Interim Results to 29 February 2012

For release at 2.00pm 4 October 2012

ALTERNATIVE ENERGY LIMITED

Interim Results for period to 29 February 2012

The Company is pleased to present its unaudited interim accounts for the six months ended 29 February 2012. Extracts are set out below.

CHAIRMAN'S STATEMENT

The latest interim figures for the Company for the period to 29th February 2012 are being released at the same time as a further announcement which it is expected will mark a new impetus for the Group.

As the February figures show, the development of the Group and its products from the research and development to the commercial phase was not easy, particularly against the background of a changing market in the renewable energy sector.

The Company has for some time been seeking significant partners and markets for its products and services, and such arrangements take time to put in place. It was against this background that trading of the shares of the Company was suspended on 30 May 2012 pending release of the Company's interim statement for the six months ended 29 February 2012. During that period of suspension, the Company has been concluding its arrangements with its various new partners and settling the Company's capital requirements for those arrangements and is now in a position to announce those arrangements along with the interims and ask for the trading in the Company's shares to be resumed. Accordingly, following the release of the announcement containing the Interims, the suspension of the Company's shares from trading will be lifted, and the Company's shares are expected to resume trading from 2.00pm on 4 October 2012.

I am therefore very satisfied to be able to announce not only the company's arrangements in respect of the significant Indonesian1000 Island Project, but also the potentially significant relationship with one of China's leading photovoltaic cell manufacturers which has already resulted in the Company securing and performing a Euro 9.5 million contract in Germany, and which should enable the Company to source one of the principal components of its next generation solar products at competitive prices.

With solar panels and cells now becoming affordable commodities, the Company's development of its building integrated solar technologies and solar powered eLive housing is more relevant and competitive, particularly in those developing countries which are our target markets. Penetration of these markets will also make it easier for the Company to sell its other products such as lighting.

The Company will now be focussing hard on the execution of those transactions announced which could see the Company create a much stronger and more visible presence in the Renewable Energy sector.

Christopher Nightingale

Chairman

REPORT ON REVIEW OF THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION OF ALTERNATIVE ENERGY LIMITED AND ITS SUBSIDIARIES FOR THE SIX MONTHS PERIOD ENDED 29 FEBRUARY 2012

Introduction

We have been engaged to review the accompanying unaudited interim condensed consolidated financial information of Alternative Energy Limited (the "Company") and its subsidiaries (the "Group"), which comprises the statement of financial position, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity and the condensed consolidated statement of cash flows and the related notes for the six months ended 29 February 2012. Our responsibility is to express a conclusion on the unaudited interim condensed consolidated financial information based on our review.

This report is made solely to the Board of Directors and we do not accept or assume responsibility to any party other than the Board of Directors, for our works, for this report, or for the conclusion we have formed.

Directors' Responsibilities

The interim financial report, including the financial information contained therein, is the responsibility of and has been approved by the directors. The directors are responsible for preparing the half-yearly financial report in accordance with IAS 34 "Interim Financial Reporting", and the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market ("AIM") which require that the interim financial report be presented and prepared in a form consistent with that which will be adopted in the Company's annual accounts having regard to the accounting standards applicable to such annual accounts.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial information in the interim financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity." A review of unaudited interim condensed consolidated financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying unaudited interim condensed consolidated financial information are not presented fairly, in all material respects, in accordance with IAS 34.

Emphasis of Matter

We draw your attention to Note 2 which indicates the Group has been incurring losses for the current and past periods. The Group has taken measures as described in Note 2 to secure the necessary funding to meet its daily operation needs. If these measures described in Note 2 fail to materialise, this could indicate an existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. Our conclusion is not qualified in respect of this matter.

BDO LLP

Public Accountants and

Certified Public Accountants

Singapore

2 October 2012

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

ALTERNATIVE ENERGY LIMITED

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

ALTERNATIVE ENERGY LIMITED

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) to 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 Group's operation is not subject to any seasonality or cyclicality.

The interim unaudited financial statements of the Company and its subsidiary (the "Group") for the period ended 29 February 2012 were authorised for issue by the Board of Directors on 2 October 2012.

2. Basis of preparation

The unaudited interim condensed consolidated financial information for the 6 months ended 29 February 2012 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 2011 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 29 February 2012 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 2012, 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 2011.

The financial information for the year ended 31 August 2011 has been extracted from the statutory accounts for that period. The auditors' report for the year ended 31 August 2011 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 2011 has been extracted from the unaudited interim results released on 27 May 2011. 

2. Basis of preparation (Continued)

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 and as at 29 February 2012 the recurring losses from operations in the current and past financial years.

The Group has now entered into a number of arrangements which are intended to produce revenues and raise capital. The Group has signed a revised conditional convertible loan arrangement with its chairman which should make available further funding for working capital purposes, it has also entered into a conditional placement arrangement with LDK Solar and is planning to raise a further US$4.8 million through a preferred offering to shareholders. Whilst each of these measures is conditional, the directors have indicated that they are confident that the relevant conditions will be fulfilled.

