THORNEY TECHNOLOGIES LTD — M&A Activity 2012

Dec 17, 2012

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18 December 2012

Dear Wentworth Shareholder,

On 15 November 2012, the Board of Wentworth Holdings Limited ( Wentworth ) announced that it had entered into a Merger Implementation Deed with Australian Renewable Fuels Limited ( ARfuels ) under which it has agreed offer terms for the proposed acquisition by ARfuels of all the shares in Wentworth that it does not already own by way of a recommended off-market takeover bid.

The Offer Consideration consists of 5.7 ARfuels Shares for each Wentworth Share. Based on the closing price of ARfuels Shares on the ASX on 14 December 2012 of 1.2 cents, the deemed value of the Offer is 6.84 cents per Wentworth Share .

Enclosed is a copy of Wentworth’s Target’s Statement, which has been prepared by Wentworth in response to the takeover bid by ARfuels.

Leadenhall, the Independent Expert appointed by Wentworth, has determined that the terms of the Offer are fair and reasonable. The Independent Expert’s Report is included in Annexure A to this Target’s Statement.

Each Director of Wentworth has signed a Pre-Bid Agreement in respect of all Wentworth Shares they hold or control, representing an aggregate of 7.04% of Wentworth Shares.

The Wentworth Board unanimously recommends that Wentworth Shareholders ACCEPT the Offer for all of their Wentworth Shares, in the absence of a Superior Proposal and a Material Adverse Event.

Some of the reasons for this recommendation are set out below and in more detail in Section 1.2 of this Target’s Statement.

1. The Independent Expert has concluded that the Offer is fair and reasonable

2. ARfuels has an active business operation

3. There are no competing offers

To accept the Offer, you should complete and submit the Acceptance Form which you will receive from ARfuels in accordance with the instructions on it.

A list of frequently asked questions is set out in Section 2 of this Target’s Statement.

I encourage you to read this Target’s Statement (including the Independent Expert’s Report) in its entirety before making a decision whether to accept the Offer.

Yours sincerely

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Vaughan Webber Non-Executive Chairman

Wentworth Holdings Limited ABN 41 080 167 264

Level 29, 55 Collins Street T 0420 961 617 Melbourne VIC 3000 F 03 8692 1122 E ron.hollands@wentworthholdings.com.au

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TARGET’S STATEMENT

of Wentworth Holdings Limited (ABN 41 080 167 264)

in response to the Offer by Australian Renewable Fuels Limited (ABN 66 096 782 188)

to acquire all of your ordinary shares in Wentworth Holdings Limited

Your Directors unanimously recommend that you ACCEPT the Offer

in the absence of a Superior Proposal and a Material Adverse Event

The Independent Expert appointed by Wentworth has concluded that the Offer is fair and reasonable to Wentworth Shareholders

This Target’s Statement has been issued by Wentworth Holdings Limited (ABN 41 080 167 264) under Part 6.5 of the Corporations Act in response to the takeover bid made by Australian Renewable Fuels Limited (ABN 66 096 782 188)

This document contains important information and requires your immediate attention. This document should be read in its entirety. If you do not understand it or are in doubt as to how to deal with it you should consult your professional advisers without delay.

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Legal adviser to Wentworth

IMPORTANT NOTICES

Nature of this document

This Target’s Statement is dated 18 December 2012 and is given under Part 6.5 of the Corporations Act 2001 (Cth) by Wentworth Holdings Limited ABN 41 080 167 264 ( Wentworth ) in response to the Bidder’s Statement from Australian Renewable Fuels Limited ABN 66 096 782 188 ( ARfuels ).

You should read this Target’s Statement in its entirety.

Australian Securities and Investments Commission (ASIC) and ASX

A copy of this Target’s Statement was lodged with ASIC and provided to the ASX on 18 December 2012. Neither ASIC, ASX nor any of their officers takes any responsibility for the content of this Target’s Statement.

Investment Decision

This Target’s Statement does not take into account the individual investment objectives, financial situation or particular needs of each Wentworth Shareholder. You may wish to seek independent financial and taxation advice before making a decision as to whether or not to accept the Offer for your Wentworth Shares.

Maps and Diagrams

Any diagrams, charts, maps, graphs and tables appearing in this Target’s Statement are illustrative only and may not be drawn to scale. Unless stated otherwise, all data contained in diagrams, charts, maps, graphs and tables is based on information available as at the date of this Target’s Statement.

Definitions and Interpretation

Unless the contrary intention appears, terms used in this Target’s Statement are defined in Section 10 of this document.

