Final Results

5 November 2010

GEM BIOFUELS PLC

("GEM" or the "Company")

Results for the Year Ended 31 December 2009

GEM Biofuels Plc (AIM: GBF), the emerging feedstock supplier to the global biofuel, biochemical and energy industries, today announces its results for the year ended 31 December 2009.

Operational Highlights

• 55,700 hectares now planted since commencement of operations 

• Company's plantation program held over until the next plantation season to focus on maximisation of the potential of its existing assets

• Successful commencement of commercial-scale production of crude jatropha oil ("CJO")

• Confirmation of key aspects of the Company's operational model, including oil yields and logistics capabilities

Financial Highlights

• Completion of a placing which raised £500,000 before expenses

• Cash as at 31 December 2009 £102,949 (2008: £1.07 million)

• Group loss for the year: £956,183 (2008: £1.39 million), or a loss per ordinary share of 3.30p (2008: 5.05p)

Post Period Highlights

• Successful shipping of Company produced CJO to, and processing by, third-party customers in the bio fuels and biochemical industries

• Placing of an additional £300,000

• Raise up to an additional £2m of new funding by 31 December 2010 to strengthen the Company's financial position, thereby enabling it to capitalise fully on its position in the market and continue as a going concern

The Company also confirms that its annual report and accounts for the year ended 31 December 2009 have now been posted to shareholders. The Company's AGM will be held at on 14 December 2010 at 12 noon, 33 Athol Street, Douglas, Isle of Man, IM1 1LB and notice of the AGM will be circulated to shareholders shortly. The annual report and accounts are included in this announcement and copies will be available from GEM BioFuels Plc's registered office, 33 Athol St, Douglas, Isle of Man IM1 1LB and may be viewed on, or downloaded from the Company's website www.gembiofuels.com.

Mr Paul Benetti, Chief Executive Officer, comments, "2009 has seen us commence commercial-scale production of crude jatropha oil and consolidate our position as an owner/manager of large-scale, low-cost, sustainable energy crop plantations, which we believe will be a key source of non-traditional feedstocks for the biofuel, biochemical and energy industries. We have continued to build the capabilities of our team, including our 'in country' relationships and alliances, as we progress towards our immediate goal of full commercial production of crude Jatropha oil."

Mr Simon Hunt, Non-Executive Chairman, added, "GEM is developing into a key player in the business of managing large-scale plantations of energy crops for the low-cost production of non-food feedstocks for the biofuels. biochemical and energy industries. We are in the process of refining the Company's operations to best position it for significant growth and we look forward to taking the business to the next stage of development and delivering value for our shareholders."

Enquiries

Report of the Chairman and of the Chief Executive Officer

We are pleased to announce the results of GEM BioFuels Plc ("GEM" or the "Company") for the year ended 31 December 2009 and following is our report to shareholders for the year.

GEM is a plantation company which controls, through its wholly-owned subsidiary, substantial owner-managed plantations of Jatropha in Madagascar and since the commencement of its plantation operations in 2005, the Company has planted over 55,700 hectares of Jatropha. In addition, it has exclusive access to 40,000 hectares of natural forest that contains substantial numbers of mature Jatropha trees. This represents a significant area under management and sets the Company apart from other companies involved with Jatropha which rely on seed purchase, contract farming and/or joint venture production models. The natural forest under management has allowed GEM to commence production earlier than if it were to wait for the full maturity of its own plantation.

The Company and its wholly-owned subsidiary (together the "Group") are focused on establishing and maintaining plantations that will enable it to provide sustainable feedstock for the global biofuel and biochemical industries. The outlook for these industries and the 'green energy' industry, which the Company expects to enter through the on-going development of new crops and processing techniques, provides GEM with an excellent platform for future growth.

Successful year

2009 was a year of consolidation for the Company. With difficult capital markets, it avoided attempting to raise significant additional capital beyond the £500,000 raised in September 2009.

The year was used to focus on maximisation of the Company's existing plantation assets as well as enhancing its operational base, to ensure that it is ready for when the plantations reach production age. This involved, among other things, the commencement of commercial seed crushing operations to test out its business model and logistical operations. This generated:

·; 61 tonnes of crude Jatropha oil, which was sold and shipped to customers in Australia and Europe after the end of the year, and

·; 143 tonnes of seed meal, which is being stored awaiting the commencement of trials with several potential users of this biomass.

