ALR.L Regulatory News (ALR)

12 December 2014

ALTERNATIVE ENERGY LIMITED

("Alternative Energy" or "the Company")

Final Results and Report and Accounts

The Company today announces that it has published the Report and Accounts for the year ended 31 December 2013 ("the Accounts"), and they are being posted to shareholders today. The Accounts will shortly be available on the Company website, www.alternativeenergy.com.sg and extracts are set out below:

Chairman's Statement

The financial statements presented in this review follow the delayed interim results to 30 June 2013, and reflect the period of turmoil through which the Company was passing at the end of 2013. Their publication has been considerably delayed as the Company and its advisers have been seeking to reflect in the financial statements the effect of the delays and uncertainties of the plans which it announced in 2012 on the Company's business and assets - and in particular on the valuation of its Intellectual property.

The Board naturally regrets the delay in publishing the Annual Results to 31 December 2013 and the Interim Results to 30 June 2014. Our approach has been to model the anticipated cashflows to arrive at an impairment in our December 2013 Accounts of US$ 11.57 million (in addition to the US$1.43 million amortisation principally of our US patents). The resultant carrying value is also carried forward into the Interim Results to 30 June 2014 less an additional amortisation of US$0.72 million. However, due to the lack of sales and demonstrable sales orders and in our view the impracticality and lack of meaningfulness of commissioning a third party valuation report, we have not been able to satisfy our auditors that there is sufficient back-up for the ongoing carrying value of our intellectual property. The Financial Statements are therefore qualified solely as to the uncertainty of this issue.

During this period the Company was wrestling with the delays in its anticipated Indonesian business arrangements with MUP, which had engaged the majority of the Company's resources in 2013. The Company's shares were suspended from trading between October 2013 and April 2014 pending release of the Company's interim results which required resolution of the Company's future by the Board. Revenues anticipated from the Indonesian contracts signed by the Company totally failed to materialise as our partner, MUP, was unable to obtain the expected off take agreements with the Indonesian energy monopoly, PLN, in respect of the projects surveyed by our team. This required the Company to refocus its business, but this in turn has been hampered by the suspension of the Company's shares and the delays and frustrations in finalising its financial statements.

Clearly many lessons have been learned and many shortcomings, both internal and external are being addressed. First, the Company is currently considering what action to take in respect of its arrangements with MUP, which have cost the Company both time and money. Steps will be taken to see how this can be made up. Secondly, the Company is changing its business focus and direction to ensure that it does not depend on one jurisdiction and that it develops sales of goods which are ready for market and for which there is an established need, such as LED street lights, whilst also seeking revenue generating projects for its next generation solar technologies. Thirdly, the Company will be seeking profitable and revenue generating businesses which it can acquire to augment the organic growth of revenues from its own products, which has been disappointingly slow. Finally the Company will be carrying out a total review of both internal and external auditing teams to ensure that it does not face a situation in the future where its shares are suspended as a result of late filing of accounts.

In respect of the financial statements themselves, apart from the lack of revenue and losses associated with the delay of the Indonesian business, the major issue has been a significant impairment of the Company's intellectual property portfolio. Whilst it is recognized that the Company's eRoof technologies, on which the Company has spent significant sums by way of patent protection, and which is currently the subject of several patents, still have a significant value as next generation solar technology, there has been some difficulty in assessing the precise value of this as it is based on future projected earnings. Whilst the Company has several potential projects and orders in view, the Company needs to be cautious in its valuation until revenues are actually generated. As a result the Company has impaired its intellectual property significantly, despite the fact that it has been increasing the number of granted patents, and this impaired valuation could go up or further down depending on the realisation of revenues based on its technologies. Whilst the board and I believe that the time has now come for eRoof technologies to be commercially exploited as a realistic alternative roofing material in place of the current system of solar panels, we have acceded to the auditors caution in respect of our intellectual property valuation and therefore taken the resulting impairment into the December 2013 accounts.

As can be seen the combination of the delay of the planned Indonesian business and impairment of our intellectual property portfolio has put the Company under considerable pressure, and measures have had to be taken to ensure the Company's continued survival until we have had a chance to grow new revenue streams. In this respect it was announced in March (and revised in May), that the Company entered into a GBP 10 million convertible note program to provide it with working capital as it builds its revenues. To date, the Company has drawn 10 sub-tranches of this facility, representing GBP 250,000 of which 5 sub-tranches have been converted into shares. It is this facility, together with such support as I have been able to bring to the Company which has enabled the Company to survive. The Company anticipates continuing to draw on this facility but hopes to reduce drawings as greater operational revenues are generated. In addition I am continuing to support the Company with my convertible loan agreement in respect of which approximately 4 million US dollars has been drawn and which has been extended by one year from its original expiry date of October 2014. Although a further circa US$3 million remains to be drawn under the Convertible Loan, the Chairman has indicated that his ability to allow the Company to draw further funds under this Convertible Loan will depend upon the circumstances and the realisation by him of further cash from his own sources.

