ENECO REFRESH LTD — Interim / Quarterly Report 2011

Feb 27, 2011

Appendix 4D Half-Year Financial Report

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Results for announcement to the market

1. Results for the half year to 31 December 2010 and the corresponding period to 31 December 2009

Company Result Revenue from ordinary activities up 27% to Losses for the period attributable to members up 342% to	A$’000 3,527 (1,112)

For the Period ending Net tangible asset per share Net asset per share	31 Dec 10 $0.02 $0.06	31 Dec 09
		$0.05 $0.06

Dividends

No interim dividend is payable

2. Brief Explanation of the Result

For the first 6 months, revenue has increased by 27% as compared to previous year mainly because of the additional revenue of $794K from Fusion. However, despite the increase in revenue, low margin, high distribution, warehousing and marketing costs resulted in Fusion business incurring an operating loss of $428K. AridTec, newly acquired subsidiary is also operating at a loss of $366K for the first 6 months.

The increase in losses was also attributed to amortisation of AridTec patent amounting to $118K, amortisation of Fusion goodwill of $9.8K and impairment loss of Toowoomba CGU amounting to $158K.

For more details, please refer to Page 3 of the Directors’ Report.

3. Details of entities over which control has been gained or lost during the period

On 13 July 2010, the Group acquired 100% of the issued capital of AridTec Pte Ltd, a Singapore-based company.

Details are in Note 7 Business Combination of the Financial Report.

Appendix 4D Half-Year Financial Report

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4. Details of individual and total dividends or distributions and dividend or distribution payments

Nil

5. Details of any dividend or distribution reinvestment plans in operation and the last date for the receipt of an election notice for participation in any dividend or distribution reinvestment plan

Nil

6. Details of associates and joint venture entities including the name of the associate or joint venture entity and details of the reporting entity’s percentage holding in each of these entities and – where material to an understanding of the report - aggregate share of profits (losses) of these entities, details of contributions to net profit for each of these entities, and with comparative figures for each of these disclosures for the previous corresponding period.

Nil

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Refresh Group Limited

and its controlled entities

ABN 28 079 681 244

Half Year Financial Report

31 December 2010

REFRESH GROUP LIMITED – HALF YEAR REPORT

Table of Contents

DIRECTORS’ REPORT ............................................................................................................... 3
AUDITORS' INDEPENDENCE DECLARATION…………………………………………….……… 4
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ............................................ 5
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ……………………………… ........ 6
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ..................................................... 7
CONSOLIDATED STATEMENT OF CASH FLOWS ................................................................... 8
1. CORPORATE INFORMATION ....................................................................................... 9
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ............................................. 9
3. SIGNIFICANT EVENTS AND TRANSACTIONS .......................................................... 10
4. OPERATING SEGMENTS …………………………………………………………………..11
5. EARNINGS PER SHARE .............................................................................................. 13
6. ISSUED CAPITAL ......................................................................................................... 13
7. BUSINESS COMBINATION .......................................................................................... 14
8. GOODWILL IMPAIRMENT ........................................................................................... 15
9. EVENTS AFTER THE BALANCE SHEET DATE ......................................................... 15
10. RELATED PARTY TRANSACTIONS………………………………………………………..15
DIRECTORS’ DECLARATION ................................................................................................... 16
INDEPENDENT REVIEW REPORT .......................................................................................... 17

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REFRESH GROUP LIMITED – HALF YEAR REPORT

DIRECTORS’ REPORT

Your directors submit their report for the half-year ended 31 December 2010.

DIRECTORS

The names of the directors of the Company in office at the date of this report or during the half-year are:-

• Henry Heng Edmund Teo

Mun Yew Chan (appointed on 13 July 2010)

Chee Keong Oh (appointed on 13 July 2010) Jamie Gee Choo Khoo (appointed on 25 November 2010) Alan Ong (resigned on 18 February 2011)

REVIEW AND RESULTS OF OPERATIONS

We are pleased to report that 4 out of 6 Refresh factories in Australia are currently profitable. The first half being a cooler season, we are working towards making all 6 factories profitable by end of the year. Unfortunately, we had to impair goodwill on our Toowoomba operations resulting in taking $158k off our bottomline. Without the impairment the Australian segments (WA, NSW, VIC and QLD), excluding Fusion, could have achieved a profit of $176k.