Whilst the Company's focus is currently on the establishment and management of plantations of Jatropha, it is also examining complementary crops and processing techniques which, through their shorter maturation times, will enable it to maximize the Company's significant land bank and to accelerate revenue generation

Operational Review

The Company's planned consolidation meant that no additional plantation establishment work was carried out during the 2009/10 season, with the focus being on preparing existing plantation areas, storage and processing arrangements for increased production expected to result from the first harvest from the Company's plantations and an expansion of the collections from the 'natural forest' areas to which the Company has access.

First crushing of seed occurred during the year and, while we utilized toll/third party crushing facilities, these operations confirmed the oil content of our seed and the effectiveness of the Company's logistics of collection, crushing and shipping. These now form the basis of planning for our own crushing operations in Madagascar.

Research is being conducted on several complementary crops, in particular biomass plants, that can be incorporated into existing and future Jatropha plantation areas. We believe that by pursuing such a strategy we will be able to bring forward cash flow from the plantations, through shorter maturation times and diversify the Company's customer and industry base. These should yield quicker positive results in terms of shareholder value creation.

GEM continues to focus on its target of establishing up to 200,000 hectares of low-cost, sustainable plantations under company management in Madagascar and planning for future planting campaigns is currently underway.

Financial Review

In the year ended 31 December 2009, the Group's loss on ordinary activities after taxation was £956,183 (2008: £1,394,417), or a loss per ordinary share of 3.30p (2008: 5.05p).

In September 2009 the Company completed a placement, raising £500,000 before expenses. The Group's cash balance at the end of the year was £102,940 (2008: £1,070,753).

Since the end of the financial year, the Company has achieved sales prices for its crude Jatropha oil product of between US$540 and US$685/Metric ton ("Mt"), which are well in line with our financial forecasts and implies a potential annual revenue figure for the Group of between US$620 and US$800 per mature hectare of Jatropha plantation. Further, it has raised £300,000 in new capital through a private placement of fully-paid, ordinary shares as it prepares for a larger fund raising round prior to the end of the current financial year.

Management

The consolidation and review of operations has led to a number of changes in the Company's governance structure, including the resignations of Messrs Frank Tiller, Adam Broadhurst and Pritesh Desai as Directors. We thank them all for the part they have played in the development of the Company to date. Adam Broadhurst remains as an executive of the Company and we are continuing to make changes aimed at enlarging our management skills set as we move to production and expanded operations.

We would again like to thank all the staff at GEM for their hard work and determination to see the Company's plans come to fruition. Without their effort and dedication we could not have made or continue to make the progress we have or expect in the future.

Outlook

The Company's outlook is positive as we capitalise on our increasing experience as a manager of plantations of energy crops. In addition new technologies and government mandates point towards the expansion the biofuels markets which represents the largest opportunity for our end products. Additionally, we are increasingly being presented with new markets, particularly in the biochemical and energy industries, which offer significant upside that is not already factored in to our plans.

We remain excited about the opportunities we have before us and continue to strive toward maximising the benefits that can be derived from them by all our various stakeholders. However, in order to capitalise fully on our position we need to maintain the Company as a going concern and to ensure this GEM will need to raise up to an additional £2 million of new funding by 31 December 2010. Details of the Group's financing plans for the future can be found in note 2 to the financial statements.

Simon D Hunt

Non-Executive Chairman

Paul R Benetti

Chief Executive Officer

Date: 2 November 2010

Directors' report

The directors present their annual report on the affairs of GEM BioFuels Plc (the "Company") and of its subsidiary (together the "Group"), together with the financial statements and independent auditors' report, for the year ended 31 December 2009.

Principal activity

GEM BioFuels Plc has been formed to establish plantations that will provide low-cost, sustainable feedstock to the rapidly growing global biofuel and biochemical markets through focusing on the deployment of company-managed operations.

Business review

The Group's loss for the year ended 31 December 2009 was £956,183 (2008: £1,394,417). The Company made a loss for the year ended 31 December 2009 of £776,391 (2008: £1,220,420).

Dividends

The directors do not recommend the payment of a dividend for the year ended 31 December 2009 (2008: nil).

Directors

The directors, who served throughout the year and to date, were as follows:

Directors' interests

The directors who held office at 31 December 2009 have the following interests in the Company's ordinary share capital as at that date:

1 These options are exercisable at £0.60 per share and lapse after 5 years. These options vested as to one half on 17 October 2008 and the other half after 17 October 2009.

Further details with respect to the above options granted to directors are set out in note 22. No director held any other interests in the Group during the year and to date.

