ALR.L Regulatory News (ALR)

RNS Number : 7659H

Alternative Energy Limited

26 February 2010

 

For immediate release

26 February 2010

 

 

 

Alternative Energy Limited ("Alternative Energy" or "the Company")

 

Report and Accounts

 

The Company today announces that it has published the Report and Accounts for the year to 31 August 2009 ("the Accounts"), and they are being posted to shareholders.

The Accounts will shortly be available on the Company website www.alternativeenergy.com.sg and extracts are set out below:

 

 

Chairman's Statement

 

I am delighted to present to you the financial statements for the financial year ended 31st August 2009, which was the Company's second year of operations.

 

As the accounts show the Company concentrated this year on continuing to analyse alternative energy technologies with Dr Goh, Dr Tay and the team making great progress within a steady and conservative budget.

 

The continued research and efforts of the entire team has put the Company in a position to commence the move from the development to the commercialisation stage within the near future.

 

During the course of the year, Shareholders were asked to endorse the Company's investment policy and confirm their support for the ongoing activities of the Company in the light of the timescale set by the Board when the company was initially listed.

These resolutions were passed unanimously and I feel confident that the patience of shareholders will be seen to be fully justified.

 

Christopher Nightingale

Chairman

 

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF

 

 

We have audited the accompanying financial statements of Alternative Energy Limited (the "Company") and its subsidiaries (the "Group") for the financial year ended 31 August 2009 which comprise the balance sheet of the Group and of the Company as at 31 August 2009, the consolidated income statement, the statement of changes in equity of the Group and of the Company and the consolidated cash flow statement for the financial year then ended, and a summary of significant accounting policies and other explanatory notes.

 

Management's responsibility for the financial statements

 

Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the "Act") and International Financial Reporting Standards. This responsibility includes:

 

(a) devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair income statement and balance sheet and to maintain accountability of assets;

 

(b) selecting and applying appropriate accounting policies; and

 

(c) making accounting estimates that are reasonable in the circumstances.

 

 

Auditors' responsibility

 

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider the internal control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

Opinion

 

In our opinion,

 

(a) the consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and International Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 August 2009 and of the results, changes in equity and cash flows of the Group and changes in equity of the Company for the financial year ended on that date and;

 

(b) the accounting and other records required by the Act to be kept by the Company and by subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

 

Emphasis of Matter

 

Without qualifying our opinion, we draw attention to Note 2(b) to the financial statements which indicate that the Group has been incurring losses for the current and past years. The Company has taken measures as described in Note 2(b) to the financial statements to secure the necessary funding to meet their daily operation needs. If these measures described in Note 2(b) to the financial statements fail to materialise, this would indicate an existence of a material uncertainty which may cast significant doubt about the Group's and the Company's abilities to continue as a going concern.

 

 

 

BDO LLP

Public Accountants and

Certified Public Accountants

 

 

Singapore

25 February 2010

 

 

Lai Keng Wei

Partner-in-charge

 

 

 

 

ALTERNATIVE ENERGY LIMITED

 

 

 

			Group				Company
	Note		2009		2008		2009		2008
			US$		US$		US$		US$
Assets
Non-current assets
Plant and equipment	4		206,552		157,984		4,111		2,803
Investment in subsidiaries	5		-		-		537,742		537,741
Intangible assets	6		921,882		643,019		216,083		57,626
			1,128,434		801,003		757,936		598,170
Current assets
Cash and bank balances	7		1,798,732		5,914,760		1,700,055		5,777,640
Other receivables	8		99,961		149,830		2,744,336		1,186,594
			1,898,693		6,064,590		4,444,391		6,964,234
Total assets			3,027,127		6,865,593		5,202,327		7,562,404
Equity and liabilities
Capital and reserves
Issued capital	9		7,916,392		7,916,392		7,916,392		7,916,392
Treasury shares	9		(1,200,000)		-		(1,200,000)		-
Accumulated losses			(3,847,806)		(1,269,762)		(1,607,092)		(505,742)
Foreign currency translation
reserve	10		-		5,621		-		-
			2,868,586		6,652,251		5,109,300		7,410,650
Current liabilities
Other payables and accruals	11		115,247		181,284		93,027		151,754
Provisions	12		43,294		32,058		-		-
			158,541		213,342		93,027		151,754
Total equity and liabilities			3,027,127		6,865,593		5,202,327		7,562,404

 

 

 

 

 

ALTERNATIVE ENERGY LIMITED

 

CONSOLIDATED INCOME STATEMENT

 

 

	Note		2009		2008
			US$		US$
Administrative expenses			(511,447)		(301,182)
Other expenses			(2,118,112)		(1,097,016)
Finance income			53,926		160,246
Finance cost			(2,296)		(1,203)
Loss before income tax	13		(2,577,929)		(1,239,155)
Income tax	14		(115)		(658)
Loss for the financial year			(2,578,044)		(1,239,813)
Attributable to:
Equity holders of the Company			(2,578,044)		(1,239,813)
Earning per share (US$ cents)
Basic and diluted	15		#		#

 

# denotes a figure which is less than US$0.01 cent.

 

 

 

ALTERNATIVE ENERGY LIMITED

 

 

 

2009	Issued capital		Treasury shares		Foreign currency translation reserve		Accumulated losses		Total
Group	US$		US$		US$		US$		US$
Balance at 1 September 2008	7,916,392		-		5,621		(1,269,762)		6,652,251
Foreign currency translation						-
differences	-		-		(5,621)	-	-		(5,621)
Net expense recognised						-
directly in equity	-		-		(5,621)	-	-		(5,621)
						-
Loss for the financial year	-		-		-	-	(2,578,044)		(2,578,044)
Total recognised expense						-
for the financial year	-		-		(5,621)	-	(2,578,044)		(2,583,665)
Shares repurchased during the						-
financial year	-		(1,200,000)		-	-	-		(1,200,000)
						-
Balance at 31 August 2009	7,916,392		(1,200,000)		-		(3,847,806)		2,868,586

 

 

2008	Issued capital		Foreign currency translation reserve		Accumulated losses		Total
Group	US$		US$		US$		US$
Balance at 1 September 2007	3,604,496		-		(29,949)		3,574,547
Foreign currency translation differences	-		5,621	-	-		5,621
Net income recognised directly in equity	-		5,621	-	-		5,621
				-
Loss for the financial year	-		-	-	(1,239,813)		(1,239,813)
Total recognised income and expense				-
for the financial year	-		5,621	-	(1,239,813)		(1,234,192)
Issue of shares	4,341,663		-	-	-		4,341,663
				-
Issue expenses	(29,767)		-	-	-		(29,767)
				-
Balance at 31 August 2008	7,916,392		5,621		(1,269,762)		6,652,251

 

 

 

 

ALTERNATIVE ENERGY LIMITED

 

 

 

2009	Issued capital		Treasury shares		Accumulated losses		Total
Company	US$		US$		US$		US$
Balance at 1 September 2008	7,916,392		-		(505,742)		7,410,650
Loss for the financial year	-	-	-	(	(1,101,350)		(1,101,350)
Total recognised expense for the
financial year	-	-	-		(1,101,350)		(1,101,350)
Shares repurchased during the financial year	-	-	(1,200,000)		-		(1,200,000)
		-
Balance at 31 August 2009	7,916,392		(1,200,000)		(1,607,092)		5,109,300

