnggffaaccttoorrss ooff tthhee ppaassttaarree nnooww bbeehhiinndd

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Pluckanes Wind FarmReforce recently made an announcement that it hascompleted the purchase of Pluckanes Windfarm Limited(‘Pluckanes’), which has developed a fully consented 800kwsingle wind turbine project located in Cork, Ireland. Thepurchase of the Pluckanes project has added a constructionready asset to the portfolio, which is targeted to becomeoperational during 2013. Once the Acquisition is finalisedand with the commissioning of the project next year, theCompany’s operational capacity will increase by 40 per cent.

Project PortfolioThe Company is currently in discussion with a number of siteowners in the UK and Ireland regarding future sites for thedevelopment of renewable energy projects. The intention isto secure sites that will increase the development pipeline toa minimum 300MW within the next three years.

Reforce whose acquisition will be completed shortly has apipeline of over 60 projects with a capacity of in excess of40MW across various technologies located in the UK,Ireland and Northern Ireland.

Financial ReviewRevenue in the period amounted to e10.1m and was in linewith expectations (FY 2011 restated: e0.9m). The Groupreported a loss for the period of e2.5m, a decrease on theprior year loss of e4.5m for FY 2011. Included in the loss ofe2.5m is a one-off impairment cost of e1.4m arising on therevaluation of the group’s Latvian subsidiary, SIA Vudlandebefore disposal post year end. The decrease in losses isattributable to a significant reduction in administrative costsduring the year and a decrease in financing costs arisingfrom the restructuring of debt.

At 30th June 2012, the Group had net debt of e11.9m(30th June 2011: e11.8m) including cash balances ofe144,764 (30th June 2010: e616,285).

The Group has carried out a restructuring process since theyear end which has significantly strengthened the Group’sbalance sheet through the reduction of approximatelye10.8m of debt obligations of the Group, as well as areduction of its annual interest charge by approximatelye1.5m. The reduction of e10.8m was achieved through theconversion of debt into equity and the sale of its Latviansubsidiary, SIA Vudlande.

OutlookIn the 2011 preliminary announcement the Board promisedshareholders that we would aggressively pursue otheropportunities in our project pipeline. I am pleased to reportthat we have made substantial progress in adding furtherprojects to the pipeline, which I believe will add shareholdervalue in the short to medium term.

Against this positive backdrop, we have further refined andrefocused the Company’s strategy with a clear aim of beingone of the largest independent renewable energy companiesin the UK and Ireland. The successful completion of thebalance sheet restructure further solidifies this strategy andprovides a springboard for the Company to accelerate itsproject pipeline. In light of the Company’s expandingpipeline of development and acquisition opportunities, theDirectors anticipate undertaking a further equity fundraisingin 2013.

I was also delighted to announce the impending acquisitionof Reforce which is expected to close imminently. I feel thatthe transaction provides a key endorsement of our strategy.In addition to a strong pipeline of renewable energy projects,Reforce has an experienced management team with over 10years’ experience across 500MW+ of renewable energyprojects. The Reforce management team and shareholders,by agreeing to the acquisition, believe there is an attractivevalue creation story for the combined Group.

Chief Executive’s Report - continued

p8

The Board has identified the following objectives for thecoming 12 months:� To complete the financing and starting construction of the12MW Enfield Biomass project. � To complete the financing and start installation of thesecond stage of the 4MW Newry Biomass which will be fullycommissioned by end of the 2013.� To complete the planning process for a further 4MWextension to the Newry Biomass project, thereby bringingthe capacity up to 8MW. � Once the Reforce Acquisition is finalised, complete thefinancing and commissioning the 800kw PluckanesWindfarm project.� To obtain planning permission for the 8MW Clay CrossBiomass project.� Once the Acquisition is finalised bring the Altilow 800kwwind project to a fully consented and ready-to-constructstage.� To obtain at least another six planning permissions forsmall scale renewable energy projects� To double the size of the Company’s current developmentpipeline.

We believe the constraining factors of the past are nowbehind the Company. With the restructuring, pipelineprogress and proposed acquisition of Reforce, we are moreconfident than ever of being able to deliver real shareholdervalue in the short to medium term.

We will continue to focus the Company’s resources onbringing projects to construction ready and financial closestages and in managing the operations of these projects.Projects will sit in their own individual special purposeentities and project funding will take place in those entities.The Company intends to retain an equity interest in all futureprojects to the benefit of shareholders in the listed Company.

Gerry MaddenCEO

Chief Executive’s Report - continued


p9

Kedco PLC Board of Directors -

�� Dermot O’ConnellNon-Executive ChairmanDermot O’Connell, who isChairman of Cork CooperativeMarts and a director of theCompany’s largest shareholder,Farmer Business Developmentsplc, joined the Board as a Non-Executive Director in March2011 and was appointed asNon – Executive Chairman inOctober 2011. Dermot's other directorships compriseFairfield Estates Limited, Fairfield Developments Limited,CCM House Limited, Corrin Event Centre Limited, MarketGreen Developments Limited, Market Green Estates Limitedand CCM Dovea Genetics Limited.

�� Gerry Madden CEO and Interim Finance DirectorGerry Madden joined Kedco plc in May 2007 as FinanceDirector. He has more than two decades of experience inbusiness in the UK and Ireland. Prior to joining Kedco, Gerryoperated his own consulting practice between 1998 and2007, advising companies on corporate finance and businessstrategy. Before that Gerry worked for 16 years with theinternational accountants KPMG and was auditor andadviser to listed companies, multinationals and privatecompanies operating in Ireland and internationally. Gerry hasacted as Non-Executive Director for a variety of companiesin different business sectors in Ireland. Gerry is a Fellow ofthe Institute of Chartered Accountants in Ireland havingqualified as an accountant with KPMG in 1987. Gerry holdsa degree in Commerce from University College Cork.

�� Brendan Halpin Executive DirectorBrendan Halpin joined Kedco plc in February 2006 asFinancial Controller and joined the Board as ExecutiveDirector in March 2011. Brendan is a Fellow of the Instituteof Chartered Accountants in Ireland, having qualified as anaccountant with PricewaterhouseCoopers in 1998. Hiscurrent responsibilities include inter alia, financemanagement, project management and treasury functions.

�� Edward Barrett Non-Executive DirectorEddie Barrett is one of the original founders of Kedco plc.He established International Livestock Genetics Ltd, an Irishimporter and distributor of bovine genetics based in Co.Cork and has been Managing Director since 1993. Inaddition, Eddie is a Director of Platinum Asset ManagementLtd, an investment company specialising in the renewableenergy sector.

�� William Kingston Non-Executive DirectorWilliam Kingston is one of the original founders of Kedcoplc, joining the Board in January 2005 as Chairman. He isalso a past president of the Irish Grassland Association, abody focused on research and dissemination of informationto the Irish agricultural industry. William was a boardmember of the Food Safety Authority of Ireland from 2002to 2006 and the West Cork Leader (an EU-backed bodyinvolved in rural development) from 2005 to 2007.

�� Diarmuid Lynch Non-Executive DirectorDiarmuid Lynch is one of the original founders of Kedco plc.He operates one of the largest dairy farms in Ireland basedin Co. Cork. From 1998 to 2000, he served on the board ofthe Blackwater Trading Company, a group involved in theprocurement of agricultural inputs, services and feedstockin the Blackwater region of Ireland.

�� Donal O’Sullivan Non-Executive DirectorDonal O’Sullivan joined the board in August 2007. He wasthe Chairman and Executive Director of Esso Ireland Limitedbetween 1986 and 2001. He was also a Director of the IrishPetroleum Industry Association, the representative body ofcompanies in Ireland who import, distribute and marketpetroleum products. Donal held the position of ManagingDirector of HOYER Ireland Ltd and was a board member ofHOYER in the UK from 2001 to 2006. HOYER Ireland is asubsidiary of HOYER GmbH, a company involved in theprovision of specialist logistics services to the petroleum,chemical, gas and foodstuff sector.

Kedco plc Board of Directors (l-r): Edward Barrett, Donal O'Sullivan, Diarmuid Lynch, Dermot O'Connell, Brendan Halpin, Gerry Madden and William Kingston.

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Directors’ Report -

The Directors present their annual report and the audited financial statements of the company and its subsidiaries collectively known as‘the Group’ for the year ended 30th June 2012.

Principal ActivitiesThe principal activities of the Group are to identify, develop, build, own and operate power plants in the UK and Ireland using renewableenergy technologies. The Group focuses on both large and small scale projects, providing flexibility to maximize existing land positions whilediversifying development and technology risks. The Group’s ultimate aim is to be one of the UK and Ireland’s largest independent renewableenergy companies, with a diverse portfolio of operating and development assets across various renewable technologies. To this end, theGroup will focus on developing its existing portfolio as well as considering strategic bolt-on acquisition opportunities that add generatingpotential to its project portfolio.

Review of Business and Future Developments and Key Performance Indicators

A review of the Group’s business and future developments and key performance indicators is contained in the Chairman’s Statement andthe Chief Executive’s Report on pages 6 to 9. Below is a summary.

Operational HighlightsThe Company achieved its objective of transitioning from a clean energy project developer to an operational project owner with thecommencement of generation of electricity at the 4MW Newry Biomass project in Northern Ireland.●Significant progress has been made in relation to the ready-to-construct 12MW Enfield Biomass project in London, including detaileddiscussions with EPC contractors and with potential debt and equity partners.●Pre-planning consultation phase for the Clay Cross Biomass project is now complete with a full planning application to be submitted bythe end of Q1 2013.●Successfully negotiated the proposed acquisition of Reforce Energy Limited (‘Reforce’), a project developer with 60 active projects and acapacity in excess of 40MW at various stages of development in the UK and Ireland. It is anticipated that the acquisition will be completedshortly.

Financial Highlights Revenue from continuing operations of e10.1m (FY 2011 restated: e0.9m).●Administrative costs reduced to e0.95million (FY 2011 restated: e3.6m).●Loss before tax from continuing operations for the period reduced to e1.6m (FY 2011 restated: Loss before tax e5.3m). ●Total loss for the period reduced to e2.5m (FY 2011 restated: Loss for period e4.5m) includes one-off impairment cost of e1.4m arisingon the revaluation of the Group’s Latvian subsidiary, SIA Vudlande.●0.6 cent loss per share for continuing operations (FY 2011 restated: loss per share 2.3 cent).

Debt RestructuringSuccessfully negotiated balance sheet restructuring with various lenders, resulting in the conversion of debt to equity and a reduction ofbalance sheet debt by approximately e10.8m.●Material reduction in ongoing annual interest of approximately e1.5m.

Asset DisposalCompleted the disposal of a further non-core asset being the entire interest in Latvian subsidiary for e3m, as part of debt restructuring.

Share Placing / Funding Successful placings of shares to new investors in February 2012, May 2012 and November 2012 raising approximately e1.5m.●Negotiated and agreed term sheet for the provision of £1.5m in VCT funding for the Newry Biomass project.

Results and DividendsThe results for the year are set out on page 18. No dividends have been proposed by the Directors (2011: eNil).


p11

Directors’ Report - (continued)

Principal Risks and UncertaintiesThe Group has a risk management structure in place, which is designed to identify, manage and mitigate business risk. Risk assessmentand evaluation is an essential part of the Group’s internal control system.

Information about the financial risk management objectives and policies of the Group, along with exposure of the group to credit risk,liquidity risk and market risk, are disclosed in Note 4 of the notes to the consolidated financial statements.

The Group is exposed to a number of other risks and uncertainties. These break into two categories:1 General risks impacting the business.2 Project development related risk.

GGeenneerraall RRiisskkss

Electricity marketThe Group’s plans are exposed to electricity market price risk through variations in the wholesale price of electricity. The Group managesthis risk by entering into long term power purchase agreements.

Legislative riskThe Group is exposed to adverse changes in legislation that may impact the income for renewable energy power plants. The directorsmonitor possible changes to legislation and where possible engage in the consultation process to safeguard the Group’s interests.Projected project revenues could be affected by changes to the renewable legislation including for example; the number of RenewableObligation Certificates awarded per MWh of generation under the Renewable Obligation. Any negative changes to these projectedrevenues could impact the ability of the group to secure debt and equity for projects.

PPrroojjeecctt ddeevveellooppmmeenntt rriisskkss

Site evaluation and procurementSecuring sites for the development of renewable energy power plants is a key requirement in further developing the business. This reliesupon the ability of the Group to locate, evaluate, select, develop and realise appropriate opportunities, and to be able to negotiate andcomplete land agreements and related access/connection agreements at a cost that allows profitable projects to be developed.

The Group manages these risks by continually reviewing a large number of sites in the UK and Ireland such that it is not focused onany one particular landowner or location.

Planning and development consentOnce a site is secured a planning and development consent is sought, together with any other necessary permits to allow a renewableenergy power plant to be constructed and operated. During this stage of the process the Group is exposed to the following specificrisks:�

�

�

�

The Group manages these risks through securing sites on which it believes it can secure planning and development consent, employingsuitably qualified and significantly experienced staff to manage the consenting process and ensure compliance with the latest legislation,as well as ensuring maximum engagement of local authorities and interested stakeholders from a very early stage.

The Group has significant experience of securing planning consents for renewable energy power plants and knowledge of the importantcriteria involved. The Group uses this experience when selecting sites for development.

consents may be subjected to delays beyond the Group’s control, which may subsequently cause the project to be delayed or aborted.There are no guarantees that any or all of the necessary consents will be granted;consents granted may be subject to conditions that affect the economic or operational viability of the proposed project. These couldin turn impact the Group’s ability to raise project finance, or reduce the value of a project in the case of a sale;delays or onerous planning conditions may lead to unforeseen costs which the Group may need to raise finance for;legislative changes may influence the acceptability of the site or the economic viability of the project.

p12


Principal Risks and Uncertainties (continued)PPrroojjeecctt ddeevveellooppmmeenntt rriisskkss (continued)Contract NegotiationThis stage of the development process involves the negotiation of contracts for the construction of the renewable energy plant, thesale of electricity and related products produced by the plant, the procurement of fuel for the plant and the operation of the plant. Thisstage begins during the early stages of the planning and development and concludes at the point of financial close. During this stagethe Group is exposed to the following specific risks in addition to those outlined above:�

�

The Group manages these risks through soliciting bids from a number of different suppliers for the equipment required to constructthe plant and any other materials or equipment required to ensure the plant can operate profitably.

Financial closeThis stage relates to the crystallisation of the project into the construction stage. This may involve either the sale of the project, in wholeor part, or securing project finance enabling the project to be constructed. During this stage the Group is exposed to the additionalrisks:�

�

�

�

It is the Boards view that once the project has planning and development consent, these risks are mitigated by the potential to sell aproject for at least its book value.

The Group has experience in negotiating financial arrangements for power plants and understands the contract structures required tosecure project finance. Additionally the Group has relationships with a number of project finance banks, utility and large industrialcompanies allowing project finance or sale discussions to be initiated.

ConstructionThis stage is reached once financing, both debt and equity, is secure and all project contracts are entered into.

During this stage the Group is exposed to the following specific risks:�

�

�

�

The Group seeks to mitigate these risks through the negotiation of fixed price contracts with reputable contractors and by ensuringthe financial plans include adequate levels of contingency to accommodate cost overruns. Additionally, the Group seeks to appoint anowner’s engineer with significant experience to oversee the project programme once construction commences.

Going ConcernThe directors have assessed going concern. See Note 3 for further details.

DirectorsThe present Directors are listed on page 10.

Mr Alf Smiddy resigned as director of the company on 13th February, 2012.

In accordance with the Articles of Association, Diarmuid Lynch and Donal O’Sullivan retire by rotation and, being eligible, offerthemselves for re-election.

The board recommends the re-election of Diarmuid Lynch and Donal O’Sullivan as directors.

the ability to secure fixed price contracts for the construction of each power plant with the required level of guarantees that allowproject finance to be secured;significant changes to inflation impacting the costs of building and operating renewable energy power plants and therefore theprofitability of renewable energy power plants; and

the general availability of finance to fund the construction of power plants, and the level of lending that can be secured;changes to interest rates which may impact the cost of financing power projects;the ability to secure equity on acceptable terms for the construction of projects once debt is in place; anddepressed market for the sale of projects, leading to low prices or no willing buyers.

cost overruns by contractors or claims made may result in a need for additional equity or debt funding;delays to the construction programme leading to higher than planned interest charges during the construction programme and maydelay the commencement of operating cash flows to fund the Company’s ongoing activities;failure of the completed plant to operate as planned; andsupplier insolvency.


p13


Directors’ and Secretary’s Interests in SharesThe Directors and Secretary of Kedco plc who held office at 30th June 2012 had the following interests in the shares of the Company:

� Diarmuid Lynch 21,294,186 5,021,880 21,294,186 5,021,880� William Kingston 16,639,734 4,094,100 16,559,734 4,094,100� Edward Barret 13,571,666 3,080,000 13,486,666 3,080,000� Brendan Halpin 8,271,120 3,261,873 8,271,120 3,261,873� Gerry Madden 76,667 14,926,161 76,667 14,926,161� Donal O’Sullivan 66,667 2,238,924 66,667 2,238,924� Dermot O’Connell - - - -

Remuneration Committee ReportThe Group’s policy on senior executive remuneration is designed to attract and retain people of the highest calibre who can bring theirexperience and independent views to the policy, strategic decisions and governance of the Group.

In setting remuneration levels the Remuneration Committee takes into consideration the remuneration practices of other companies ofsimilar size and scope. A key philosophy is that staff must be properly rewarded and motivated to perform in the best interests of theshareholders. Details of Directors remuneration are included in Note 36 of the notes to the consolidated financial statements.

Books of AccountTo ensure that proper books and accounting records are kept in accordance with Section 202 of the Companies Act, 1990, the Directorshave employed appropriately qualified accounting personnel and have maintained appropriate computerised accounting systems. Thebooks of account are located at 4600 Airport Business Park, Cork, Ireland.

Subsequent EventsDetails of events occurring since 30th June 2012 which impact on the Group are included in Note 41.

AuditorsThe auditors, Deloitte & Touche, Chartered Accountants, continue in office in accordance with Section 160(2) of the Companies Act 1963.

Approved by the Board on 30th November 2012.

Dermot O’Connell Gerard Madden Chairman Director

Number of Ordinary Sharesat 30th June 2012

Number of ‘A’ Ordinary Sharesat 30th June 2012

Number of Ordinary Sharesat 1st July 2011

(or at date ofappointment if earlier)

Number of ‘A’ Ordinary Sharesat 1st July 2011

(or at date ofappointment if earlier)

Statement of Directors’ Responsibilities -

Irish company law requires the Directors to prepare financial statements for each financial year, which gives a true and fair view of the stateof affairs of the Company and the Group, and of the profit or loss of the Group for that period.

In preparing the financial statements, the Directors are required to:� Select suitable accounting policies and then apply them consistently;� Make judgements and estimates that are reasonable and prudent; and� Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in

business.