Corporate governance

As an AIM-listed company, the Company is not required to comply with the revised Combined Code, issued by the Financial Reporting Council in June 2006, ("Combined Code"). However, the Directors recognised the value of the provisions set out in the Combined Code and have therefore decided to provide certain corporate governance disclosures based on the disclosures required of a fully listed company.

The Board has established an Audit Committee and a Remuneration Committee, each with formally delegated duties and responsibilities. The Audit Committee and the Remuneration Committee are comprised of Simon Hunt (Chairman) and Malcolm Williams.

The Audit Committee receives and reviews reports from management and the Group's auditors relating to the interim and annual financial statements and the accounting and internal control systems in use throughout the Group. The Audit Committee has unrestricted access to the Group's auditors.

The Remuneration Committee reviews the scale and structure of the Executive Directors' remuneration and the terms of their service contracts. The remuneration and terms and conditions of appointment of the Non-Executive Directors are set by the Board. The Remuneration Committee also administers the Group's share option scheme.

Going concern basis

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman and CEO's Review and this Directors Report. The financial position of the Group, its cash flows, liquidity position and capital requirements are also described in these financial statements on pages 12 to 15. In addition, notes 23 and 26 of the financial statements include the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposure to credit risk and liquidity risk.

As highlighted in note 2(b) the Group's forecasts and projections, taking account of reasonably possible changes in trading variables, such as sale prices, oil and seed yields, operating costs and maturation of plantations, show that the Group will need to raise additional, new capital if it is to execute its current operating plan. The Group has, since 31 December 2009:

·; raised £300,000 in new capital through the issue of 3,750,000 ordinary, fully paid shares; and

·; had initial discussions with brokers regarding the raising of up to an additional £2 million of new funding by 31 December 2010 and, although no commitments have been made, no matters have been drawn to the Group's attention to suggest that the capital raising may not be achievable on acceptable terms.

The directors have a reasonable expectation that the Company and the Group have, or will have, adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Substantial shareholding interests

The following shareholdings of 3% or more of the ordinary share capital of the Company are set out in the register of members of the Company as at 31 December 2009 and 30 September 2010.

Auditors

Following the transfer of their business to Deloitte LLP with effect from 1 October 2010, Deloitte & Touche have confirmed their intention to resign as auditors at the next annual general meeting, at which time a resolution to appoint their successors, Deloitte LLP as auditors will be proposed.

Approved by the Board of Directors and signed on behalf of the Board.

___________________________

Paul R Benetti (Director)

Date: 2 November 2010

Statement of directors' responsibilities

The Directors are responsible for preparing the Annual Report comprising the Report of the Chairman and of the Chief Executive Officer, the Directors' Report, and financial statements prepared in accordance with applicable laws and regulations. The Directors have elected to prepare financial statements of the Company and the Group in accordance with International Financial Reporting Standards ("IFRS"). Isle of Man company law requires the Directors to prepare such financial statements in accordance with relevant accounting standards and the Companies Acts 1931 to 2004.

International Accounting Standard 1 requires that financial statements present fairly for each financial year the Company's position, financial performance, and cash flows. This requires the faithful representation of the effects of the transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income, and expenses set out in the International Accounting Standard's 'Framework for the Preparation and Presentation of Financial Statements'. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable International Financial Reporting Standards. Directors are also required to:

·; properly select and apply accounting standards;

·; present information, including accounting policies, in a manner that provides relevant, reliable, comparable, and understandable information;

·; prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business; and

·; provide additional disclosures when compliance with the specific requirements of IFRS is insufficient to enable users to understand the impact of particular transactions, other events, and conditions on the entity's financial position and financial performance.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and the Group, for the system of internal control, for safeguarding assets, for taking reasonable steps for the prevention and detection of fraud, and other irregularities and for the preparation of a Directors' Report which complies with the requirements of the Companies Acts 1931 to 2004.

The Directors are responsible for the maintenance and integrity of the company website. Legislation in the Isle of Man governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF GEM BIOFUELS PLC

We have audited the Consolidated and Company financial statements (the ''financial statements'') of GEM BioFuels Plc for the year ended 31 December 2009 which comprise the Consolidated and Company Statements of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statements of Changes in Equity, the Consolidated and Company Statements of Cashflows and the related notes 1 to 28. These financial statements have been prepared under the accounting policies set out therein.