Responsibility Statement

The information in the Independent Expert’s Report relating to ARfuels and the information in this Target’s Statement relating to ARfuels and relating to the Bidder’s Statement ( ARfuels Information ) has been prepared by Wentworth using publicly available information and limited non-public information made available to Wentworth by ARfuels. Information in this Target’s Statement about ARfuels has not been independently verified by Wentworth. Accordingly, Wentworth does not, subject to the Corporations Act, make any representation or warranty, express or implied, as to the accuracy or completeness of such information.

The information in this Target’s Statement other than the ARfuels Information ( Wentworth Information ) and except to the extent specified below, is the sole responsibility of Wentworth and none of ARfuels or its officers, employees or advisers assumes any responsibility for the accuracy or completeness of the Wentworth Information.

The Independent Expert’s Report has been prepared by the Independent Expert for the purposes of this Target’s Statement and the Independent Expert takes full responsibility for that report. A full version of the Independent Expert’s Report is set out in Annexure A of this Target’s Statement. None of Wentworth, ARfuels or any of their respective officers, employees or advisers assumes any responsibility for the accuracy or completeness of the Independent Expert’s Report, except, in the case of Wentworth and ARfuels, in relation to the information given by them respectively to the Independent Expert (if any).

Forward Looking Statements

This Target’s Statement contains forward looking statements. Such statements are only predictions and are subject to inherent risks and uncertainties. Those risks and uncertainties include factors and risks specific to the industry in which Wentworth is involved as well as general economic conditions and conditions in the financial markets. Actual events or results may differ materially from the events or results expressed or implied in any forward looking statement and such deviations are both normal and to be expected. None of Wentworth, any of its officers, or any person named in this Target’s Statement with their consent or any person involved in the preparation of this Target’s Statement makes any representation or warranty (either express or implied) as to the accuracy or likelihood in any forward looking statement, and you should not place undue reliance on these statements.

Forward looking statements in this Target’s Statement reflect views held only as at the date of this Target’s Statement.

Privacy

Wentworth has collected your information from the register of Wentworth Shareholders for the purposes of providing you with this Target’s Statement. The type of information Wentworth has collected about you includes your name, contact details and information on your shareholdings in Wentworth. Without this information, Wentworth would be hindered in its ability to issue this Target’s Statement. The Corporations Act requires the names and addresses of Wentworth Shareholders to be held in a public register. Your information may be disclosed on a confidential basis to Wentworth and its Related Bodies Corporate, and holders of Wentworth Shares and external service providers, and may be required to be disclosed to regulators, such as ASIC.

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Table of Contents

1	Considerations for and against accepting the Offer	6
2	Frequently Asked Questions	8
3	Your choices as a Wentworth Shareholder	11
4	Wentworth Directors’ Recommendations, Intentions and Interests	12
5	Information about Wentworth	14
6	Information about ARfuels	17
7	Important information about the Offer	18
8	Additional Information	22
9	Consents and Approval	24
10	Definitions and Interpretation	25
Schedule 1 Announcements since lodgement of 2012 Annual Report		29
Schedule 2 Wentworth consolidated statement of financial position		30
Annexure A Independent Expert’s Report		31

Key Information

Key Dates
Announcement Date	15 November 2012
Date that this Target's Statement was lodged with ASIC	18 December 2012

What choices do I have as a Wentworth Shareholder?	Further Information
Accept the Offer for all of your Wentworth Shares	See section 3
Sell some or all of your Wentworth Shares on ASX	See section 3
Reject the Offer and do nothing	See section 3

What does the Wentworth Board recommend I do?	Further Information
Your Wentworth Directors unanimously recommend you ACCEPT the	See section 4
Offer, in the absence of a Superior Proposal and a Material Adverse
Event
To accept the Offer, follow the instructions on page 4 of this Target’s	See page 5
Statement and in section 11.3 of the Bidder’s Statement and its
accompanying Acceptance Form

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How to accept the Offer

You should read this Target’s Statement (including the Independent Expert’s Report) and the Bidder’s Statement before making a decision whether to accept the Offer.

1. You may accept the Offer only for all of your Wentworth Shares. Your acceptance of the Offer will be treated as being for all of your Wentworth Shares registered as held by you at the date your acceptance is processed.

2. If your Wentworth Shares are in a CHESS Holding, to accept you must either:

3. (a) instruct your Controlling Participant to accept the Offer on your behalf; or

4. (b) complete, sign and return the Acceptance Form in accordance with the instructions on it.

5. If you are a Participant (as defined in the ASX Settlement Operating Rules) (typically, a stockbroker who is a participating organisation of ASX Settlement), the above does not apply. To accept the Offer you must initiate acceptance in accordance with the ASX Settlement Operating Rules.

6. If your Wentworth Shares are in an Issuer Sponsored Holding, to accept you must complete, sign and return the Acceptance Form in accordance with the instructions on it. Acceptance Forms must be received before the end of the Offer Period. If your SRN/HIN begins with an “I”, this indicates that your Wentworth Shares are in an Issuer Sponsored Holding.

Full details on how to accept the Offer are set out in section 11.3 of the Bidder’s Statement.

Your Directors unanimously recommend that you ACCEPT the Offer in the absence of a Superior Proposal and a Material Adverse Event

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1 Considerations for and against accepting the Offer

1.1 Introduction

The Offer has a number of advantages, disadvantages and risks, which may affect Wentworth Shareholders in different ways depending on their individual circumstances. Wentworth Shareholders should consider seeking professional advice on their particular circumstances, as appropriate.

Your Wentworth Directors unanimously recommend that you accept the Offer in the absence of a Superior Proposal and a Material Adverse Event. Your Wentworth Directors consider the following reasons are relevant in relation to your decision to accept or not to accept the Offer.

1.2 Why you should accept the Offer

(a) The Wentworth Directors unanimously support the Offer

The Wentworth Directors have unanimously formed the conclusion that the Offer is in the best interests of Wentworth Shareholders and recommend that Wentworth Shareholders accept the Offer, in the absence of a Superior Proposal and a Material Adverse Event.

In addition, each Director of Wentworth has signed a Pre-Bid Agreement in respect of all Wentworth Shares they hold or control, representing an aggregate of 7.04% of Wentworth Shares.

(b) The Independent Expert appointed by Wentworth has concluded that the Offer is fair and reasonable

The Independent Expert, Leadenhall, has concluded that the transaction contemplated by the Offer is fair and reasonable to Wentworth Shareholders.

The Independent Expert considers that the fair market value per Wentworth Share before the Bid to be in the order of 6.37 cents per share and the value of consideration offered pursuant to the Offer to be in the range of 5.19 cents to 6.91 cents per share.

The Independent Expert’s Report is set out in Annexure A of this Target’s Statement and the Wentworth Directors encourage you to read the report in full before deciding whether or not to accept the Offer.

(c) ARfuels is a company with an active business operation

With the approval of shareholders, Wentworth divested its real estate property management business and associated assets and liabilities in December 2011. On 6 August 2012, Wentworth changed its main undertaking to that of an investment company. Since Wentworth became an investment company, an investment committee was formed by the Wentworth Board and regular meetings have been held. However, to date, Wentworth has continued to hold only cash investments and cash at call.

ARfuels has an existing ongoing business operation. Therefore the Offer provides Wentworth Shareholders with the opportunity to be involved in a company with an established and ongoing business operation, growth prospects and access to an experienced and qualified management team with a proven track record in operating biodiesel plants.

(d) The merger is expected to improve liquidity

There is currently a low level of trading in Wentworth Shares making it more difficult for Wentworth Shareholders to sell Wentworth Shares on market.

The Merged Group is likely to have a market capitalisation significantly in excess of the current market capitalisation of Wentworth. This may attract greater analyst coverage and may enhance the profile of the Merged Group and therefore is expected to result in increased liquidity and greater trading depth than Wentworth on a standalone basis.

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(e) There are no competing offers

No formal alternative offers or approaches by potential acquirers have been received subsequent to the Bid being announced on 15 November 2012. In the absence of a Superior Proposal, Wentworth Shareholders are unlikely to realise their Wentworth Shares for an amount in excess of the consideration offered pursuant to the Offer in the foreseeable future.

1.3 Reasons why you may consider not accepting the Offer

The Offer gives rise to certain potential disadvantages and risks that Wentworth Shareholders must consider in deciding whether or not to accept it. While the Wentworth Directors are of the opinion that these disadvantages are clearly outweighed by the Offer’s advantages and that accepting the Offer is in the best interests of Wentworth Shareholders, Wentworth Shareholders should consider their individual circumstances and make their own determination. A summary of the potential disadvantages associated with the Offer are as follows:

(a) You will be exposed to risks associated with ARfuels’ business

If you accept the Offer and the Offer is completed, you will become a shareholder in ARfuels and the Merged Group will continue to operate ARfuels’ business operations, being biodiesel production and sale. Accordingly, as an ARfuels shareholder, you will be exposed to certain risk factors associated with ARfuels and its business, which you are not currently exposed to, including regulatory and commodity price risk. These risk factors are highlighted in Section 6.2 and are further outlined in section 8 of the Bidder’s Statement.

(b) You will be unable to accept a superior offer if one was to emerge

Except in the limited circumstances provided for in the Corporations Act, accepting the Offer will preclude Wentworth Shareholders from accepting a Superior Proposal from a third party, should one emerge during the Offer Period. At the date of this Target’s Statement, the Wentworth Directors are not aware of a proposal by anyone to make a Superior Proposal.

