Half Yearly Report & Return from Suspension

7 December 2012

GEM BIOFUELS PLC

("GEM" or the "Company")

 Half Yearly Report, Return from Suspension & Update on Proposed Board Changes

Half Yearly Report for the Six Months Ended 30 June 2012

GEM BioFuels Plc (AIM: GBF), today announces its interim financial results for the six months to 30 June 2012.

Report of the Chairman

As announced on 12 April 2012, based on an internal and detailed review of the Company's operations in Madagascar, it has become clear that, due mainly to a lack of sufficient financial resources for the necessary level of intervention and maintenance, its plantation activities there have resulted in significantly less success than was hoped. Further examination through external agronomic consultants confirmed that the success levels were too low to make a commercially viable business from the Company's existing plantations. Other recent third-party research on Jatropha suggests that it requires significantly more agronomic care and maintenance than originally thought as well has higher rainfall and the addition of fertilizers. The same report suggests that successful commercial scale exploitation of Jatropha is not now expected before 2020 and will require significant improvement on current techniques and breeding stock.

 A major part of this exercise also involved examining other plantation crop opportunities both utilising the Company's land bank and in other areas within the country. Whilst several such opportunities appeared to have great potential it was deemed too difficult to capitalise on them without major new funding for this purpose. Over and above this, the board examined several other plantation crop projects in other countries and spent a considerable amount of time investigating these. However, it has proved too difficult to bring any such project within the Company's original plantation focus to fruition for a number of reasons.

The board has therefore concluded that better value for shareholders can be achieved through adopting a new investing policy around the mining and natural resources sector where sources of funding are more readily available.

Financial Review

In the period ended 30 June 2012, the Group's loss on ordinary activities after taxation was £147,305 (2011: £237,448), or a loss per ordinary share of 0.16p (2011: 0.67p).

Outlook

The board has therefore concluded that better value for shareholders can be achieved through adopting a new investing policy around the mining and natural resources sector where sources of funding are more readily available. The Company intends to cease all its current trading activities and wind down its operations in Madagascar. The Board does not believe these will result in any returns to its shareholders. 

Statement of Changes in Equity

for the six months ended 30 June 2012

1. GENERAL INFORMATION

GEM BioFuels PLC is a company domiciled and incorporated in the Isle of Man with company registration number 115011C. The Company's ordinary shares are traded on AIM.

The consolidated accounts for GEM BioFuels Plc and its subsidiary (the "Group") have been prepared for the six months ended 30 June 2012.

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

The functional currency of the Company and is 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 Group's stated policy.

2. BASIS OF PREPARATION

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

The financial information for the six months ended 30 June 2012 is unaudited and has been prepared in accordance with the accounting policies set out in the Group's Annual Report for the year ended 31 December 2011 ("Annual Report") and should be read in conjunction with the Annual Report. The financial information for the six months ended 30 June 2012 is also unaudited and the results have not been reviewed by the Group's auditors. The financial information relating to the year ended 31 December 2011 has been extracted from the full report for that year. The report of the Auditors on the 2011 accounts was unqualified.

Where necessary, the comparatives have been reclassified from the previously reported interim results to take into account any presentational changes made in the Annual Report.

These interim financial statements were approved by the board of directors on December 2012.

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 not satisfied that the carrying amount of the goodwill was justified and an impairment loss was recognised at the period end 31 December 2011 and goodwill was written down to Nil. In making their assessment, the Directors have made certain assumptions which underpin the value. Refer to note 10 of the Annual Report for details of the assumptions made.

Impairment of biological assets

Following a review of the Group's plantation and forest assets as at 31 Decembers 2011, the Company has determined that full value of the biological assets were impaired and were written down to Nil as at 31 December 2011. In making their assessment, the Directors have made certain assumptions which underpin the value. Refer to note 13 of the Annual Report 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 and bio-chemicals markets.

5. NET FINANCING (EXPENSE)/ INCOME

6. 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 period 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.

7. LOSS PER ORDINARY SHARE

The number of shares in issue at 30 June 2012 was 93,164,834 (2011 - 76,003,190). For the purpose of calculating the diluted loss per share options have not been included as the share options are not dilutive.

8. NOTES TO THE CASH FLOW STATEMENT

9. SUBSEQUENT EVENTS

The Company has recently entered into an Underwriting Agreement, whereby a new subscription of funds of not less than £250,000 is expected to be approved at the Company's Annual General Meeting on 28 December 2012. In addition, subject to the fund raising proceeding, £192,738 of creditors as at 31 December 2011 have agreed to receive 30% as full and final settlement of the liabilities due to them.

10. AVAILABILITY OF THIS REPORT

This Interim Report is available from the Company's website at www.gembiofuels.com.

Return from Suspension

The Company is pleased to announce that following the release this morning of the financial results for both the six months to 30 June 2012 and the full year results for the year to 31 December 2011, the Company's ordinary 0.1p shares have returned from suspension to trading on AIM.

Proposed Board Changes at Annual General Meeting - Updated Biography

Further to the announcement of 5 December 2012, the Company provides an updated biography for Mr John Molyneux.

John Molyneux

He started his career in the City of London in 1967 by joining the London Stock Exchange. Various career moves over the next thirty years involved both merchant banking and stock broking (Montague Loebl Stanley, English Trust, Grieg Middleton, Seymour Pierce Middleton, Henry Cooke Lumsden, and culminating in joining AIM quoted W H Ireland in 1998 to develop a London operation for the company. This office has since expanded from eleven staff to approximately fifty and he is now a Regional Director of W H Ireland. His primary role now is the management of private client funds as well as overseeing the W H Ireland's Australian interests in market making and dealing. Aged 65, Mr Molyneux is a Chartered Fellow of the Chartered Institute of Securities and Investment.

The Company will provide disclosure of the information required under Schedule 2 of the AIM Rules prior to the appointment of Messrs Paull and Molyneux.

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