This report is made solely to the company's members, as a body, in accordance with section 15 of the Companies Act 1982. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

The Directors' responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and International Financial Reporting Standards (IFRSs) are set out in the Statement of Directors' Responsibilities.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view are properly prepared in accordance with the Companies Acts 1931 to 2004. We also report to you if, in our opinion, the information given in the Directors' Report is not consistent with the financial statements, if the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors' transactions is not disclosed.

We read the Directors' Report and other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. The other information comprises only the Report of the Chairman and of the Chief Executive Officer. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies within them.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Group's and Company's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion

In our opinion:

·; the financial statements give a true and fair view, in accordance with IFRSs, of the state of the Company and Group's affairs as at 31 December 2009 and of their losses for the year then ended; and

·; the financial statements have been properly prepared in accordance with the Companies Acts 1931 to 2004.

Emphasis of matter - Going concern & valuation of assets

In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosures made in note 2(b) to the financial statements concerning the Company and Group's ability to continue as going concerns. The Company and the Group have incurred a net loss after tax for the year ended 31 December 2009 of £776,391 and £956,183 respectively and experienced net cash outflows from operations of £950,705 and £878,383 respectively. As disclosed in note 2(b), additional funding is still required and along with other matters explained in note 2(b) to the financial statements, these conditions indicate the existence of a material uncertainty which casts significant doubt about the ability of the Company and of the Group to continue as going concerns and to realise their assets and discharge their liabilities in the normal course of business at the amounts stated in these financial statements. The financial statements do not include the adjustments that would result if the Company and Group were unable to continue as going concerns and if they were required to realise their assets and extinguish their liabilities other than in the normal course of business and at amounts different to those stated in these financial statements.

Deloitte & ToucheChartered AccountantsDouglas

Isle of Man

2 November 2010

Statements of Changes in Equity

for the year ended 31 December 2009

1. GENERAL INFORMATION

GEM BioFuels PLC (the "Company") is a company domiciled and incorporated in the Isle of Man, and was incorporated on 6 December 2005. The Company's ordinary shares are traded on the London Stock Exchange's Alternative Investment Market ("AIM"), although it has been suspended from trading since 1 July 2010.

The consolidated and company accounts for GEM BioFuels Plc and its subsidiary (the "Group") have been prepared for the year ended 31 December 2009.

The Company's registered address is 33 Athol St, Douglas, Isle of Man, IM1 1LB.

The functional currency of the Company and the Group is the United States Dollars ('USD') as it is the currency of the primary economic environment in which the Group operates. The consolidated financial statements are presented in Pounds Sterling (presentation currency) for the convenience of readers. The translation between the functional and presentation currency is in accordance with the policy set out in Section 2(g) below.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as they apply to the financial statements of the Group for the year ended 31 December 2009.

At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective:

Amendments to IFRS 1 Additional Exemptions for First-time Adopters

Amendment to IFRS 1 - Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters

Amendments to IFRS 2 Group Cash-settled Share-based Payment Transactions  

IFRS 3 Business Combinations (revised January 2008)

IFRS 9 Financial Instruments

Revised IAS 24 Related Party Disclosures

Amendment to IAS 32 Classification of Rights Issues

Amendment to IFRIC 14 Prepayments of a Minimum Funding Requirement

IFRIC 17 Distribution of Non-cash Assets to Owners

IFRIC 18 Transfers of Assets from Customers

IFRIC 19 Extinguishing Liabilities with Equity Instruments

Improvements to IFRSs - 2010

The directors anticipate that all of the above standards and interpretations will be adopted when effective and that the adoption of these Standards and Interpretations will have no material impact on the financial statements of the Group in the period of initial application.

(b) Basis of preparation

The Group financial statements are prepared on the historical cost basis.

The accounting policies have been consistently applied to the results, gains and losses, assets, liabilities and cash flows of entities included in the consolidated financial statements.

The preparation of financial statements in conformity with IFRSs requires the Directors to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the 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 affects only that year or in the year of the revision and future periods if the revision affects both current and future years.

The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business activity.

The Company and the Group have incurred a net loss after tax for the year ended 31 December 2009 of £776,391 and £956,183 respectively (2008: £1,220,420 and £1,394,417 respectively) and experienced net cash outflows from operations of £950,705 and £878,383 respectively (2008: £782,945 and £1,022,490 respectively). As at 31 December 2009 the Company and the Group had net current assets of £2,052,881 and £15,748 respectively (2008: £2,662,109 and £1,054,941 respectively). These conditions indicate the existence of a material uncertainty which may cast significant doubt about the ability of the Company and the Group to continue as going concerns and mean that they may be unable to realise their assets and discharge their liabilities in the normal course of business.