The Directors are responsible for keeping proper books of account which disclose with reasonable accuracy at any time the financial positionof the Company and to enable them to ensure that the financial statements are prepared in accordance with accounting standards generallyaccepted in Ireland and comply with Irish statute comprising the Companies Acts, 1963 to 2012. They are also responsible for safeguardingthe assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. TheDirectors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.

Corporate Governance Report -

The Company is not subject to the Combined UK Corporate Governance Code, applicable to companies with full listing on the LondonStock Exchange. The Company does however intend, so far as is practicable and desirable, given the size and nature of the business, tofollow the recommendations on corporate governance for AIM companies (the ‘QCA Guidelines’) issued by the Quoted CompaniesAlliance (‘QCA’).

The BoardThe board of directors of the Company is responsible to shareholders for leadership in all aspects of the business. The board comprises sevenmembers. Five independent Non-Executive directors, contribute individual experience from diverse backgrounds. Two Executive Directorsare responsible for the implementation of all board decisions and oversee the management of the Group on a day-to-day basis.

In accordance with the articles of association, one-third of directors retire by rotation each year. Each director must be subject to re-electionat least every three years.

Role of the BoardThe Company has adopted a schedule of matters reserved for consideration by the whole board, including, for example: approval of theGroup’s long-term objectives and commercial strategy; approval of the annual operating and capital expenditure budgets of the Group (andany material changes thereto); changes relating to the Group’s structure; major changes to the Group’s corporate structure; approval ofthe Group’s annual report and accounts; approval of the dividend policy; major capital projects; changes to the structure, size andcomposition of the board; determination of the remuneration for the directors, the Company Secretary and executive management; divisionof responsibilities between the Chairman, the Chief Executive and other executives of the board; and the making of political donations orpolitical expenditure.

The Board is also responsible for ensuring maintenance of sound systems of internal control and risk management and the directors confirmthat they continually review the effectiveness of the system of internal control, covering all material controls including financial, operationaland compliance controls and risk management.

In accordance with QCA Guidelines, the board has established audit, nomination and remuneration committees, as described below, andutilises other committees as necessary in order to ensure effective governance.

Audit CommitteeThe Company’s Audit Committee comprises William Kingston as the Chairman, Donal O’Sullivan and Diarmuid Lynch. The Audit Committeemeet at least three times a year at appropriate times in the reporting and audit cycle and otherwise as required. The Finance Directornormally attends meetings of the Committee and the Chief Executive Officer attends as necessary. The external auditors are invited toattend meetings of the Audit Committee on a regular basis.

The terms of reference for the Audit Committee include the following responsibilities:� Monitoring the integrity of the reported financial performance of the Group, including its preliminary results announcement, annual reportand interim report;

� Reviewing the effectiveness of the Group’s internal financial controls;� Making recommendations to the board on the appointment and removal of the external auditors and the audit fee;� Monitoring the objectivity and independence of the external auditors.

Nomination CommitteeThe Company’s Nomination Committee comprises Donal O’Sullivan as the Chairman, Diarmuid Lynch and William Kingston. TheNomination Committee meets at such times required by the Chairman of the Committee. The Nomination Committee is responsible formaking recommendations on all new board appointments.

Remuneration CommitteeThe Company’s Remuneration Committee comprises Edward Barrett as the Chairman, Diarmuid Lynch and William Kingston. The role ofthe Remuneration Committee is to review the performance of the Executive Directors and other senior executives and to set the scale andstructure of their remuneration, including the implementation of any bonus arrangements, with due regard to the interests of OrdinaryShareholders. The Remuneration Committee also administers and establishes performance targets for share incentive schemes anddetermines the allocation of share incentives to employees.

The Board has adopted a code for dealings in the Company’s securities by directors and applicable employees, which conforms to therequirement of the AIM Rules (Share Dealing Code). The Company will be responsible for taking all proper and reasonable steps to ensurecompliance by the directors and applicable employees with the Share Dealing Code and the AIM Rules. The Company complies with thecorporate governance obligations applicable to Irish registered public companies whose shares are quoted on the AIM market of theLondon Stock Exchange.


p15

Independent Auditor’s Report to the members of Kedco plc -

We have audited the financial statements of Kedco plc for the year ended 30th June 2012 which comprise the Group Financial Statements:the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Other Comprehensive Income, the ConsolidatedStatement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cashflows and theCompany Financial Statements: the Company Statement of Financial Position, the Company Statement of Changes in Equity and CompanyStatement of Cashflows and the related Notes 1 to 42. These financial statements have been prepared under the accounting policies setout therein.

This report is made solely to the company's members, as a body, in accordance with Section 193 the Companies Act, 1990. Our auditwork has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditors’report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other thanthe company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditorsThe directors are responsible for preparing the Annual Report, including the preparation of the Group Financial Statements in accordancewith applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and the Parent CompanyFinancial Statements in accordance with applicable law and accounting standards issued by the Accounting Standards Board and publishedby the Institute of Chartered Accountants in Ireland (Generally Accepted Accounting Practice in Ireland).

Our responsibility, as independent auditor, is to audit the financial statements in accordance with relevant legal and regulatory requirementsand International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the Group Financial Statements give a true and fair view, in accordance with IFRSs as adoptedby the European Union and the Parent Company Financial Statements give a true and fair view, in accordance with Generally AcceptedAccounting Practice in Ireland, and are properly prepared in accordance with Irish statute comprising the Companies Acts, 1963 to 2012.We also report to you whether in our opinion: proper books of account have been kept by the company; whether, at the balance sheetdate, there exists a financial situation requiring the convening of an extraordinary general meeting of the company; and whether theinformation given in the Directors' Report is consistent with the financial statements. In addition, we state whether we have obtained allthe information and explanations necessary for the purpose of our audit and whether the company's balance sheet is in agreement withthe books of account.

We also report to you if, in our opinion, any information specified by law or the Listing Rules of the Alternative Investment Market of theLondon Stock Exchange regarding directors’ remuneration and directors’ transactions is not disclosed and, where practicable, include suchinformation in our report.

We read the other information contained in the Annual Report and consider the implications for our report if we become aware of anyapparent misstatement or material inconsistencies with the financial statements. The other information comprises only the Chairman’sStatement, Chief Executive’s Report, Director’s Report and the Corporate Governance Statement. Our responsibilities do not extend to otherinformation.

Basis of audit opinionWe conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board.An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It alsoincludes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statementsand of whether the accounting policies are appropriate to the company’s and the group’s circumstances, consistently applied and adequatelydisclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order toprovide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whethercaused by fraud or other irregularity or error. In forming our opinion we evaluated the overall adequacy of the presentation of informationin the financial statements.

p16

Independent Auditor’s Report to the members of Kedco plc (continued)

OpinionIn our opinion: • the Group Financial Statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, of thestate of the affairs of the group as at 30 June 2011 and of its loss for the year then ended; • the Group Financial Statements have been properly prepared in accordance with the Companies Acts, 196to 2009 • the Parent Company Financial Statements give a true and fair view, in accordance with Generally Accepted AccountingPractice in Ireland as applied in accordance with the provisions of the Companies Acts 1963 to 2009, of the state of the parentcompany affairs as at 30 June 2011; and • the Parent Company financial statements have been properly prepared in accordance with the Companies Acts, 1963 to2009.

Emphasis of Matter – Going Concern Without qualifying our opinion, we draw your attention to Note 3 to the financial statements which indicates that the Groupincurred a loss for the year of e2,481,358 and had net current liabilities and net liabilities of e6,258,722 and e827,330 respectivelyat the balance sheet date. These conditions indicate the existence of a material uncertainty which may cast significant doubt aboutthe Group’s ability to continue as a going concern. The directors believe progress towards securing finance is being made and thatmeasures have been taken to strengthen the Group’s financial position. The directors have a reasonable expectation that the Groupwill have adequate resources to continue in operational existence for the foreseeable future. The directors have prepared thefinancial statements of the company and the group on a going concern basis. The financial statements do not include theadjustments that would result if the Group was unable to continue as a going concern.

We have obtained all the information and explanations we considered necessary for the purpose of our audit. In our opinionproper books of account have been kept by the company. The company’s balance sheet is in agreement with the books of account.

In our opinion the information given in the Directors' Report is consistent with the financial statements.

The net assets of the company, as stated in the Company Statement of Financial Position are more than half the amount of its called-up share capital and, in our opinion, on that basis there did not exist at 30th June 2012 a financial situation which, under Section40(1) of the Companies (Amendment) Act, 1983, would require the convening of an extraordinary general meeting of theCompany.

Brian Murphy For and on behalf of Deloitte & Touche Chartered Accountants and Registered Auditors Cork

Date: 10th December 2012

The Group Financial Statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, of thestate of the affairs of the group as at 30th June 2012 and of its loss for the year then ended; The Group Financial Statements have been properly prepared in accordance with the Companies Acts, 1963 to 2012;The Parent Company Financial Statements give a true and fair view, in accordance with Generally Accepted Accounting Practicein Ireland as applied in accordance with the provisions of the Companies Acts, 1963 to 2012, of the state of the parent companyaffairs as at 30th June 2012; and The Parent Company financial statements have been properly prepared in accordance with the Companies Acts, 1963 to 2012.


p17

Consolidated Statement of Comprehensive Income -for the year ended 30th June 2012

(Restated)Notes 2012 2011

h h

Revenue 8 10,083,158 9,936,435

Cost of Sales 9 (10,123,726) (1,059,127)

Gross Loss (40,568) (122,692)

Operating ExpensesAdministrative Expenses 10 (953,705) (3,617,547)Other Operating Income 11,100 7,605

Operating Loss (983,173) (3,732,634)

Finance Costs 11 (414,424) (1,534,344)Share of Losses on Joint Ventures after Tax 23 (213,923) (356,228)Profit on Disposal of Share in Joint Venture 23 - 9,285,379Finance Income 11 333 287

Loss Before Taxation 13 (1,611,187) (5,337,540)

Income Tax Expense 14 - -

Loss for the Year from Continuing Operations (1,611,187) (5,337,540)

Profit for the year from discounted operations 15 493,911 9,802,677Losses arising on the remeasurement of assets held for sale 15 (1,364,082) -

Net loss for the year from discontinued operations 15 (870,171) 9,802,677

Loss for the year - total (2,481,358) (4,534,863)

Loss Attributable To:Owners of the Company (2,580,140) (4,698,241)Non-Controlling Interest 98,782 163,378

(2,481,358) (4,534,863)

Euro Per Share Euro Per ShareBasic Loss Per Share:From Continuing Operations 17 (0.006) (0.023)From Continuing and Discontinued Operations 17 (0.009) (0.020)

Diluted Loss Per Share:From Continuing Operations 17 (0.006) (0.023)From Continuing and Discontinued Operations 17 (0.009) (0.020)

p18

Consolidated Statement of Other Comprehensive Income -for the year ended 30th June 2012

2012 2011h h

Loss for the Financial Year (2,481,358) (4,534,863)

Other Comprehensive IncomeExchange differences arising on retranslation of foreign operations (310,844) 21,063

Total comprehensive income and expense for the year (2,792,202) (4,513,800)

Attributable to:Owners of the company (2,890,984) (4,677,178)Non-controlling interests 98,782 163,378

(2,792,202) (4,513,800)


p19

Consolidated Statement of Financial Position -At ended 30th June 2012

Notes 2012 2011ASSETS h h

Non-Current AssetsGoodwill 18 - 549,451Intangible assets 19 - 505Property, plant and equipment 20 757,329 5,060,243Financial assets 21 7,608,687 990,000Total Non-Current Assets 8,366,016 6,600,199

Current AssetsInventories 24 50,000 1,613,026Amounts due from customers under construction contracts 25 1,355,212 9,425,279Trade and other receivables 26 1,605,518 2,848,088Cash and cash equivalents 37 144,764 616,285

3,155,494 14,502,678Assets classified as held for sale 16 6,584,239 -

Total Current Assets 9,739,733 14,502,678

TOTAL ASSETS 18,105,749 21,102,877

EQUITY AND LIABILITIESEquityShare capital 27 4,106,808 3,543,999Share premium 27 19,375,525 19,038,300Shared based payment reserves 28 - 492,580Retained earnings – deficit (25,207,673) (22,316,689)

(Deficit) /Equity attributable to equity holders of the parent (1,725,340) 758,190Non-controlling interest 898,010 799,228Total (Deficit) /Equity (827,330) 1,557,418

Non-Current LiabilitiesBorrowings 29 2,425,025 7,958,393Deferred income – government grants 30 - 36,915Finance lease liabilities 31 - 373Share of net liabilities of jointly controlled entities 23 509,599 18,867Deferred tax liability 33 - 268,062Total Non-Current Liabilities 2,934,624 8,282,610

Current LiabilitiesAmounts due to customers under construction contracts 25 1,110,090 1,272,735Trade and other payables 32 2,595,766 5,481,674Borrowings 29 9,661,645 4,494,676Deferred income – government grants 30 - 9,444Finance lease liabilities 31 373 4,320

13,367,874 11,262,849Liabilities associated with assets held for sale 16 2,630,581 -Total Current Liabilities 15,998,455 11,262,849

TOTAL EQUITY AND LIABILITIES 18,105,749 21,102,877

p20

Consolidated Statement of Changes in Equity -for the year ended 30th June 2012

Share Share Retained Share Based Attributable to Non TotalCapital Premium Earnings Payment Equity Holders Controlling

Reserve of the Parent Interesti i i i i i i

Balance at 1st July 2010 3,239,407 17,410,077 (17,639,511) 328,383 3,338,356 635,850 3,974,206

Issue of ordinary shares in Kedco plc 304,592 1,628,223 - - 1,932,815 - 1,932,815

Loss for the financial year - - (4,698,241) - (4,698,241) 163,378 (4,534,863)

Unrealised foreign exchange gain - - 21,063 - 21,063 - 21,063

Share based payments - - - 164,197 164,197 - 164,197

Balance at 30th June 2011 3,543,999 19,038,300 (22,316,689) 492,580 758,190 799,228 1,557,418

Issue of ordinary sharesin Kedco plc 562,809 337,225 - - 900,034 - 900,034

Loss for the financial year - - (2,580,140) - (2,580,140) 98,782 (2,481,358)

Unrealised foreign - - (310,844) - (310,844) - (310,844)exchange gain

Share based payments - - (492,580) (492,580) - (492,580)

Balance at 30th June 2012 4,106,808 19,375,525 (25,207,673) - (1,725,340) 898,010 (827,330)


p21

Consolidated Statement of Cash Flows -for the year ended 30th June 2012

Notes 2012 2011Cash Flows from Operating Activities h h

Loss for the financial year (2,481,358) (4,394,977)Adjustments for:Income Tax 69,731 -Share based payments (492,580) 164,197Depreciation of property, plant and equipment 596,418 634,734Amortisation of intangible assets 2,275 71,396Profit on disposal of property, plant and equipment (67,236) (88,881)Impairment of property, plant and equipment - 424,668Impairment of intangible assets - 94Impairment of assets held for sale 1,364,082 -Write off of unpaid share capital 492,563 -Unrealised foreign exchange gain 163,677 6,941Share of losses of jointly controlled entities after tax 213,923 356,228Decrease in provision for impairment of trade receivables (71,924) (166,014)(Decrease) /Increase in impairment of inventories (294,715) 281,921Decrease in deferred income (10,302) (10,303)Interest expense 506,754 1,627,690Profit on disposal of share in joint venture - (285,379)Interest income (338) (364)

Operating cash flows before working capital changes (9,030) (1,378,049)Decrease/(Increase) in:Amounts due from customers under construction contracts 8,070,067 (133,368)Trade and other receivables 4,336 (174,720)Inventories 276,377 (284,932)

(Decrease)/increase in:Amounts due to customers under construction contracts (162,645) (29,622)Trade and other payables (2,476,219) (717,781)

Cash From /(Used in) Operations 5,702,886 (2,718,472)Income taxes paid (9,108) (55,968)Net Cash From /(Used in) Operating Activities 5,693,778 (2,774,440)

Cash Flows from Investing ActivitiesAdditions to property, plant and equipment (644,737) (573,181)Proceeds from sale of property, plant and equipment 126,951 113,229Additions to intangible assets (1,770) -Additions to investments in jointly controlled entities (6,660,010) -Proceeds from disposal of interest in jointly controlled entities - 134,840Interest received 338 364Net Cash Used in Investing Activities (7,179,228) (324,748)

Cash Flows from Financing ActivitiesProceeds from borrowings 2,896,483 4,142,687Repayments of borrowings (2,293,628) (1,583,381)Proceeds from issuance of ordinary shares 644,250 1,932,815Payments of finance leases (58,496) (36,803)Interest paid (255,842) (590,526)Net Cash from Financing Activities 932,767 3,864,792

Net (Decrease) /Increase in Cash and Cash Equivalents (552,683) 765,604Cash and cash equivalents at the beginning of the financial year 208,587 (557,017)Cash and cash equivalents at the end of the financial year 37 (344,096) 208,587

p22

Company Statement of Financial Position -At 30th June 2012

Notes 2012 2011h h

ASSETSNon-Current AssetsIntangible Assets 19 - -Investment in Subsidiary Undertakings 21 24,941,463 24,941,463

Total Non-Current Assets 24,941,463 24,941,463

Current AssetsTrade and other receivables 26 18,336,014 10,850,094Cash and bank balances 37 14,331 402,718

Total Current Assets 18,350,345 11,252,812

TOTAL ASSETS 43,291,808 36,194,275

EQUITY AND LIABILITIESEquityShare Capital 27 4,106,808 3,543,999Share Premium 27 38,309,604 37,972,379Share based payment reserve 28 - 492,580Retained earnings - deficit (11,835,887) (11,550,529)

Equity attributable to equity holders of the parent 38 30,580,525 30,458,429

Non-Current LiabilitiesBorrowings 29 - 3,435,580

Total Non-Current Liabilities - 3,435,580

Current LiabilitiesBorrowings 29 6,680,402 1,827,070Trade and other payables 32 6,030,881 473,196

Total Current Liabilities 12,711,283 2,300,266

TOTAL EQUITY AND LIABILITIES 43,291,808 36,194,275


p23

Company Statement of Changes in Equity -for the Year Ended 30th June 2012

Share Share Retained Share-Based TOTALCapital Premium Earnings Payment

Reserveh h h h h

Balance at 1st July 2010 3,239,407 36,344,157 (401,254) 328,383 39,510,693

Issue of ordinary sharesin Kedco plc 304,592 1,628,222 - - 1,932,814

Loss for the financial year - - (11,149,275) - (11,149,275)

Share based payments - - - 164,197 164,197

Balance at 30th June 2011 3,543,999 37,972,379 (11,550,529) 492,580 30,458,429

Issue of ordinary sharesin Kedco plc 562,809 337,225 - - 900,034

Loss for the financial year - - (285,358) - (285,358)

Share based payments - - - (492,580) (492,580)

Balance at 30th June 2012 4,106,808 38,309,604 (11,835,887) - 30,580,525

p24

Company Statement of Cash Flows -for the Year Ended 30th June 2012

Year Ended Year EndedNotes 30th June 2012 30th June 2011

u u

Cash Flows from Operating ActivitiesLoss before taxation (285,358) (11,149,275)Adjustments for:Share based payments (492,580) 164,197Interest expense 160,926 1,148,881Interest income (333) (265)Amortisation of intangible assets 1,770 -Foreign currency losses arising from retranslation of borrowings 430,401 -Provision for impairment of investment in subsidiaries - 10,460,290

Operating cash flows before working capital changes (185,174) 623,828

Increase in:Trade and other receivables (7,485,824) (5,326,037)

Increase in:Trade and other payables 5,551,138 287,286

Cash used in operations (2,119,860) (4,414,923)Income taxes paid (695) (5,390)

Net Cash Used in Operating Activities (2,120,555) (4,420,313)

Cash Flows from Investing ActivitiesAdditions to investments in subsidiaries - (1)Additions to intangible assets (1,770) -Interest received 333 265

Net Cash (used in) / from Investing Activities (1,437) 264

Cash Flows from Financing ActivitiesProceeds from borrowings 1,200,000 4,117,732Repayments of borrowings (95,979) (1,073,411)Proceeds from issuance of ordinary shares 644,250 1,932,814Interest paid (14,666) (182,091)

Net Cash from Financing Activities 1,733,605 4,795,044

Net (Decrease) / Increase in Cash and Cash Equivalents (388,387) 374,995

Cash and cash equivalents at the beginning of the Financial Year 402,718 27,723

Cash and Cash Equivalents at the end of the Financial Year 37 14,331 402,718


p25

Notes to the Consolidated Financial Statements -for the Year Ended 30th June 2012

General InformationKedco plc (‘the Company’) was incorporated in Ireland on 2nd October 2008. The address of its registered office and principal placeof business is Building 4600, Cork Airport Business Park, Kinsale Road, Cork.

