Exhibit 99.1

Grupo Guascor, S.L. and
Subsidiaries

Audit Report,
Consolidated Annual Accounts as at 31 December 2010 and
Directors’ Report for 2010

Report of Independent Registered Public Accounting Firm

To the shareholders of Grupo Guascor, S.L.:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, shareholders’ equity and cash flows present fairly, in all material respects, the financial position of Grupo Guascor, S.L. and subsidiaries at December 31, 2010 and December 31, 2009, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in Spain. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers Auditores, S.L.
Vitoria, España

June 30, 2011

Grupo Guascor, S.L.
and subsidiaries

Consolidated annual accounts
31 December 2010

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

CONTENTS OF THE CONSOLIDATED ANNUAL ACCOUNTS

CONSOLIDATED BALANCE SHEETS AT 31 DECEMBER 2010 AND 2009 (Thousand euro)

		Note		2010				2009
NON-CURRENT ASSETS					213,394				222,761
Intangible assets		5			36,684				37,247
Property, plant and equipment		6			122,153				128,908
Land and buildings					31,345				33,265
Other installations, machinery, tooling, furnishings and other fixed assets					88,759				94,235
Fixed assets in course of construction and advance payments					2,049				1,408
Long-term investments in Group companies and associates					5,501				6,160
Investments carried under the equity method		7			2,809				3,299
Equity instruments		8			602				405
Loans to companies		8			2,090				2,456
Long-term investments		8			11,928				10,753
Equity instruments					137				286
Long-term loans to companies					6,948				6,312
Other financial assets					4,843				4,155
Deferred tax assets		14			37,128				39,693
CURRENT ASSETS					204,503				161,339
Inventories		9			56,212				54,874
Goods purchased for resale					2,413				2,198
Raw materials and other supplies					25,295				16,129
Work in progress and semi-finished goods					19,627				22,137
Finished products					7,759				13,098
Prepayments to suppliers					1,118				1,313
Trade and other accounts receivable		8			103,607				67,819
Trade receivables for sales and services rendered					70,364				45,465
Trade receivables, Group companies and associates					3,202				3,197
Other receivables					30,041				19,157
Short-term financial assets		8			11,503				19,276
Short-term loans to companies					1,502				1,578
Other financial assets					10,001				17,698
Accruals and deferred income					808				642
Cash and cash equivalents					32,373				18,728
Cash at bank and in hand					32,373				17,024
Cash equivalents					—				1,704
TOTAL ASSETS					417,897				384,100

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS AT 31 DECEMBER 2010 AND 2009 (Thousand euro)

		Note		2010				2009
EQUITY		10			88,865				64,721
Shareholders’ funds					70,024				51,788
Capital					23,441				23,441
Authorised capital					23,441				23,442
Share premium					32,699				32,699
Reserves and prior-year results					4,052				1,473
Legal reserve					2,713				2,455
Voluntary reserves					1,339				(982	)
Reserves in consolidated companies					(3,231	)			(14,835	)
Reserves in equity method companies									—
Results for the year attributable to the Parent Company					13,063				9,010
Consolidated profit/(loss)					14,633				10,999
Gains and losses minority shareholders					(1,570	)			(1,989	)
Measurement adjustments					28				(5,624	)
Translation differences in consolidated companies					28				(5,624	)
Grants, donations and bequests received					12,468				9,610
Minority interests					6,345				8,947
NON-CURRENT LIABILITIES					155,506				171,844
Long-term provisions		11			894				5,441
Other provisions					894				5,441
Long-term payables		12			138,021				145,820
Bank borrowings					36,829				42,009
Bank loans (Project Finance)					34,759				41,933
Payables, participating loans					15,739				13,700
Other payables					50,694				48,178
Long-term payables to Group companies and associates					7,343				7,191
Amounts payable to Group companies					7,343				7,191
Deferred tax liabilities		14			9,248				13,392
CURRENT LIABILITIES					173,526				147,535
Short-term provisions		11			9,231				18,326
Short-term payables		12			41,713				41,527
Bank borrowings					22,910				11,348
Bank loans (Project Finance)					13,052				20,746
Other financial liabilities					5,751				9,433
Trade and other payables		12			122,196				87,347
Trade payables					68,089				45,792
Advance payments from customers					29,962				24,776
Sundry payables					9,330				6,000
Personnel					3,705				2,866
Other amounts payable to the Public Administrations					11,110				7,913
Accruals and deferred income					386				335
TOTAL LIABILITIES AND EQUITY					417,897				384,100

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS FOR THE YEARS ENDED 31 December 2010 AND 2009 (Expressed in thousand euro)

		Note		2010				2009
CONTINUING OPERATIONS
Revenue		15			311,969				252,660
Changes in inventories of finished products and work in progress		15			(7,849	)			(2,656	)
Own work capitalized					9,376				6,879
Raw materials and consumables		15			(162,130	)			(126,729	)
Consumption of raw materials and other consumable materials					(144,263	)			(115,260	)
Subcontracted work					(18,824	)			(8,584	)
Impairment of goods for resale, raw materials and other					957				(2,885	)
Other operating income					1,911				5,565
Sundry and other income					840				3,116
Operating grants released to income during the year					1,071				2,449
Personnel expenses		15			(49,202	)			(44,896	)
Wages, salaries and similar remuneration					(39,845	)			(36,200	)
Staff welfare expenses					(9,357	)			(8,696	)
Other operating expenses					(59,234	)			(54,051	)
External services					(39,373	)			(26,340	)
Taxes					(349	)			(1,203	)
Other expenses					(18,930	)			(22,563	)
Losses, impairment and changes in trade provisions					(582	)			(3,945	)
Fixed asset depreciation		5-6			(20,982	)			(16,153	)
Impairment and profit/ loss on fixed asset disposals		5			195				(2	)
Excess provisions					3,953				96
Release of non-financial fixed asset grants and other					9,931				5,715
OPERATING RESULTS					37,938				26,428
Financial income					1,563				3,271
Shares in equity instruments
From third parties					33				77
Marketable securities and other financial instruments					1,530				3,194
From third parties					1,530				3,194
Financial expenses					(14,864	)			(17,848	)
Payables to third parties					(14,864	)			(17,848	)
Gains/(losses) on exchange					676				2,008
Change in fair value of financial instruments					(824	)			(392	)
Impairment and results on disposal of financial instruments					(691	)			40
Impairment and losses					(691	)			40
NET FINANCIAL INCOME/(EXPENSE)		15			(14,140	)			(12,921	)
Share in profits (losses) — equity method companies		7			18				—
PROFIT/(LOSS) BEFORE TAXES					23,816				13,507
Corporate income tax		14			(6,276	)			(2,508	)
PROFIT FOR YEAR FROM CONTINUING OPERATIONS					17,540				10,999
PROFIT/LOSS FOR YEAR FROM DISCONTINUED OPERATIONS					(2,907	)			—
CONSOLIDATED PROFIT/(LOSS) FOR THE YEAR					14,633				10,999
Profit/(loss) attributed to parent company					13,063				9,010
Profit/(loss) attributed to minority interests		10			1,570				1,989

