Financial Adviser and Broker: SVS Securities plc

1
China New Energy Limited
Placing and Admission to Trading on
AIM March/April 2011
Financial Adviser and Broker SVS Securities plc
2
Important Notice

• The information contained in this Presentation
  has been prepared by China New Energy Limited
  (the Company). This Presentation and its
  contents are for distribution in the United
  Kingdom only to persons of the kinds described in
  Articles 19(5) (investment professionals), 48
  (certified high net worth individuals), 49(2)
  (high net worth companies), 50 (sophisticated
  investors) or 50A (self-certified sophisticated
  investors) of the Financial Services and Markets
  Act 2000 (Financial Promotion) Order 2005 (as
  amended) (the Order) and persons who are
  otherwise permitted by law to receive it. It is
  not intended to be distributed or passed on,
  directly or indirectly, to any other class of
  persons. Persons of any other description,
  including those who do not have such experience
  in matters relating to investments, should not
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  represents and warrants that they are a person
  who falls within the above description of persons
  entitled to receive the Presentation.
• The information contained in this presentation
  has been prepared by the Company in connection
  with the proposed placing of securities in the
  Company. This presentation is being supplied to
  you solely for your information and may not be
  reproduced or redistributed, in whole or in part,
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• This presentation may be incomplete or condensed
  and it may not contain all material information
  concerning the Company. The information in this
  presentation may be subject to updating,
  revision, amendment and further verification.
• The information in this presentation does not
  constitute, or form part of, any offer or
  invitation to sell or issue, or any solicitation
  of an offer or invitation to purchase or
  subscribe for, any shares in the Company nor
  shall this presentation, or any part of it, or
  the fact of its distribution, form the basis of,
  or be relied on, in connection with any contract.
• Certain statements throughout this presentation
  are "forward-looking statements" and represent
  the Company's projections, intentions,
  expectations, estimates or beliefs concerning,
  among other things, future operating results and
  various components thereof or the Company's
  future economic performance. The projections,
  intentions, expectations, estimates and beliefs
  contained in such forward-looking statements
  necessarily involve known and unknown risks and
  uncertainties which may cause the Company's
  actual performance and financial results in
  future periods to differ materially from any
  projections, intentions, expectations, estimates
  or beliefs. Accordingly, you should not rely on
  any forward-looking statements and the Company
  accepts no obligation to disseminate any updates
  or revisions to such forward-looking statements.
• The Company and the directors of the Company
  accept responsibility for the information
  contained in this presentation and to the best of
  their knowledge and belief such information is
  true and does not omit anything likely to affect
  the import thereof.
• SVS Securities plc and Cairn Financial Advisers
  LLP, who are both authorised by the Financial
  Services Authority, are acting solely for the
  Company in relation to the proposed placing of
  securities and admission to AIM described in this
  presentation and will not be responsible in
  respect of the proposed placing and admission to
  AIM to any other person for providing protections
  afforded to clients of SVS Securities plc or
  Cairn Financial Advisers LLP (including persons
  who have been, or may be, clients of SVS
  Securities plc or Cairn Financial Advisers LLP in
  respect of other services). Neither SVS
  Securities plc nor Cairn Financial Advisers LLP
  is advising any recipient of this presentation in
  respect of the proposed placing and admission to
  AIM.
• Recipients of this presentation who intend to
  participate in the proposed placing are reminded
  that no reliance may be placed by any person for
  any purpose whatsoever on the information
  contained in this presentation or on its
  completeness, accuracy or fairness. No
  representation or warranty, express or implied,
  is given by or on behalf of the Company, SVS
  Securities plc or their respective shareholders,
  directors, officers or employees or any other
  person as to the completeness, accuracy or
  fairness of the information or opinions contained
  in the presentation and the accompanying verbal
  presentation, and no liability is accepted for
  any such information or opinions (including in
  the case of negligence, but excluding any
  liability for fraud).
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  presentation in certain jurisdictions may be
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  made available in whole or in part to persons in
  the United States of America, Canada, Malaysia,
  Japan, Australia, the Republic of Ireland or the
  Republic of South Africa or to any corporation,
  partnership or other entity created or organised
  under the laws thereof. No securities commission
  or similar authority in Canada has in any way
  passed on the merits of the securities offered
  hereunder and any representation to the contrary
  is an offence. No document in relation to the
  proposed placing has been, or will be, lodged
  with, or registered by, The Australian Securities
  and Investments Commission, and no registration
  statement has been, or will be, filed with the
  Japanese Ministry of Finance in relation to the
  placing or the securities described in this
  presentation. Accordingly, subject to certain
  exceptions, the securities described in this
  presentation may not, directly or indirectly, be
  offered or sold within Canada, Malaysia, Japan,
  Australia, the Republic of Ireland or the
  Republic of South Africa or offered or sold to a
  resident of Canada, Malaysia, Japan, Australia,
  the Republic of Ireland or the Republic of South
  Africa.
• The securities described in this presentation
  have not been, and will not be, registered under
  the United States Securities Act of 1933, as
  amended (the US Securities Act) or with any
  securities regulatory authority of any state or
  other jurisdiction of the United States of
  America and may not be offered or sold within the
  United States of America or to, or for the
  account or benefit of, any US Person as that term
  is defined in Regulation S under the US
  Securities Act. The Company has not been
  registered and will not register under the United
  States Investment Company Act of 1940, as
  amended.
• This presentation contains information about the
  historical financial performance of the Company
  and its subsidiaries from time to time (the
  Group or CNE). Past performance is not,
  however, a guarantee or reliable guide as to the
  future financial performance of the Group.