On 13th October 2008 the Group, previously headed by Kedco Block Holdings Limited, underwent a re-organisation by virtue ofwhich Kedco Block Holdings Limited’s shareholders, in their entirety, exchanged their shares for shares in Kedco plc, a newly-formedcompany. Kedco plc then became the ultimate parent company of the Group.

These financial statements for the year ended 30th June 2012 consolidate the individual financial statements of the Company and itssubsidiaries (together referred to as ‘the Group’).

On 20th October 2008 the Company’s shares were admitted to trading on the London Stock Exchange’s AIM market.

The principal activity of the Group is as follows:

� Identify, develop, build, own and operate power plants in the UK and Ireland using renewable energy technologies. The Groupfocuses on both large and small scale projects, providing flexibility to maximise existing land positions while diversifying developmentand technology risks.

Application of New and Revised International Financial Reporting Standards (IFRSs)The following new and revised Standards and Interpretations have been adopted by the Group with no significant impact on itsconsolidated results or financial position, but may impact the accounting for future transactions or arrangements:

AS 24 Related Party Disclosures (2009) clarifies the definition of a related party and provides a partial exemption from related partydisclosures for government-related entities.

Amendment to IFRIC 14 Prepayments of a minimum funding requirement remedies an unintended consequence of IFRIC 14 whereentities are in some circumstances not permitted to recognise as an asset prepayments of minimum funding contributions.

Improvements to IFRSs (2010). These amendments concerned the following Standards:

� IFRS1 First Time Adoption of International Financial Reporting Standards clarifies the requirement to explain changes in accountingpolicy in the year of adoption and amends the usage of deemed cost in certain circumstances.

� IFRS7 Financial Instruments: Disclosures encourages the use of qualitative disclosures to enable users to understand the nature andextent of risks arising from financial instruments and clarifies the required level of disclosure around credit risk and collateral held.

� IAS1 Presentation of Financial Statements clarifies that an entity may present the analysis of other comprehensive income by itemeither in the statement of changes in equity or in the notes to the financial statements.

� IAS 34 Interim Financial Reporting emphasises the principle in IAS34 that the disclosure of significant events and transactions in interim periods should update the relevant information presented in the most recent annual report.

� IFRIC 13 Customer Loyalty Programmes clarifies what should be accounted for in determining the fair value of award credits.

Disclosures – Transfers of Financial Assets (Amendments to IFRS 7 Financial Instruments: Disclosures) increases the disclosurerequirements for transactions involving the transfer of financial assets, enhances the existing disclosures under IFRS7 where an assetis transferred but not derecognised and introduces new disclosures for assets that are derecognised but the entity continues to have acontinuing exposure to the asset after the sale.

The following new and revised Standards and Interpretations have not been adopted by the Group, whether endorsed by the EuropeanUnion or not. The Group is currently analysing the practical consequences of the new Standards and the effects of applying them tothe financial statements. The related standards and interpretations are:

� IFRS 9 Financial Instruments and subsequent amendments (effective for annual periods beginning on or after 1st January 2015, notyet endorsed by the European Union);

� IFRS 10 Consolidated Financial Statements (effective for annual periods beginning on or after 1st January 2013; not yet endorsedby the European Union).

1

2

p26

Notes to the Consolidated Financial Statements - (continued)for the Year Ended 30th June 2012

Application of New and Revised International Financial Reporting Standards (IFRSs) (continued)� IFRS 11 Joint Arrangements (effective for annual periods beginning on or after 1st January 2013; not yet endorsed by the EuropeanUnion).

� IFRS 12 Disclosure of Interest in Other Entities (effective for annual periods beginning on or after 1st January 2013; not yet endorsedby the European Union).

� IFRS 13 Fair Value Measurement (effective for annual periods beginning on or after 1st January 2013; not yet endorsed by theEuropean Union).

� IAS 27 Separate Financial Statements (Amended 2011) (effective for annual periods beginning on or after 1st January 2013; not yetendorsed by the European Union).

� IAS 28 Investments in Associates and Joint Ventures (Amended 2011) (effective for annual periods beginning on or after 1st January2013; not yet endorsed by the European Union).

� Amendments to IFRS 1 First Time Adoption of International Financial Reporting Standards (effective for annual periods beginningon or after 1st January 2013; not yet endorsed by the European Union).

� Amendments to IFRS 7 Financial Instruments: Disclosures (effective for annual periods beginning on or after 1st January 2013; notyet endorsed by the European Union).

� Amendments to IAS 1 Presentation of Financial Statements (effective for annual periods beginning on or after 1st July 2012; endorsedby the European Union 5th June 2012).

� Amendments to IAS 12 Income Taxes (effective for annual periods beginning on or after 1st January 2012; not yet endorsed by theEuropean Union).

� Amendments to IAS 19 Employee Benefits (effective for annual periods beginning on or after 1st January 2013; endorsed by the European Union 5th June 2012).

� Amendments to IAS 32 Financial Instruments: Presentation (effective for annual periods beginning on or after 1st January 2014; notyet endorsed by the European Union).

� Annual Improvements to IFRSs: 2009-2011 Cycle (effective for annual periods beginning on or after 1st January 2013; not yet endorsed by the European Union)

� Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transitional Guidance (effectivefor annual periods beginning on or after 1st January 2013; not yet endorsed by the European Union)

Statement of Accounting Policies

Basis of PreparationThe Group’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards(IFRS) effective at 30th June 2012 for all periods presented as issued by the International Accounting Standards Board. The consolidatedfinancial statements are also prepared in accordance with IFRS as adopted by the European Union (‘EU’).

The consolidated financial statements are prepared under the historical cost convention except for certain financial assets and financialliabilities which are measured ar fair value. The principal accounting policies set out below have been applied consistently by the parentcompany and by all of the Company’s subsidiaries to all periods presented in these consolidated financial statements.

The financial statements of the parent company, Kedco plc have been prepared in accordance with accounting standards generallyaccepted in Ireland and Irish statute comprising the Companies Acts, 1963 to 2012.

2

3


p27


Statement of Accounting Policies (continued)Basis of Preparation (continued)As described in the Chief Executive’s Report, the Company continues to invest capital in developing customer and partner relationshipsin the UK and Ireland. The Company has also continued to develop and expand its pipeline of projects. These activities resulted in theCompany continuing to report reduced losses for the year to 30th June 2012.

The group incurred a loss of e2,481,358 (2011: e4,534,863) during the year, and it had net current liabilities of e6,258,722 (2011:net current assets e3,239,829) and net liabilities of e827,330 (2011: net assets e1,557,418) at 30th June 2012. Since 30th June 2012,the Company has carried out a restructuring process, with the objective of stabilising the Company’s financial affairs, position theCompany in a manner which will enable it to raise further capital, and enable the Company to adopt a more appropriate capitalstructure, which will facilitate the advancement of its development project line through the planning and permitting process. Resolutionsapproving the restructuring process were agreed by the members of the Company at an Extraordinary General Meeting of the Companyheld on 5th October 2012.

The restructuring has significantly strengthened the Group’s balance sheet through the reduction of approximately e10.8m of DebtObligations from the group and a reduction of its annual interest charge by approximately e1.5m. The reduction in e10.8m wasachieved through the conversion of debt into equity (e5.8m) and the sale of its Latvian subsidiary SIA Vudlande, which has the affectof removing debt (e1.4m) from the balance sheet and paying down zero loan note holders (e3m).

In conjunction with the above restructuring, the Company raised approximately e0.95m in an equity placing in November 2012. Theproceeds of the Fundraising will be used by the Company to meet its on-going working capital requirements including the continueddevelopment of its project pipeline. The Company also announced in November 2012 that it had secured a conditional offer of furtherfinancing of £1.5m for the further development of its Newry Power Plant.

The financial statements have been prepared on a going concern basis. The Directors have given careful consideration to theappropriateness of the going concern concept in the preparation of the financial statements. The validity of the going concern conceptis dependent upon finance being available for the Group’s working capital requirements and for the continued investment in theGroup’s strategy of identifying, developing, building and operating power generating plants so that the Group can continue to realiseits assets and discharge its liabilities in the normal course of business. The financial statements do not include any adjustments that wouldresult should the above conditions not be met.

After making enquiries and considering the matters referred to above, the Directors believe that progress towards securing finance hasbeen and is being made. The Directors have a reasonable expectation that the Group will have adequate resources to continue inoperational existence for the foreseeable future. For these reasons the Directors continue to adopt the going concern basis of accountingin preparing the financial statements.

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Statement of Accounting Policies (continued)Basis of ConsolidationThe consolidated financial statements incorporate the financial information of the Company and its subsidiaries. The financial year-endsof all entities in the Group are coterminous.

The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control over theoperating and financial decisions is obtained and cease to be consolidated from the date on which control is transferred out of theGroup. Control exists where the Company has the power, directly or indirectly, to govern the financial and operating policies of theentity so as to obtain economic benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effectivedate of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with thoseused by other members of the Group.

The results and assets and liabilities of subsidiaries are incorporated in these financial statements using equity method of accounting,except when the subsidiary is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 Non-current AssetsHeld for Sale and Discontinued Operations.

On 13th October 2008 the Group, previously headed by Kedco Block Holdings Limited, underwent a re-organisation by virtue ofwhich Kedco Block Holdings Limited’s shareholders, in their entirety, exchanged their shares for shares in Kedco plc, a newly formedCompany. Kedco plc then became the ultimate parent company of the Group. Notwithstanding the change in the legal parent of theGroup, this transaction has been accounted for as a reverse acquisition under IFRS 3 Business Combinations and these consolidatedfinancial statements are prepared on the basis of the new legal parent, Kedco plc, having been acquired by the existing Group. As aresult of applying reverse acquisition accounting, the consolidated financial statements are a continuation of the financial statementsof Kedco Block Holdings Limited and its subsidiaries.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Non-controlling interests in the net assets (excluding goodwill) of consolidated subsidiaries are identified separately from the Group’sequity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination andthe non-controlling share of changes in equity since the date of the combination. Losses applicable to the non-controlling interest inexcess of its interest in the subsidiary’s equity are allocated against the interests of the Group except to the extent that the non-controlling interest has a binding obligation and is able to make an additional investment to cover the losses.

Business CombinationsAcquisitions of subsidiaries and businesses from third parties are accounted for using the purchase method. The cost of the businesscombination is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed,and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the businesscombination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3,Business Combinations, are recognised at their fair values at the acquisition date, except for non-current assets that are classified asheld for sale in accordance with IFRS 5, Non-Current Assets Held for Sale and Discontinued Operations, which are recognised andmeasured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the businesscombination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If,after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilitiesexceeds the cost of the business combination, the excess is recognised immediately in profit or loss.

The interest of non-controlling shareholders in the acquiree is measured at the non-controlling interest’s proportion of the net fairvalue of the assets, liabilities and contingent liabilities recognised.

GoodwillFor the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from thesynergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or morefrequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less thanthe carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to theunit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

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Statement of Accounting Policies (continued)Goodwill (continued)An impairment loss for goodwill is immediately recognised in profit or loss and not reversed in a subsequent year.

On disposal of a subsidiary or a jointly controlled entity, the attributable amount of goodwill is included in the determination of theprofit or loss on disposal.

Interests in Jointly Controlled EntitiesJoint venture arrangements that involve the establishment of a separate entity in which each venturer has an interest are referred toas jointly controlled entities. The Group reports its interests in jointly controlled entities using the equity method of accounting exceptwhen the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 Non-current Assets Heldfor Sale and Discontinued Operations. Under the equity method, investments in jointly controlled entities are carried in the consolidatedbalance sheet at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the jointly controlled entity, lessany impairment in the value of individual investments. Losses of jointly controlled entities in excess of the Group’s interest in thatjointly controlled entity (which includes any long-term interests that, in substance, form part of the Group’s net investment in thejointly controlled entities) are recognised only to the extent that the Group has incurred legal or constructive obligations or madepayments on behalf of the jointly controlled entity.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingentliabilities of the jointly controlled entity recognised at the date of acquisition is recognised as goodwill. The goodwill is included withinthe carrying amount of the investment and is assessed for impairment as part of that investment.

Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost ofacquisition, after reassessment, is recognised immediately in profit or loss.

Where the Group transacts with its jointly controlled entities, unrealised profits and losses are eliminated to the extent of the Group’sinterest in the joint venture.

InvestmentsInvestments in subsidiary undertakings are accounted for at cost less provisions for diminution in value.

Revenue RecognitionRevenue is measured at fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns,rebates and other similar allowances.

Sale of GoodsRevenue from the sale of goods, including boilers, wood pellets, wood chips and timber production, is recognised when all the followingconditions are satisfied:� The significant risks and rewards of ownership have transferred to the buyer of the goods;� The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective controlover the goods sold;

� The amount of revenue can be measured reliably;� It is probable that the economic benefits associated with the transaction will flow to the entity; and� The costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue from the sale of goods is recognised when the possession of the goods pass to the buyer on delivery. The Group still retainslegal title until payment has been made to protect collectability of the amount due, but the significant risks and rewards have beenpassed to the buyer.

Rendering of servicesThe Group recognises revenue for services provided when the amount of the revenue can be reliably measured and it is probable thatfuture economic benefits will flow to the entity.

Interest RevenueInterest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, whichis the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s netcarrying amount.

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Statement of Accounting Policies (continued)LeasingThe Group as LesseeLeases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership tothe lessee. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets of the Group at their fair value, or if lower, at the present value of the minimumlease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheetas a finance obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as toachieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. In the event that lease incentivesare received to enter into operating leases, such incentives are recognised as a liability. The benefit of incentives is recognised as areduction of rental expense on a straight-line basis over the lease term.

Foreign CurrenciesFor the purposes of the consolidated financial statements, the results and financial position of each group entity are expressed in Euro,which is the functional currency of the Company and its subsidiaries, except for SIA Vudlande and Kedco Fabrication Limited, wherethe functional currency is Latvian Lats and Sterling, respectively.

There has been no material currency movement arising as a result of the stable position of the Lat and Sterling relative to Euro.

Transactions in currencies other than the functional currencies are recorded at the rates of exchange prevailing at the dates of thetransactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing atthe balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the ratesprevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in aforeign currency are not retranslated.

For the purpose of presenting the consolidated financial statements, the assets and liabilities of the Group’s foreign operations areexpressed in Euro using exchange rates prevailing at the balance sheet date. Income and expense items are translated at the rates atthe dates of the transactions. For practical reasons, in some cases a rate that approximates the exchange rates at the dates of thetransactions is used if exchange rates do not fluctuate significantly.

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

Borrowing CostsBorrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarilytake a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time asthe assets are substantially ready for their intended use or resale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets isdeducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the year in which they are incurred.

Government GrantsGovernment grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching tothem and that the grants will be received.

Government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets arerecognised as deferred income in the balance sheet within either non-current liabilities or current liabilities, as appropriate and transferredto profit or loss on a systematic and rational basis over the useful lives of the related assets and included in the line item ‘administrativeexpenses’ as an offset against depreciation of the relevant asset.

Other government grants are recognised as income over the periods necessary to match them with the costs for which they areintended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses alreadyincurred or for the purposes of giving immediate financial support to the Group with no future related costs are recognised in profit orloss in the year in which they become receivable.

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Statement of Accounting Policies (continued)TaxationIncome tax expense represents the sum of the tax currently payable and deferred tax.

Current TaxThe tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidatedincome statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludesitems that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted orsubstantively enacted at the balance sheet date.

Deferred TaxDeferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and thecorresponding tax bases used in the computation of taxable profit and are accounted for using the balance sheet liability method.Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognisedfor all deductible temporary differences to the extent that it is probable that taxable profits will be available against which thosedeductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises fromgoodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affectsneither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longerprobable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

A deferred tax liability is recognised for all taxable temporary differences associated with investments in subsidiaries except where theCompany controls the timing of the reversal of the temporary difference and where the temporary difference will not reverse in theforeseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settledor the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Themeasurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Groupexpects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current taxliabilities, when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assetsand liabilities on a net basis.

Current and Deferred Tax for the Financial YearCurrent and deferred tax are recognised as an expense or income in profit or loss, except where they relate to items credited or debiteddirectly in equity.

Share-based PaymentsThe group operates an equity settled share-based long-term incentive plan (the ‘LTIP’). Group share schemes allow employees toacquire shares in the Company. The fair value of the share entitlements is recognised as an employee expense in the income statementwith a corresponding increase in equity. Share entitlement granted by the Company under the LTIP are subject to non-market vestingconditions. Non-market vesting conditions are not taken into account when estimating the fair value of entitlements as at the grantdate.

The expense for the share entitlements shown in the income statement is based on the fair value of the total number of entitlementsexpected to vest and is allocated to accounting periods on a straight-line basis over the vesting period. The cumulative charge to theincome statement is reversed only where entitlements do not vest because non-market performance conditions have been met orwhere an employee in receipt of share entitlements leaves the Group before the end of the vesting period.

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Statement of Accounting Policies (continued)Property, Plant and EquipmentProperty, plant and equipment are stated in the balance sheet at cost, less accumulated depreciation and any accumulated impairmentlosses. The cost of plant, property and equipment and construction in progress comprises purchase price and other directly attributablecosts.

Freehold land and construction in progress are not depreciated.