 

 

2008	Issued capital		Accumulated losses		Total
Company	US$		US$		US$
Balance at 1 September 2007	3,604,496		(29,949)		3,574,547
Loss for the financial year	-	-	(475,793)		(475,793)
Total recognised expense for the financial year	-	-	(475,793)		(475,793)
Issue of shares	4,341,663	-	-		4,341,663
		-
Issue expenses	(29,767)	-	-		(29,767)
		-
Balance at 31 August 2008	7,916,392		(505,742)		7,410,650

 

 

 

 

 

ALTERNATIVE ENERGY LIMITED

 

CONSOLIDATED CASH FLOW STATEMENT

 

 

			2009		2008
	Note		US$		US$
Cash flows from operating activities
Loss before income tax			(2,577,929)		(1,239,155)
Adjustments for:
Amortisation of intangible assets			12,021		5,410
Depreciation of plant and equipment			120,914		44,152
Provision for reinstatement cost	12		(375)		21,195
Provision for unutilised leave	12		11,611		10,863
Interest expense			2,296		1,203
Interest income			(53,926)		(160,246)
Operating cash outflow before working capital changes			(2,485,388)		(1,316,578)
Changes in working capital:
Decrease / (increase) in other receivables			49,869		(92,053)
Decrease in other payables and accruals			(66,037)		(283,757)
Cash used in operations			(2,501,556)		(1,692,388)
Interest paid			(2,296)		(1,203)
Income tax paid			(115)		(658)
Net cash used in operating activities			(2,503,967)		(1,694,249)
Cash flows from investing activities
Interest received			53,926		160,246
Purchase of plant and equipment	4		(169,482)		(195,425)
Increase in pledged fixed deposits	7		(11,252)		(85,773)
Purchase of intangible assets	6		(290,884)		(183,665)
Acquisition of a subsidiary, net of cash acquired	16		-		36,575
Effect of foreign currency alignment on investing
activities			-		264
Net cash used in investing activities			(417,692)		(267,778)
Cash flows from financing activities
Proceeds from issue of shares, net issue costs			-		1,286,897
Purchase of own shares			(1,200,000)		-
Net cash (used in)/generated from financing activities			(1,200,000)		1,286,897
Net decrease in cash and cash equivalents			(4,121,659)		(675,130)
Cash and cash equivalents at beginning of financial year			5,828,987		6,498,496
Effect of foreign exchange on cash and cash equivalents			(5,621)		5,621
Cash and cash equivalents at end of financial year	7		1,701,707		5,828,987

 

Major non-cash transaction during the financial year

 

During previous financial year, the Company issued ordinary shares worth US$400,000 in respect of the acquisition of Renewable Power Pte Ltd.

 

Proceeds from issue of shares, net of issue costs of US$1,286,897 are stated in the consolidated cash flow statement for the prior year after the effects of the above transaction.

 

 

 

ALTERNATIVE ENERGY LIMITED

 

 

 

1. General corporate information

 

The Company was incorporated in Singapore on 26 December 2006 under the name of Alternative Energy Pte. Ltd. On 11 July 2007 the Company was converted into a public limited company and changed its name to Alternative Energy Limited (the "Company"). The Company is domiciled in Singapore.

 

On 12 October 2007, the Company was successfully admitted to the official list of the Alternative Investment Market of the London Stock Exchange in the United Kingdom.

 

The principal activity of the Company is the making of investments and/or acquisitions in and to develop energy technologies, businesses and companies which offer an alternative to conventional fossil fuel and nuclear methods of generating household and industrial energy, as well as performing management services (including marketing and other necessary services) for its subsidiaries. The registered office of the Company is at 1 Science Park Road, #02-09, The Capricorn, Singapore Science Park II, Singapore 117528.

 

The principal activities of the subsidiaries are set out in Note 5 to the financial statements.

 

The balance sheet and statement of changes in equity of the Company and the consolidated financial statements of the Group for the financial year 31 August 2009 were authorised for issue by the Board of Directors on 25 February 2010.

 

 

2. Summary of significant accounting policies

 

(a) Statement of compliance

 

The financial statements have been prepared in accordance with the provisions of the Singapore Companies Act, Cap. 50 and the International Financial Reporting Standards (IFRS), including interpretations made by the International Financial Reporting Interpretations Committee (IFRIC).

 

(b) Basis of preparation

 

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.

 

These financial statements have been prepared on historical cost basis except as disclosed in the accounting policies below, andare in line with International Financial Reporting Standards (IFRS) and IFRIC interpretations issued by the International Accounting Standards Board (IASB). The adoption of all of the new and revised Standards and Interpretations issued by the IASB and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to the operations and effective for annual reporting periods beginning on 1 September 2008 are reflected in these financial statements.

 

Going concern

In preparing the consolidated financial statements, the directors have carefully considered the future liquidity of the Group and the Company in the light of the current financial position of the Group and as at 31 August 2009 the recurring losses from operations in the current and past years.

 

The directors are currently in negotiations to strengthen the financial position of the Group and the Company.

 

 

The directors are in the process of bringing in new investors that they expect will enable them to raise US$3.4 million or more in gross additional funds for the Company. These proceeds will be used to finance the next phase of growth for the Group. 

 

The directors expect this transaction to be completed within the first half of year 2010.

 

In addition, the Group is in an advanced stage of talks to supply solar powered products to a key customer. This transaction is expected to generate further cash flow for the Group, as well as to gain a secure foothold in the renewable energy industry for the Group.

 

While the directors continue to keep administrative and operating costs to a minimum, they continue to actively seek new business opportunities that will generate cash inflow and profitability for the Group.

 

The directors are confident that the ongoing negotiations and their expected results will yield the Group and the Company sufficient working capital to finance its operations and remain a going concern for the foreseeable future. Hence, notwithstanding that the Group and the Company has incurred an operating loss of US$2.578 million and US1.101 million respectively for the year ended 31 August 2009, the directors of the Company are of the opinion that it is appropriate to prepare the consolidated financial statements of the Group on a going concern basis.

 

The financial statements do not include the adjustments that would result if the Group was not able to continue as a going concern.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision only affects that period or in the period of revision and future periods if the revision affects both current and future periods.

 

Information about significant sources of estimation uncertainty and critical accounting judgements that are significant to the financial statements is disclosed in Note 3 to the financial statements.

 

During the financial year, the Group and Company adopted the new or revised IFRS and IFRIC that are relevant to their operations and effective for the current financial year. Changes to the Group's and the Company's accounting policies have been made as required, in accordance with the relevant transitional provisions in the respective IFRS and IFRIC. The adoption of the new or revised IFRS and IFRIC did not result in any substantial changes to the Company's accounting policies and has no material effect on the financial statements.