3
Overview

• CNE is a technology, process and engineering
  solutions provider, whose operations are based in
  China, for bioethanol and biobutanol projects
  focusing on the bioenergy sector.
• CNE
• Has an established track record in China, as well
  as overseas customers in countries including
  Romania, Taiwan, Russia, Thailand and Indonesia.
• Has advised on 88 projects with an aggregate
  production capacity of approximately 9.0m tonnes
  per year and a total contract value of
  approximately RMB1.5bn.
• Has experienced and qualified personnel - CNEs
  Chairman and CEO have many years of experience in
  the renewable energy industry.
• Has its own RD laboratory and has proprietary
  bioenergy technology.
• Because of its experience in providing services
  to the bioenergy sector, the Directors of CNE
  believe that CNE is well positioned to benefit
  from the expected continued growth in the
  bioenergy sector, particularly in China.
• The global bioenergy industry is expanding,
  including in China.
• In September 2010, Chinas biofuel industry was
  forecasted to bring about construction projects
  with a total value of RMB 96bn (US14.1bn based
  on a September 2010 exchange rate).
• Ethanol production in China is forecast to
  increase to 10m tons in 2020.
• CNE is seeking admission to AIM and looking to
  raise gross proceeds of up to US2.0m pursuant to
  a placing of new shares.

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4
Board of Directors
Yu Weijun MBA Executive Chairman
Tang Zhaoxing MBA Chief Executive Officer
Chen Yong Ph.D. Non-Executive Director
Foo Shiang Peow MBA Non-Executive Director
Richard Bennett Non-Executive Director

• Chairman of CNE and ZKTY (Guangdong Zhongke
  Tianyuan New Energy Science and Technology Co.
  Ltd.).
• Primarily in charge of the overall strategic
  planning and corporate development of CNE.
• Prior to joining CNE, he worked in GIEC CAS
  (Guangzhou Institute of Energy Conversion,
  Chinese Academy of Sciences), where he was
  latterly Deputy Chief, in charge of the
  industrial and external investments, asset
  management and financial matters.
• Holds an Executive Master of Business
  Administration from Sun Yat-sen University and is
  a member of the Chinese Institute of Certified
  Public Accountants.

• A director of CNE since 2006.  
• Managing Director of ZKTY.
• Responsible for the overall company operation,
  sales and project design and management.
• Prior to joining ZKTY, he was managing director
  of GZTY Regeneration Resources (of which he is
  still a director).
• Mr. Tang graduated from South China Science
  Tech University with a degree in Chemical
  Engineering, and has an EMBA from Peking
  University.

• President of Guangzhou Institute of Energy
  Conversion, Chinese Academy of Sciences.
  Professor. 
• Bachelors degree in Chemical Engineering from
  Nanjing University of Technology.
• Masters degree from Aichi University of
  Technology, Japan.
• Ph.D. in chemical engineering from Nagoya
  University, Japan.

• Has worked with Credit Suisse First Boston, UOB
  Asia Limited (part of the United Overseas Banking
  Group in Singapore) and BDO Raffles, Singapore
  before establishing NovusAsia Capital Limited, of
  which he is a director and shareholder.
• Mr. Foo has a Master of Business Administration
  from Nanyang Technological University, Singapore.
  