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

(b) Basis of preparation (continued)

During the year and to the date of this report the Directors have taken steps to ensure the Company and the Group continue as going concerns. These steps have included:

(i) Entering into discussions with a number of potential investors regarding the raising of additional equity funds to progress the Group's project in Madagascar.

(ii) Appointment of Shore Capital and Haywood Securities to assist the Company in raising additional equity funds.

(iii) Entering into discussions with a number of potential off-take parties.

(iv) The Directors have reviewed the quantum and timing of all discretionary expenditure and wherever necessary these costs will be minimised or deferred to suit the Company's and Group's cashflows.

The Company has not obtained any debt funding and has no external debts at the date of this report. Further the Company does not have any significant commitments.

The ability of the Company and the Group to continue as going concerns and to pay their ongoing liabilities as and when they fall due is dependent on a combination of the following:

(i) Successful completion of the proposed fund raising of £2 million by December 2010; and

(ii) Ongoing and active management of the expenditure incurred by the Group to protect current cash levels.

The Directors have reviewed the Company's and the Group's overall position and outlook in respect of the matters identified above and are of the opinion that the use of the going concern basis is appropriate in the circumstances.

Notwithstanding this, there are a number of matters upon which the going concerns of the Company and the Group are dependent and should these matters not be satisfactorily resolved, and in particular should the proposed capital raising by December 2010 not be successful, there is significant uncertainty whether the Company and the Group will be able to continue as going concerns.

Should the Company and the Group be unable to continue as going concerns, they may be required to realise their assets and extinguish their liabilities other than in the normal course of business and at amounts different from those stated in the financial report.

 (c) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December. Control is achieved where the Company has the power to govern the financial and operating policies of an investee 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 or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.

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

The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for resale in accordance with IFRS 5 Non Current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities exceed the cost of the business combination, the excess is recognised immediately in profit or loss.

(d) Goodwill

Goodwill is allocated as described in Section (c). After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill which is recognised as an asset is reviewed for impairment at least annually.

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

 (e) Revenue recognition

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

(f) Leases

Leases are classified as finance leases whenever the terms of the lease substantially transfer the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. The Group only has operating leases. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

(g) Foreign currencies

The functional currency of the Company and subsidiaries is considered to be United States Dollars as the currency of the primary economic environment in which the Group operates. For the purpose of the consolidated financial statements, the results and financial position of the Company and Group are expressed in Pounds Sterling.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at 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 are recognised in profit or loss in the year in which they arise except for:

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

·; exchange differences on transactions entered into to hedge certain foreign currency risks (see below under derivative financial instruments and hedge accounting); and

·; exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur, which form part of the net investment in a foreign operation, and which are recognised in the foreign currency translation reserve and recognised in profit or loss on disposal of the net investment.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the year, unless exchange rates fluctuate significantly during that year, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are classified as other comprehensive income and transferred to the Group's translation reserve. Such translation differences are recognised as income or as expenses in the year in which the operation is disposed of.

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

(h) Taxation

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

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

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

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

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

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

(h) Taxation(continued)

Deferred tax is calculated at the tax rates that are expected to apply in the year when the liability is settled or the asset is realised. Deferred tax is charged or credited in the statement of comprehensive income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

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

(i) Financial instruments

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

Trade receivables

Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired.

Investments in subsidiaries

Investments in subsidiaries are held at initial cost less provision for any impairment.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company or the Group after deducting all of its liabilities.

Trade payables

Trade payables are measured at cost which is deemed to equate to fair value.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Derivative financial instruments and hedge accounting

The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Group does not use derivative financial instruments for speculative purposes.

Compound instruments

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 on conversion or upon the instruments reaching maturity. The equity component initially brought to account 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 remeasured.

 (j) Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the Directors' best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material.

(k) Property, plant and equipment

Items of property, plant and equipment are initially recorded at cost, being the fair value of consideration provided plus incidental costs, including an amount for dismantling costs where applicable. Items of plant and equipment, including motor vehicles, fixtures and fittings and leasehold improvements are depreciated from the date of acquisition using the straight line method over their estimated useful lives. Depreciation rates are reviewed annually.

 The depreciation rates used for each class of asset are as follows:

Motor vehicles 25%

Fixtures and equipment 5% - 40%

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

 (l) Biological assets

A biological asset is a living animal or plant. The Group has determined that it has a biological asset being the Jatropha trees in Madagascar. A biological asset is required to be recognised when the company controls the asset as a result of a past event, it is probable that the future economic benefits associated with the asset will flow to the entity and the fair value or cost of the asset can be measured reliably.