The existence of our ELN program has enabled us to work with our lawyers (who are our principal creditors apart from LDK Solar and myself) to establish a program to address outstanding fees. In the case of LDK, which is still owed a large amount by one of our operating subsidiaries, we are also discussing a means of regulating our arrangements and may have a further announcement in this regard shortly.

Whilst a large part of the team's energies have been expended over the past four months on the process of publishing the delayed accounts, operationally the Group has refocused its activities so as not to be so reliant on any one market. Orders are beginning to arrive from our Indonesian distributors but management is now active on a much broader geographical front. With the financial statements published and the resumption of the trading of the Company's shares, the team will be pressing to complete the arrangements currently being negotiated in several new jurisdictions, including the UK, and we hope to make announcements of our progress following resumption of trading of the Company's shares. The Company is also actively exploring whether revenues can also be accelerated by acquisition as well as organic growth.

Notwithstanding the very difficult period through which we have just come, for the first time in the Company's history the Company has viable products, both solar and lighting, for which there is a demand. Whilst the market remains very competitive, by focus and innovation the Company hopes to earn itself a place in the global green energy market.

It is now for the Company to push hard on the marketing of the products it has started to sell. The benefit of the platform we have established is that it is quickly scalable with little further major capital spend required. Once the Company is able consistently to sell three containers of street lights per month the Board believes that these sales levels will underpin the valuation of the Company and justify its years of research and development.

In respect of product development and research I have little to add to my last statement, issued in March, but it is encouraging to see that buyers are beginning to appreciate the advantages of our technologies, whilst we continue to work with suppliers and partners such as LDK Solar to bring down costs and make our products more competitive.

We are also continuing to explore ways to grow the Company strategically as well as by operational growth while watching the Company's costs in order to ensure that there is no waste in the Group.

We are also happy to report that we have now appointed Beaufort Securities Limited as the Company's joint Broker (alongside Beaumont Cornish our existing Nominated Adviser and joint Broker) to help the Company in building a new profile in London.

The next few months will be a critical period for the Company in order to survive and move forward, but with the commencement of sales of products which have succeeded in the face of international competition in a very competitive market, we finally have something concrete to promote.

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF

Report on the Financial Statements

We have audited the accompanying financial statements of Alternative Energy Limited (the "Company") and its subsidiaries (the "Group") which comprise the consolidated statement of financial position of the Group and the statement of financial position of the Company as at 31 December 2013, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows of the Group and statement of changes in equity of the Company for the financial year ended 31 December 2013, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the "Act") and International Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide 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 profit and loss accounts and balance sheets and to maintain accountability of assets.

Auditor's 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 about 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 auditor's 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 auditor considers internal control relevant to the entity's preparation of financial statements that give a true and fair view 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 entity'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 qualified audit opinion.

Basis for Qualified Opinion on financial statements

As at 31 December 2013, included in the consolidated statement of financial position of the Group are intangible assets of US$16,661,676 and included in the statement of financial position of the Company are intangible assets, investments in subsidiaries and amount due from subsidiaries of US$15,995,872, US$4,848,072, and US$5,634,205 respectively. For the financial year ended 31 December 2013, an impairment loss on intangible assets of US$11,570,000 is charged to the Group's consolidated statement of comprehensive income and the Company's statement of comprehensive income. No provision for impairment has been made for the investments in subsidiaries and amount due from subsidiaries included in the Company's statement of financial position as at 31 December 2013. For the purpose of assessing impairment of the Group's and the Company's intangible assets, investments in subsidiaries and amount due from subsidiaries, the management has prepared a discounted cash flow to determine the value in use of these assets based on the discounted cash flow method as disclosed in Note 11 to the financial statements. Management have prepared the discounted cash flow based on various assumptions including the ability to secure various significant projects which are in preliminary stage of discussion.

We are unable to obtain sufficient appropriate audit evidence regarding the reasonableness and appropriateness of these assumptions made (including the estimated amount of cash inflows that would be generated from certain significant projects) in the discounted cash flow. Consequently, we are unable to determine whether any adjustments to these amounts were necessary and whether the asset values referred to above are therefore supportable.

Qualified Opinion on financial statements

In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the consolidated financial statements of the Group, the statement of financial position of the Company and the 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 December 2013 and 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.