•  

• Started his career in the energy industry
  working for General Electric in Asia - involved
  commercialising and bringing to market new
  technologies.
• Co-founder of JFAX Inc., which became a leading
  internet communications company J2 Global
  Communications, Inc. that listed on NASDAQ
  (NASDAQJCOM) and today has a valuation exceeding
  1bn.
• Was involved in developing two businesses
  admitted to AIM, Virtual Internet UK Limited and
  Coms plc (AIMCOMS).
• Actively working it the clean technology sector
  as CEO of Jade Clean Technology Limited
  (developing underground coal gasification
  projects in China and India).

5
Senior Management

• Ding Liren (Adam) Chief Administrative
  Officer
• Mr Ding has been the Chief Administrative
  Officer of ZKTY since 2008. He is responsible for
  procurement, administration and human resources
  in ZKTY.
• Prior to joining ZKTY, he worked in Ningxia
  Xiacheng Import/Export Corporation, Ningxia
  Chengwei Advertising Co., Ltd. and Devotion
  Energy Group Ltd.
• Graduated from the University of International
  Business Economics Beijing in 1990 with a
  Bachelors degree in Economics.
• Wen Xiaoyi (Sunny) - Chief Financial Officer
• Ms Wen has been the Chief Financial Officer of
  ZKTY since 2007. She is responsible for the
  finance, accounting, taxation and compliance
  matters relating to the operations of ZKTY.
• Prior to joining ZKTY, she worked at Guangzhou
  Finance Bureau and Guangzhou Financing Guarantee
  Centre and was chief financial officer at
  Guangzhou Jinpeng Company and assistant chief
  executive officer at iTour Co. Ltd.
• Member of the Chinese Institute of Certified
  Public Accountants.

6
Group Structure Background
Group Structure Chart (following Admission)
AIM quoted, Jersey incorporated, Group holding
company
Overseas
China
100
Wholly foreign owned enterprise and trading
entity  
100
Technology engineering
Group Background The origins of ZKTYs
activities date back to 2002, with the formation
of Guangdong Zhongke Tianyuan Regeneration
Resources Engineering Co., Ltd (GZTY
Regeneration Resources), which was formed as a
result of a spin-out from the Guangzhou Institute
of Energy Conversion, Chinese Academy of
Sciences.   In 2005, Guangzhou Baojie
Electromechanical Co., Ltd. (Guangzhou Baojie)
was founded to focus on the production and supply
of equipment and provision of production
technology and technical services to produce
ethanol downstream products, including acetic
acid and ethanol.   In 2006 ZKTY acquired
certain assets, including customer contracts and
technology, from Guangzhou Baojie and GZTY
Regeneration Resources, which enabled the
establishment of ZKTY's operations.   In October
2010, ZKTY acquired Guangdong Boluo Jiuneng High
New Technology Engineering Co., Ltd. (Boluo),
which fabricates equipment in accordance with
project requirements, and provides services
exclusively for ZKTY.
7
Background Milestones

• The Group operates through its wholly owned
  subsidiary, Guangdong Zhongke Tianyuan New Energy
  Science and Technology Co. Ltd (ZKTY).
• The Group has extensive experience in designing
  and constructing ethanol and ethanol downstream
  production plants.
• Since ZKTYs establishment, the Group has
  advised on 88 projects, with an associated total
  contract value of approximately RMB1.5bn.
• These completed projects demonstrate the Groups
  track record in providing its customers with a
  range of technology and engineering services in
  relation to their ethanol and biobutanol
  production needs.
• The Directors believe that the Group is an
  established integrated service provider which can
  offer customers a range of services, thereby
  potentially saving customers costs and time by
  avoiding engaging multiple parties.
•  

• Key Group Milestones
• 2002 GZTY Regeneration Resources secures its
  first major contract, which was subsequently
  transferred to ZKTY.
• 2003-04 GZTY Regeneration Resources was awarded
  the first in a series of contracts by Jilin
  Meihekou Foukang Alcohol Co., Ltd to increase its
  production of edible ethanol by 35,000 tonnes per
  year.
• 2006 The Company and ZKTY were formed.
• 2006 ZKTY secured its first contract in Europe
  to provide design and construction services for
  the production of a 80,000 tonnes per year fuel
  ethanol plant in Romania.
• 2007 ZKTY was awarded ISO 90012000
  certification by the China Great Wall (Tianjin)
  Quality Assurance Centre.
• 2007 ZKTY secured contracts with further
  international clients, including the
  Blagoveschensk Alcohol Plant in Russia and
  clients in Taiwan and Thailand.
• 2008 ZKTY secured a contract with Indonesia Fuel
  Ethanol Co. Limited.
• 2008 CE accreditation granted confirming that
  certain of the pressure equipment designed and
  constructed by ZKTY and Boluo conformed to EU
  standards for pressure equipment.