The biological asset should be measured on initial recognition and at each balance sheet date at its fair value less estimated point of sale costs, except where the fair value cannot be measured reliably. Fair value is not reliably measurable when market determined prices are not available and for which alternative measures of fair value are clearly unreliable. For these reasons and the fact that the planted areas are relatively immature and still to yield substantial harvests, the Directors do not believe it is possible to reliably measure the fair value of these asset and, as such, have not used fair value accounting.

Costs incurred may approximate fair value when little biological transformation has taken place since the initial cost occurrence. As disclosed in note 13, the Group recognises plantation assets at cost, this being the directors' best estimation of fair value. Depreciation of these assets commences when assets are ready for their intended use.

Changes in the fair value (gains and/or losses) of the biological asset are recorded in the statement of comprehensive income in the period in which the change occurs.

 (m) Impairment of assets

At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

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

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately.

(n) Inventories

Inventories are valued at the lower of cost and net realisable value. Costs, including an appropriate portion of fixed and variable overhead expenses, are assigned to inventory on hand by the method most appropriate to each particular class of inventory, with the majority being valued on a first in first out basis. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

(o) Share-based payments

Equity-settled share-based payments with employees and others providing similar services are measured at the fair value of the equity instrument at the grant date. Fair value is measured by use of a binomial model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. Further details on how the fair value of equity-settled share-based transactions has been determined can be found in note 22.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest.

At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit and loss over the remaining vesting period, with corresponding adjustment to the equity-settled employee benefits reserve.

No amount has been recognised in the financial statements in respect of other equity-settled share based payments.

Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods and services received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

(o) Share-based payments (continued)

For cash-settled share-based payments, a liability equal to the portion of the goods or services received is recognised at the current fair value determined at each reporting date.

3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the process of applying the Group's accounting policies, which are described in note 2, the Directors have made the following judgements that have the most significant effect on the amounts recognised in the financial statements.

Impairment of goodwill

Following a detailed review of the business combinations acquired, the Directors are satisfied that the carrying amount of the goodwill is justified and no impairment loss is to be recognised at the year end. In making their assessment, the Directors have made certain assumptions which underpin the value. Refer to note 11 for details of the assumptions made.

Impairment of biological assets

Following a review of the Group's plantation and forest assets, the Company has determined that as at 31 December 2009 the biological asset will be measured at the cost of initial planting as little biological transformation had occurred at 31 December 2009 and accordingly cost reflected the best approximation of fair value. Further, the Group's interest in wild forests continues to be carried at nil value. In making their assessment, the Directors have made certain assumptions which underpin the value. Refer to note 13 for details of the assumptions made.

Valuation of Share Based payments

Share options are required to be valued at the grant date. The Directors have made certain assumptions which underpin the value assigned to the options. Refer to note 22 for details of the assumptions made.

4. SEGMENT REPORTING

The Group's primary reporting format is its geographical segment, while its secondary reporting format is its business segment.

The Group has one geographical segment being Madagascar.

The Group has one business segment, which is the production of feedstock for the Biodiesel market.

5. ADMINISTRATIVE EXPENSES

Operating loss is stated after charging:

Included within the Administrative expenses are the following amounts of Auditors' remuneration:

6. STAFF NUMBERS AND COSTS

The average number of persons employed by the Group (including Directors) during the year, by category, was as follows:

The costs incurred in respect of these employees (including Directors) were:

The average number of persons employed by the Company (including Directors) during the year, by category, was as follows:

The costs incurred in respect of these employees (including Directors) were:

7. DIRECTORS' REMUNERATION

(i) Resigned 29 September 2009 and Share Options retained as remained an employee of the Company

(ii) Resigned 29 September 2009 and Share Options forfeited in accordance with Employee Share Option Plan

(iii) These amounts (£36,000 fees and £4,250 additional services) are paid to Cornerstone Capital Limited, a company of which Simon Hunt is both a Director and shareholder

(iv) These amounts are paid to Cavendish Trust Limited, a company of which Pritesh Desai is both a Director and shareholder

(v) Resigned 5 May 2010

(vi) Further details of the share options issued to directors are set out in note 22

8. NET FINANCING (EXPENSE)/INCOME

9. INCOME TAX EXPENSE

The Income Tax (Amendment) Act 2006 provides that a standard zero rate of income tax will apply to the Company in the Isle of Man for 2006/07 and subsequent years of assessment. Therefore no provision for liability to Isle of Man income tax has been included in these accounts.