In respect of the business and revenues of the Group, the Group has now signed heads of terms appointing them as principal Engineering Procurement and Construction contractor for a major Indonesian project and has commenced sales of the solar panels with a large contract in Germany. The Group has also commenced sales of its lighting products in Singapore, Indonesia, UK and other jurisdictions. Many of these sales are test orders which have led to other quotations for larger projects.

The directors are confident that the measures they are taking, together with the continuing financial 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$1,462,366 for the period ended 29 February 2012 (for the period ended 28 February 2011: US$2,106,042), the directors of the Company are of the opinion that it is appropriate to prepare the unaudited interim condensed consolidated financial statements of the Group on a going concern basis.

If the Group is unable to continue in operational existence for the foreseeable future, the Group may be unable to discharge its 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 of the Group and the Company. No such adjustments have been made to these unaudited interim condensed consolidated financial statements of the Group.

ALTERNATIVE ENERGY LIMITED

3. Plant and equipment

ALTERNATIVE ENERGY LIMITED

3. Plant and equipment (Continued)

4. Investment in joint venture

The details of the joint venture are as follows:

ALTERNATIVE ENERGY LIMITED

4. Investment in joint venture (Continued)

On 21 January 2011, Alternative Energy Holdings Limited, a wholly-owned subsidiary of the Company, incorporated a joint venture company in the People's Republic of China with Jiashan Joray Electronic Technology Co. Ltd., a company incorporated in the People's Republic of China. The joint venture is a limited liability company.

The unaudited management financial information of the joint venture are used for the equity accounting purposes in preparation of the unaudited interim condensed consolidated financial information of the Group.

The Group's interest (based on the paid-up capital ratio) in the joint venture are as follows:

5. Intangible assets

5. Intangible assets (Continued)

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 29 February 2012, 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.

5. Intangible assets (Continued)

Pursuant to an agreement entered into between the Company and a related party in 2010, the Company is to acquire certain patents and technology from the said related party. An independent professional valuer had valued these patents and technology at US$33 million. Having considered this, on the date of agreement, the Company and the said related party have agreed on the purchase consideration for the purchase of these patents and technology at US$20 million and amount 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.

In January 2011, upon the successful registration of patents, the Company purchased patents and technology for a contractual purchase consideration of US$4 million by allotting 133,333,333 new ordinary shares for the fair value of the purchase consideration of US$7,666,667 as disclosed in Note 8. As of 29 February 2012, after the successful registration of patents, 313,558,332 new ordinary shares have already been issued as part of this purchase.

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

* This represents fair value based on the Company's share price as at 27 January 2011.

6. Cash and cash equivalents

Fixed deposits are pledged with the bank, with original maturing periods of not more than 365 (28.2.2011: 365 and 31.8.2011: 365) days. Interest rate ranges from 0.35% to 0.45% (28.2.2011: 0.45% to 0.55% and 31.8.2011: 0.35% to 0.45%).

The Group's fixed deposits of US$95,829 (28.2.2011: US$95,378 and 31.8.2011: US$99,262) are pledged to bank for credit card facility granted to a subsidiary company.

7. Trade and other receivables

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

8. Issued capital

In January 2011, the Company purchased patents from a related party for a contractual purchase consideration of US$4 million (which represents a fair value of US$7,666,667 based on the Company's share price as at 27 January 2011) by allotting 133,333,333 ordinary shares of the Company to the related party and will be issued as follows:

(a) US$4,161,563 of the 1st tranche has been settled by way of issuing 72,375,000 new ordinary shares. 30 million share representing US$1,725,000 capital reserve has been issued in January 2011 and the remaining 42,375,000 ordinary share representing US$2,436,543 has been issued in various date from April to July 2011.

(b) US$3,505,104 of the 2nd tranche were to be settled by way of issuing 60,958,333 new ordinary shares.

On various dates during the period ended 29 February 2012, 41,183,333 new ordinary shares representing US$2,368,042 of capital reserve have been issued from 2nd tranche above.

In May 2011, the Company issued 22,500,000 new ordinary shares to shareholders. These ordinary shares were issued at US$0.04. Cash amounting to US$900,000 was raised from this exercise. The costs directly attributable to this issuance of new ordinary shares amounted to US$45,000 has been deducted from the proceeds received.

ALTERNATIVE ENERGY LIMITED

9. Treasury shares

10. 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.

11. Convertible loans reserve

The convertible loans reserve represents the residual amount of convertible loans 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.

12. Other payables and accruals

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

13. Convertible loans

ALTERNATIVE ENERGY LIMITED

13. Convertible loans (Continued)

The convertible loans are denominated in United States dollar. Convertible loans due to a director represents the residual amount of convertible loans due to Christopher Nightingale after deducting the fair value of the equity component and is made up as follows: