THORNEY TECHNOLOGIES LTD — Annual Report 2008

Aug 28, 2008

Page 1 of 11 pages

Friday 29 August 2008

Company Announcements Office Australian Stock Exchange Limited 10^th Floor, 20 Bond Street Sydney NSW 2000

AUSTRALIAN RENEWARIA FUELS LIMITED

AUSTRALIAN RENEWABLE FUELS LIMITED

ABN 66 096 782 188

SUITE 1B. LEVEL 5 SOUTH SHORE PIAZZA 85 SOUTH PERTH ESPLANADE SOUTH PERTH WA 6151

PO ROX 837 SOUTH PERTH WA 6951

TEL +61 8 9363 3500 FAX $+61893633511$ E-MAIL info@arfuels.com.au WEB www.arfuels.com.au

Dear Sir/Madam,

PRELIMINARY FINAL REPORT FINANCIAL YEAR ENDED 30 JUNE 2008

Australian Renewable Fuels Limited (ASX Code ARW) ("ARF") herewith lodges the Preliminary Final Report (Appendix 4E) for the financial year ended 30 June 2008.

The principal activity of Australian Renewable Fuels Limited during the 2008 financial year was the production and marketing of biodiesel from its plants at Largs Bay, South Australia and Picton, Western Australia. At the commencement of the financial year the Company was engaged in the commercial production and marketing of biodiesel. During the period July to November 2007, there were substantial increases in the price of feedstocks used in the production of biodiesel, namely, tallow and canola. These increases were attributed to Asian demand, particularly in relation to tallow. In November 2007, following sustained and substantial increases in feedstock prices, the Company placed both its biodiesel plants on a care and maintenance basis as the production of biodiesel in Australia had become uneconomic.

Simultaneous with the suspension of biodiesel production, ARF implemented major reductions in operating costs and overhead expenditure. Following the resignation of Mr John Lillywhite as Managing Director and Chief Executive Officer, Mr Max Ger was appointed Chief Executive Officer of the Group's Australian operations. Mr Ger continues in his role as Chief Financial Officer of the ARF Group.

In making the expenditure reductions mentioned above, ARF was mindful that it did not impair its capacity to recommence large scale production once economic circumstances for biodiesel improved. To this end, the core technical, operational, administrative and managerial know-how of the Company was retained. This policy has ensured that the Company is readily able to recommence production of biodiesel under favourable economic conditions. The Company continues to grapple with the punitive changes to fuel tax legislation which occurred in 2006, but it has achieved some success in working through the difficulties imposed on biodiesel producers by those changes.

Commencing May 2008, there were significant increases in world oil prices which had direct impact on biodiesel off-take prices. Although there has since been some reduction in oil prices, the increases have had a positive impact on biodiesel producers since biodiesel can be directly substituted for mineral diesel. The environmental and health benefits of substituting biodiesel for mineral diesel are proven. The current quoted Terminal Gate Price of mineral diesel is higher than the existing production price of ARF's biodiesel leaving it opportunity to achieve profit margins if satisfactory sales contracts can be procured.

During the year, the Company conducted a Rights Issue raising \$2.625 million after associated costs. Additional funds were raised in the United States by the Company's subsidiary, American Renewable Fuels Inc to fund the development of the Group's U.S. assets. These development costs have been expensed in the 2008 Group's Financial Statements.

With regard to the commercial exploitation of its Energea NAFTA Rights, American Renewable Fuels Inc has experienced some difficulty in raising finance for the planned Clovis, New Mexico biodiesel production plant. The difficulties stem from the collapse of international confidence in financial markets brought about by the U.S. sub-prime crisis. ARF will continue to seek U.S. funding for the Clovis plant, albeit that such funding may significantly dilute ARF's interest in its first U.S. biodiesel plant.

On April 18 2008, ARF announced to shareholders that it had entered into a Purchase Term Sheet for the sale of a minimum volume of 5 million litres of biodiesel to a prominent West Australian resource company. The Agreement is subject to obtaining funding for the storage and blending infrastructure at the resource company's minesite. This initiative is expected to reach conclusion shortly.