Depreciation is charged so as to write off the cost of assets, other than freehold land and construction in progress, over their estimateduseful lives to estimated residual value, using the straight line method. The estimated useful lives, residual values and depreciationmethod are reviewed at each year end. The following estimated useful lives are used in the calculation of depreciation:� Buildings 5-50 years� Plant and machinery 2-5 years� Office equipment 2-5 years� Fixtures and fittings 2-5 years� Motor vehicles 5 years

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter,the term of the relevant lease.

The gain or loss on disposal or retirement of an item of property, plant and equipment is determined as the difference between thesales proceeds and the carrying amount of the asset and is recognised in profit or loss.

Held for SaleNon-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered through a saletransaction rather than through continuing use.

This condition is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate salein its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as acompleted sale within one year from the date of classification. Non-current assets and disposal groups classified as held for sale aremeasured at the lower of the assets’ carrying amount and fair value less costs to sell. Where the criteria are no longer met the non-current asset or disposal group is reclassified to the appropriate balance sheet heading and is measured at the lower of its recoverableamount at the date of the decision not to sell and its carrying amount before being reclassified as held for sale, adjusted for anydepreciation, amortisation or revaluation that would have been recognised had the asset not been classified as held for sale.

Intangible AssetsInternally-generated Intangible Assets – Research and Development Expenditure

Expenditure on research activities is recognised as an expense in the year in which it is incurred.

Intangible assets arising from development are only recognised if the Group has the necessary technical, financial and other resourcesto complete the development, the asset has the ability to generate future cash flows and other economic benefits for the Group andthe Group can measure the expenditure attributable to the intangible asset.

The amount initially recognised for internally-generated intangible assets is the amount of the expenditure incurred from the datewhen the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can berecognised, development expenditure is charged to profit or loss in the year in which it is incurred.

Subsequent to initial recognition, internally-generated assets are reported at cost less accumulated amortisation and accumulatedimpairment losses. Amortisation is charged on a straight line basis over their estimated useful lives. The estimated useful life andamortisation method are reviewed at the end of each annual reporting year.

The following useful lives are used in the calculation of amortisation of intangible assets:� Website 2 years� Software 3 years� Trademarks 4 years� Development costs 5 years

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Statement of Accounting Policies (continued)Impairment of Tangible and Intangible Assets Excluding GoodwillAt each balance sheet date, the Group reviews the carrying amount of its tangible and intangible assets to determine whether thereis any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the assetis estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverableamount of an individual asset, the Group estimates the recoverable amount of the cash generating units for which a reasonable andconsistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, andwhenever there is an indication that the assets may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cashflows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value ofmoney and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amountof the asset (or cash-generating unit) is reduced to its recoverable amount.

InventoriesInventories are stated at the lower of cost and net realisable value. Cost is determined on an average cost basis and includes allexpenditure incurred in the normal course of business in bringing the products to their present location and condition. Net realisablevalue represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

Construction ContractsWhere the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stageof completion of the contract activity at the balance sheet date, measured based on the proportion of contract costs incurred for workperformed to date relative to the estimated total contract costs, except where this would not be representative of the stage ofcompletion. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed withthe customer.

Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contractcosts incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the year in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expenseimmediately.

Trade and Other ReceivablesTrade and other receivables are initially recognised at fair value plus transaction cost. Impairment is recognised for trade receivableswhere there is objective evidence that the Group will not be able to collect amounts due according to the original terms of the receivableindicated by a default in payment terms and significant financial difficulty.

Cash and Cash EquivalentsCash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid investments that are readily convertible toknown amounts of cash with maturities of three months or less from the date of acquisition and that are subject to an insignificant riskof change in value.

Financial Liabilities and Equity Instruments Issued by the GroupMeasurementFinancial liabilities are initially measured at fair value net of transaction costs.

The effective interest rate method is a method of calculating the amortised cost of a financial liability and of allocating interest expenseover the relevant year. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expectedlife of the financial liability or, where appropriate, a shorter year.

Classification as Debt or EquityDebt and equity instruments are classified as either financial liabilities or as an equity instrument in accordance with the substance ofthe contractual arrangement and the definitions of a financial liability and an equity instrument.

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Statement of Accounting Policies (continued)Equity InstrumentsAn equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equityinstruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

A financial instrument is classified as an equity instrument if, and only if, the instrument includes a contractual obligation to deliver cashor other financial assets to another entity and if the instrument will or may be settled in the issuer’s own equity instruments, it is a non-derivative with no contractual obligation to deliver a variable number of its own equity instruments or a derivative that will be settledby the issuers exchanging a fixed amount of cash or another financial asset for a fixed number of its own equity instruments.

Financial instruments which do not meet the recognition criteria of equity instruments are classified as financial liabilities.

Financial LiabilitiesFinancial liabilities are classified as either financial liabilities at fair value through profit or loss (‘at FVTPL’) or other financial liabilities.

Financial Liabilities at FVTPLFinancial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL.

A financial liability is classified as held for trading if:� It has been acquired principally for the purpose of repurchasing it in the near term; or� On initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or

� It is a derivative that is not designated and effective as a hedging instrument.

A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:� Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or� The financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

� It forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset and liability) to be designated as at FVTPL.

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. Thenet gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ‘other gains orlosses’ line item in the consolidated income statement.

Other Financial LiabilitiesOther financial liabilities (including borrowings) are subsequently measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense overthe relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees andpoints paid or received that forms an integral part of the effective interest rate, transaction costs and other premiums or discounts)through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initialrecognition.

Derecognition of financial liabilities The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire. Thedifference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised inprofit or loss.

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4


Critical Accounting Judgements and Key Sources of Estimation of UncertaintyIn the application of the Group’s accounting policies, management is required to make judgements, estimates and assumptions aboutthe carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptionsare based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in theyear in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revisionaffects both current and future years.

The following are the critical judgments, apart from those involving estimations, that management have made in the process of applyingthe entity’s accounting policies and that have the most significant effect on the amounts recognised in the consolidated financialstatements.

Going ConcernAs described in the basis of preparation in Note 3 above, the validity of the going concern concept is dependent upon finance beingavailable for the Group’s working capital requirements and for the continued investment in the Group’s strategy of identifying,developing, building and operating power generating plants so that the Group can continue to realise its assets and discharge itsliabilities in the normal course of business. The restructuring has significantly strengthened the Group’s balance sheet through thereduction of approximately e10.8m of Debt Obligations from the group and a reduction of its annual interest charge by approximatelye1.5m. In conjunction with the above restructuring, the Company raised approximately e0.95m in a equity placing in November 2012.The proceeds of the Fundraising will be used by the Company to meet its on-going working capital requirements including the continueddevelopment of its project pipeline. The Company also announced in November 2012 that it had secured a conditional offer of furtherfinancing of £1.5m for the further development of its Newry Power Plant. After making enquiries and considering the matters referredton above, the Directors believe that solid progress towards securing finance has been and is being made. The Directors have areasonable expectation that the Group will have adequate resources to continue in operational existence for the foreseeable future.

Recoverability of amounts due under construction contractsThe directors considered the recoverability of the group’s balances due under construction contracts which is included in the balancesheet at 30th June 2012 at e1,355,212 (2011: e9,425,279). The directors have reviewed the relevant costs incurred to date andexpected costs for completion. They have also been in contact with the ultimate beneficiaries of the construction contracts and haveconsidered the ability of these customers to have the relevant facilities available to pay for these contracts. Based on these reviews,the directors are satisfied with the recoverability of balances due under construction contracts at the balance sheet date.

Provisions for impairment of trade receivables The Group estimates the allowance for doubtful trade receivables related to trade receivables based on assessment of specific accountswhere the Group has objective evidence comprising default in payment terms or significant financial difficulty that certain customersare unable to meet their financial obligations. In these cases, judgment used was based on the best available facts and circumstancesincluding but not limited to, the length of relationship. At 30th June 2012, provisions for doubtful debts amounted to eNil whichrepresents 0% of trade receivables at that date (2011: e140,333 – 10%).

Determining useful lives of intangible assetsThe amortisation charge of intangible assets is dependent on the estimated useful lives allocated to each type of intangible asset. TheDirectors regularly review these asset lives and change them as necessary to reflect current thinking on remaining assets and theexpected pattern of consumption of the future economic benefits embodied in the asset. Changes in asset lives can have a significantimpact on amortisation charges for the period. Details of useful lives are included in the accounting policy in Note 3 above.

Provision for impairment of financial assetsDetermining whether the carrying value of financial assets has been impaired requires an estimation of the value in use of the investmentin subsidiaries and joint venture vehicles. The value in use calculation requires the directors to estimate the future cash flows expectedto arrive from these vehicles and a suitable discount rate in order to calculate present value. After reviewing these calculations, thedirectors are satisfied that no impairment is required for the current year.

Determining useful lives of property, plant and equipmentLong lived assets, consisting primarily of property, plant and equipment, comprise a significant portion of the Group’s total assets. Theannual depreciation charge depends primarily on the estimated lives of each type of asset and, in certain circumstances, estimates offair values and residual values. The Directors annually review these asset lives and adjust them as necessary to reflect current thinkingon remaining lives in light of technological change, prospective economic utilisation and physical condition of the assets concerned.

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Critical accounting judgements and key sources of estimation of uncertainity (continued)Determining usefull lives of property, plant and equipment (continued)Changes in asset lives can have significant impact on depreciation charges for the period. It is not practical to quantify the impact ofchanges in asset lives on an overall basis, as asset lives are individually determined, and there are a significant number of asset lives in use.Details of useful lives are included in the accounting policy in Note 3 above. The impact of any change would vary significantly dependingon the individual changes in assets and the classes of assets impacted.

Valuation of the Long Term Incentive PlanThe Group has an equity settled share-based long term incentive plan (‘LTIP’) for employees. Employee services received, and thecorresponding increase in equity, are measured by reference to the fair value of the equity instruments at the date of the grant, excludingthe impact of non-marketing vesting conditions. The fair value of the LTIP is measured by management on the date of the grant basedon certain assumptions. These assumptions include, among others, the degree of probability of the vesting conditions being achieved andthe marketability of the shares at the date of the grant.

Financial Risk Management Financial Risk Management and Policies

The Group’s activities expose it to a variety of financial risks: credit risk, liquidity risk and interest rate risk.

The Group’s financial risk management programme aims to manage the Group’s exposure to the aforementioned risks in order to minimisethe potential adverse effects on the financial performance of the Group. The Group seeks to minimise the effects of these risks bymonitoring the working capital position, cash flows and interest rate exposure of the Group. There is close involvement by members ofthe Board of Directors in the day-to-day running of the business.

One of the Group’s subsidiaries operates in Latvia and the fluctuations in the Latvian Lat compared to the Euro have not been significantfor the financial periods presented. Another subsidiary’s reporting currency is Sterling and the fluctuation in Sterling compared to Euro hasnot been significant for the financial periods presented. The Group’s exposure to price risk is not a significant risk as the company doesnot currently hold a portfolio of securities which may be materially impacted by a decline in market values.

Credit RiskThe Group’s maximum exposure to credit risk is represented by the balance sheet amount of each financial asset:

2012 2011e e

Amounts due from customers under construction contracts 1,355,212 9,425,279Trade and other receivables 1,605,517 2,848,088Cash and cash equivalents 144,764 616,285

The Group’s credit risk is primarily attributable to its amounts due from customers under construction contracts and to its trade and otherreceivables.

The amounts due from customers under construction contracts represents the total costs incurred to date on the Group’s projects plusrecognised profits less recognised losses to date. These customers are jointly controlled entities in which the Group is a 50% partner. Thedirectors of the Group are in constant contact with the other partners of the jointly controlled entities. The Group’s exposure to credit riskarises from the failure of the ultimate customer to raise the appropriate finance, with a maximum exposure equal to the carrying amountof the related costs.

The Group has adopted procedures in extending credit terms to customers and in monitoring its credit risk. The Group’s exposure to creditrisk arises from defaulting customers, with a maximum exposure equal to the carrying amount of the related receivables. Provisions aremade for impairment of trade receivables when there is default of payment terms and significant financial difficulty. Ongoing creditevaluation is performed on the financial condition of accounts receivable at operating unit level at least on a monthly basis. The Groupdoes not have significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. TheGroup defines counterparties as having similar characteristics if they are related parties. Concentration of credit risk to any counterpartydid not exceed 5% of gross monetary assets at any time during the financial year.

Exposure to credit risk on cash deposits and liquid funds is monitored by Directors. Cash held on deposit is with financial institutions inthe Ba rating category of Moody’s. The directors are of the opinion that the likelihood of default by a counter party leading to materialloss is minimal.

Liquidity RiskThe Group’s liquidity is managed by ensuring that sufficient facilities are available for the Group’s operations from diverse funding sources.The Group uses cash flow forecasts to regularly monitor the funding requirements of the Group. The Group’s operations are funded bycash generated from financing activities, borrowings from banks and investors and proceeds from the issuance of ordinary share capital.

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Notes to the Consolidated Financial Statements (continued)for the Year Ended 30th June 2012

Financial Risk Management (continued)Liquidity Risk (continued)The table below details the maturity of the Group’s liabilities as at 30th June 2012:

Up to 1 Year 1 – 5 Years After 5 Years TOTALa a a a

Trade and Other Payables 2,595,764 - - 2,256,764Amounts Due to Customers under Construction Contracts 1,110,090 - - 1,110,090Liabilities Associated withAssets Held for Sale 2,630,581 - - 2,630,581Investor Loans 3,311,191 - - 3,311,191Vudlande Loan 1,050,000 - - 1,050,000Zero Coupon Loan Notes 3,956,621 - - 3,956,621Preference Shares - 500,000 - 500,000Bank Overdrafts 150,000 - - 150,000Bank Loans 1,193,833 - 1,925,025 3,118,858Finance Leases 373 - - 373

15,998,453 500,000 1,925,025 18,423,478

The table below details the maturity of the Group’s liabilities as at 30th June 2011:

Up to 1 Year 1 – 5 Years After 5 Years TOTALa a a a

Trade and Other Payables 5,481,674 - - 5,481,674Amounts Due to Customers under Construction Contracts 1,272,735 - - 1,272,735Investor Loans 2,650,905 - - 2,650,905Vudlande Loan 1,050,000 - - 1,050,000Zero Coupon Loan Notes - 3,435,580 - 3,435,580Preference Shares - 500,000 - 500,000Bank Overdrafts 407,698 - - 407,698Bank Loans 386,073 2,128,407 1,894,406 4,408,886Finance Leases 4,320 373 - 4,693

11,253,405 6,064,360 1,894,406 19,212,171

The Group expects to meet its obligations from operating cash flows and from access to alternative sources of finance, which iscurrently ongoing.

As noted in Note 41, the Group announced details of a proposed restructuring which would remove debt obligations from the Companysuch that it will have a suitable basis on which to raise further equity finance in the future. The restructuring has significantlystrengthened the Group’s balance sheet through the reduction of approximately a10.8m of Debt Obligations from the group and areduction of its annual interest charge by approximately a1.5m. The reduction in a10.8m was achieved through the conversion ofdebt into equity (a5.8m) and the sale of its Latvian subsidiary SIA Vudlande, which has the affect of removing debt (a1.4m) fromthe balance sheet and paying down zero loan note holders (s3m).

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Financial Risk Management (continued)Liquidity Risk (continued)

Future interest payments on borrowings which are repayable after more than one year are at carrying rates as follows:

Amount Interest rateBank Loans 1,925,025 Varying rates as noted in Note 29 (iii)Preference Shares 500,000 8%

The future finance charges on finance leases are disclosed in Note 29 to the financial statements.

Interest Rate RiskThe primary source of the Group’s interest rate risk relates to bank loans and other debt instruments. The interest rates on these assetsand liabilities are disclosed above.

Bank loans and other debt instruments amounted to e12,086,670 and e12,453,069 in 2012 and 2011, respectively.

The interest rate risk is managed by the Group by maintaining an appropriate mix of fixed and floating rate borrowings. The Groupdoes not engage in hedging activities. Bank loans and certain debt instruments are arranged at floating rates which are mainly basedupon EURIBOR and the prime lending rate of financial institutions thus exposing the Group to cash flow interest rate risk. The otherremaining debt instruments were arranged at fixed interest rates and expose the Group to a fixed cash outflow.

These bank loans and debt instruments are mostly medium-term to long-term in nature. Interest rates on loans received from investorsand shareholders are fixed in some cases while others are a fixed percentage greater than current prime lending rates. ‘Medium-term’refers to bank loans and debt instruments repayable between 2 and 5 years and ‘long-term’ to bank loans repayable after more than5 years.

The sensitivity analysis below has been determined based on the exposure to interest rates for non-derivative instruments at the endof the reporting period. For floating rate liabilities, the analysis is prepared assuming that the amount of the liability outstanding at theend of the year was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate riskinternally to key management personnel and represents management’s assessment of the reasonably possible changes in interest rates.

If interest rates have been 50 basis points higher/lower and all other variables were held constant, the Group’s loss for the year ended30th June 2012 would decrease/increase by e16,344 (2011: Decrease/increase by e24,083). This is mainly attributable to the Group’sexposure to interest rates on its variable rate borrowings.

The Group’s sensitivity to interest rates has increased during the current year mainly due to the increase in variable rate debt instruments.

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Financial Risk Management (continued)Foreign Exchange RiskThe Group is exposed to future changes in the Sterling and Latvian Lats relative to the Euro. These risks are managed by monthly reviewof Sterling and Latvian Lats denominated monetary assets and monetary liabilities and assessment of the potential exchange ratefluctuation exposure. The Group’s exposure to foreign exchange risk is not actively managed. Management will reassess their strategyto foreign exchange risk in the future.

The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the end of the reportingperiod are as follows:

Liabilities Assets2012 2011 2012 2011e e e e

Sterling 4,824,901 3,612,940 8,519,149 8,968,123Latvian Lats 1,848,783 2,251,219 1,968,803 2,069,736

The group is mainly exposed to Sterling. There is no exposure to the Latvian Lat as Latvia is in the process of adopting the Euro as itscurrency and has a fixed exchange rate of 1 Euro = 0.702804 Lats.

The following table details the Group’s sensitivity to a 10% increase and decrease in the Euro against Sterling. 10% is the sensitivityrate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment ofthe reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currencydenominated monetary items and adjusts their translation at the year-end for a 10% change in foreign currency rates. The sensitivityanalysis includes external loans as well as loans to foreign operations within the Group where the denomination of the loan is in thecurrency other than the currency of the lender or the borrower. A positive number below indicates an increase in profit and otherequity where the Euro strengthens 10% against Sterling. For a 10% weakening of the Euro against Sterling, there would be acomparable impact on the loss and other equity, and the balances below will be negative.

Sterling Impact2012 2011£ £

Profit or Loss 463,318 602,168

The Group’s sensitivity to foreign currency has decreased during the current year mainly due to the decrease in amounts due fromcustomers under construction contracts.

Market RiskThe Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates, whichare detailed above. There has been no change to the Group’s exposure to market risks or the manner in which it manages and measuresthe risk.

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Capital ManagementThe Group manages its capital to ensure that the Group is able to continue as a going concern while maximising the return toshareholders through the optimisation of the debt and equity balance.

