Half Yearly Report

For immediate release 31 May 2011

ALTERNATIVE ENERGY LIMITED

Interim Results for period to 28th February 2011

CHAIRMAN'S STATEMENT

The period covered by the Company's interim financial statements to 28th February 2011 represents the six months immediately following the Company's relisting on AIM as an operating company.

As I reported in my last statement the relisting transformed the Company; following which the Company has been actively working with potential distributors around the world to establishing markets for the Company's products. As a result of this the Company appointed its first distributors, in the UK and Nigeria, in January 2011, although these appointments came at the end of the financial period and therefore the current accounts do not yet reflect the earnings which the Company expects to generate from these appointments.

The Company's operating expenses during the period were steady, although augmented by the employee share options granted following the relisting to incentivise our engineering team, as well as an increase in professional fees and expenses attributable to the relisting exercise.

The Company continues to pursue revenues through its worldwide marketing efforts, having now appointed four distributors as well as a marketing agent in Singapore to assist the Company in developing sales in its home market.

The Company is also continuing to expand the range of its market ready products both in respect of LED lighting and in the development of its eLive self-powered housing (which now incorporates the Company's eRoof technology), with a view to capturing market share in green technologies and reaching profitability as soon as possible.

I have continued to support the Company with working capital by way of an expansion of my convertible bond and the Company has also carried out further placements to augment working capital and provide additional capital for growth.

The next few months will be important for the Company as it seeks to build its business and the team are continuing to work hard to achieve the best value for money spent by the Company.

Christopher Nightingale

31st May 2011

ALTERNATIVE ENERGY LIMITED

ALTERNATIVE ENERGY LIMITED

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

ALTERNATIVE ENERGY LIMITED

ALTERNATIVE ENERGY LIMITED

ALTERNATIVE ENERGY LIMITED

1. General

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. The registered office of the Company is 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 trading on AIM, a market operated by the London Stock Exchange.

The principal activity of the Company is the provision of technology, hardware and equipment for renewable energy and green energy solutions. It also develops and makes investments or acquisitions 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 principal activities of the subsidiaries are that of research and development of renewable energies for household consumers and holding of trademarks and intellectual properties.

The interim unaudited financial statements of the Company and its subsidiary (the "Group") for the period ended 28 February 2011 were authorised for issue by the Board of Directors on 27 May 2011.

2. Basis of preparation

The unaudited interim condensed consolidated financial information for the 6 months ended 28 February 2011 has been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting.

The unaudited interim condensed consolidated financial information does not include all the information and disclosures required in the annual financial statements. Accordingly, this report is to be read in conjunction with the Annual Report for the year ended 31 August 2010 and any public announcements made by the Group during the interim reporting period.

The unaudited interim condensed consolidated financial information for the six months period ended 28 February 2011 do not constitute statutory accounts and have been drawn up using accounting policies and presentation expected to be adopted in the Group's full financial statements for the financial year ending 31 August 2011, which are not expected to be significantly different to those set out in note 2 to the Group's audited financial statements for the year ended 31 August 2010.

The financial information for the year ended 31 August 2010 has been extracted from the statutory accounts for that period. The auditors' report for the year ended 31 August 2010 was unqualified with an emphasis of matter paragraph referring to the Group's abilities to continue as a going concern.

The financial information for the 6 months ended 28 February 2010 has been extracted from the unaudited interim results released on 28 February 2010. 

Going concern

In preparing the unaudited interim condensed consolidated financial information, the directors have carefully considered the future liquidity of the Group in the light of the current financial position of the Group as at 28 February 2011 the recurring losses from operations in the current and past period, during which the Company concentrated on the research and development necessary to prepare the Company's products for sale in the international markets.

The Company's Chairman, Christopher Nightingale, made an additional USD1 million available to the Company in February 2011 as part of his convertible loan facility, bringing the facility available to the Company up to US$3 million. As at 28 February 2011, USD2.6 million of the facility has been drawn down. The Chairman has indicated his willingness to continue to support the Group with further convertible loans if necessary. In addition, new shares for USD900,000 are issued in May 2011.

Currently, the Group has signed four distribution agreements with distributors in four different countries, with further agreements being negotiated at this moment. Each agreement provides sales targets of at least US$5 million. In addition, the Group has signed a marketing agreement in Singapore with a marketing agent and is now marketing and selling its products here.

The Group is currently engaged in continuing fundraising efforts to raise up to US$5 million by equity or convertible bond to fund expansion.