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED 31 December 2010 AND 2009

A) STATEMENT OF RECOGNISED INCOME AND EXPENSE (thousand euro)

		31/12/2010				31/12/2009
Consolidated profit for the year			14,633				10,999
- Grants, donations and bequests received			12,960				7,050
- Translation differences			6,154				7,462
- Tax impact			(1,939	)			—
Total income and expense attributed directly to consolidated equity			17,175				14,512
- Translation differences			270				—
- Grants, donations and bequests received			(9,931	)			(4,866	)
- Tax impact			1,794				—
Total transfers to the consolidated income statement			(7,867	)			(4,866	)
TOTAL RECOGNISED CONSOLIDATED INCOME AND EXPENSE			23,941				20,645

B) CONSOLIDATED STATEMENT OF TOTAL CHANGES IN EQUITY (Thousand euro)

														Results for the
														year attributable
		Authorised				Share								to the parent				Translation								Minority
		capital				premium				Reserves				company				differences				Grants				interests				Total
Opening balance 2009			23,005				25,135				(22,754	)			9,388				(13,086	)			7,426				5,923				35,037
Total recognised revenues and expenses			—				—				—				9,010				7,462				2,184				1,989				20,645
Distribution of 2008 results			—				—				9,388				(9,388	)			—				—				—				—
Share capital increase			436				7,564																								8,000
Other changes in equity											4				—				—				—				1,035				1,039
Closing balance 2009			23,441				32,699				(13,362	)			9,010				(5,624	)			9,610				8,947				64,721
Adaptation to new regulations for preparation of consolidated accounts (Note 2.b)			—				—				5,078				—				—				—				(5,078	)			—
			23,441				32,699				(8,284	)			9,010				(5,624	)			9,610				3,869				64,721
Total recognised revenues and expenses			—				—				—				13,063				6,424				2,884				1,570				23,941
Distribution of 2009 results			—				—				9,010				(9,010	)			—				—				—				—
Other changes in equity											95								(772	)			(26	)			906				203
Closing balance 2010			23,441				32,699				821				13,063				28				12,468				6,345				88,865

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

CONSOLIDATED CASH FLOW STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2010 AND 2009 (thousand euro)

		Notes		31/12/2010				31/12/2009
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(loss) for the year before tax					20,909				13,507
Adjustments to results					32,783				37,732
Changes in working capital					80				(10,122	)
Other cash flows from operating activities					(22,207	)			(9,734	)
Cash flows from operating activities		17			31,564				31,383
CASH FLOWS FROM INVESTING ACTIVITIES
Amounts paid on investments					(20,587	)			(13,637	)
Collections on divestments					2,955				1,028
Cash flows from investing activities		17			(17,632	)			(12.609	)
CASH FLOWS FROM FINANCING ACTIVITIES
Collections and payments equity instruments					8,490				13,839
Collections and payments financial liability instruments					(8,777	)			(36,247	)
Cash flows from financing activities		17			(287	)			(22,408	)
NET INCREASE/DECREASE IN CASH OR CASH EQUIVALENTS					13,645				(3,634	)
Cash and cash equivalents at beginning of the year					18,728				22,362
Cash and cash equivalents at year end					32,373				18,728

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

1. General information

i) Activity

Grupo Guascor was set up in 1966 in order to manufacture industrial engines and marine propulsion engines. Its registered office for mercantile and tax purposes is located in Alava.

Since 1994 Grupo Guascor has carried out other complementary activities such as the design, construction and exploitation of energy generation and cogeneration plants and mini-hydroelectric plants, and the development and exploitation of wind farms and biomass, used oil and landfill energy recovery, farming purine processing, used tyres facilities etc.

During 2009 Grupo Guascor has had a large business portfolio, mainly made up of:

•

Photovoltaic solar energy,

•

Wind energy,

•

Industrial and marine engine manufacture,

•

Design and construction (on a turn-key basis) of industrial plants,

•

Services (subcontracting of operations and maintenance etc),

•

Energy generation (principally energy generation in isolated zones in Brazil and animal waste treatment in Spain).

For management purposes, these lines of business are grouped into the following segments:

•

Power, mainly covering industrial and marine engine production,

•

Renewable energies. This mainly includes photovoltaic solar energy, wind power and other energy facilities.

•

Services

ii) Markets

The activities described above are carried out in both Spain and abroad since the Guascor Group’s approach is clearly global. They are normally performed through the acquisition of a holding in companies giving rise to different controlling interests that enable the corporate objects of the parent company, Grupo Guascor S.L., to be carried out, through such activities.

The photovoltaic facilities constructed and occasionally exploited by the Group are governed by Royal Decree 661/2007 of 5 May 2007, for facilities prior to 29 September 2008, and by Royal Decree 1578/2008, of 26 September 2008, for facilities after that date. Such legislation contains the applicable tariff framework.

At the 2010 and 2009 year end Grupo Guascor, S.L. is the parent of a group (“the Group”), made up of the subsidiaries and associates detailed in Appendices I and II, respectively.

There have been no significant changes in the consolidation scope in 2010 and 2009.

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

For the purposes of preparing the consolidated annual accounts, a group is understood to exist when the parent company has one or more subsidiaries, i.e. companies controlled directly or indirectly. The principles applied in the preparation of the Group’s consolidated annual accounts, together with the consolidation scope, are set out in Note 3.1.

2. Basis of presentation

a) Fair presentation

The consolidated annual accounts have been prepared on the basis of the accounting records of Grupo Guascor, S.L. and consolidated companies and include all adjustments and reclassifications required for consistency with the Group’s accounting policies in terms of both timing and values.