Recently ARF renewed its biodiesel supply agreement with Piacentini and Son Pty Ltd for the supply of biodiesel for a period of 5 years. The agreement contains breakclauses which enable both parties to terminate the contract in the event of either party experiencing significant financial hardship under the agreement.

RESULTS OF OPERATIONS

The attached Appendix 4E is based on financial statements that are currently in the final stages of audit. To the best of our knowledge, the financial statements are not the subject of any dispute with, or likely qualification by, the auditors of the Company.

The loss after tax for the year ended 30 June 2008 attributable to members of ARF, amounted to A\$53,177,306.. The Minority shareholders in American Renewable Fuels Inc sustained a loss of A\$8,229,319 during the 2008 year.

No dividends were declared or paid during the 2008 financial year.

ARF recognises the benefits to be derived from carbon credit trading on international carbon trading markets. It is not yet able to reliably quantify the benefits to be derived by it from this source.

No dividends were declared or paid during the 2008 financial year.

ARF's Australian management team remains focused on the successful re-opening of its existing two biodiesel plants in Australia. Both are currently producing biodiesel to meet current customer demand.

For further information, please contact:

Australian Renewable Fuels Limited Max L Ger CEO (Australian Operations) Chief Financial Officer (Group) T: 08 9227 7688 E: info@arfuels.com.au ENDS

$\lambda$

Appendix 4E

Preliminary final report
for the Year Ended 30 June 2008

1.	Company details		Name of entity
	arfuels AUSTRALIAN RESERVENE		Australian Renewable Fuels Limited
	ABN 66 096 782 188	Financial year ended ('current year') 30 June 2008				Financial year ended ('previous year') 30 June 2007
2.	Results for announcement to the market					\$
2.1 2.2 2.3	Revenues from operations (Loss) from operations after tax attributable to members (excludes impairment of assets) Net (loss) for the period attributable to members		Down Down	61.0% 22.7%	to to	5,338,733 (8,424,850)
2.4	Dividends		Up Amount per security	58.0%	to	(53, 177, 306) Franked amount per security
	Final dividend proposed		Nil			Nil
	Interim dividend		Nil			Nil
2.5	Record date for determining entitlements to the final dividend.			N/A
2.6	Brief explanation of any of the figures in 2.1 to 2.4 above necessary to enable the figures to be understood.
	(a) The Group's major activity during the financial year ended 30 June 2008 was the production and marketing of biodiesel in Australia. During the period November 2007 through to early June 2008 the Group's two biodiesel plants were under care and maintenance due to steep increases in feedstocks which made the production of biodiesel uneconomic.
	(b) The Group's revenue during the financial year ended 30 June 2008 was derived from sales of Biodiesel, interest received and profit on disposal of non-current assets.
	(c) No dividends were declared or paid during the financial year ended 30 June 2008.

3. Consolidated income statement

	Current year	Previous year
Revenues from continuing operations	5,231,781	12,838,286
Revenue from outside operating activities	106,952	960,065
Expenses from ordinary activities, excluding borrowing costs (refer note 3.1) and impairment of assets	(13,993,775)	(28, 172, 359)
Impairment of assets	(44, 752, 456)	(29, 446, 767)
Borrowing costs	(249, 127)	(351, 545)
(Loss) before income tax	(53,656,625)	(44, 172, 320)
Income tax benefit/ (expense)	(7,750,000)	10,605,070
Net (loss) for the year	(61, 406, 625)	(33, 567, 250)
Net (loss) attributable to minority interests	(8,229,319)
Net (loss) attributable to members	(53, 177, 306)	(33, 567, 250)

Notes to the consolidated income statement

Expenses from ordinary activities (excluding borrowing costs and impairment of assets)

Details of "Expenses from ordinary activities" by nature	Current year	Previous year
Cost of sales (excluding employee benefits & plant depreciation)	(6, 556, 051)	(16, 394, 742)
Employee benefits expense	(2,662,838)	(5,503,017)
Depreciation and amortisation expense	(1,528,082)	(3,027,655)
Other expenses from ordinary activities	(3,246,804)	(3,246,945)
Total Expenses	(13, 993, 775)	(28, 172, 359)