 

 

 

IFRS and IFRIC issued but not yet effective

 

The Group and the Company have not adopted the following IFRSand IFRIC that have been issued but are not yet effective:

 

			Effective date (Annual periods beginning on or after)
Revised IAS 1	:	Presentation of Financial Statements	1 January 2009
Revised IAS 23	:	Borrowing Costs	1 January 2009
Amended IAS 27	:	Consolidated and Separate Financial Statements	1 July 2009
Amended IAS 32 and IAS 1	:	Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements - Puttable Financial Instruments and Obligations Arising on Liquidation	1 January 2009
Amended IAS 39	:	Eligible Hedged Items - Amendment to IAS 39 Financial Instruments: Recognition and Measurement	1 July 2009
Amended IFRS 1 and IAS 27	:	Amendments IFRS 1 First-time Adoption of International Financial Reporting Standards and IAS 27 Consolidated and Separate Financial Statements - Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate	1 January 2009
Amended IFRS 2	:	Amendment to IFRS 2 Share-based Payment - Vesting Conditions and Cancellations	1 January 2009
Revised IFRS 3	:	Business Combinations	1 July 2009
IFRS 8	:	Operating Segments	1 January 2009
IFRS 9	:	Financial Instruments: Classification and Measurement	1 January 2013
IFRIC 15	:	Agreements for the Construction of Real Estate	1 January 2009
IFRIC 16	:	Hedges of a Net investment in a Foreign Operation	1 October 2008
IFRIC 17	:	Distributions of Non-cash Assets to Owners	1 July 2009

 

Amendments to IFRS 7	:	Improving Disclosures about Financial Instruments	1 January 2009
Improvements to IFRSs (2008)	:	A collection of amendments to IFRSs	1 January 2009
Improvement to IFRSs (2009)	:	Eliminating inconsistencies within and between Standards	1 January 2010
Revised IAS 24	:	Related Party Disclosures	1 January 2011
Amendments to IFRIC 14 IAS 19	:	Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction	1 January 2011
IFRIC 13	:	Customers Loyalty Programmes	1 July 2008
IFRIC 18	:	Transfer of Assets from Customers	1 July 2009
IFRIC 19	:	Extinguishing Financial Liabilities with Equity Instruments	1 April 2010

 

 

 

The Group and the Company expect that the adoption of the above pronouncements, if applicable, will have no material impact on the financial statements in the period of initial application, except as disclosed below:

 

IFRS 8 - Operating Segments

 

IFRS 8 requires an entity to adopt the management approach in reporting financial and descriptive information about its reportable segment. Financial information is required to be reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments. Additional disclosures are also required to provide more information on the operating segments. The Group will apply IFRS 8 for the financial year beginning 1 September 2009.

 

 

(c) Basis of consolidation

 

The purchase method of accounting is used to account for the acquisitions of subsidiaries and businesses. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values on the date of acquisition, irrespective of the extent of any minority interests.

 

Subsidiaries are consolidated from the date on which control is transferred to the Group to the date on which that control ceases. In preparing the consolidated financial statements, inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.

 

Any excess of the cost of business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill. The goodwill is accounted for in accordance with the accounting policy for goodwill stated in Note 2(e) to the financial statements.

 

Any excess of the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognised as negative goodwill in the consolidated income statement on the date of acquisition.

 

 

(d) Investment in subsidiaries

 

Subsidiaries are entities over which the Group and the Company have power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group and the Companycontrol another entity.

 

Investments in subsidiaries are stated at cost on the Company's balance sheet less impairment in value, if any.

 

 

(e) Intangible assets

 

(i) Goodwill on acquisition

 

Goodwill on acquisitionrepresents the excess of the cost of a business combination or cost of an acquisition of an associate over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Goodwill is initially measured at cost and is subsequently measured at cost less impairment in value, if any.

 

Goodwill acquired in a business combination is included in intangible assets.

 

Gains and losses on disposal of a subsidiary include the carrying amount of goodwill relating to the entity or business sold.

 

(ii) Patents and trademarks

 

Patents and trademarks are initially recognised at cost and are subsequently carried at cost less accumulated amortisation and accumulated impairment losses. Trademarks and patents with finite useful lives are amortised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Trademarks and patents with indefinite useful lives are not amortised. Each period, the useful lives of such assets are reviewed to determine whether events and circumstances continue to support the indefinite useful life assessment for the asset. Such assets are tested for impairment in accordance with the accounting policy for impairment stated in Note 2(h) to the financial statements.

 

(iii) Computer software

 

Acquired computer software licences are initially capitalised at cost which includes purchase price and other cost attributed to prepare the assets for its intended use. Direct expenditure, which enhances or extends the performance of computer software beyond its specifications and which can be reliably measured, is recognised as a capital improvement and added to the original cost of the software. Maintenance costs are recognised as an expense as incurred.

 

Computer software licences are subsequently carried at cost less accumulated amortisation and accumulated impairment loss. These costs are amortised using the straight-line method over their estimated useful lives of 3 years.

 

(f) Plant and equipment

 

Plant and equipment are stated at cost less accumulated depreciation and impairment in value, if any.

 

The cost of plant and equipment comprises its purchase price and any direct attributable costs of bringing the plant and equipment to working condition for its intended use. Expenditure for additions, improvements and renewals are capitalised, and expenditure for maintenance and repairs are charged to the income statement. Dismantlement, removal or restoration costs are included as part of the cost of plant and equipment if the obligation for dismantlement, removal or restoration is incurred as a consequence of acquiring or using the plant and equipment.

 

Depreciation is provided using the straight-line method so as to write off the cost of the plant and equipment over their estimated useful lives of 3 years.

 

 

The residual value, useful life and depreciation method of plant and equipment are reviewed at each balance sheet date to ensure that the residual values, period of depreciation and depreciation method are consistent with previous estimates and the expected pattern of consumption of future economic benefits embodied in the items of plant and equipment.

 

Subsequent expenditure relating to the plant and equipment that has already been recognised is added to the carrying amount of the asset when it is probable that the future economic benefits, in excess of the standard of performance of the asset before the expenditure was made, will flow to the Group and the Company and the cost can be reliably measured. Other subsequent expenditure is recognised as an expense during the financial year in which it is incurred.

 

On disposal of an item of plant and equipment, the difference between the net disposal proceeds and its carrying amount is taken to the income statement.

 

(g) Financial assets

 

The Group and the Company follow the guidance of IAS 39 in determining the classification of its financial assets.

 

Financial assets are recognised on the balance sheet when, and only when, the Group and Company become a party to the contractual provisions of the financial instrument. As at the balance sheet, the Group and Company only have financial assets in the category of loan and receivables.

 

When financial assets are recognised initially, they are measured at fair value, plus directly attributable transaction costs. The Group and Company determine the classification of its financial assets after initial recognition and, where allowed and appropriate, re-evaluate this classification at each financial year-end.

 

All regular way purchases and sales of financial assets are recognised on the trade date, i.e. the date that the Group and Company commit to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the market place concerned.

 

Loans and receivables

 

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These arise when the Group and Company provide money, goods or services directly to a debtor with no intention of trading the receivable. Loans and receivables are initially recognised at fair value plus transaction costs. They are subsequently carried at amortised cost, where applicable, using the effective interest method. Loans and receivables are included in current assets.