Emphasis of Matter - Material Uncertainty Regarding Continuation as a Going Concern

We draw attention to Note 2.3 to the financial statements which indicates that the Group incurred a net loss of US$15,796,219 during the financial year ended 31 December 2013 and, as of that date, the Group's and the Company's current liabilities exceeded their current assets by US$7,675,560 and US$6,275,377 respectively. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Group's and the Company's ability to continue as a going concern. Our audit opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditor have been properly kept in accordance with the provisions of the Act.

BDO LLP

Public Accountants and

Chartered Accountants

Singapore

5 December 2014

The accompanying notes form an integral part of these financial statements.

The accompanying notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

The accompanying notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

The accompanying notes form an integral part of these financial statements.

STATEMENT OF CHANGES IN EQUITY

The accompanying notes form an integral part of these financial statements.

STATEMENT OF CHANGES IN EQUITY

The accompanying notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS

The accompanying notes form an integral part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

These notes form an integral part of and should be read in conjunction with the accompanying financial statements.

1. General corporate information

Alternative Energy Limited (the "Company") (Registration Number 200619290H) is incorporated and domiciled in Singapore with its principal place of business and registered office at 1 Science Park Road, #02-09, The Capricorn, Singapore Science Park II, Singapore 117528.

On 12 October 2007, the Company was successfully admitted to the AIM, a market operated by the London Stock Exchange Plc in the United Kingdom.

The principal activity of the Company is the provision of technology, hardware and equipment for renewable energy and green energy solutions. It also makes 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 providing management services (including marketing and other necessary services) to its subsidiaries.

The principal activities of the subsidiaries are set out in Note 9 to the financial statements.

The controlling shareholder of the Company is Christopher Nightingale.

The consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company for the financial year ended 31 December 2013 were authorised for issue by the Board of Directors on 5 December 2014.

2. Summary of significant accounting policies

2.1 Statement of compliance

The financial statements have been prepared in accordance with the provisions of the Singapore Companies Act, Chapter 50 and the International Financial Reporting Standards (IFRS), IFRS Interpretations Committee (collectively IFRSs) issued by the International Accounting Standards Board (IASB).

2.2 Basis of preparation

The principal accounting policies adopted in the preparation of the consolidated 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.

The individual financial statements of each Group entity are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company are presented in United States dollar ("US$") which is the functional currency of the Company and the presentation currency for the consolidated financial statements.

2.2 Basis of preparation (Continued)

The preparation of financial statements in compliance with IFRS requires management to make judgements, estimates and assumptions that affect the Group's application of accounting policies and reported amounts of assets, liabilities, revenue and expenses. Although these estimates are based on management's best knowledge of current events and actions, actual results may differ from those estimates. The areas where such judgements or estimates have the most significant effect on the financial statements are disclosed in Note 3.

In the current financial year, the Group has adopted all the new and revised IFRSs that are relevant to its operations and effective for the current financial year. The adoption of these new/revised IFRSs did not result in changes to the Group's accounting policies and had no material effect on the amounts reported for the current or prior years, except as detailed below.

Amendments to IAS 1 Presentation of Items of Other Comprehensive Income

The amendments to IAS 1 require that items presented in other comprehensive income must be grouped separately into those that may be reclassified subsequently to profit or loss and those that will never be reclassified. As the amendments only affect the presentation of items recognised in other comprehensive income, there is no impact on the Group's financial position or financial performance on initial adoption of this standard on 1 January 2013.

IFRS 10 Consolidated Financial Statements and IAS 27 Separate Financial Statements

IFRS 10 replaces the control assessment criteria and consolidation requirements currently in IAS 27 and INT FRS 12 Consolidation - Special Purpose Entities.

IFRS 10 introduces a single new control model, as the basis for determining which entities are consolidated in the Group's financial statements. Under IFRS 10 control exists when the Group has:

- Power over an investee;

- Exposure, or rights, to variable returns from the investee; and

- The ability to use its power over an investee to affect the Group's returns from the investee.

IAS 27 remains as a standard applicable only to separate financial statements.

The Group has applied IFRS 10 retrospectively, in accordance with the transitional provisions of IFRS 10 and changed its accounting policy for determining whether it has control over an entity and whether it is required to consolidate that interest. The adoption of IFRS 10 has not resulted in any changes to the control conclusions reached by the Group in respect of its involvement with other entities as at 1 January 2013.

IFRS 11 Joint Arrangements and IAS 28 Investments in Associate and Joint Ventures

IFRS 11 classifies a joint arrangement as either a joint operation or a joint venture based on the parties' rights and obligations under the arrangement. A joint operation is a joint arrangement whereby the parties that have joint control have rights to the assets and obligations for the liabilities. A joint venture is a joint arrangement whereby the parties that have joint control have rights to the net assets.