Other disclosures relating to the income statement

	Current year	Previous year
Net gain/(loss) on the disposal of assets:
- property, plant and equipment	26,720
Net revenue/(expense) since the beginning of the reporting period resulting from deductions from the carrying amounts of assets :
- amortisation of non-current assets		(630, 962)
- depreciation of non-current assets	(1,528,082)	(2,396,693)

$\left($

Revision of Accounting Estimates

Details of Revision of Accounting Estimates in accordance with AASB 108

$N/A$

4. Condensed consolidated balance sheet	Current year	Previous year
Current assets
Cash and cash equivalents	1,310,923	6,081,472
Trade and other receivables	1,376,307	2,253,898
Inventories	1,455,964	4,230,551
Total current assets	4,143,194	12,565,921
Non-current assets
Property, plant and equipment	9,961,707	35,799,800
Deferred tax asset		7,750,000
Intangibles		18, 181, 952
Other Non Current Assets	416,137
Total non-current assets	10,377,844	61,731,752
Total assets	14,521,038	74,297,673

	Current year	Previous year S
Current liabilities
Payables	2,729,969	3,391,336
Interest bearing loans & borrowings	31,494	1,230,128
Provisions		374,553
Total current liabilities	2,761,463	4,996,017
Non-current liabilities
Interest bearing loans & borrowings	52,496	84,148
Non-interest bearing liabilities	400,000	400,000
Deferred tax liabilities		1,988
Total non-current liabilities	452,496	486,136
Total liabilities	3,213,960	5,482,153
Net assets	11,307,077	68,815,520

Total equity	11,307,077	68,815,520
Minority interests in controlled entities		5,916,915
Equity attributable to members of the parent entity	11,307,077	62,898,605
Retained profits/(accumulated losses)	(90, 896, 008)	(37, 718, 702)
Reserves	(86, 592)	952,909
Contributed equity	102,289,677	99,664,398
Equity

5. Condensed consolidated statement of cash flows

	Current year \$	Previous year \$
Cash flows from operating activities
Cash receipts in the course of operations	6,107,680	11,752,966
Cash payments in the course of operations	(11, 551, 032)	(27, 657, 298)
Interest received	80,236	192,016
Grant income		67,420
Foreign exchange gains		93,293
Borrowing costs	(249, 127)	(351, 545)
Net cash (used) in operating activities	(5,612,243)	(15,903,148)
Cash flows from investing activities
Payments for purchases of property, plant and equipment	(1,898,653)	(4,343,719)
Proceeds of sales of fixed assets	304,518
Receipt of Biofuels Capital Grant		5,360,040
Payments for intangibles	(603, 413)	(5,976,737)
Net cash (used) in investing activities	(2, 197, 548)	(4,960,416)
Cash flows from financing activities
Proceeds from issues of shares - net	4,505,110	15,850,278
Proceeds from borrowings		5,119,214
Repayments of borrowings	(1,261,779)	(3,905,055)
Net cash provided by financing activities	3,243,331	17,064,437
Net increase/(decrease) in cash he ld	(4, 566, 460)	(3,799,127)
Cash at beginning of period	6,081,472	10,023,115
Effects of exchange rate fluctuation on cash held in foreign currency	(204, 089)	(142, 516)
Cash at end of period	1,310,923	6,081,472

Non-cash financing and investing activities

Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows are as follows.

$N/A$

Reconciliation of cash

Reconciliation of cash at the end of the period (as shown in the condensed consolidated statement of cash flows) to the related items in the accounts is as	Current year	Previous year
follows:
Cash on hand and at bank	1,310,923	6,081,472
Total cash at end of period	1,310,923	6,081,472

Reconciliation of profit from ordinary activities after income tax to net cash inflow from operating activities