The capital structure of the company consists of financial liabilities, cash and cash equivalents and equity attributable to the equityholders of the parent company.

The Group’s management reviews the capital structure on a periodic basis. As part of the review, management considers the cost ofcapital and risks associated with it. The Group’s overall strategy on capital risk management is to continue to improve the ratio of debtto equity.

The gearing ratio of the Group for the year presented is as follows:

30th June 2012 30th June 2011s s

Debt 12,086,670 12,453,069Cash and Bank Balances (144,764) (616,285)Finance Leases 373 4,693Net Debt 11,942,279 11,841,477Equity (1,725,340) 758,190Net Debt to Equity Ratio (692%) 1,562%

Debt is defined as financial liabilities and borrowings of the Group while equity includes all capital, reserves and retained earningsattributable to equity holders of the parent.

The Group has noted the increase in the above ratio in the year and, post year-end, has announced a restructuring process which wouldinvolve the sale of SIA Vudlande and the conversion of debt into equity, which will improve the above net debt to equity ratio. Detailsof the restructuring are described in more detail in Note 41 of the financial statements.

Segment InformationInformation reported to the chief operating decision maker for the purposes of resource allocation and assessment of segmentperformance focuses on the products sold to customers. The Group’s reportable segments under IFRS8 Operating Segments are asfollows:

Power Generation: Being the supply of technologies including anaerobic digestion, gasification and biomass heating; andRenewable Energy Solutions: Being the supply of combined heat and power units, domestic boilers, solar panels and other relatedproducts.

The chief operating decision maker is the Chief Executive.

Information regarding the Group’s reportable segments is presented below. The following is an analysis of the Group’s revenue andresults from continuing operations by reportable segment:

Segment Revenue Segment Profit / (Loss)2012 2011 2012 2011

(Restated) (Restated)q q q w

Power Generation 10,036,547 69,860 (106,404) (1,409,087)Renewable Energy Solutions 46,611 866,575 (145,779) (958,475)Total from continuing operations 10,083,158 936,435 (252,183) (2,367,562)

Central administration costs and directors’ salaries (742,090) (1,372,677)Other operating income 11,100 7,605Share of losses on joint ventures (213,923) (356,228)Profit on disposal of share in joint venture - 285,379Interest costs (414,424) (1,534,344)Interest income 333 287Loss Before Taxation (continuing operations) (1,611,187) (5,337,540)

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Segment Information (continued)Revenue reported above represents revenue generated from jointly controlled entities and external customers. Inter-segment sales forthe year amounted to eNil. (2011: e30,011). Included in revenues in the Power Generation Segment are revenues of e10,031,773(2011: aNil) which arose from sales to Newry Biomass Limited, a company which is under the joint control of Kedco plc. No othersingle customer contributed 10% or more to the Group’s Revenue for both 2012 and 2011.

Revenues from external customers for each product and service have not been disclosed, as the necessary information is not available,and the cost to develop it would be excessive.

The accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note 3. Segmentprofit or loss represents the profit or loss earned by each segment without allocation of central administration costs and directors’salaries, other operating income, share of profit or loss of jointly controlled entities, profit on disposal of jointly controlled entities,interest costs, interest income and income tax expense. This is the measure reported to the chief operating decision maker for thepurpose of resource allocation and assessment of segment performance.

Other segment information:

Depreciation and Amortisation Additions to Non-Current Assets2012 2011 2012 2011

e e e e

Power Generation 14,795 95,428 8,068 5,731Renewable energy solutions 15,625 57,994 - -

30,420 153,422 8,068 5,731

In addition to the depreciation and amortisation reported above, impairment losses of eNil (2011: e424,762) were recognised inrespect of property, plant and equipment. These impairment losses were attributable as follows: Renewable Energy Solutions Segment,eNil (2011:e340,057); Power Generation Segment, eNil (2011: e84,705).

The Group operates in two principal geographical areas: Republic of Ireland (country of domicile), and the United Kingdom. TheGroup’s revenue from continuing operations from external customers and information about its non-current assets* by geographicallocation are detailed below:

Revenue from Non-Current Assets*Jointly Controlled Entities and External Customers

2012 2011 2012 2011ee ee ee ee

Republic of Ireland 51,385 911,105 757,329 781,449United Kingdom 10,031,773 25,330 - -

10,083,158 936,435 757,329 781,449

* Non-current assets excluding financial instruments and investment in jointly controlled entities.

The management information provided to the chief operating decision maker does not include an analysis by reportable segment ofassets and liabilities and accordingly no analysis by reportable segment of total assets or total liabilities is disclosed.

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RevenueAn analysis of the Group’s revenue for the year (excluding interest revenue), from continuing operations, is as follows:

2012 2011(Restated)

h h

Revenue from the Sale of Goods and Provision of Services 10,083,158 936,435

Cost of Sales 2012 2011(Restated)

h h

Opening Inventory 142,894 631,817Purchases 9,968,170 164,326Provision for Impairment of Inventory to Net Realisable Value 60,237 315,606Freight 2,425 90,272Closing Inventory (50,000) (142,894)

10,123,726 1,059,127

Administrative Expenses 2012 2011(Restated)

h h

Employee Expenses 515,920 1,679,880Recharge Consultancy Fee (274,012) -Office Expenses 164,984 419,897Marketing Expenses 2,456 3,979Professional Fees 373,141 293,440Depreciation and Impairment of Property, Plant and Equipment 30,420 506,098Profit on disposal of property, plant and equipment (13,072) (2,893)Amortisation and Impairment of Intangible Assets 1,770 69,194Travel and Subsistence (10,898) 217,983Write off of unpaid share capital re LTIP (Note 35) 492,563 -Other receivables written off 20,220 -Bad Debt Expense 30,384 234,227Provision for Impairment of Trade Receivables (25,750) (124,138)Other Miscellaneous Expenses 19,495 136,846Gain on Foreign Exchange (391,816) (51,952)Regulatory Expenses 17,900 234,986

953,705 3,617,547

Finance Costs / (Income) 2012 2011(Restated)

Finance Costs h h

Interest on loans, bank facilities and overdraft 374,247 1,489,649Interest on preference shares 40,000 40,000Lease interest charges 177 739Interest on revenue liabilities - 3,956

414,424 1,534,344

Finance IncomeInterest on deposit accounts 333 287

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Employee Data 2012 2011(Restated)

Employee Costs (including Executive Directors): h h

Salaries 792,278 1,300,524Social Insurance Costs 82,924 135,648Share Based Payments (Note 35) (492,580) 164,197

382,622 1,600,369

No. No. Average Number of Employees (including Executive Directors) 9 17

CompanyAll group employees are employed in subsidiary companies.

Loss Before Taxation 2012 2011(Restated)

Loss before taxation is stated after charging /(crediting): v v

Depreciation of Property, Plant and Equipment 30,420 293,440Gain on Foreign Exchange (391,816) (51,952)Amortisation of Intangible Assets 1,770 69,194Directors’ Remuneration: for Services as Directors 67,000 73,000Directors’ Remuneration: for Other Services 325,000 372,750Termination of Services – Director - 153,000Other Redundancy Costs 2,784 11,678Impairment Losses of Property, Plant and Equipmentcharged to Profit and Loss - 424,668 -Impairment Losses of Intangible Assets charged to Profit and Loss - 94 Profit on Disposal of Property, Plant and Equipment (13,072) (2,893)Provision for Impairment of Trade Receivables (25,750) (124,138)Provision for Impairment of Inventory to Net Realisable Value 60,237 315,606

Auditor’s RemunerationAudit Services 38,700 34,500Other Assurance Service - -Tax Advisory Services 13,400 12,400Other Non-Audit Services - -

52,100 46,900

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Income Taxes Relating to Continuing Operations 2012 2011(Restated)

j j

Income Tax Expense Comprises:Current Tax - -Deferred Tax - -

Income Tax Expense Recognised in Profit or Loss - -

2012 2011j j

Loss before taxation (1,611,187) (5,337,540)

Applicable Tax 12.50% (2011: 12.50%) (201,398) (667,192)

Effects of:Amortisation & depreciation in excess of capital allowances (7,990) 67,058Lease payments (581) (729)Expenses not deductible for tax purposes 75,826 203,303Non-taxable income (12,860) -Other Timing Differences (18,072) -Income taxed at higher rate 3,589 19,406Loss utilised - (10,651)Losses carried forward 161,486 388,805

- -

The tax rate used for 2012 and 2011 reconcilation above is the corporate rate of 12.5% payable by corporate entities in Ireland ontaxable profits under tax law in that jurisdiction.

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Discontinued OperationsPPllaann ttoo ddiissppoossee ooff SSIIAA VVuuddllaannddee ((WWoooodd PPrroodduuccttss BBuussiinneessss))In its interim results for the six months to 31st December 2011, the Group announced that it was seeking purchasers for its 80%interest in its Latvian wood processing facility, SIA Vudlande, as it was deemed non-core to the Group’s focus on the conversion ofbiomass to renewable energy. The company sought purchasers for its interest in SIA Vudlande over a considerable period. The highestoffer received for the Group’s interest as a result of this process was d2.5m. On 10th September 2012, the Group announced aproposed restructuring of the debts of the Group. As part of the restructuring, the Group have agreed in principle to allow the holdersof Zero-Coupon Secured Notes in the company to acquire the entire share capital of Kedco Block Limited for d3m (£2,379,253), theproceeds of which will correspondingly reduce amounts due to the holders of the Zero-Coupon Secured Notes. Kedco Block Limitedis the registered shareholder of the Group’s 80% shareholding in SIA Vudlande. This proposal was approved by shareholders at anExtraordinary General Meeting held on 5th October 2012.

The Group has recognised impairment losses in respect of the wood products business to reduce the net carrying value of assets heldfor sale to their fair value, less the estimated cost to sell these assets, at the end of the reporting period of d1,364,082.

The results of the discontinued wood products operations included in the consolidated income statement are set out below. Thecomparative profit and cash flows from discontinued operations have been represented to include those operations classified asdiscontinued in the current year.

((LLoossss))//PPrrooffiitt ffoorr tthhee yyeeaarr ffrroomm ddiissccoonnttiinnuueedd ooppeerraattiioonnss2012 2011

dd dd

Revenues 9,456,422 10,196,135Other Gains 5 77

9,456,427 10,196,212Expenses (8,892,785) (9,253,649)Profit before tax 563,642 942,563Attributable income tax expense (69,731) (139,886)Profit for the year from discontinued operations 493,911 802,677Loss on remeasurement to fair value less costs to sell of assets held for sale (1,364,082) -

Net (loss)/profit for the year from discontinued operations (870,171) 802,677

Attributable to the owners of the Company (968,953) 639,299

CCaasshh fflloowwss ffrroomm ddiissccoonnttiinnuueedd ooppeerraattiioonnss2012 2011

dd dd

Net cash inflows from operating activities 643,548 1,352,760Net cash outflows used in investing activities (524,555) (457,375)Net cash outflows used in financing activities (365,555) (223,486)Net cash outflows (246,562) (671,899)

Movement in the Consolidated Statement of Cash Flows on page 22 includes items classified as held for sale in accordance with IFRS5, see Note 16 for further details.

The wood products business has been classified and accounted for at 30th June 2012 as a disposal group held for sale (see Note 16).

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Assets Classified as Held For Sale2012 2011

ee ee

Assets related to the wood products business 6,584,239 -

Liabilities associated with assets held for sale 2,630,581 -

As described in Note 15 above, the Group completed the disposal of the wood products business being the entire 80% interest inLatvian sudsidiary for e3m, as part of debt restructuring. The major classes of assets and liabilities of the wood products business atthe end of the reporting period are as follows:

2012ee

Property, plant and equipment 3,782,884Inventories 1,581,364Trade and other receivables 1,091,711Cash and bank balances 128,280

Assets of wood products operations classified as held for sale 6,584,239

Trade and other payables (512,482)Current borrowings (687,937)Current finance lease liabilities (74,014)Current deferred income (10,302)Non-current borrowings (804,487)Non-current finance lease liabilities (177,811)Non-current deferred income (25,755)Non-current deferred tax liability (337,793)

Liabilities of wood products operations associated with (2,630,581)assets classified as held for sale

Net assets of wood products operations classified as held for sale 3,953,658

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(Loss) /Earnings Per Share 2012 2011d d

Euro per share Euro per shareBasic (Loss) /Earnings Per ShareFrom continuing operations (0.006) (0.023)From discontinued operations (0.003) 0.003Total basic loss per share (0.009) (0.020)

Diluted (Loss)/ Earnings Per ShareFrom continuing operations (0.006) (0.023)From discontinued operations (0.003) 0.003Total diluted loss per share (0.009) (0.020)

Basic (Loss)/ Earnings Per Share The loss and weighted average number of ordinary shares used in the calculation of the basic (loss)/ earnings per share are as follows:

2012 2011d d

Loss for year attributable to equity holders of the parent (2,580,140) (4,698,241)

(Loss) /profit for the year from discontinued operations used in the calculation of basic earnings per share from discontinued operations (870,171) 802,677Losses used in the calculation of basic loss per share from continuing operations (1,709,969) (5,500,918)

Weighted average number of ordinary shares forthe purposes of basic loss per share 274,612,376 236,242,380

Diluted (Loss) /Earnings Per ShareThe loss used in the calculation of all diluted earnings per share measures is the same as those for the equivalent basic earnings pershare measures, as outlined above.

The weighted average number of ordinary shares for the purposes of diluted loss per share reconciles to the weighted average numberof ordinary shares used in the calculation of basic loss per share as follows:

2012 2011Weighted average number of ordinary shares used in the calculation of basic loss per share 274,612,376 236,242,380

‘A’ Shares in issue 99,117,952 99,117,952

Weighted average number of ordinary shares used in the calculation of diluted earnings per share 373,730,328 335,360,332

Share warrants which could potentially dilute basic earnings per share in the future have not been included in the calculation of dilutedearnings per share as they are anti-dilutive for the periods presented. The dilutive effect as a result of share warrants in issue as at 30thJune 2012 would be to increase the weighted average number of shares by 27,392,915 (2011: 30,672,924).

Convertible preference shares which could potentially dilute basic earnings per share in the future have not been included in thecalculation of diluted earnings per share as they are anti-dilutive for the periods presented. The dilutive effect as a result of preferenceshares in issue as at 30th June 2012 would be to increase the weighted average number of shares by 3,125,000 (2011: 3,125,000).

Convertible loans which could potentially dilute basic earnings per share have not been included in the calculation of diluted earningsper share as they are anti-dilutive for the periods presented. The dilutive effect as a result of loans in issue as at 30th June 2012 wouldbe to increase the weighted average of shares by 21,942,154 (2011: 9,500,000).

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Goodwill 2012 2011d d

Goodwill - SIA Vudlande - 549,451

Goodwill arose on the acquisition of an 80% shareholding in SIA Vudlande, a limited liability company incorporated in Latvia asdisclosed in Note 22. Goodwill was allocated to the Latvian CGU within the Kedco Wood Products segment.

As noted in Notes 15 and 16 above, the Group completed the disposal of the wood products business being the entire interest inLatvian sudsidiary for e3m, as part of debt restructuring. Arising from this reclassification, the goodwill arising on the purchase of SIAVudlande has been fully impaired.

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Intangible Assets Website Trademarks Software Development TOTALCosts

GroupCost e e e e e

At 1st July 2010 - 1,128 11,025 412,349 424,502

At 30th June 2011 - 1,128 11,025 412,349 424,502Additions 1,770 - - - 1,770Reclassified as held for sale - - (11,025) - (11,025)At 30th June 2012 1,770 1,128 - 412,349 415,247

Accumulated AmortisationAt 1st July 2010 - 658 8,224 343,625 352,507Amortisation Expense - 376 2,296 68,724 71,396Impairment - 94 - - 94

At 30th June 2011 - 1,128 10,520 412,349 423,997Amortisation Expense 1,770 - - - 1,770Reclassified as held for sale - - (10,520) - (10,520)At 30th June 2012 1,770 1,128 - 412,349 415,247

Carrying AmountAt 30th June 2011 - - 505 - 505

At 30th June 2012 - - - - -

Development expenditure, substantially all of which was incurred in 2006, in respect of anaerobic digestion, gasification and biomassheating technologies has been recognised as an intangible asset. The expenditure incurred related to engineering costs, surveys andconsultants fees. These costs are associated with technologically feasible processes which will be used in the business in future andaccordingly have been capitalised. These costs have been fully amortised as at 30th June 2011.

All other research costs incurred during the year presented relate to other research activities and do not represent capitalisabledevelopment costs. Amortisation expense has been included in the line item ‘administrative expenses’.

Impairment losses recognised in the prior yearDuring the year ended 30th June 2011, impairment losses recognised in respect of intangible assets amounted to e94. These lossesare attributable to greater than anticipated wear and tear. These assets are used in the Group’s Renewable Energy Solutions segment.

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Intangible Assets (continued) Website TOTAL

Company d d

CostAt 1st July 2010 - -

At 30th June 2011 - -Additions 1,770 1,770

At 30th June 2012 1,770 1,770

Accumulated AmortisationAt 1st July 2010 - -

At 30th June 2011 - -Amortisation expense 1,770 1,770

At 30th June 2012 1,770 1,770

Carrying AmountAt 30th June 2011 - -

At 30th June 2012 - -

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Property, Plant and Equipment

Land and Office Plant and Construction Fixtures and Motor TotalBuildings Equipment Machinery In Progress Fittings Vehicles

f f f f f f f

CostAt 1st July 2010 3,065,463 156,410 5,260,900 - 208,466 103,141 8,794,380Additions 96,090 4,265 53,200 412,466 7,160 - 573,181Disposals (1,901) (599) (339,625) - (25,327) (9,337) (376,789)Reclassification 14,308 - 296,864 (311,172) - - -

At 30th June 2011 3,173,960 160,076 5,271,339 101,294 190,299 93,804 8,990,772

Additions - 6,299 - - - - 6,299Disposals - (38,178) (87,697) - (150,484) (93,804) (370,163)Reclassified as held for sale (1,513,917) - (5,183,642) (101,294) (39,815) - (6,838,668)

At 30th June 2012 1,660,043 128,197 - - - - 1,788,240

Accumulated DepreciationAt 1st July 2010 931,365 73,353 1,989,184 - 139,678 89,988 3,223,568On Disposals (1,901) (260) (315,616) - (25,327) (9,337) (352,441)Impairment 358,151 33,748 - - 29,820 2,949 424,668Charge for the Year 146,529 21,784 422,449 - 33,768 10,204 634,734

At 30th June 2011 1,434,144 128,625 2,096,017 - 177,939 93,804 3,930,529

On Disposals - (38,178) (87,696) - (150,483) (93,804) (370,161)Reclassified as held for sale (524,100) - (2,008,321) - (27,456) - (2,559,877) Charge for the Year 15,625 14,795 - - - - 30,420

At 30th June 2012 925,669 105,242 - - - - 1,030,911

Carrying AmountAt 30th June 2011 1,739,816 31,451 3,175,322 101,294 12,360 - 5,060,243

At 30th June 2012 734,374 22,955 - - - - 757,329

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Property, Plant and Equipment (continued)Included are leased assets held under finance leases or hire purchase contracts as follows:

2012 2012 2011 2011Asset Description Carrying Depreciation Carrying Depreciation

Amount Charge Amount Chargef f f f

Plant and Machinery - - - -Motor Vehicles - - - 2,224

- - - 2,224

The Group’s obligations under finance leases are secured by lessors’ title to the leased assets.