The joint venture should use equity method under the revised IAS 28 Investments in Associate and Joint Ventures to account for the joint venture. The option to use the proportionate consolidation method has been removed.

The application of the IFRS 11 did not have any significant impact to the financial statements as the Group has used equity method to account for its investment in its joint venture.

IFRS 12 Disclosure of Interests in Other Entities

IFRS 12 prescribes comprehensive disclosure requirements for all types of interests in other entities. It requires an entity to disclose information that helps users to assess the nature and financial effects of relationships with subsidiaries, associates, joint arrangements and unconsolidated structured entities. As the new standard affects only disclosure, there is no effect on the Group's financial position or performance of the Group.

IFRS 13 Fair Value Measurement

IFRS 13 provides a single source of guidance on fair value measurement and fair value disclosure requirements when fair value measurement and/or disclosure is required by other IFRSs. It also provides a common fair value definition and hierarchy applicable to the fair value measurement of assets, liabilities, and an entity's own equity instruments within its scope.

IFRS 13 did not materially affect any fair value measurements of the Group's assets or liabilities, with changes being limited to presentation and disclosure, and therefore has no effect on the Group's financial position or performance.

IAS 36 (Amendments) - Recoverable Amount Disclosure for Non-financial Assets

The consequential amendments of IFRS 13 include amendments to IAS 36 that require the disclosure of information about the recoverable amount of any CGU for which the carrying amount of intangible assets with an indefinite useful life is significant compared to the total carrying amount of intangible assets with an indefinite useful life. As this was an unintended consequence, Amendments to IAS 36, effective for annual periods beginning on or after 1 January 2014, was issued to remove this requirement and instead require disclosure about recoverable amount only when there is a significant impairment or reversal of an impairment, as well as additional disclosure when recoverable amount is based on fair value less costs of disposal.

The Group has early adopted the amendments to IAS 36 from 1 January 2013, and reflected the relevant amended disclosure requirements in these financial statements. There is no impact on the Group's financial position or financial performance.

New or amended IFRSs that have been issued but are not yet effective

The following new or amended IFRSs, which are potentially relevant to the Group's financial statements, have been issued, but are not yet effective and have not been early adopted by the Group:

1 Effective for annual periods beginning on or after 1 January 2014

2 Effective for annual periods beginning on or after 1 July 2014

3 Effective for annual periods beginning, or transactions occurring on or after 1 July 2014

The Group and the Company expect that the adoption of the above IFRS and amendment to IFRS, if applicable, will have no material impact on the financial statements in the periods of initial adoption, except as described below:

IFRS 9 - Financial Instruments

Under IFRS 9, financial assets are classified into financial assets measured at fair value or at amortised cost depending on the entity's business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. Fair value gains or losses will be recognised in profit or loss except for those non-trade equity investments, which entity will have a choice to recognise the gains and lossess in the other comprehensive income. IFRS 9 carries forward the recognition, classification and measurement requirements for financial liabilities from IAS 39, except for financial liabilities that are designated at fair value through profit or loss, where the amount of change in fair value attributable to change in credit risk of that liability is recognised in other comprehensive income unless that would create or enlarge an accounting mismatch. In addition, IFRS 9 retains the requirements in IAS 39 for derecognition of financial assets and financial liabilities. The Group is yet to assess IFRS 9's full impact. The Group will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued.

Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities

This standard is effective for accounting periods beginning on or after 1 January 2014. The amendment has clarified and expanded the application guidance in relation to the offsetting of financial assets and financial liabilities in respect of (1) the meaning of 'currently has a legally enforceable right of set-off'; (2) the application of simultaneous realisation and settlement; (3) the offsetting of collateral amounts and (4) the unit of account for applying the offsetting requirements. When this amendment is first adopted for 1 January 2014 year end, there will be no material impact is anticipated in respect of the accounting treatment for offsetting the Group's financial assets and financial liabilities.

2.3 Going concern

The Group incurred a net loss of US$15,796,219 for the financial year ended 31 December 2013 and as of that date, the Group's and the Company's current's liabilities exceeded its current assets by US$7,675,560 and US$6,275,377 respectively. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Group's and the Company's ability to continue as a going concern.