The Company's subsidiary pays tax at a rate of 30% on its taxable profits. No tax charge has been recorded in the current year in respect of the operations of the subsidiary due to losses arising. A deferred tax asset has not been recognised in respect of these losses due to the unpredictability of future income streams in the company. The total of the unrecognised deferred tax asset as at 31 December 2009 was £326,436 (2008: £263,728). The charge for the year can be reconciled to the loss per the statement of comprehensive income as follows:

10. LOAN TO SUBSIDIARY

The Company has lent an additional £225,414 during the year to Green Energy Madagascar sarl ('Green Energy'), a wholly owned subsidiary, bringing the total amount loaned by the Company to Green Energy as at 31 December 2009 to £2,064,782 (2008: £1,839,368). The loan is repayable on demand and attracts no interest.

The recoverability of the loan to the subsidiary is dependent on the Group continuing as a going concern. The financial statements have been prepared on a going concern basis notwithstanding the uncertainties faced by the Company and Group. Refer to section 2(b) for further details.

11. GOODWILL

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating unit (CGU) that is expected to benefit from that business combination. The Group's only CGU is Green Energy Madagascar sarl.

The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.

The recoverable amount of the CGU is determined from value in use calculations from its plantation operations. The key assumptions for the value in use calculations are those regarding the discount rates, oil yield from seeds, seed yields from trees and expected changes to selling prices and direct costs during the year. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU and at present uses a range of discount factors between 14% and 31% (2008: 16%) to account for a number of potential outcomes to the risks inherent in the project at the time. Oil yield assumed from seeds is set at 29% and is based on our direct experience from commercial-scale crushing of seeds in Madagascar. The Company plants on average just over 2,000 trees per hectare of plantation and seed yields assumed from trees ranges from 0.0kg per tree in the first 2 years to 0.55kg per tree in the third year to 1.0kg per tree in the fourth year to 2.0kg per tree in the fifth year and beyond and are based on our direct experience with natural, wild trees in Madagascar and international experience - these levels are at the lower end of published international experience. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market, with the current selling price based on US$550/Mt of crude jatropha oil - a value that sits within the recently achieved sales values of US$540/Mt and US$685/Mt. Accordingly goodwill is considered not to be impaired.

The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next five years and extrapolates cash flows for the following five years.

The recoverability of the goodwill is dependent on the Company and Group continuing as going concerns. The financial statements have been prepared on a going concern basis notwithstanding the uncertainties faced by the Company and Group. Refer Section 2(b) for further details.

12. PROPERTY, PLANT AND EQUIPMENT

Following a review of the Group's plantation assets, the Group has determined that as at 31 December 2009 the biological asset will continue to be measured at the cost of initial planting as little biological transformation has occurred at that date. As the assets have not yet been brought into use depreciation has not yet been applied.

In considering whether there has been any impairment the Group has considered the reasonableness of the carrying value at cost by reference to value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, oil yield from seeds, seed yields from trees and expected changes to selling prices and direct costs during the year. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU and at present uses a range of discount factors between 14% and 31% (2008: 16%) to account for a number of potential outcomes to the risks inherent in the project at the time. Oil yield assumed from seeds is set at 29% and is based on our direct experience from commercial-scale crushing of seeds in Madagascar. The Company plants on average just over 2,000 trees per hectare of plantation and seed yields assumed from trees ranges from 0.0kg per tree in the first 2 years to 0.55kg per tree in the third year to 1.0kg per tree in the fourth year to 2.0kg per tree in the fifth year and beyond and are based on our direct experience with natural, wild trees in Madagascar and international experience - these levels are at the lower end of published international experience. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market, with the current selling price based on US$550/Mt of crude jatropha oil - a value that sits within the recently achieved sales values of US$540/Mt and US$685/Mt.

Accordingly, the directors do not believe that the cost of the biological asset has been impaired and that cost continues to reflect the best approximation of fair value.

Whilst the CGU has access to 40,000 hectares of natural forest which provide the Group with a source of seeds, due to the fact that trees are more sparsely grown in this area and yields are unpredictable because of the uncultivated and unmanaged nature of the areas, no value continues to be attributed to them as a biological asset.

The recoverability of plantation assets is dependent on the Company and Group continuing as going concerns. The financial statements have been prepared on a going concern basis, notwithstanding the uncertainties faced by the Company and the group. Refer to Section 2(b) for further details.