 

An allowance for impairment of receivables is established when there is objective evidence that the Group and Company will not be able to collect all amounts due according to the original terms of the receivables. The amount of the allowance is the difference between the asset's carrying amount and the present value of the estimated future cash flows, discounted at the effective interest rate. The amount of the allowance is recognised in the income statement.

 

Cash and cash equivalents

 

Cash and cash equivalents comprise cash on hand, cash with banks and financial institutions. Cash equivalents are short-tem, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.

 

A financial asset and a financial liability shall be offset and the net amount presented in the balance sheet when, and only when, an entity currently has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

 

(h) Impairment

Non-financial assets other than goodwill

 

The carrying amounts of non-financial assets are reviewed at each balance sheet date to determine whether there is any indication of impairment in value and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If any such indication exists, or when annual impairment testing for an asset (intangible assets with indefinite useful life and intangible assets not yet available for use) is required, the asset's recoverable amount is estimated.

 

An impairment in value is recognised whenever the carrying amount of the asset or its cash-generating unit exceeds its recoverable amount. Impairment in value is recognised in the income statement.

 

The recoverable amount is the higher of an asset's fair value less cost to sell and value in use. The fair value less cost to sell is the amount obtainable from the sale of an asset in an arm's length transaction. Value in use is the estimated future cash flow discounted to their present value using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset, expected to arise from the continuing use of the asset and from its disposal at the end of its useful life.

 

Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash-generating unit to which the asset belongs.

 

An impairment in value is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment in value is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment in value has been recognised. Reversals of impairment in value are recognised in the income statement.

 

Goodwill

 

Goodwill is tested annually for impairment, as well as when there is any indication that the goodwill may be impaired.

 

For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating-units expected to benefit from the synergies of the business combination. If the recoverable amount of the cash-generating-unit is less than the carrying amount of the unit including the goodwill, the impairment in value is recognised in the income statement and allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment in value recognised for goodwill is not reversed in subsequent periods.

 

 

 

Financial assets

 

The Group and the Company assess at each balance sheet date whether there is any objective evidence that a financial asset is impaired, and recognise an allowance for impairment when such evidence exists.

 

Assets measured at amortised cost

 

If there is objective evidence that an impairment in value on loans and receivables measured at amortised cost has been incurred, the amount of the impairment in value is measured as the difference between the asset's carrying amount and the present value of estimated future cash flow (excluding future credit losses that have not been incurred), discounted at the financial asset's original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced through the use of an allowance accounts are held separately from the asset. The amount of the impairment in value is recognised in the income statement.

 

If in a subsequent period, the amount of the impairment in value decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment in value is reversed. Any subsequent reversal of an impairment in value is recognised in the income statement, to the extent that the carrying value of the asset does not exceed its amortised cost at reversal. 

 

(i) Financial liabilities

 

Financial liabilities are recognised on the balance sheet when, and only when, the Group and Company become parties to the contractual provisions of the financial instrument.

 

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired.

 

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.

Other payables and accruals

 

Other payables and accruals are recognised initially at fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Group and Company, and are subsequently measured at amortised cost, where applicable, using the effective interest method.

 

Effective interest method

 

The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period.

 

 

(j) Provisions

 

Provisions are recognised when the Group and Company have a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. The expenses relating to any provisions are recognised in the income statement.

 

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as finance costs.

 

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimates. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.

 

(k) Employee benefits

 

Defined contribution plan

 

Contributions to defined contribution plans are recognised as an expense in the income statement in the same financial year as the employment that gives rise to the contributions.

 

Employee leave entitlement

 

Employee entitlements to annual leave are recognised when they accrue to employees. An accrual is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date.

 

(l) Revenue recognition

 

Management fee income

 

Management fee income is recognised on an accrual basis in accordance with the substance of the relevant agreements.

Finance income

Interest income from fixed depositsis recognised as the interest accrues (using the effective interest method that is the rate that exactly discounts estimated future cash receipt through the expected life of the financial instrument) to the net carrying amount of the financial asset.

 

(m) Finance costs

 

Interest expense are expensed in the income statement in the period in which they are incurred, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to be prepared for its intended use or sale. There is no borrowing cost incurred by the Group during the financial year that has been capitalised.

 

 

(n) Income tax - current and deferred

 

Income tax for the financial year comprises current and deferred taxes. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case, such income tax is recognised in equity.

 

Current income tax is the expected tax payable on the taxable income for the financial year, using tax rates enacted or substantively enacted by the balance sheet date, and any adjustment to tax payable in respect of previous financial years.

 

Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled based on tax rates enacted or substantively enacted by the balance sheet date.

 

Deferred tax liabilities are recognised for all taxable temporary differences associated with investments in subsidiaries, except where the timing of the reversal of the temporary difference can be controlled by the Group and it is probable that the temporary difference will not be reversed in the foreseeable future.

 

Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax losses and unabsorbed capital allowances to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carry-forward of unused tax losses and unused tax credits can be utilised.

 

At each balance sheet date, the Group and the Company re-assess unrecognised deferred tax assets and the carrying amount of deferred tax assets. The Group and the Company recognise a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. The Group and the Company conversely reduce the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax asset to be utilised.

 

Deferred tax is charged or credited directly to equity if the tax relates to items that are charged or credited, in the same or a different period, directly to equity.

 

Deferred tax assets and liabilities are offset against each other if they relate to the same tax authority and can be offset.

 

(o) Foreign currency translation

 

Functional and presentation currency

 

The individual financial statements of each entity in the Group are measured in the currency of the primary economic environment in which the entity operates ("functional currency"). The consolidated financial statements of the Group and the balance sheet of the Company are presented in United States dollar, which is the functional currency of the Company and the presentation currency of the consolidated financial statements.

 

 

 

Transactions and balances

 

Transactions in a currency other than the functional currency ("foreign currency") are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rates prevailing on the balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Non-monetary items that are measured at fair value in a foreign currency are translated to the functional currency using the exchange rates prevailing at the date the fair value was determined.

 

Exchange differences arising on the settlement of monetary items and on translation of monetary items at the balance sheet date are recognised in the income statement for the financial year.

 

For the purpose of presenting consolidated financial statements of the Group and the balance sheet of the Company, the results and financial position of all the Group's entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

 

(i) assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the balance sheet date;

 

(ii) income and expenses for each income statement are translated at average exchange rate for the financial year (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case, income and expenses are translated using the exchange rates at the dates of the transactions); and

 

(iii) all resulting exchange differences are recognised in the foreign currency translation reserve within equity.

 

Goodwill and fair value adjustments arising on acquisition of a non-Singapore operation are treated as assets and liabilities of the non-Singapore operation and are recorded in the functional currency of the non-Singapore operation and translated at the closing exchange rate at the balance sheet date.

 

On disposal of a foreign operation, the cumulative amount of exchange differences deferred in equity relating to that foreign operation is recognised in the consolidated income statement as a component of the gain or loss on disposal.

 

(p) Share capital and treasury shares

 

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new equity instruments are shown in equity as a deduction against the share capital account.