In order to ensure that the Group and the Company remains a going concern, the Group and the Company have taken the following steps in order to strengthen their working capital position:

i) The Chairman has indicated his ongoing financial support for the Group and Company to ensure that the Group and the Company can continue their operation and meet their liabilities as and when they fall due. The continuing Convertible loan facility from the Chairman, Christopher Nightingale of up to US$7 million of which US$3.91 million has now been drawn. Although a further US$3.09 million remains to be drawn under the Convertible Loan, the Chairman has indicated that his ability to allow the Company to draw further funds under this Convertible Loan will depend upon the circumstances and the realisation by him of further cash from his own sources.  On 26 June 2014, the Chairman agreed to extend the Convertible Loan (Note 19) until 31 October 2015.

ii) The Group has entered into a GBP10,000,000 5% Equity Linked Note Program ("ELN") with Advance Capital Partners Pte Ltd ("ACP"). The gradual drawing down by the Company of the GBP10 million Equity Linked Note facility which is providing the Company on a rolling basis with the operational working capital it will need in order to roll out its products. To date the Company has drawn GBP250,000 of this facility since its execution in April, representing 10 sub-tranches, of which 5 sub-tranches have been the subject of a conversion notice. The Company is required to comply with certain conditions in respect of the ELN Program and certain conditions have been breached due to the suspension of shares trading. Management has obtained written confirmation from ACP that it will continue to provide financing to the Company and waived all conditions included in the agreement that could result in the termination of the agreement until 31 December 2015. Over the past couple of years a major challenge for the Company has been the amount of management time which has had to be devoted to fundraising away from the core business of rolling out and marketing the Company's products.

iii) The completion of the issue of a further 50 million shares for cash which raised the sum of US$250,000.

iv) The Group is in discussions with several parties with a view to such potentially taking a significant stake in the Company.

v) The Group has renegotiated with certain of its major creditors to revise the repayment schedule. Management is in discussions with certain creditors to settle certain portions of the liabilities with shares in the Company.

vi) On the operational side, the Company has continued to develop its business in various jurisdictions. The Company is currently in discussions with new partners in the Ukraine, Democratic Republic of Congo, UK, Morocco and Cote D'Ivoire which support the Board's view of potential business for 2015.

vii) Whilst it is expected that any 2014 revenues will be anchored by the street lighting contracts, the Company is currently in discussions with other potential buyers of the Groups products in Africa, the Bahamas, the Philippines and the Middle East which may lead to additional contracts for the Group's products. These potential contracts are not incorporated in the projections prepared by the Group but can be followed up once the Group has secured regular revenues from its existing projects.

viii) The overall business market relating to both the Group's solar products and streetlights are now maturing and stabilizing after a time of considerable turmoil. In the Director's opinion, AEL's technologies are still ahead of the general panel market which make up 90% of the current solar industry and if the Group can get these deployed it will be able to demonstrate the superiority of this technology over existing variants. The mature market means that buyers and institutions now clearly recognize the role and advantages of solar power and LED lights and no longer need to be educated on the intrinsic merits. The issue now becomes one of cost and delivery, in respect of which the Board is expecting the Group's assembly plants to make the Company more competitive.

Given the accumulation of the above, the Group is actively trading and is seeking to achieve revenue growth during the 2015 financial year, and the Board believes the Company will have adequate working capital for its requirements for the foreseeable future, on the basis that the Company's shares resume trading in the near future and permit the continued draw down of the ELN facility.

Hence the management is of the view that the going concern assumption remains valid for the Group.

If the Group and the Company are unable to continue in operational existence for the foreseeable future, the Group and the Company may be unable to discharge their liabilities in the normal course of business and adjustments may have to be made to reflect the situation that assets may need to be realised other than in the normal course of business and at amounts which could differ significantly from the amounts at which they are currently recorded in the statements of financial position. In addition, the Group and the Company may have to reclassify non-current assets. No such adjustments have been made to these financial statements.

2.4 Basis of consolidation

Where the company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

De-facto control exists in situations where the Company has the practical ability to direct the relevant activities of the investee without holding the majority of the voting rights. In determining whether de-facto control exists the company considers all relevant facts and circumstances, including:

- The size of the Company's voting rights relative to both the size and dispersion of other parties who hold voting rights.

- Substantive potential voting rights held by the company and other parties

- Other contractual arrangements

- Historic patterns in voting attendance.

The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree's identified assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.

Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

When the Group losses control of a subsidiary it derecognises the assets and liabilities of the subsidiary. The profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary.

Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity.

In the separate financial statements of the Company, investments in subsidiaries and joint venture are carried at cost, less any impairment losses that has been recognised in profit or loss.

2.5 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is presented net of estimated customer returns, rebates, other similar allowances and sales related taxes.

Sale of goods

Revenue from the sale of solar panels and light bulbs is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership of the goods and it is probable that the agreed consideration will be received. Normally these criteria are considered to be met when the goods are delivered to and accepted by the buyer.

2.6 Income tax

Income tax expense represents the sum of the tax currently payable and deferred tax.

Current income tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit reported as profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. The Group's liabilities for current tax is recognised at the amount expected to be paid or recoverable from tax authorities and is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the Company and subsidiaries operate by the end of the financial year.

