1. External Audit Report...Page Consolidated Annual Accounts...Page5. 3. Consolidated Management Report...Page208

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2 Annual Report 2010: 1. External Audit Report...Page Consolidated Annual Accounts...Page5 3. Consolidated Management Report...Page Auditor s PCAOB Report on Internal Control over Financial Reporting...Page229 1

3 1. External Audit Report 2

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5 Consolidated Annual Accounts a) Consolidated Statement of Financial Position... Page 6 b) Consolidated Income Statement... Page 9 c) Consolidated Statement of Comprehensive Income... Page 11 d) Consolidated Statement of Changes in Equity... Page 13 e) Consolidated Cash Flows Statement... Page 15 f) Notes to the Consolidated Annual Account....Page 17 g) Appendices I to X... Page 172 4

6 a) Consolidated Statements of Financial Position 5

7 Consolidated Statement of Financial Position of Abengoa Solar at 31/12/2010 and 31/12/09 - Figures in thousands of euros - Assets Note (1) 31/12/ /12/2009 A. Non-current Assets Other intangible assets Provisions and depreciation (53.822) (44.055) I. Intangible Assets Property, plant and equipment Provisions and depreciation (72.993) (62.871) II. Property, plant and equipment Intangible assets Provisions and depreciation (7.521) (5.528) Property, plant and equipment Provisions and depreciation (30.738) (17.842) III. Fixed Assets in Projects Investments in associates Financial assets available for sale Financial accounts receivables Derivative financial instruments IV. Financial Investments V. Deferred Tax Assets ToTotal Non-current Assets C. Current Assets I. Inventories Trade receivables for sales and services Credits and other receivables II. Clients and Other Receivables Financial assets available for sale Financial accounts receivables Derivative financial instruments III. Financial Investments IV. Cash and Cash Equivalents Total Current Assets Total Assets (1) Notes 1 to 35 and Appendices I to X are an integral part of these Consolidated Financial Statements at 31 December,

8 Consolidated Statement of Financial Position of Abengoa Solar at 31/12/2010 and 31/12/09 - Figures in thousands of euros - Shareholders' Equity and Liabilities Notes (1) 31/12/ /12/2009 A. Capital and Reserves (22.752) I. Share Capital II. Parent company reserves 22 (34.006) III. Other reserves 23 (40.044) (32.363) At fully or proportionally consolidated companies (4.934) (10.366) IV. Translation differences 24 (4.934) (10.366) V. Other equity instruments VI. Retained earnings 25 (48.945) (81.688) B. Non-controlling interest Total Equity C. Non-current Liabilities I. Long-term non-recourse Financing (Project Finance) Bank loans Loans with related companies Other loans and borrowings Finance lease liabilities II. Corporate Financing III. Grants and Other Liabilities IV. Provisions for Other Liabllities and Expenses V. Deriviative Financial Instruments VI. Deferred Tax Liabilities VII. Employee Benefits Total Non-current Liabilities E. Current Liabilities I. Short-term non-recourse Financing (Project Finance) Bank loans Loans with related companies Other loans and borrowings Finance lease liabilities II. Corporate Financing III. Trade Payables and Other current liabilities IV. Current Tax Liabilities V. Derivative Financial Instruments Total Current Liabilities Total Equity and Liabilities (1) Notes 1 to 35 and Appendices I to X are an integral part of these Consolidated Financial Statements at 31 December,

9 b) Consolidated Income Statement 8

10 Consolidated Income Statement of Abengoa Solar for the years ended December 31, 2010 and Figures in thousands of euros - Nota (1) 31/12/ /12/2009 Revenue Change in inventories of finished goods and work in progress (1.922) (15.235) Other operating income Raw materials and consumables used (79.647) (80.087) Employee benefit expenses 29 (32.058) (22.343) Depreciation, amortisation and impairment 30 (41.291) (84.507) Research & Development costs and impairment charges (8.791) (11.661) Other operating expenses 30 (20.815) (3.654) I. Operating Profit (62.934) Financial income Financial expenses 31 (52.639) (31.680) Net exchange differences (610) (40) Other net finance income/expenses (13.583) II. Finanace cost net (33.077) (43.301) III. Share of Profits of Associates IV. Profit/(Loss) before Income Tax Expense (3.675) ( ) Corporate Income Tax 20 (9.074) V. Profit/(loss) for the year from Continuing Operations (12.749) (60.653) Profit attributable to non-controlling interests from continuing operations VII. Profit/(Loss) for the year attributable to Parent Company (10.859) (60.194) Number of ordinary shares outstanding (thousands) VII. Earnings per share from continuing operations atributable to the equity holders of company during the year ( per share) 33 (1,1) (60,9) (1) Notes 1 to 35 and Appendices I to X are an integral part of these Consolidated Financial Statements at 31 December,