The acquisition of Fusion has added to our revenue. However, a lot was spent to get our products into the supermarkets. This resulted in the division making a loss of $428k in the first half year. We have since closed the division and integrated the operations into the various states we are operating in.

Delay in the introduction of a new low-priced model has severely impacted AridTec sales in the first half resulting in a loss of $366k.

The Board is weighing various options with regards to funding and growth. As the discussions are preliminary, it is not expedient to report them at this stage. However, we should be able to present a proposal to shareholders in the near future.

Details of the results are found in Note 4 Operating Segment.

AUDITOR’S INDEPENDENCE DECLARATION

We have obtained an independence declaration from our auditors, Grant Thornton Audit Pty Ltd, which is included on page 4.

Signed for and on behalf of the directors in accordance with a resolution of the Board.

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Henry Heng Executive Chairman

Dated 28 February 2011 Perth, Western Australia

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Grant Thornton Audit Pty Ltd ABN 94 269 609 023

10 Kings Park Road West Perth WA 6005 PO Box 570 West Perth WA 6872

T +61 8 9480 2000 F +61 8 9322 7787 E admin.wa@au.gt.com W www.grantthornton.com.au

Auditor’s Independence Declaration To The Directors of Refresh Group Limited

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of Refresh Group Limited for the half-year ended 31 December 2010, I declare that, to the best of my knowledge and belief, there have been:

• a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• b no contraventions of any applicable code of professional conduct in relation to the review.

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

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P W Warr Director - Audit & Assurance

Perth, 28 February 2011

Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.

Liability limited by a scheme approved under Professional Standards Legislation

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REFRESH GROUP LIMITED – HALF YEAR REPORT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 31 DECEMBER 2010

Revenue Cost of Sales Gross Profit Other income Marketing Expenses Distribution Expenses Production, Research and Development Expenses Administrative Expenses Occupancy Expenses Other expenses Results from operating activities Finance income Finance costs Net finance costs Loss before income tax Income tax expense (credit) Net loss attributable to members of Refresh Group Limited Other comprehensive income Foreign currency translation Total comprehensive income/(loss) attributable to members of Refresh Group Limited Basic earnings/(loss) per share (cents per share) Diluted earnings/(loss) per share (cents per share)	6 months to 31 December 2010 $ 6 months to 31 December 2009 $ 3,527,221 2,779,814 (1,737,771) (1,061,639)
	1,789,450 1,718,175 21,060 - (568,362) (192,318) (680,739) (630,778) (117,243) - (855,246) (840,823) (339,005) (295,027) (288,537) (1,904)
	(1,038,622) (242,675)
	2,919 6,383 (18,331) (15,366)
	(15,412) (8,983)
	(1,054,034) (251,658) - -
	(1,054,034) (251,658) (58,013) -
	(1,112,047) (251,658)
	(0.94) (0.45) (0.94) (0.45)

The condensed consolidated financial statements should be read in conjunction with the accompanying notes

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REFRESH GROUP LIMITED – HALF YEAR REPORT

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 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 Equity attributable to equity holders of the parent Issued capital Reserves Accumulated losses TOTAL EQUITY	Notes	31 December 2010 $ 30 June 2010 $
	8 6	242,377 536,891 972,910 650,036 1,452,171 1,080,880
		2,667,458 2,267,807
		1,050 1,050 2,410,822 2,018,488 5,409,259 1,164,602
		7,821,131 3,184,140
		10,488,589 5,451,947
		1,057,092 956,609 329,571 46,706 94,876 102,520
		1,481,539 1,105,835
		92,830 34,606 44,605 49,106
		137,435 83,712
		1,618,974 1,189,547
		8,869,615 4,262,400
		11,562,595 5,843,333 129,007 187,020 (2,821,987) (1,767,953)
		8,869,615 4,262,400

The condensed consolidated financial statements should be read in conjunction with the accompanying notes

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REFRESH GROUP LIMITED – HALF YEAR REPORT

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 DECEMBER 2010

Balance at 1 July 2009 Equity fund raising costs Issue of share capital Transactions with owners Total comprehensive income Balance at 31 December 2009 Balance at 1 July 2010 Equity fund raising costs Issue of share capital Transactions with owners Total comprehensive income Balance at 31 December 2010

Issued Capital Fund Raising Cost Other Reserves Foreign Currency Translation Reserve Accumulated Losses Total 5,113,070 (334,077) 141,883 - (1.347,630) 3,573,246 - (78,725) - - - (78,725) 1,176,781 - - - - 1,176,781 6,289,851 (412,802) 141,883 - (1,347,630) 4,671,302 - - - (251,658) (251,658) 6,289,851 (412,802) 141,883 - (1,599,288) 4,419,644 6,308,101 (464,768) 187,020 - (1.767,953) 4,262,400 - (74,787) - - - (74,787) 5,794,049 - - - - 5,794,049 12,102,150 (539,555) 187,020 - (1,767,953) 9,981,662 - - - (58,013) (1,054,034) (1,112,047) 12,102,150 (539,555) 187,020 (58,013) (2,821,987) 8,869,615

The condensed consolidated financial statements should be read in conjunction with the accompanying notes

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REFRESH GROUP LIMITED – HALF YEAR REPORT CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 31 DECEMBER 2010

Cash flows from operating activities Receipts from customers Payments to suppliers and employees Borrowing costs Interest received Net cash flows from/(used in) operating activities Cash flows from investing activities Proceeds from sale of property, plant and equipment 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 from/(used in) investing activities Cash flows from financing activities Proceeds from issue of shares Proceeds from borrowing Proceeds from related parties loans Share Issue expenses Repayment of borrowings Net cash flows from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	6 months to 31 December 2010 $ 6 months to 31 December 2009 $
	3,263,024 2,754,082 (4,467,918) (2,931,154) (18,331) (16,563) 2,919 6,383
	(1,220,306) (187,252)
	12,243 - (479,802) (141,255) - (174,549) - - - (150,000)
	(467,559) (465,804)
	1,102,050 - 96,997 75,243 281,635 - (49,787) (78,725) (37,544) (198,502)
	1.393,351 (201,984)
	(294,514) (855,040) 536,891 1,256,854
	242,377 401,814

The condensed consolidated financial statements should be read in conjunction with the accompanying notes

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REFRESH GROUP LIMITED – HALF YEAR REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2010

1. CORPORATE INFORMATION

The financial report of Refresh Group Limited for the half-year ended 31 December 2010 was authorised for issue in accordance with a resolution of the directors on 28 February 2011. Refresh Group Limited is a company incorporated in Australia and limited by shares which are publicly traded on the Australian Securities Exchange.

The Group’s principal activities are the production and/or distribution of lifestyle products like bottled water, coolers and filtration systems.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The half-year financial report does not include all of the notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.

The half-year financial report should be read in conjunction with the annual Financial Report of Refresh Group Limited as at 30 June 2010.

It is also recommended that the half-year financial report be considered together with any public announcements made by Refresh Group Limited and its controlled entities during the half-year ended 31 December 2010 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001.

(a) Basis of preparation

The half-year consolidated financial report is a general purpose financial report, which has been prepared in accordance with the requirement of the Corporations Act 2001, applicable Accounting Standards, including AASB134 Interim Financial Reporting and other mandatory professional reporting requirements. The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the company’s 2010 annual financial report for the financial year ended 30 June 2010, except for the impact of the Standards and Interpretations described below. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards.

For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period.

(b) Significant accounting policies

The half-year consolidated financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 30 June 2010 except for the adoption of Statement of Comprehensive income analysing expenses using classification based on the function of expenses instead of nature of expenses for this financial year.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these half-year consolidated financial statements.

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REFRESH GROUP LIMITED – HALF YEAR REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2010

(c) Basis of consolidation

The half-year consolidated financial statements comprise the financial statements of Refresh Group Limited and its controlled subsidiaries (‘the Group’).

