OPG Power Ventures Plc
Annual Report 2022

Plain-text annual report

Powering. Prospering. Innovating. OPG Power Ventures Plc FY2022 Annual Report & Accounts Index Strategic Report Highlights Chairman’s Statement Financial Review CEO Operational Review Business Model Group Objectives and Strategies Market Review ESG Report Corporate Governance Principal Risks Board of Directors Corporate governance Directors’ report Directors’ remuneration report Statement of Directors’ responsibilities Financial Statements Auditors’ report Financial Statements Notes to Financial Statements Corporate directory Definitions & glossary Page Number 3-4 5-6 7-10 11-12 13 14 15-17 Enclosed 33-34 35-37 38-42 43-44 45-47 48 49-55 56-60 61-84 85 86-87 3 Highlights Revenue Unit FY20 FY21 FY22 Operating Profit Unit FY20 FY21 FY22 Adjusted EBITDA Unit FY20 FY21 FY22 Basic EPS Unit FY20 FY21 FY22 Profit before Tax Unit FY20 FY21 FY22 Net Debt to Adjusted EBITDA Ratio FY20 FY21 FY22 £ m £154.0 £93.8 £80.1 £ m £24.0 £27.5 £16.1 £ m £31.2 £33.7 £21.6 Pence 2.1 3.5 1.5 £ m £14.5 £21.6 £13.0 x 1.7 x 0.5 x 0.3 x 4 • • • • • • • Revenue decreased by 14.66 per cent to £80.1 million in FY 22 from £93.8 million in FY21 because of Covid-19 and increased coal prices in second half of FY22. Total generation (including deemed) in FY22 was nearly 1.9 billion kWh, 11.0 per cent lower than last year’s generation of nearly 2.1 billion kWh. 1 Adjusted EBITDA of £21.6 million (27.0 per cent margin) as compared with £33.7 million (36.0 per cent margin) in FY21. Profit before tax from continued operations was £13.0 million (16.2 per cent) as compared to £21.6 million (23.0 per cent) in FY21. Basic earnings per share 1.5 pence in FY22 as compared to 3.5 pence in FY21. 2 Net Debt reduced from £16.24 million in FY21 to £6.9 million in FY22. Net Debt to Adjusted EBITDA ratio further improved from 0.5x to 0.3x. 1 See definition of Adjusted EBITDA on page 6 2 See definition of Net Debt on page 8 Chairman’s Statement Resilience, robust profitability and strong cash generation FY22 has been a challenging year. As the world and the global economy was recovering from Covid-19, the war in Ukraine dented sentiment with a sharp increase in global energy prices. Despite a challenging year, OPG has continued to deliver strong cash generation, robust profitability and achieve a significant reduction in net debt. The unprecedented health crisis, caused by Covid-19, took an immense human and economic toll globally. At OPG, we responded immediately with a comprehensive Covid-19 response plan – putting in place health and safety measures to protect our employees, continuing to run our plant operations smoothly to ensure supply of electricity to our consumers, and providing essential support and assistance to our local communities in need. Yet, even in such critical circumstances, our Group has emerged strong, reporting solid set of financial results and paving pathways for accelerated and sustainable future growth. The plants’ generation, including deemed generation, during FY22 was 1.9 billion units which is an 11.0 per cent reduction in generation in comparison with FY21 primarily due to the increase in coal prices. The average Plant Load Factor (“PLF”) in FY22 (including deemed) was at 52 per cent (FY21: 58 per cent) and the average realised tariff was ? 5.60 (FY21: ? 5.52) per kilowatt hour. In FY22, the Group’s revenue was £80.1 million (FY21: £93.8 million) and Adjusted EBITDA was £21.6 million (FY21: £33.7 million) and profit for the year was £6.0 million (FY21: £14.1 million). We are glad to report that OPG was comfortably in line with FY22 market expectations despite the difficult market conditions. Creating shareholder value through deleveraging In 2018, the Board took the decision to focus on our profitable, long-life assets in Chennai, and to prioritise deleveraging as a method to grow shareholders’ equity. to This strategy, we believe, will deliver value shareholders with free cash flows providing significant returns to our shareholders and further opportunities to grow the business. During the period FY20 - FY22 net debt reduced significantly from £53.4 million to £16.2 million and then to £6.9 million. Net debt to Adjusted EBITDA ratio reduced from 1.7x to 0.5x and further to 0.3x demonstrating the robustness of OPG’s financial position. The Group remains amongst the least leveraged power companies in India. The Board remains convinced, especially in light of the Covid-19 challenges, that our strategy of maintaining operational excellence and paying down expensive borrowings is the right one to pursue for all our stakeholders. Maximising stakeholders’ long-term value One of OPG’s paramount objective is to maximise stakeholders’ long-term value. In light of disruptions and uncertainty caused by Covid-19 and extraordinary volatility in coal prices and freight over the past year and a half, the Board believes that it is in the best interest of the Group and its stakeholders to conserve cash. The cash thus conserved will be utilized for repaying debt, growing ESG focused projects and maintaining a strong and resilient balance sheet to withstand the turbulent times. Building sustainable future Rapid growth in urbanisation, universal electrification, and a renewable energy transition driven by climate change, means that India’s incremental power needs is targeted to largely be met by renewable energy. Our business strategy is aligned with this, offering us an opportunity to unlock value for all our stakeholders in the years to come. OPG has developed its ESG strategy, which, among other matters, includes objectives to reduce its carbon footprint. As part of this strategy, the Group is evaluating various options to increase its renewable energy asset base and to establish joint ventures to roll out various energy transition technologies. These initiatives will ensure that OPG delivers year-on-year improvements to reach the Group’s emissions reduction targets in the medium and longer-term. We are pleased to present our second standalone ESG report which pertains to FY22 and summarises the objectives, activities, and the performance of the Group from an ESG perspective. This report includes examples of how we have demonstrated our commitments and applied our management approach on a range of ESG topics, including environmental stewardship, health & safety, relationship with local community, and governance. 5 Indian Economy and Power Sector Update India is the third largest producer and third largest consumer of electricity in the world with installed power capacity reaching 400 GW as at March 2022. In FY22, even amidst a relatively weaker macroeconomic scenario, peak power demand hit an all-time high of 200.5 GW. On account of a record breaking heat wave in North India, the peak power demand has already touched 210.8 GW in the current financial year. In June 2022, the World Bank’s Global Economic Outlook projected India’s FY23 (CY22) economic growth forecast at 7.5 per cent, supported by plans for higher spending on infrastructure, rural development and health services as well as stronger-than-expected recovery in services. FY24 (CY23) is forecasted at 7.1 per cent, amongst the highest growth rates. During FY22, power consumption increased by 9.5 per cent to 1,392.1 BU from 1,271.5 BU. ICRA, which is a leading ratings agency in India estimates that India’s electricity demand is expected to grow up to 6.5 per cent in FY23 on a year-on-year basis. Over the last several months the prices of thermal coal and freight have surged sharply primarily due to increased imports of coal and other goods by China and other Asian countries on the back of post Covid-19 economic recovery. Whilst OPG is partially covered from increases in prices with fixed price agreements for coal and freight, the Group remains exposed to market fluctuations for the unhedged portion of coal consumption and freight. The Group continues to explore various options including sourcing the coal from other geographies (including domestic sources) to reduce the per unit cost of electricity. Outlook Since April 2022, the prices of thermal coal and freight have increased significantly due to geo-political tensions. Coal prices may not reduce significantly in the short term. While challenges to the economy will continue in FY23; the Group has strong foundations, allowing us both to manage the ongoing Covid-19 situation and to pursue growth sustainably. The Group’s medium and long-term fundamentals remain unchanged. We have strong cash flows which will enable OPG to continue to reduce and deliver our long-term profitable business model of responsible growth and sustainable returns to shareholders. We will also continue to focus on advancing our ESG agenda. I would like to extend my gratitude to all our employees who overcame challenges posed by the pandemic, as well as vendors, banks and all stakeholders, especially our shareholders, for the incredible support we have received during these unprecedented and extraordinary times. N. Kumar Chairman 29 September 2022 6 Financial Review The following is a commentary on the Group’s ?nancial performance for the year. Revenue FY22 has been a tough year for OPG. The Group’s revenues decreased by £13.8 million (a 14.7 per cent decline) in FY22 primarily driven by the impact of Covid-19 in the first half and high coal prices in the second half of FY22. The Group decreased generation and consequently sales to captive power users because of the unprecedented increase in costs. Adjusted EBITDA in FY22 at £21.6 million was 27.0 per cent of revenues as compared to 36 per cent last year. Income statement 3 Year ended 31 March Revenue Cost of revenue (excluding depreciation) Gross profit Other operating income Other income Distribution, General and Administrative expenses, ECL (excluding depreciation, employee stock option charge) Adjusted EBITDA Share based compensation Depreciation Net finance costs Profit before tax from continuing operations Taxation Profit after tax from continuing operations (Loss)/Profit from discontinued operations, including Non-Controlling Interest Profit for the year 2022 £m £80.1 (£56.5) £23.6 £0.0 £8.1 (£10.0) £21.6 (£0.2) (£5.3) (£3.1) £13.0 (£4.1) £8.9 (£2.9) £6.0 % of revenue % of revenue 2021 £m £93.8 (£56.9) 29.4 £36.9 39.4 £9.4 £1.9 (£14.5) £33.7 (£0.5) (£5.7) (£5.9) £21.6 (£8.4) £13.1 £1.0 £14.1 27.0 16.2 11.1 7.5 36.0 23.0 14.0 15.0 The average tariff realized in FY22 was `5.60/kWh, marginally higher than previous year’s 5.52/kWh. Total generation including deemed was 1.87 Bn units, a decline of 11.3 per cent over last year’s 2.1 Bn units. This reduction was primarily because of the second Covid-19 wave that affected India and the high coal prices in the second half. The increase in coal prices was due to higher demand for coal from China, Europe, excessive rains in the Q3FY22 and later on, the export ban on coal in Q4FY22 in Indonesia. ` The production and output levels from the Group’s operating power plants compared to the prior years were as follows: Total generation, incl. “deemed” generation (million units) Plant Load Factor (PLF) (%) 4 Average tariff (INR/unit) FY22 1,868 52 5.60 FY21 2,107 58 5.52 3 Note: Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. 4 Unit 3: “Deemed” PLF (%) has been included. 7 Gross Profit The Gross Profit (GP) for the year was £23.6 million (29.4 per cent of revenue). On y-o-y basis (FY21 - £36.9 million (39.4 per cent of revenue)), the gross profit declined by 36 per cent reflecting the impact of high Indonesian coal prices. The cost of revenue represents fuel costs. The table below shows average price of coal consumed in FY22 and FY21. Average price of coal consumed Average price of coal consumed (`/mt) Average price of coal consumed (` / mKCal) Per cent change in average price of coal consumed (`/mt) Per cent change in the average price of coal consumed (` / mKCal) Adjusted EBITDA FY22 ? 5,460 ? 1,328 32.3 34.0 FY21 ? 4,127 ? 991 (4.1) (3.6) Adjusted earnings before interest, taxation, depreciation and amortisation (‘Adjusted EBITDA’) is a measure of a business’ cash generation from operations before depreciation, interest and exceptional and non-standard or non- operational charges, e.g. share based compensation, etc. Adjusted EBITDA is useful to analyse and compare profitability among periods and companies, as it eliminates the effects of financing and capital expenditures. Adjusted EBITDA for FY22 was £21.6 million, a decrease of 36 per cent from £33.7 million in FY21 primarily because of increase in international coal prices. Profit from continuing operations before tax was £13.0 million (16.2 per cent of revenue) as compared to £21.6 million (23.0 per cent of revenue) in FY21 primarily because of increase in international coal prices. Profit before Tax (PBT) reconciliation for FY22 (£m) PBT FY22 PBT FY21 Increase /(Decrease) in PBT Decrease in Gross Profit Decrease in Other Operating Income Increase in Other Income Decrease in Distribution, General & Administrative Expenses, Expected Credit Loss Decrease in Net Finance Costs Decrease in Depreciation and Amortisation Increase/(Decrease) in PBT Taxation £13.0 £21.6 (£8.6) (£13.4) (£9.4) £6.1 £4.9 £2.9 £0.4 (£8.6) The Company’s operating subsidiaries are under a tax holiday period but are subject to Minimum Alternate Tax (‘MAT’) on their accounting profits. Taxes paid under MAT can be offset against future tax liabilities arising after the tax holiday period. The tax expense during the year was £4.1 million. Profits after tax from continuing operations Profits after tax from continuing operations has decreased by 32.1 per cent or £4.2 million from £13.1 million to £8.9 million. The decrease was in line with H1FY22 forecasts. Assets held for sale and loss from discontinued operations – 62 MW Karnataka solar projects In FY18, four Karnataka solar projects (62 MW) were commissioned. OPG has a 31 per cent equity interest in these projects. During FY19, the Group obtained a right to exercise an option to buy an additional 30 per cent equity interest in solar companies. Effective from FY20 this right was assigned to a third party and from FY21 the remaining related obligations and the results of the operations of the solar companies are not consolidated in the Group’s consolidated financial statements due to loss of control. As previously reported, after evaluation of all options, the Group decided that the most efficient way to maximise shareholders’ value from the solar operations was to divest its’ stake in the solar companies. 8 The process of disposing the assets satisfy all conditions of IFRS 5. Therefore, the solar assets have been classified as ”Assets held for sale” as on 31 March 2022. The completion of the disposal process was impacted by Covid-19. OPG in its endeavour to sell the solar assets continues to identify potential buyers. Based on the term sheet received from potential buyer, the Group’s investment in the solar companies was valued at £13.5 million as compared to OPG’s initial investment of £16.4 million. This loss of £2.9 million is recognized as loss from discontinued operations on account of the diminution in the value of investment. The management is evaluating and actively considering the offer received from the potential buyer. Earnings per Share (EPS) The group’s total reported EPS decreased from 3.5 pence in FY21 to 1.5 pence in FY22. Dividend policy One of OPG’s paramount objectives is to maximise stakeholders’ long-term value. Keeping in mind, the disruptions and uncertainty caused by Covid-19 and extraordinary volatility in coal prices and freight, the Board believes that it is in the best interests of the Group and its stakeholders to conserve cash. The cash thus accumulated will be used to repay debt, to fund growth in relation to ESG focused projects and to maintain a strong and resilient balance sheet to withstand turbulent times. Therefore, the Board decided not to declare a dividend for FY22. The Board will revisit the Group’s dividend policy in due course. Foreign exchange gain/loss on translation The British Pound to Indian Rupee exchange rate appreciated to a closing rate of £1= `99.37 on 31 March 2022 from a rate of £1= `100.81 on 31 March 2021 thereby resulting in a gain of £2.3 million. The same has been recognized under “Exchange differences on translating foreign operations”. Property, plant and equipment The increase in net book value of our property, plant and equipment to £173.4 million principally relates to additions during the year offset by depreciation and foreign exchange impact during the year. Other non-current assets Other non-current assets (excluding property, plant and equipment & intangible assets) have increased by £4.3 million. The major components of this increase was in the non-current portion of restricted cash (up £2.2 million) represented by investments in mutual funds and fixed deposits maturing after twelve months of £10.4 million (2021: £8.2 million) allocated to debenture redemption fund and OPG’s strategic investment in Atsuya Technologies Private Limited totalling to £2.1 million (`210.0 million). The debenture redemption fund was created to repay the non-convertible debentures of £20.1 million (`2.0 billion) which are repayable in FY24. Current assets Current assets have decreased by £4.4 million from £74.5 million to £70.1 million year on year primarily as a result of the following: • • • • • decrease in Assets held for sale by £2.9 million due to diminution in the value of investments in the solar companies. decrease in trade receivables by £6.2 million as a result of strong collections from the Group’s captive power users and customers, including old receivable balances. decrease in inventories by £1.7 million on account of consumption and sale of coal. increase in other short-term assets by £8.4 million primarily due to increase in investments in mutual funds to £18.2 million (2021: £13.3 million) and advances to vendors of £6.2 million (2021: £2.4 million). decrease in cash balances (including restricted cash) by £2.1 million. Liabilities Current liabilities have marginally increased by £0.2 million from £38.2 million to £38.4 million year on year. Bank borrowings increased by £8.9 million from £4.5 million to £13.4 million. Trade payables decreased by £8.1 million from £32.5 to £24.4 million. Non-current liabilities have decreased by £8.1 million primarily due to decrease in the non-current portion of borrowings by £12.5 million from £22.3 million to £9.8 million. Deferred Tax liabilities have increased from £13.0 million to £17.0 million. 9 Financial position, debt, gearing and ?nance costs As at 31 March 2022, total borrowings were £43.3 million (31 March 2021: £46.6 million). The gearing ratio, net debt (i.e. total borrowings minus cash and current and non-current investments in mutual funds)/(equity plus net debt), was 3.9 per cent (31 March 2021: 9.1 per cent). The gearing ratio is a useful measure to identify the financial risk of a company. OPG’s NCDs are repayable in June 2023 and have an interest coupon of 9.85 per cent. The issue of the NCDs had a material positive impact upon the Group’s cash flow during the uncertain Covid-19 impacted period, through a significant deferment of principal payments and the NCDs’ interest coupon being lower by c.1 per cent in comparison with the existing term loans interest rate. During FY22 net debt (total borrowings minus cash and current and non-current investments in mutual funds) reduced from £16.3 million to £6.9 million and net debt to Adjusted EBITDA ratio reduced from 0.5x to 0.3x as a result of the repayment of term loans and working capital loans as well as strong cash collections achieved during the year. This demonstrates the robustness of OPG’s financial position. The Group remains amongst the least leveraged power companies in India. Based on the present term loans repayment schedule, the Group is expected to be term loan free by June 2024. Finance costs have decreased by £1.4 million from £6.8 million in FY21 to £5.4 million in FY22. This was primarily due to the impact of decrease in foreign exchange losses and reduction in interest expenses following scheduled repayments of the term loans and the issuance of the NCDs. Finance income increased from £0.9 million in FY21 to £2.3 million in FY22. This has resulted in a decrease of £2.8 million in Net Finance Costs from £5.9 million in FY21 to £3.1 million in FY22. Current restricted cash representing deposits maturing between three to twelve months amounted to £2.4 million (FY21: £3.2 million) which have been pledged as security for Letters of Credit. Non-current restricted cash represents investments in mutual funds of £8.8 million (31 March 2021: £8.2 million) and fixed deposits of £1.6 million (31 March 2021: £0.01 million). These non-current investments have a maturity period in excess of twelve months and are allocated to the debenture redemption fund which is earmarked towards the redemption of non-convertible debentures scheduled during FY24 of £20.1 million (`2.0 billion). Cash ?ow Cash flow from continuing operations before and after changes in working capital were £21.6 million (FY21: £36.8 million) and £16.3 million (FY21: £40.2 million) respectively. Net cash flow from operating activities decreased from £40.2 million in FY21 to £16.3 million in FY22, a decrease of £23.8 million, primarily due to decrease in trade payables and other liabilities. Movements (£m) Operating cash flows from continuing operations before changes in working capital Tax paid Change in working capital assets and liabilities Net cash generated by operating activities from continuing operations Purchase of property, plant and equipment (net of disposals) Investments (purchased)/sold, incl. in solar projects, shipping JV, market securities, movement in restricted cash and interest received 5 Net cash (used in)/from continuing investing activities Finance costs paid, incl. foreign exchange losses Dividend paid Total cash change from continuing operations before net borrowings FY22 £21.6 (£0.0) (£5.2) £16.3 (£3.5) (£5.7) (£9.2) (£4.5) - £2.6 FY21 £36.8 (£0.7) £4.1 £40.2 (£0.5) (£29.0) (£29.5) (£5.8) - £4.9 Ajit Pratap Singh Chief Financial Officer, 29 September 2022 5 Includes purchase of investments in mutual funds and other market securities of £10 million included in restricted cash and other short term assets in the statement of financial position. 10 CEO Operational Review The following is a review of the Group’s operations for the year. Plant availability and generation OPG’s operational performance depends upon its’ sales model, plant availability, plant load factors and auxiliary power consumption. As an organization, in FY22, despite a challenging environment, the Group honoured all its commitments. The credit for this achievement goes to the dedication of our team members and to the development of robust O&M practices coupled with fuel and logistics management capabilities, which made this achievement possible. Both coal availability and water consumption are two factors that have disrupted the availability and load factors of other thermal power plants in India in recent years. OPG’s plants are designed to use wide range of fuels, both domestic and international, and built with the air-cooled condenser technology to minimize water consumption. However, just like other thermal power plants OPG was also impacted by the macro environment that led to sharp increase in coal prices and the Group’s restriction in increasing prices beyond the state utility tariff to its core captive users other than TANGEDCO. The whole industry in India, deferred their coal purchases in absence of clarity from the government. This resulted in coal shortages which was further aggravated by the early onset of summer. The Government of India has responded positively with increasing domestic coal production and allowing the high costs of imported coal to be passed on. The timely and positive intervention by the government has helped avert a power crisis in India. The plant’s load factors take account of plant availability as reduced by external factors like normal seasonal demand adjustments to their offtake under the Long Term Variable Tariff Agreement (LTVT) (though the customer still pays OPG as discussed further below), enforced system back downs and one-off disruptions to demand. Total generation at our plant in FY22, including ‘deemed’ offtake, was 1.87 bn units (FY21: 2.1 bn units) with the reduction in generation primarily being due to the spike in coal prices in the second half of FY22. The plant load factor (‘PLF’) including ‘deemed’ offtake, in FY22 was 52 per cent (FY21: 58 per cent). In the latter half of FY 23, the Group expects a higher load factor compared to FY22 after the expected stabilization in coal prices. 