14 INVENTORIES

15. TRADE AND OTHER PAYABLES

Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 30 days. For most suppliers no interest is charged on the trade payables. The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.

16. SHARE CAPITAL AND SHARE PREMIUM

On 31 August 2009, the Company completed the placing of 4,000,000 ordinary shares at 1 pence each at 12.5 pence per share and issued 2,000,000 warrants with an exercise price of 18p per share at no cost with an expiry date of 3 September 2010. The shares rank pari passu in all respects with the existing ordinary shares, including the right to receive all dividends and other distributions hereafter declared, made or paid.

In addition the Company issued 200,000 warrants with an exercise price of 12.5 pence per share at no cost with an expiry date of 3 September 2010 to Haywood Securities (UK) Limited in connection with the placing.

Share Capital

Share capital represents the nominal value of shares issued by the Company.

Share Premium

Share premium represents the premium over nominal value raised on the issue of shares by the Company.

The Company has one class of ordinary shares which carry no right to income.

Holders of the ordinary shares are entitled to receive dividends and other distributions and to attend and vote at any general meeting.

17. NOTES TO THE CASH FLOW STATEMENT

18. ACQUISITION OF SUBSIDIARIES

On 21 December 2005 GEM BioFuels Plc acquired Green Energy Madagascar sarl, a company incorporated in Madagascar.

19. GROUP ENTITIES

There were no acquisitions or disposals of investments during the year. The movement in the investment in subsidiary is due to foreign exchange differences.

20. LOSS PER ORDINARY SHARE

21. RELATED PARTIES

Transactions between the Company and its subsidiary, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Amounts outstanding between the Company and subsidiary are disclosed in note 10.

Trading transactions

During the year, there were no transactions with companies in the Group or transactions with related parties having certain common Directors other than those referred to below:

The Company paid £40,250 (2008 £36,000) in fees for Simon Hunt's services under aan agreement with Cornerstone Capital Limitedd, a company in which Simon Hunt is a shareholder and a director. The contract is based on normal commercial terms.

The Company paid £12,911 (2008 £12,000) in rent for office space in Perth, Australia under a 'cancellable, month-to-month' operating lease to DAPRB Pty Ltd, a company in which Paul Benetti is a director. The contract is based on normal commercial terms.

21. RELATED PARTIES (continued)

Loans

There are no other outstanding loans granted or guarantees provided by the Company to or for the benefit of any of the Directors, nor are there any outstanding loans or guarantees provided by the Directors to or for the benefit of the Company. However, as at 31 December 2009 the Company owes certain Directors amounts totalling £33,158 (2008: £1,615), which represents outstanding repayments of expenses that the Director has incurred in carrying out his duties for the Company.

22. SHARE-BASED PAYMENTS

Employee share option plans

The Group has two ownership-based compensation schemes for Directors and executives of the Group. In accordance with the provisions of these plans, as approved by shareholders at a previous general meeting, awards are made to Directors and executives at the discretion of the Board of Directors either on appointment, at salary review time, or any other time that the Directors deem appropriate. Other than the Broadhurst options, there are no specific performance or vesting criteria attaching to the options and it is at the discretion of the Board of Directors to establish these criteria for option award if they deem it desirable. The Broadhurst options vest subject to certain conditions relating to the establishment and performance of the Company's operations in Madagascar. All of the conditions relating to vesting have been met.

The table below shows the contract and vesting periods of the options granted at 31 December 2009:

The expected life of the options has been assessed at 2.5 years (2008: 2.5 years) for options which vest 1 year from grant and 3 years (2008: 3 years) for options which vest after 1 year from grant.

The fair value of the awards is calculated using the Black-Scholes model and subsequently adjusted for gain dependency, assessed at 15%, and forfeitures, assessed at 10% over the life of the award. A volatility adjustment considered appropriate for the sector and the age of the Group is included in the calculation. In forming the volatility assumption, the Directors have considered the volatility of the share price since the date of listing. The volatility of companies operating in the same sector has also been reviewed. Based on these factors, volatility has been assessed at 60% for the award grants made during the year. An appropriate risk-free rate (as defined by the Bank of England) of 5.0% has been applied to individual awards and to the calculation. A zero dividend yield has been assumed.

The expenditure recognised in the statement of comprehensive income of the Group and the Company for the share-based payments in respect of employee services received during the year to 31 December 2009 is £nil (2008: £394,822). The expense all relates to equity-settled, share-based payment transactions.

The tables below illustrates the number and weighted average exercise price (WAEP) of, and movements in, two share options streams during the year.