These consolidated accounts are presented in accordance with current mercantile legislation contained in the Code of Commerce, as amended under Law 16/2007 on the reform and adaptation of accounting legislation, to bring it into line with international regulations and EU legislation; Royal Decree 1514/2007 which approved the new Spanish Chart of Accounts, and Royal Decree 1159/2010 which approved the rules for drawing up consolidated annual accounts, when this does not conflict with the amended mercantile regulations mentioned above, in order to present fairly the Group’s financial situation and results, and the veracity of the cash flows included in the cash flow statement.

b) Changes in accounting policies under Royal Decree 1159/2010

Royal Decree 1159/2010, which approved the regulations governing the preparation of consolidated annual accounts and amended the Chart of Accounts approved under Royal Decree 1514/2007, and the Chart of Accounts for small and medium sized enterprises approved by Royal Decree 1515/2007, were published in the Official State Gazette on 24 September 2010.

This Royal Decree is applicable to consolidated accounts for financial years commencing as from 1 January 2010 (Transitional Provision Three).

Main changes in regulations for preparing consolidated annual accounts

The main novelties in these regulations that affect the Group are as follows:

•

Although the calculations concerning the consolidation of Group companies in years prior to 1 January 2010 have been maintained in these consolidated annual accounts, the parent company reserves include €5,078 thousand to recognise the negative balance in minority shareholders, as provided in Transitional Provision 1.3 of Royal Decree 1159/2010.

•

The concept of control is strengthened through its definition as the power to direct an entity’s financial and operating policies in order to obtain profits from its activities, over and above ownership or interest criteria. In line with this new concept, no new companies have been included in the consolidation scope.

•

The new concept for Group implies that the parent company is the one which “may exercise control” while the previous wording was “holding control”. This has not led to any changes in the consolidation scope.

•

The takeover of the investee entails a qualitative change in the Group’s net assets which requires the utilisation of the rules applicable to business swaps and therefore the obligation to recognise the relevant income in the income statement. In this respect, the previous holding in the parent company must be measured at fair value and therefore an impact on equity arises in the elimination investment — equity. No impact on the Group.

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

•

Likewise, if a holding is maintained after the loss of control over a subsidiary, the swap of the group of assets and liabilities which are derecognised in exchange for the consideration received, including the holding that is kept, requires the latter to be accounted for at fair value, and the pertinent income to be recognised. No impact on the Group.

•

Reverse mergers, where a parent is acquired by a subsidiary, are also regulated. No reverse mergers have taken place during the year and therefore this item has no effect on the Group.

•

The rules provide for a euro conversion system which is similar to the end-of-year exchange rate method regulated under the 1991 legislation. The main novelty is the consideration of goodwill as an asset of the subsidiary, meaning that it should not be measured at historical exchange rates, and the requirement that the translation difference accumulated in equity be reclassified to the income statement when the investment is disposed by other means abroad, i.e. when the company ceases to be exposed to exchange rate risk, in particular when its investment is recovered in the form of dividends. Since there is no goodwill denominated in foreign currency, there is no impact on the Group.

Pursuant to Transitional Provision 2 of Royal Decree 1159/2010, the parent company has chosen to consider these 2010 annual accounts as initial accounts for the purposes of comparability and consistency. Therefore, the comparative figures for the previous year have not been brought into line with the new standards. However, since the changes made under said Royal Decree are not applicable to the Group, their inclusion does not affect the comparability or consistency of these accounts.

c) Critical valuation issues and estimates of uncertainty

The preparation of the financial statements requires the use by the Group of certain estimates and judgements in relation to the future and that are assessed constantly and are based on historical experience and other factors, including expectations of future events considered reasonable under the circumstances.

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

Revenue recognition

The Group uses the percentage of completion method to account for some of the turn-key projects that it carries on. Under this method, the cost of the services performed at each balance sheet date must be estimated as a proportion of total costs to be incurred in each project and this percentage is used to recognise revenues at the balance sheet date for this type of projects.

Useful lives of property, plant and equipment

The Group’s management determines estimated useful lives and related depreciation charges for its plant and equipment. This estimate is based on the forecast life cycles of the products manufactured by the Group. This could change significantly as a result of technical innovations and competitor actions in response to the sector’s future development. Management will increase the depreciation charge where useful lives are shorter than previously estimated, and write off or write down technically obsolete or non-strategic assets that have been abandoned or sold.

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

Fair value of financial instruments

The fair value of financial instruments that are not traded on an active market is determined using valuation techniques. Group management uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at each balance sheet date.

Guarantees

As is standard practice in the sector, the Group offers customers warranties in relation to the completion of turn-key projects and the products it sells. Group management uses its judgement to determine the amount of the provisions for possible warranty claims. Such provisions are estimated on the basis of technical forecasts and historical data concerning estimated defect rates and repair costs and are reviewed and adjusted regularly.

d) Currency of presentation

The annual accounts have been expressed in thousand euro.

3. Accounting policies

3.1. Consolidation principles

a) Subsidiaries

Subsidiaries are all companies, including special purpose entities, which are or may be directly or indirectly controlled by the Group. Control is understood as the power to direct a business’s financial and operational policy to make a profit from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The acquisition of subsidiaries is accounted for using the acquisition method. Acquisition cost is the fair value of the asset delivered, the equity instruments issued and the liabilities incurred or assumed at the date of exchange, the fair value of any additional consideration that depends on future events (provided they are probable and may be reliably measured) plus the costs directly attributable to the acquisition.

The assets, liabilities, income and expenses of subsidiaries are included in the consolidated annual accounts using the full consolidation method.

	1.		Carrying values of the interests in subsidiaries are offset, on the acquisition date, against the proportion that they represent in relation to the fair value of the assets and liabilities acquired.
	2.		The difference between the carrying value of the interest and the value attributable to the interest of the fair value of the assets and liabilities acquired is recognised, if positive, as goodwill on consolidation. In the exceptional event that said difference is negative, it is recognised as income for the year in the consolidated income statement.
	3.		Group companies’ assets and liabilities are included in the consolidated balance sheet using the same valuations as those at which they were carried in the respective balance sheets of those companies, except for assets acquired and liabilities assumed as at the acquisition date, which are included in the consolidated balance sheet based on their fair value at the acquisition date, after taking into account the depreciation and impairment arising since said date.