11 c) Consolidated Statement of Comprehensive Income 10

12 Consolidated Statement of Comprehensive Income of Abengoa Solar for the years ended December 31, 2010 and Figures in thousands of euros - Notes (1) 31/12/ /12/2009 A. Consolidated Profit/Loss) after Tax (12.749) (60.653) Fair Value of Cash-Flow Hedges (16.036) Currency Translation Differences (2.955) Tax effect (492) I. Net Income/(Expenses) 23 (5.779) (1.808) Fair Value of Availabel-for-sale Financial Assests Fair Value of Cash-Flow Hedges Tax effect (1.512) (795) II. Transfers to Income Statement B. Other Comprehensive Income (2.249) 46 C. Total Comprehensive Income (A + B) (14.998) (60.607) Total Comprehensive Income Attributable to Non-controlling Interests D. Total Comprehensive Income attributable to Parent Company (13.108) (60.148) (1) Notes 1 to 35 and Appendices I to X are an integral part of these Consolidated Financial Statements at 31 December,

13 d) Consolidated Statement of Changes in Equity 12

14 Consolidated Statement of Changes in Equity of Abengoa Solar for the years ended December 31, 2010 and Figures in thousands of euros - Attributable to the Owners of the Company Share Capital Reserves & Other Reserves Accumulated Currency Translation Difference Retained Earnings Total Noncontrolling Interest Total Equity (Note 21) (Notes 21,22 & 23) (Note 24) (Note 25) (Note 26) A. Balance at 31 December, (32.691) (7.411) (7.333) (35.375) (32.405) I. Consolidated Profit/(Loss) after Tax (60.194) (60.194) (459) (60.653) Fair Value of Financial Assest Available-for-sale Fair Value of Cash-flow Hedges Currency Tranlation Differences - - (2.955) - (2.955) - (2.955) Tax effect - (1.287) - - (1.287) - (1.287) II. Other Comprehensive Income (2.955) III. Total Comprehensive Income (I + II) (2.955) (60.194) (60.148) (459) (60.607) Distribution of 2008 profit (10.502) Convertible loan IV. Transactions with Owners (10.502) V. Other Movements of Equity (3.659) (3.659) (2.316) (5.975) B.Balance at 31 December, (10.366) (81.688) C. Balance at 1 January, (10.366) (81.688) I. Profit/ (loss) before Income tax expenses (10.859) (10.859) (1.890) (12.749) Fair Value of Cash-flow Hedges - (10.994) - - (10.994) - (10.994) Convertible loan Tax effect II. Other Eomprehensive Income - (7.681) (2.249) - (2.249) III. Total Comprehensive Income (I + II) - (7.681) (10.859) (13.108) (1.890) (14.998) - Distribution of 2009 profit - (47.181) Convertible loan - (8.527) - - (8.527) - (8.527) IV. Transactions with Owners - (55.708) (8.527) - (8.527) - V. Other Movements of Equity (3.579) (3.579) D.Balance at 31 December, (4.934) (48.945) (22.752)