 

When share capital recognised as equity is repurchased ("treasury shares"), the consideration paid including any directly attributable incremental cost is presented as a deduction within equity, until they are subsequently cancelled, sold or reissued.

 

 

Where shares are held as treasury shares, the Company may at any time:

 

(i) sell the treasury shares for cash;

 

(ii) transfer the treasury shares for the purposes or pursuant to an employees' share scheme;

 

(iii) transfer the treasury shares as consideration for the acquisition of shares in or assets of another company or assets of a person;

 

(iv) cancel the treasury shares; or

 

(v) sell, transfer or otherwise use the treasury shares for such other purposes as may be prescribed by the Minister Of Finance.

 

When the treasury shares are subsequently cancelled, the cost of the treasury shares is deducted from the share capital account if the shares are purchased out of capital of the Company, or against the retained earnings of the Company if the shares are purchased out of earnings of the Company.

 

When the treasury shares are subsequently sold or reissued pursuant to the employee share option scheme and share performance plan, the cost of treasury shares is reversed from the treasury shares account and the realised gain or loss on sale or reissue, net of any directly attributable incremental transaction costs and related income tax, is recognised as a change in equity of the Company.

 

(q) Operating leases

 

As lessee

 

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets, are classified as operating leases.

 

Payments made under operating leases (net of any incentives received from the lessor) are taken to the income statement on a straight-line basis over the term of the lease.

 

When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the financial year in which termination takes place.

 

 

 

3. Critical accounting judgements and key sources of estimation uncertainty

 

(a) Critical judgements made in applying the accounting policies

 

In the process of applying the accounting policies, the management is of the opinion that there are no critical judgements involved that have a significant effect on the amounts recognsied in the financial statements except as discussed below.

 

(i) Impairment of investment in subsidiaries and financial assets

 

The Group and the Company follow the guidance of IAS 36 and IAS 39 in determining when investments in subsidiaries or financial assets are other than temporary impaired. This determinationrequires the assumption made regarding the duration or extent to which the fair value of an investment or a financial asset is less than its costs and the financial health of and near-term business outlook for the investment or financial asset, including factors such as industry and sector performance, changes in technology and operational and financing cash flow.

 

 

Based on the management's assessment, it has determined that the investment in subsidiaries and financial assets are not impaired as at 31 August 2009. The carrying amount of investment in subsidiaries at 31 August 2009 was US$537,742 (2008: US$537,741).

 

(ii) Patents and trademarks

Patents and trademarks are capitalised in accordance with the accounting policy in Note 2 (e) (ii). Initial capitalisation of costs is based on management's judgement that the assets are separate from the entity, the entity controls the asset and it is probable that future economic benefits from the assets will flow to the entity. The management has determined the useful lives of patents and trademarks after having considered various factors such as competitive environment, product life cycles, operating plans and the macroeconomic environment of the patents and trademarks. In addition, management believes there is no foreseeable limit to the period over which the indefinite trademarks are expected to generate net cash inflows for the Group.

 

(iii) Going concern basis of preparation

The financial statements of the Company and its subsidiaries have been prepared on a going concern basis. The appropriateness of the going concern basis is assessed after taking into consideration all relevant information about the future of the Company and its subsidiaries available at the date of this report. However, the current uncertain economic outlook may affect consumer's discretionary spending and confidence which could in turn impact the future operations of the Group.

 

(b) Key sources of estimation uncertainty

 

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities and the reported amounts of revenue and expense within the next financial year, are discussed below.

 

(i) Depreciation of plant and equipmentand amortisation of computer software

 

Plant and equipment and computer software are depreciated/amortised on a straight-line basis over their estimated useful lives. Management estimates the useful lives of these assets to be 3 years. The carrying amounts of the Group's plant and equipment and computer software as at 31 August 2009 were US$206,552 and US$20,157 (2008: US$157,984 and US$24,955) respectively. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation/amortisation charges could be revised.

 

(ii) Income taxes 

 

Significant judgement is involved in determining the Group's provision for income taxes. The Group and the Company recognise expected liabilities for tax based on an estimation of the likely taxes due, which requires significant judgement as to the ultimate tax determination of certain items. Where the actual liability arising from these issues differs from these estimates, such differences will have an impact on income tax and deferred tax provisions in the period when such determination is made

 

 

 

(iii) Impairment of goodwill and patents and trademarks 

 

The management determines whether goodwill and patents and trademarks are impaired at least on an annual basis and as and when there is an indication that goodwill and patents and trademarks may be impaired. Such assessment and determination require the management to make judgements, estimates and assumptions. These estimates and associated assumptions are continually evaluated and are based on historical experience and other factors including expectations of future events or changes in circumstances. Actual results may differ from these estimates. The carrying amounts of goodwill and patents and trademarks as at 31 August 2009 were US$464,726 and US$436,999 (2008: US$464,726 and US$153,338), respectively.

 

 

4. Plant and equipment

 

Group	Office renovation		Computers		Machinery, office equipment, furniture and fittings		Total
2009	US$		US$		US$		US$
Cost
As at 1 September 2008	117,788		39,824		44,413		202,025
Additions	-		18,680		150,802		169,482
As at 31 August 2009	117,788		58,504		195,215		371,507
Accumulated depreciation
As at 1 September 2008	28,621		7,478		7,942		44,041
Depreciation charge for the year	39,263		17,160		64,491		120,914
As at 31 August 2009	67,884		24,638		72,433		164,955
Net book value
As at 31 August 2009	49,904		33,866		122,782		206,552

 

 

 

Group	Office renovation		Computers			Machinery, office equipment, furniture and fittings		Total
2008	US$		US$			US$		US$
Cost
As at 1 September 2007	-		-			-		-
Arising from acquisition of a
subsidiary	-		4,687			2,226		6,913
Additions	118,091		35,097			42,237		195,425
Foreign currency translation
difference	(303)		40			(50)		(313)
As at 31 August 2008	117,788		39,824			44,413		202,025
Accumulated depreciation
As at 1 September 2007	-		-			-		-
Depreciation charge for the year	28,695		7,495			7,962		44,152
Foreign currency translation
difference	(74)		(17)			(20)		(111)
As at 31 August 2008	28,621		7,478			7,942		44,041
Net book value
As at 31 August 2008	89,167		32,346			36,471		157,984

 

	Computers
	2009		2008
Company	US$		US$
Cost
As at the beginning of the year	3,523		-
Additions	3,724		3,523
As at end of the year	7,247		3,523
Accumulated depreciation
As at the beginning of the year	720		-
Depreciation charge for the year	2,416		720
As at end of the year	3,136		720
Net book value
As at end of the year	4,111		2,803

 

 

 

5. Investment in subsidiaries

 

	Company
	2009		2008
	US$		US$
Unquoted equity shares, at cost	537,742		537,741

 

Particulars of the subsidiaries are as follows:

 

			Effective equity
		Country of	interest held
		incorporation/	by the Group
Subsidiaries	Principal activities	operation	2009	2008
Held by the Company			%	%
Renewable Power Pte  Ltd	Research and development of renewable energies for household consumers	Singapore	100	100
Alternative Energy Technology Pte Ltd	Holding of trademarks and intellectual properties	Singapore	100	100
Alternative Energy Limited	Holding of operational subsidiaries but is currently dormant	British Virgin Islands	100	-
Held by subsidiary
- Alternative Energy Limited
Alternative Energy (Africa) Limited	Dormant	British Virgin Islands	100	-

 

All the subsidiaries are audited by BDO LLP, except for Alternative Energy Limited and Alternative Energy (Africa) Limited, which were newly incorporated during the financial year, currently dormant and are not audited.