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

	4.		Subsidiaries’ income and expenses are recorded in the consolidated annual accounts.
	5.		Accounts receivable and payable between consolidated companies, income and expenses relating to transactions between them and the profits generated by said transactions which are not realised vis-à-vis third parties, are eliminated on consolidation.

When a controlling interest is acquired in stages, the goodwill (or negative difference on consolidation) is determined for each individual transaction as the difference between the carrying value of the interest and the net amount of the fair value of the identifiable assets and liabilities existing at said date attributable to the interest. Identifiable assets and liabilities acquired are accounted for based on the fair value at the time of the acquisition of the controlling interest. Minority interests are carried based on the relevant interest in capital.

The difference between the net attributable amount of the fair value of the assets and liabilities acquired and existing at the date of the acquisition of the controlling interest and the net figure corresponding to each date on which the interest was acquired, gives rise to an adjustment in the reserves of the consolidated company, which figures net of the relevant tax effect.

Schedule I provides a breakdown of the identifying details of the subsidiaries included in the scope of consolidation by means of the full consolidation method.

b) Minority interests and transactions with minority shareholders

Additional acquisitions of minority shareholders’ interests constitute a transaction involving treasury shares, which entails reducing Minority interests by the amount by which their interest is reduced in the consolidated balance sheet. Shareholders’ funds are adjusted by the difference between the value of the consideration delivered and the amount by which minority interests have been adjusted. There is no change in goodwill on consolidation and assets or liabilities on the consolidated balance sheet.

Further investment, that does not increase the interest, does not result in additional differences with respect to those on first consolidation initially determined.

In the event of a decrease in the percentage interest held in the capital of the subsidiaries without a loss of control, the heading minority interests is increased by the amount by which the minority shareholder interest is increased in the consolidated balance sheet and reserves are adjusted for the difference between the consideration received and the amount of the adjustment to minority interests. There are no gains or losses. The amount of goodwill on consolidation recognised does not change and nor does the amount of assets or liabilities on the consolidated balance sheet.

Indications of goodwill impairment are deemed to exist when the transaction entails a significant fall in reserves with respect to the amount of the transaction.

If the decrease in the percentage interest entails the loss of control, results are reflected for the difference between the value of the consideration received and the carrying value in the consolidated accounts attributable to the interest sold. Similarly, the total amount of income and expenses recognised directly in the subsidiary’s equity is transferred to profit and loss as part of the results on the disposal of the interests.

If, after the loss of control, the company becomes a jointly-controlled company or associate, it is initially consolidated under the equity method on the basis of the consolidated assets and liabilities attributable to that interest while the equity items attributable to that interest are maintained. If the interest held after the transaction does not qualify as a jointly-controlled company or associate, its cost is the consolidated carrying value on the date on which it no longer forms part of the consolidation scope.

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

When the investment is reduced without this causing a decrease in the percentage interest, no changes are made to consolidation goodwill or negative consolidation differences.

c) Jointly-controlled entities

The Group participates in joint ventures through the formation of an independent legal entity or jointly controlled companies.

d) Jointly-controlled companies

Jointly-controlled companies are those that are managed by the Group jointly with other non-Group companies. Jointly-controlled companies are included in the consolidated accounts using the equity method as detailed in section e) below. This method is applied to all jointly-controlled companies.

Schedule III to these notes includes a breakdown of the identification details of the jointly- controlled companies in which the Group participates and that have been proportionately consolidated.

e) Associates

Associates are all those entities over which some of the companies included in the consolidation exercise significant influence. Significant influence is understood to exist when the Group has an interest in the company and is able to take part in its financial and operational policy decisions without having control.

The Group also participates in some jointly-controlled companies that are managed by the Group jointly with other non-Group companies. Jointly-controlled companies are carried under the equity method in the consolidated accounts.

When the equity method is applied for the first time, investments in associates are carried at the amount relating to the percentage that such interest represents at the time of the investment, with respect to the fair value of the assets acquired and liabilities assumed. If the difference between the cost of the interest and this value is positive, it is included in the carrying value of the investment. If negative, the difference is taken directly to the income statement.

Changes in the year in progress in the company’s equity included in the consolidated annual accounts using the equity method, following the elimination of the proportion deriving from the results generated on transactions between that company and the company that holds the interest or any group company, not realised with respect to third parties, increase or decrease, as appropriate, the carrying value of that interest in the pertinent proportion, taking into account amortisation/ depreciation since the method was first applied.

Profits distributed by the company included in the consolidated annual accounts using the equity method reduce the carrying value of the interest.

The accounts of associates are standardised from a value and timing viewpoint in the same way as for subsidiaries.

Schedule II provides the identifying details of the associates included in the scope of consolidation using the equity method.

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

3.2. Intangible assets

a) Research and development expenses

Research expenditure is recognised as an expense when incurred. Development costs incurred in projects are recognised as intangible assets when it is probable that the project will be a success considering its technological and commercial feasibility, there are sufficient technical and financial resources to complete it, the costs incurred may be measured reliably and a profit is likely to be generated.

Other development expenditure is recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Development costs with a finite useful life that have been capitalised are amortised on a straight-line basis over the period of the project’s expected benefit, not exceeding five years.

If an asset’s carrying amount is greater than its estimated recoverable amount, its carrying amount is written down immediately to its recoverable amount (Note 3.5).

If the circumstances favouring the project that permitted the capitalisation of the development costs change, the unamortised portion is expensed in the year of change.

b) Concessions, patents, licenses, trademarks and similar items

Patent and concessions are carried under assets at cost less accumulated amortisation and the accumulated amount of recognised value adjustments for impairment. They are amortised on a straight-line basis over their estimated duration.

c) Computer applications

Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives.

Expenses associated with software maintenance are recognised when incurred. Costs that are directly associated with the production of identifiable and unique software products controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Direct costs include the software development employee costs and an appropriate portion of relevant overhead.

Software development costs recognised as assets are amortised over the software’s estimated useful life (which does not exceed 5 years).

d) Emission rights

Greenhouse gas emission rights transferred to the company under the National Assignment Plan or acquired by the company, are stated at acquisition price or production cost. When dealing with emission rights acquired gratuitously, the present use value at the time of acquisition is considered the acquisition price.

Emission rights are not amortised. The necessary provisions are recorded in order to attribute to them the corresponding lower market value at the end of each year, provided that their carrying value is not recoverable through the generation of sufficient revenues to cover all costs and expenses. Such provisions are cancelled as and when the reasons for establishing them disappear.