15 e) Consolidated Cash Flow Statement 14

16 Consolidated Cash Flow Statement of Abengoa Solar for the years ended December 31, 2010 and Figures in thousands of euros - Note (1) 31/12/ /12/2009 I. Consolidated after Tax Profit (12.749) (60.653) Non-monetary adjustments: Depreciation, amortisation, provisions and impairment charges Gain/loss on financial assets available for sale - (1.748) Finance income/expenses 31 & Share of loss/ (profit) from associates 7 (487) (189) Income tax (45.393) Foreign exchange losses/ (gains) and other non-monetary items II. Cash generated by Operations Inventories (2.976) (14.194) Clients and other receivables (35.872) (47.092) Suppliers and other payable accounts Other current assets/liabilities (14.380) III. Variations in Working Capital (3.897) Income tax received/ paid (3.340) Interest received/ paid (17.720) (31.050) IV. Cash generated from Operations (3.463) (34.390) A. Net Cash Flows from Operating Activities (17.887) Property, plant and equipment 5 & 6 ( ) ( ) Intangible assets 4 & 6 (21.540) (30.831) Acquisitions of subsidiary (85.680) - I. Investments ( ) ( ) Group, multi-group and associated companies Property, plant and equipment 5 & Intangible assets 4 & 6-64 Other assets/liabilities II. Disposals B. Net Cash Flows from Investing Activities ( ) ( ) Income from loans and borrowings Repayment of loans and borrowings (57.251) (3.851) Income/repayments from corporate financing Other financing activities / convertible loan (8.921) Contributions of non-controlling interests C. Net Cash Flows from Financing Activities Net Increase/Decrease in Cash and Cash Equivalents Cash or cash equivalents and bank overdrafts at beginning of year Translation differences cash or cash equivalent Cash and Cash Equivalents at End of Year (1) Notes 1 to 35 and Appendices I to X are an integral part of these Consolidated Financial Statements at 31 December,

17 f) Notes to the Consolidated Annual Accounts 16

18 Contents Notes Note 1.- General Information and Activities 18 Note 2.- Summary of Key Accounting Policies 22 Note 3.- Accounting Estimates and Opinions 64 Note 4.- Intangible Assets. 69 Note 5.- Property, Plant and Equipment. 71 Note 6.- Fixed Assets in Projects 76 Note 7.- Investments in Associated Companies 82 Note 8.- Inventories 83 Note 9.- Financial Risk Management and Information on Financial Instruments 86 Note 10.- Financial Assets Available for Sale 94 Note 11.- Derivative Financial Instruments 95 Note 12.- Clients and Other Receivables Accounts 103 Note 13.- Cash and Cash Equivalents 106 Note 14.- Non-recourse Financing 107 Note 15.- Corporate Financing 112 Note 16.- Grants and Other Liabilities 115 Note 17.- Trade and Other Payables 116 Note 18.- Provisions and Contingent Liabilities 119 Note 19.- Third-Party Guarantees and Commitments 120 Note 20.- Tax Situation. 122 Note 21.- Share Capital 127 Note 22.- Parent Company Reserves 128 Note 23.- Other Reserves 130 Note 24.- Translation Differences 131 Note 25.- Retained Earnings 131 Note 26.- Non-controlling Interests 132 Note 27.- Revenue 135 Note 28.- Other Operating Income 135 Note 29.- Employee Benefit Expenses 136 Note 30.- Depreciation, Amortization, Impairment Charges and Other Operating Expenses 136 Note 31.- Financial Income and Expenses 141 Note 32.- Other Net Financial Income and Expenses 141 Note 33.- Earnings per Share 142 Note 34.- Financial Information by Segment 143 Note 35.- Other Information

19 Notes to the Consolidated Annual Accounts Note 1.- General Information and Activities 1.1. General Information Abengoa Solar, S.A. is the parent of a group of companies (hereinafter, Abengoa Solar or Group), which, at the 2010 year end, was formed by 313 companies: the parent company itself, 293 subsidiaries, 7 associated companies and 10 joint ventures. Likewise, Group companies were participating in 3 temporary joint ventures (UTEs). Additionally, Group companies held interests of less than 20% in other companies. Abengoa Solar, S.A., was incorporated in Spain on 18 December, 2006 under the name Solúcar Solar, S.A., which was changed to the present corporate name on 3 September, It is registered in the Seville Companies Register, Folio 1-9, Volume 4,568, Sheet No. SE-71,375, 2 nd entry and holds tax identification code A Until the 2009 year end, its registered office was in Seville, at Avenida de Buhaira, 2, On 25 January, 2010, the Board of Directors of Abengoa resolved to move the registered office within the municipal area of Seville and the company s registered office was entered in the Companies Register as Campus Palmas Altas, Parcela ZE-33, Palmas Altas, Seville, with the resulting amendment of article 2 of the Bylaws. The controlling shareholder of Abengoa Solar is Abengoa, S.A. (a listed company), which holds 99.99% of the shares and is, in turn, a subsidiary of Inversión Corporativa, S.A. The consolidated annual financial statements of Inversión Corporativa, S.A are filed at the Companies Registry of Madrid, where its registered office is located. The balances and transactions that refer to related companies refer to those companies that, although they do not form part of the Abengoa Solar consolidated group, are consolidated with Abengoa, S.A. and Inversión Corporativa, S.A. These balances and transactions are not, therefore, eliminated in the consolidation process. The Board of Directors of Abengoa, S.A. met on 23 February, 2011 to formulate the consolidated annual financial statements of Abengoa, S.A., the Group parent, for Said financial statements are filed at the Seville Companies Registry. 18