Current income taxes are recognised in profit or loss, except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

Deferred tax

Deferred tax is recognised on all temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised on taxable temporary differences arising on investments in subsidiaries and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each financial year and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the financial year.

The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the group expects to recover or settle its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Deferred tax is recognised in profit or loss, except when it relates to items recognised outside profit or loss, in which case the tax is also recognised either in other comprehensive income or directly in equity.

Sales tax

Revenue, expenses and assets are recognised net of the amount of sales tax except:

· when the sales tax that is incurred on purchase of assets or services in not recoverable from the tax authorities, in which case the sales tax is recognised as part of cost of acquisition of the asset or as part of the expense item as applicable; and

· receivables and payables that are stated with the amount of sales tax included.

2.7 Employee benefits

Retirement benefit costs

Payments to defined contribution plans are charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes, such as the Singapore Central Provident Fund, are dealt with as payments to defined contribution plans where the Group's obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan.

Employee leave entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated undiscounted liability for annual leave expected to be settled wholly within 12 months from the reporting date as a result of services rendered by employees up to the end of the financial year.

Share-based payments

The Group issues equity-settled share-based payments to certain employees.

Equity-settled share-based payments are measured at fair value of the equity instruments (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period with a corresponding credit to the share-based payment reserve, based on the Group's estimate of the number of equity instruments that will eventually vest and adjusted for the effect of non market-based vesting conditions. At each balance sheet, the Group revises its estimates of the number of shares under options that are expected to become exercisable on the vesting date and recognises the impact of the revision of the estimates in the profit or loss, with a corresponding adjustment to the share option reserve over the remaining period.

Fair value is measured using the Black-Scholes pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

The proceeds received, net of any directly attributable transaction costs are credited to issued capital when the options are exercised.

2.8 Share based payment policy on shares to subsidiaries employees

The grant by the Company of its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised as an increase to investment in subsidiary undertakings, with a corresponding credit to equity.

2.9 Foreign currency transactions and translation

In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency are recorded at the rate of exchange prevailing on the date of the transaction. At the end of each financial year/period, monetary items denominated in foreign currencies are retranslated at the rates prevailing as of the end of the financial year/period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations (including comparatives) are expressed in United States dollars using exchange rates prevailing at the end of the financial year/period. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised initially in other comprehensive income and accumulated in the Group's foreign exchange translation reserve.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities (including monetary items that, in substance, form part of the net investment in foreign entities), and of borrowings and other currency instruments designated as hedges of such investments, are taken to the foreign currency translation reserve.

On disposal of a foreign operation, the accumulated foreign exchange translation reserve relating to that operation is reclassified to profit or loss.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

2.10 Operating leases

Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

2.11 Joint arrangements

The Group is a party to a joint arrangement when there is a contractual arrangement that confers joint control over the relevant activities of the arrangement to the group and at least one other party. Joint control is assessed under the same principles as control over subsidiaries.

The Group's investments in joint venture is accounted for using the equity method. Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted to recognise changes in the Group's share of net assets of the joint venture since the acquisition date.

The statement of profit or loss reflects the Group's share of the results of operations of the joint venture. Any change in other comprehensive income of those investees is presented as part of the Group's other comprehensive income. When the group's share of losses in a joint venture equals or exceeds its interests in the joint ventures, the group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.

Unrealised gains on transactions between the group and its joint ventures are eliminated to the extent of the group's interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

When the Group's share of losses exceeds its interest in the joint venture, the Group's interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the investee. For this purpose, the Group'slong-term interests in substance form part of the Group's net investment in the joint venture.

2.12 Intangible assets

(i) Goodwill

Goodwill arising on acquisition of a subsidiary represents the excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired.

Goodwill for a subsidiary is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.

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 combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is 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 loss recognised for goodwill is not reversed in a subsequent period.

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

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the gain or loss on disposal.

(ii) Patents and trademarks

Patents are initially stated at cost less accumulated amortisation and accumulated impairment losses. 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 financial year, with the effect of any changes in estimate being accounted for on a prospective basis.

These costs are amortised to profit or loss using the straight-line method over their estimated useful lives of 20 years.

Trademarks with indefinite useful lives are not amortised. At the end of each financial year, 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 2.14 to the financial statements.

(iii) Computer software

Acquired computer software licences are initially capitalised at cost which includes purchase price (net of any discounts and rebates) and other directly attributable costs of preparing the software 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 added to the original cost of the software. Costs associated with maintaining computer software are recognised as an expense as incurred.