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

Expenses relating to greenhouse emission rights accrue as and when such gases are emitted and are reflected in operating expenses. The relevant provision for liabilities and charges is established at the year end since the exact amount involved is not known at that date. This provision is reflected until the obligation is settled through the delivery of the relevant emission rights.

The amount of the aforementioned expenses and the related provision is determined taking into account that the obligation will be settled:

•

Firstly, through the emission rights transferred to the company under the National Assignment Plan. The expense relating to that obligation will be quantified on the basis of the carrying value of the emission rights transferred under the National Assignment Plan.

•

Other emission rights that figure on the company’s balance sheet are carried under the average price method.

•

In the event that gas emissions entail the need to acquire emission rights, the expense pertaining to the shortfall in rights should also be taken into account, quantified on the basis of the best estimate possible of the necessary amount to acquire such shortfall.

Non-repayable grants associated with emission rights are reflected as “Grants, donations and bequests” and are released to income as and when the expenses deriving from the gas emissions related to the subsidized emission rights are taken to results. In the event of the impairment of emission rights, the relevant grant is taken to results in proportion to the same.

3.3. Property, plant and equipment

Property, plant and equipment are stated at acquisition price or production cost less accumulated depreciation and accumulated impairment losses recognised.

Own work capitalised is measured by adding to the price of the consumable materials used the direct or indirect costs attributable to the assets.

Costs incurred to extend, modernise or improve property, plant and equipment are only recorded as an increase in the value of the asset when the capacity, productivity or useful life of the asset is extended and it is possible to ascertain or estimate the carrying amount of the assets that have been replaced in inventories.

The cost of major repairs is capitalised and depreciated over the estimated useful life of the asset, while recurring maintenance costs are charged to the income statement in the year in which they are incurred.

Depreciation of property, plant and equipment, with the exception of land, which is not depreciated, is calculated systematically using the straight-line method over the assets’ estimated useful lives based on the actual decline in value brought about by operation, use and possession. The depreciation rates applied are as follows:

		Estimated useful life, years
Buildings		25-50
Plant		10-15
Machinery		10-15
Furnishings		5-10
Tooling		5-10
Vehicles		5-10
Computer equipment		6-7

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

The residual values and useful lives of assets are reviewed and adjusted, if necessary, at each balance sheet date.

If an asset’s carrying amount is greater than its estimated recoverable amount, its carrying amount is written down immediately to its recoverable amount (Note 3.5).

Gains and losses on the sale of tangible fixed assets are calculated by comparing the revenue obtained with the carrying value and are included in the income statement.

3.4. Borrowing costs

Interest costs directly attributable to the acquisition or construction of fixed assets that require more than one year before they may be brought into use are included in the cost of the assets until they are ready for use.

3.5. Losses due to impairment of non-financial assets

Assets that have an indefinite useful life are not subject to depreciation and are tested annually for impairment. The Group has no assets with an indefinite useful life except for consolidation goodwill. Assets subject to amortisation are tested for impairment whenever events or changes in circumstances indicate that carrying value may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount, understood as the asset’s fair value less the higher of costs to sell and value in use. For the purposes of assessing impairment losses, assets are grouped together at the lowest level for which there are separately identifiable cash flows (Cash Generating Units). Non-financial assets, other than goodwill, which are impaired, are reviewed at the balance sheet date for reversal of the loss.

3.6. Financial assets

a) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market. They are included in current assets except for maturities of more than 12 months of the balance sheet date that are classified as non-current assets. Loans and receivables are included in “Loans to companies” and “Trade and other receivables” in the balance sheet.

Financial assets are initially carried at fair value, including directly attributable transaction costs, and are subsequently measured at amortised cost. Accrued interest is recognised at the effective interest rate, which is the discount rate that brings the instrument’s carrying amount into line with all estimated cash flows to maturity. Trade receivables falling due in less than one year are carried at their face value at both initial recognition and subsequent measurement, provided that the effect of not discounting flows is not significant.

At the year end, at least, the necessary value adjustments are made to account for impairment when there is objective evidence that all receivables will not be collected.

The amount of the impairment loss is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate prevailing at the date of initial recognition. Value adjustments, and reversals, where applicable, are recognised in the income statement.

Financial assets are written off when substantially all the risks and rewards attaching to ownership of the asset are transferred. Specifically, for accounts receivable, this situation is generally understood to arise if the insolvency and default risks have been transferred.

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

b) Available-for-sale financial assets

This category includes debt securities and equity instruments that are not classified in any of the above categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

They are measured at fair value and any changes are recorded in equity until the asset is disposed of or is impaired, at which time accumulated gains and losses are taken to the income statement provided that such fair value can be determined. Otherwise, they are reflected at cost less impairment. In the event that fair value cannot be determined, they are carried at cost.

For available-for-sale financial assets, value adjustments are made if there is objective evidence of impairment as a result of a reduction or delay in estimated future cash flows in the case of debt instruments acquired or owing to the non-recoverability of the asset’s carrying value in the case of investments in equity instruments. The value adjustment is the difference between cost and amortised cost less, if appropriate, any value adjustment previously recognised in the income statement and fair value at the time of measurement. For equity instruments measured at cost because fair value cannot be determined, the value adjustment is determined in the same way as investments in the equity of group companies, jointly-controlled entities and associates.

If there is objective evidence of impairment, the Group recognises the cumulative loss previously recognised in equity in respect of the decline in fair value in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.

The fair values of quoted investments are based on prevailing bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, references to other instruments that are substantially the same, discounted cash flow analysis and option pricing models, making maximum use of observable market data and relying as little as possible on the Company’s subjective considerations.

Financial assets are written off when substantially all the risks and rewards attaching to ownership of the asset are transferred.

3.7. Goodwill on consolidation

Goodwill represents the difference, at the acquisition date between the cost of the acquisition of the shareholding in Group and jointly-controlled companies and the fair value of the net identifiable assets acquired on the transaction. Exceptionally if the value of the identifiable assets acquired less the liabilities assumed in the terms contained above is higher than the cost of the business combination, the excess is accounted for in the income statement as revenue.

When initially recognized, goodwill is stated as mentioned in Note 3.1. (a).

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

Goodwill is not amortized and is tested annually for impairment. After its initial recognition, it is carried at cost less accumulated impairment losses.

Measurement adjustments for goodwill impairment are recorded as an expense on the income statement and are not reversed in subsequent years.