Non cash transactionsAcquisitions of property, plant and equipment include eNil (2011: eNil) acquired under finance leases.

Impairment losses recognised in the prior yearDuring the year ended 30th June 2011, as a result of a slowdown in the trading activities in the Renewable Energy Solutions operatingsegment, the Group carried out a review of the recoverable amount of assets in that segment. The review led to recognition of animpairment loss of e33,963, which has been recognised in profit or loss. The recoverable amount of the assets has been determinedon the basis of their value in use.

The Group also carried out a review of the recoverable amount of property held by the Renewable Energy Solutions operating segmentat 30th June 2011, as a result of falls in the property market in Ireland. The review led to recognition of an impairment loss of e306,000,which has been recognised in profit or loss. The recoverable amount of the assets has been determined on the basis of their fair value,less costs to sale.

Additional impairment losses recognised in the year ended 30th June 2011 in respect of property, plant and equipment amounted toe84,705. These losses are attributable to greater than anticipated wear and tear. These assets are used in the Group’s Power Generationsegment.

The impairment losses have been included in the line item ‘Administrative Expenses’ in the consolidated income statement.

Financial AssetsGroup 2012 2011Loan Advanced to Jointly Controlled Entities f f

At 1st July 990,000 990,000Additions in year 6,618,687 -

7,608,687 990,000

During the year, Newry Biomass Limited, a joint venture vehicle which was established to develop a biomass electricity and heatgenerating plant in Newry, Northern Ireland, issued loan notes to the Group of £5,330,691. These loan notes will be redeemed in fullon 1st November 2026, and entitle the holder to a share of the earnings after tax of Newry Biomass Limited in the ratio of the loannotes issued to the relevant loan note holders.

Company 2012 2011Investment in Subsidiary Undertakings f f

At 1st July 24,941,463 35,401,752Provision for Impairment in Investment - (10,460,290)At 30th June 24,941,463 24,941,463

The investment in subsidiary undertakings has been calculated by reference to the number of shares issued by Kedco plc in the sharefor share exchange with Kedco Block Holdings Limited, multiplied by the share price on the day of the Company’s admission to theAIM. In the opinion of the directors, the shares in the subsidiary undertakings are worth at least the amounts at which they are statedin the balance sheet. Details of subsidiary undertakings are set out in Note 22.

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Financial Assets (continued)

In the year ended 30th June 2011, the carrying value of the investment in the financial statements of Kedco plc exceeded the carryingamount in the consolidated financial statements of the investee’s net assets, and as a consequence the investment in subsidiaryundertakings was impaired. The Group reviewed the carrying value of the investment with reference to the future cash flows of projectscurrently undertaken by the Group, and have calculated the resulting impairment to be f10,460,290.

The Group carried out a further assessment the carrying value of the investment with reference to the future cash flows of projectscurrently undertaken by the Group as at 30th June 2012, and have determined that no additional impairment is required for the currentperiod.

Subsidiaries

Details of Kedco plc subsidiaries at 30th June 2012 and 30th June 2011 are as follows:Name Country of Incorporation Shareholding Principal Activity

� Kedco Block Holdings Limited Republic of Ireland 100% Investment company� Kedco Power Limited Republic of Ireland 100% Provision of energy solutions� Kedco Block Limited United Kingdom 100% Contracting company� Granig Trading Limited Republic of Ireland 100% Dormant company� SIA Vudlande Latvia 80% Wood processing and

sawn material production � Castle Home Supplies Limited Republic of Ireland 100% Dormant company� Kedco Energy Limited Republic of Ireland 100% Provision of energy solutions� Kedco Investment Co. 1 Limited Republic of Ireland 100% Investment company� Kedco Investment Co. 2 Limited Republic of Ireland 100% Investment company� Kedco Fabrication Limited Republic of Ireland 100% Contracting company� Kedco Group Holdings USA Inc. United States of America 100% Dormant company� Ardstown Investments Limited Republic of Ireland 100% Dormant company

The shareholding in each company above is equivalent to the proportion of voting power held.

The registered office for all of the above companies is 4600, Airport Business Park, Cork except for Kedco Block Limited, whoseregistered office is Hill House, 1 Little New Street, London EC4A 3TR, England, and SIA Vudlande whose registered office is ‘Lejasupites’,Launkalnes pagasrs, Valkas, LV-4718, Latvia.

Shares in SIA Vudlande are held by Kedco Block Limited, a wholly owned subsidiary incorporated in the United Kingdom under a trustdeed with Kedco Block Holdings Limited. Kedco Block Limited acknowledges holding shares upon trust for Kedco Block HoldingsLimited ‘the beneficial owner’. All dividends and interest accrued or to accrue upon same, including bonuses, rights and other privilegesshall be transferred, paid, or dealt with in such manner as the beneficial owner shall from time to time direct. As noted in Note 41, adecision has been reached after the year end to dispose of the shareholding in SIA Vudlande and has been reclassified as a discontinuedoperation (see Note 15).

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Investment in Jointly Controlled Entities

Details of the Group’s interests in jointly controlled entities at 30th June 2012 and 30th June 2011 are as follows:

Name of Jointly Controlled Entity Country of Incorporation Shareholding Principal Activity� Newry Biomass Limited Northern Ireland 50%* Energy Utility Company

(formerly Best Kedco Limited)� Enfield Biomass Limited United Kingdom 50% Energy Utility Company

(formerly Kedco Howard Limited)� Asdee renewables Limited Republic of Ireland 50% Energy Utility Company� Bridegreen Energy Limited Republic of Ireland 50% Energy Utility Company

* The Group owns 50% of the shares of Newry Biomass Limited. However, as noted in Note 21 above, during the year the group hasreceived loan notes from Newry Biomass Limited which entitles the holders to a share of the profits of the company. Based on theholding of shares and loan notes, the Group is entitled to a share of 92% of the profits and losses of the company.

None of the above companies have commenced trading as at 30th June 2012.

The company has entered into a guarantee in respect of Enfield Biomass Limited in relation to the due and proper performance of itsduties and obligations under the joint venture agreement. Kedco Investment Co. 1 Limited entered into a put and call option agreementand a second call option agreement relating to the shares in Enfield Biomass Limited during the year ended 30th June 2009. Underthe put and call option agreement, Kedco Investment Co. 1 Limited may be required to purchase the remaining 50% of shares inEnfield Biomass Limited for e510,000. Under the second call option agreement, Kedco Investment Co. 1 Limited may be required tosell 50% of the shares, if required, under the put and call agreement in Enfield Biomass Limited for e1,510,000.

The put and call option was exercised by the joint venture partner on 20th June 2010. Under a new option agreement made on 15thJuly 2010, the option price was changed to e1,510,000.

On 13th July 2011, an agreement was signed whereby the joint venture partner, Wellwin Investments Limited was to receive fromKedco plc the balance of the loan outstanding, payable in equal instalments over seven months, as offset against the debt owed byEnfield Biomass Limited to Wellwin Investments Limited. At 30th June 2012, the debt stood at e220,000. (30th June 2011: e492,500)The reduction in this debt is offset against the reduction of monies owed by Kedco Investment Co. 1 Limited to Enfield Biomass Limited.Kedco plc was also to pay a facility fee of 5% of the outstanding loan to Wellwin Investments Limited until the outstanding loan ofWellwin Investments Limited to Enfield Biomass Limited is discharged.

As noted in Note 41, the above loan issued to Wellwin Investments Limited is part of the restructuring plan issued by the Group afterthe year end.

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Investment in Jointly Controlled Entities (continued)

Summarised financial information in respect of the group’s interests in jointly controlled entities is as follows:

2012 2011f f

Non-Current Assets 11,095,301 1,208Current Assets 4,863,923 2,329,495Non-Current Liabilities (6,892,749) -Current Liabilities (9,705,017) (2,368,438)

Net Liabilities (638,542) (37,735)

Group’s Share of Net Liabilities of Jointly Controlled Entities (509,599) (18,867)

Total Revenue - 163,719Total Expenses (321,078) (876,176)Total Loss for the Year (321,078) (712,457)Group’s Share of Losses of Jointly Controlled Entities (213,923) (356,228)

On 19th July 2010, controlling interest in a subsidiary, Kedco Agrikomp Limited and its subsidiaries was amended to create a jointlycontrolled entity in which the Group held a 50% share in the jointly controlled entity. On 29th June 2011, the Group disposed of its50% interest in Kedco Agrikomp Limited to the other joint venture partner for proceeds of e150,000 (received on 30th June 2011).This transaction has resulted in a gain in the income statement for the year ended 30th June 2011, calculated as follows:

f

Proceeds of Disposal 150,000Plus: Fair Value of Losses Realised 150,540Less: Costs Associated with Disposal (15,160) Less: Carrying Value of Investment on Date of Loss of Significant Influence (1) Gain Recognised 285,379

Inventories 2012 2011f f

GroupRaw Materials - 788,029Finished Goods 50,000 824,997

50,000 1,613,026

The cost of inventories recognised as an expense during the year in respect of continuing operations was e10,123,726 (2011 restated:e1,059,127).

The cost of inventories recognised as an expense during the year in respect of write-downs of inventory to net realisable value amountedto e60,237 (2011: e315,606).

All inventories are expected to be sold within twelve months.

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Construction Contracts

Contracts in progress at the Balance Sheet Date:2012 2011

Construction Costs Incurred Plus Recognised Profits o o

Less Recognised Losses To Date 11,386,985 9,425,279Less Payment Received In Advance (11,141,863) (1,272,735)

245,122 8,152,544

Recognised and Included in the Financial Statements as amounts due:From Customers Under Construction Contracts 1,355,212 9,425,279To Customers Under Construction Contracts (1,110,090) (1,272,735)

245,122 8,152,544

At 30th June 2012, retentions held by customers for contract work amounted to eNil (2011: eNil). Advances received from customersfor contract work amounted to e11,141,863 (2011: e1,272,735).

The following table shows an aged analysis of amounts due from customers under construction contracts (being construction costsincurred on projects plus recognised profits less recognised losses to date):

2012 2011o o

Costs incurred in the past twelve months 850,996 1,043,630Costs incurred between twelve and twenty-four months 35,453 2,008,335Costs incurred between twenty-four and sixty months 468,763 6,373,314

1,355,212 9,425,279

Of the balance of o1,355,212 (2011: o9,425,279), o832,612 (2011: o8, 846,956) relates to the construction of a 4MW Gasificationplant in Northern Ireland. The principal customer for this contract is Newry Biomass Limited (formerly Best Kedco Limited), a jointlycontrolled entity of the Group. Newry Biomass Limited has put in place financing facilities and is paying the Group for work carriedout on a regular basis. The directors of the Group are satisfied, from this review, that the Group’s exposure to credit risk with respectto the above projects is manageable.

Trade and Other Receivables 2012 2011f f

GroupTrade Receivables 2,325 1,478,095Provision for Impairment of Trade Receivables - (140,333)

2,325 1,337,762

Amounts Due from Jointly Controlled Entities 1,469,169 762,916VAT Receivable 47,972 22,415Prepayments 43,785 164,017Corporation Tax 101 -Other Receivables 42,166 560,978

1,605,518 2,848,088

The movement in the Group’s provision for impairment of trade receivables consists of provisions established amounting to fNil (2011:f95,446) offset by a reversal of a prior period provision of f140,333 (2011: f261,460). The reversal of prior period provisions is asa result of these provisions being recognised as a bad debt expense in the current year.

The following table shows an analysis of trade receivables split between past due and within terms accounts. Past due is when anaccount exceeds the agreed terms of trade, which are typically sixty days.

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Trade and Other Receivables(continued)2012 2011

f f

Within Terms - 1,132,842Past due more than one month but less than two months - 163,630Past due more than two months 2,325 41,290

2,325 1,337,762

Included in the Group’s trade receivables balance are debtors with carrying amount of f2,325 (2011: f204,920) which are past dueat year end and for which the Group has not provided. There has not been a significant change in credit quality and therefore thedirectors consider the amounts are still recoverable.

The Group does not hold any collateral over these balances. No interest is charged on overdue receivables. The quality of past due notimpaired trade receivables is considered good. The carrying amount of trade receivables approximates to their fair values.

The Group has recognised an allowance for doubtful debts of 100% where appropriate against all receivables over 120 days becausehistorical experience has been that trade receivables that are past due beyond 120 days are not recoverable. Allowances for doubtfuldebts are recognised against trade receivables between 60 days and 120 days based on estimated irrecoverable amounts determinedby reference to past default experience of the counterparty and an analysis of the counterparty’s current financial position.

In determining the recoverability of a trade receivable, the Group considers any changes in the credit quality of the trade receivablefrom the date credit was initially granted up to the end of the current reporting period. The concentration of the credit risk is limiteddue to the customer base being large and unrelated, and the fact that no one customer holds balances that exceeds 10% of the grossassets of the Group. The maximum exposure risk to trade and other receivables at the reporting date by geographic region is asfollows:

2012 2011

f f

Ireland 2,325 103,412United Kingdom - 2,147Eurozone Countries - 1,372,536

2,325 1,478,095

Other receivables related to unpaid share capital of fNil (2011: f492,563) relating to the issue of 49,256,352 ‘A’ Shares of f0.01each as part of the long-term incentive plan (‘LTIP’) for employees; balances recoverable from debt providers totalling fNil (2011:f16,500); unpaid share capital of f40,000 (2011: f40,000); deposits on rental contracts amounting to f2,166 (2011: f5,000); andmiscellaneous debtors amounting to fNil (2011: f6,915). Other receivables relating to unpaid share capital were released in thecurrent year as conditions attaching to the conversion of the shares were not met. Apart from receivables relating to share capital, theaged analysis of other receivables is within terms. Other receivables relating to share capital, totalling f40,000 (2011: f532,563) areolder than two years but have been reviewed by management and it is believed that the credit risk is limited due to the matching ofliabilities.

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Trade and Other Receivables (continued)

There is no concentration of credit risk with respect to receivables as disclosed in Note 5 under credit risk.

Company 2012 2011e e

Amounts Due from Subsidiary Undertakings 18,282,438 9,542,491Amounts Due from Jointly Controlled Entities - 762,916Prepayments 13,045 10,707Corporation Tax 96 -VAT Receivable 435 1,417Other Receivables 40,000 532,563

18,336,014 10,850,094

The concentration of credit risk in the individual financial statements of Kedco plc relates to amounts due from subsidiary undertakings.The directors have reviewed these balances in the light of the impairment review carried out on the investments by Kedco plc in itssubsidiaries. The Directors considered the future cash flows arising from subsidiaries and are satisfied that no impairment is requiredon these balances.

Share Capital Kedco plc

At 30th June 2011 Authorised Allotted and Authorised Allotted and Number Called up Number Called up

f f

Ordinary Shares of f0.01 each 10,000,000,000 225,281,916 100,000,000 2,552,819

‘A’ Shares of f0.01 each 10,000,000,000 99,117,952 100,000,000 991,180

At 30th June 2012 Authorised Allotted and Authorised Allotted and Number Called up Number Called up

f f

Ordinary Shares of f0.01 each 10,000,000,000 311,562,785 100,000,000 3,115,628

‘A’ Shares of f0.01 each 10,000,000,000 99,117,952 100,000,000 991,180

The holders of the ordinary shares are entitled to receive dividends as declared and are entitled to one vote per share at meetings ofthe company. All ordinary shares are fully paid up, with the exception of f40,000 which is disclosed in Note 26.

The Company was incorporated on 2nd October 2008 with an initial authorised share capital of f100,000,000 divided into100,000,000 ordinary shares of f1.00 each of which 38,100 ordinary shares of f1.00 each fully paid up were issued.

On 14th October 2008 the ordinary shares were subdivided so that each ordinary share had a nominal value of f0.01 each as opposedto the previous nominal value of f1.00 each.

On 3rd December 2010, the trading denomination of the Company’s ordinary shares of f0.01 each changed from Euro to poundssterling. This does not affect the nominal valuation of the shares.

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Share Capital (continued)Reverse asset acquisitionOn 13rd October 2008, the Company acquired the entire issued share capital of Kedco Block Holdings Limited (‘KBHL’) in considerationfor the allotment and issue of 2,493,081 ordinary shares of e1.00 each to the former members of KBHL. Pursuant to the agreement,the Company allotted and issued one ordinary share of e1.00 each in consideration for the transfer to it of each share held in KBHL.

The fair value of the shares in Kedco Block Holdings Limited received as consideration for the issue of these shares in Kedco plc wase34,903,134 which resulted in a share premium in the Company of e32,908,669. From a group perspective, since the acquisition isbeing accounted for as a reverse asset acquisition, the shares of the new legal parent (Kedco plc) were recognised and the shares ofthe accounting parent (Kedco Block Holdings Limited) were derecognised. A reverse acquisition adjustment has been made for the sharecapital of the accounting parent and is offset against the share premium of the new legal parent.

Movements in the year to 30th June 2012Kedco plc:� On 3rd February 2012, the Company issued 31,000,001 ordinary shares of e0.01 each at a premium of e134,981. At the same

time, the Company allotted 8,801,259 ordinary shares of e0.01 at a premium of e99,981 to its 22.14% shareholder, Farmer Business Developments plc as a result of FBD exercising its rights under its February 2011 e1,200,000 10% Convertible Loan Note.

� On 1st May 2012, the Company issued 12,835,385 ordinary shares of e0.01 each at a premium of e70,915. At the same time, the Company allotted 3,644,224 ordinary shares of e0.01 at a premium of e31,349 to its 22.14% shareholder, Farmer Business Developments plc as a result of FBD exercising its rights under its February 2011 e1,200,000 10% Convertible Loan Note.

Share premium relates to the share premium arising on share issues.

Reserves2012 2011

Equity Settled Employee Benefits Reserve s s

Balance at Beginning of the Financial Year 492,580 328,383Reversal of share-based payment expense (492,580) -Share-Based Payment Expense - 164,197

Balance at End of the Financial Year - 492,580

The equity settled employee benefits reserve arises on the grant of share options to employees under the employee share optionplan. The expense was reversed in the current year as conditions attaching were not met. Further information about share-basedpayments to employees is set out in Note 35.