8
Revenue Model 1

• The Group intends to organise its business into
  two segments
• Technology and Engineering Solutions.
• Investments.

Proposed
In Operation
9
Revenue Model 2

• The Group, through ZKTY, is an integrated service
  provider which principally provides technology
  and engineering services mainly to
• Ethanol producers.
• Ethanol downstream product producers.
• Biobutanol producers.
• The Groups Technology and Engineering
  Solutions business segment generates revenue
  from providing services which include
• Technical design and engineering.
• Procurement and construction.
• Installation and testing.
• Training of customers staff.
• Going forward, the Directors expect the Group to
  develop its Biogas and Energy Management
  Conservation (EMC) revenue streams and to
  establish an Investments segment.

9
10
Solutions
Technology Engineering Solutions - Bioethanol
and Biobutanol

• Ethanol (alcohol) is commonly used in the
  manufacture of chemicals, cosmetics, and
  beverages.
• Butanol is commonly used in the manufacture of
  chemicals and solvents.
• Both ethanol and butanol may also be used as
  fuels.
• Bioethanol and biobutanol are commonly made from
  starchy materials and saccharides via a
  combination of both fermentation and
  distillation.
• The Group has technologies for producing various
  grades of ethanol (normal, superfine, fuel).
• The Directors believe that the Groups core
  competency lies in the design and construction of
  fermentation, distillation and dehydration
  systems for ethanol production - the critical
  processes for the production of ethanol.

PHOTO / IMAGE
Selected Bioethanol and Biobutanol Projects
Contractual Value Capacity (tonnes per year) Project Description Date of Completion or Estimated Date of Completion
RMB 30,200,000 35,000 Super-grade edible alcohol project for Jilin Meihekou City Foukang Alcohol Co., Ltd. March 2011
180,000 80,000 Ethanol fuel plant for Romania Biofuel Energy SRL. June 2011
RMB 43,173,000 100,000 Cassava-based edible alcohol project for Guangxi Mingyang Bio-Chemical Science Technology Co., Ltd. August 2011
11
Solutions II
Technology Engineering Solutions - Biogas

• Biogas refers to either a methane, hydrogen or
  carbon dioxide rich gas that is produced as
  organic matter breaks down.
• Plants can supply and sell clean biogas as fuel
  for civilian use to the local utility gas
  companies.
• The Group specialises in the production of
  biogas through the treatment and anaerobic
  fermentation of waste by-products from the
  ethanol production process.
• In addition to domestic and utility company use,
  biogas can be used in many industries such as
  fuel, materials, intermediates and additives.
• Although commercial production of biogas is
  relatively new, the Directors believe that the
  Groups background and experience in designing
  and constructing ethanol production plants will
  help build a competitive strength for the Group
  in biogas production.

Existing Biogas Projects
Project Description
An agreement with Dongguan Xinao Gas Co. Ltd, to design and construct a bio-gas recovery and purifying plant at a beer brewery located in Dongguan China.
A letter of intent to build a bio-gas recovery and purifying plant at a beer brewery owned by Kingway Beer Group, located in Shenzhen China, with the intention that the purified biogas be sold to Shenzhen City Gas Group.
Note The image above is illustrative and is not
a CNE Biogas project.
11
12
Solutions III Investments
Technology Engineering Solutions - Energy
Management Conservation (EMC)

• Under its EMC model, the Group offers customers
  with existing production facilities the ability
  to reduce energy consumption by modifying the
  customers existing equipment and/or installing
  ancillary equipment for the customers existing
  production infrastructure.
• Under the model, the Group bears the costs of
  modifying the customers existing equipment and
  installing ancillary equipment in return for a
  share of the customer's targeted net energy
  saving.