Goodwill is allocated to cash-generating units (CGUs) for the purpose of impairment testing. It is allocated to those CGUs that are expected to benefit from the business combination that generated such goodwill.

3.8. Inventories

Inventories are stated at the lower of cost and net realisable value. When the net realisable value of inventories is less than cost, the appropriate value adjustments are made and recognised as an expense in the income statement. If the circumstances that caused the value adjustment cease to exist, the adjustment is reversed and income is recognised in the income statement.

Raw material inventories are stated using FIFO. The cost of finished products and work in progress comprises raw materials, direct labour, other direct costs and general production overheads (based on normal operating capacity). The net realisable value is the estimated selling price in the ordinary course of business, less estimated costs necessary to complete the sale and, in the case of raw materials and work in progress, the estimated costs necessary to complete their manufacture.

In the case of inventories that require a period exceeding one year to be ready to be sold, financial expense is included in the cost in the same terms established for assets.

3.9. Equity

Share capital consists of ordinary shares.

The costs of issuing new shares or options are recognised directly in equity as a reduction in reserves.

3.10. Financial liabilities

Creditors and payables

This includes trade and non-trade payables. Borrowings are classed as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months as from the balance sheet date.

Payables are initially recognised at fair value, adjusted for directly attributable transaction costs, and subsequently measured at amortised cost using the effective interest method. The effective interest rate is the discount rate that brings the instrument’s carrying amount into line with the expected future flow of payments to the maturity date of the liability.

Nonetheless, trade payables falling due in less than one year without a contractual interest rate are carried at their face value at both initial recognition and subsequent measurement, provided that the effect of not discounting flows is not significant.

In the event of the renegotiation of existing debts, the financial liability is not deemed to change significantly when the lender of the new loan is the same as the initial lender and the present value of cash flows, including net fees, is not more than 10% higher or lower than the present value of cash flows payable on the original liability, calculated using the same method.

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

3.11. Grants received

Repayable grants are recognised under liabilities until the conditions are fulfilled for the grants to be treated as non-repayable. Non-repayable grants are recognised directly in equity and are released to income on a systematic and rational basis in line with grant costs. Non-repayable grants received from shareholders are recognised directly in equity.

A grant is deemed to be non-repayable when it is awarded under a specific agreement, all stipulated grant conditions have been fulfilled and there are no reasonable doubts that it will be collected.

Monetary grants are carried at the fair value of the amount granted and non-monetary grants are carried at the fair value of the asset received, at the recognition date in both cases.

Non-repayable grants related to the acquisition of intangible assets, property, plant and equipment, and investment property are recognised as income for the period in proportion to the amortisation or depreciation charged on the relevant assets or, if applicable, upon their sale, value adjustment or write-off. Non-repayable grants related to specific costs are recognised in the income statement in the period in which the relevant costs accrue, and non-repayable grants awarded to offset an operating deficit are recognised in the year they are awarded, unless they are used to offset an operating deficit in future years, in which case they are recognised in those years.

3.12. Current and deferred taxes

Income tax expense (income) is that amount of income tax that accrues during the period. It includes both current and deferred tax expense (income).

Both current and deferred tax expense (income) is recognised in the income statement. However, the tax effect of items recorded directly in equity is recognised in equity.

Current tax assets and liabilities are carried at the amounts that are expected to be payable to or recoverable from the tax authorities, in accordance with prevailing legislation or regulations that have been approved and are pending publication at the year end.

Deferred income tax is calculated, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. However, if the deferred taxes arise from the initial recognition of a liability or an asset on a transaction other than a business combination that at the time of the transaction has no effect on the tax or accounting gain or loss, they are not recognised. The deferred tax is determined applying tax regulations and rates approved or about to be approved at the balance sheet date and which are expected to be applied when the corresponding deferred tax asset is realised or deferred tax liability is settled.

Deferred tax assets are recognised insofar as future tax profits will probably arise against which to offset the temporary differences.

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

Deferred taxes on temporary differences arising on investments in subsidiaries, associates and joint ventures are recognised, except where the Group is able to control the reversal date of the temporary differences and such differences are unlikely to reverse in the foreseeable future.

Grupo Guascor, S.L. pays tax under the tax consolidation regime with a tax group represented by the Company and made up of the companies indicated in Schedule I.

3.13. Employee benefits

Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either: terminating the employment of employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after balance sheet date are discounted to present value.

3.14. Provisions and contingent liabilities

Provisions for legal claims are recognised when the Group has a present legal or constructive obligation as a result of past events; it is likely that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Provisions are carried at the present value of forecast payments that are expected to be required to settle the obligation, using a rate before taxes that reflects the current market assessment of the time value of money and the specific risks of the obligation. Adjustments to the provision deriving from restatements are recognised as a financial expense as they accrue.

Provisions maturing in one year or less with no significant financial effect are not discounted.

When it is expected that a portion of the payment necessary to settle the provision will be reimbursed by a third party the reimbursement is recognised as an independent asset, provided that receipt of the reimbursement is practically certain.

A contingent liability is a potential obligation arising from past events, the materialization of which is dependent on the occurrence or non-occurrence of one or more future events beyond the Group’s control. These contingent liabilities are not recorded in the accounts but are described in the notes presenting the financial statements.

The Group grants customers warranties under the turn-key contracts for photovoltaic plants. The necessary provisions for the warranties granted are calculated based on theoretical forecasts and historical information of estimated defect rates and repair costs and are reviewed and adjusted on a regular basis.

3.15. Revenue recognition

Revenue is carried at the fair value of the consideration receivable and represents amounts receivable for goods delivered and services rendered in the ordinary course of the Group’s activities, less returns, discounts and value added tax.

The Group recognizes revenue when the amount may be reliably estimated, it is likely that the future economic benefits will flow to the Group and the specific conditions are fulfilled for each of the activities, as described below. A reliable calculation of the amount of revenue is not deemed possible until all sale-related contingencies have been resolved. The group bases its estimates on historical results, taking into account the type of customer, the type of transaction and the specific terms of each agreement.

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

a) Sales of solar parks

Revenues on turn-key projects for the construction of solar parks for non-Group third parties are recognised by applying the percentage of completion to the total forecast margin on the construction and sale of the solar park provided that at 31 December each year the following conditions are met:

•

there is a firm obligation for the purchaser prior to the commencement of the turn-key construction

•

total revenues to be received may be estimated with an acceptable level of assurance.