11 Auxiliary consumption levels are also a key measure of plant efficiency, and are usually in the range of 7.5 per cent to 8.5 per cent for our units. The Group has instituted several measures and technical improvements to improve efficiency of the units. Sales contracts During FY22, the Group continued supplying directly to captive power users under short-term and multi-year contracts. This has accelerated cash collections and improved visibility of earnings. The capacity allocated for captive power plant was 334 MW, or 81 per cent of the plant’s installed capacity. 74 MW of capacity has remained available for supply on the LTVT to the TANGEDCO, Tamil Nadu State Utility. For FY23, offtake by TANGEDCO under the long term contract is expected to be higher than FY22. TANGEDCO also awarded a short term open access contract of supply of 250 MW of electricity in the month of April and May 2022. TANGEDCO, following the directions of Ministry of Power of the Government of India, allowed the pass through of high coal costs for the Group’s thermal plants os one time measure, by deviating the provisions of PPA. The pass through is valid until December 2022. The Group was also able to negotiate an increase in tariff from its captive users during FY 22 under the existing contracts, minimizing to a certain extent the impact of higher coal prices. In FY22, the plant realised an average tariff of ? 5.60 (FY21: ? 5.52) and a ‘deemed’ offtake charge of ? 1.50 per unit for ‘deemed’ generation. The difference between tariff and cost of coal on a per unit basis (‘the Clean Dark Spread’), was ? 1.05/unit for FY22 (FY21: ? 2.16/unit), which was impacted on account of coal prices. Coal supply and prices The Group has consistently been able to import low sulphur coal from reputed Indonesian coal producers and traders with whom OPG have developed long- standing relationships. The Group has purchased coal primarily on short and medium-term contracts in FY22 and as such the Group bene?tted as prices have been on the upward trajectory. The Group has also increased the offtake of Indian coal and was awarded a contract of 372,000 Tonnes in an auction by MSTC Ltd. The Group has also entered into a long term Fuel Supply Agreement with Mahanadi Coalfields Ltd. for procurement of nearly 130,000 Tonnes per annum for a period of five years. The average coal price was ? 5,460 per tonne in FY22, which is 32.3 per cent higher than last year’s average price of ? 4,127 per tonne. Current coal price and freight rates have increased significantly on account of geopolitical factors. However, independent forecasts predict international coal prices will stabilize in the last quarter of FY23 once China and Europe stocks up winter. Apart from diversifying the sources of coal, the Group has also implemented utilising a different mix (high and low GCV) of coal to minimise the impact of the increasing coal price. The Group continues to actively review its procurement and hedging practices to establish ways in which to mitigate the volatility of the coal price. Safety and environmental compliance The Group made xcellent progress with its safety programme, recording no fatalities and an industry leading Total Recordable Incident Report (TRIR) in FY22. The Group continues to minimise its consumption of water through air cooling and we operate with a philosophy of continual improvement with regards to any effluent. On 1 April 2021, the Government of India (GoI) further extended the timeline for meeting emission norms for a majority of coal-based power plants in India, which are now allowed to comply with the emission norms by December 2026. The revised timeline for each power plant will vary as per its location and the GoI’s categorisation of their location. The Group is well placed to comply with the new standards applicable for SOx, NOx and SPM. The Group is evaluating various technologies with a view to being fully compliant to the revised emission norms. Investment in Atsuya Technologies As part of the group’s strategy to diversify into energy savings/ESG compliant opportunities, OPG acquired an equity stake in Chennai-based sustainability solutions provider, Atsuya Technologies Private Limited (Atsuya). Atsuya provides a suite of innovative engineering solutions to a wide variety of industries and helps its’ clients scale up organically while meeting their sustainability goals. Atsuya’s solutions, which cover eight of the seventeen Sustainable Development Goals (SDGs), leverage state-of-the-art technologies such as artificial intelligence, deep tech and the internet of things. Atsuya’s existing clients include new-age Unicorns as well as a Fortune 500 Indian energy company. Avantika Gupta Chief Executive Officer 29 September 2022 12 13 Group objectives and strategies The Group’s objective is to build shareholder value through pro?table growth by becoming the ?rst choice provider of reliable and uninterrupted power to its' captive power users In addition, the Group’s aim is to be a sector leader by reference to the quality of its earnings, the pro?table growth it delivers and its performance against its own stringent safety and environment management standards. To meet these objectives, the Group’s strategy includes maximising the performance of its existing power generation assets; reducing its cost of capital and delivering returns pursuing responsible growth; and delivering accretive growth projects within its areas of expertise. Pro?tability The Group’s strategy involves developing and operating its power plants under the captive model enabling it to set its own tariffs with captive users and thereby providing the Group with the ?exibility to optimise tariffs and pro?tability. The Group continuously seeks to improve its operational performance and accordingly implements strategies for the optimisation of its power generation assets. Dividends In light of disruptions caused by the extraordinary volatility in coal prices and freight this year, the Board believes that it is in the best interests of the Group and its for the stakeholders to conserve cash repayment of debt, to fund growth in relation to ESG focused projects and to maintain a strong and resilient balance sheet to withstand the turbulent times. Therefore, the Board decided to not declare a dividend for FY22. The Board will revisit the Company’s dividend policy once the coal prices stabilize. Maximising performance of the power plant Reducing cost of capital and delivering returns Deleveraging The Group is committed to maximising the performance of its existing power generation assets through plant availability and providing a reliable and uninterrupted supply of electricity directly to its captive power users. The ?exible design of our plants allows us to procure a variety of international and domestic coal and maintain an uninterrupted supply of coal. Further, the Group seeks to achieve competitive prices that are negotiated directly with captive power users. The Group’s use of the group captive model means that it is well positioned to respond to ?uctuations in fuel costs through short- and medium-term sales contracts. The Group aims to maximise cash generation at its existing power plants in order to provide liquidity support for its operations and to repay debt, to deliver returns and to generate equity for use in potential projects. The Group continues to prioritise projects that can be funded through a combination of debt ?nancing and internal resources, and that can be expected to generate revenues which meet its target return levels without any direct subsidies being made available. Furthermore, the Group seeks to maintain manageable gearing levels and regular open dialogue with its shareholders and ?nancing partners. As of 31 March 2022, total borrowings were £43.3m. The gearing ratio (net borrowings / (equity plus net borrowings) was 4 per cent (31 March 2021: 9 per cent). During FY22 net debt (total borrowings minus cash and in current and non-current mutual funds) reduced to £6.9 million from £16.2 million and Net Debt to Adjusted EBITDA ratio reduced to 0.3x from 0.5x as a result of the repayment of term loans and working capital loans and foreign exchange impact. Based on term loans repayment schedule Chennai plant will be debt free by June 2024. investments 14 Market Review Global and Indian Economy The two years of global pandemic and spill overs from the Russian Federation’s invasion of Ukraine, have led to a sharp increase in global commodity prices and resultantly, is leading to muted economic activity. With varying duration, magnitude and economic impact, the Global Economy witnessed re-emergence of Covid-19 in different parts of the world. In many countries, inflation has become a central concern. The global growth is projected to decline from 6.1 per cent in FY21 to 2.6 per cent in FY23 mainly attributable to the Russia-Ukraine conflict, continued Covid-19 flare-ups, frequent and wider ranging of lockdowns in China including the key manufacturing hubs, diminished fiscal support and lingering supply bottlenecks. Further escalation in conflict, may deteriorate global-supply demand imbalances, and a further increase in commodity prices. Central Banks have started the interest rate hike and are expected to remain aggressive throughout CY22 and the first half of CY23. India, on the other hand will continue to shine and provide a ray of hope in this otherwise dismal scenario. Indiais expected to remain one of the fastest growing major economies in the world. Despite witnessing contraction in economy during the Covid-19 induced lockdowns, the size of the Indian economy is at US$ 3.1 trillion in FY22 against US$2.69 trillion in FY21. Even though the Indian economy contracted by 7.3 per cent in FY21 due to pandemic related disruptions, the economic rebound has been sharp and despite turbulences, the GDP crossed the pre-pandemic levels in the second quarter of FY22. According to the World Economic Report, the Indian Economy is expected to grow by 8.2 per cent in FY23 supported by strong projected performance of major sectors including services, agriculture, manufacturing, mining, construction and energy. The Reserve Bank of India, even while maintaining a conservative outlook, has projected a growth rate of 7.2 per cent due to the volatile geopolitical situation, surge in international energy and commodity prices, supply-side disruptions, tightening of global financial conditions and weak external demand pose risks. India and the World – Gross Domestic Product In continuation of the vision to make India a US$5 trillion economy by FY25, various initiatives such as “Make in India”, “Local to be Vocal”, digitization at every level of functioning, labour reforms, betterment of infrastructure and augmenting logistic facilities, have been undertaken by the Government of India, so as to make Indiaa hub of global manufacturing activities. India is on the path to a sustained economic recovery led by the vigorous countrywide vaccination drive, which helped to reduce the severity of the third wave with minimal disruptions to mobility and economic activity. The government’s capital spending is increasing while the revenue expenditure is on a decreasing trend. 15 Overview of the Indian power sector: Power being one of the most essential components of infrastructure, is crucial for the economic growth and welfare of a nation like India. To sustain the rapid economic growth that India has seen over the last few decades, the power sector will continue to play a pivotal role. India has the fourth largest electricity market in the world, after China, the US and the European Union, with generation of 1,484 billion units (BU) (FY21: 1,382 BU). It is the world’s third largest energy consuming country led by population growth, urbanization, industrialization, commercialization, growing air- conditioning units and digitisation. Increase in electricity demand has further been led by improved standards of living and gains in electrification access. Generation breakup in billion units India's per capita consumption however stands abysmally low at about one-third of the world's average per capita electricity consumption. The per capita consumption in the UK is more than five times that of India. With electricity being a critical enabler for the economic growth of the country, the Government of India is committed to growth in power generation. The power demand in the country is expected to grow at 6.5 per cent between FY22 and FY24 according to the Central Electricity Authority, Government of India (GOI), driven by rising industrial and commercial demand. Further, demand revival will be facilitated by various reforms undertaken by the GOI. India's power sector is one of the most diversified in the world with sources of power generation ranging from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power to viable non-conventional sources such as wind, solar, and agricultural and domestic waste. As at 31 March 2022, India total installed capacity was 400 GW out of this 60% was through fossil fuels. In the current decade (2020-2029), the Indian electricity sector is likely to witness a major transformation with respect to demand growth, energy mix and market operations. Considering the expected pick-up in the GDP growth and the various macroeconomic reforms and measures taken by the GOI. Further, power demand revival in the country will be driven by various reforms undertaken by the Government of India, viz., Ujwal DISCOM Assurance Yojana (UDAY) scheme, the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGYA) scheme,'Power for all' initiatives, Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY) scheme and Integrated Power Development Scheme (IPDS). Under the UDAY scheme, DISCOMs need to modernize their networks and lower their distribution losses. As at 31 March 2022 total installed Renewable Energy Source (RES) except large hydropower was 109.9 GW. New capacity addition during the year was 15.5 GW. At the UN Climate Change Conference in Glasgow (COP26), India committed to cut its emissions to net zero by 2070 and generate 50 per cent of its energy from renewable resources by 2030, and by the same year to reduce total projected carbon emissions by one billion tons. Despite India's commitment at the COP26,coal will remain a significant fuel source in the country's quest to provide power to every citizen. According to CEA, at the beginning of the FY22, 48 thermal power units aggregating to 32.3GW were under construction in the country. Nearly 10.3 GW of thermal capacity was expected to be commissioned in FY22. However, only 43.6 per cent of this scheduled capacity was commissioned in FY22. 16 Policy Initiatives that will positively impact OPG • • • The Central Electricity Regulatory Commission (CERC) in June 2022 has issued the Draft Central Electricity Regulatory Commission (Indian Electricity Grid Code) Regulations, 2022 for stable, reliable and secure grid operation and to achieve maximum economy and efficiency of the power system. A stable and reliable grid will help OPG in exporting power to captive users in other states. All States and Union Territories (UTs) have signed MoUs with the Central Government to ensure 24x7 power supply to all households, industrial & commercial consumers and adequate supply of power to agricultural consumers. This may translate into increased offtake by the state utility, TANGEDCO. The Government of India approved commercial coal mining for the private sector and the methodology of allocating coalmines via auction and allotment, thus introducing transparency in the process. OPG is actively participating in these auctions and allotments. 17 | | | | | PRINCIPAL RISKS The Group faces a number of risks to its business and strategy. The management of these risks is an integral part of the management of the Group. The list of principal risks and uncertainties facing the Group’s business set out below cannot be exhaustive because of the very nature of risk. New risks emerge and the severity and probability associated with these will change over time. SECTOR RELATEDRISK Power sale DESCRIPTION MONITORING AND MITIGATION The Company’s power plants derive their revenue from the group captive model supplying power on short-term, medium-term, or long-term sale basis and would, for this purpose, enter into power purchase agreements with counterparties such as industrial captive power users, power trading companies and state utilities. Contracts with captive power users and other customers may impose restrictions on the Company’s ability to, amongst other things, increase prices at short notice and undertake expansion initiatives with other customers. The Group’s power plants may not qualify or continue to be recognised as captive power producers which may damage the Group’s business model or increase the costs to the Group’s captive power users. This could adversely affect the revenues in the short-to medium-term and results of operations. (cid:225) Review contracts periodically to obtain best possible tariffs. (cid:225)Flexibility to supply to captive consumers or in the open market. (cid:225)Bench marking captive consumer prices to state utility prices to bene?t from any price increases. (cid:225)Monitor ongoing customer performance, maintaining a group of counterparties. Availability of fuel supply and costs The Group has coal linkages with domestic companies and agreements for imported coal. The dependence on third parties for coal exposes the Group’s power plants to vulnerabilities such as non-supply, price increases in the international market, foreign exchange ?uctuations and increases in shipping costs and any changes in applicable taxes and duties. This could impact the operations and pro?tability of the Group. (cid:225) Seeking long-term supplies (cid:225)Maintaining adequate storage facilities to keep appropriate levels of surplus stocks (cid:225)Maintaining relationships with suppliers and mitigating any potential disruption (cid:225)Developing different sources for fuel supply especially in the imports market Reliable transmission infrastructure The Group is dependent upon a reliable transmission and distribution infrastructure so that the power generated at the Group’s power plants can be evacuated and transmitted to consumers. The Group pays an open access fee to access the transmission and distribution structure. If the transmission infrastructure is in adequate or subject to approvals and unexpected fees then this will adversely affect the Group’s ability to deliver electricity to its customers and impact revenues and pro?tability. (cid:225) Assessing adequate availability of transmission capacity and related fees during project evaluation stage (cid:225)Construction and/or upgrade of transmission facilities near the Group’s existing or future powerplants (cid:225)Maintaining a proactive relationship with local Distribution Companies (‘Discoms’) and monitor any changes Geopolitical Risks Russia’s invasion of Ukraine has led to increased demand for coal from Europe. The Group is dependent upon imported coal which is mostly procured from Indonesia. Global disruptions caused by unforeseen events such as Russia’s invasion of Ukraine can adversely impact the demand for coal. (cid:225) The Group continues to monitor changes and developments in the global markets to assess the impact on its procurement plans 33 SECTOR RELATEDRISK Exchange rate ?uctuations Government policy and regulations DESCRIPTION MONITORING AND MITIGATION (cid:225) Putting in place, where appropriate, forward contracts or hedging mechanisms (cid:225)Monitoring our risk on a regular basis where no hedging mechanism is in place and taking steps to minimise potential losses (cid:225) Group monitors and reviews changes in the r e g u l a t o r y e n v i r o n m e n t a n d i t s commitments under licences previously granted (cid:225)It continually ensures compliance with the conditions contained within individual licences and is mindful of the importance of complying with national and local legislation and standards (cid:225)The Group maintains an open and proactive relationship with the Indian government and its various agencies. As a consequence of the international nature of its business, the Company is exposed to risks associated with changes in foreign currency exchange rates. The Group’s operations are based in India and its functional currency is the Indian Rupee although the presentational currency is Great Britain Pound. Imported coal is purchased in US Dollars and the company has replaced rupee denominated term loans to dollar denominated term loans. The Group’s ?nancial results may be affected by appreciation or depreciation of the value of the foreign exchange rates relative to the Indian Rupee. The Group’s operations are subject to complex national and state laws and regulations with respect to numerous matters, including the following: (cid:225)environmental factors (emissions, waste disposal, storage and handling); (cid:225)health and safety; and planning and; (cid:225)development. The Group is required to obtain approvals, licences and permits issued by the Indian government and other regulators and failure to obtain, comply with the terms of or renew such approvals, licences and permits may restrict the Group’s operations or development plans, or require their amendment, and may adversely affect the Group’s pro?tability, or result in it being subject to ?nes, sanctions, revocation of licences or other limitations. Group’s business model of GCPPs is subject to rules and regulations, which can be potentially interpreted by the authorities in a way different from Group’s interpretations. The pro?tability of the Group will be in part dependent upon the continuation of a favourable regulatory regime with respect to its projects. Ability to retain ?scal and tax incentives The Group’s existing and planned power plants bene?t from various ?scal and tax incentives that are available to the Company from the federal and state governments. A change in policy or the adoption of tax policies and incentives can have an adverse impact on the pro?tability of the Group. (cid:225) The Group continues to monitor changes and developments in respect of incentives provided by the Indian federal and state authorities (cid:225)Project investment returns are evaluated based on the expected incentives available to the Company and are revised based on the most up-to-date guidance available COVID-19 pandemic The spread of COVID-19 across the world has impacted businesses globally. The pandemic has posed risks to human life, resulted in low power demand due to national lockdown and disrupted supply chain. (cid:225) The Group had adequate stock of coal and oil for plant startup and critical spares at the time of the COVID-19 lockdown. This has helped in ensuring the functioning of the plant during the lockdown. Global ?nancial instability The Indian market and Indian economy are in?uenced by global economic and market conditions, particularly emerging market countries in Asia. (cid:225) The Group continues to monitor changes and developments in the global markets to assess the impact on its ?nancing plans Financial instability in recent years has in evitably affected the Indian economy. Continuing uncertainty and concerns about contagion in the wake of the ?nancial crises could have a negative impact on the availability of funding. 