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Borrowings2012 2011

Group s s

Non-Current Liabilities

Secured – at Amortised CostZero-Coupon Loan Notes (i) - 3,435,580Bank Loans (iv) 1,925,025 4,022,813

1,925,025 7,458,393Financial liabilities carried at fair value through profit or lossPreference shares (v) 500,000 500,000

2,425,025 7,958,393

Current Liabilities 2012 2011s s

Bank Overdrafts 150,000 407,698Investor Loans (ii) - Secured 400,000 475,967

- Unsecured 2,911,191 2,174,938Zero-Coupon Loan Notes (i) 3,956,621 -Vudlande Loan (iii) 1,050,000 1,050,000Bank Loans (iv) 1,193,833 386,073

9,661,645 4,494,676

Summary of Borrowing ArrangementsThe Group has secured debt funding from banks and from its equity investors throughout the reporting year in order to finance capitalinvestment and working capital. The principal loan arrangements entered into are as follows:

(i)

29

On 5th July 2010, the Company raised s3.2m (£2.6m) from the issue of 3,588,583 zero-coupon secured loan notes. The loan notes,which had a subscription price of £0.72, were issued to a variety of investors and are redeemable at par value (being £1) two yearsfrom the date of issue (or earlier on the occurrence of certain events including a sale of the Company). Each Loan Note entitled theholder to subscribe for three Ordinary Shares of the Company at a subscription price of s0.08, or if certain performance criteriawas not met within 6 months of the drawdown, the lowest trade price between the date of drawdown and the date of first salesreceipts from the national grid, at any time prior to the fourth anniversary of the issue. As this performance criteria was not met,the subscription price is now £0.01. Pursuant to the placing, Newry Biomass Limited (formerly Best Kedco Limited), a jointlycontrolled entity established for the purposes of the Newry Project, will pay a royalty of 5 per cent of the proceeds arising from thesale of energy from the Newry Project to the investors. The royalty payments would commence with the initial generation of 1MWof energy from Newry and would conclude following 24 months of continuous generation of 2MW electricity.

Pursuant to a separate warrant agreement and in consideration for its placing services, Cornhill Asset Management Limited, anadviser to the Company, will have the right to subscribe to two Ordinary Shares per Loan Note issued to the Company at asubscription price as described in the preceding paragraph. Additionally, pursuant to a separate royalty agreement, Newry BiomassLimited would pay 2 per cent of the proceeds arising from the sale of energy from the Newry Project to Cornhill for the sameperiod as that outlined above for the Investors.

Under the Loan Note agreement, the Company granted the holders of the Loan Note second-ranking security over its 80% interestof its SIA Vudlande subsidiary in Latvia. As of 5th July 2011, the security is capable of being enforced due to the delays in thefinalisation of the Newry Project and the Company has received notice from the Trustee of the Loan Notes that it intends to enforcethe security. The Company, as part of its strategic review, was already considering seeking purchasers for its SIA Vudlande subsidiaryas it was deemed non-core to the Company’s focus on waste to energy generation.

Under the terms of the Loan Note if the Company is successful in executing a sale of Vudlande, the proceeds of any such sale mayfirst be applied in discharging its obligations under the Loan Note Agreement and other senior lending facilities.

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Borrowings (continued)Summary of Borrowing Arrangements (continued)(i)

(ii)

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ContinuedAs noted in Note 41, the Group announced a proposed restructuring to remove debt obligations from the Company such that itwould have a suitable basis on which to raise further equity finance. As part of this restructuring, it was agreed that the holders ofthe Zero-Coupon Secured Notes would take on a 40% reduction in the interest payable on the Notes, equivalent to £401,921(e499,033).

A loan of e1,000,000 was received from equity investors during the year ended 30th April 2007 to finance the general workingcapital requirements of the Group. These equity investors are a director and his close family. In 2008, e36,445 of this loan wasconverted into ordinary share capital in the company. In the year ended 30th June 2011, e329,242 was converted into zero-coupon secured loan notes as discussed in note (i) above, while another e34,404 was repaid to the investor. In the year ended 30thJune 2012, a further e12,500 was repaid to the investor. The remaining e587,409 loan is repayable on demand between 24th May2012 and 24th November 2013. This loan is unsecured and carries an annual interest rate of 2% over the prime lending rate ofAllied Irish Banks plc. Interest is payable monthly.

As noted in Note 41, the Group announced a proposed restructuring to remove debt obligations from the Company such that itwould have a suitable basis on which to raise further equity finance. As part of this restructuring, it was agreed that the holders ofthe above investor loan would take on a 40% reduction in the interest payable on the loan to date, ie e7,440. This accrued interestis included in accruals under the category ‘Trade and Other Payables’.

Investor loans of e1,219,028 were received during the year ended 30th June 2010. Of the total e1,219,028 received, e250,000is secured on the 75kW combined heat and power modular biopower system included in inventories at 30th June 2012 ande150,000 is secured by personal guarantees from certain directors. This e400,000 was repayable between 1st September 2010and 31st October 2010 with an interest payment of between 2.5% and 3% per month. These funds were advanced to financeworking capital. During the year ended 30th June 2011, e162,500 of the principal was repaid. During the year ended 30th June2012, e62,500 of the principal was repaid.

As noted in Note 41, the Group announced a proposed restructuring to remove debt obligations from the Company such that itwould have a suitable basis on which to raise further equity finance. As part of this restructuring, it was agreed that the holders ofthe above Investor Loans would take on a 40% reduction in all interest that had been accrued and remained unpaid to date,equivalent to e60,258. At 30th June 2012, the outstanding loan balance and accrued interest was e365,387 (2011: e475,967).

The remaining investor loans of e819,028 received during the year ended 30th June 2010 are unsecured, have no fixed interestrate and have no fixed repayment date. These funds were advanced to finance working capital. Of this amount, e108,000 relatedto funds advanced by directors. During the year ended 30th June 2011, a further e190,000 was advanced to the company tofinance working capital while e910,911 was repaid by the company. During the year ended 30th June 2012, e33,479 was repaidby the company, leaving an outstanding balance of e64,638 payable to investors at 30th June 2012 (2011: e98,117).

During the year ended 30th June 2011, e1,200,000 was received from its 22.14% shareholder, Farmer Business Developments plc(‘FBD’) to assist its short term working capital requirements. These funds were repayable as from 1st May 2011, with an interestpayment on outstanding capital of 10% per annum. The drawdown portion of the facility may be converted at any time by FBDinto either the Loan Notes as described in (i) above or Ordinary Shares in Kedco. If FBD opts to convert the Facility into Kedcoordinary shares, then the conversion price will be the average of the closing mid-market price of the ten working days prior toconversion. FBD would not be able to convert any proportion of the Facility into Kedco ordinary shares if to do so would result inFBD holding in excess of 29.9% of Kedco’s issued share capital.

On 3rd February 2012, the Company allotted 8,801,259 ordinary shares of e0.01 at a premium of e99,981 to its 22.14%shareholder, Farmer Business Developments plc as a result of FBD exercising its rights under its February 2011 e1,200,000 10%Convertible Loan Note. The total value of the loan converted at this time was e187,933.

On 1st May 2012, the Company allotted 3,644,224 ordinary shares of e0.01 at a premium of e31,349 to its 22.14% shareholder,Farmer Business Developments plc as a result of FBD exercising its rights under its February 2011 e1,200,000 10% ConvertibleLoan Note. The total value of the loan converted at this time was e67,792.


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Borrowings (continued)Summary of Borrowing Arrangements (continued)(ii)

(iii)

(iv)

�

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ContinuedDuring the year ended 30th June 2012, a further e1,200,000 was received from its 22.14% shareholder, FBD, to assist its shortterm working capital requirements. These funds were repayable as from 1st April 2012, with an interest payment on outstandingcapital of 10% per annum. The drawdown portion of the facility may be converted at any time by FBD into either the Loan Notesas described in (i) above or Ordinary Shares in Kedco. If FBD opts to convert the Facility into Kedco ordinary shares, then theconversion price will be the average of the closing mid-market price of the ten working days prior to conversion. FBD would notbe able to convert any proportion of the Facility into Kedco ordinary shares if to do so would result in FBD holding in excess of 29.9%of Kedco’s issued share capital. The facility is secured on the residual of the assets secured by the Loan Notes in Note (i) above.

As noted in Note 41, the Group announced a proposed restructuring to remove debt obligations from the Company such that itwould have a suitable basis on which to raise further equity finance. As part of this restructuring, it was agreed that FBD wouldaccept a 40% reduction in all interest that had been accrued and remained unpaid to date, equivalent to e99,694. At 30th June2012, the outstanding loan balance and accrued interest was e2,293,757 (2011: e1,252,986).

During the year ended 30th June 2010, further investor loans of e223,925 were advanced to finance working capital. These loansare unsecured, have no fixed interest rate and have no fixed repayment date. This loan was repaid in full in the year ended 30thJune 2012.

A loan of e1,650,000 was received from directors (e500,000) and external investors (e1,150,000) during the year ended 30thApril 2007 to develop the SIA Vudlande plant in Latvia. e340,000 was repaid to directors during the year ended 30th June 2010.During the year ended 30th June 2011, e260,000 was converted by the investors into zero-coupon secured loan notes as describedin note (i) above, resulting in an outstanding balance of e1,050,000 at year end. This loan is unsecured and carries an annualinterest rate of 15%. The term is 5 years with repayment dates between 31st January 2011 and 26th March 2012. Interest isrepayable annually.

As noted in Note 41, the Group announced a proposed restructuring to remove debt obligations from the Company such that itwould have a suitable basis on which to raise further equity finance. As part of this restructuring, it was agreed that the holders ofthe above loan would take on a 40% reduction in the interest payable on the loan, ie e104,500. This accrued interest is includedin accruals under the category ‘Trade and Other Payables’.

Bank loans were entered into in the year ended 30th April 2006 to fund acquisition of freehold land and buildings by Castle HomeSupplies Limited. The loan balance at 30th June 2012 was e1,925,025 (2011: e1,894,406).

This loan carries interest at base rate varying plus 2.5% and is repayable in 2031 according to the terms of the original agreement.This loan is secured by personal guarantees from the directors totalling e750,000 and a charge over the freehold land and buildingsof Castle Home Supplies Limited, a subsidiary company.

Bank loans were entered into in the year ended 30th April 2007 to fund working capital:

An additional bank loan of e599,568 was taken out during the year ended 30th April 2007 for the purpose of meeting workingcapital requirements. This loan carries an interest rate of base rate varying plus 3.1%. This loan is secured by personal guaranteesfrom the directors. The balance at 30th June 2012 was e633,603 (2011: e606,046). This is presented within current loans.

Liabilities include bank loans in the amount of e80,230 (2011: e164,185) for a stocking loan. This is secured by a letter of guaranteefrom the directors, a floating charge over assets of Kedco Energy Limited, a subsidiary company, and assignments over policies onthe life of nominated individuals. Interest on the stocking loan is the Ulster Bank’s cost of funds rate plus 2.75%. This loan ispresented within current bank loans.

Business credit lines were received in 2007 for working capital. The balance outstanding at 30th June 2012 was e499,999 (2011:e499,913). Interest is a varying business credit line rate. The facility is secured by letters of guarantee from the directors as notedabove and a charge over the commercial warehouse at Portgate Business Park, Monkstown, Co. Cork. This is presented withincurrent bank loans.

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Borrowings (continued)Summary of Borrowing Arrangements (continued)(v)

The directors consider the carrying amount of borrowings approximates to their fair values.

Company 2012 2011Non-Current Liabilities j j

Secured – at Amortised CostZero-Coupon Loan Notes (i) - 3,435,580

- 3,435,580

2012 2011Current Liabilities j j

Zero-Coupon Loan Notes (i) 3,956,620 -Investor Loans (ii) - Secured 400,000 475,967

- Unsecured 2,323,782 1,351,103

6,680,402 1,827,070

Summary of Borrowing ArrangementsThe Company has secured debt funding from its equity investors throughout the reporting year in order to finance capital investmentand working capital. The principal loan arrangements entered into are as follows:

(i)

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Preference SharesKedco Power Limited issued 500,000 8% cumulative redeemable convertible preference shares of e1 each at par to EnterpriseIreland, the Irish Government agency responsible for the Global expansion of Irish companies, in the year ended 30th June 2010,realising e500,000. The preference shares will be convertible at the option of the holder in the event that investment of at leaste2m is secured by Kedco plc, or Kedco Power Limited, within five years from the date of allotment of the preference shares andwould convert into ordinary shares in either Kedco plc or Kedco Power Limited respectively. The shares are unsecured borrowingsof the Group and are designated as at fair value through profit or loss.

On 5th July, 2010, the Company raised j3.2m (£2.6m) from the issue of 3,588,583 zero-coupon secured loan notes. The loannotes, which had a subscription price of £0.72, were issued to a variety of investors and are redeemable at par value (being £1)two years from the date of issue (or earlier on the occurrence of certain events including a sale of the Company). Each Loan Noteentitled the holder to subscribe for three Ordinary Shares of the Company at a subscription price of j0.08, or if certain performancecriteria was not met within six months of the drawdown, the lowest trade price between the date of drawdown and the date offirst sales receipts from the national grid, at any time prior to the fourth anniversary of the issue. As this performance criteria wasnot met, the subscription price is now £0.01. Pursuant to the placing, Newry Biomass Limited (formerly Best Kedco Limited), a jointlycontrolled entity established for the purposes of the Newry Project, will pay a royalty of 5 per cent of the proceeds arising from thesale of energy from the Newry Project to the investors. The royalty payments would commence with the initial generation of 1MWof energy from Newry and would conclude following 24 months of continuous generation of 2MW electricity.

Pursuant to a separate warrant agreement and in consideration for its placing services, Cornhill Asset Management Limited, anadviser to the Company, will have the right to subscribe to two Ordinary Shares per Loan Note issued to the Company at asubscription price as described in the preceding paragraph. Additionally, pursuant to a separate royalty agreement, Newry BiomassLimited would pay 2 per cent of the proceeds arising from the sale of energy from the Newry Project to Cornhill for the sameperiod as that outlined above for the Investors.

Under the Loan Note agreement, the Company granted the holders of the Loan Note second-ranking security over its 80% interestof its SIA Vudlande subsidiary in Latvia. As of 5th July 2011, the security is capable of being enforced due to the delays in thefinalisation of the Newry Project and the Company has received notice from the Trustee of the Loan Notes that it intends to enforcethe security. The Company, as part of its strategic review, was already considering seeking purchasers for its SIA Vudlande subsidiaryas it was deemed non-core to the Company’s focus on waste to energy generation.

Under the terms of the Loan Note if the Company is successful in executing a sale of Vudlande, the proceeds of any such sale mayfirst be applied in discharging its obligations under the Loan Note Agreement and other senior lending facilities.

As noted in Note 41, the Group announced a proposed restructuring to remove debt obligations from the Company such that itwould have a suitable basis on which to raise further equity finance. As part of this restructuring, it was agreed that the holders ofthe Zero-Coupon Secured Notes would take on a 40% reduction in the interest payable on the Notes, equivalent to £401,921(j499,033).


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Borrowings (continued)Summary of Borrowing Arrangements (continued)(ii)

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Investor loans of e1,219,028 were received during the year ended 30th June 2010. Of the total e1,219,028 received, e250,000is secured on the 75kW combined heat and power modular biopower system included in inventories at 30th June 2012 ande150,000 is secured by personal guarantees from certain directors. This e400,000 was repayable between 1st September 2010and 31st October 2010 with an interest payment of between 2.5% and 3% per month. These funds were advanced to financeworking capital. During the year ended 30th June 2011, e162,500 of the principal was repaid. During the year ended 30th June2012, e62,500 of the principal was repaid.

As noted in Note 41, the Group announced a proposed restructuring to remove debt obligations from the Company such that itwould have a suitable basis on which to raise further equity finance. As part of this restructuring, it was agreed that the holders ofthe above Investor Loans would take on a 40% reduction in all interest that had been accrued and remained unpaid to date,equivalent to e60,258. At 30th June 2012, the outstanding loan balance and accrued interest was e365,387 (2011: e475,967).

The remaining investor loans of e819,028 received during the year ended 30th June 2010 are unsecured, have no fixed interestrate and have no fixed repayment date. These funds were advanced to finance working capital. Of this amount, e108,000 relatedto funds advanced by directors. During the year ended 30th June 2011, a further e190,000 was advanced to the company tofinance working capital while e910,911 was repaid by the company. During the year ended 30th June 2012, e33,479 was repaidby the company, leaving an outstanding balance of e64,638 payable to investors at 30th June 2012 (2011: e98,117).

During the year ended 30th June 2011, e1,200,000 was received from its 22.14% shareholder, Farmer Business Developments plc(‘FBD’) to assist its short term working capital requirements. These funds were repayable as from 1st May 2011, with an interestpayment on outstanding capital of 10% per annum. The drawdown portion of the facility may be converted at any time by FBDinto either the Loan Notes as described in (i) above or Ordinary Shares in Kedco. If FBD opts to convert the Facility into Kedcoordinary shares, then the conversion price will be the average of the closing mid-market price of the ten working days prior toconversion. FBD would not be able to convert any proportion of the Facility into Kedco ordinary shares if to do so would result inFBD holding in excess of 29.9% of Kedco’s issued share capital.

On 3rd February 2012, the Company allotted 8,801,259 ordinary shares of e0.01 at a premium of e99,981 to its 22.14%shareholder, Farmer Business Developments plc as a result of FBD exercising its rights under its February 2011 e1,200,000 10%Convertible Loan Note. The total value of the loan converted at this time was e187,933.

On 1st May 2012, the Company allotted 3,644,224 ordinary shares of e0.01 at a premium of e31,349 to its 22.14% shareholder,Farmer Business Developments plc as a result of FBD exercising its rights under its February 2011 e1,200,000 10% ConvertibleLoan Note. The total value of the loan converted at this time was e67,792.

During the year ended 30th June 2012, a further e1,200,000 was received from its 22.14% shareholder, FBD, to assist its shortterm working capital requirements. These funds were repayable as from 1st April 2012, with an interest payment on outstandingcapital of 10% per annum. The drawdown portion of the facility may be converted at any time by FBD into either the Loan Notesas described in (i) above or Ordinary Shares in Kedco. If FBD opts to convert the Facility into Kedco ordinary shares, then theconversion price will be the average of the closing mid-market price of the ten working days prior to conversion. FBD would notbe able to convert any proportion of the Facility into Kedco ordinary shares if to do so would result in FBD holding in excess of 29.9%of Kedco’s issued share capital. The facility is secured on the residual of the assets secured by the Loan Notes in Note (i) above.

As noted in Note 41, the Group announced a proposed restructuring to remove debt obligations from the Company such that itwould have a suitable basis on which to raise further equity finance. As part of this restructuring, it was agreed that FBD wouldaccept a 40% reduction in all interest that had been accrued and remained unpaid to date, equivalent to e99,694. At 30th June2012, the outstanding loan balance and accrued interest was e2,293,757 (2011: e1,252,986).

The directors consider the carrying amount of borrowings approximates to their fair values.

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Deferred Income - Government Grants 2012 2011h h

Non-Current Liabilities Deferred Income - Government Grants - 36,915

Current Liabilities Deferred Income - Government Grants - 9,444

Deferred income relating to government grants represent rural support service and EU structure fund co-financing received in 2004and 2005 for the purchase of plant, property and equipment. The financing received has been recognised as deferred income and istransferred to the profit or loss over the useful lives of the related assets which are five and eleven years.