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

(iv) Research and development

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised, if, any only if, all the following have been demonstrated:

· the technical feasibility of completing the intangible asset so that it will be available for use or sale;

· the intention to complete the intangible asset and use or sell it;

· the ability to use or sell the intangible asset;

· how the intangible asset will generate probable future economic benefits;

· the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible assets; and

· the ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is charged to profit or loss in the period in which it is incurred.

Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets acquired separately.

The amortisation period and amortisation method for intangible assets other than goodwill and trademark with indefinite life are reviewed at least at end of each financial year. The effects of any revision are recognised in profit or loss when the changes arise.

2.13 Plant and equipment

All items of plant and equipment are initially recognised at cost. The cost includes its purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Dismantlement, removal or restoration costs are included as part of the cost if the obligation for dismantlement, removal or restoration is incurred as a consequence of acquiring or using the plant and equipment.

Plant and equipment are subsequently stated at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is charged over their estimated useful lives, using the straight-line method, on the following bases:

Office renovation 33%

Computers 33%

Machinery, office equipment, furniture and fittings 33%

The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The estimated useful lives, residual values and depreciation methods are reviewed, and adjusted as appropriate, at the end of each financial year.

An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal.

The gain or loss arising on disposal or retirement of an item of plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

2.14 Impairment of non-financial assets excluding goodwill

At the end of each financial year, the Group reviews the carrying amounts of its non-financial assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.

The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

2.15 Financial instruments

Financial assets and financial liabilities are recognised on the Group's consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

Financial assets

Financial assets are classified into loans and receivables. The classification depends on the nature and purpose for which these financial assets were acquired and is determined at the time of initial recognition.

Loans and receivables

Non-derivative financial assets which have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost, using the effective interest method, less impairment. Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

The Group's loans and receivables in the statement of financial position comprise trade and other receivables excluding prepayments, and cash and bank balances.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at the end of each financial year. Financial assets are impaired where there is objective evidence that the estimated future cash flows of the investment have been impacted.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

The carrying amounts of all financial assets are reduced by the impairment loss directly with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

On derecognition, any difference between the carrying amount and the sum of proceeds received and amounts previously recognised in other comprehensive income is recognised in profit or loss.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial instrument and allocating the interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or where appropriate, a shorter period, to the net carrying amount of the financial instrument. Income and expense are recognised on an effective interest basis for debt instruments other than those financial instruments at fair value through profit or loss.

Classification as debt or equity

Financial liabilities and equity instruments issued by Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

Equity instruments 

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs. The Group classifies ordinary shares as equity instruments.

When shares recognised as equity are reacquired, the amount of consideration paid is recognised directly in equity. Reacquired shares are classified as treasury shares and presented as a deduction from total equity. No gain or loss is recognised in profit or loss on the purchase, sale issue or cancellation of treasury shares.

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

When treasury shares are subsequently sold or reissued the cost of treasury shares is reversed from the treasury share 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 in the capital reserve of the Company.

Financial liabilities

Financial liabilities are classified as other financial liabilities.

Other financial liabilities

Trade and other payables

Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, where applicable, using the effective interest method.

Convertible loan notes

Convertible loan notes are regarded as compound instruments, consisting of a liability component and an equity component. The component parts of compound instruments are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability, on an amortised cost basis until extinguished upon conversion or at the instruments maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognised and included in equity, net of income tax effects, and is not subsequently re-measured.

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire. The difference between the carrying amount and the consideration paid is recognised in profit or loss.

2.16 Cash and cash equivalents

Cash and bank balances in the statement of financial position comprise cash on hand and demand deposits which are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value. For the purposes of the statement of cash flows, cash and cash equivalents excludes any pledged deposits.

2.17 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the financial year/period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Changes in the estimated timing or amount of the expenditure or discount rate are recognised in profit or loss when the changes arise.

2.18 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the group of executive directors and the chief executive officer who make strategic decisions.

3. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group's accounting policies, which are described in Note 2, management made judgements, estimates and assumptions about the carrying amounts of assets and liabilities that were not readily apparent from other sources. The estimates and associated assumptions were based on historical experience and other factors that were considered to be reasonable under the circumstances. Actual results may differ from these estimates.

These 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 affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

3.1 Critical judgements made in applying the entity's accounting policies

The following are the critical judgements, apart from those involving estimations (see below) that management has made in the process of applying the Group's accounting policies and which have the significant effect on the amounts recognised in the financial statements.

(i) Impairment of goodwill, patents and trademarks

The management determines whether goodwill, 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, on whether there are changes in circumstances or objective evidence indicate the carrying amount may not be recoverable. These judgement are continually evaluated and are based on historical experience and other factors including expectations of future events or changes in circumstances.

3.2 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the financial year/period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

(i) Amortisation of patents

The Group amortises the patents, using the straight-line method, over their estimated useful lives after taking into account of their estimated residual values. The estimated useful life reflects management's estimate of the period that the Group intends to derive future economic benefits from the use of the Group's patents.