PHOTO / IMAGE
Existing EMC Project
Contractual Value Customer Date of Completion
RMB 220,000 per month for a period of sixty months from January 2010 is due from the customer. Yichang Sanxia Limin Biochemical Ltd. November 2009.
Investments

• The Group has identified the following potential
  future investment orientated income streams that
  it is currently exploring
• Investing in undervalued biofuel operators and
  producers.
• Forming joint ventures to co-invest in next
  generation biofuel operators.

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Financial Snapshot
CNEs financial performance
Year ended 31 December 2007 RMB000 Audited Year ended 31 December 2008 RMB000 Audited Year ended 31 December 2009 RMB000 Audited Year ended 31 December 2010 RMB000 Unaudited
Revenue 205,749 224,208 125,301 138,477
Revenue Growth () N/A 9 -44 11
Gross profit 41,802 42,080 31,520 40,738
Gross Margin () 20 19 25 29
Other operating income 1,079 4,587 5,563 464
Total Operating expenses (55,696) (52,834) (19,820) (17,032)
Interest expenses (1,045) (9,622) (2,837) -
Income tax expense (9) (8) (2,508) (3,623)
Profit/(loss) for the financial year/period (13,869) (15,797) 11,918 20,547
Net margin () -7 -7 10 15
As at 31 December 2007 RMB000 Audited As at 31 December 2008 RMB000 Audited As at 31 December 2009 RMB000 Audited As at 31 December 2009 RMB000 Unaudited
Total Assets 255,129 127,298 152,441 170,827
Total Liabilities 252,180 137,980 156,703 152,449
Net assets/(liabilities) 2,949 (10,682) (4,262) 18,378
PLEASE NOTE THAT PAST PERFORMANCE IS NO GUARANTEE
AS TO THE FUTURE PERFORMANCE OF THE COMPANY
14
Market Drivers

• Bioenergy is widely considered to be one of the
  key alternatives to fossil fuel use because of
  its easy acquisition and clean emissions.
• The National Development and Reform Commission in
  China forecasts that the production of ethanol
  will increase from 1.7m tons in 2008 to 10m tons
  in 2020.
• Novozymes and Mckinsey Company predict that
  cellulosic ethanol could be substituted for 31m
  tons of gasoline in China by 2020, cutting the
  nation's oil imports by 10.
• China has overtaken the USA to become the world's
  biggest energy consumer - fuelled by its
  decades-long economic growth and its rapidly
  expanding position as an industrial giant.
• China is the second largest oil consumer behind
  the USA. Chinas oil consumption growth accounted
  for about a third of the worlds oil consumption
  growth in 2009.
• The PRC government has enacted various laws and
  regulations encouraging the use of renewable
  energy as a substitute for petroleum.
• In September 2010, Chinas biofuel industry was
  forecasted to bring about construction projects
  with a total value of RMB 96bn (US14.1bn - based
  on a September 2010 exchange rate).

15
Market Opportunity

• The Directors believe that the development of the
  Chinese ethanol industry and its expanding
  production capacity will open up opportunities
  for the Group.
• The Directors believe that China will demonstrate
  increasing demand for alcoholic beverages in the
  future.
• The Directors also believe that there will be an
  increased demand for higher quality alcoholic
  beverages in China, and a demand for new plants
  which are capable of producing higher quality
  ethanol.
• The Directors believe that there will be an
  increase in the demand for the Groups services
  from ethanol downstream producers due to
  increasing industrialisation in China.
• As many industrial, commercial and household
  products contain ethanol and acetic acid, the
  Directors believe that the demand for ethanol
  production plants will continue to rise in the
  future.
• The conversion of biomass into fuel, energy and
  chemicals is predicted to have the potential to
  generate upwards of US230bn for the global
  economy by 2020.
• The Directors are of the opinion that bioenergy
  demand will increase as a result of the expected
  continued increase in the price of oil in the
  near future.

16
Growth Strategy

• The Group intends to focus its strategy towards
  the future growth and expansion of its business
  as follows
• Expand customer base and enlarge geographical
  market.
• Expand its capability to capture and maintain its
  market share in the China ethanol fuel market.
• Broaden its international presence by marketing
  its services globally, especially in Southeast
  Asia.
• CNEs agent is in negotiations relating to the
  potential sale of the Groups products and
  services for a cassava ethanol plant in Thailand.
• Broaden EMC business by developing new
  complementary services.
• Expand its existing service offering by further
  developing its engineering capabilities.
• Develop and commercialize new sources of biofuel
  through internal research efforts, and via joint
  collaborations with third parties.
• Carry out further research and development in the
  areas of biofuel production.
• Develop new processes to maximise the extraction
  of ethanol and other biogases from cassava.
• Achieve growth through acquisitions, joint
  ventures or strategic alliances
• Expand its capabilities and business through
  acquisitions, joint ventures or strategic
  alliances.
• Explore opportunities to acquire other operations
  which are also involved in similar industries.

16
17
Current Trading and Prospects

• The Directors envisage the operating environment
  for FY2011 to be encouraging, as the Directors
  believe that the recent increase in oil prices
  will result in increasing demand for bioenergy,
  which will in turn lead to growth in the ethanol
  markets in the PRC and around the world.
• As at 31 December 2010, the Groups order book
  for existing contracts was approximately RMB39m.
• The Directors expect that a substantial part of
  this order book will be completed and recognized
  in FY2011.
• The Group is currently exploring opportunities
  and negotiating with prospective customers for
  new projects in the PRC and overseas.
• In particular, via its agent, the Group is
  negotiating to provide products and services for
  a cassava based ethanol project in Thailand.
• Barring unforeseen delays or cancellations of
  projects arising from factors including adverse
  weather and funding problems faced by the Groups
  customers, the Directors expect the Company to
  register increased revenue in FY2011.

18
Use of Proceeds AIM

• CNE is seeking admission to AIM and looking to
  raise up to US2.0m gross pursuant to a placing
  of new shares at Admission (the Placing).
• It is the intention of the Company to use the
  proceeds from the Placing to provide the business
  with additional working capital.
• Reasons for the Admission to AIM
• Enhance the Groups status with its customers
  (both existing and prospective) and its other
  stakeholders, including suppliers, potential
  joint ventures partners and collaborators.
• Provide access to capital for growth i.e. raise
  finance for further development both at the time
  of Admission and through further capital raising
  after Admission.
• Encourage and incentivise employees commitment
  through an employee benefit trust, determine a
  market value for the Groups shares and broaden
  the Groups shareholder base.

19
Why Invest?
CNE

• The global bioenergy industry is developing and
  expanding
• The Directors believe that the increase in oil
  prices is likely to lead to growth in ethanol
  markets in PRC and around the world.
• Cellulosic ethanol (bioethanol produced from
  wood, grasses etc) could be substituted for 31m
  tons of gasoline in China by 2020, cutting the
  nation's oil imports by 10. In September 2010,
  Chinas biofuel industry was forecast to bring
  about construction projects with a total value of
  RMB 96bn.
• Has an established track record in China, with
  overseas customers
• 88 projects completed.
• International sales - the group has exported its
  services outside of China into other Asian
  jurisdictions, Russia and the EU.
• Has experienced and qualified personnel
• Chairman and CEO have many years of experience in
  the renewable energy industry.
• Board of Directors includes members with relevant
  experience, supported by a team of dedicated and
  academically qualified personnel.
• Has proprietary technology and maintains own RD
  laboratory to develop and commercialize new
  sources of biofuel internally and via
  collaborations with third parties.
• Is not a plant operator - CNE is a services
  company which targets the ethanol and bioenergy
  industries, rather than a bioenergy or ethanol
  plant operator.
• Pipeline of projects in negotiation.

19
20
Placing Statistics Timetable
Placing Statistics Placing Statistics
Placing Price ?p
Anticipated market capitalisation on Admission ? million to ? million
Gross proceeds to be raised by the Company pursuant to the Placing ? million
Percentage of the Enlarged Share Capital represented by the Placing Shares Approximately ? to ?
The Directors and existing Significant Shareholders (those who, prior to the Placing, hold Ordinary Shares representing 3 or more of the ordinary share capital of the Company) will be subject to the provisions of orderly market agreements. The Directors and existing Significant Shareholders (those who, prior to the Placing, hold Ordinary Shares representing 3 or more of the ordinary share capital of the Company) will be subject to the provisions of orderly market agreements.
Indicative Timetable Indicative Timetable
Last day for book building ? 2011
Anticipated date for despatch of placing letters ? 2011
Latest date for receipt of placing letters ? 2011
Dealing expected to commence on ? 2011
21
China New Energy Limited
APPENDIX
22
Financial Information
Abbreviated Consolidated Statements of Financial
Position
Abbreviated Consolidated Statements of
Comprehensive Income
Year ended 31 December 2010 Unaudited RMB000 Year ended 31 December 2009 Audited RMB000 Year ended 31 December 2008 Audited RMB000 Year ended 31 December 2007 Audited RMB000
Revenue 138,477 125,301 224,208 205,749
Gross profit 40,738 31,520 42,080 41,802
Other operating income 464 5,563 4,587 1,079
Total Operating expenses (17,032) (19,820) (52,834) (55,696)
Interest expenses - (2,837) (9,622) (1,045)
Profit /(loss) before income tax 24,170 14,426 (15,789) (13,860)
Income tax expense (3,623) (2,508) (8) (9)
Profit /(loss) for the financial year/period 20,547 11,918 (15,797) (13,869)
As at 31 December 2010 Unaudited RMB000 As at 31 December 2009 Audited RMB000 As at 31 December 2008 Audited RMB000 As at 31 December 2007 Audited RMB000
Non-current assets 21,089 17,090 7,938 8,133
Current assets 149,738 135,351 119,360 246,996
Current liabilities 151,431 155,648 86,379 189,619
Net current assets/ (liabilities) (1,693) (20,297) 32,981 57,377
Non-current liabilities 1,018 1,055 51,601 62,561
Net assets/ (liabilities) 18,378 (4,262) (10,682) 2,949
PLEASE NOTE THAT PAST PERFORMANCE IS NO GUARANTEE
AS TO THE FUTURE PERFORMANCE OF THE COMPANY
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23
Current Capital Structure

• Immediately prior to Admission, the Company will
  have 69,351,002 Ordinary Shares in issue.

Significant Shareholdings
Director Shareholdings
As at the date immediately prior to Admission As at the date immediately prior to Admission
Name Number of Ordinary Shares Percentage of total number of issued ordinary Shares
Cobalt Ventures Ltd 16,832,770 24.27
Best Full Investments Limited 12,000,000 17.30
Jiang Xinchun 5,000,000 7.21
Qui Weiming 5,000,000 7.21
As at the date immediately prior to Admission As at the date immediately prior to Admission
Name Number of Ordinary Shares Percentage of total number of issued ordinary Shares
Yu Weijun 1 16,000,000 23.07
Tang Zhaoxing 2 12,000,000 17.30
Foo Shiang-Peow 3 2,019,932 2.91

1. Yu Weijun is the sole legal and beneficial owner
   of 16,000,000 Ordinary Shares held by Leader
   Vision Investments Limited. In addition to the
   interests referred to above, Mr Yu is the sole
   beneficial holder of Tewin Capital Holdings
   Limited, which has entered an agreement to
   acquire 6,733,110 Ordinary Shares from Cobalt
   Ventures Ltd.
2. Tang Zhaoxing is the sole legal and beneficial
   owner of the 12,000,000 Ordinary Shares held by
   Asia Tianxing Investment Limited.
3. Foo Shiang-Peow is a director and shareholder in
   NovusAsia Capital Limited, to which the Company
   has agreed to issue 2,019,932 Ordinary Shares at
   Admission in part settlement of fees.

• Citadel Debt Financing
• In July 2007, CNE raised US12 million from the
  Citadel Equity Fund Limited (Citadel) through
  the issuance of convertible bonds which the
  Company undertook to use for, inter alia,
  contributing to ZKTYs registered capital.
• In October 2008, the Company entered into a
  redemption arrangement with Citadel, pursuant to
  which the Company paid Citadel US4m and the
  principal amount of convertible bonds held by
  Citadel was reduced to US8m.
• In December 2010, the Company entered into
  further agreements with Citadel to restructure
  the debt existing at such time, cancelling the
  convertible bonds and reissuing ordinary bonds to
  the same value.
• In consideration for the restructuring of its
  bonds and reduction in debt, Citadel has been
  granted warrants to subscribe for 4,713,175
  Ordinary Shares (being 7 of the issued ordinary
  share capital of the Company at the close of
  business on 28 February 2011).