(d) Going Concern

The financial report has been prepared on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.

The Consolidated entity incurred a net loss of $1,054,034 and had cash outflows from operations of $1,220,306 during the period ended 31 December 2010.

The ability of the consolidated entity to continue paying its debts as and when they fall due is dependent upon the consolidated entity’s improving its profitable operations, the raising of additional equity funds and finance funding (as and when required) and limiting the consolidated entity’s cash burn rate.

The management is continuing its effort to increase revenue through securing new contracts on its core business and business from Fusion. With its recent drastic cost cutting measures and developing new strategies, the consolidated entity is expecting to reduce its losses in the future. We are also actively seeking funding from potential investors.

In the event that the consolidated entity is unable to continue as a going concern, it may be required to realise all assets at amounts different from that recorded in the statement of financial position, settle liabilities other than in the ordinary course of business, and make provision for other costs which may arise as a result of cessation or curtailment of normal business procedures.

3. SIGNIFICANT EVENTS AND TRANSACTIONS

On 13 July 2010, Refresh Group Ltd acquired AridTec Pte Ltd, a Singapore-based company, with the issue of 71,800,000 ordinary shares at an issue price of $0.065 each. AridTec is a manufacturer of water harvesting and purification equipment.

During the last 6 months, 16,954,616 shares at an issue price of $0.065 each was issued, raising $1,102,050 for working capital purposes.

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REFRESH GROUP LIMITED – HALF YEAR REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2010

4. OPERATING SEGMENT

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”.

Types of products and services by segment

All segments provide the same type of products and services being the manufacture and sale of bottled water and filtration systems.

Basis of accounting for purposes of reporting by operating segments

(a) Accounting policies adopted

Unless stated otherwise, all amounts reported to the Board of Directors, being the chief decision maker with respect to operating segments, are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group.

(b) Intersegment transactions

There is no intersegment sale and corporate costs are not allocated. Corporate costs are classified under “Other” in the segment performance analysis.

(c) Segment assets

Segment assets are clearly identifiable on the basis of their nature and physical location.

(d) Segment liabilities

Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a whole and are not allocated. Segment liabilities include trade and other payables and certain direct borrowings.

(e) Unallocated items

The following items of revenue, expenses, assets and liabilities are not allocated to operating segments as they not considered part of the core operations of any segment:

• impairment of assets and other non-recurring items of revenue or expense

• income tax expense

• corporate costs

• deferred tax assets and liabilities

• current tax liabilities

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REFRESH GROUP LIMITED – HALF YEAR REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

(f) Segment performance

31 December 2010 Revenue from external customers Segment operating profit/(loss) Total assets Total liabilities 31 December 2009 Revenue from external customers Segment operating profit/(loss) Total assets Total liabilities	WA NSW VIC QLD FUSION (National) ARIDTEC (Singapore) OTHER (Corporate) TOTAL*
	1,267,370 533,998 228,576 612,934 793,875 90,468 - 3,527,221 149,614 28,314 (21,568) (138,081) (428,369) (366,053) (277,891) (1,054,034) 2,627,601 770,610 410,176 1,260,242 455,259 4,811,242 153,459 10,488,589
	1,138,156 10,934 1,394 67,860 90,686 82,379 227,565 1,618,974 1,253,261 531,979 213,553 781,021 - - - 2,779,814 35,902 (31,316) (11,054) 57,232 - - (302,422) (251,658) 2,474,825 844,005 393,411 1,325,567 - - 213,203 5,251,011
	533,714 48,145 2,296 112,049 - - 135,163 831,367

*Qld operating segment loss for the period ending 31 December 2010 includes an impairment loss of $158,069 for Toowoomba. Without the impairment loss, Qld is operating at a profit of $19,988 for the period.

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REFRESH GROUP LIMITED – HALF YEAR REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

5. EARNINGS PER SHARE

Basic earnings per share amounts are calculated by dividing net loss for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net loss attributable to ordinary shareholders (after deducting interest on the convertible redeemable preference shares) by the weighted average number of ordinary shares outstanding during the year (adjusted for the effects of dilutive options and dilutive convertible non-cumulative redeemable preference shares).

