ENECO REFRESH LTD — Annual Report 2010

Aug 31, 2010

Refresh Group Limited ( ABN 28 079 681 244) 17 Denninup Way, Malaga WA 6090 Tel: (08) 9248 3006 Fax: (08) 9248 7233 Email: info@refreshgroup.com.au Website: refreshgroup.com.au

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Appendix 4E

Preliminary final report Period ending 30 June 2010

Results for announcement to the market

Financial Results			June 2010	June 2009
Revenue from ordinary activities	Dn	7 %	5,545,486	$5,936,991
Comprehensive (Loss) from ordinary activities after tax attributable to members	Up	14 %	($420,323)	($488,173)

Dividends	2010 interim dividend	2009 interim dividend
Amountper OrdinarySecurity	Nil	Nil
Franked amountper Security	Nil	Nil
Record date for determiningentitlements to interim dividends	N/A
Net Tangible Asset Backing	June 2010	June 2009
Net tangible asset backing per ordinary security	$0.05	$0.06

Commentary

We are pleased to report that our performance has improved. Despite Western Australia losing significant sales because of the loss of some major customers, our operating subsidiaries are profitable. This is because of cost cutting in previous years taking effect as well as increase in revenue in all other segments. We expect all divisions to continue to be profitable this year.

Refresh has been growing very well in the home and office delivery segment of the bottled water market but found it very difficult to penetrate the supermarket and route trades. The acquisition of Fusion H2O will add significantly to revenue this year. However, as this is a national operation, a fair amount will be spent during the initial setup phase. The acquisition has also turned Refresh into a truly national company with operations in every state and territory now.

The increase in corporate expenses was mainly because of 2 major corporate exercises – the rights issue completed in July 2009 and the acquisition of AridTec Pte Ltd completed in July 2010. The recent acquisition of AridTec would mean a bigger revenue base to support the corporate expenses.

PRELIMINARY FINAL REPORT STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30 JUNE 2010

Revenues from ordinary activities Change in inventories of finished goods and work in progress Other income Employee benefits expense Depreciation and amortisation expense Professional fees Advertising expenses Motor vehicle expenses Occupancy expenses Other expenses Operating loss From Continuing Operations Finance income Finance costs Net Loss before Income Tax Income tax benefit/ (expense) Net loss attributable to members of Refresh Group Limited Other comprehensive income Total comprehensive income/(loss) attributable to members of Refresh Group Limited Basic loss per share (cents per share)	Note	CONSOLIDATED 2010 $ 2009 $
	2a 2b 2c 2d 2e	5,545,486 5,936,991 (1,993,331) (2,308,879) (29,945) (13,498) (2,285,126) (2,252,654) (231,428) (204,812) (91,896) (113,096) (131,698) (139,885) (166,956) (197,077) (457,931) (435,259) (562,447) (716,725)
		(405,272) (444,894) 13,335 13,814 (28,386) (57,093)
		(420,323) (488,173) - -
		(420,323) (488,173) - -
		(420,323) (488,173)
		(0.62) (1.10)

The accompanying notes form part of the Statement of Comprehensive Income

REFRESH GROUP LIMITED and its controlled entities

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PRELIMINARY FINAL REPORT STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2010

ASSETS Current Assets Cash and cash equivalents Trade and other receivables Inventories Total Current Assets Non-Current Assets Other financial assets Property, plant and equipment Intangible assets Total Non-current assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Financial liabilities Short-term provisions and accruals Total Current Liabilities Non-current Liabilities Financial liabilities Long-term provisions Total Non-current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY	Notes	CONSOLIDATED 2010 2009 $ $
	3 4 5	536,891 1,256,854 650,036 614,184 1,080,880 777,707
		2,267,807 2,648,745
		1,050 1,050 2,018,488 2,005,858 1,164,602 971,137
		3,184,140 2,978,045
		5,451,947 5,626,790
		956,609 1,700,923 46,706 159,227 102,520 86,211
		1,105,835 1,946,361
		34,606 81,312 49,106 25,871
		83,712 107,183
		1,189,547 2,053,544
		4,262,400 3,573,246
		5,843,333 4,778,993 187,020 141,883 (1,767,953) (1,347,630)
		4,262,400 3,573,246

The accompanying notes form part of the Statement of Financial Position

REFRESH GROUP LIMITED and its controlled entities

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PRELIMINARY FINAL REPORT STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2010

CONSOLIDATED Balance at 1 July 2009 Equity fund raising costs Issue of share capital Cost of share-based payments Transactions with owners Total comprehensive loss for the period Balance at 30 June 2010 Balance at 1 July 2008 Equity fund raising costs Issue of share capital Cost of share-based payments Transactions with owners Total comprehensive loss for the period Balance at 30 June 2009	Issued Fund Raising Other Accumulated Capital Cost Reserves Losses Total
	5,113,070 (334,077) 141,883 (1,347,630) 3,573,246 - (130,691) - - (130,691) 1,195,031 - - - 1,195,031 - - 45,137 - 45,137
	6,308,101 (464,768) 187,020 (1,347,630) 4,682,723
	- - - (420,323) (420,323)
	6,308,101 (464,768) 187,020 (1,767,953) 4,262,400
	5,105,070 (326,079) 127,888 (859,457) 4,047,422 - (7,998) - - (7,998) 3,024 - - - 3,024 4,976 - 13,995 - 18,971
	5,113,070 (334,077) 141,883 (859,457) 4,061,419
	- - - (488,173) (488,173)
	5,113,070 (334,077) 141,883 (1,347,630) 3,573,246

The accompanying notes form part of the Statements of Changes in Equity

REFRESH GROUP LIMITED and its controlled entities

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PRELIMINARY FINAL REPORT STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2010

Cash flows from operating activities Receipts from customers Payments to suppliers and employees Borrowing costs Interest received Net cash flows (used in) operating activities Cash flows from investing activities Proceeds from sale of property, plant and equipment, and investment Purchase of property, plant and equipment Repayment to director related entity Purchase of other non-current assets Acquisition of subsidiaries, net of cash acquired Net cash flows provided by /(used in) investing activities Cash flows from financing activities Proceeds from issue of shares Proceeds from application of right issues Proceeds from borrowings Share Issue expenses Repayments of borrowings Net cash flows (used in)/ provided by financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	CONSOLIDATED 2010 2009 $ $
	5,719,934 5,854,778 (6,006,161) (6,180,209) (28,386) (57,093) 13,335 13,814
	(301,278) (368,710)
	7,455 9,296 (209,923) (244,441) (174,549) (24,151) - (1,363) (270,000) -
	(647,017) (260,659)
	518,250 8,000 - 1,124,281 75,246 1,589,600 (130,691) (7,998) (234,473) (1,566,106)
	228,332 1,147,777
	(719,963) 518,408 1,256,854 738,446
	536,891 1,256,854

The accompanying notes form part of the Statement of Cash Flows

REFRESH GROUP LIMITED and its controlled entities

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PRELIMINARY FINAL REPORT NOTES TO AND FORMING PART OF PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2010

1. SEGMENT INFORMATION

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources.

In identifying its operating segment, management follows the geographical location of the Group’s operations. Corporate costs are included under “Other”. Segment information can be analysed as follows for the reporting period under review.

12 months to 30 June 2010 Revenue from external customers Segment operating profit/(loss) Total assets	WA NSW VIC QLD*	NATIONAL OTHER TOTAL
	2,571,794 1,102,749 444,917 1,386,305	39,721 - 5,545,486
	85,494 (6,492) (7,319) 40,142	(24,435) (507,713) (420,323)
	2,475,077 799,046 403,371 1,233,210	123,363 417,880 5,451,947

12 months to 30 June 2009 Revenue from external customers Segment operating profit Total assets	3,082,810 1,191,072 370,254 1,292,855	- - 5,936,991
	173,468 (27,300) (98,272) (182,859)	- (353,210) (488,173)
	2,202,476 664,277 395,541 1,197,871	- 1,166,625 5,626,790

* The acquisition of Minnamurra Natural Springwater resulted in non-recurring expenses like moving and setup costs. On top of that, disposal of fixed assets incurred a loss of $29k.

REFRESH GROUP LIMITED and its controlled entities

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PRELIMINARY FINAL REPORT NOTES TO AND FORMING PART OF PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2010

2. REVENUE AND EXPENSES

a. Revenue Sale of bottled water and accessories b. Other income Gain/(loss) on disposal of property, plant and equipment Sale of distribution run c. Employee benefits expense Wages and Salaries Workers’ compensation costs Superannuation costs Provisions for Annual and Long Service Leave Expense of share-based payments d. Finance income Interest received e. Finance Costs Bank loans and receivable factoring Finance charges payable under finance leases and hire purchase contracts		CONSOLIDATED 2010 2009 $ $
		5,545,486 5,936,991
		5,545,486 5,936,991
		(29,945) (23,498) - 10,000
		(29,945) (13,498)
		2,001,015 1,963,728 61,514 70,050 142,745 178,266 30,715 14,200 49,137 26,410
		2,285,126 2,252,654
		13,335 13,814
		13,335 13,814
		18,550 41,995 9,836 15,098
		28,386 57,093

REFRESH GROUP LIMITED and its controlled entities

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PRELIMINARY FINAL REPORT NOTES TO AND FORMING PART OF PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2010