34 BOARD OF DIRECTORS Mr. Arvind Gupta, Chairman (until 4 April 2022) Mr. N. Kumar, Non-Executive Chairman (with effect from 4 April 2022) Mr. Jeremy Warner Allen, Non-Executive Deputy Chairman Mr. Warner Allen has over 25 years’ experience in capital markets. He is currently a Non-Executive Director of TP Group Plc. Prior to that he was an Executive Director, Board Member and Head of the Growth Companies Team at Cenkos Securities Plc., where he advised a number of AIM companies over a period of 11 years. Prior to joining Cenkos, he was a founding member of Beeson Gregory Limited and responsible for the UK sales desk, a role he retained when Beeson Gregory merged with Evolution Securities in 2002. Mr. Jeremy Warner Allen is the Chairman of the Audit Committee and a member of the Remuneration Committee. He became Chairman of the Nomination Committee with effect from 4 April 2022. Mr. Arvind Gupta, a Commerce graduate from the University of Madras, joined the OPG family business in 1979. An energetic self-starter, visionary and a strategic leader, Mr. Gupta set up a steel pipe unit in 1979 at the age of 18 and pioneered the Group Captive Power Producer concept in Tamil Nadu state and developed and operationalised the 18 MW gas fired plant of OPG Energy, through to successful completion in 2004. Since then, Mr. Gupta has been responsible for the construction and development of the power plants of the OPG Group as well as its overall strategy, growth and direction. Having gained experience in various divisions of the business flour milling, steel production and logistics, he went on to become the President of Kanishk Steel (listed on the Bombay Stock Exchange). He identified opportunities in power generation and developed this division within Kanishk Steel with initial projects in wind power generation in 1994. In addition, he has interests in several industries including cycle tyre tubes, energy - wind, power & solar, NBFC and real estate. Mr. Gupta is the Honorary Consul for North Macedonia in India. including Mr. Arvind Gupta stepped down from the Board of OPG Power Ventures Plc, effective from 4 April 2022 and Mr. N. Kumar became the Non-Executive Chairman, effective from 4 April 2022. Mr. Gupta was the Chairman of the Nomination Committee till 4 April 2022. Mr. Kumar is Vice-Chairman of The Sanmar Group, a multinational group, headquartered in Chennai, India, with activities spanning chemical production, engineering and shipping. He serves on the boards of various public bodies and a number of companies across various s e c t o r s i n c l u d i n g e l e c t r o n i c s , telecommunications, engineering, technology, management and finance. He is a former President of the Confederation of Indian Industry and is currently Chairman of the Indo-Japan Chamber of Commerce & Industry. He is the Honorary Consul General of Greece in Chennai. Mr.Kumar has a wide range of public interests in the areas of health, social welfare, sports and education, which include his role as President of Bala Mandir Kamaraj Trust and Managing Trustee of The Indian Education Trust. He is also a trustee of the World Wildlife Fund for Nature, India and is a former member of the Institute for Financial Management and Research. Mr Kumar has a degree in Electronics Engineering from Anna University, Chennai and is a fellow member of the Indian National Academy of Engineering. He is also a life member of t h e I n s t i t u t e o f E l e c t r o n i c s a n d Telecommunications Engineers. Mr. N. Kumar became the Non-Executive Chairman of the Company with effect from 4 April 2022. He is the Chairman of the Remuneration Committee and a member of the Nomination Committee and Audit Committee of the Board. 35 Dmitri Tsvetkov, Chief Financial Officer, Executive Director (until 31 May 2022) Mr Tsvetkov has over 23 years of financial, accounting and operational experience ,including significant experience of working with promoter/founder led energy sector listed companies in London, Africa, Asia and Canada. Mr Tsvetkov was Chief Financial Officer of OPG Power Generation Pvt Ltd, the Chennai subsidiary of OPG from July 2017 to October 2017.Prior to that he was Chief Financial Officer of Advance International Exploration, Inc., Interim Chief Executive Officer and Chief Financial Officer of Mart Resources, Inc., a TSX listed oil and gas company, and Chief Financial Controller of Heritage Oil Plc, a FTSE 250 oil and gas company. Mr Tsvetkov was with Price water house coopers in Calgary, Canada and Moscow ,Russia from 1994 to 2006.He has a Chartered Accountant (CA) designation from the Canadian Institute of Chartered Accountants, an FCCA designation from the Association of Chartered and Certified Accountants in the UK and Chartered Financial Analyst (CFA) designation from the CFA Institute in the US. Mr. Dmitri Tsvetkov, Chief Financial Officer stepped down and retired from the Board of Directors of the Company and Mr. Ajit Pratap Singh was appointed as the Executive Director and Chief Financial Officer of the Company with effect from 31 May 2022. Ms. Avantika Gupta, Chief Operating Officer, Executive Director (until 4 April 2022) Chief Executive Officer, Executive Director (with effect from 4 April 2022) Ms.Gupta is a Barrister-at-law, England and Wales from Grays Inn, London. She completed her LLB, Bachelor of Laws from University College London and Bar Vocational Course from Inns of Court School of Law. Ms.Gupta is a visionary thought leader and an energetic self-starter with a progressive mindset. She joined the Company in 2010 and headed the Legal function, driving the G r o u p ’ s l i t i g a t i o n s , c o m m e r c i a l arbitrations and regulatory compliances. During this period, she was also jointly responsible the development and commissioning of the Group’s thermal and solar power projects in India. After transitioning to the role of Chief Operating Officer of OPG in 2018, she was instrumental in formulating the company’s n e w s u s t a i n a b i l i t y s t r a t e g y a n d implementing these measures across all locations. for Ms. Gupta has vast experience in a spectrum of disciplines relevant to the Energy and Power sector. She is committed to building OPG and its world- class team, as a leader in the energy transition space in India. Continuous stakeholder engagement and strategic collaborations are her core philosophy. She firmly believes that sustainable growth will be achieved by leveraging new age technology. She is a creative problem solver by nature who envisages out-of-the- box solutions to manage risks. She drives the company’s endeavor at meeting and exceeding the performance metrics of top global companies in this sector by prioritizing an objective capital allocation process. Currently, Ms. Gupta serves as the Group’s Chief Executive Officer with effect from April 2022. She is a member of the ESG Committee since June 2021. Mr. P. Michael Grasby, Non-Executive Director Mr.Grasby was re-appointed as a Non- Executive Director to the Board of OPG Power Ventures Plc. in February 2021. He was a Non-Executive Director of the Company from admission to AIM in May 2008 until November 2019 and has previously held a number of senior positions in the UK and international power sector. Mr.Grasby was a Non-Executive Director at Drax Group Plc. from December 2003 to April 2011. He retired from International Power in 2002, where he held a senior Vice-President position for global operations. During his career he has held a number of senior positions in the UK and international power industry with the Central Electricity Generating Board and National Power. He was manager of Drax Power Station between 1991 and 1995, and director of operations for National Power’s portfolio, with responsibilities for over 16,000 MW of generating capacity, until 1998. Following the demerger of National Power in 1999, he joined International Power as Senior Vice President, continuing with his international directorships and leading a major consortium in the Czech Republic. Mr.Grasby has experience of being a director of power companies in Portugal, Turkey and Pakistan. Mr.Grasby was a founder director of Strategic Dimensions, an executive recruitment business for t e c h n i c a l , g e n e r a l a n d f i n a n c i a l management roles in the energy, process and engineering sectors. He is a Chartered Engineer, FIET and FIMechE. Mr.Grasby became the Chairman of the ESG Committee of the Company and a member of the Remuneration Committee with effect from 28 June 2021. He became a member of the Nomination Committee with effect from 29 April 2022. 36 Mr. Ajit Pratap Singh, Chief Financial Officer, Executive Director (with effect from 31 May 2022) Mr. Ajit Pratap Singh is a management and finance professional currently associated with OPG Group as Executive Director of Indian operating subsidiary since February 2019. He has over 24 years of experience across mergers& acquisitions, structured finance, corporate finance, corporate commercial, corporate governance, treasury management and investor relations. Prior to joining OPG Power, Ajit has worked with leading corporate houses in India and internationally like JSW, Vedanta, Jaypee, Lohia and Ghazanfar Group in leadership roles. He has also worked with USAID, ADB and IFC(World Bank). Ajit is Fellow Member of the Institute of Company Secretaries of India, Fellow Member of the Institute of Cost Accountants of India, Chartered Financial Analyst (CFA),Certified Management Accountant (USA), Member of Chartered Institute of Public Finance& Accountancy (UK), Member of the Chartered Institute of Securities & Investments (UK).He is also law graduate, Post Graduate Diploma in Business Administration (Fin), Master of Science (MS - Fin) and Certificate holder in Strategic Management from Indian Institute of Management (IIM). He is associated with OPG Group since February 2019. Mr. Ajit Pratap Singh was appointed as the Executive Director and Chief Financial Officer of the Company with effect from 31 May 2022. He is a member of the ESG Committee. 37 CORPORATE GOVERNANCE REPORT FINANCIAL YEAR ENDED 31 MARCH 2022 Compliance with the Code Since admission to AIM, the Group has grown substantially against a background of difficult trading conditions within the Indian electricity generation sector. The Company completed its development programme, paid a dividend with respect to the years ended 31 March 2018, 2019 and 2020 and is poised for the next phase of its development. The key objective is to build on these achievements and the Board has therefore adopted an approach to governance that is proportionate with and appropriate to the current size and complexity of the Group. The Company is committed to high standards of corporate governance and places good governance at the heart of the business. In March 2020, the Board of the Company formally adopted the Quoted Companies Alliance’s (“QCA”) corporate governance code (“the Code”) in line with requirements of the AIM Rules for Companies. In accordance with AIM Rule 26, the Directors review the compliance with the Code on an annual basis. The Board believes that the QCA Code provides the Company with a rigorous corporate governance framework to support the business and its success in the long-term. The Code sets out ten corporate governance principles. The ways in which the Company meets the following principles are described on our website at www.opgpower.com/investors/aim-rule-26/index.html: Establish a strategy and business model which promotes long-term value for shareholders. Seek to understand and meet shareholder needs and expectations. Take into account wider stakeholder and social responsibilities and other implications for long-term success. Embed effective risk management, considering both opportunities and threats, throughout the organisation. 1. 2. 3. 4. 5. Maintain the board as a well-functioning, balanced team led by the chair. 6. 7. 8. 9. Maintain governance structures and processes that are fit for purpose and support good decision making by Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement. Promote a corporate culture that is based on ethical values and behaviour. the board. 10. Communicate how the Group is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders. Board of Directors as at 31 March 2022 The Board of the Directors of the Company comprised of the following individuals as at 31.03.2022: Executive Directors as at 31 March 2022 1. Mr. Arvind Gupta (Chairman); 2. Mr. Dmitri Tsvetkov (Chief Financial Officer); and 3. Ms. Avantika Gupta (Chief Operating Officer). Non-executive Directors as at 31 March 2022 1. Mr. Jeremy Warner Allen (Deputy Chairman); 2. Mr. N. Kumar, Non-Executive Director and; 3. Mr. Michael Grasby (appointed on 19 February 2021). Changes in the Board of Directors Mr. Arvind Gupta resigned from the Board of the Company and was replaced by Mr. N. Kumar as Non-Executive Chairman of the Company with effect from 4 April 2022. Ms. Avantika Gupta was appointed as the Chief Executive Officer of the Company with effect from 4 April 2022. Mr. Dmitri Tsvetkov, Chief Financial Officer stepped down and retired from the Board of Directors of the Company with effect from 31 May 2022 and Mr. Ajit Pratap Singh was appointed as the Executive Director and Chief Financial Officer of the Company with effect from 31 May 2022. The Board of Directors of the Company placed on record its sincere appreciation for the valuable services rendered by Mr. Arvind Gupta and Mr.Dmitri Tsvetkov during their respective tenures. Therefore, as at the date of this Report, the Board of Directors of the Company comprises of the following Executive and Non-Executive Directors : 38 EXECUTIVE DIRECTORS 1. Ms. Avantika Gupta (Chief Executive Officer, Director). 2. Mr. Ajit Pratap Singh (Chief Financial Officer, Executive Director). NON-EXECUTIVE DIRECTORS 1.Mr. N. Kumar (Non-Executive Chairman). 2. Mr. Jeremy Warner Allen (Non-Executive Deputy Chairman). 3. Mr. P. Michael Grasby (Non-Executive Director). Changes in constitution of the Committees The ESG Committee was established on 28 June 2021 and Mr. Michael Grasby became the Chairman of the ESG Committee with effect from 28 June 2021.Mr. Dmitri Tsvetkov and Ms.Avantika Gupta are the other members of the Committee. Mr.Ajit Pratap Singh became a member of the ESG Committee in place of Mr. Dmitri Tsvetkov with effect from 31 May 2022. Mr. Michael Grasby became a member of the Remuneration Committee and Nomination Committee with effect from 28 June 2021 and 29 April 2022 respectively. Mr. Jeremy Warner Allen became Chairman of the Nomination Committee with effect from 4 April 2022. The Board considers that, as at the date of this report, it complies with Code provision, which requires that, there should be at least two independent Non-executive Directors. Mr. Jeremy Warner Allen, Mr, N. Kumar and Mr. P.Michael Grasby are considered to be independent under the Code. Biographical details of all the Directors at the date of this report are set out on pages 33 to 35 together with details of their membership, as appropriate, of the Board Committees. The Board is responsible for setting the Company’s objectives and policies and providing effective leadership and the controls required for a publicly listed company. Directors receive papers for their consideration in advance of each Board meeting, including reports on the Group’s operations to ensure that they remain briefed on the latest developments and are able to make fully informed decisions. The Board met six times during the year under review. All the board meetings during the year were held by Video Conference. During the FY 22, the Executive Committee (‘ExCo’) comprised of the three Executive Directors and four members of senior management. All Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring that Board procedures are followed and that applicable rules and regulations are complied with. Consequent to the changes in the Board of Directors, effective from 4 April 2022 and 31 May 2022 as indicated above, the Executive Committee as at the date of this Report comprises of Ms. Avantika Gupta, Chief Executive Officer, Director and Mr. Ajit Pratap Singh, Chief Financial Officer, Executive Director and five members of senior management. Directors have the right to request that any concerns they have are recorded in the appropriate Committee or Board minutes. Informal procedures are in place for Directors to take independent professional advice at the Company’s expense although these are not currently set down in writing. The Company maintains Directors’ and officers’ liability insurance and indemnity cover, the level of which is reviewed annually. Division of Responsibilities Mr. N. Kumar, the Company’s Non-Executive Chairman is responsible for the matters relating to strategic decisions and functioning of the Board. Ms.Avantika Gupta, Chief Executive Officer is responsible for the day-to-day running of the operations of the Company and heads the Executive Committee. Mr. Jeremy Warner Allen is the Deputy Chairman. In the Board’s view, these arrangements together ensure an appropriately clear division of responsibilities between the running of the Board and the executive responsibility for the running of the Company’s business. Chairman and Deputy Chairman The Chairman’s key responsibilities were the effective running of the Board, proposing and developing the Group’s strategy and ensuring that the Board plays a full and constructive part in the development and determination of the Group’s strategy and overseeing the Board’s decision-making process. Mr. Jeremy Warner Allen, the Deputy Chairman, is available to shareholders who have concerns that cannot be resolved through discussion with the Chairman. The role of the Deputy Chairman is to support and tender advice to the Chairman on all governance matters. 39 Re-election of Directors At every AGM, one-third of the Directors for the time being (excluding any Director appointed since the previous AGM) or, if their number is not divisible by three, the number nearest to one-third, shall retire from office by rotation.Mr. Jeremy Warner Allen, Non-Executive Director shall retire from office by rotation and is up for re-election at the forthcoming AGM. Information and professional development All Directors received a briefing from the Company’s nominated adviser of their duties, responsibilities and liabilities as a Director of an AIM company. In addition, all Directors receive a regular briefing on the AIM Rules for Companies and the Market Abuse Regulations (MAR) from the Company’s Nominated Adviser. Directors are encouraged to keep abreast of developments and attend training courses to assist them with their duties. In addition to the formal meetings of the Board, the Chairman is available to the other Non-executive Directors to discuss any issues of concern they may have relating to the Group or as regards to their area of responsibility and to keep them fully briefed on ongoing matters relating to the Group’s operations. Board performance and evaluation The Chairman, as part of his responsibilities, informally assesses the performance of the Board and its Directors on an ongoing basis and brings to the Board’s attention any areas for improvement. For the time being, the Board will continue to evaluate in this way the balance of skills, experience, independence and knowledge required to ensure that its composition is appropriate to the Group’s size and complexity. In 2019 the Board introduced a process of self- evaluation of its performance and completed its first self-evaluation. Meetings of the Board and its Committees The following table sets out the number of meetings of the Board and its Committees during the year under review and individual attendance by the relevant members at these meetings: Board meetings Board Committee meetings Audit Remuneration Nomination ESG* Number Attended Number Attended Number Attended Number Attended Number Attended Arvind Gupta** Dmitri Tsvetkov** Avantika Gupta Jeremy Warner Allen N Kumar Michael Grasby Number of meetings held during the year 6 6 6 6 6 6 6 4 6 5 6 6 5 NA NA NA 2 2 NA NA NA 2 2 NA NA 2 NA NA NA 1 1 1 1 NA NA NA 1 1 1 1 NA NA 1 1 1 NA NA 1 1 NA NA 1 NA NA 3 2 NA NA 3 3 2 NA NA 3 3 *ESG Committee was established on 28 June 2021. **Mr. Arvind Gupta resigned from the Board of Directors of the Company and Mr. N. Kumar became the Non-Executive Chairman with effect from 4 April 2022. Mr. Dmitri Tsvetkov resigned as CFO, Executive Director from the Board and Mr. Ajit Pratap Singh was appointed as CFO, Executive Director with effect from 31 May 2022. Notes:- 1. Mr. Michael Grasby became member of the Nomination Committee wef 29 April 2021 and Remuneration Committee w.e.f. 28 June 2021. He was appointed as the Chairman of the ESG Committee w.e.f 28 June 2021. 2. Mr. Arvind Gupta was the Chairman of the Nomination Committee till 04 April 2022 and Mr. Jeremy Warner Allen became the Chairman of the Nomination Committee wef 04 April 2022 In the event that Directors are unable to attend a meeting, their comments on the business to be considered at the meeting are discussed in advance so that their contribution can be included in the wider Board discussions. Board Committees Audit Committee The members of the Audit Committee are Mr. Jeremy Warner Allen and Mr. N Kumar. Mr. Jeremy Warner Allen, Chairman of the Committee is considered to have continuing, relevant financial experience. The Chief Executive Officer and Chief Financial Officer and also, as necessary, a representative of the auditors are normally invited to attend meetings of the Committee. 40 The primary duty of the Audit Committee is to oversee the accounting and financial reporting process of the Group, the external audit arrangements, the internal accounting standards and practices, the independence of the external auditor, the integrity of the Group’s external financial reports and the effectiveness of the Group’s risk management and internal control system. The Audit Committee met twice during the year and considered the following matters during the year under review: • • Committee at its meeting held on 24 September 2021 approved the FY21 Annual Report and Financial Statements for the year ended 31 March 2021; and Committee at its meeting held on 06.12.2021 approved the Financial Statements for the H1 FY22. The Audit Committee considered relevant significant issues in relation to the financial statements taking into account business developments during the year and risks and matters raised in the external auditors’ FY21 final and FY22 planning reports to the Audit Committee. These issues were addressed as part of preparation of the FY22 financial statements. Remuneration Committee The Remuneration Committee currently consists of Mr. N Kumar, Mr. Jeremy Warner Allen and Mr. Michael Grasby. Mr. Michael Grasby became a member of the Remuneration Committee with effect from 28 June 2021. The primary duty of the Remuneration Committee is to determine and agree with the Board the framework or broad policy for the remuneration of the Executive Directors and such other members of the executive management team of the Group as is deemed appropriate. The remuneration of the Non-executive Directors is a matter for the executive members of the Board. No Director may be involved in any decisions as to his own remuneration. Full details of the role and composition of the Remuneration Committee, the remuneration policy of the Company and its compliance with the Code provisions relating to remuneration are set out in the Directors’ Remuneration Report on pages 43 to 45. Nomination Committee As on 31 March 2022, the members of the Nomination Committee were Arvind Gupta, Jeremy Warner Allen and N Kumar. Mr.Arvind Gupta was the Chairman of the Committee till 4 April 2022. Mr. Jeremy Warner Allen became the Chairman of the Committee with effect from 4 April 2022. Mr. Michael Grasby became a member of the Committee with effect from 29 April 2022. The primary duty of the Nomination Committee is to lead the process for Board appointments and make recommendations to the Board. The Nomination Committee regularly reviews the composition of the Board to ensure that the Board has an appropriate and diverse mix of skills experience, independence and knowledge of the Group. Ms. Avantika Gupta’s presence in the Board is a testament to the gender diversity in the Board. Environmental, Social, and Governance (“ESG”) Committee The Company’s ESG Committee was created on 28 June 2021 and Mr. Michael Grasby was appointed as Chairman of this committee with effect from 28 June 2021. The other members of the ESG committee are Ms. Avantika Gupta and Mr.Dmitri Tsvetkov as on 31 March 2022. Consequent to the changes in the Board of Directors, effective from 31 May 2022, the Company’s ESG Committee comprises of Mr. Michael Grasby, Ms.Avantika Gupta and Mr.Ajit Pratap Singh as at date of this Report. The primary duty of the ESG Committee is to establish objectives and the milestones to achieve short and long-term ESG goals and to lead the process of development and implementation of Company’s ESG strategy. Accountability and Audit Risk management and internal control The Board has overall responsibility for the Group’s system of internal control, which includes risk management. The Board has delegated the responsibility for reviewing the effectiveness of its internal control systems to the Audit Committee. The Audit Committee reviews these systems, policies and processes for tendering, authorisation of expenditure, fraud and the internal audit plan. The system of internal control is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. The Board has instructed the ExCo to be a leading part of its process to identify, evaluate and manage the significant risks the Group faces, which is in accordance with the current guidance on internal control. The Audit Committee will assist the Board in discharging its review responsibilities. The Board has carried out a robust assessment of the principal risks faced by the Group, including those that would threaten its business model, future performance, solvency or liquidity. A summary of the key risks facing the Group and mitigating actions is described on pages 31 and 32. 