 

 

6. Intangible assets

 

Group	Goodwill		Computer software		Patents		Trademarks		Total
2009	US$		US$		US$		US$		US$
Cost
As at 1 September 2008	464,726		30,351		57,626		95,712		648,415
Additions	-		7,223		160,482		123,179		290,884
As at 31 August 2009	464,726		37,574		218,108		218,891		939,299
Accumulated amortisation
As at 1 September 2008	-		5,396		-		-		5,396
Amortisation for the year	-		12,021		-		-		12,021
As at 31 August 2009	-		17,417		-		-		17,417
Net book value
AAs at 31 August 2009	464,726		20,157		218,108		218,891		921,882

 

 

6. Intangible assets (Continued)

 

Group	Goodwill		Computer software		Patents		Trademarks		Total
2008	US$		US$		US$		US$		US$
Cost
As at 1 September 2007	-		-		-		-		-
Additions	-		30,327		57,626		95,712		183,665
Arising from acquisition
of a subsidiary	464,726		100		-		-		464,826
Foreign currency
translation difference	-		(76)		-		-		(76)
As at 31 August 2008	464,726		30,351		57,626		95,712		648,415
Accumulated amortisation
As at 1 September 2007	-		-		-		-		-
Amortisation for the year	-		5,410		-		-		5,410
Foreign currency
translation difference	-		(14)		-		-		(14)
As at 31 August 2008	-		5,396		-		-		5,396
Net book value
As at 31 August 2008	464,726		24,955		57,626		95,712		643,019

 

 

	Patents
	2009		2008
Company	US$		US$
Cost and carrying amount
As at 1 September	57,626		-
Additions	158,457		57,626
As at 31 August	216,083		57,626

 

Included in the patents is an amount of approximately US$1 being the cost of the option to purchase certain patents from a related party (the "vendor"). In October 2008, the Company has engaged an independent professional valuer to value certain patents to be purchased from the vendor. Based on the discounted cash flow method of valuation, the independent professional valuer has valued these patents to be at approximately US$33 million. Having considered the valuation performed by the professional valuer, the Company and the vendor have agreed to fix the purchase consideration for the purchase of these patents at US$20 million. This purchase consideration shall be fully settled by the issue of new ordinary shares of the Company on formula agreed between the Company and the vendor. At the date of the financial statements, the proposed purchase has not been completed.

 

 

 

7. Cash and bank balances

 

	Group				Company
	2009		2008		2009		2008
	US$		US$		US$		US$
Cash on hand and bank balances	698,636		1,241,323		624,364		1,118,333
Fixed deposits	1,100,096		4,673,437		1,075,691		4,659,307
Cash and bank balances	1,798,732		5,914,760		1,700,055		5,777,640
Less: fixed deposit pledged to a bank	(97,025)		(85,773)
Cash and cash equivalents as per
consolidated cash flow statement	1,701,707		5,828,987

 

Fixed deposits pledged to a bank are deposits that are placed with banks, with original maturing periods of not more than 183 (2008: 90) days. Interest rate ranges from 0.06% to 1.5% (2008: 0.825% to 4.4%) per annum.

 

Cash and bank balances are denominated in the following currencies:

 

	Group				Company
	2009		2008		2009		2008
	US$		US$		US$		US$
Singapore dollar	188,772		330,749		90,096		193,629
United States dollar	1,609,960		5,584,011		1,609,959		5,584,011
	1,798,732		5,914,760		1,700,055		5,777,640

 

The Group's and the Company's fixed deposits of US$97,025 and US$72,620 respectively (2008: US$85,773 and US$71,643) are pledged to a bank for credit card facilities granted to the company and a subsidiary company and for the GST registration of a subsidiary company.

 

 

8. Other receivables

 

	Group				Company
	2009		2008		2009		2008
	US$		US$		US$		US$
Other receivables	21,215		2,417		20,976		2,417
Deposits	49,586		143,295		12,164		-
Prepayments	29,160		4,118		-		-
Amounts due from subsidiaries	-		-		2,711,196		1,184,177
	99,961		149,830		2,744,336		1,186,594

 

All other receivables are not past due and are not impaired as at 31 August 2009 and 31 August 2008.

 

Amounts due from subsidiaries are interest-free, unsecured and repayable on demand.

 

 

 

Other receivables are denominated in the following currencies:

 

	Group				Company
	2009		2008		2009		2008
	US$		US$		US$		US$
United States dollar	20,976		-		1,361,676		-
Singapore dollar	78,985		149,830		1,381,551		1,183,068
British pound	-		-		1,109		3,526
	99,961		149,830		2,744,336		1,186,594

 

 

9. Issued capital and treasury shares

 

(a) Issued capital

	Group and Company
	2009		2008		2009		2008
	Number of ordinary shares				US$		US$
Issued and paid-up
As at 1 September	1,183,092,564		570,445,035		7,916,392		3,604,496
Issue of new shares	-		603,235,765		-		3,941,663
Issue of new ordinary shares
to acquire subsidiary	-		9,411,764		-		400,000
Less: Share issue expenses	-		-		-		(29,767)
As at 31 August	1,183,092,564		1,183,092,564		7,916,392		7,916,392

 

The Company has one class of ordinary shares. All issued ordinary shares are fully paid and carry one vote per ordinary share and also carry a right to dividends. There is no par value for these ordinary shares.

 

(b) Treasury shares

	Group				Group
	31.8.2009		31.8.2008		31.8.2009		31.8.2008
	No. of shares		No. of shares		US$		US$
Balance at beginning of
financial year	-		-		-		-
Purchase during the financial
year	40,042,966		-		1,200,000		-
Balance at end of financial
year	40,042,966		-		1,200,000		-

 

In September 2008, the Company acquired 40,042,966 of its own shares from its shareholders through off-market purchases at an average price of US$0.03 per share. The Company paid US$1,200,000 in cash to acquire the said shares. This amount was deducted from issued share capital within the shareholders' equity. The shares brought back are held as treasury shares.

 

(c) Share options and share performance schemes

 

Since the date of inception, no options or shares were granted or awarded under the ESOS or the SPP, respectively.

 

10. Foreign currency translation reserve

 

The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of the Group's subsidiary whose functional currency is not the United States dollar. This reserve is non-distributable.

 

 

11. Other payables and accruals

 

	Group				Company
	2009		2008		2009		2008
	US$		US$		US$		US$
Other payables	66,354		1,133		66,354		-
Accruals	41,652		113,661		19,432		85,264
Amount due to a Director	7,241		66,490		7,241		66,490
	115,247		181,284		93,027		151,754

 

Amount due to a Director is due to Christopher Nightingale andis interest-free, unsecured and repayable on demand.