3. TRADE AND OTHER RECEIVABLES

				CONSOLIDATED	CONSOLIDATED
				2010	2009
Current				$	$
Trade receivables				466,596	606,296
Provision for impairment of receivables				(21,054)	(126,302)
				445,542	479,994
Other receivables				88,195	72,138
Prepayments				116,299	62,052
				650,036	614,184
		Past due
	Gross	and	Past due but not impaired			Within initial
	Amount	impaired	(days overdue)			trade terms
			31-60	61-90	>90
Consolidated
2010
Trade receivables	466,596	21,054	109,605	47,173	1,824	286,940
Other receivables	88,195	-	1,158	-	63,727	23,310
	554,791	21,054	110,763	47,173	65,551	310,250
2009
Trade receivables	606,296	126,302	138,607	38,601	14,782	288,004
Other receivables	72,138	-	2,658	-	52,338	17,142
	678,434	126,302	141,265	38,601	67,120	305,146

4. INVENTORIES

Raw materials (at cost) Finished goods (at cost) Total inventories at lower of cost or net realisable value	CONSOLIDATED 2010 2009 $ $
	443,747 393,637 637,133 384,070
	1,080,880 777,707

REFRESH GROUP LIMITED and its controlled entities

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PRELIMINARY FINAL REPORT NOTES TO AND FORMING PART OF PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2010

5. TRADE AND OTHER PAYABLES

Current Trade payables Subscriptions in Advance Other payables Related party payables: Loan from Refresh Property Trust	CONSOLIDATED 2010 2009 $ $
	286,311 230,363 500,000 1,124,759 170,298 171,252
	956,609 1,526,374 - 174,549
	956,609 1,700,923

Trade payables are non-interest bearing and are normally settled on 60-day terms. Other payables are noninterest bearing and have an average term of 3 months.

6. DETAILS OF ENTITIES OVER WHICH CONTROL HAS BEEN GAINED OR LOST DURING THE PERIOD

• a. On 1 September 2009, the Group acquired Minnamurra Natural Springwater based in Sydney. This business is integrated into the Sydney operation, allowing customers the choice of natural spring water or pure distilled water. The purchase consideration was $150,000 in cash and 750,000 ordinary shares in Refresh Group Limited based on 7 cents each.

Purchase consideration Cash paid Equity issued as consideration Total Consideration Fair value of assets and stocks acquired Goodwill Assets and liabilities held at acquisition date: Inventories Plant and equipment Net Assets acquired	$ 150,000 52,500
	202,500
	107,500 95,000
	202,500
	57,500 50,000
	107,500

REFRESH GROUP LIMITED and its controlled entities

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PRELIMINARY FINAL REPORT NOTES TO AND FORMING PART OF PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2010

6. DETAILS OF ENTITIES OVER WHICH CONTROL HAS BEEN GAINED OR LOST DURING THE PERIOD. (Contd)

• b. On 27 May 2010, the Group acquired Fusion H[2] O for $120,000 in cash. This business is integrated into the Perth operation, operating as a separate division selling bottled water in every states and territory.

Purchase consideration Cash paid Total Consideration Fair value of assets and stocks acquired Goodwill Assets and liabilities held at acquisition date: Plant and equipment Net Assets acquired	$ 120,000
	120,000
	21,535 98,465
	120,000
	21,535
	21,535

7. EVENTS AFTER THE BALANCE SHEET DATE

On 13 July 2010, the Group acquired 100% of the issued capital of AridTec Pte Ltd, a Singapore-based company. AridTec is a manufacturer of water harvesting and purification of equipment. It is the parent company of AirQua International Pte Ltd, providing atmospheric water solutions. The purchase consideration was 71,800,000 ordinary shares in Refresh Group Limited based on 6.5 cents each and issue of up to 48,200,000 deferred shares based on 6.5 cents each no later than 1 November 2011 dependent on the profitability of AridTec.

Purchase consideration Equity issued as consideration Total Consideration Fair value of assets acquired (see below) Goodwill Assets and liabilities held at acquisition date: Cash on hand Receivables Inventories Plant & Equipment Patent Payables Net Assets acquired	$ 4,667,000
	4,667,000
	4,135,864 531,136
	4,667,000
	37 42,141 242,215 67,416 4,000,000 (215,945)
	4,135,864

The above figures are computed based on exchange rate of A$1 against S$1.20.

Key factor contributing to the $531,136 of goodwill is the future profitability, revenue growth, international market penetration and economies of scale.

None of the goodwill arising on this acquisition is expected to be deductible for tax purposes.

REFRESH GROUP LIMITED and its controlled entities

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PRELIMINARY FINAL REPORT NOTES TO AND FORMING PART OF PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2010

8. CONTINGENT ASSETS & LIABILITIES

There are no contingent liabilities or contingent assets as at 30 June 2010 and in the interval between 30 June 2010 and the date of this report.

9. BASIS FOR PREPARATION

This preliminary final report has been prepared in accordance with ASX listing rule 4.3A and the disclosure requirements of ASX Appendix 4E. The accounting policies adopted in the preparation of the preliminary final report are consistent with those adopted in the preparation of the annual financial report.

10. UNAUDITED APPENDIX E

This report has not been audited. The results of the Group are subject to change post the review and audit of the current year.

REFRESH GROUP LIMITED and its controlled entities

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