The amortisation of deferred income is offset against depreciation on the relevant assets within ‘administrative expenses’ in the incomestatement.

Deferred income has now been reclassed as part of liabilities associated with assets held for sale in the current year. (See Note 16).

Finance Lease LiabilitiesFinance lease liabilities relate to motor vehicles and plant and machinery. Lease terms vary from three to five years. The Group hasoptions to purchase the related assets for a nominal amount at the conclusion of the lease agreements. The Group’s obligationsunder finance leases are secured by lessors’ title to the leased assets.

2012 2011h h

Minimum Lease PaymentsNo later than 1 Year 375 4,497Later than 1 Year and not later than 5 Years - 375

375 4,872Less Future Finance Charges (2) (179)Present Value of Minimum Lease Payments 373 4,693

Present Value of Minimum Lease PaymentsNo later than 1 Year 373 4,320Later than 1 Year and not later than 5 Years - 373Present Value of Minimum Lease Payments 373 4,693

Included in the financial information as:Current Liabilities 373 4,320Non-Current Liabilities - 373

The fair value of finance lease liabilities is approximately equal to their carrying amount.

Trade and Other Payables2012 2011

Group h h

VAT Payable 531,374 1,350Trade Payables 646,646 3,264,538Other Payables 42,291 43,773Accruals 1,350,954 1,234,808Amounts due to Jointly Controlled Entities 2 781,920PAYE and Social Welfare 24,499 149,998Income Tax Payable - 5,287

2,595,766 5,481,674

The carrying amount of trade and other payables approximates fair value. All trade and other payables fall due within one year.

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Trade and Other Payables (continued)2012 2011

Company h h

Trade Payables 64,261 18,089Amounts Due to Subsidiary Undertakings 5,711,206 134,840Income Tax Payable - 599Accruals 255,414 319,668

6,030,881 473,196

The carrying amount of trade and other payables approximates fair value. All trade and other payables fall due within one year.

Deferred Tax Liability2012 2011

h h

At the beginning of the financial year 268,062 128,176Reclassified as liabilities associated with assets held for sale (268,062)Movement in deferred tax liability – charged to income - 139,886

At the end of the financial year - 268,062

The deferred tax liability recognised in the prior year has now been reclassified as liabilities associated with assets held for sale in thecurrent year (See Note 16).

A deferred tax asset has not been recognised at the balance sheet date in respect of trading tax losses. Due to the history of pastlosses, the company has not recognised any deferred tax asset in respect of tax losses to be carried forward which are approximatelyh12.5m at 30th June 2012.

Operating Lease ArrangementsOperating leases relate to office facilities with lease terms varying from 5 years to 25 years and a rent review every 5 years. The Groupdoes not have an option to purchase the leased asset at the expiry of the lease period.

2012 2011h h

Operating Lease Charges 20,000 143,740

At the balance sheet date, the Group has commitments under non-cancellable operating leases which fall due as follows:

2012 2011h h

Within One Year 20,000 20,000Longer than 1 Year and not longer than 5 Years - -Longer than 5 Years - -

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Share Based PaymentsOn 16th October 2008 the Group established a Long-Term Incentive Plan (the ‘LTIP’) under the terms of which certain employeessubscribed for ‘A’ Shares at a subscription price being the par value of h0.01 each that reflected the restricted nature and contingentvalue attaching to such shares.

All ‘A’ Shares will convert into ordinary shares with full voting and dividend rights following the achievement by management of theGroup of any one of the following performance related targets:

�

�

�

EBITDA in respect of any relevant financial year means the earnings of the Group before interest, taxation, depreciation and amortisationby reference to the profit and loss account of the Group for the relevant financial year (based on the audited financial statements ofthe Group for such financial year) which shall be calculated both in accordance with IFRS and in accordance with the same accountingprinciples and policies applied by the Group in previous years (IFRS prevailing in the case of conflict).

If the EBITDA targets referred to above are not met then the conversion of the ‘A’ Shares shall not occur and the Group may redeemthese ‘A’ Shares, subject to adequate reserves, at the par value thereof.

If a successful offer is made to acquire control of a majority of the shares in the Group or all, or substantially all, of its assets, immediatelyprior to completion of such an offer, the ‘A’ Shares will convert into ordinary shares so that they become eligible to participate in suchan offer notwithstanding if such an offer occurs prior to 30th June 2011.

The Group will have an option to redeem all ‘A’ Shares (at the original subscription price) held by a member of management who leavesthe Group’s employment for whatever reason before the date of conversion, save for:

�

�

Details of the ‘LTIP’ shares are as follows:

Issue Date Number of ‘LTIP’ Issue Price Fair Value Expense in Expense in ‘A’ Shares at Issue Date Income Statement Income Statement

30th June 2012 30th June 201116th October 2008 49,256,332 g0.01 g0.01 (g492,580) g164,197

The fair value assigned to the ‘LTIP’ shares is estimated by management on the date of the grant based on certain assumptions. Theseassumptions include, among others, the degree of probability of the vesting conditions being achieved and the marketability of theshares at the date of the grant.

There was a reversal of share based payment reserve and related receivable balance in the current year, as conditions attaching to theconversion of the shares were not met.

the Group, for any financial year ending on or prior to 30th June 2011, achieving EBITDA of at least h14 million in respect of suchfinancial year; or

the Group, for any financial year ending on or prior to 30th June 2011, achieving EBITDA of at least h7 million in respect of suchfinancial year (conversion only taking place after 30th June 2012 notwithstanding the achievement of the relevant target in anearlier year); or

the Group, for the financial year ending on 30th June 2011 and for the financial year ending on 30th June 2012, achieving cumulativeEBITDA of at least h14 million over the period of such financial years.

where a member of management ceases to be an employee of the Group by reason of death or permanent disability. In this instancethe ‘A’ Shares will pass to the deceased’s estate (in the case of death) or will be retained by him/her (in the case of permanentdisability) pending confirmation as to whether conversion shall occur; and

where a member of management ceases to be an employee of the Group (for any reason whatsoever) after the end of a particularfinancial year (or years), but before EBITDA is determined based on the audited accounts for that year (or years), then if the relevanttargets are achieved for such financial year (or years) such person will, notwithstanding his/her departure from the Group, remainentitled to benefit under this incentive scheme and have his/her ‘A’ Shares converted and re-designated into ordinary shares.

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Related Party TransactionsTransactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated onconsolidation. Details of transactions between the Group and other related parties are disclosed below.

During the reporting year the Group received finance from its related parties. There were no further related party transactions otherthan the remuneration of key management.

Financing transactions

The following transactions have taken place with members of the Board:

2012 2011Amounts Owed to Directors: c c

Zero-Coupon Loan Notes 2012 (Note 29) 612,838 532,135Investor Loans (Note 29) 587,409 599,909

During the year ended 30th June 2012, c12,500 of the investor loans was repaid to members of the Board (2011: c222,404).

Security for the Zero-Coupon Loan Notes is disclosed under Note 29. There is no security attached to the other loans disclosed above.Warrants attached to the Zero-Coupon Loan Notes issued to Board members above total 1,667,499 – details of the exercise of thesewarrants are disclosed in Note 29 above.

As described in Note 23 of the financial statements, the company entered into a put and call option and a second call option relatingto the shares in Enfield Biomass Limited (formerly Kedco Howard Limited) with the other party in the joint venture, Wellwin InvestmentsLimited, a company incorporated in Ireland. One of the shareholders of Wellwin Investments Limited, who controls 32.5% of thecompany, is a director of Kedco plc. As part of the agreement described in Note 23, Kedco plc has guaranteed to repay the debt ofc990,000 owed by Enfield Biomass Limited to Wellwin Investments Limited, and to pay a facility fee of 5% of the loan outstandingto Wellwin Investments Limited. During the year ended 30th June 2012, Kedco plc paid c272,500 to Wellwin Investments Limited byway of its own investment in Enfield Biomass Limited (2011: c497,500). At 30th June 2012, the debt stood at c220,000 (2011:c492,500). Kedco plc also paid c8,237 to Wellwin Investments Limited by way of facility fee (2011: c59,175). Warrants attachingto these loans total c4,050,000 at a subscription price of the lowest listed share price between signing of the agreement and the datethat the outstanding balance of the loan is paid to Wellwin Investments Limited, exercisable at any date up to 30th June 2014. As notedin Note 41, the Group announced a restructuring to remove debt obligations from the Company. Included in this restructuring is theconversion of the Wellwin Investments loan plus accrued facility fee less a discount of 40% to equity in Kedco plc. The amountconverted was c230,000. A development fee of c255,000 will be paid to Wellwin within five business days of the financial close ofproject finance for the project known as the Enfield Biomass project.

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Related Party Transactions (continued)Finance costs recognised in the income statement in respect of loans from members of the Board amounted to:

2012 2011c c

Zero-Coupon Loan Notes 2012 (Note 29) 14,039 127,051Investor Loans (Note 29) 29,760 54,970Wellwin Facility Charge (see above) 15,813 59,175Vudlande Loan (Note 29) - -

59,612 241,196

Included in accruals at 30th June 2012 is finance costs payable of c29,668 relating to loans from members of the Board (2011:c11,562). Interest from the Zero Coupon Loan Notes has been rolled up into the loan balance at 30th June 2012.

Certain directors have provided personal guarantees to Allied Irish Bank plc and Ulster Bank for bank loans, business credit linefacilities and a stocking loan.

Key Management RemunerationKey management personnel of Kedco plc consists of the Board of Directors as they are responsible for planning, directing andcontrolling the activities of the Group.

The remuneration of directors during the year presented was as follows:2012 2011

c c

Fees for services as directors 67,000 73,000Remuneration for other services 325,000 372,750Termination payments - 153,000

392,000 598,750

Remuneration earned by each director during the financial year ended 30th June 2012 is as follows:

Emoluments and Long Term Pension TerminationCompensation Incentive Plan Contributions Payments

h h h h

William Kingston 12,000 - - -Gerry Madden 250,000 - - -Edward Barrett - - - -Brendan Halpin 75,000 - - -Dermot O’Connell 20,500 - - -Diarmuid Lynch 12,000 - - -Donal O’Sullivan 12,000 - - -Alf Smiddy 10,500 - - -

392,000 - - -

At 30th June 2012, directors’ remuneration unpaid amounted to h242,167 (2011: h224,084).

The Company and the Group are controlled by the Board of Directors.

No long term incentive plan (‘LTIP’) shares were issued during the financial year ended 30th June 2012. At 30th June 2012, 49,256,332‘LTIP’ shares were in issue (see Note 35). Details of each director’s shareholding who were in office at the year-end are shown in theDirectors’ Report.

Consultancy costs paid to a company controlled by one of the directors amounted to h53,000 in the year to 30th June 2012 (2011:h9,000).

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Related Party Transactions (continued) 2012 2011

Other Related Party Transactionsh h

Amounts owed to external investors:Investor loans (Note 29) 2,293,756 1,252,986Vudlande loan (Note 29) 700,000 700,000

During the year ended 30th June 2012 and in the comparative year, investor loans of h1,200,000 per annum were advanced byFarmer Business Development plc, the 22.14% shareholder of the Company to the Group. Details of this facility, and movementsthereon, are noted in Note 29.

The Vudlande loan relates to monies advanced by close family members of one of the directors. There was no movement in these loansin the year to 30th June 2012 or in the comparative year.

Management fees of h706,183 were recharged from Kedco plc and Kedco Block Holdings Limited to Kedco Power Limited for servicesprovided.

Finance costs recognised in the income statement in respect of loans from related parties amounted to:

2012 2011h h

Investor loans (Note 29) 96,555 52,986Vudlande loan (Note 29) 29,750 105,000

126,305 157,986

Included in accruals at 30th June 2012 are finance costs payable on Vudlande loan of g112,875 relating to loans from related parties(2010: g83,125). Interest from investor loan has been rolled up into loan balance at 30th June 2012.

Jointly Controlled Entities

Details of amounts advanced to and received from jointly controlled entities are as follows:

2012 2011Amounts advanced to Jointly Controlled Entities: h h

Loans to Jointly Controlled Entities (disclosed under financial assets) 7,608,687 990,000

Balances Due from Jointly Controlled Entities (disclosed under Trade and Other Receivables in Note 21) 930,567 762,916

Amounts Payable to Jointly Controlled Entities:Balances due to Jointly Controlled Entities (disclosed under Trade and Other Payables in Note 32) 2 781,920

During the year ended 30th June 2012, sales of g10,031,773 were made to jointly controlled entities (2011: g42,080). During theyear a consultancy fee of h548,025 was charged to Enfield Biomass Limited for services provided. Included in trade and otherreceivables at 30th June 2012 is a prepayment of g538,602 relating to jointly controlled entities (2011: gNil). Included in amountsdue to customers under construction contracts is g1,110,090 (2011:g1,272,735) relating to amounts received from jointly controlledentities. During the year ended 30th June 2012, stock and services were purchased from a jointly controlled entity totalling gNil (2011:g121,339). Expenses recharged to a jointly controlled entity for the year ended 30th June 2012 amounted to gNil (2011: g227,611).

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Cash and Cash EquivalentsFor the purposes of the cash flow statement, cash and cash equivalents include cash on hand and in banks and bank overdrafts. Cashand cash equivalents at the end of the financial year as shown in the cash flow statement can be reconciled to the related items in thebalance sheet as follows:

Group 2012 2011g g

Cash and Bank Balances 144,764 616,285Cash and Bank Balances included in Assets Held for Sale (Note 16) 128,280 -Bank Overdrafts (150,000) (407,698)Bank Overdrafts Associated with Assets Held for Sale (Note 16) (467,140) -

(344,096) 208,587CompanyCash and Bank Balances 14,331 402,718

Reconcilation of Movement in Shareholders’ FundsFor the year ended For the year ended30th June 2012 30th June 2011

Company g g

Issue of Ordinary Shares 562,809 304,592Share Premium Arising on Issued Share Capital 337,225 1,628,222Loss for the Financial Year (285,358) (11,149,275)Share-Based Payment Reserve (492,580) 164,197

Movement in Shareholders’ Funds in the Period 122,096 (9,052,264)Opening Shareholders’ Funds 30,458,429 39,510,693Closing Shareholders’ Funds 30,580,525 30,458,429

Contingent LiabilitiesIn the normal course of business, the Group has contingent liabilities arising from various legal proceedings with third parties, theoutcome of which is uncertain. Provision for a liability is made when the directors believe that it is probable that an outflow of fundswill be required to settle the obligation where it arises from an event prior to year end. It is the policy of the Group to rigorouslydefend all legal actions taken against the Group.

During the year, Newry Biomass Limited, a jointly controlled entity of the Group, entered into a binding facilities agreement with UlsterBank Group. Pursuant to this agreement, Ulster Bank will advance up to £9.44m to enable the completion of construction, installationand commissioning of a 4MW biomass electricity and heat generating plant in Newry, Northern Ireland. As part of this agreement,Kedco plc has:

�

�

Details of other guarantees are disclosed at Note 29.

Assigned all relevant licences and permits held by the Group with respect to the Newry project; and

Provided a guarantee guaranteeing the obligations of Kedco Fabrication Limited and Kedco Power Limited with respect to theconstruction, installation and commissioning of the plant.

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Contingent Liabilities (continued)As disclosed in Note 41, and as part of the restructuring carried out by the Group, Wellwin Investments Limited have been guaranteeda development fee of e255,000 upon financial close of the project finance for the project known as the Enfield Biomass project.

CommitmentsAt the balance sheet date, the group has commitments of eNil (2011: e212,073) with respect to the purchase of equipment in relationto one of its construction contracts.

Events After the Balance Sheet DateIn its circular to Shareholders on 10th September 2012, the Group announced details of a proposed restructuring which would removedebt obligations from the Company such that it will have a suitable basis on which to raise further equity finance in the future. Therestructuring has significantly strengthened the Group’s balance sheet through the reduction of approximately e10.8m of DebtObligations from the Group and a reduction of its annual interest charge by approximately e1.5m. The reduction in e10.8m wasachieved through the conversion of debt into equity (e5.8m) and the sale of its Latvian subsidiary, SIA Vudlande which has the affectof removing debt (e1.4m) from the balance sheet and paying down zero loan note holders (e3m). Enfield Biomass, a company inwhich Kedco did hold a 50 per cent interest will as a result of the restructuring become a wholly-owned subsidiary of the Group. Inconjunction with the above restructuring, the Company raised approximately £0.8m in an equity placing in November 2012.

On 12th September 2012, the Group announced that the Company’s plant in Newry, Northern Ireland, which will produce a total of4MW, has commenced the exportation of power to the grid from its biomass electricity and heat generation plant. This marks theCompany’s transition to an operator of renewable energy assets from a pure development company.

On 18th September 2012, the Group announced that it has signed a heads of agreement with Reforce Energy Limited, in relation tothe acquisition of its entire share capital. Both parties are now proceeding to final contracts and the completion of all pre-conditionsrelating to the Acquisition. The consideration for the Acquisition, if completed, would be satisfied by the issue of a new Kedco ordinaryshares and would not involve cash consideration. Reforce Energy Limited is a renewable energy development company focused onsmall-scale renewable projects across various technologies. The company’s key markets are the UK, Ireland and Northern Irelandwhere it already has an active pipeline of over 60 projects with a capacity of in excess of 40MW at various stages of development.

Approval of Financial StatementsThese consolidated financial statements were approved by the Board of Directors on 30th November 2012.

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Advisors and Other Information -

� DIRECTORS:Dermot O’Connell, Non-Executive ChairmanGerry Madden, Chief Executive Officer and Interim Finance DirectorBrendan Halpin, Executive DirectorEdward Barrett, Non-Executive DirectorWilliam Kingston, Non-Executive DirectorDiarmuid Lynch, Non-Executive DirectorDonal O’Sullivan, Non-Executive Director

� SECRETARY:Diarmuid Lynch

� NOMINATED ADVISER:Deloitte & Touche LLP, Stonecutter Court, 1 Stonecutter Street, London, EC4A 4TR, United Kingdom.

� AUDITORS:Deloitte & Touche, No 6 Lapps Quay, Cork, Ireland.

� BANKERS:Allied Irish Bank, Main Street, Carrigaline, Co. Cork, Ireland.Ulster Bank, Georges Quay, Dublin 2, Ireland.

� SOLICITORS:Brown Rudnick, 8 Clifford Street, London, W15 2LQ, United Kingdom.

� BROKER:SVS Securities plc, 21 Wilson Street, London, EC2M 2SN, United Kingdom

� REGISTRAR:Capita Corporate Registrars plc, Unit 5, Manor Street Business Park, Manor Street, Dublin 7, Ireland.

� REGISTERED OFFICE:Kedco plc, 4600 Airport Business Park, Kinsale Road, Cork, Ireland.

4600 Cork Airport Business Park

Kinsale Road

Cork

Ireland

t +353 (0)21 483 9104

f +353 (0)21 483 9112

e [email protected]

w www.kedco.com desig

n: Cha

rlie Nev

ille, Cork

Kedco plc

Kedco PLC Annual Report 2012

Documents

Transcript of Kedco PLC Annual Report 2012