 

Other payables and accruals are denominated in the following currencies:

 

	Group				Company
	2009		2008		2009		2008
	US$		US$		US$		US$
British pound	25,632		10,264		25,632		10,264
Singapore dollar	62,374		104,530		40,154		75,000
United States dollar	27,241		66,490		27,241		66,490
	115,247		181,284		93,027		151,754

 

 

12. Provisions

 

	Group				Company
	2009		2008		2009		2008
	US$		US$		US$		US$
Provision for unutilised leave	22,474		10,863		-		-
Provision for reinstatement cost	20,820		21,195		-		-
	43,294		32,058		-		-

 

Movements of provisions during the financial year are as follows:

 

	Group				Company
	2009		2008		2009		2008
	US$		US$		US$		US$
At beginning of financial year	32,058		-		-		-
Additions during the year	11,236		32,058		-		-
As at end of the financial year	43,294		32,058		-		-

 

 

Provision for unutilised leave represents employee entitlements to annual leave as a result of services rendered by employees up to the balance sheet date.

 

Provision for reinstatement cost is relation to the obligation for dismantlement, removal or restoration of office premises.

 

 

13. Loss before income tax

 

In addition to the information disclosed elsewhere in the financial statements, the Group's loss before income tax is arrived at after charging the following:

 

	Group
	2009		2008
	US$		US$
Staff costs
- Directors' remuneration other than fees	278,795		108,331
- Directors' fees	-		80,000
- Employee benefits expense	347,280		174,273
Amortisation of intangible assets	12,021		5,410
Depreciation of plant and equipment	120,914		44,152
Office rental	101,102		124,033
Foreign currency exchange loss, net	44,813		25,469
Research and development costs	54,305		92,682
Professional fees	486,353		313,793

 

 

14. Income tax

 

	Group
	2009		2008
	US$		US$
Current income tax
- under provision in prior period	(115)		(658)

 

The income tax expense has been determined by applying the Singapore income tax rate of 17% (2008:18%) to loss before income tax and total charge for the financial year can be reconciled to accounting loss as follows:

 

	Group
	2009		2008
Reconciliation of effective tax rate	US$		US$
Loss for the financial year	(2,577,929)		(1,239,155)
Tax calculated at statutory rate of 17% (2008:18%)	(438,248)		(223,048)
Effect of change in tax rate	7,616		-
Under provision in prior period	(115)		(658)
Expenses not deductible for tax purposes	268,488		85,961
Income not subject to tax	(407)		-
Deferred tax assets not recognised	162,551		137,087
	(115)		(658)

 

 

Deferred tax assets not recognised related to the following:

 

	Group
	2009		2008
	US$		US$
Tax losses	(270,352)		(127,745)
Property, plant and equipment	(25,465)		(7,387)
Provision for unutilised leave	(3,821)		(1,955)
	(299,638)		(137,087)

 

Deferred tax assets have not been recognised because it is not certain whether future taxable profits will be available against which the Group can utilise the benefits.

 

As at the balance sheet date, the Group had unutilised tax losses amounting to US$1,590,309 (2008: US$709,695), which are available for set-off against future taxable profits subject to the provisions of the Singapore Income Tax Act and agreement by the Singapore tax authority.

 

 

15. Basic and diluted loss per share

 

(a) Basic loss per share

 

Basic loss per share is calculated by dividing the Group's loss attributable to equity holders by the weighted average number of ordinary shares in issue during the financial year.

 

The loss per share is calculated as follows:

	Group
	2009		2008
Net loss attributable to equity holders of the Company	US$2,578,044		US$1,239,813
Weighted average number of ordinary shares	1,144,110,254		1,118,493,512
Basic loss per share	#		#

 

# denotes a figure which is less than US$0.01 cent

 

(b) Diluted loss per share

 

There are no potentially dilutive shares in issue.

 

 

16. Acquisition of a subsidiary

 

On 30 October 2007, the Company entered into a sale and purchase agreement with Dr Goh Swee Ming (the "vendor") pursuant to which the vendor sold his shareholding interest of 100% in Renewable Power Pte Ltd, a company incorporated in Singapore, to the Company for a consideration of US$400,000 which was fully paid or satisfied by way of the issuance of 9,411,764 new ordinary shares in the Company at the issue price of US$0.0425 per ordinary share (the "consideration shares"). The US$0.0425 price is based on the market price of the share as at 30 October 2007.

 

The allotted and issued consideration shares rank pari passu in all respects with the then existing ordinary shares of the Company save that they will not rank for any dividends, rights, allotments or any distribution, the record date of which falls before the date of issue of the consideration shares. The consideration shares represented approximately 0.79% of the enlarged issued share capital of the Company upon the completion of this acquisition.

 

 

The acquired company did not contribute any revenue but did contribute a net loss of approximately US$746,041 to the consolidated income statement for the financial year, since acquisition date. If the acquisition had occurred on 1 September 2007, the Group's revenue would remain the same whilst and the Group's net loss would have been US$1,304,540.

 

Subsequent to the above transactions, Dr Goh Swee Ming became a Director of the Company on 17 November 2007.

The carrying amount and fair value of identifiable assets and liabilities of Renewable Power Pte Ltd as at the date of acquisition and the net cash inflow on acquisition were as follows:

 

	Carrying amount before combination		Fair value recognised on acquisition
	US$		US$
Plant and equipment	6,913		6,913
Intangible asset - computer software	100		100
Cash and bank balances	36,575		36,575
Current assets (other than cash and bank balances)	57,777		57,777
Current liabilities	(166,091)		(166,091)
Total net liabilities	(64,726)		(64,726)
Goodwill (Note 6)			464,726
Total purchase consideration			400,000

 

The purchase consideration is fully settled by the issuance of 9,411,764 ordinary shares of the Company.

 

		2007
		US$
Consideration paid by cash		-
Cash acquired		36,575
Net cash inflow on acquisition of subsidiary		36,575

 

Goodwill is attributable to the acquisition of subsidiary which is expected to provide future economic benefits in excess of the normal return generated from the acquired net identifiable assets.

 

 

17. Related parties transactions

 

For the purposes of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

 

 

(a) In addition to the information disclosed elsewhere in the financial statements, related party transactions between the Group and Company and its related parties during the financial year were as follows:

 

	Company
	2009		2008
	US$		US$
Advances to subsidiary	1,055,413		1,085,612
Payment made on behalf of subsidiaries	142,814		98,565
Payment made on behalf by subsidiary	31,208		-
Management fee charged to subsidiaries	360,000		-

 

(b) Compensation of Directors and key management personnel

 

The remuneration of Directors during the financial year was as follows:

 

	Group
	2009		2008
	US$		US$
Directors' fees	-		80,000
Remuneration	278,795		101,325
Post-employment benefits - CPF contribution	6,577		6,065
Short-term benefits	1,077		941
Consultancy fee paid	80,000		18,852
Consultancy fee paid to companies in which certain
directors have interest	40,000		-
	406,449		207,183

 

The remuneration of Directors is determined by the Remuneration Committee having regard to the performance of individuals and market trends. The remuneration disclosed above includes only the Directors as there is no personnel other than Directors who are considered to be a member of key management of the Group.

