Report and Accounts

For immediate release 28 February 2011

ALTERNATIVE ENERGY LIMITED

("Alternative Energy" or "the Company")

Report and Accounts

The Company today announces that it has published the Report and Accounts for the year to 31 August 2010 ("the Accounts"), and they are being posted to shareholders. The Accounts will shortly be available on the Company website, www.alternativeenergy.com.sg and extracts are set out below:

CHAIRMANS STATEMENT

I am pleased to present to you the Company's financial statements for the financial year ended 31st August 2010.

The period since the Company relisted in June 2010 has seen a transformation in the Company. For the period up until the relisting, which effectively encompassed the period covered by the attached financial statements, the Company had been heavily engaged in the research and development necessary to provide the basis for becoming an operational business. The three years of background and hard work put in by Dr Goh, Dr Tay and their team have resulted in the Company now having an increasing range of products representing both green energy generation systems and energy saving products led by its range of LED lights.

The company now has 116 patent applications in 56 countries in respect of 15 inventions, 5 of which inventions now have patents granted. We have also filed applications for 27 trade marks across 39 countries with a view to securing our brands. These applications are supported by a growing number of certifications in respect of the Company's products to ensure quality and also ensure that those products meet the highest international standards and are accepted in all of the major international markets.

The Company now owns 50% of a manufacturing plant in China which enables its engineers to oversee the design and quality control of its lighting products for supply into the international market place. Advances in the design and production methods of the Company's solar eRoof, and progress with its eLive housing are expected to put the Company in a position to deliver to its first customers by the end of the year.

Significant efforts have also been made during the past six months to begin to establish a global network of distributors for the Company's products, with candidates being carefully vetted to ensure that they have the necessary competence. This has resulted in the signing of two distribution agreements to date, in the United Kingdom and Nigeria. The Company's products are currently being tested in a number of other countries around the world and we will be seeking to appoint further distributors during the coming months. The Company has also received a grant from the Singapore government to establish a marketing office in the United States, and this will help to ensure that the Company's reach will become truly global.

The Company is now truly focussed on revenue generation from its products, building on the very solid foundations it has established, with a view to revenues making an increasing contribution to overheads and achieving profitability as soon as possible. In the meantime the Company is exploring the possibility of a further fund raising in order to enable it to match growth to the available opportunities, for example the opportunity created by the abolition of conventional incandescent light bulbs across the European Union in accordance with climate change directives.

Pending our analysis of the Company's funding requirements for growth I will continue to support the Company and for this reason I have also agreed to increase the level of my convertible loan to the Company by a further US$1,000,000.

As a result of all of the combined efforts of our dedicated team, Alternative Energy is becoming a multi-technology focussed green energy company which develops practical and well priced branded technology which will be marketed by a global network of competent distributors.

This time last year I expressed confidence that shareholders' patience would be seen to be justified. I believe that if shareholders reflect on the tremendous amount which has been achieved within the Company's budget, including the cost of relisting the Company, the amount of intellectual property secured, the establishment of the Company's manufacturing capacity in China and the development of a growing product list and distribution network, they would accept that these words were an accurate prediction of the Company's achievements.

There is still much to be done, but the Company is now operational and will be seeking to capitalise on the key business drivers, which are the worldwide growth of energy consumption, the political support for green energy and climate change incentives which is now manifesting itself in increasing financial incentives around the world, and the volatility of fossil fuel prices, which make adoption of alternative energy and energy saving measures, the Company's core business, an imperative and not an option.

Christopher Nightingale, Chairman

INDEPENDENT AUDITORS' 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 statements of financial position of the Group and of the Company as at 31 August 2010, and the consolidated statement of comprehensive income, statement of changes in equity of the Group and of the Company and statement of cash flows of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory note.

Management's Responsibility for the Financial Statements

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

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

(b) selecting and applying appropriate accounting policies; and

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

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 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 and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion,

(a) the consolidated financial statements of the Group, the statement of financial position and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and International Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 August 2010 and of the results, changes in equity and cash flows of the Group and changes in equity of the Company for the financial year ended on that date and;

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

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 2.2 to the financial statements which indicate that the Group and the Company have been incurring losses for the current and past years. The Group and the Company have taken measures as described in Note 2.2 to the financial statements to secure the necessary funding to meet their daily operation needs. If these measures described in Note 2.2 to the financial statements fail to materialise, this would indicate an existence of a material uncertainty which may cast significant doubt about the Group's and the Company's abilities to continue as a going concern.

BDO LLP

Public Accountants and

Certified Public Accountants

Singapore

25 February 2011

Lai Keng Wei

Partner-in-charge

ALTERNATIVE ENERGY LIMITED

ALTERNATIVE ENERGY LIMITED

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

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

ALTERNATIVE ENERGY LIMITED

ALTERNATIVE ENERGY LIMITED

ALTERNATIVE ENERGY LIMITED

ALTERNATIVE ENERGY LIMITED

ALTERNATIVE ENERGY LIMITED

CONSOLIDATED STATEMENT OF CASH FLOWS

ALTERNATIVE ENERGY LIMITED

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

1. General corporate information

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 official list of the Alternative Investment Market of the London Stock Exchange 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 performing management services (including marketing and other necessary services) for its subsidiaries.

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

The consolidated financial statements of the Group and the statement of financial position of the Company for the financial year ended 31 August 2010 were authorised for issue by the Board of directors on 25 February 2011.

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, Cap. 50 and the International Financial Reporting Standards (IFRS), including interpretations made by the International Financial Reporting Interpretations Committee (IFRIC).

2.2 Basis of preparation

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

These financial statements have been prepared on historical cost basis except as disclosed in the accounting policies below, and are in line with International Financial Reporting Standards (IFRS) and IFRIC interpretations issued by the International Accounting Standards Board (IASB). The adoption of all of the new and revised Standards and Interpretations issued by the IASB and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to the operations and effective for annual reporting periods beginning on 1 September 2009 are reflected in these financial statements.

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, 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. Summary of significant accounting policies

2.2 Basis of preparation

Going concern

In preparing the consolidated financial statements, the directors have carefully considered the future liquidity of the Group and the Company in the light of the current financial position of the Group and as at 31 August 2010 the recurring losses from operations in the current and past years, during which the Company concentrated on the research and development necessary to prepare the Company's products for sale in the international markets.

For the last few months the Company has been supported by its Chairman, Christopher Nightingale, who entered into a US$2 million convertible loan agreement with the Company in 2010. The Company has now started to generate revenues having entered into two distributorship agreements and is expecting to generate further revenues during the course of the coming year which will make an increasing contribution to its overheads with a view to taking the Company into profitability. In the meantime the Chairman has confirmed that he will continue to support the Company and has now offered to extend his convertible loan to the Company by a further US$1 million to US$3 million. The Company is also exploring other options to raise funds in order to fund the global distribution of the Company's products which will augment the Company's available cash. The directors continue to keep administrative and operating costs to a minimum.

The directors are confident that the measures they are taking, together with the support of the Chairman, will yield the Group and the Company sufficient working capital to finance its operations and remain a going concern for the foreseeable future. Hence, notwithstanding that the Group has incurred an operating loss of US$3.599 million (2009: US$2.578 million) for the year ended 31 August 2010, the directors of the Company are of the opinion that it is appropriate to prepare the consolidated financial statements of the Group on a going concern basis.

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

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

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

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

During the financial year, the Group and the Company adopted the new or revised IFRS and IFRIC that are relevant to their operations and effective for the current financial year. Changes to the Group's and the Company's accounting policies have been made as required, in accordance with the relevant transitional provisions in the respective IFRS and IFRIC.

2.2 Basis of preparation

The adoption of these new/revised IFRS and IFRIC does not result in changes to the Group's and the Company's accounting policies and has no material effect on the amounts reported for the current or prior year's except as discussed below.

IAS 1 (2008) Presentation of Financial Statements

The Group and the Company have adopted IAS 1 (2008) from 1 September 2009. IAS 1 (2008) requires the Group and the Company to present all changes in equity arising from transactions with non-owners in a statement of comprehensive income separately from those equity changes arising from transactions with owners in their capacity as owners to be presented in the statement of changes in equity. IAS 1 (2008) also requires the Group and the Company to disclose income tax relating to each component of other comprehensive income and to disclose reclassification adjustments relating to components of other comprehensive income. Where the Group and the Company restate or reclassify comparative information, the Group and the Company will be required to present a restated balance as of the beginning of the earliest comparative period in addition to the current requirement to present the statements of financial position as at the end of the current period and comparative period. The Group and the Company have chosen to present both the income statement and the statement of other comprehensive income in a consolidated statement of comprehensive income.

As a result of the application of IAS 1 (2008), certain comparative figures have been adjusted to conform to the current year's presentation and to provide for comparative amounts in respect of items disclosed for the first time in 2009. This change in presentation has no effect on reported profit or loss, total income and expense or net assets for any period presented.

IAS 27 (revised) Consolidated and Separate Financial Statements (effective for annual periods beginning on or after 1 July 2009)

The Group and the Company were adopted IAS 27(revised) prospectively to all business combinations from 1 September 2009. IAS 27 (revised) requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognised in income statement.

IFRS 3 (revised) Business Combinations (effective from 1 July 2009)

The Group and the Company have adoptedIFRS 3(revised) prospectively to all business combinations from 1 September 2009. The revised standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the statement of comprehensive income. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree at fair vale or at the non-controlling interest's proportionate share of the acquiree's net assets. All acquisition-related costs should be expensed off.