The residual value reflects management's estimated amount that the Group would currently obtain from the disposal of the asset, after deducting the estimated costs of disposal, as if the asset were already of the age and in the condition expected at the end of its useful life. Changes in the expected level of usage and technological developments could affect the economics, useful lives and the residual values of these assets which could then consequentially impact future amortisation charges. The carrying amounts of the Group's and the Company's patents at 31 December 2013 were $16,061,328 (2012: $28,335,326) and $15,995,872 (2012: $28,311,631) respectively (Note 11).

(ii) Impairment of investments in subsidiaries

At the end of each financial year, an assessment is made on whether there is objective evidence that the investments in subsidiaries are impaired. The management's assessment is based on the estimation of the value-in-use of the cash-generating unit ("CGU") by forecasting the expected future cash flows for a period up to 5 years, using a suitable discount rate in order to calculate the present value of those cash flows. The Company's carrying amount of investments in subsidiaries as at 31 December 2013 was US$4,848,072 (2012: US$4,848,072).

(iii) Impairment of amounts due from subsidiaries and due from a related party

The provision policy for doubtful debts of the Company is based on the ageing analysis and management's ongoing evaluation of the recoverability of the outstanding receivables. A considerable amount of judgement is required in assessing the ultimate realisation of these receivables. If the financial conditions of these subsidiaries were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. The carrying amounts of the Group's amounts due from a related party and the Company's amounts due from subsidiaries as at 31 December 2013 are disclosed in Note 12 to the financial statements.

(iv) Convertible loans

The fair values of the liability components of the convertible loans, at their initial recognition, estimated by an independent valuer based on the present value of the contractual stream of cash flows using the average effective interest rate of 5.2% (2012: 6.25%) which generally represents the best estimate of the market value of similar instrument without the conversion feature. The fair values of the equity components are determined as the residual amount by deducting the fair values of the liability components from the fair values of the convertible loans.

(v) Fair value measurement

A number of assets and liabilities included in the Group's financial statements require measurement at, and/or disclosure of, fair value.

The fair value measurement of the Group's financial and non-financial assets and liabilities utilises market observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorised into different levels based on how observable the inputs used in the valuation technique utilised are (the 'fair value hierarchy'):

- Level 1: Quoted prices in active markets for identical items (unadjusted)

- Level 2: Observable direct or indirect inputs other than Level 1 inputs

- Level 3: Unobservable inputs (i.e. not derived from market data).

The classification of an item into the above levels is based on the lowest level of the inputs used that has a significant effect on the fair value measurement of the item. Transfers of items between levels are recognised in the period they occur.

The Group measures financial assets and financial liabilities (Note 25) at fair value on recurring basis.

4. Revenue

Revenue represents invoiced value earned from sale of goods to third parties.

5. Loss before income tax

In addition to the charges and credits disclosed elsewhere in the notes to the statement of comprehensive income, the above includes the following charges/(credits):

Employee benefits expense includes key management personnel compensation which is disclosed in Note 22.2 to the financial statements.

6. Income tax

There is no current tax charge for the current financial year as the Group has no chargeable income.

Deferred tax assets not recognised are related to the following:

Subject to the agreement by relevant tax authorities, at the end of the financial year/period, the Group has unutilised tax losses of approximately US$13,000,000 (2012: US$11,549,000) available for offset against future profits. No deferred tax asset has been recognised due to the unpredictability of profit streams. These losses may be carried indefinitely subject to the conditions imposed by law.

7. Basic and diluted 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.

A total of 263 million (2012: 408 million) issuable shares that could potentially dilute basic earnings per ordinary share in the future were not included in the calculation of diluted earnings per ordinary share because they are anti-dilutive for the years presented.

The basic and diluted loss per share are calculated as follows:

8. Plant and equipment

9. Investments in subsidiaries

In prior financial period, the Company has increased the investment in a subsidiary, Renewable Power Pte Ltd ("RPPL") through capitalisation of US$3,500,000 loan to the subsidiary for the purpose of increasing the paid up capital, in response to RPPL's need to participate in sales project that require a high paid-up capital.

The details of the subsidiaries are as follows:

10. Investment in joint venture

The details of the joint venture are as follows:

Summarised financial information in relation to the joint venture is presented below:

The Group has not recognised losses relating to the joint venture as its share of losses exceeded the Group's carrying amount of its investment in the joint venture. The Group's cumulative share of unrecognised losses were US$148,605 (2012: US$53,074) of which US$95,531(2012: US$53,074) was the share of the current year's losses. The Group has no obligation in respect of those losses.

11. Intangible assets