•

the costs to completion of the contract and level of completion to said date may be reliably estimated.

Where there is no firm obligation with a non-group third party purchaser or where the result of a construction contract cannot be reliably estimated, contract revenues are recognised only up to the limit of the construction contract costs considered recoverable. When it is probable that the contract costs will exceed total contract revenues, the expected loss is recognised immediately as an expense.

The percentage of completion is calculated on the basis of total estimated revenues under each contract and is determined taking into account the relationship between the costs incurred to date and total forecast project costs.

b) Sales of goods

The Group sells various items (engines, etc.). Such sales of goods are recognised when the entity sells the product to the customer, i.e. when the risks and rewards are transferred.

c) Interest income

Interest income is recognised using the effective interest method. When a receivable is impaired, the Group reduces the carrying amount to the recoverable amount and discounts the estimated future cash flows at the original effective interest rate of the instrument and continues to carry the discount as a decrease in interest income. Interest income on loans that have become impaired is recognised using the effective interest rate method.

d) Income from dividends

Dividend income is recognised as income in the income statement at the time the entitlement to receive the dividends is established. Notwithstanding the above, if the dividends distributed originate from profits generated prior to the acquisition date they are not recognised as income but rather as lowering the carrying value of the investment.

3.16. Leases

a) When a Group company is the lessee — finance lease

The Group leases certain property, plant and equipment. Leases of property, plant and equipment where the Group retains substantially all the risks and rewards of ownership are classed as finance leases. Finance leases are capitalised at inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. Present value is calculated using the interest rate implicit in the lease agreement and, if this rate cannot be determined, the interest rate applied by the Group in similar transactions.

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

Each lease payment is distributed between the liability and financial charges. The total financial charge is apportioned over the lease term and taken to the income statement in the period of accrual, using the effective interest rate method. Contingent instalments are expensed in the year they are incurred. Lease obligations, net of financial charges, are recognised in “Finance lease liabilities”. Property, plant and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and the lease term.

b) When a Group company is the lessee — operating lease

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Operating lease payments (net of any incentive received by the lessor) are charged against the income statement for the year in which they accrue on a straight- line basis over the lease period.

3.17. Foreign currency transactions

a) Functional and presentation currency

The financial statements are presented in thousand euro, which is the Group’s functional and presentation currency.

b) Transactions and balances

Foreign currency transactions are translated to the functional currency using the exchange rates prevailing at the transaction dates. Foreign currency gains and losses resulting from the settlement of transactions and translation at the year- end exchange rates of monetary assets and liabilities denominated in foreign currency, are recognised in the income statement, unless they are deferred in equity as qualified cash flow hedges and qualified net investment hedges.

c) Translation of annual accounts in foreign currency

The results and financial position of all Group companies (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows

i)

The assets and liabilities on each balance sheet presented are translated at the closing exchange rate at the balance sheet date;

ii)

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

iii)

All resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings and other currency instruments designated as hedges of such investments, are taken to equity. When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss on the sale.

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

3.18. Related-party transactions

In general, transactions between group companies are initially recognised at fair value. If applicable, where the agreed price differs from the fair value, the difference is recognised based on the economic reality of the transaction. Transactions are subsequently measured in accordance with applicable standards.

3.19. Environmental disclosures

Business actions with an environmental impact are considered an expense of the year or an increase in the value of the relevant asset, on the basis of the valuation criteria described in property, plant and equipment in the corresponding note above.

4. Financial risk management

4.1. Financial risk factors

The Group’s activities are exposed to various types of financial risk: market risk (including exchange rate risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on uncertainty in financial markets and seeks to minimise the potential adverse impact on its financial profitability.

Responsibility for financial risk management is controlled by the Group’s Central Treasury Department in accordance with policies approved by the Board of Directors. This Department identifies, assesses and hedges financial risks in close cooperation with the Group’s operating units. The Group provides policies for overall risk management and written policies covering specific areas such as foreign exchange risk, interest rate risk, liquidity risk, use of derivatives and non-derivatives and investing excess liquidity.

a)

Market risk

i) Foreign exchange risk

The Group operates internationally and is exposed to the foreign exchange risk arising from currency transactions. The exchange rate risk arises mainly on business transactions abroad that are denominated in a currency other than the euro which is the Group’s functional currency.

ii) Price risk

The Group is not exposed directly to listed raw material prices.

iii) Interest rate, cash flow and fair value risk

Interest rate fluctuations affect the fair value of assets and liabilities that bear a fixed rate of interest and future flows of assets and liabilities that bear a floating rate of interest.

As the Group has no significant interest-bearing assets, its income and operating cash flows are substantially independent of changes in market interest rates.

The Group’s interest rate risk arises mainly on debts with credit institutions and other debts. Debts with credit institutions and other variable interest rate debts expose the Group to cash flow interest rate risk. The Group has covered part of its project finance requirements by arranging derivatives with respect to the interest rate risk on those loans linked to a variable interest rate.

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

b) Credit risk

Credit risk derives from cash and cash equivalents, bank and financial institution deposits and trade and other receivables, including outstanding receivables and transaction commitments. Concerning banks and financial institutions, transactions are only performed with highly recognised quality entities, taking into account past experience and other factors. Where there is no independent credit quality rating of customers, the Finance Department assesses the same, taking into account the customer’s financial position, past experience and other factors. It is not group policy to grant long-term loans to customers, except in exceptional circumstances.

Maximum exposure to the credit risk at the date of presentation of the financial assets is their carrying value.

In 2010 impairment losses amounting to €0.1 million were booked (2009: €3.7 million).

The credit quality of the financial assets and customer balances may be classified as satisfactory since, to date, there have been no significant impairment losses.

c) Liquidity risk

The prudent management of liquidity risk entails maintaining sufficient cash and marketable securities, ensuring available funding in the form of sufficient committed credit facilities and the ability to monetise market positions. Given the dynamic nature of the underlying businesses, the Group’s Financial Department aims to ensure flexibility in financing through the availability of committed credit lines that complemented the financing associated with the turnkey projects in the case of photovoltaic facilities.

Liquidity risk (current assets less current liabilities) is adequately managed by means of tight control over working capital, limits on the amount of credit exposure to any financial institution and permanent monitoring of levels of borrowings and fund generation.