2.2 Basis of preparation

IFRS and IFRIC issued but not yet effective

IFRS 9 Financial Instruments (effective from 1 January 2013)

IFRS 9 replaces the multiple classification and measurement models in IAS 39 with a single model that has only two classification categories: amotised cost and fair value. Classification under IFRS 9 is driven by the entity's business model for managing the financial assets and the contractual characteristics of the financial assets. A financial asset is measured at amortised cost if two criteria are met: a) the objective of the business model is to hold the financial asset for the collection of the contractual cash flows, and b) the contractual cash flows under the instrument solely represent payments of principal and interest. The Group and the Company will apply this standard from 1 January 2013.

2.3 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

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 loses control of a 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 and any non-controlling interests. 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.

2.4 Investment in subsidiaries

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

Investments in subsidiaries are stated at cost on the Company's statement of financial position less impairment in value, if any.

2.5 Intangible assets

(i) Goodwill on acquisition

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

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

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

(ii) Patents and trademarks

Patents and trademarks are initially recognised at cost and are subsequently carried at cost less accumulated amortisation and accumulated impairment losses. Patents and trademarks with finite useful lives are amortised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Patents and trademarks with indefinite useful lives are not amortised. Each period, the useful lives of such assets are reviewed to determine whether events and circumstances continue to support the indefinite useful life assessment for the asset. Such assets are tested for impairment in accordance with the accounting policy for impairment stated in Note 2.7 to the financial statements.

 (iii) Computer software

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

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

2.6 Plant and equipment

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

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

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

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

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

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 the statement of comprehensive income.

2.7 Financial instruments

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

Effective interest method

The effective interest method calculates the amortised cost of a financial instrument and allocates 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. Income and expense is recognised on an effective interest basis for debt instruments other than those financial instruments "at fair value through profit or loss".

2.7 Financial instruments

Financial assets

The Group and the Company follow the guidance of IAS 39 in determining the classification of its financial assets. The classification depends on the nature and purpose of these financial assets and is determined at the time of initial recognition.

Loans and receivables

Loans and receivables that have fixed or determinable payments that are not quoted in an active market are classified as "loans and receivables". Loans and receivables are initially recognised at fair value plus transaction costs. They are subsequently carried at amortised cost, where applicable, using the effective interest method. Interest is recognised by applying the effective interest method, except for short-term receivables when the recognition of interest would be impacted.

Impairment of financial assets

Loans and receivables are assessed for indicators of impairment at the end of each financial year. Loans and receivables are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the loans and receivables, the estimated future cash flows of the investment have been impacted.

The carrying amounts of all financial assets are reduced by the impairment losses directly with the exception of trade receivables where the carrying amounts are reduced through the use of an allowance account. Changes in the carrying amount of the allowance account are recognised in the statement of comprehensive income.

If, in a subsequent financial year, 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 the statement of comprehensive income 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 Company 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. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds receivables.

2.7 Financial instruments

Financial assets

Impairment of non-financial assets

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

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

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

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

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

Goodwill

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

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

Financial liabilities and equity instruments

Classification as debt or equity

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

2.7 Financial instruments

Financial liabilities and equity instruments 

Equity instruments

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

Financial liabilities

The Company classifies its financial liabilities as other financial liabilities.

Other payables and accruals

Other payables and accruals are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, where applicable, using the effective interest method, with interest expense recognised on an effective yield basis.

Derecognition of financial liabilities

The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or they expire.

Convertible loans

Convertible loans 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.

2.8 Cash and cash equivalents

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

2.9 Provisions

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

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

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

2.10 Employee benefits

Retirement benefit costs

Payments to defined contribution retirement benefit 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 Company'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. An accrual is made for the estimated liability for annual leave as a result of services rendered by employees up to the reporting date.

Share-based compensation

The Group and the Company operate an equity-settled share-based compensation plan. The fair value of the employee services received in exchange for the grant of the option is recognised as an expense in the statement of comprehensive income with a corresponding increase in the share options reserve over the vesting period. The total amount to be recognised over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets), on the date of the grant. Non-market vesting conditions are included in assumptions on the number of options that are expected to become exercisable on vesting date. At the end of the financial year, the entity revises its estimates of the number of options that are expected to become exercisable on vesting date. It recognises the impact of the revision of original estimates, if any, in the statement of comprehensive income, and a corresponding adjustment to equity over the remaining vesting period.

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

2.11 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.

Management fee income

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

Sale of goods

Sale of goods is recognised when the Company has transferred to the buyer the significant risks and rewards of ownership of the goods and retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, the amount of revenue can be measured reliably, and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Finance income

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

2.12 Finance costs

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

2.13 Income tax

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

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

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

2.13 Income tax

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

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

At the end of each financial year, the Group and the Company re-assesses unrecognised deferred tax assets and the carrying amount of deferred tax assets. The Group and the Company recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. The Group and the Company conversely reduces the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax asset to be utilised.