20 According to its Bylaws, the corporate purpose of the company Abengoa Solar, S.A. is the organisation and exploitation of businesses and activities related to the promotion of the use of renewable energy sources or improvements in the energy efficiency of industrial processes in the fields of Solar Energy, Environment and Industry, including the research and development of applications, technologies and materials, the design, manufacture, construction, operation and maintenance of related installations, the import and marketing of these products or derivatives thereof, together with advisory and support services, including financial, economic, legal and business organisation services, control and tax auditing services, human resource services and information, commercial management, supply and risk management services. These Consolidated Annual Financial Statements were formulated by the Board of Directors of 10 March, 2011 and are expected to be approved by the Shareholders Meeting without any changes. All public documentation on Abengoa Solar can be consulted on our website, Activities Abengoa Solar develops and applies solar energy technologies to combat climate change and ensure sustainable development through its own thermosolar and photovoltaic technologies. For more than 20 years, Abengoa, S.A. has been investing in solar project research and development and subsequently created the Abengoa Solar business group, which engages in the promotion, construction and operation of electricity plants and solar installations and the development and marketing of the technologies necessary to do so (R&D). The activities of Abengoa Solar are based on the design, development, engineering supervision, construction and operation of electricity plants and solar energy installations. The Group is present in two principal markets: Spain and the United States, with important international expansion through its participation in the construction of plants in Algeria and Abu Dhabi. The Group is currently betting on entering other markets. Abengoa Solar has developed knowledge of different types of solar energy: 19

21 - In the thermosolar branch, the Group builds thermosolar plants using tower and paraboliccylinder technologies and solar-cycle hybrid combined plants for electricity generation, while, for personalized industrial installations, it uses parabolic-cylinder technology. - In the photovoltaic area, it constructs electricity plants with different configurations: fixed plants with tracking (on one or two axes) and photovoltaic concentration. In addition, the Group applies its technology in one-off projects, such as roofs and the integration into buildings. Moreover, the Group is involved in developing projects of its own and projects in collaboration with research institutes of recognized prestige worldwide. The Group works to develop more efficient solar technologies. In addition to the sales of solar energy generated by the plants it operates, the Group generates income through the sale of certain key manufactured components for solar energy generation using parabolic-cylinder and photovoltaic technology (for example, structure, mirrors, parabolic-cylinder technology receivers or photovoltaic panels). Promotion and Supervision of the Construction of Solar Energy Plants The Group handles the promotion, design, engineering supervision, construction and start-up of its solar plants and the construction of solar plants for third parties. The promotion process for solar energy plants involves primarily: seeking partners and/or investors, seeking financing, choosing a site, surface rights, obtaining solar resources, administrative processes and obtaining the relevant authorisations and connection to the grid. The construction of the plants is carried out by a builder, which is usually a related company, under a turnkey contract, at market price. On occasions, the Group participates in temporary joint ventures under turnkey contracts. Abengoa carries out a large part of the engineering work (research and development of the technology and supervision of the plant construction, together with the startup). The construction process of a parabolic-cylinder solar plant requires an approximate period of between 18 and 36 months, depending on the size of the plant and whether or not it is able store the solar energy. The construction process of a photovoltaic plant is generally shorter, approximately 6 months. 20

22 Operating and maintaining plants This activity includes the production and sale of electricity and the operation and maintenance of solar energy plants. Once the plants come into operation, they can begin to generate income by the sale of the energy produced. The production level and electricity price are two factors that have a direct effect on the amount of income generated by the plants. The mechanisms used to determine the electricity selling price vary in accordance with the legislation applicable to the plant location and include regimes based on regulated tariffs and those in which a tariff is fixed for each project. Once the plant is operational, the Group also supplies materials, tools and workers for plant maintenance work. Income from this business activity comes from the sale of energy. Development of new technologies (R&D) An important part of growth strategy is seeking, developing and innovating projects, which allows the Group to develop technologies that can be applied to the solar sector, while costs are reduced and solar technology is helped to come closer to conventional technologies in terms of costs. The Group s development activities are carried out in the Excellence Centres in Spain and the United States, in addition to collaborating with leading-edge research centres worldwide, including universities and technological institutions. The following table provides a detailed summary of the Group s projects in operation and under construction: 21