4.2. Fair value measurement

The carrying value of trade receivables and payables is assumed to approximate their fair value. The fair value of financial liabilities for financial reporting purposes is estimated by discounting future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

5. Intangible assets

Set out below is an analysis of and movements in the accounts recorded under Intangible assets:

		Thousand euro
																										Payments on
																										account and
		Research and				Concessions,																				assets in
		development				patents and				Computer								Emission				Goodwill on				course of
		expenses				licences				applications				Goodwill				rights				consolidation				construction				Total
Cost
Balance at 01/01/2009			29,490				3,563				1,288				3,316				7,991				1,270				177				47,095
Additions			5,792				2				230				—				5,143				84				1,235				12,486
Disposals			(489	)			—				(92	)			—				(7,397	)			—				(94	)			(8,072	)
Transfers			—				—				88				—				—				—				(88	)			—
Balance at 31/12/2009			34,793				3,565				1,514				3,316				5,737				1,354				1,230				51,509
Additions			6,986				4				523								4,463				—				1,492				13,466
Disposals			(402	)			(95	)			(2	)			(115	)			(5,677	)			—				(173	)			(6,464	)
Transfers															(3,000	)							3,000								—
Balance at 31/12/2010			41,377				3,474				2,035				201				4,523				4,354				2,549				58,513
Amortisation
Balance at 01/01/2009			9,335				1,024				1,104				—				—				—				—				11,463
Appropriation			2,387				342				235				—				—				—				72				3,036
Disposals			(165	)			(5	)			(92	)			—				—				—				—				(262	)
Transfers			—				—				—				—				—				—				—				—
Balance at 31/12/2009			11,557				1,361				1,247				—				—				—				72				14,237
Appropriation			3,530				1,202				227				108				—				—				1,611				6,678
Disposals			—				(1	)			(4	)			—				—				—				(1	)			(6	)
Transfers			—				—				—				—				—				—				—				—
Balance at 31/12/2010			15,087				2,562				1,470				108				—				—				1,681				20,908
Provision
Balance at 01/01/2009			—				—				—				—				214				—				—				214
Additions/(disposals)			—				—				—				—				(190	)			—				—				(190	)
Balance at 31/12/2009			—				—				—				—				24				—				—				24
Additions/(disposals)			913				1				7				—				(24	)			—				—				897
Balance at 31/12/2010			913				1				7				—				—				—				—				921
Carrying amount
At 01/01/2009			20,155				2,539				184				3,316				7,777				1,270				177				34,148
At 31/12/2009			23,236				2,204				267				3,316				5,713				1,354				1,158				37,247
At 31/12/2010			25,377				911				558				93				4,523				4,354				868				36,684

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

a) Research and development expenses

Capitalised R&D expenses mainly relate to the Group’s own work on the following projects:

		Million euro
		2010				2009
High photovoltaic industrialisation process			5.8				5.9
Engine development			7.8				7.5
Electricity generation technology			9.1				8.6
Other			2.7				1.2
			25.4				23.2

b) Concessions, patents, licences and trademarks

This heading includes the cost of the industrial licence for the use of the technology for high concentration photovoltaic generation acquired in 2005 from Amonix, Inc. for $1,8 million (€1,5 million). Amortisation is charged over 10 years. No impairment losses have been reflected on the basis of the business plan for the high concentration division.

c) Goodwill on consolidation

At 31 December 2010 and 2009 consolidation goodwill breaks down as follows by company:

		Thousand euro
		2010				2009
Fully-consolidated companies
• Energía Natural de Mora			3,000				—
• Guascor Wind, S.L.			348				348
• Guascor Fotón AGF, S.L.			999				999
• Other			7				7
			4,354				1,354

The key assumptions used to calculate the in-use value are as follows:

Growth rate (1)			1	%
Discount rate (2)			14	%

Management determined the budgeted gross margin before tax based on their expectations of market development. Average weighted growth rates are consistent with the forecasts included in industry reports. The discount rates used are before tax and reflect specific risks related to significant segments.

During 2010 and 2009, there was no impairment to goodwill.

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

d) Intangible assets located abroad

As at 31 December 2010 the Group possesses in foreign locations intangible fixed asset investments amounting to a gross figure of €1,961 thousand (2009: €2,037 thousand).

e) Fully-depreciated assets

At 31 December 2010 fully-depreciated assets amount to €10,784 thousand (2009: €9,413 thousand).

GRUPO GUASCOR, S.L. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2010
(Thousand euro)

6. Property, plant and equipment

Set out below is an analysis of Property, plant and equipment showing movements:

		Thousand euro
										Payments on
										account and assets
						Plant, machinery				in course of
		Land and buildings				and other				construction				Total
Cost
Balance at 01/01/2009			46,926				217,397				4,282				268,605
Additions			492				2,146				—				2,638
Disposals			(7	)			(912	)			(330	)			(1,249	)
Transfers			429				1,308				(1,737	)			—
Translation differences			4,184				12,917				(807	)			16,294
Balance at 31/12/2009			52,024				232,856				1,408				286,288
Additions			798				7,275				952				9,025
Disposals			(332	)			(1,636	)			(7	)			(1,975	)
Transfers			—				65				(65	)			—
Translation differences			1,106				10,871				147				12,124
Balance at 31/12/2010			53,596				249,431				2,435				305,462
Amortisation
Balance at 01/01/2009			12,195				99,349				—				111,544
Appropriation			1,516				10,988				—				12,504
Disposals							(467	)							(467	)
Transfers			(108	)			108				—				—
Translation differences			533				6,511				—				7,044
Balance at 31/12/2009			14,136				116,489				—				130,625
Appropriation			2,498				11,806				—				14,304
Disposals			(109	)			(271	)			—				(380	)
Transfers			—				—				—				—
Translation differences			(50	)			4,704				—				4,654
Balance at 31/12/2010			16,475				132,728				—				149,203
Provision
Balance at 01/01/2009			4,694				22,144				—				26,838
Additions			25				—				—				25
Disposals			(96	)			(12	)			—				(108	)
Balance at 31/12/2009			4,623				22,132								26,755
Additions			557				4,918				386				5,861
Disposals			(905	)			(191	)			—				(1,096	)
Transfers			1,501				1,085				—				2,586
Balance at 31/12/2010			5,776				27,944				386				34,106
Carrying amount
At 01/01/2009			30,037				95,904				4,282				130,223
At 31/12/2009			33,265				94,235				1,408				128,908
At 31/12/2010			31,345				88,759				2,049				122,153