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

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

2.14 Foreign currency 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, monetary items denominated in foreign currencies are retranslated at the rates prevailing as of the end of the financial year. 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 the statement of comprehensive income for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in the statement of comprehensive income 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.

Exchange differences which relate to assets under construction for future productive use, are included in the cost of those assets where they are regarded as an adjustment to interest costs on foreign currency borrowings.

2.14 Foreign currency translation

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. 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 classified as equity and transferred to the Group's translation reserve. Such translation differences are recognised in the statement of comprehensive income in the period in which the foreign operation is disposed of.

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.

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.

2.15 Operating leases

Rentals payable under operating leases are charged to the statement of comprehensive income 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 year in which they are incurred. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

2.16 Share capital and treasury shares

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

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

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

(i) sell the treasury shares for cash;

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

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

(iv) cancel the treasury shares; or

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

2.16 Share capital and treasury shares

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

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

2.17 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

3.1 Critical judgements made in applying the accounting policies

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

(i) Impairment of investment in subsidiaries and financial assets

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

Based on the management's assessment, it has determined that the investment in subsidiaries and financial assets are not impaired as at 31 August 2010. The carrying amount of investment in subsidiaries at 31 August 2010 was US$668,072 (2009: US$537,742).

3.1 Critical judgements made in applying the accounting policies

(ii) Patents and trademarks

Patents and trademarks are capitalised in accordance with the accounting policy in Note 2.7. Initial capitalisation of costs is based on management's judgement that the assets are separate from the entity, the entity controls the asset and it is probable that future economic benefits from the assets will flow to the entity. The management has determined the useful lives of patents and trademarks after having considered various factors such as competitive environment, product life cycles, operating plans and the macroeconomic environment of the patents and trademarks. In addition, management believes there is no foreseeable limit to the period over which the indefinite trademarks are expected to generate net cash inflows for the Group.

3.2 Key sources of estimation uncertainty

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

(i) Going concern basis of preparation

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

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

Plant and equipment and computer software are depreciated/amortised on a straight-line basis over their estimated useful lives. Management estimates the useful lives of these assets to be 3years. The carrying amounts of the Group's plant and equipment and computer software as at 31 August 2010were US$114,416 and US$20,445(2009: US$206,552 and US$20,157) respectively. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation/amortisation charges could be revised.

(iii) Income taxes

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

3.2 Key sources of estimation uncertainty

 (iv) Impairment of goodwill and patents and trademarks 

The management determines whether goodwill and patents and trademarks are impaired at least on an annual basis and as and when there is an indication that goodwill and patents and trademarks may be impaired. Such assessment and determination require the management to make judgements, estimates and assumptions. These estimates and associated assumptions are continually evaluated and are based on historical experience and other factors including expectations of future events or changes in circumstances. Actual results may differ from these estimates. The carrying amounts of goodwill and patents and trademarks as at31 August 2010 were US$464,726 and US$6,722,737 (2009: US$464,726 and US$436,999), respectively.

(v) Share options reserve

The charge for share options reserve is calculated in accordance with estimates and assumptions which are described in Note 19 to the financial statements. The option valuation model used requires highly subjective assumptions to be made including the future volatility of the Company's share price, expected dividend yields, risk-free interest rates and expected staff turnover. The management draws upon a variety of external sources to aid them in determination of the appropriate data to use in such calculations. The carrying amounts of share-based payments for the Group and Company as at 31 August 2010 was US$264,082 (2009: nil) and US$130,411 (2009: nil) respectively.

(v) Convertible loan

The fair value of the liability component of the convertible loan, at itsinitial recognition, estimated by independent valuer based on the present value of the contractual stream of cash flows using the effective interest rate of 13% which generally represents the best estimate of the market value of similar instrument without the conversion feature. The fair value of the equity component is determined as the residual amount by deducting the fair value of the liability component from the fair value of the convertible loan.

4. Plant and equipment

4. Plant and equipment

5. Investment in subsidiaries

Particulars of the subsidiaries are as follows:

 (1) Audited by BDO LLP, Singapore, for statutory audit purposes

 (2) Audited by BDO LLP, Singapore, for consolidation purposes

(3) The company is inactive or dormant and management financial statements are used for the preparation of the consolidated financial statements

During the year, the Company has invested in wholly-owned subsidiaries, Alternative Energy Holdings Limited (HK) and Alternative Energy Worldwide Limited. In addition, Alternative Energy Limited (BVI), a subsidiary has invested in a wholly-owned subsidiary, Alternative Energy (Middle East) Limited, and they are currently dormant.

6. Intangible assets