23 Project Company Type Technology Mw Tariff type Country Location Status Operation (O) - Construction (C) Start of operations Estimated years in operation Financing (project finance -PF- or own resources -OR-) PS10 Sanlúcar Solar S.A. Termosolar Tower 11 M / RT Spain Sevilla (O) PF PS20 Solar Processes S.A. Termosolar Tower 20 M / RT Spain Seville (O) PF Solnova 1 Solnova Electricidad S.A. Termosolar Parabolic Cylinder Collector 50 M / RT Spain Seville (O) PF Solnova 3 Solnova Electricidad Tres S.A. Termosolar Parabolic Cylinder Collector 50 M / RT Spain Seville (O) PF Solnova 4 Solnova Electricidad Cuatro S.A. Termosolar Parabolic Cylinder Collector 50 M / RT Spain Seville (O) PF Helioenergy 1 Helio Energy Electricidad Uno S.A. Termosolar Parabolic Cylinder Collector 50 M / RT Spain Écija (C) PF Helioenergy 2 Helio Energy Electricidad Dos S.A. Termosolar Parabolic Cylinder Collector 50 M / RT Spain Écija (C) PF Solaben 2 Solaben Electricidad Dos, S.A. Thermosolar Parabolic Cylinder Collector 50 M / RT Spain Cáceres (C) PF Solaben 3 Solaben Electricidad Tres, S.A. Thermosolar Parabolic Cylinder Collector 50 M / RT Spain Cáceres (C) PF Helios 1 Helios I Hyperion Energy Investments S.L. Thermosolar Parabolic Cylinder Collector 50 M / RT Spain Ciudad Real (C) PF Helios 2 Helios II Hyperion Energy Investments S.L. Thermosolar Parabolic Cylinder Collector 50 M / RT Spain Ciudad Real (C) PF Solacor 1 Solacor Electricidad Uno S.A. Thermosolar Parabolic Cylinder Collector 50 M / RT Spain Córdoba (C) PF Solacor 2 Solacor Electricidad Dos S.A. Thermosolar Parabolic Cylinder Collector 50 M / RT Spain Córdoba (C) PF Solana Arizona Solar One Thermosolar Parabolic Cylinder Collector 280 RT United States Arizona (C) PF Shams - 1 Shams Power Company PJSC (1) Thermosolar Parabolic Cylinder Collector 100 RT United Arab Emirates Abu Dhabi (C) PF Sevilla Pv Fotovoltaica Solar Sevilla S.A. Photovoltaic 2-axis tracking 1,2 RT Spain Seville (O) PF Casaquemada Casaquemada Fotovoltaica S.L. Photovoltaic 2-axis tracking 1,9 RT Spain Seville (O) PF Linares Linares Fotovoltaica S.L. Photovoltaic 2-axis tracking 1,9 RT Spain Jaen (O) PF Las Cabezas Las Cabezas Fotovoltaica S.L. Photovoltaic 1-axis tracking 5,2 RT Spain Seville (O) PF Copero 1-10 Copero Solar Huerta Uno a Diez S.A. Photovoltaic 2-axis tracking 1 RT Spain Seville (O) 2007 / PF Solar Technologies Demonstration Projects Eureka Abengoa Solar New Technologies I+D+i Termosolar High-temperature tower - - Spain Seville In operation OR Direct vapour generation parabolic Planta GDV Abengoa Solar New Technologies I+D+i Termosolar cylinder technology - - Spain Seville In operation OR Tes PS10 Abengoa Solar New Technologies I+D+i Termosolar Thermal storage in molten salts - - Spain Seville In operation OR Hercules Abengoa Solar New Technologies I+D+i Hydrogen production using solar Fotovoltáico energy - - Spain Seville In operation OR Photovoltaic I+D+i Abengoa Solar New Technologies Laboratory Fotovoltáico Test of FV materials - - Spain Seville In operation OR I+D+i Inst. Solares Cameo Abengoa Solar Inc. Industriales Solar thermal installation - - United States Colorado In operation OR (1)Percentage interest of Abengoa of 2% (see Appendix II attached) Tariff types: RT Regulated tariff (fixed) M Market price The Group is currently operating a total of 193 MW (43 MW in 2009). The difference between the figures for the years 2010 and 2009 is primarily because three paraboliccylinder thermosolar plants (Solnova 1, 3 and 4) came into operation in In addition, the construction of seven new plants commenced in 2010 and the construction of four thermosolar plants continued. Note 2.- Summary of Key Accounting Policies The key accounting policies adopted in preparing the Consolidated Annual Financial Statements are described below: 2.1. Basis of presentation The Consolidated Annual Financial Statements at 31 December, 2010 have been prepared in accordance with International Financial Reporting Standards adopted for use in the European Union (hereinafter, IFRS-EU). Unless otherwise stated, the policies mentioned in this Note have been applied consistently to all the years presented in these Consolidated Annual Financial Statements. 22