The following reflects the loss and share data used in the total operations basic and diluted earnings per share computations:

Loss attributable to members of the parent entity Weighted average number of ordinary shares for basic earnings per share Basic loss per share (cents per share)	CONSOLIDATED 31.12.10 31.12.09
	(1,054,034) (251,658) 111,578,928 55,756,275 (0.94) (0.45)

There have been no other transactions involving ordinary shares or potential ordinary shares since the reporting date and before the completion of these financial statements.

6. ISSUED CAPITAL

Ordinary shares Issued and fully paid Movements in ordinary shares on issue 6 months to 31 December 2010 At 1 July 2010 Issue shares to Yong Wei Por on 13/7/10 Issue shares to acquire AridTec on 13/7/10 (note 7) Other share issue on 13/7/10 Issue shares to Catherine Chan & Hon Leong Chong on 27/8/10 Issue shares to Pacific Alliance Group on 29/9/10 Fund raising costs At 31 December 2010	Number 68,206,849 7,692,308 71,800,000 384,600 1,570,000 7,692,308 -	CONSOLIDATED 31.12.10 30.06.10 $ $ 11,562,595 5,843,333
		$ 5,843,333 500,000 4,667,000 24,999 102,050 500,000 (74,787) 11,562,595
	157,346,065

Effective 1 July 1998, the Company Law Review Act abolished the concept of authorised capital. Accordingly, the Company does not have authorised capital or par value in respect of its issued shares.

On 13 July 2010, 71,800,000 shares were issued at 6.5 cents each as purchase consideration for the acquisition of AridTec.

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REFRESH GROUP LIMITED – HALF YEAR REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

7. BUSINESS COMBINATION

. 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
	4,136,781 530,219
	4,667,000
	37 42,141 242,215 67,416 4,000,000 (215,028)
	4,136,781

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

Key factor contributing to the $530,219 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.

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REFRESH GROUP LIMITED – HALF YEAR REPORT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

8. INTANGIBLE ASSETS

Due to the current economic environment, changes to the Company’s operating results and forecasts, and a reduction in the Company’s market capitalisation, the Company determined a triggering event had occurred and performed a goodwill impairment test at balance sheet date.

Goodwill is allocated to the Company’s cash generating units “CGUs”. The Company tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.

In accordance with AASB 136, “Impairment of Assets”, the Company performed its goodwill impairment test by comparing the recoverable amount of each CGU with its carrying amount, including goodwill. The recoverable amount of a CGU was determined based on value-in-use calculations. Value-in-use is calculated based on the present value of cash flow projections over a five year period including a terminal value. The growth rate assumptions ranged from 5% to 10% reflecting achievement of at least a long-term estimate of inflation in the region in which each CGU operates. Management prepared the value-in-use calculations with reference to historical results and forecasts for each CGU.

The discount rate for each CGU was estimated based on the Company’s weighted average cost of capital adapted for the regions in which the CGUs operate. The discount rate used is 12.11%.

The Board anticipates the growth rate in revenue and net profit margin to remain the same for all CGUs as reported in 30 June 2010 except for growth rate in revenue for Hydr8 to be 5% as compared to 6-8% and its net profit margin to be 5% as compared to 8%. Fusion, a new CGU is anticipated to achieve a growth rate of 5% and a net profit margin of 5%.

As a result of changes in the sales mix, impairment of $158,069 for Toowoomba was recognised, based on the discount rate of 12.11%, and estimated growth rate of 1%.

AridTec has not performed to expectations and the Board is considering all commercial options available. At 31 December 2010, the Group had $3,882,353 and $530,219 related to AridTec patents and goodwill, respectively, in intangible assets in the consolidated statement of financial position. The recoverability of the values at when these assets are carried depends on the successful completion of one of the commercial options being considered. If any of the commercial options cannot be successfully concluded, these assets would need to be significantly written down.

9. EVENTS AFTER BALANCE SHEET DATE

No significant events have occurred between the reporting date and the date of authorisation.

