Half Yearly Report

GEM Biofuels Plc

("GEM" or the "Company")

Interim Results for the six months ended 30 June 2010

GEM Biofuels Plc (AIM: GBF) today announces its interim financial results for the six months to 30 June 2010.

Report of the Chairman and of the Chief Executive Officer

Overview

GEM is a plantation company which controls, through its wholly-owned subsidiary, (together, the "Group") substantial owner-managed plantations of Jatropha in Madagascar and since the commencement of its plantation operations in 2005, the Group has planted over 55,700 hectares of Jatropha. In addition, it also 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 that 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 Group is focused on establishing and maintaining plantations that will enable it to provide sustainable non-food agricultural products to the global bioenergy and biochemical industries. Whilst the Company's focus is currently on the establishment and management of plantations of Jatropha, it is diversifying away from a reliance on biofuels and to include complementary crops and processing techniques which, due to shorter maturation times, will enable it to make maximum use of the Group's plantation experience and skills and of its significant land bank. This should also allow it to accelerate revenue generation and cash flow, in order to deliver shareholder value in a shorter timescale

The outlook for our product markets and the industries the service provides GEM with an excellent platform for future growth.

Operational Review

The Company has continued to focus on preparing for the move into processing operations and has used the results of its first commercial-scale seed crushings (which confirmed the oil content of our seed and the effectiveness of our logistics of collection, crushing and shipping) to form the basis of planning for our own crushing operations in Madagascar.

Research has been conducted on several complementary crops, in particular biomass plants, that can be incorporated into existing and future plantation plans. 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 crops and planting campaigns is currently underway.

Financial Review

During the period ended 30 June, the Group has generated its first revenue from the sales of crude jatropha oil of £17,895 (2009: £nil). In generating these sales, 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.

The Group's operations during the period produced a net loss of £608,097 (2009: £323,053). The increased loss compared to the June 2009 period reflects the downscaled operations as the Company continues with its consolidation and development of its amended strategy, along with the significant movement in exchange rates over the time under review. The basic and diluted loss per share was 1.99p (2009: 1.17p). The Group's cash and cash equivalents at 30 June 2010 were £14,562 (2009: £167,150). The Group's cash position was bolstered in July 2010 by the proceeds of a placement, raising £300,000 before expenses.

In order to capitalise fully on our position the Company requires additional funding to continue as a going concern and we will therefore be seeking to raise up to £2 million of new funds. In addition to the £300,000 of new equity raised in July 2010, the Company has secured a short-term facility of £100,000 and is in discussions regarding the further new funding. However, if the Company is unable to raise the requisite new funding this would have a serious impact on its ongoing structure and viability and may necessitate the Company seeking alternative means of financing its projects such as through joint ventures and/or asset sales.

Management

As noted in the Company's 2009 Annual Report, the consolidation and review of operations has led to a number of changes in the Company's governance structure, including the resignations of several Directors and we thank them all for the part they have played in the development of the Company to date.

We are continuing to make changes aimed at enlarging our management, scientific and agricultural skill sets as we move to production and expanded and new operations.

Outlook

The Company's outlook is positive. We remain excited about our opportunities to capitalise on our increasing experience as a manager of plantations by becoming involved in a broader range of non-food agricultural products. In addition, new technologies and government mandates point towards the longer term expansion of the bioenergy and biochemical markets which represents the largest opportunities for our end products.

As we move into the second half of 2010 we are working hard on a number of fronts. Operationally, our major aim is to collect and process more significant quantities of jatropha seed and to sell the resulting crude jatropha oil. At the corporate level, we are seeking to complete the development of our future strategy, structure and funding of the business, particularly the completion of a new funding round by 31 December 2010.

Statement of Changes in Equity

for the six months ended 30 June 2010

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 2010.

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 2010 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 2009 ("Annual Report") and should be read in conjunction with the Annual Report. The financial information for the six months ended 30 June 2009 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 2009 has been extracted from the full report for that year. The report of the Auditors on the 2009 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 4 November 2010.

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 period end. In making their assessment, the Directors have made certain assumptions which underpin the value. Refer to note 11 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, the Company has determined that as at 30 June 2010 the biological asset will be measured at the cost of initial planting as little biological transformation had occurred at 30 June 2010 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 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 2010 was 31,601,501 (2009 - 27,601,501). 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

Subsequent to 30 June 2010, the Company raised £300,000 in new equity through the issue of new shares to a range of institutional investors, both new and existing shareholders.

10. AVAILABILITY OF THIS REPORT

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

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