24 In general, the Consolidated Annual Financial Statements have been prepared on a historical cost basis, except for those headings for which the aforementioned Standards expressly mention a different mandatory measurement criterion. The preparation of financial statements under IFRS-EU requires the use of certain critical accounting estimates. It also requires Management to exercise its judgement in the process of applying the accounting policies of Abengoa Solar. Note 3 mentions the areas that involve a higher degree of complexity and the areas where the assumptions and estimates are most significant. The figures contained in the documents that comprise the Consolidated Annual Financial Statements (Consolidated Statement of Financial Position, Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity, Consolidated Statement of Cash Flows and the Notes to the Consolidated Annual Financial Statements) are expressed in thousands of euros unless otherwise stated. All the Group companies have their year end at 31 December. Unless otherwise stated, the percentage interest in the share capital of the companies includes both direct and indirect holdings. For a better understanding of the Consolidated Annual Financial Statements, the name of the heading Borrowings and Loans in the Statement of Financial Position of the Consolidated Annual Financial Statements for the preceding year has been changed to the new name of Corporate Financing. Likewise, regroupings have been made under the Corporate Financing and Trade and Other Receivables headings and a separate heading has been created for Grants and Other Liabilities in the Consolidated Statement of Financial Position for 2010 and Going-concern Principle These Group Consolidated Annual Financial Statements show, at 31 December, 2010, equity of 28,122 thousand euros (2,657 thousand euros at 31 December, 2009), a loss of 10,859 thousand euros attributed to the parent company (a loss of 60,194 thousand euros at 31 December, 2009) and negative working capital of 85,819 thousand euros (negative working capital of 28,747 thousand euros at 31 December, 2009). These Consolidated Statements have been prepared under the going-concern principle, taking the following circumstances and mitigating factors into account: 23

25 - The negative working capital and loss are primarily due to the solar plant project operation activity, which currently has a significant portfolio of projects in progress. During their construction phase, these projects are financed by own funds, loans and borrowings and funds for settling short-term payables to suppliers and creditors for construction of the plants. Once these assets come into operation, they will generate stable cash flows. - The support of the majority shareholder is demonstrated by the financing obtained through the net debt received from Abengoa, S.A. through the Centralised Treasury System, recognized as Loans with Related Companies under the Corporate Financing heading (see Note 15) and as Credits with related companies under Financial Receivables with Related Companies under the Financial Receivables heading (see Note 12), a net amount of 445,099 thousand euros of which had been drawn at the 2010 year end. In addition, the Group has financed itself through a convertible loan of 110,000 thousand euros from said company approved in the year 2009, as described in Note Changes and amendments to accounting standards The IASB has recently approved and published certain accounting standards, amendments to standards that were already in force and IFRIC interpretations. In this respect, the Group has adopted the following measures: a) Standards, amendments and interpretations mandatory for all annual periods commencing 1 January, 2010 applied by the Group: IFRS 3 (amended) Business Combinations and the resulting amendments to IAS 27 Consolidated and Separate Financial Statements and IAS 31 Interests in Joint Ventures (which it is mandatory to apply, prospectively, to all business combinations the acquisition date of which is after the commencement of the first annual period starting on or after 1 July, 2009). The amended standard maintains the acquisition method for business combinations, although it introduces important changes in comparison with the former standard. For example, all payments for acquisition of a business are recognized at their fair value at the acquisition date and contingent payments classified as liabilities are measured at each year end at their fair value, recognising the changes in the profit and loss account. An accounting policy option applicable at the level of each business combination is introduced, consisting of measuring non-controlling interests at fair value or at the proportional amount of the net assets and liabilities of the business acquired. All transaction costs are recognized as expenses. The Group has adopted IFRS 3 (amended) prospectively for all business combinations as from 1 January,