diff --git a/scalac-scoverage-plugin/src/main/scala/scoverage/report/CodeGrid.scala b/scalac-scoverage-plugin/src/main/scala/scoverage/report/CodeGrid.scala
index 2b590b0f..e0284922 100644
--- a/scalac-scoverage-plugin/src/main/scala/scoverage/report/CodeGrid.scala
+++ b/scalac-scoverage-plugin/src/main/scala/scoverage/report/CodeGrid.scala
@@ -5,8 +5,13 @@ import _root_.scoverage.MeasuredFile
 import scala.io.Source
 
 /** @author Stephen Samuel */
-class CodeGrid(mFile: MeasuredFile) {
+class CodeGrid(mFile: MeasuredFile, sourceEncoding: Option[String]) {
 
+  // for backward compatibility only
+  def this (mFile: MeasuredFile) {
+    this(mFile, None);
+  }
+  
   case class Cell(char: Char, var status: StatementStatus)
 
   private val lineBreak = System.getProperty("line.separator")
@@ -60,7 +65,13 @@ class CodeGrid(mFile: MeasuredFile) {
     s"<pre style='font-size: 12pt; font-family: courier;'>$code</pre>"
   }
 
-  private def source(mfile: MeasuredFile): String = Source.fromFile(mfile.source).mkString
+  private def source(mfile: MeasuredFile): String = {
+    val src = sourceEncoding match {
+     case Some(enc) => Source.fromFile(mfile.source, enc)
+     case None => Source.fromFile(mfile.source)
+    }
+    src.mkString
+  }
 
   private def spanStart(status: StatementStatus): String = s"<span style='${cellStyle(status)}'>"
 
diff --git a/scalac-scoverage-plugin/src/main/scala/scoverage/report/ScoverageHtmlWriter.scala b/scalac-scoverage-plugin/src/main/scala/scoverage/report/ScoverageHtmlWriter.scala
index f7858278..c88252da 100644
--- a/scalac-scoverage-plugin/src/main/scala/scoverage/report/ScoverageHtmlWriter.scala
+++ b/scalac-scoverage-plugin/src/main/scala/scoverage/report/ScoverageHtmlWriter.scala
@@ -8,8 +8,14 @@ import scoverage._
 import scala.xml.Node
 
 /** @author Stephen Samuel */
-class ScoverageHtmlWriter(sourceDirectories: Seq[File], outputDir: File) extends BaseReportWriter(sourceDirectories, outputDir) {
+class ScoverageHtmlWriter(sourceDirectories: Seq[File], outputDir: File, sourceEncoding: Option[String]) extends BaseReportWriter(sourceDirectories, outputDir) {
 
+  // for backward compatibility only
+  def this (sourceDirectories: Seq[File], outputDir: File) {
+    this(sourceDirectories, outputDir, None);
+  }
+  
+  // for backward compatibility only
   def this (sourceDirectory: File, outputDir: File) {
     this(Seq(sourceDirectory), outputDir);
   }
@@ -75,7 +81,7 @@ class ScoverageHtmlWriter(sourceDirectories: Seq[File], outputDir: File) extends
         </ul>
         <div class="tab-content">
           <div class="tab-pane active" id="codegrid">
-            {xml.Unparsed(new CodeGrid(mfile).highlighted)}
+            {xml.Unparsed(new CodeGrid(mfile, sourceEncoding).highlighted)}
           </div>
           <div class="tab-pane" id="statementlist">
             {new StatementWriter(mfile).output}
diff --git a/version.sbt b/version.sbt
index a1b7d187..7bc4f283 100644
--- a/version.sbt
+++ b/version.sbt
@@ -1 +1 @@
-version in ThisBuild := "1.1.1"
\ No newline at end of file
+version in ThisBuild := "1.2.0-SNAPSHOT"
\ No newline at end of file