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24
Summarised Risk Factors

• Before deciding whether to invest in the Ordinary
  shares, prospective investors should carefully
  consider the risks described below which will
  apply to the Company together with all other
  information contained in this presentation. If
  any of the following risks actually occur, the
  Groups business, financial condition and/or
  results of operations could be materially and
  adversely affected. In such case, an investor may
  lose all or part of his or her investment.
  Additional risks and uncertainties not currently
  known to the Directors may also have an adverse
  effect on the Groups business and the
  information set out below is not and does not
  purport to be an exhaustive summary of the risks
  affecting the Group.
• Failure to obtain or maintain requisite permits
  and licenses The Directors believe that the
  Group currently holds all necessary licenses and
  permits to carry on the activities which it is
  currently conducting under applicable laws and
  regulations. ZKTY and Boluo are subject to
  various government rules and regulations to carry
  out their respective business activities in the
  PRC. They are also subject to the periodic audits
  by the relevant PRC authorities for the renewal
  of these licenses and certifications. The
  relevant PRC authorities may suspend or refuse to
  renew the existing licenses or certifications.
  There is no assurance that ZKTY and Boluo will be
  able to maintain or renew their respective
  existing permits, licenses and certifications in
  the future.
• Intellectual Property The Companys success
  depends in part on obtaining, maintaining, and
  enforcing its intellectual property rights, and
  its ability to avoid infringing the intellectual
  property rights of others. There is a risk that
  certain technology used by ZKTY in connection
  with the Groups current business operations, may
  not be adequately protected by patents or any
  other intellectual property rights.
• The Group is largely reliant on the Chinese
  market The Groups operations in China represent
  a significant majority of the Groups total
  revenues. As a result, the Groups operations,
  prospects and financial condition could be
  adversely affected if there is any deterioration
  in or disruption to legal, political, economic or
  social conditions in China.
• Price of petroleum and related substitute
  ethanol downstream products Biofuel is an
  alternative energy source to petroleum and
  ethanol is commonly used as a partial substitute
  of gasoline. The demand for biofuel may be
  significantly influenced by the price of
  petroleum and related products. In the event the
  price of petroleum decreases, this could lead to
  the increase in demand for biofuel. This will
  adversely affect the demand for the Groups
  products and services. If the prices of petroleum
  and related products fall significantly, the
  Companys financial performance may be materially
  and adversely affected.
• Prices of the feedstock for ethanol production
  The prices of feedstock may be affected by
  factors such as climatic variations and
  government regulations. The increase in the
  prices of feedstock will increase the production
  cost of ethanol, which is likely to reduce the
  cost effectiveness of producing bioethanol. In
  such an event, capital expenditure by the
  Companys customers in the building of new plants
  is likely to decrease. If the prices of feedstock
  increase substantially, this could affect the
  demand for the Groups products and services and
  this may affect the Groups financial
  performance.
• The MA Regulations there is a risk that the
  CSRC or other PRC governmental authorities may
  issue an interpretation or implementing rules in
  the future that could determine that the CSRCs
  or another PRC governmental authoritys approval
  is required for the proposed listing of the
  company on AIM. The Group may face sanctions by
  the authorities if the authorities subsequently
  determine that the approval is required for the
  proposed listing of the Company on AIM.
• Political risks in PRC The degree to which the
  PRC Government regulates industry is a key risk
  to business in PRC in the future. The rate of
  economic liberalization could change and laws and
  policies affecting the environmental protection
  sector, foreign investment, exchange rates and
  other matters affecting investment in PRC could
  change as well.
• .Limitations caused by PRC foreign exchange
  control There can be no assurance that the PRC
  regulatory authorities will not impose further
  restrictions on the convertibility of the RMB.
  Any further restriction on currency exchanges may
  limit the ability of the Company to repatriate
  revenues.

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Company Advisory Team

• China New Energy Limited
• Queensway House
• Hilgrove StreetSt HelierJerseyJE1 1ESChannel
  Islands
• Contact Foo Shiang Peow
• Ding Liren (Adam)
• SVS Securities plc, Broker Financial Adviser
• 21 Wilson Street
• London EC2M 2SN
• Contact Ian Callaway 020 7638 5600
• ian.callaway_at_svssecurities.com
• Alex Mattey 020 7638 5600
• alex.mattey_at_svssecurities.com

Stephenson Harwood, Solicitors to the Company as
to English Law One Raffles Place 12-00 Singapore
048616 Bird Bird LLP, Solicitors to the
Nominated Adviser and Broker 15 Fetter
Lane London EC4A 1JP Walbrook Public Relations,
Financial Public Relations 4 Lombard
Street London EC3V 9HD