41 Assurance BDO LLP was appointed as auditor for the Group for the financial years ended 31 March 2019, 31 March 2020 and 31 March 2021 following a tender process. The Audit Committee reviewed the effectiveness of the external auditor and BDO LLP was reappointed for the financial year ended 31 March 2022. The Audit Committee’s assessment was based on inputs obtained in the course of monitoring the integrity of the financial statements and the significant financial reporting issues and judgements underlying the financial statements, and on its direct interactions with the external auditors. The Audit Committee’s principal interactions with the auditors were its discussions of the audit work performed on areas of higher audit risk and the basis for the auditors’ conclusions on those areas. These interactions were supplemented by others that enabled them, for example, to gauge the depth of the auditors’ understanding of the Company’s business. The Audit Committee’s review focused on the level of experience and expertise of the audit team, their objectivity and professional scepticism, and their preparedness to challenge management in a knowledgeable, informed and constructive manner. The Committee’s review also took account of feedback from management on the effectiveness of the audit process. The Audit Committee considers that, at this stage in the Group’s development, it is more efficient to use a single audit firm to provide certain non-audit services for transactions and tax matters. However, to regulate the position, the Committee will at the appropriate time establish a policy on the provision of non-audit services by the external auditor. That policy will set out the external auditor’s permitted and prohibited non-audit services and a fee threshold requiring prior approval by the Audit Committee for any new engagement. The external auditor did not provide any non-audit services during the year. Viability statement A statement on the Directors’ position regarding the Company as going concern is contained in the Directors’ Report on pages 41 and 42. As part of an annual strategy session, the Directors have assessed the prospects of the Group over a period significantly longer than the 12 months required by the going concern. In this assessment, the Board has considered the principal risks faced by the Group, relevant financial forecasts and the availability of adequate funding. The Board conducted this assessment over a period to the end of calendar year 2024, primarily because this is the remaining period of repayment of term loans. Based on its review, the Board is satisfied the viability of the Group would be preserved and have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the two-year period of their assessment. Shareholder Relations and the Annual General Meeting The Board is committed to maintaining an ongoing dialogue with its shareholders. The Directors are keen to build a mutual understanding of objectives with its principal shareholders. To this end, the Chairman and Chief Financial Officer together with the Deputy Chairman met with a number of institutional shareholders during the year. The Directors also encourage communications with private shareholders and encourages their participation in the AGM. Mr. N. Kumar is primarily responsible for ensuring the effective communication of shareholders’ views to the Board as a whole and updates the Board accordingly. Board members keep abreast of shareholder opinion and discuss strategy and governance issues with them as appropriate. Notice of the AGM will be sent to shareholders at least 21 clear days before the meeting. The voting results will be made available on the Company’s website following the meeting. The Company uses its corporate website (www.opgpower.com) to communicate with its institutional shareholders and private investors and posts the latest announcements, press releases and published financial information together with updates on current projects and other information about the Group. 42 DIRECTORS’ REPORT The Directors present their report, together with the audited financial statements of the Group, for the year ended 31 March 2022. Principal activity OPG Power Ventures Plc (“the Company” or “OPG”) is a public limited company incorporated in the Isle of Man, registered number 002198V, which is quoted on the AIM Market of the London Stock Exchange (“AIM”). The Company and its subsidiaries (collectively referred to as ‘the Group’) are primarily engaged in the development, owning, operation and maintenance of private sector power projects in India. The electricity generated from the Group’s plants is sold principally to public sector undertakings and captive power users in India or in the short-term market. The business objective of the Group is to focus on the power generation business within India and thereby provide reliable, cost-effective power under the ‘Captive’ provisions mandated by the Government of India. Results The Group’s results for the year ended 31 March 2022 are set out in the Consolidated Statement of Comprehensive Income. The Group’s profit for the year after tax was £8.9million (2021: £13.1million). A review of the Group’s activities is set out in the Chairman’s statement. Directors The Board of Directors of the Company comprised of the following Directors as at 31 March 2022 : Sl.No. Name of the Directors Profile 1. 2. 3. 4., 5. 6. Mr. Arvind Gupta Chairman Mr. Dmitri Tsvetkov Chief Financial Officer, Executive Director Ms. Avantika Gupta Chief Operating Officer, Executive Director Mr. Jeremy Warner Allen Deputy Chairman, Non-Executive Director and Audit and Nomination Committees Chairman Mr. N. Kumar Non-Executive Director, Chairman of Remuneration Committee Mr. P. Michael Grasby Non-Executive Director, Member of Remuneration Committee and Chairman of ESG Committees Consequent to the changes in the Board of Directors as mentioned on Page 36, Board of Directors of the Company comprises of the following individuals as at the date of this Report:- Sl.No. Name of the Directors Profile 1. 2. 3. 4., 5. Mr. N. Kumar Non-Executive Chairman Chairman of the Remuneration Committee and a member of the Nomination Committee and Audit Committee Ms. Avantika Gupta Mr. Ajit Pratap Singh Mr. Jeremy Warner Allen Mr. P. Michael Grasby Chief Executive Officer, Director Member of ESG Committee Chief Financial Officer, Executive Director Member of ESG Committee Non-Executive Deputy Chairman Chairman of the Audit Committee and Nomination Committee and a member of the Remuneration Committee. Non-Executive Director Chairman of the ESG Committee and a member of the Remuneration Committee and Nomination Committee. Directors’ liability insurance and indemnities The Company maintains liability insurance for the Directors and officers of OPG. Indemnities are in force under which the Company has agreed to indemnify the Directors to the extent permitted by applicable law and the Company’s Articles of Association in respect of all losses arising out of, or in connection with, the execution of their powers, duties and responsibilities as Directors of the Company. Neither the Group’s liability insurance nor indemnities provides cover in the event that a Director or officer is proved to have acted fraudulently or dishonestly. 43 Share capital The issued share capital of the Company at 31 March 2022 was £58,909 comprising 400,733,511 ordinary shares of £0.000147 each, of which there are no designated treasury shares. Political donations The Group has made no political donations during the year under review. Going concern As highlighted in the Consolidated Statement of Cash Flows and notes 5 (a) and 22 to the financial statements, the Group meets its day-to-day working capital requirements through cash from operations and bank facilities. The world economy and the Indian economy have been facing tumultuous times. First, ravaged by the Covid-19 virus, and later on by the war in Ukraine that has led to a sharp increase in commodity prices, including coal. The Group has considered the possible effects that may result from the pandemic and the abnormal increase in coal prices on the carrying amounts of receivables and other financial assets and carried out a Reverse Stress Test (“RST”). Based on the RST analysis, we can conclude that the Group is in strong position to navigate the current situation caused by the Covid-19 pandemic and the war in Ukraine and going concern is not an issue. Further information on the financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Financial Review. In addition, note 28 to the financial statements details the Group’s objectives, policies and processes for managing its capital and its exposures to credit risk and liquidity risk. The management’s forecasts and projections, taking account of possible changes in trading performance, show that the Group should be able to operate within the level of its current facility. After making enquiries, the Board has a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence over a period of at least 12 months from the date of approval of the financial statements. Accordingly, the Board considers it appropriate to adopt the going concern basis of accounting in preparing the financial statements. Substantial shareholdings Details of the Company’s substantial shareholdings are set out on the Company’s website at www.opgpower.com. The Company has been notified, in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority, of the following interests (whether directly or indirectly held) in 3% or more of the Company’s total voting rights at 31 March 2022: Gita Investments Limited and related parties and Directors M&G Investment Management Limited British Steel Pension Scheme Registered agent Percentage of voting rights Number of and issued share capital ordinary shares 52.1% 11.9% 3.3% 208,694,770 47,699,617 13,177,222 The registered agent of the Company at 31 March 2022 was FIM Capital Limited who served throughout the year and has continued to date. Financial instruments Information on the Group’s financial risk management objectives and policies and its exposure to credit risk, liquidity risk, interest rate risk and foreign currency risk can be found in note 28. Disclosure of information to the auditor The Directors serving at the date of approval of the financial statements confirm that: 1. to the best of their knowledge and belief, there is no information relevant to the preparation of their report of which the Company’s auditors are unaware; and 2. each Director has taken all the steps a Director might reasonably be expected to have taken to be aware of relevant audit information and to establish that the Company’s auditors are aware of that information. This report was approved by the Board of Directors on 29 September 2022 and signed on its behalf by: Philip Scales Company Secretary OPG Power Ventures Plc 55 Athol Street Douglas Isle of Man IM1 1LA 29 September 2022 44 DIRECTORS’ REMUNERATION REPORT 2022 Introduction This report sets out information about the remuneration of the Directors of the Company for the year ended 31 March 2022. As a company admitted to trading on AIM, OPG is not required to prepare a directors’ remuneration report. However, the Board follows the principle of transparency and has prepared this report in order to provide information to shareholders on executive remuneration arrangements. This report has been substantially prepared in accordance with the Schedule 8 of the Large and Medium Sized Companies and Groups (Accounts and Reports) (2008) (the ‘Regulations’). Remuneration Committee The Remuneration Committee as at 31 March 2022 comprises of Mr. N Kumar, Mr. Jeremy Warner Allen and Mr. Michael Grasby, who are independent Non-Executive Directors. Mr. N.Kumar is the Chairman of the Remuneration Committee. Mr. Michael Grasby became a member of the Remuneration Committee with effect from 28 June 2021. Terms of reference have been approved for the Remuneration Committee the primary duty of which is to determine and agree with the Board the framework or broad policy for the remuneration of the Executive Directors, senior managers and such other members of the executive management team of the Group as is deemed appropriate. The remuneration of the Non-Executive Directors is a matter for the executive members of the Board. The principal responsibilities of the Committee include: • • • • assessing and setting compensation levels for Directors and senior managers; reviewing the ongoing appropriateness and relevance of the remuneration policy at regular intervals to ensure that members of the executive team are provided with incentives that encourage enhanced performance; reviewing the design of share incentive plans for the approval of the Board or shareholders, as appropriate; and ensuring that contractual terms on termination are such that failure is not rewarded and that the duty to mitigate losses is fully recognised in the drafting of Directors’ service agreements and letters of appointment. In fulfilling these duties, the Committee shall be cognisant of remuneration trends across the Group and within the sector in which the Group operates. The Executive Directors and external advisers may be invited to attend meetings of the Remuneration Committee but do not take part in the decision making. Attendance at meetings of the Remuneration Committee by individual members is detailed in the Corporate Governance Report on page 38. Remuneration policy The Remuneration Committee seeks to maintain a remuneration policy to ensure that the Company is able to attract, retain and motivate its Executive Directors and senior management. The retention of key management and the alignment of management incentives with the creation of shareholder value are key objectives of this policy. The Group therefore sets out to provide competitive remuneration for all its management and employees appropriate to the business environment in the market in which it operates and in recognition of their contribution to Group performance. To achieve this, the remuneration package is based upon the following principles: • • • total rewards should be set to provide a fair and attractive remuneration package; appropriate elements of the remuneration package should be designed to reinforce the link between performance and contribution to the Group’s success and reward; and Executive Directors’ incentives should be aligned with the interests of shareholders. The remuneration strategy is designed to be in line with the Group’s fundamental values of fairness, competitiveness and equity, and also to support the Group’s corporate strategy. The Group seeks increasingly to align the interests of shareholders with those of Directors and senior employees by giving the latter opportunities and encouragement to build up a shareholding interest in the Company. Long-term incentives The Remuneration Committee believes that it is appropriate to operate share incentive schemes to encourage Executive Directors and senior employees to meet the Group’s long-term strategic and financial objectives set by the Board. Long Term Incentive Plan (‘LTIP’) In April 2019, the Remuneration Committee of the Board of Directors approved the introduction of an LTIP, which was subsequently revised in July 2019, for a performance-related award of up to 14.0 million new ordinary shares 45 (representing approximately 3.6 per cent of the Company’s issued share capital) in order to incentivise further the executives and senior management to deliver its planned strategy. The LTIP Shares were awarded to certain members of the senior management team as Nominal Cost Shares and will vest in three tranches subject to continued service with OPG until vesting and meeting the following share price performance targets, plant load factor and term loan repayments of the Chennai thermal plant. - - - 20 per cent of the LTIP Shares shall vest upon meeting the target share price of 25.16p before the first anniversary for the first tranche, i.e. 24 April 2020, achievement of PLF during the period April 2019 to March 2020 of at least 70 per cent at the Chennai thermal plant and repayment of all scheduled term loans; 40 per cent of the LTIP Shares shall vest upon meeting the target share price of 30.07p before the second anniversary for the second tranche, i.e. 24 April 2021, achievement of PLF during the period April 2020 to March 2021 of at least 70 per cent at the Chennai thermal plant and repayment of all scheduled term loans; 40 per cent of the LTIP Shares shall vest upon meeting the target share price of 35.00p before the third anniversary for the third tranche, i.e. 24 April 2022, achievement of PLF of at least 70 per cent at the Chennai thermal plant during the period April 2021 to March 2022 and repayment of all scheduled term loans. The share price performance metric will be deemed achieved if the average share price over a fifteen day period exceeds the applicable target price. In the event that the share price or other performance targets do not meet the applicable target, the number of vesting shares would be reduced pro-rata, for that particular year. However, no LTIP Shares will vest if actual performance is less than 80 per cent of any of the performance targets in any particular year. The terms of the LTIP provide that the Company may elect to pay a cash award of an equivalent value of the vesting LTIP Shares. None of the LTIP Shares, once vested, can be sold until the third anniversary of the award, unless required to meet personal taxation obligations in relation to the LTIP award. No changes/revisions were made to LTIP during the FY22 and no shares were issued during FY 22. In April 2020, and upon meeting relevant performance targets, 80 per cent of the first tranche of LTIP shares vested, 1,185,185 to Arvind Gupta, Chairman, 568,889 to Dmitri Tsvetkov, CFO and 284,445 to Avantika Gupta, COO. These shares will be issued later this year. The share price performance and other performance targets for the second and third tranches of LTIP shares were not achieved primarily due to the COVID-19 impact and therefore 10,192,593 LTIP shares outstanding under these tranches to three executive directors didn’t vest and expired. Annual bonus The Remuneration Committee considered bonuses for Executive Directors who were entitled performance bonuses with respect to FY22. In light of current market conditions, it was decided that no bonuses would be awarded to Executive Directors in FY22. No bonuses were awarded to Executive Directors in FY21 due to COVID-19. Non-Executive Directors The remuneration of the Non-executive Directors consists of fees that are paid quarterly in arrears. The Non-executive Directors do not have a contract of employment with the Company. Each has instead entered into a contract for services with the Company. External appointments It is the Board’s policy to allow the Executive Directors to accept directorships of other companies provided that they have obtained the consent of the Board. Any such directorships must be formally notified to the Board. Directors’ interests in ordinary shares The interests of Directors in the ordinary share capital of the Company during the year were as follows: Gita Investments Limited and related parties 1 Jeremy Warner Allen Dmitri Tsvetkov* N Kumar Michael Grasby Total 31 March 2022 31 March 2021 206,432,166 206,432,166 1,124,680 1,126,691 - 11,233 1,124,680 1,126,691 - 11,233 208,694,770 208,694,770 1Beneficial interest in these shareholdings vests with Gupta’s family. *Mr. Dmitri Tsvetkov, Chief Financial Officer stepped down and retired from the Board of Directors of the Company with effect from 31 May 2022. 46 There were no changes to Directors’ interests between 31 March 2022 and the date of this report. No Director had any interest in any contract of significance with the Group during the year ended 31 March 2022 other than their service contracts. Directors’ remuneration for the period 1April 2021 to 31 March 2022. Salary, annual bonus and benefits Chairman Arvind Gupta* Executive Directors Dmitri Tsvetkov Avantika Gupta Non-executive Directors Jeremy Warner Allen N Kumar Michael Grasby (from 19 February 2021) Total Salary/fees £ –* 150,000 59,043 25,000 22,500 22,500 2,79,043 Annual bonus Total FY22** Total FY21 £ £ £ – – – – – – – – - 150,000 150,000 59,043 60,000 25,000 22,500 22,500 25,000 22,500 2,562 2,79,043 260,062 No consideration was paid or received by third parties for making available the services of any Executive or Non- Executive Director. *In FY21 and FY 22, as part of COVID-19 response, Arvind Gupta voluntarily agreed to take 100 per cent salary reduction. Under their service agreements, Mr. Arvind Gupta, Mr. Dmitri Tsvetkov and Ms. Avantika Gupta are entitled to medical, insurance and other allowances. During the year 2021-22, Mr. Arvind Gupta and Ms. Avantika Gupta received medical, insurance and other allowances aggregating to £56,941 and £7,085 respectively. During the year 2020-21, Mr. Arvind Gupta and Ms. Avantika Gupta received £144,896 and £352 respectively. Directors’ LTIP Movements during the period LTIP granted LTIP as at Expired/ 1 April 2021 Granted Cancelled LTIP Outstanding Latest vesting date Exercised 31 March 2022 Arvind Gupta 24 April 2019 7,111,111 Dmitri Tsvetkov 24 April 2019 3,413,334 Avantika Gupta 24 April 2019 1,706,667 Nil Nil Nil 5,925,926 2,844,445 1,422,222 Nil Nil Nil 1,185,185 24 April 2020 568,889 24 April 2020 284,445 24 April 2020 At 31 March 2022, the closing mid-market price of the Company’s shares was 7.15 pence. During the year under review, the Company’s closing mid-market share price ranged between a high of 20.25 pence and a low of 7.15 pence. This report has been approved by the Board of Directors of the Company. N. Kumar Chairman, Remuneration Committee 29 September 2022 47 STATEMENT OF DIRECTORS’ RESPONSIBILITIES Directors’ responsibilities The Directors are responsible for preparing the Annual Report, the Directors’ Remuneration Report and the Group financial statements. The Directors are required to prepare financial statements for the Group in accordance with International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board. Company law requires the Directors to prepare such financial statements in accordance with IFRS and the Companies Act 2006. International Accounting Standard 1 requires that financial statements present fairly for each financial year the Group’s and Company’s financial position, financial performance and cash flows. This requires the fair presentation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board’s ‘Framework for the Preparation and Presentation of Financial Statements’. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable International Financial Reporting Standards. In preparing these financial statements, the directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and accounting estimates that are reasonable and prudent; • • state whether they have been prepared in accordance with IFRS as issued by the International Accounting Standards Board, subject to any material departures disclosed and explained in the financial statements; 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 adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Responsibility statement of the directors in respect of the annual financial report We confirm that to the best of our knowledge: – – the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; and the strategic report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face. We consider the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s position and performance, business model and strategy. Website publication The directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the company's website in accordance with legislation in the Isle of Man governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the company's website is the responsibility of the directors. The directors' responsibility also extends to the ongoing integrity of the financial statements contained therein. On behalf of the Board by: Philip Scales Company Secretary OPG Power Ventures Plc 55 Athol Street Douglas Isle of Man IM1 1LA 29 September 2022 48 49 50 51 52 53 54 55 Consolidated statement of financial position As at 31 March 2022 (All amount in £, unless otherwise stated) Assets Non-current assets Intangible assets Property, plant and equipment Right-of-use assets Investments Other long-term assets Restricted cash Current assets Inventories Trade and other receivables Other short-term assets Current tax assets (net) Restricted cash Cash and cash equivalents Assets held for sale Total assets Equity and liabilities Equity Share capital Share premium Other components of equity Retained earnings Equity attributable to owners of the Company Non-controlling interests Total equity Liabilities Non-current liabilities Borrowings Non-Convertible Debentures Trade and other payables Other liabilities Deferred tax liabilities (net) Current liabilities Borrowings Trade and other payables Other liabilities Liabilities classified as held for sale Total liabilities Total equity and liabilities Notes As at 31 March 2022 As at 31 March 2021 14 15 15 16 19 18 17 16 19(b) 19(a) 7(a), 7(b) 20 20 22 22 23 13 22 23 7 11,810 173,369,128 36,548 2,113,307 12,140 10,427,847 185,970,780 10,465,820 8,607,935 26,182,923 1,250,086 2,392,104 7,691,392 13,497,027 70,087,287 2,394 172,716,040 - - 69,853 8,194,412 180,982,699 12,186,644 14,829,989 17,805,554 1,131,342 3,219,356 8,920,952 16,425,368 74,519,205 256,058,067 255,501,904 58,909 131,451,482 (10,221,248) 47,904,448 169,193,591 872,663 170,066,254 9,759,610 20,126,738 630,358 36,228 17,029,927 47,582,861 13,399,429 24,440,324 569,199 - 38,408,952 85,991,813 58,909 131,451,482 (12,735,470) 41,910,280 160,685,201 881,869 161,567,070 22,260,206 19,840,089 607,702 - 12,994,371 55,702,368 4,510,358 32,495,799 1,226,309 - 38,232,466 93,934,834 256,058,067 255,501,904 The notes are an integral part of these consolidated financial statements. The financial statements were authorised for issue by the board of directors on 29 September 2022 and were signed on its behalf by: N Kumar 1 Non-Executive Chairman Arvind Gupta 1 Chairman Dmitri Tsvetkov 2 Chief Financial Officer Ajit Pratap Singh 2 Chief Financial Officer 1 Effective 4 April 2022. Mr Arvind Gupta step down from the Board and Mr N. Kumar appointed as Non-executive Chairman 2 Effective 31 May 2022. Mr Dmitri Tsvetkov step down from the Board and Mr Ajit Pratap Singh appointed as Chief Financial Officer 56 Consolidated statement of Comprehensive Income For the Year ended 31 March 2022 (All amount in £, unless otherwise stated) Revenue Cost of revenue Gross profit Other Operating income Other income Distribution cost General and administrative expenses Expected credit loss on trade receivables Depreciation and amortization Operating profit Finance costs Finance income Profit before tax Tax expense Profit for the year from continued operations (Loss)/Gain from discontinued operations, including Non-Controlling Interest Profit for the year Profit for the year attributable to: Owners of the Company Non – controlling interests Earnings per share from continued operations Basic earnings per share (in pence) Diluted earnings per share (in pence) Earnings/(Loss) per share from discontinued operations Basic (Loss)/Earnings per share (in pence) Diluted (Loss)/Earnings per share (in pence) Earnings per share -Basic (in pence) -Diluted (in pence) Other comprehensive income / (loss) Items that will be reclassified subsequently to profit or loss Exchange differences on translating foreign operations Notes 8 9 10(a) 10(b) 28 11 12 13 7 25 25 25 Items that will be not reclassified subsequently to profit or loss Exchange differences on translating foreign operations, relating to non-controlling interests Total other comprehensive income / (loss) Total comprehensive income Total comprehensive income / (loss) attributable to: Owners of the Company Non-controlling interest The notes are an integral part of these consolidated financial statements Year ended 31 March 2022 80,067,032 (56,500,964) 23,566,068 - 8,054,865 (3,894,563) (6,316,484) - (5,333,531) 16,076,355 (5,356,089) 2,285,364 13,005,630 (4,097,184) 8,908,446 (2,928,341) 5,980,105 5,994,168 (14,063) 5,980,105 2.23 2.23 (0.73) (0.73) 1.50 1.50 Year ended 31 March 2021 93,823,933 (56,893,065) 36,930,868 9,420,712 1,921,546 (4,791,056) (7,256,153) (3,025,055) (5,705,538) 27,495,324 (6,803,137) 868,439 21,560,626 (8,447,699) 13,112,927 999,398 14,112,325 14,091,807 20,518 14,112,325 3.27 3.25 0.25 0.25 3.52 3.50 2,319,444 (12,860,261) 4,857 2,324,301 8,304,406 8,313,612 (9,206) 8,304,406 (13,322) (12,873,583) 1,238,741 1,231,546 7,196 1,238,741 57 y t i u q e l a t o T g n i l l o r t n o c - n o N l a t o T s t s e r e t n i l o t e b a t u b i r t t a t n e r a p f o s r e n w o i d e n a t e R i s g n n r a e y c n e r r u c n g e r o F i s e v r e s e r r e h t O i m u m e r p e r a h S s e r a h s y r a n d r O i l a t i p a c d e u s s I n o i t a l s n a r t e v r e s e r ) s e r a h s f o . o N ( 3 3 8 , 3 0 5 , 8 5 1 5 5 9 , 7 9 4 8 7 8 , 5 0 0 , 8 5 1 4 7 4 , 8 1 8 , 7 2 ) 4 1 1 , 9 0 8 , 8 ( 7 2 1 , 6 8 4 , 7 2 8 4 , 1 5 4 , 1 3 1 9 0 9 , 8 5 1 1 5 , 3 3 7 , 0 0 4 0 2 0 2 l i r p A 1 t A , 7 4 2 5 3 5 7 4 2 , 5 3 5 , 4 2 3 2 1 1 4 1 , , 9 4 2 9 8 2 1 , , ) 3 8 5 3 7 8 2 1 ( , 0 9 9 , 7 2 5 , 2 0 7 0 , 7 6 5 , 1 6 1 0 7 0 , 7 6 5 , 1 6 1 , 8 7 7 4 9 1 8 7 7 , 4 9 1 , 5 0 1 0 8 9 5 , , 1 0 3 4 2 3 2 , 6 0 4 , 4 0 3 , 8 - - 8 1 5 0 2 , , 8 1 7 6 7 3 ) 2 2 3 3 1 ( , 4 1 9 , 3 8 3 9 6 8 , 1 8 8 9 6 8 , 1 8 8 - - ) 3 6 0 4 1 ( , 7 5 8 4 , ) 6 0 2 , 9 ( , 7 4 2 5 3 5 7 4 2 , 5 3 5 - - , 1 3 5 2 1 9 , 6 0 8 1 9 0 4 1 , , ) 1 6 2 0 6 8 2 1 ( , - - , 6 0 8 1 9 0 4 1 , - - - , 1 3 5 2 1 9 , ) 1 6 2 0 6 8 2 1 ( , 6 7 0 , 4 4 1 , 2 6 0 8 , 1 9 0 , 4 1 ) 0 3 7 , 7 4 9 , 1 1 ( - - - - , 7 4 2 5 3 5 7 4 2 , 5 3 5 - - - - - - - - - - - - - - - - - - t n e m y a p d e s a b e r a h S e e y o p m E l ) 1 2 e t o N ( P I T L s r e n w o h t i w n o i t c a s n a r T r a e y e h t r o f t i f o r P ) b 7 e t o n ( n o i t a d i l o s n o c e D s s o l e v i s n e h e r p m o c r e h t O e m o c n i e v i s n e h e r p m o c l a t o T , 8 7 7 4 9 1 8 7 7 , 4 9 1 - - , 8 6 1 4 9 9 5 , , 8 6 1 4 9 9 5 , - - - , 4 4 4 9 1 3 2 , - , 4 4 4 9 1 3 2 , 2 1 6 , 3 1 3 , 8 8 6 1 , 4 9 9 , 5 4 4 4 , 9 1 3 , 2 - - - , 8 7 7 4 9 1 8 7 7 , 4 9 1 - - - - - - - - - - - - - - - t n e m y a p d e s a b e r a h S e e y o p m E l ) 1 2 e t o N ( P I T L e m o c n i e v i s n e h e r p m o c r e h t O e m o c n i e v i s n e h e r p m o c l a t o T s r e n w o h t i w n o i t c a s n a r T r a e y e h t r o f t i f o r P 1 0 2 , 5 8 6 , 0 6 1 0 8 2 , 0 1 9 , 1 4 ) 4 4 8 , 6 5 7 , 0 2 ( 4 7 3 , 1 2 0 , 8 2 8 4 , 1 5 4 , 1 3 1 1 0 2 , 5 8 6 , 0 6 1 0 8 2 , 0 1 9 , 1 4 ) 4 4 8 , 6 5 7 , 0 2 ( 4 7 3 , 1 2 0 , 8 2 8 4 , 1 5 4 , 1 3 1 9 0 9 , 8 5 9 0 9 , 8 5 1 1 5 , 3 3 7 , 0 0 4 1 1 5 , 3 3 7 , 0 0 4 1 2 0 2 h c r a M 1 3 t A 1 2 0 2 l i r p A 1 t A 58 4 5 2 , 6 6 0 , 0 7 1 3 6 6 , 2 7 8 1 9 5 , 3 9 1 , 9 6 1 8 4 4 , 4 0 9 , 7 4 ) 0 0 4 , 7 3 4 , 8 1 ( 2 5 1 , 6 1 2 , 8 2 8 4 , 1 5 4 , 1 3 1 9 0 9 , 8 5 1 1 5 , 3 3 7 , 0 0 4 2 2 0 2 h c r a M 1 3 t A ) d e t a t s e s i w r e h t o s s e n u l , £ n i t n u o m a l l A ( 2 2 0 2 h c r a M 1 3 d e d n e r a e Y e h t r o F s t n e m e t a t s l a i c n a n i f d e t a d i l o s n o c e s e h t f o t r a p l a r g e t n i n a e r a s e t o n e h T y t i u q e n i s e g n a h c f o t n e m e t a t s d e t a d i l o s n o C Consolidated statement of cash flows For the Year ended 31 March 2022 (All amount in £, unless otherwise stated) Cash flows from operating activities Profit before income tax including discontinued operations Adjustments for: (Profit) / Loss from discontinued operations, net Unrealised foreign exchange loss Financial costs Financial income Share based compensation costs Depreciation and amortization Expected credit loss on Trade receivables Changes in working capital Trade and other receivables Inventories Other assets Trade and other payables Other liabilities Cash generated from continuing operations Taxes paid Cash provided by operating activities of continuing operations Cash used for operating activities of discontinued operations Net cash provided by operating activities Cash flows from investing activities Purchase of property, plant and equipment (including capital advances) Interest received Movement in restricted cash Purchase of investments Cash used in investing activities of continuing operations Net cash used in investing activities Cash flows from financing activities Proceeds from borrowings (net of costs) Repayment of borrowings Finance costs paid Cash used in financing activities of continuing operations Cash used in financing activities of discontinued operations Net cash used in financing activities Net decrease in cash and cash equivalents from continuing operations Net decrease in cash and cash equivalents from discontinued operations Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents on deconsolidation Exchange differences on cash and cash equivalents Cash and cash equivalents of the discontinued operations Cash and cash equivalents at the end of the year 59 Notes Year ended 31 March 2022 Year ended 31 March 2021 10,077,289 22,560,024 7 9(d) 11 12 21 28 2,928,341 184,880 5,171,209 (2,285,364) 194,778 5,333,531 - 6,294,982 1,854,857 (3,283,261) (9,121,460) (969,676) 16,380,106 (48,554) 16,331,552 - 16,331,552 (3,534,707) 2,285,364 (1,213,769) (6,760,520) (9,223,632) (9,223,632) - (3,909,695) (4,528,565) (8,438,260) - (999,398) 46,931 6,756,206 (864,156) 535,247 5,705,538 3,025,055 7,404,759 (1,654,539) 4,976,235 (7,106,516) 490,713 40,876,099 (709,277) 40,166,822 - 40,166,822 (506,222) 864,156 (4,655,096) (25,250,994) (29,548,156) (29,548,156) 21,981,043 (27,938,844) (5,812,498) (11,770,299) - (8,438,260) (11,770,299) (1,330,340) (1,151,633) - - (1,330,340) (1,151,633) 8,920,954 - 100,781 - 7,691,395 3,438,830 (28,560) 6,662,317 - 8,920,954 Consolidated statement of cash flows For the Year ended 31 March 2022 (continued) (All amount in £, unless otherwise stated) Disclosure of Changes in financing liabilities : Analysing of changes in Net debt 1 April 2021 Cash flows Other Changes 31 March 2022 Working Capital loan Secured loan due within one year Borrowings grouped under Current liabilities 3,788,314 722,044 4,510,358 (2,152,472) 10,780,822 8,628,350 Secured loan due after one year Borrowings grouped under Non-current liabilities 42,100,295 42,100,295 (12,538,045) (12,538,045) 5,949 254,772 260,721 324,098 324,098 1,641,791 11,757,638 13,399,429 29,886,348 29,886,348 Analysing of changes in Net debt 1 April 2020 Cash flows Other Changes 31 March 2021 Working Capital loan Secured loan due within one year Borrowings grouped under Current liabilities 6,914,122 16,832,107 23,746,229 (2,704,726) (15,443,674) (18,148,399) Secured loan due after one year Borrowings grouped under Non-current liabilities 33,081,456 33,081,456 12,190,599 12,190,599 (421,082) (666,390) (1,087,471) (3,171,760) (3,171,760) 3,788,314 722,044 4,510,358 42,100,295 42,100,295 60 Notes to the consolidated financial statements (All amount in £, unless otherwise stated) 1 Nature of operations OPG Power Ventures Plc (‘the Company’ or ‘OPGPV’), and its subsidiaries (collectively referred to as ‘the Group’) are primarily engaged in the development, owning, operation and maintenance of private sector power projects in India. The electricity generated from the Group’s plants is sold principally to public sector undertakings and heavy industrial companies in India or in the short term market. The business objective of the Group is to focus on the power generation business within India and thereby provide reliable, cost effective power to the industrial consumers and other users under the ‘open access’ provisions mandated by the Government of India. 2 Statement of compliance The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) - as issued by the International Accounting Standards Board and the provisions of the Isle of Man, Companies Act 2006 applicable to companies reporting under IFRS. 3 General information OPG Power Ventures Plc, a limited liability corporation, is the Group’s ultimate parent Company and is incorporated and domiciled in the Isle of Man. The address of the Company’s registered Office, which is also the principal place of business, is 55 Athol street, Douglas, Isle of Man IM1 1LA. The Company’s equity shares are listed on the Alternative Investment Market (AIM) of the London Stock Exchange. The Consolidated Financial statements for the year ended 31 March 2022 were approved and authorised for issue by the Board of Directors on 29 September 2022. 4 Recent accounting pronouncements a) Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Group At the date of authorisation of these financial statements, certain new standards, and amendments to existing standards have been published by the IASB that are not yet effective, and have not been adopted early by the Group. Information on those expected to be relevant to the Group’s financial statements is provided below. Management anticipates that all relevant pronouncements will be adopted in the Group’s accounting policies for the first period beginning after the effective date of the pronouncement. New standards, interpretations and amendments not either adopted or listed below are not expected to have a material impact on the Group’s financial statements. b) Changes in accounting Standards The following standards and amendments to IFRSs became effective for the period beginning on 1 January 2021 and did not have a material impact on the consolidated financial statements: i Amendments to IFRS 16, Covid 19 "related rent concessions" "The amendments permit lessees, as a practical expedient, not to assess whether particular rent concessions occurring as a direct consequence of the Covid-19 pandemic are lease modifications and instead, to account for those rent concessions as they were not lease modifications. Initially, these amendments were to apply until June 30, 2021.” ii Amendments to IFRS 16, Covid 19 "related rent concessions beyond 30 June 2021” "In light of the fact that the Covid-19 pandemic is continuing, the IASB extended the application period of the practical expenditure with respect to accounting for Covid-19-related rent concessions through June 30, 2022” iii Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16 "Interest rate benchmark reform (phase 2)” "IFRS9. IAS 39, BRS 7, The amendments provide temporary relief to adopters regarding the financial reporting impact that will result from replacing Interbank Offered Rates (IBOR) with alternative risk-free rates (RFRS). The amendments provide for the following practical expedients:Treatment of contract modifications or changes in contractual cash flows due directly to the Reform-such as fluctuations in a market interest rate-as changes in a floating rate, allow changes to the designation and documentation of a hedging relationship required by IBOR reform without discontinuing hedge accounting. Temporary relief from having to meet the separately identifiable requirement when an RFR instrument is designated as a hedge of a risk comes in connection with the IBOR Reform." iv Amendments to IFRS 9, IAS 39 and IFRS 7, “Interest Rate Benchmark Reform” In September 2019, the IASB published amendments to IFRS 9, IAS 39 and IFRS 7, “Interest Rate Benchmark Reform.” The Phase 1 amendments of the IASB’s Interest Rate Benchmark Reform project (IBOR reform) provide for temporary exemption from applying specific hedge accounting requirements to hedging relationships that are directly affected by IBOR reform. The exemptions have the effect that IBOR reform should not generally cause hedge relationships to be terminated due to uncertainty about when and how reference interest rates will be replaced. However, any hedge ineffectiveness should continue to be recorded in the income statement under both IAS 39 and IFRS 9. Furthermore, the amendments set out triggers for when the exemptions will end, which include the uncertainty arising from IBOR reform. The amendments have no impact on Group’s Consolidated Financial Statements. v Amendments to IFRS 4, “Extension of the temporary exemption from IFRS 9” "Deferral of initial application of IFRS 9 for insurers” 61 c) Standards and Interpretations Not Yet Applicable The IASB and the IFRS IC have issued the following additional standards and interpretations. Group does not apply these rules because their application is not yet mandatory. Currently, however, these adjustments are not expected to have a material impact on the consolidated financial statements of the Group: i Amendments to IAS 16-proceeds before intended use The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the Company is preparing the asset for its intended use. Instead, a company will recognize such sales proceeds and related cost in profit or loss. ii Amendments to IAS 37-Onerous contracts-cost of Fulfilling a contract "Clarification that all costs directly attributable to a contract must be considered when determining the cost of fulfilling the contract." iii Amendments to IFRS 3-Reference to the Conceptual Framework Reference to the revised 2018 IFRS Conceptual Framework. Priority application of LAS 37 or IFRIC 21 by the acquirer to identify acquired liabilities. No recognition of contingent assets acquired allowed. iv Annual Improvements Project-Annual Improvements to IFRSs 2018-2020 Cycle Minor amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41. v IFRS 17 "Insurance contracts including Amendments to IFRS 17” The new IFRS 17 standard governs the accounting for insurance contracts and supersedes IFRS 4. vi Amendment to IFRS 17-Initial Application of IFRS 17 and IFRS 9-Comparative Information The amendment concerns the transitional provisions for the initial joint application of IFRS 17 and IFRS 9. vii Amendments to IAS 1-Classification of Liabilities as Current or Non-current Amendments to IAS 1-Classification of Liabilities as Current or Non-current-Deferral of Effective Date Clarification that the classification of liabilities as current or non-current is based on the rights the entity has at the end of the reporting period. viii Amendments to IAS 1 and IFRS Practice Statement 2-Disclosure of Accounting Policies "Clarification that an entity must disclose all material (formerly ""significant"") accounting policies. The main characteristic of these items is that, together with other information included in the financial statements, they can influence the decisions of primary users of the financial statements” ix Amendments to IAS 8-Definition of Accounting Estimates Clarification with regard to the distinction between changes in accounting policies (retrospective application) and changes in accounting estimates (prospective application). x Amendments to IAS 12-Deferred Tax related to Assets and Liabilities arising from a Single transaction. Clarification that the initial recognition exemption of IAS 12 does not apply to leases and decommissioning obligations. Deferred tax is recognized on the initial recognition of assets and liabilities arising from such transactions. 5 Summary of significant accounting policies a) Basis of preparation The consolidated financial statements of the Group have been prepared on a historical cost basis, except for financial assets and liabilities at fair value through profit or loss and financial assets measured at FVPL. The consolidated financial statements are presented in accordance with IAS 1 Presentation of Financial Statements and have been presented in Great Britain Pounds (‘£’), the functional and presentation currency of the Company. During the current year, the results of the operations of solar entities Avanti Solar Energy Private Limited, Mayfair Renewable Energy Private Limited, Avanti Renewable Energy Private Limited and Brics Renewable Energy Private Limited continued to be classified as Assets held for sale as the process of disposition of the solar entities could not be implemented during FY22 due to pandemic Covid-19 and expectation of comparatively better valuation for sale. However the Management expects the interest in the solar entities to be sold within the next 12 months and continues to locate a buyer. The Group continues owning a 31% equity interest in the solar entities. Going Concern "As at 31 March 2022 the Group had £7.7m in cash and net current assets of £31.7m. The Group has considered the possible effects that may result from the pandemic on the carrying amounts of receivables and other financial assets and carried out a Reverse Stress Test (RST). In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of this pandemic, the Group, as at the date of approval of these financial statements has used internal and external sources of information. The Group has performed sensitivity analysis on the assumptions used for business projections and based on current estimates expects the carrying amount of these assets will be recovered and no material impact on the financial results inter-alia including the carrying value of various current and non-current assets are expected to arise for the year ended 31 March 2022. The 62 Group will continue to closely monitor any variation due to the changes in situation and these changes will be taken into consideration, if necessary, as and when they crystalise. The directors and management have prepared a cash flow forecast to September 2023, 12 months from the date this report has been approved. Based on the RST analysis, we can conclude that the Group is in strong position to go through the current situation caused by Covid-19 pandemic and going concern is not an issue.The Group experiences sensitivity in its cash flow forecasts due to the exposure to potential increase in USD denominated coal prices and a decrease in the value of the Indian Rupee. The Directors and management are confident that the Group will be trading in line with its forecast and that any exposure to a fluctuation in coal prices or the exchange rate INR/USD has been taken into consideration and therefore prepared the financial statements on a going concern basis.” "The consequences of the Covid-19 pandemic continued to impact the Group businesses. However, the economic consequences of the Covid-19 pandemic, which had a marginally negative effect on the Group activities in the FY21, have to a large extent dissipated in FY22, although the economic impediments that still persist vary from region to region and from segment to segment.The Group received no materially significant public support measures such as tax relief or compensatory mechanisms except for certain debt drawn as part of COVID-19 related credit measures extended by the Reserve Bank of India. In addition, there were no material effects on the employment situation in the Group. Overall, the Covid-19 pandemic did not have very significant impact for the Group during the year." Sharp rise in global coal price during second half of the year deterred import of coal, putting further pressure on demand for domestic (Indian) coal. The war between Russia and Ukraine from February 2022 has further aggravated the situation, with a sharp upward movement in global coal prices. As power demand in India continues to be met mainly through thermal generation, a surge in power demand during second half of the year put pressure on fuel supply. The unanticipated rise in demand for electricity with pickup in economic activities was not met by proportional growth in coal supplies (also in part due to sharp jump in global coal price), resulting in severe coal shortages. If global coal prices do not correct to normal levels there can be a material adverse effect on the group’s results of operations and financial condition. The Group has taken certain commercial and technical measures to reduce the impact of this adverse development including blending comparatively cheaper coal, modifications to boilers to facilitate different quality coal firing and also renegotiation of the tariff and commercial terms of the power sale arrangement with the power consumers. b) Basis of consolidation The consolidated financial statements include the assets, liabilities and results of the operation of the Company and all of its subsidiaries as of 31 March 2022. All subsidiaries have a reporting date of 31 March. A subsidiary is defined as an entity controlled by the Company. The parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. Subsidiaries are fully consolidated from the date of acquisition, being the date on which effective control is acquired by the Group, and continue to be consolidated until the date that such control ceases. All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Non-controlling interest represents the portion of profit or loss and net assets that is not held by the Group and is presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from parent shareholders’ equity. Acquisitions of additional stake or dilution of stake from/ to non-controlling interests/ other venturer in the Group where there is no loss of control are accounted for as an equity transaction, whereby, the difference between the consideration paid to or received from and the book value of the share of the net assets is recognised in ‘other reserve’ within statement of changes in equity. c) Investments in associates and joint ventures Investments in associates and joint ventures are accounted for using the equity method. The carrying amount of the investment in associates and joint ventures is increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive income of the associate and joint venture, adjusted where necessary to ensure consistency with the accounting policies of the Group. Unrealised gains and losses on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group’s interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment. d) List of subsidiaries, joint ventures, and associates Details of the Group’s subsidiaries and joint ventures, which are consolidated into the Group’s consolidated financial statements, are as follows: 63 i) Subsidiaries Subsidiaries % Voting Right % Economic interest Immediate parent Country of incorporation