The directors are confident that the measures they are taking, together with the support of the Chairman, will yield the Group sufficient working capital to finance its operations and remain a going concern for the foreseeable future. Hence, notwithstanding that the Group has incurred an operating loss of US$2,106,042 for the period ended 28 February 2011, the directors of the Company are of the opinion that it is appropriate to prepare the unaudited interim condensed consolidated financial information of the Group on a going concern basis.

The unaudited interim condensed consolidated financial information of the Group does not include the adjustments that would result if the Group was not able to continue as a going concern.

3. Plant and equipment

4. Intangible assets

Goodwill represents the excess of the cost of a business combination over the interest in the fair value of identifiable assets, liabilities and contingent liabilities acquired. Cost comprises the fair values of assets given, liabilities assumed and equity instruments issued plus any direct cost of acquisition.

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash generating units and is not amortised but is tested annually for impairment or more frequently if events or changes in circumstances indicate that it might be impaired.

As at 28 February 2011, the management has assessed and determined that the goodwill is not 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.

Pursuant to an agreement entered into between the Company and a related party, the Company is to acquire certain patents and technology from the said related party. An independent professional valuer had in April 2010 valued these patents and technology at US$31 million. Having considered this, the Company and the said related party have agreed to fix the purchase consideration for the purchase of these patents and technology at US$20 million. This purchase consideration of US$20 million shall be fully settled by the issue of 666,666,666 new ordinary shares of the Company at US$0.03 per share. The obligation to pay the purchase consideration is subject to certain terms and conditions.

During the year ended 31 August 2010, upon the successful registration of certain patents, the Company purchased part of these patents and technology for a consideration of US$6 million by issuing 199,999,999 new ordinary shares at US$0.03. The remaining patents costing US$14 million will be purchased as and when the remaining patents and technology are successfully registered in the near future.

During the period ended 28 February 2011, upon the successful registration of certain patents, theCompany further purchased part of these patents and technology for a consideration of US$4 million by issuing 133,333,333 new ordinary shares at US$0.03.

Subsequent to the period end, as disclosed in note 19, upon successful registration of certain patents, the Company further purchases part of these patents and technology for a consideration of US$423,750 by issuing 14,125,000 new ordinary shares at US$0.03.

For the purpose of the consolidated statement of cashflows, the group's additions to intangible assets during the year comprise of the following:

5. Cash and cash equivalents

Cash and cash equivalents are denominated in the following currencies:

Fixed deposits are pledged with the bank, with original maturing periods of not more than 365 (28.2.2010: 365 and 31.8.2010: 183) days. Interest rate ranges from 0.45% to 0.55% (28.2.2010: 0.45% to 0.55% and 31.8.2010: 0.55%).

The Group's fixed deposits of US$95,378 (28.2.2010: US$96,062 and 31.8.2010: US$97,462) are pledged to bank for credit card facility granted to a subsidiary company.

6. Trade and other receivables

Other receivables are denominated in the following currencies:

All other receivables are not past due and are not impaired as at the end of the financial period.

7. Issued capital and treasury shares

7.1 Issued capital

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.

In June 2010, the Company issued 199,999,999 new ordinary shares to a related party as consideration for the Company's purchase of patents and technology. The new ordinary shares were issued at US$0.03 and no cash was raised from this transaction.

In January 2011, the Company issued 133,333,333 new ordinary shares to a related party as consideration for the Company's purchase of patents and technology. The new ordinary shares were issued at US$0.03 and no cash was raised from this transaction.

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.

All newly issued shares of the Company shall rank pari-passu in all respects with the then existing issued shares.

7.2 Treasury shares

In November 2009, the Company re-issued 19,370,000 of its treasury shares at US$0.03 per share. The Company received US$581,100 for these shares.

In August 2010, the Company re-issued 18,750,000 treasury shares to shareholders. These shares were issued at US$0.04. Cash amounting to US$750,000 was raised from this exercise. Gain arising from this transaction US$187,500 is recognized directly in statement of changes in equity.

The Company has one class of ordinary shares. All re-issued treasury shares of the Company shall rank pari-passu in all respects with the then existing issued shares.

8. Share options reserve

Share options reserve represents equity-settled share options granted to directors of the Company and employees of the Group. The reserve is made up of cumulative value of services received from share options holders recorded on grant of equity-settled share options.

The movement of this account is disclosed in the statement of changes in equity.

9. Convertible loan reserve

The convertible loan reserve represents the residual amount of convertible loan after deducting the fair value of the liability component. This amount is presented net of transaction costs and deferred liability arising from the convertible loan.

10. Other payables and accruals

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

Other payables and accruals are denominated in the following currencies:

11. Provisions