10. RELATED PARTY TRANSACTIONS

During the period the Group borrowed $415,406 from related parties. Loans totalling $110,000 have a two month term and a 24% interest rate. In addition there is an unsecured revolving line of credit with interest rate of 12%. At 31 December 2010, $267,406 was outstanding on these related party debts.

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REFRESH GROUP LIMITED – HALF YEAR REPORT

DIRECTORS’ DECLARATION

In accordance with a resolution of directors of Refresh Group Ltd, I state that;

In the opinion of the directors:

• a) the consolidated financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001 , including:

(i) give a true and fair view of the financial position as at 31 December 2010 and the performance for the halfyear ended on that date of the consolidated entity; and

• (ii) comply with Accounting Standard AASB 134 “Interim Financial Reporting” and the Corporations Regulations 2001; and

• b) There are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

On behalf of the Board

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Henry Heng Executive Chairman

Dated 28 February 2011 Perth, Western Australia

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Grant Thornton Audit Pty Ltd ABN 94 269 609 023

10 Kings Park Road West Perth WA 6005 PO Box 570 West Perth WA 6872

T +61 8 9480 2000 F +61 8 9322 7787 E admin.wa@au.gt.com W www.grantthornton.com.au

Independent Auditor’s Review Report To the Members of Refresh Group Limited

We have reviewed the accompanying half-year financial report of Refresh Group Limited (“Company”), which comprises the consolidated financial statements being the consolidated statement of financial position as at 31 December 2010, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, a statement of accounting policies, other selected explanatory notes and the directors’ declaration of the consolidated entity, comprising both the Company and the entities it controlled at the half-year’s end or from time to time during the half-year.

Directors’ responsibility for the half-year financial report

The directors of the Company are responsible for the preparation and fair presentation of the half-year financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibility

Our responsibility is to express a conclusion on the consolidated half-year financial report based on our review. We conducted our review in accordance with the Auditing Standard on Review Engagements ASRE 2410: Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001. As the

Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.

Liability limited by a scheme approved under Professional Standards Legislation

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auditor of Refresh Group Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we complied with the independence requirements of the Corporations Act 2001.

Basis for Qualified Conclusion

A limitation in scope of our work exists for the reasons described below:

As disclosed in Note 8 to the financial statements, the consolidated entity has included in the non-current assets, intangible assets representing patents and goodwill reported at 31 December 2010 at $3,882,353 and $530,219 respectively (the assets). This relates to the acquisition of AridTec. As set out in Note 8, the recoverability of the carrying values of the assets is dependent on the successful completion of one of several commercial options being considered by the Board. Australian Accounting Standard AASB 136 Impairment of Assets requires an asset to be carried at no more than its recoverable amount. We have been unable to obtain sufficient appropriate audit evidence in relation to the commercial options being considered by the Board to support the recoverable amount of the assets and, accordingly, we have been unable to determine whether the recoverable amounts of the assets are at least equal to their carrying values. In the event that the carrying value of the assets exceeds their recoverable amount, it would be necessary for the carrying value of the assets to be written down to their recoverable amount.

Qualified Conclusion

Based on our review, which is not an audit, with the exception of the matter described in the preceding paragraph, we have not become aware of any matter that makes us believe that the half-year financial report of Refresh Group Limited is not in accordance with the Corporations Act 2001, including:

• a giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and of its performance for the half-year ended on that date; and

• b complying with Accounting Standard AASB 134: Interim Financial Reporting and Corporations Regulations 2001.

Material uncertainty regarding continuation as a going concern

Without further qualification to the conclusion expressed above, we draw attention to Note 2d to the financial statements which indicate that the consolidated entity incurred a net loss

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of $1,054,034 during the half-year ended 31 December 2010 and, as of that date, the consolidated entity had cash outflows from operations of $1,220,306. These conditions, along with other matters as set forth in Note 2d, indicate the existence of a material uncertainty which may cast significant doubt about the consolidated entity’s ability to continue as a going concern and therefore the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business and at the amounts stated in the financial report.

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

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P W Warr Director - Audit & Assurance

Perth, 28 February 2011

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