March 2022 March 2021 March 2022 March 2021 Caromia Holdings limited (‘CHL’) OPGPV Cyprus 100.00 100.00 100.00 100.00 Gita Power and Infrastructure Private Limited, (‘GPIPL’) OPG Power Generation Private Limited (‘OPGPG’) CHL GPIPL Samriddhi Surya Vidyut Private Limited OPGPG India India India 100.00 100.00 100.00 100.00 75.38 75.38 71.25 71.25 99.92 100.00 100.00 99.90 100.00 100.00 Powergen Resources Pte Ltd OPGPV Singapore 100.00 100.00 ii) Joint ventures - Assets Held for sale Joint ventures % Voting Right % Economic interest Venture Country of March 2022 March 2021 March 2022 March 2021 incorporation Padma Shipping Limited ("PSL") OPGPV / OPGPG Hong Kong 50 50 50 50 iii) Associates- Assets Held for sale Associates Avanti Solar Energy Private Limited Mayfair Renewable Energy (I) Private Limited Avanti Renewable Energy Private Limited Brics Renewable Energy Private Limited e) Foreign currency translation % Voting Right % Economic interest Country of March 2022 March 2021 March 2022 March 2021 incorporation India India India India 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31 The functional currency of the Company is the Great Britain Pound Sterling (£). The Cyprus entity is an extension of the parent and pass through investment entity. Accordingly the functional currency of the subsidiary in Cyprus is the Great Britain Pound Sterling. The functional currency of the Company’s subsidiaries operating in India, determined based on evaluation of the individual and collective economic factors is Indian Rupees (‘? ’ or 'INR'). The presentation currency of the Group is the Great Britain Pound (£) as submitted to the AIM counter of the London Stock Exchange where the shares of the Company are listed. At the reporting date the assets and liabilities of the Group are translated into the presentation currency at the rate of exchange prevailing at the reporting date and the income and expense for each statement of profit or loss are translated at the average exchange rate (unless this average rate is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expense are translated at the rate on the date of the transactions). Exchange differences are charged/ credited to other comprehensive income and recognized in the currency translation reserve in equity. Transactions in foreign currencies are translated at the foreign exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the Statement of financial position date are translated into functional currency at the foreign exchange rate ruling at that date. Aggregate gains and losses resulting from foreign currencies are included in finance income or costs within the profit or loss. ` exchange rates used to translate the Indian Rupee financial information into the presentation currency of Great Britain Pound (£) are the closing rate as at 31 March 2022: 99.37 (2021: 100.81) and the average rate for the year ended 31 March 2022: 101.62 (2021: 96.72). f) Revenue recognition In accordance with IFRS 15 - Revenue from contracts with customers, the Group recognises revenue to the extent that it reflects the expected consideration for goods or services provided to the customer under contract, over the performance obligations they are being provided. For each separable performance obligation identified, the Group determines whether it is satisfied at a “point in time” or “over time” based upon an evaluation of the receipt and consumption of benefits, control of assets and enforceable payment rights associated with that obligation. If the criteria required for “over time” recognition are not met, the performance obligation is deemed to be satisfied at a “point in time”. Revenue principally arises as a result of the Group’s activities in electricity generation and distribution. Supply of power and billing satisfies performance obligations. The supply of power is invoiced in arrears on a monthly basis and generally the payment terms within the Group are 10 to 45 days. 64 Revenue Revenue from providing electricity to captive power users and sales to other customers is recognised on the basis of billing cycle under the contractual arrangement with the captive power users & customers respectively and reflects the value of units of power supplied and the applicable tariff after deductions or discounts. Revenue is earned at a point in time of joint meter reading by both buyer and seller for each billing month. Interest and dividend Revenue from interest is recognised as interest accrued (using the effective interest rate method). Revenue from dividends is recognised when the right to receive the payment is established. g) Operating expenses Operating expenses are recognised in the statement of profit or loss upon utilisation of the service or as incurred. h) Taxes Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity. Current income tax assets and/or liabilities comprise those obligations to, or claims from, taxation authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with investments in subsidiaries is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised against future taxable income. Deferred tax assets and liabilities are offset only when the Group has a right and the intention to set off current tax assets and liabilities from the same taxation authority. Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or loss, except where they relate to items that are recognised in other comprehensive income or directly in equity, in which case the related deferred tax is also recognised in other comprehensive income or equity, respectively. i) Financial assets IFRS 9 Financial Instruments contains regulations on measurement categories for financial assets and financial liabilities. It also contains regulations on impairments, which are based on expected losses. "Financial assets are classified as financial assets measured at amortized cost, financial assets measured at fair value through other comprehensive income (FVOCI) and financial assets measured at fair value through profit and loss (FVPL) based on the business model and the characteristics of the cash flows. If a financial asset is held for the purpose of collecting contractual cash flows and the cash flows of the financial asset represent exclusively interest and principal payments, then the financial asset is measured at amortized cost. A financial asset is measured at fair value through other comprehensive income (FVOCI) if it is used both to collect contractual cash flows and for sales purposes and the cash flows of the financial asset consist exclusively of interest and principal payments. Unrealized gains and losses from financial assets measured at fair value through other comprehensive income (FVOCI), net of related deferred taxes, are reported as a component of equity (other comprehensive income) until realized. Realized gains and losses are determined by analyzing each transaction individually. Debt instruments that do not exclusively serve to collect contractual cash flows or to both generate contractual cash flows and sales revenue, or whose cash flows do not exclusively consist of interest and principal payments are measured at fair value through profit and loss (FVPL). For equity instruments that are held for trading purposes the Group has uniformly exercised the option of recognizing changes in fair value through profit or loss (FVPL). Refer to note 29""Summary of financial assets and liabilities by category and their fair values"".” Impairments of financial assets are both recognized for losses already incurred and for expected future credit defaults. The amount of the impairment loss calculated in the determination of expected credit losses is recognized on the income statement. Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision. j) Financial liabilities The Group's financial liabilities include borrowings and trade and other payables. Financial liabilities are measured subsequently at amortised cost using the effective interest method. All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in profit or loss are included within 'finance costs' or 'finance income'. 65 k) Fair value of financial instruments The fair value of financial instruments that are actively traded in organised financial markets is determined by reference to quoted market prices at the close of business on the Statement of financial position date. For financial instruments where there is no active market, fair value is determined using valuation techniques. Such techniques may include using recent arm’s length market transactions; reference to the current fair value of another instrument that is substantially the same; discounted cash flow analysis or other valuation models. l) Property, plant and equipment Property, plant and equipment are stated at historical cost, less accumulated depreciation and any impairment in value. Historical cost includes expenditure that is directly attributable to property plant & equipment such as employee cost, borrowing costs for long- term construction projects etc, if recognition criteria are met. Likewise, when a major inspection is performed, its costs are recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repairs and maintenance costs are recognised in the profit or loss as incurred. Land is not depreciated. Depreciation on all other assets is computed on straight-line basis over the useful life of the asset based on management’s estimate as follows: Nature of asset Buildings Power stations Other plant and equipment Vehicles Useful life (years) 40 40 3-10 5-11 Assets in the course of construction are stated at cost and not depreciated until commissioned. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the profit or loss in the year the asset is derecognised. The assets residual values, useful lives and methods of depreciation of the assets are reviewed at each financial year end, and adjusted prospectively if appropriate. Intangible assets Acquired software Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and install the specific software. Subsequent measurement All intangible assets, including software are accounted for using the cost model whereby capitalised costs are amortised on a straight- line basis over their estimated useful lives, as these assets are considered finite. Residual values and useful lives are reviewed at each reporting date. The useful life of software is estimated as 4 years. m) Leases All leases are accounted for by recognising a right-of-use asset and a lease liability except for: • leases of low value assets; and • leases with a duration of 12 months or less. Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the group’s incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate. On initial recognition, the carrying value of the lease liability also includes: • amounts expected to be payable under any residual value guarantee; • the exercise price of any purchase option granted in favour of the Group if it is reasonable certain to assess that option and • any penalties payable for terminating the lease, if the term of the lease has been estimated in the basis of termination option being exercised. Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for: • lease payments made at or before commencement of the lease; • initial direct costs incurred; and • the amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset (typically leasehold dilapidations)” 66 Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term. When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted using a revised discount rate. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised, except the discount rate remains unchanged. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term. If the carrying amount of the right-of-use asset is adjusted to zero, any further reduction is recognised in profit or loss. n) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets. Interest income earned on the temporary investment of specific borrowing pending its expenditure on qualifying assets is deducted from the costs of these assets. Gains and losses on extinguishment of liability, including those arising from substantial modification from terms of loans are not treated as borrowing costs and are charged to profit or loss. All other borrowing costs including transaction costs are recognized in the statement of profit or loss in the period in which they are incurred, the amount being determined using the effective interest rate method. o) Impairment of non-financial assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or Groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the profit or loss. p) Non-current Assets Held for Sale and Discontinued Operations Non-current assets and any corresponding liabilities held for sale and any directly attributable liabilities are recognized separately from other assets and liabilities in the balance sheet in the line items “Assets held for sale” and “Liabilities associated with assets held for sale” if they can be disposed of in their current condition and if there is sufficient probability of their disposal actually taking place. Discontinued operations are components of an entity that are either held for sale or have already been sold and can be clearly distinguished from other corporate operations, both operationally and for financial reporting purposes. Additionally, the component classified as a discontinued operation must represent a major business line or a specific geographic business segment of the Group. Non-current assets that are held for sale either individually or collectively as part of a disposal group, or that belong to a discontinued operation, are no longer depreciated. They are instead accounted for at the lower of the carrying amount and the fair value less any remaining costs to sell. If this value is less than the carrying amount, an impairment loss is recognized. The income and losses resulting from the measurement of components held for sale as well as the gains and losses arising from the disposal of discontinued operations, are reported separately on the face of the income statement under income/loss from discontinued operations, net, as is the income from the ordinary operating activities of these divisions. Prior-year income statement figures are adjusted accordingly. However, there is no reclassification of prior-year balance sheet line items attributable to discontinued operations. q) Cash and cash equivalents Cash and cash equivalents in the Statement of financial position includes cash in hand and at bank and short-term deposits with original maturity period of 3 months or less. For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash in hand and at bank and short- term deposits. Restricted cash represents deposits which are subject to a fixed charge and held as security for specific borrowings and are not included in cash and cash equivalents. r) Inventories Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition is accounted based on weighted average price. Net realisable value is the estimated selling price in the ordinary course of business, less estimated selling expenses. 67 s) Earnings per share The earnings considered in ascertaining the Group’s earnings per share (EPS) comprise the net profit for the year attributable to ordinary equity holders of the parent. The number of shares used for computing the basic EPS is the weighted average number of shares outstanding during the year. For the purpose of calculating diluted earnings per share the net profit or loss for the period attributable to equity share holders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity share. t) Other provisions and contingent liabilities Provisions are recognised when present obligations as a result of a past event will probably lead to an outflow of economic resources from the Group and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises from the presence of a legal or constructive obligation that has resulted from past events. Restructuring provisions are recognised only if a detailed formal plan for the restructuring has been developed and implemented, or management has at least announced the plan's main features to those affected by it. Provisions are not recognised for future operating losses. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their present values, where the time value of money is material. Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision. All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. In those cases where the possible outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognised, unless it was assumed in the course of a business combination. In a business combination, contingent liabilities are recognised on the acquisition date when there is a present obligation that arises from past events and the fair value can be measured reliably, even if the outflow of economic resources is not probable. They are subsequently measured at the higher amount of a comparable provision as described above and the amount recognised on the acquisition date, less any amortisation. u) Share based payments The Group operates equity-settled share-based remuneration plans for its employees. None of the Group's plans feature any options for a cash settlement. All goods and services received in exchange for the grant of any share-based payment are measured at their fair values. Where employees are rewarded using share-based payments, the fair values of employees' services is determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example profitability and sales growth targets and performance conditions). All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding credit to 'Other Reserves'. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting. Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares issued are allocated to share capital with any excess being recorded as share premium. v) Employee benefits Gratuity In accordance with applicable Indian laws, the Group provides for gratuity, a defined benefit retirement plan (“the Gratuity Plan”) covering eligible employees. The Gratuity Plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of employment. Liabilities with regard to the gratuity plan are determined by actuarial valuation, performed by an independent actuary, at each Statement of financial position date using the projected unit credit method. The Group recognises the net obligation of a defined benefit plan in its statement of financial position as an asset or liability, respectively in accordance with IAS 19, Employee benefits. The discount rate is based on the Government securities yield. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to profit or loss in the statement of comprehensive income in the period in which they arise. w) Business combinations Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that common control was established using pooling of interest method. The assets and liabilities acquired are recognised at 68 the carrying amounts recognised previously in the Group controlling shareholder’s consolidated financial statements. The components of equity of the acquired entities are added to the same components within Group equity. Any excess consideration paid is directly recognised in equity. x) Segment reporting The Group has adopted the “management approach” in identifying the operating segments as outlined in IFRS 8 - Operating segments. Segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Board of Directors being the chief operating decision maker evaluate the Group’s performance and allocates resources based on an analysis of various performance indicators at operating segment level. During the year 2021 the Group has deconsolidated solar entities and are classified as associates (note 7(b)). Accordingly, during FY22 there is only only one operating segment thermal power. The solar power business is classified as held for sale. There are no geographical segments as all revenues arise from India. All the non current assets are located in India. 6 Significant accounting judgements, estimates and assumptions The preparation of financial statements in conformity with IFRS requires management to make certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The principal accounting policies adopted by the Group in the consolidated financial statements are as set out above. The application of a number of these policies requires the Group to use a variety of estimation techniques and apply judgment to best reflect the substance of underlying transactions. The Group has determined that a number of its accounting policies can be considered significant, in terms of the management judgment that has been required to determine the various assumptions underpinning their application in the consolidated financial statements presented which, under different conditions, could lead to material differences in these statements. The actual results may differ from the judgments, estimates and assumptions made by the management and will seldom equal the estimated results. a) Judgements The following are significant management judgments in applying the accounting policies of the Group that have the most significant effect on the financial statements. Non-current assets held for sale and discontinued operations "The Group exercises judgement in whether assets are held for sale. After evaluation of all options, the Company decided that the most efficient way to maximise shareholders’ value from solar operations is to dispose of the solar companies and it initiated the process of disposition of the solar companies. Under IFRS 5, such a transaction meets the 'Asset held for sale' when the transaction is considered sufficiently probable and other relevant criteria are met. Management consider that all the conditions under IFRS 5 for classification of the solar business as held for sale have been met as at 31 March 2022 and expects the interest in the solar companies to be sold within the next 12 months. " The investment in the joint venture Padma Shipping Limited and associated advance net of impairments has been presented as asset held for sale following the process of sale of the second vessel as mentioned in note 7(a). Recoverability of deferred tax assets The recognition of deferred tax assets requires assessment of future taxable profit (see note 5(h)). b) Estimates and uncertainties: The key assumptions concerning the future and other key sources of estimation uncertainty at the Statement of financial position date, that have a significant risk of causing material adjustments to the carrying amounts of assets and liabilities within the next financial year are discussed below: i) Estimation of fair value of financial assets and financial liabilities: While preparing the financial statements the Group makes estimates and assumptions that affect the reported amount of financial assets and financial liabilities. Trade Receivables The Group ascertains the expected credit losses (ECL) for all receivables and adequate impairment provision are made. At the end of each reporting period a review of the allowance for impairment of trade receivables is performed. Trade receivables do not contain a significant financing element, and therefore expected credit losses are measured using the simplified approach permitted by IFRS 9, which requires lifetime expected credit losses to be recognised on initial recognition. A provision matrix is utilised to estimate the lifetime expected credit losses based on the age, status and risk of each class of receivable, which is periodically updated to include changes to both forward-looking and historical inputs. Assets held for sale - Financial assets measured at FVPL Valuation of Investment in joint venture Padma Shipping Limited is based on estimates and subject to uncertainties (Note 7(a)). Financial assets measured at FVPL Management applies valuation techniques to determine the fair value of financial assets measured at FVPL where active market quotes are not available. This requires management to develop estimates and assumptions based on market inputs, using observable data that market participants would use in pricing the asset. Where such data is not observable, management uses its best estimate. Estimated fair values of the asset may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date. 69 ii) Impairment tests: In assessing impairment, management estimates the recoverable amount of each asset or cash-generating units based on expected future cash flows and use an interest rate for discounting them. Estimation uncertainty relates to assumptions about future operating results including fuel prices, foreign currency exchange rates etc. and the determination of a suitable discount rate. The management considers impairment upon there being evidence that there might be an impairment, such as a lower market capitalization of the group or a downturn in results. iii) Useful life of depreciable assets: Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. 