 

 

18. Operating lease commitments

 

At the balance sheet date, the commitments in respect of non-cancellable operating leases of office premisesand equipmentwere as follows:

 

	Group				Company
	2009		2008		2009		2008
	US$		US$		US$		US$
Future minimum lease payments payable:
Within one financial year	105,909		107,302		-		-
In second to fifth financial year inclusive	134,237		36,400		-		-
	240,146		143,702		-		-

 

 

The above operating lease commitments are based on existing rates. The lease agreement provides for a periodic revision of such rates in the future.

 

The Group has an option to renew the lease for another 1 year after the expiry of the current lease term.

 

 

 

 

19. Financial risk management

 

The Group's and the Company's activities are exposed to a variety of financial risks: market risk (including foreign exchange risk and interest risk), credit risk and liquidity risk. The Group's and the Company's overall risk management programme focuses on the predictability of financial markets and seeks to minimise potential adverse effects on the Group's and the Company's financial performance. The Group and the Company do not use derivatives financial instruments to hedge any risk exposures.

 

The Group and the Company have established risk management policies and guidelines, which set out its overall risk management strategies.

 

(a) Credit risk

The carrying amounts of cash and bank balances and other receivables represent the Group's and the Company's maximum exposure to credit risk in relation to financial assets. The Group and the Company have no significant concentration of credit risk.

 

Credit risk is managed on a group basis. Credit risk arises from cash and bank balances, deposits with banks and financial institutions, including outstanding receivables and committed transactions.

 

Cash and fixed deposits are placed with major and reputable financial institution which is regulated and located in Singapore. Management is not expecting any counterparty to fail to meet its obligations.

 

As at balance sheet date, the Group and Company's credit risk in respect of cash and bank balances are concentrated on bank balances kept in a single bank amounting to $1,797,374 (2008: $5,791,780) and $1,700,053 (2008: $5,777,637) or 100% (2008: 98%) and 100% (2008: 100%) respectively.

 

(b) Interest rate risk

 

Interest rate risk is the risk that the fair value future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group's and the Company's exposure to interest rate risk arises primarily from their fixed deposits with financial institution.

 

 

The table below shows the sensitivity analysis of interest rate risk showing the effect on income statement if the United States dollar and Singapore dollar interest rates had been 100 (2008: 100) basis points, with all other variables held constant.

 

	2009		2008
	Increase in basis point	Increase/ (Decrease) in profit	Increase in basis point	Increase/ (Decrease) in profit
		US$		US$
Group
Fixed deposits	+100	10,978	+100	35,920
Company
Fixed deposits	+100	10,735	+100	35,869

 

A 100 basis points decrease in the United States dollar and Singapore dollar interest rates would have an equal but opposite effect.

 

The Group and the Company have no significant interest rate risk. As at the balance sheet date, the Group and the Company have not adapted any specific risk management on interest rate risk.

 

(c) Foreign currency risk

 

The Group and the Company are exposed to currency risk arising from various currency exposures. The currencies giving rise to this risk are primarily Singapore dollar and British pound. Exposure to foreign currency risk is monitored on an ongoing basis by the Group and the Company to ensure that the net exposure is at an acceptable level, as the Group and the Company manage its transactional exposure by a policy of matching, as far as possible, receipts and payments in each individual currency. As the entities in the Group transacts substantially in the functional currency of the respective entities within the Group, the Group's exposure to currency risk is not significant.

(d) Liquidity risk

 

The Group and the Company ensure availability of funds through an adequate of cash and where necessary, fund raising exercise will be considered via right issues, private placements, other equity or equity-related exercise.

 

Prudent liquidity risk management implies maintaining sufficient cash. Due to the dynamic nature of the underlying businesses, the Group and the Company financial control maintains flexibility in funding by maintaining availability of a sufficient balance of cash. Management monitors rolling forecast of the Group's liquidity reserve (comprising cash and bank balances) on the basis of expected cash flow.

 

All financial liabilities as disclosed in the balance sheet are payable within the next twelve months.

 

(e) Fair value of financial assets and financial liabilities

 

The carrying amounts of cash and bank balances, other receivables, other payables and accruals and amount due to a Director approximate to their respective fair values due to the relatively short-term maturity of these financial instruments.

 

 

(f) Capital risk management

 

The management's policy is to maintain a strong capital base so as to maintain investors, creditors and market confidence and to sustain future development of the business. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. The Group regards the equity attributable to shareholders as capital. Equity is represented by net assets.

 

The Group maintains an optimum capital structure by various means such as deciding on the amount of dividends paid to shareholders, return of capital to shareholders, issue of new shares to reduce debts, purchasing and re-issuing of treasury shares as it deems beneficial to the interests of its shareholders.

 

In September 2008, the Company purchased its own shares from its shareholders through off-market purchasesas disclosed in Note 9 to the financial statements. Primarily such actions are intended to be used for issuing shares under the Group's share options performance plan schemes. Buy and sell decisions are made on a specific transaction basis by the management. The Group does not have a defined share buy-back plan.

 

There are no further changes in the Group's approach to capital management during the financial year 2009 and 2008.

 

Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.

 

 

20. Segment reporting

 

No segment reporting is presented as the Group is principally engaged in a single business segment of dealing with household and industrial clean energy and a single geographical segment which is located in Asia.

 

 

21. Contingent liabilities

 

Continuing financial support

 

The Company has given undertaking to its subsidiaries to provide financial support to these companies, where necessary, to enable them to operate as going concern and to meet their obligations for at least 12 months from the date of their respective audited financial statements.

 

At the end of the financial year, the subsidiaries had capital deficiencies of approximately US$2,168,000(2008: US$670,000) including amounts due by the subsidiaries to the Company of US$2,711,000 (2008: US$1,184,000).

 

In the opinion of the management, no significant actual losses are expected to arise from these contingent liabilities.

 

 

 

22. Events after the reporting period

 

(i) Re-issue of treasury shares

 

In November 2009, the Company re-issued 19,370,000 treasury shares to shareholders. These shares were issued at US$0.03. Cash amounting to US$581,100 was raised from this exercise.

 

(ii) Incorporation of subsidiaries

 

On 10 November 2009, Alternative Energy Limited (BVI) has incorporated a wholly-owned subsidiary in British Virgin Islands under the name of Alternative Energy (Middle East) Limited. In addition, on 24 December 2009, the Company has also incorporated a wholly-owned subsidiary in British Virgin Islands under the name of Alternative Energy Worldwide Limited.

 

(iii) Issue of new ordinary shares

 

In February 2010, the Company issued 15,580,000 new ordinary shares to shareholders. These ordinary shares were issued at US$0.03. Cash amounting to US$467,400 was raised from this exercise.

 

ENDS

 

For further information, please contact:
Alternative Energy Limited
Dr. Eric Goh, Director	Tel: +65 6873 7782
Richard Lascelles, Director	Tel: +44 (0) 20 7408 1067
Beaumont Cornish Limited Roland Cornish	Tel: +44 (0) 20 7628 3396