	Current year \$	Previous year S
Net (Loss)	(61, 406, 925)	(33, 567, 250)
Depreciation and Amortisation	1,528,082	3,027,655
Impairment of assets	44,714,010	29,446,767
Amortisation - Biofuels Capital Grant		(357, 336)
Write back of deferred tax asset	7,750,000
Unrealised exchange gain
Profit on sale of assets	(26,716)
Share options expense	(776, 412)	535,746
(Increase) decrease in assets:
Decrease/(increase) in trade debtors	875,899	(1,085,320)
Decrease/(increase) in inventories	2,774,587	(2, 297, 255)
(Increase) in deferred tax assets		(3,919,359)
Increase/(decrease) in liabilities:
Increase/(decrease) in trade creditors and accruals	(1,443,010)	(752, 233)
Increase/(decrease) in provisions	400,230
Reduction in government loan		(250,000)
Increase/(decrease) in deferred tax liabilities		(6,685,711)
Other	(1,988)	1,148
Net cash inflow/(outflow) from operating activities	(5,612,245)	(15,903,148)

6. Dividends

Individual dividends per security

		Date dividend is payable	Amount per security	Franked amount per security at 30% tax	Amount per security of foreign source dividend
Final dividend:	Current year			$\overline{\phantom{a}}$
	Previous year			۰
Interim dividend:	Current year
	Previous year

Total dividend per security (interim plus final)

	Current year	Previous vear
Ordinary securities		-

7. Dividend Reinvestment Plans

The dividend or distribution plans shown below are in operation.

$N/A$

The last date(s) for receipt of election notices for the dividend or distribution plans

$N/A$

Any other disclosures in relation to dividends (distributions).

$N/A$

8. Consolidated retained profits

	Current year	Previous year
Retained losses at the beginning of the financial year	(37,718,702)	(4,151,452)
Net loss attributable to members	(53, 177, 306)	(33, 567, 250)
Net transfers from/(to) reserves
Net effect of changes in accounting policies
Dividends and other equity distributions paid or payable
Retained losses at the end of the financial year	(90, 896, 008)	(37,718,702)

9. NTA backing	Current year э	Previous year
Net tangible asset backing per ordinary security	\$0.038	\$0.25

10.1 Control gained over entities

п

Name of entity (or group of entities)	American Renewable Fuels LLC
Date control gained	Upon Incorporation
Contribution of such entities to the reporting entity's profit/ (loss) from ordinary activities during the period (where material).	(2,695,903)
Profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) for the whole of the previous corresponding period.	Not applicable

10.2 Loss of control over entities

Name of entity (or group of entities)	N/A
Date control lost	N/A
Contribution of such entities to the reporting entity's profit/ (loss) from ordinary activities during the period (where material).	N/A
Consolidated profit/(loss) from ordinary activities of the controlled entity (or group of entities) whilst controlled during the whole of the previous corresponding period (where material).	N/A

11 Details of associates and joint venture entities

Name of associate/joint venture	Reporting entity's percentage holding
	Current year	Previous year
	N/A	N/A

Group's aggregate share of associates' and joint venture entities' profits/(losses) :	Current year	Previous year S
Profit/(loss) from ordinary activities before tax
Income tax on ordinary activities
Profit/(loss) from ordinary activities after tax
Extraordinary items net of tax
Net profit/(loss)
Adjustments
Share of net profit/(loss) of associates and joint venture entities

12. Significant Information

During the part of the 2008 financial year the ARF Group was engaged in the production and marketing of biodiesel in Australia. In November 2007 the plants were placed in care and maintenance until early June 2008.

13. Commentary on results for the period

Following the temporary cessation in production activities the Group's assets were subjected to a rigorous writedown (impairment). The carrying value of the assets will be re-assessed when appropriate.

1. This report is based on ⁺accounts to which one of the following applies. (Tick one)

□	The + accounts have been audited.	The " accounts have been subject" to review.
		The + accounts are in the process of being reviewed.
⊠	The + accounts are in the process of being audited.	The + accounts have not yet been audited or reviewed.

1. If the accounts have not yet been audited or subject to review and are likely to be subject to dispute or qualification, details are described below.

The audit is substantially completed and the Company is not aware of any disputes or proposed qualifications to the accounts.

1. If the accounts have been audited or subject to review and are subject to dispute or qualification, details are described below

$N/A$

m.L.C

Sign here:

(Chief Financial Officer)

Date: 29 August 2008

Print name:

Max Louis Ger