7 (Loss)/Profit from discontinued operations Non-current assets held for sale and (Loss)/Profit from discontinued operations consists of: Assets Held for Sale Liabilities classified as held for sale (Loss)/Profit from discontinued operations At 31 March 2022 At 31 March 2021 At 31 March 2022 At 31 March 2021 For FY 22 For FY 21 Interest in Solar entities Note 7(b) 13,497,027 16,425,368 i ii Share of (Loss)/Profit on fair value of investments, in Solar entities Note 7(b) iii Gain on deconsolidation of Solar entities Total - - - - 13,497,027 16,425,368 - - - - - - - - - - (2,928,341) 117,710 - 881,688 (2,928,341) 999,398 (a) Investment in joint venture Padma Shipping Limited - classified as held for sale In 2014 the Company entered into a Joint Venture agreement with Noble Chartering Ltd (“Noble”), to secure competitive long term rates for international freight for its imported coal requirements. Under the Arrangement, the company and Noble agreed to jointly purchase and operate two 64,000 MT cargo vessels through a Joint venture company Padma Shipping Ltd, Hong Kong (‘Padma’). The Group has invested approximately £3,484,178 in equity and £1,727,418 to date as advance. The Group impaired entire investment in earlier years of £5,211,596 in joint venture on account of the impending dissolution of the JV. (b) Assets held for sale and discontinued operations of solar entities During the year, the results of the operations of solar entities Avanti Solar Energy Private Limited, Mayfair Renewable Energy Private Limited, Avanti Renewable Energy Private Limited and Brics Renewable Energy Private Limited continued to be classified as Assets held for sale as the process of disposition of the solar entities could not be implemented during FY22 due to pandemic Covid-19 and expectation of comparatively better valuation for sale. However the management expects the interest in the solar entities to be sold within the next 12 months and continues to locate a buyer. The Group continues owning a 31% equity interest in the solar companies. Based on the term sheet available the Group’s investment in the solar companies was valued at £13.5 million as compared to OPG’s initial investment of £16.4 million. This loss of £2.9 million is recognized as loss from discontinued operations on account of the diminution in the value of investment. Non-current Assets held-for-sale and discontinued operations (a) Assets of disposal group classified as held-for-sale As at 31 March 2022 As at 31 March 2021 Property, plant and equipment Trade and other receivables Other short-term assets Restricted cash Cash and cash equivalents - - - - - - - - - - Investment in associates classsified as held for sale Total (b) Analysis of the results of discontinued operations is as follows 13,497,027 13,497,027 For FY 22 16,425,368 16,425,368 For FY 21 Revenue Operating profit before impairments Finance income Finance cost Current Tax Deferred tax - - - - - - - - - - - - Share of (Loss)/Profit on fair value of investments, in Solar entities Gain on deconsolidation of Solar entities (Loss)/Profit from Solar operations (2,928,341) - (2,928,341) 117,710 881,688 999,398 70 8 Segment Reporting The Group has adopted the “management approach” in identifying the operating segments as outlined in IFRS 8 - Operating segments. Segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Board of Directors being the chief operating decision maker evaluate the Group’s C534performance and allocates resources based on an analysis of various performance indicators at operating segment level. During the year 2021 the Group has deconsolidated solar entities and are classified as associates (note 7(b)). Accordingly, during FY22 there is only only one operating segment thermal power. The solar power business is classified as held for sale. There are no geographical segments as all revenues arise from India. All the non current assets are located in India. Revenue on account of sale of power to one customer exceeding 10% of total sales revenue amounts to £16,282,629 (2021: £28,720,575 ). Segmental information disclosure Segment Revenue Sales Total Other Operating income Depreciation, impairment Profit from operation Finance Income Finance Cost Tax expenses Gain on deconsolidation of Solar entities Share of Profit, (Loss) on fair value of investments, in Solar entities Continuing operations Thermal Discontinued operations Solar FY22 FY21 FY22 FY21 80,067,032 93,823,933 80,067,032 93,823,933 - 9,420,712 (5,333,531) (5,705,538) 16,076,355 27,495,324 2,285,364 868,439 (5,356,089) (6,803,137) (4,097,184) (8,447,699) - - - - - - - - - - - - - - - - - - - - - 881,688 (2,928,341) 117,710 Profit / (loss) for the year 8,908,446 13,112,927 (2,928,341) 999,398 Assets Liabilities 242,561,040 239,076,536 13,497,027 16,425,368 85,991,813 93,934,834 - - 9 Costs of inventories and employee benefit expenses included in the consolidated statements of comprehensive income a) Cost of fuel Included in cost of revenue: Cost of fuel consumed Other direct costs Total 31 March 2022 31 March 2021 53,886,250 54,095,390 2,614,714 2,797,675 56,500,964 56,893,065 b) Employee benefit expenses forming part of general and administrative expenses are as follows: Salaries and wages Employee benefit costs * Long Tern Incentive Plan (Note 21) Total 31 March 2022 31 March 2021 2,247,996 2,139,303 217,715 194,778 228,112 535,247 2,660,589 2,902,662 * includes £22,925 (2021 £31,885) being expenses towards gratuity which is a defined benefit plan (Note 5(v)) Auditor’s remuneration for audit services amounting to £59,000 (2021: £60,000) is included in general and administrative expenses. Foreign exchange movements (realised and unrealised) included in the Finance costs is as follows: c) d) Foreign exchange realised - loss Foreign exchange unrealised- loss Total 31 March 2022 31 March 2021 214,048 184,880 398,928 213,524 46,931 260,455 71 10 Other operating income and expenses a) Other operating income Contractual claims payments Total 31 March 2022 31 March 2021 - - 9,420,712 9,420,712 Other operating income represents contractual claims payments from company's customers under the power purchase agreements which were accumulated over several periods. b) Other income Sale of coal Sale of fly ash Power trading commission and other services Others Total 11 Finance costs Finance costs are comprised of: Interest expenses on borrowings Net foreign exchange loss (Note 9) Other finance costs Total 31 March 2022 31 March 2021 7,338,941 77,586 169,183 469,155 8,054,865 616,708 16,271 147,166 1,141,401 1,921,546 31 March 2022 31 March 2021 4,277,158 5,848,895 398,928 680,003 260,455 693,787 5,356,089 6,803,137 Other finance costs include charges and cost related to LC's for import of coal and other charges levied by bank on transactions 12 Finance income Finance income is comprised of: Interest income on bank deposits and advances Profit on disposal of financial instruments* Total 31 March 2022 31 March 2021 891,467 1,393,897 2,285,364 401,194 467,245 868,439 *Financial instruments represent the mutual funds held during the year and profits include £465,297 unrealised gain on mark to market rate as on reporting date. 13 Tax expenses Tax Reconciliation Reconciliation between tax expense and the product of accounting profit multiplied by India’s domestic tax rate for the years ended 31 March 2022 and 2021 is as follows: Accounting profit before taxes Enacted tax rates Tax expense on profit at enacted tax rate Exempt Income due to tax holiday Foreign tax rate differential Unused tax losses brought forward and carried forward Non-taxable items MAT credit (entitlement) / reversed Actual tax for the period Current tax Deferred tax Tax reported in the statement of comprehensive income 72 31 March 2022 31 March 2021 13,005,630 21,560,626 34.94% 4,544,687 - (13,847) 34.94% 7,534,145 (161,808) 487,920 - 1,216,052 (916,046) 482,390 4,097,184 (216,590) (412,019) 8,447,699 31 March 2022 31 March 2021 334,646 3,762,538 4,097,184 412,513 8,035,186 8,447,699 The Company is subject to Isle of Man corporate tax at the standard rate of zero percent. As such, the Company’s tax liability is zero. Additionally, Isle of Man does not levy tax on capital gains. However, considering that the group’s operations are primarily based in India, the effective tax rate of the Group has been computed based on the current tax rates prevailing in India. Further, a portion of the profits of the Group’s India operations are exempt from Indian income taxes being profits attributable to generation of power in India. Under the tax holiday the taxpayer can utilize an exemption from income taxes for a period of any ten consecutive years out of a total of fifteen consecutive years from the date of commencement of the operations. However, the entities in India are still liable for Minimum Alternate Tax (MAT) which is calculated on the book profits of the respective entities currently at a rate of 17.47% (31 March 2021: 17.47%). The Group has carried forward credit in respect of MAT tax liability paid to the extent it is probable that future taxable profit will be available against which such tax credit can be utilized. Deferred income tax for the Group at 31 March 2022 and 2021 relates to the following: Deferred income tax assets Unused tax losses brought forward and carried forward MAT credit entitlement Deferred income tax liabilities Property, plant and equipment Deferred income tax liabilities, net Movement in temporary differences during the year 31 March 2022 31 March 2021 - - 11,985,655 12,374,534 11,985,655 12,374,534 29,015,582 25,368,905 29,015,582 25,368,905 17,029,927 12,994,371 Particulars As at 01 April 2021 Deferred tax liability for the year Classified as Liability held for sale Translation adjustment As at 31 March 22 Property, plant and equipment (25,368,905) (3,280,148) Unused tax losses brought forward and carried forward - - MAT credit entitlement 12,374,534 (482,390) Deferred income tax liabilities net (12,994,371) (3,762,538) - - - - Particulars As at 01 April 2020 Deferred tax asset for the year Property, plant and equipment (18,902,358) Unused tax losses brought forward and carried forward 1,216,052 - - Classified as Liability held for sale (6,466,547) (1,216,052) MAT credit entitlement 11,962,515 412,019 - Deferred income tax (liabilities) / assets, net (5,723,791) 412,019 (7,682,599) (366,529) (29,015,582) - - 93,511 11,985,655 (273,018) (17,029,927) Translation adjustment As at 31 March 21 - - - - (25,368,905) - 12,374,534 (12,994,371) In assessing the recoverability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. The amount of the deferred income tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced. Shareholders resident outside the Isle of Man will not suffer any income tax in the Isle of Man on any income distributions to them. However, dividends are taxable in India in the hands of the recipient. There is no unrecognised deferred tax assets and liabilities. As at 31 March 2022 and 2021, there was no recognised deferred tax liability for taxes that would be payable on the unremitted earnings of certain of the Group's subsidiaries, as the Group has determined that undistributed profits of its subsidiaries will not be distributed in the foreseeable future. 73 14 Intangible assets Acquired software licences Cost At 31 March 2020 Additions Exchange adjustments At 31 March 2021 At 31 March 2021 Additions Exchange adjustments At 31 March 2022 Accumulated depreciation and impairment At 31 March 2020 Charge for the year Exchange adjustments At 31 March 2021 At 31 March 2021 Charge for the year Exchange adjustments At 31 March 2022 Net book value At 31 March 2022 At 31 March 2021 827,065 (63,470) 763,595 763,595 11,875 11,032 786,502 818,020 6,209 (63,028) 761,201 761,201 2,438 11,054 774,692 11,810 2,394 15 Property, plant and equipment The property, plant and equipment comprises of: Land & Buildings Power Other plant & equipment stations Vehicles Right- of-use Asset under construction Total Cost At 1st April 2020 8,765,490 216,622,367 1,886,252 2,356,081 Additions 271,158 318,038 24,375 134,659 Transfers on capitalisation 13,598 159,120 - - Sale / Disposals - - - (1,561,762) Exchange adjustments (661,265) (16,639,299) (143,908) (180,354) 8,388,982 200,460,226 1,766,719 748,624 8,388,982 200,460,226 1,766,719 748,624 At 31 March 2021 At 1st April 2021 Additions - - - - - - - 280,776 229,910,967 36,206 784,436 (172,718) - - (1,561,762) (21,547) (17,646,373) 122,717 211,487,267 122,717 211,487,267 13,919 267,007 25,229 23,745 43,843 3,265,722 3,639,464 Transfers on capitalisation Sale / Disposals - - 1,584,477 38,134 - - - (52,794) Exchange adjustments 119,437 2,905,807 25,366 10,730 - - - (1,622,611) - - (52,794) 1,392 3,062,732 At 31 March 2022 8,522,337 205,217,516 1,855,448 730,306 43,843 1,767,219 218,136,670 74 Land & Buildings Power Other plant & equipment stations Vehicles Right- of-use Asset under construction Total Accumulated depreciation and impairment At 1 April 2020 55,601 34,683,662 878,072 1,824,237 Charge for the year 12,081 5,230,238 262,333 194,677 Sale / Disposals - - - (1,263,537) Exchange adjustments (6,363) (2,874,452) (77,955) (147,367) At 31 March 2021 61,319 37,039,448 1,062,450 608,010 At 1 April 2021 61,319 37,039,448 1,062,450 608,010 - - - - - - Charge for the year 10,801 5,033,811 257,197 22,135 7,149 Sale / Disposals - - - (52,794) Exchange adjustments 1,433 649,528 21,170 9,190 - 146 73,553 42,722,787 1,340,816 586,542 7,295 - - - - - - - - - - 37,441,572 5,699,329 (1,263,537) (3,106,137) 38,771,227 38,771,227 5,331,093 (52,794) 681,467 44,730,994 At 31 March 2022 Net book value At 31 March 2022 At 31 March 2021 8,448,784 162,494,730 514,631 143,764 36,548 1,767,219 173,405,676 8,327,663 163,420,778 704,269 140,614 - 122,717 172,716,040 The net book value of land and buildings block comprises of: Freehold land Buildings 31 March 2022 31 March 2021 8,029,665 419,119 8,448,784 7,917,345 410,318 8,327,663 Property, plant and equipment with a carrying amount of £167,788,550 (2021: £169,111,804) is subject to security restrictions (refer note 22). 16 Other Assets A. Short-term Capital advances Financial instruments measured at fair value through P&L Advances and other receivables Total B. Long-term Bank deposits Other advances Total 31 March 2022 31 March 2021 - 124,601 18,265,352 13,253,663 7,917,571 4,427,290 26,182,923 17,805,554 12,140 - 12,140 57,713 12,140 69,853 The financial instruments of £18,265,352 (FY2021: £13,253,663) represent investments in mutual funds and their fair value is determined by reference to published data. 17 Trade and other receivables Current Trade receivables Total 31 March 2022 31 March 2021 8,607,935 8,607,935 14,829,989 14,829,989 The Group’s trade receivables are classified at amortised cost unless stated otherwise and are measured after allowances for future expected credit losses, see “Credit risk analysis” in note 28 “Financial risk management objectives and policies” for more information on credit risk. The carrying amounts of trade and other receivables, which are measured at amortised cost, approximate their fair value and are predominantly non-interest bearing. 75 18 Inventories Coal and fuel Stores and spares Total The entire amount of above inventories has been pledged as security for borrowings (refer note 22) 19 Cash and cash equivalents and Restricted cash a Cash and short term deposits comprise of the following: Investment in Mutual funds Cash at banks and on hand Total 31 March 2022 31 March 2021 9,499,510 11,228,377 966,310 958,267 10,465,820 12,186,644 31 March 2022 31 March 2021 5,193,275 2,498,117 7,691,392 1,815,629 7,105,324 8,920,952 Short-term deposits are placed for varying periods, depending on the immediate cash requirements of the Group. They are recoverable on demand. b Restricted cash Current restricted cash represents deposits maturing between three to twelve months amounting to £2,392,104 (2021: £3,219,356) which have been pledged by the Group in order to secure borrowing limits with the banks. Non-current restricted represents investments in mutual funds maturing after twelve months amounting to £10,427,847 (2021: £8,194,412). Investments of £8,300,665 (2021: £8,182,445) are allocated to debenture redemption fund earmarked towards redemption of non-convertible debentures of £20,126,738 scheduled during FY 2024. 20 Issued share capital Share Capital The Company presently has only one class of ordinary shares. For all matters submitted to vote in the shareholders meeting, every holder of ordinary shares, as reflected in the records of the Group on the date of the shareholders’ meeting, has one vote in respect of each share held. All shares are equally eligible to receive dividends and the repayment of capital in the event of liquidation of the Group. As at 31 March 2022, the Company has an authorised and issued share capital of 400,733,511 (2021: 400,733,511) equity shares at par value of £ 0.000147 (2021: £ 0.000147) per share amounting to £58,909 (2020: £58,909) in total. Reserves Share premium represents the amount received by the Group over and above the par value of shares issued. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits. Foreign currency translation reserve is used to record the exchange differences arising from the translation of the financial statements of the foreign subsidiaries. Other reserve represents the difference between the consideration paid and the adjustment to net assets on change of controlling interest, without change in control, other reserves also includes any costs related with share options granted and gain/losses on re- measurement of financial assets measured at fair value through other comprehensive income. Retained earnings include all current and prior period results as disclosed in the consolidated statement of comprehensive income less dividend distribution. 21 Share based payments Long Term Incentive PlanIn April 2019, the Board of Directors has approved the introduction of Long Term Incentive Plan (""LTIP""). The key terms of the LTIP are: The number of performance-related awards is 14 million ordinary shares (the "LTIP Shares") (representing approximately 3.6 per cent of the Company's issued share capital). The grant date is 24 April 2019. The LTIP Shares were awarded to certain members of the senior management team as Nominal Cost Shares and will vest in three tranches subject to continued service with Group until vesting and meeting the following share price performance targets, plant load factor ("PLF") and term loan repayments of the Chennai thermal plant. - 20% of the LTIP Shares shall vest upon meeting the target share price of 25.16p before the first anniversary for the first tranche, i.e. 24 April 2020, achievement of PLF during the period April 2019 to March 2020 of at least 70% at the Chennai thermal plant and repayment of all scheduled term loans; - 40% of the LTIP Shares shall vest upon meeting the target share price of 30.07p before the second anniversary for the second tranche, i.e. 24 April 2021, achievement of PLF during the period April 2020 to March 2021 of at least 70% at the Chennai thermal plant and repayment of all scheduled term loans; 76 - 40% of the LTIP Shares shall vest upon meeting the target share price of 35.00p before the third anniversary for the third tranche, i.e. 24 April 2022, achievement of PLF of at least 70% at the Chennai thermal plant during the period April 2021 to March 2022 and repayment of all scheduled term loans. The nominal cost of performance share, i.e. upon the exercise of awards, individuals will be required to pay up 0.0147p per share to exercise their awards The share price performance metric will be deemed achieved if the average share price over a fifteen day period exceeds the applicable target price. In the event that the share price or other performance targets do not meet the applicable target, the number of vesting shares would be reduced pro-rata, for that particular year. However, no LTIP Shares will vest if actual performance is less than 80 per cent of any of the performance targets in any particular year. The terms of the LTIP provide that the Company may elect to pay a cash award of an equivalent value of the vesting LTIP Shares. In April 2020, and upon meeting relevant performance targets, 2,190,519 LTIP shares vested (80% of the 1st tranche). These shares will be issued later this year. None of the LTIP Shares, once vested, can be sold until the third anniversary of the award, unless required to meet personal taxation obligations in relation to the LTIP award. Second and third tranches of LTIP grant didn't meet relevant performance targets and expired in April 2022. For LTIP Shares awards, £194,778 (FY2021: 535,247) has been recognised in General and administrative expenses. Grant date Vesting date Method of Settlement Vesting of shares (%) Number of LTIP Shares granted Exercise Price (pence per share) Fair Value of LTIP Shares granted (pence per share) Expected Volatility (%) 22 Borrowings The borrowings comprise of the following: 24-Apr-19 24-Apr-20 24-Apr-19 24-Apr-21 24-Apr-19 24-Apr-22 Equity/ Cash Equity/ Cash Equity/ Cash 20% 40% 40% 2,800,000 5,600,000 5,600,000 0.0147 0.1075 68.00% 0.0147 0.1217 64.18% 0.0147 0.1045 55.97% Interest rate (range %) Final maturity 31 March 2022 31 March 2021 Borrowings at amortised cost Non-Convertible Debentures at amortised cost 1 9.9-10.85 9.85 June 2024 June 2023 Total 1 Interest rate range for Project term loans and Working Capital 23,159,039 26,770,564 20,126,738 19,840,089 43,285,777 46,610,653 The term loans of £21.6m, working capital loans of £1.6m and non-convertible debentures of £20.1m are taken by the Group are fully secured by the property, plant, assets under construction and other current assets of subsidiaries which have availed such loans. All term loans and working capital loans are personally guaranteed by a Director. Term loans contain certain covenants stipulated by the facility providers and primarily require the Group to maintain specified levels of certain financial metrics and operating results. As of 31 March 2022, the Group has met all the relevant covenants. The fair value of borrowings at 31 March 2022 was £43,285,777 (2021: £46,610,653). The fair values have been calculated by discounting cash flows at prevailing interest rates. The borrowings are reconciled to the statement of financial position as follows: Current liabilities Amounts falling due within one year Non-current liabilities Amounts falling due after 1 year but not more than 5 years Total 31 March 2022 31 March 2021 13,399,429 4,510,358 29,886,348 42,100,295 43,285,777 46,610,653 77 23 Trade and other payables Current Trade payables Creditors for capital goods Total Non-current Other payables Total 31 March 2022 31 March 2021 24,402,850 32,368,058 37,474 128,777 24,440,324 32,496,835 630,358 630,358 607,702 607,702 Trade payables include credit availed from banks under letters of credit for payments in USD to suppliers for coal purchased by the Group. Other trade payables are normally settled on 45 days terms credit. The arrangements are interest bearing and are payable within one year. With the exception of certain other trade payables, all amounts are short term. Creditors for capital goods are non-interest bearing and are usually settled within a year. Other payables include accruals for gratuity and other accruals for expenses. 24 Related party transactions Key Management Personnel: Name of the party N Kumar Arvind Gupta Avantika Gupta Dmitri Tsvetkov Ajit Pratap Singh Jeremy Warner Allen Mike Grasby Nature of relationship Non-executive Chairman ( from 4 April 2022) Chairman ( till 4 April 2022) Chief Executive Officer ( from 4 April 2022) Chief Financial Officer & Director ( till 31 May 2022) Chief Financial Officer, Executive Director ( from 31 May 2022) Deputy Chairman Director (from February 2021) Related parties with whom the Group had transactions during the period Name of the party Padma Shipping Limited Avanti Solar Energy Private Limited Mayfair Renewable Energy (I) Private Limited Avanti Renewable Energy Private Limited Brics Renewable Energy Private Limited Nature of relationship The Company has joint control of the entity Associates Associates Associates Associates Samriddhi Bubna Relative of Key Management Personnel Summary of transactions with related parties Name of the party Remuneration to Samriddhi Bubna Sale of solar modules : a) Avanti Solar Energy Private Limited b) Mayfair Renewable Energy (I) Private Limited 31 March 2022 31 March 2021 24,601 25,847 188,741 75,664 198,299 79,496 78 Summary of balance with related parties Name of the party Padma Shipping Limited Padma Shipping Limited Padma Shipping Limited Avanti Solar Energy Private Limited Avanti Solar Energy Private Limited Avanti Solar Energy Private Limited Mayfair Renewable Energy Private Limited Mayfair Renewable Energy Private Limited Mayfair Renewable Energy Private Limited Avanti Renewable Energy Private Limited Avanti Renewable Energy Private Limited Avanti Renewable Energy Private Limited Brics Renewable Energy Private Limited Nature of balance 31 March 2022 31 March 2021 Investment Advances 3,448,882 1,727,418 3,448,882 1,727,418 Impairment provision (5,176,300) (5,176,300) 4,863,575 4,766,864 Investment Trade payable Advance Investment Trade payable Advance Investment Trade payable Advance Investment - 538,038 5,277,364 (52,035) - 5,804,055 - 298,745 362,664 (67,391) 6,022 5,352,890 (51,294) 7,242 5,895,541 (147,583) 9,047 410,073 - Impairment provisions - Investments in Solar (Associates) Investment (2,810,631) Outstanding balances at the year-end are unsecured. Related party transaction are on arms length basis. There have been no guarantees provided or received for any related party receivables or payables except for corporate guarantees issued to lenders of its solar entities classified as Assets held for sale (loans outstanding £21,760,989 (2021: £23,300,131)) and corporate guarantee to a director for his personal guarantees with respect to the Group. The assessment of impairment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates. A director personally guaranteed loans of an associate solar entity Nil (2021: £7,412,554)) which is classified as Asset Held for Sale. Group’s loans of £23,044,653 (2021: £25,368,634) are personally guaranteed by a director. 25 Earnings per share Both the basic and diluted earnings per share have been calculated using the profit attributable to shareholders of the parent company as the numerator (no adjustments to profit were necessary for the year ended March 2022 or 2021). The company has issued LTIP over ordinary shares which could potentially dilute basic earnings per share in the future. The weighted average number of shares for the purposes of diluted earnings per share can be reconciled to the weighted average number of ordinary shares used in the calculation of basic earnings per share (for the Group and the Company) as follows: Particulars 31 March 2022 31 March 2021 Weighted average number of shares used in basic earnings per share 402,924,030 400,733,511 Shares deemed to be issued for no consideration in respect of share based payments - 2,190,519 Weighted average number of shares used in diluted earnings per share 402,924,030 402,924,030 26 Directors remuneration Name of directors Arvind Gupta Avantika Gupta Dmitri Tsvetkov Jeremy Warner Allen N Kumar Mike Grasby (from February 2021) Total 31 March 2022 31 March 2021 - - 59,043 150,000 25,000 22,500 22,500 279,043 60,000 150,000 25,000 22,500 2,562 260,062 As part of COVID-19 response, the Company has implemented various cost reduction and efficiency improvement measures to conserve cash and improve liquidity, including voluntary 100 per cent salary reduction for Chairman and voluntary reductions up to 50 per cent in compensation for Executive and Non-Executive Directors for FY22 and FY21.The above remuneration is in the nature of short-term employee benefits. As the future liability for gratuity and compensated absences is provided on actuarial basis for the companies in the Group, the amount pertaining to the directors is not individually ascertainable and therefore not included above. 79 27 Commitments and contingencies Operating lease commitments The Group leases office premises under operating leases. The leases typically run for a period up to 5 years, with an option to renew the lease after that date. None of the leases includes contingent rentals. Non-cancellable operating lease rentals are payable as follows: Not later than one year Later than one year and not later than five years Later than five years Total 31 March 2022 31 March 2021 15,337 23,005 - 38,342 - - - - Recognition of a right of use asset £36,548 (2021: NIL) and a lease liability £36,228 (2021: NIL). Contingent liabilities Disputed income tax demands £3,715,194 (2021: £816,358). Future cash flows in respect of the above matters are determinable only on receipt of judgements / decisions pending at various forums / authorities. Guarantees and Letter of credit The Group has provided bank guarantees and letter of credits (LC) to customers and vendors in the normal course of business. The LC provided as at 31 March 2022: £13,964,728 (2021: £20,167,583) and Bank Guarantee (BG) as at 31 March 2022: £4,039,969 (2021: £2,575,878). LC are supporting accounts payables already recognised in statement of financial position. There have been no guarantees provided or received for any related party receivables or payables except for corporate guarantees issued to lenders of its associate solar entities of £21,760,986 (2021: £23,300,131). Working capital facilities limits, LCs and BGs are personally guaranteed by a director. BG are treated as contingent liabilities until such time it becomes probable that the Company will be required to make a payment under the guarantee. The Company provided a corporate guarantee to a director for his personal guarantees with respect to the Group. 28 Financial risk management objectives and policies The Group's principal financial liabilities, comprises of loans and borrowings, trade and other payables, and other current liabilities. The main purpose of these financial liabilities is to raise finance for the Group's operations. The Group has loans and receivables, trade and other receivables, and cash and short-term deposits that arise directly from its operations. The Group also hold investments designated financial assets measured at FVPL categories. The Group is exposed to market risk, credit risk and liquidity risk. The Group's senior management oversees the management of these risks. The Group's senior management advises on financial risks and the appropriate financial risk governance framework for the Group. The Board of Directors reviews and agrees policies for managing each of these risks which are summarised below: Market risk Market risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: interest rate risk, currency risk and other price risk, such as equity risk. Financial instruments affected by market risk include loans and borrowings, deposits, financial assets measured at FVPL. The sensitivity analyses in the following sections relate to the position as at 31 March 2022 and 31 March 2021 The following assumptions have been made in calculating the sensitivity analyses: (i) The sensitivity of the statement of comprehensive income is the effect of the assumed changes in interest rates on the net interest income for one year, based on the average rate of borrowings held during the year ended 31 March 2022, all other variables being held constant. These changes are considered to be reasonably possible based on observation of current market conditions. Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group's exposure to the risk of changes in market interest rates relates primarily to the Group's long-term debt obligations with average interest rates. At 31 March 2022 and 31 March 2021, the Group had no interest rate derivatives. The calculations are based on a change in the average market interest rate for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant. If interest rates increase or decrease by 100 basis points with all other variables being constant, the Group’s profit after tax for the year ended 31 March 2022 would decrease or increase by £432,858 (2021: £466,107). 80 Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rate. The Group’s presentation currency is the Great Britain £. A majority of our assets are located in India where the Indian rupee is the functional currency for our subsidiaries. Currency exposures also exist in the nature of capital expenditure and services denominated in currencies other than the Indian rupee. The Group’s exposure to foreign currency arises where a Group company holds monetary assets and liabilities denominated in a currency different to the functional currency of that entity: Currency United States Dollar (USD) As at 31 March 2022 As at 31 March 2021 Financial assets 133,577 Financial liabilities Financial assets Financial liabilities 16,067,891 60,158 27,733,983 Set out below is the impact of a 10% change in the US dollar on profit arising as a result of the revaluation of the Group’s foreign currency financial instruments: Currency As at 31 March 2022 As at 31 March 2021 Closing Rate (INR/USD) Effect of 10% strengthening in USD against INR – Translated to GBP Closing Rate (INR/USD) Effect of 10% strengthening in USD against INR – Translated to GBP United States Dollar (USD) 75.66 1,223,320 73.37 2,012,662 The impact on total equity is the same as the impact on net earnings as disclosed above. Credit risk analysis Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily for trade and other receivables) and from its financing activities, including short-term deposits with banks and financial institutions, and other financial assets. Further, the global economy has been severely impacted by the global pandemic Covid-19 (Note 5(a)). The maximum exposure for credit risk at the reporting date is the carrying value of each class of financial assets amounting to £34,802,998 (2021: £33,269,104) and corporate guarantees issued to lenders of its associates solar entities of £21,760,986 (2021: £23,300,131). The Group has exposure to credit risk from accounts receivable balances on sale of electricity. The operating entities of the Group has entered into power purchase agreements with distribution companies incorporated by the Indian state government (TANGEDCO) to sell the electricity generated therefore the Group is committed to sell power to these customers and the potential risk of default is considered low. For other customers, the Group ensures concentration of credit does not significantly impair the financial assets since the customers to whom the exposure of credit is taken are well established and reputed industries engaged in their respective field of business. It is Group policy to assess the credit risk of new customers before entering contracts and to obtain credit information during the power purchase agreement to highlight potential credit risks. The Group have established a credit policy under which customers are analysed for credit worthiness before power purchase agreement is signed. The Group’s review includes external ratings,when available, and in some cases bank references. The credit worthiness of customers to which the Group grants credit in the normal course of the business is monitored regularly and incorporates forward looking information and data available. The receivables outstanding at the year end are reviewed till the date of signing the financial statements in terms of recoveries made and ascertain if any credit risk has increased for balance dues. Further, the macro economic factors and specific customer industry status are also reviewed and if required the search and credit worthiness reports, financial statements are evaluated. The credit risk for liquid funds is considered negligible, since the counterparties are reputable banks with high quality external credit ratings. To measure expected credit losses, trade and other receivables have been grouped together based on shared credit risk characteristics and the days past due. The Group determined that some trade receivables were credit impaired as these were long past their due date and there was an uncertainty about the recovery of such receivables. The expected loss rates are based on an ageing analysis performed on the receivables as well as historical loss rates. The historical loss rates are adjusted to reflect current and forward looking information that would impact the ability of the customer to pay. Trade and other receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include , amongst others, the failure of the debtor to engage in a repayment plan, the debtor is not operating anymore and a failure to make contractual payments for a period of greater than 180 days. 81 31 March 2022 Within Credit period Days past due More than 60 days More than 30 days More than 180 days Total Expected general loss allowance rate 0% 0% 0% 73.19% 54.68% Gross carrying amount - Trade Receivables -TANGEDCO 727,191 656,818 2,158,116 7,199,394 10,741,520 Gross carrying amount - Trade Receivables -Others General loss allowance Total Loss allowance 31 March 2021 1,760,732 939,318 86,005 5,466,037 8,252,092 - - - - - - 10,385,677 10,385,677 10,385,677 10,385,677 Within Credit period Days past due More than 60 days More than 30 days More than 180 days Total Expected loss rate 0% 0% 0% 33.02% 58.76% Gross carrying amount - Trade Receivables -TANGEDCO Gross carrying amount - Trade Receivables -Others General loss allowance Specific loss allowance Total Loss allowance 1,651,140 1,686,225 2,218,844 15,097,765 20,653,974 7,862,837 1,154,009 460,326 5,831,930 15,309,103 - - - - 252,404 6,910,677 7,163,081 13,970,007 13,970,007 252,404 20,880,684 21,133,088 The closing loss allowances for trade receivables as at 31 March 2022 reconciles to the opening loss allowances as follows: Opening loss allowance as at 1 April (Reversal)/Increase in loss allowance Total 31 March 2022 31 March 2021 21,133,088 (10,747,411)* 10,385,677 18,108,033 3,025,055 21,133,088 *Out of this amount, (3,228,971) was adjusted in revenue and the balance (7,518,440) was adjusted in individual accounts of the receivables. The Group’s management believes that all the financial assets, except as mentioned above are not impaired for each of the reporting dates under review and are of good credit quality. Liquidity risk analysis The Group’s main source of liquidity is its operating businesses. The treasury department uses regular forecasts of operational cash flow, investment and trading collateral requirements to ensure that sufficient liquid cash balances are available to service on-going business requirements. The Group manages its liquidity needs by carefully monitoring scheduled debt servicing payments for long-term financial liabilities as well as cash outflows due in day-to-day business. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on the basis of a rolling 90 day projection. Long-term liquidity needs for a 90 day and a 30 day lookout period are identified monthly. The Group maintains cash and marketable securities to meet its liquidity requirements for up to 60 day periods. Funding for long-term liquidity needs is additionally secured by an adequate amount of committed credit facilities and the ability to sell long-term financial assets. The following is an analysis of the group contractual undiscounted cash flows payable under financial liabilities at 31 March 2022 and 31 March 2021. As at 31 March 2022 Borrowings Non-Convertible Debentures Trade and other payables Other liabilities Other current liabilities Total Current Non-Current Total Within 12 months 1-5 years Later than 5 years 13,399,429 9,759,610 - 20,126,738 24,440,324 630,358 - 36,228 569,199 - 38,408,952 30,552,934 82 - - - - - - 23,159,039 20,126,738 25,070,682 36,228 569,199 68,961,886 As at 31 March 2021 Borrowings Non-Convertible Debentures Interest on Borrowings Trade and other payables Other current liabilities Total Capital management Current Non-Current Total Within 12 Months 1-5 Years Later than 5 years 4,510,358 22,260,206 - 19,840,089 6,803,137 7,816,034 32,495,799 607,702 1,226,309 - - - - - - 26,770,564 19,840,089 14,619,171 33,103,501 1,226,309 45,035,603 50,524,031 - 95,559,634 Capital includes equity attributable to the equity holders of the parent and debt less cash and cash equivalents. The Group's capital management objectives include, among others: • Ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. • Ensure Group’s ability to meet both its long-term and short-term capital needs as a going concern. • To provide an adequate return to shareholders by pricing products and services commensurately with the level of risk. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years end 31 March 2022. The Group maintains a mixture of cash and cash equivalents, long-term debt and short-term committed facilities that are designed to ensure the Group has sufficient available funds for business requirements. There are no imposed capital requirements on Group or entities, whether statutory or otherwise. The Capital for the reporting periods under review is summarised as follows: 31 March 2022 31 March 2021 Total equity Less: Cash and cash equivalent Capital Total equity Add: Borrowings Overall financing Capital to overall financing ratio 170,066,254 161,567,070 (7,691,392) (8,920,952) 162,374,862 152,646,118 170,066,254 161,567,070 43,285,777 46,610,653 213,352,031 208,177,723 0.76 0.73 29 Summary of financial assets and liabilities by category and their fair values Financial assets measured at amortised cost 1 Cash and cash equivalents 1 Restricted cash 1 Current trade receivables Other long-term assets Other short-term assets Carrying amount Fair value 31 March 2022 31 March 2021 31 March 2022 31 March 2021 7,691,392 8,920,952 7,691,392 8,920,952 12,819,951 11,413,768 12,819,951 11,413,768 8,607,935 14,829,989 8,607,935 14,829,989 12,140 69,853 12,140 69,853 2,724,296 2,736,262 2,724,296 2,736,262 Financial instruments measured at fair value through profit or loss Other short term assets - (Note 16 & 19) Investments in Mutual funds Financial liabilities measured at amortised cost Term loans 2 2 Non-Convertible Debentures 1 Current trade and other payables Provision for pledged deposits 2 Non-current trade and other payables 83 23,458,627 15,069,292 23,458,627 15,069,292 55,314,341 53,040,116 55,314,341 53,040,116 23,159,039 26,770,564 23,159,039 26,770,564 20,126,738 19,840,089 20,126,738 19,840,089 24,440,324 32,495,799 24,440,324 32,495,799 36,228 630,358 - 607,702 36,228 630,358 - 607,702 68,392,687 79,714,154 68,392,687 79,714,154 The fair value of the financial assets and liabilities are included at the price that would be received to sell an asset or paid to transfer a liability (i.e. a exit price) in an ordinary transaction between market participants at the measurement date. The following methods and assumptions were used to estimate the fair values. 1. Cash and short-term deposits, trade receivables, trade payables, and other borrowings like short-term loans, current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. 2. The fair value of loans from banks and other financial indebtedness, obligations under finance leases, financial liabilities at fair value through profit or loss as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt or similar terms and remaining maturities. 3. Fair value of financial assets measured at FVPL held for trading purposes are derived from quoted market prices in active markets. Fair value of financial assets measured at FVPL of unquoted equity instruments are derived from valuation performed at the year end. Fair Valuation of retained investments in PS and BV is on basis of the last transaction. Fair value measurements recognised in the statement of financial position The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable. • • • Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). Level 1 Level 2 Level 3 Total Financial instruments measured at fair value through profit or loss 2022 Quoted securities Total 2021 Quoted securities Total 23,458,627 23,458,627 15,069,292 15,069,292 - - - - - - - - 23,458,627 23,458,627 15,069,292 15,069,292 There were no transfers between Level 1 and 2 in the period. Investments in mutual funds are valued at closing net asset value (NAV). The Group’s finance team performs valuations of financial items for financial reporting purposes, including Level 3 fair values. Valuation techniques are selected based on the characteristics of each instrument, with the overall objective of maximising the use of market-based information. The finance team reports directly to the chief financial officer (CFO). Valuation processes and fair value changes are discussed by the Board of Directors at least every year, in line with the Group’s reporting dates. 30 Ultimate controlling party As disclosed in the Directors’ Report the ultimate controlling party is considered to be the Gupta family by virtue of their majority shareholding in the Group. 84 Corporate Directory Nominated Adviser and Broker Cenkos Securities Plc 6-7-8 Tokenhouse Yard London EC2R 7AS Financial PR Tavistock Communications 18 St. Swithin's Lane EC4N 8AD Administrators and Company Secretary FIM Capital Limited 55 Athol Street Douglas Isle of Man IM1 1LA Auditors BDO LLP Arcadia House Maritime Walk Ocean Village Southampton SO143TL Registrars Link Market Services (Isle of Man) Limited Clinch's House Lord Street Douglas Isle of Man IM99 1R 85 Definitions & Glossary Act: Isle of Man Companies Act 2006 Adjusted EBITDA: is a measure of a business’ cash generation from operations before depreciation, interest and exceptional and non-standard or non- operational charges, e.g. share based compensation, etc. GCPP: Group Captive Power Plant GDP: Gross Domestic Product GHG: Green House Gas Government or GOI: Government of India GP: Gross Profit Great Britain Pound Sterling or £/pence: Pounds sterling or pence, the lawful currency of the UK AGM: Annual General Meeting GRI: Global Reporting Initiative AIM: Alternative Investment Market of the London Stock Exchange APC: Auxiliary Power Consumption BG: Bank Guarantee Board: Board of Directors of OPG Power Ventures Plc bps: Basis points BRICS: Brazil, Russia, India, China and South Africa CAD: Current Account Deficit CAGR: Compound Average Growth Rate Captive power users: Captive shareholders of OPG Power Generation Private Limited CCR: Coal Combustion Residue CEA: Central Electricity Authority CFO: Chief Financial Officer CO: Carbon Monoxide COO: Chief Operating Officer Group Captive: Group Captive power plant as defined under Electricity Act 2003, India Group or OPG: the Company and its subsidiaries GSDP: Gross State Domestic Product GW: Gigawatt is 1,000 megawatts HIRA: Hazard Identification and Risk Assessment HSE: Health, Safety and Environment IAS: International Accounting Standards IEA: International Energy Agency IFRS: International Financial Reporting Standards as issued by the International Accounting Standards Board Indian Companies Act: the Companies Act, 1956 and amendments thereto INR or `: Indian Rupee, the lawful currency of the Republic of India IPDS: Integrated Power Development Scheme ISAs (UK): International Standards on Auditing (UK) Company or OPG or OPGPV or parent: OPG Power Ventures Plc JV: Joint Venture CY: Calendar Year DDUGJY: Deen Dayal Upadhyay Gram Jyoti Yojana scheme Discom: Distribution Company (of the State Electricity Utility) EHS: Environment, Health and Safety Electricity Act: Indian Electricity Act 2003 as amended EPS: Earnings per share ESOP: Employee Stock Options Plan FRC: Financial Reporting Council FTSE: Financial Times Stock Exchange ExCo: Executive Committee FDI: Foreign Direct Investment FVPL: Fair Value through Profit or Loss FY: Financial year from 1 April to 31 March kWh: Kilowatt hour is one unit of electricity LC: Letter of Credits LOI: Letter of Intent LSE: London Stock Exchange plc LTIP: Long Term Incentive Plan LTOA: Long Term Open Access LTVT: Long Term Variable Tariff MAR: Market Abuse Regime regulation MAT: Minimum Alternative Tax MoU: Memorandum of Understanding MSME: Micro, Small and Medium Enterprises mt: Million tonnes MW: Megawatt is 1,000 kilowatts MWh: Megawatt hour NCDs: Non-convertible debentures 86 Net Debt / Net Borrowings: Total borrowings minus cash & current & non-current investments in mutual funds NITI Aayog: National Institution for Transforming India Nox: Nitrogen Oxides O&M: Operating and Management PAT: Profit After Tax PBT: Profit Before Tax PLF: Plant Load Factor PPA: Power Purchase Agreement PSA: Power Supply Agreement PTW: “Permit- To-Work” system QCA: Quoted Companies Alliance RES: Renewable Energy Source RBI: Reserve Bank of India ROE: Return on Equity RST: Reverse Stress Test Rupees/INR or Rs: Indian Rupee, the lawful currency of India SASB: Sustainability Accounting Standards Board SAUBHAGYA: The Pradhan Mantri Sahaj Bijli Har Ghar Yojana scheme SEB: State Electricity Board SEBI: Securities and Exchange Board of India Sox: Sulphur Oxides SPM: Suspended Particulate Matter SPV: Special Purpose Vehicle State: State of India STP: Sewage Treatment Plant TANGEDCO: Tamil Nadu Generation and Distribution Corporation Limited The Code: Quoted Companies Alliance’s code of corporate governance TRIR: Total Recordable Incident Report UDAY: Ujwal DISCOM Assurance Yojana, the financial turnaround and revival package for DISCOMs initiated by the Government of India UN SDGs: the United Nations Sustainable Development Goals UK/United Kingdom: United Kingdom of Great Britain and Northern Ireland US$/USD or $: US Dollars, the lawful currency of the US UT or UTs: Union Territory or Union Territories of India WPI: Wholesale Price Index 87 

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