Accepting the Offer would preclude a Wentworth Shareholder from selling their Wentworth Shares. Accepting the Offer will not, however, deny a Wentworth Shareholder the benefit of any superior price offered by ARfuels which, under the Corporations Act, is required to be extended to all Wentworth Shareholders, including those who have already accepted the Offer. At the date of this Target’s Statement, ARfuels has given no indication that it intends to increase the Offer Consideration.

(c) The value of the Offer may rise or fall as ARfuels’ share price fluctuates

Wentworth Shareholders are being offered ARfuels Shares for their Wentworth Shares at a fixed ratio regardless of the price each trades at. If Wentworth Shareholders accept the Offer they are exposed to any rise or fall in the ARfuels Share price.

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2 Frequently Asked Questions

This section answers some commonly asked questions about the Offer. It is not intended to address all relevant issues for Wentworth Shareholders. This section should be read together with all other parts of this Target’s Statement.

**Question **	Answer
What is ARfuels’ Offer for	ARfuels has made a conditional Offer of 5.7 ARfuels Shares for
my Wentworth Shares?	each Wentworth Share you own.
	The deemed value of the Offer, based on the last recorded sale
	price of ARfuels Shares on ASX on 14 December 2012 (being
	the last practicable date before the date of this Target’s
	Statement) of 1.2 cents and the Offer of 5.7 ARfuels Shares for
	every 1 Wentworth Share you own, is 6.84 cents per Wentworth
	Share.
What choices do I have as a	As a Wentworth Shareholder you can:
Wentworth Shareholder?	� accept the Offer for all of the Wentworth Shares you hold;
	� sell your Wentworth Shares (unless you previously accepted
	the Offer and have not validly withdrawn your acceptance);
	or
	� reject the Offer by doing nothing.
	A detailed explanation is set out in Section 3 of this Target’s
	Statement.
What are the Wentworth	The Wentworth Directors unanimously recommend you
Directors recommending?	ACCEPT the Offer in the absence of a Superior Proposal and a
	Material Adverse Event.
What is the opinion of the	The Independent Expert has concluded that the transaction
Independent Expert?	contemplated by the Offer is fair and reasonable to Wentworth
	Shareholders,inthe absence ofa Superior Proposal.
What is the Target’s	The law requires a company that has received a takeover offer
Statement?	to produce a Target’s Statement in response to the Offer. This
	Target’s Statement is made in response to the Bidder’s
	Statement from ARfuels and relates to the offer constituting a
	takeover bid for the acquisition of Wentworth Shares. This
	Target’s Statement contains information to help you decide
	whether or not to accept the Offer for your Wentworth Shares
	under the Bid.
What is the Bidder’s	The Bidder’s Statement contains information on the Offer and
Statement?	the law requires that ARfuels, the bidder, send it to you. The
	Bidder’s Statement has been sent contemporaneously with the
	Target’s Statement toWentworthShareholders.
What are the Wentworth	Each Director of Wentworth has signed a Pre-Bid Agreement in
Directors doing with their	respect of all Wentworth Shares they hold or control,
Wentworth Shares?	representing an aggregate of 7.04% of Wentworth Shares.
	See section8.1 for furtherdetails.
How do I accept the Offer?	Details of how to accept the Offer are set out in section 11.3 of
	theBidder’s Statement.

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**Question **	Answer
What are the consequences	If you accept the Offer, unless withdrawal rights are available
of accepting the Offer now?	(see below), you will give up your right to sell your Wentworth
	Shares on ASX, to accept a superior offer from another bidder if
	such an offer is made or otherwise deal with your Wentworth
	Shareswhile the Offer remains open.
If I accept the Offer, can I	You may only withdraw your acceptance if ARfuels varies the
withdraw my acceptance?	Offer in a way that postpones the time when ARfuels is required
	to satisfy its obligations by more than one month.
What happens if a Superior	If a Superior Proposal for Wentworth emerges, Wentworth
Proposal for Wentworth	Shareholders will be informed through an announcement to
emerges?	ASX. The Wentworth Directors will carefully reconsider the Offer
	and advise you of their recommendation.
	If you have already accepted the Offer at the time that a
	Superior Proposal emerges, you will be unable to accept the
	Superior Proposal unless the Offer lapses. Since the
	announcement of the Offer on 15 November 2012, no
	alternative proposal has emerged.
Can the Offer Period be	While the Offer remains conditional, ARfuels may extend the
extended?	Offer Period at any time before giving notice of the status of the
	conditions. However, if the Offer becomes unconditional (being
	the conditions of the Offer are waived or satisfied), ARfuels may
	extend the Offer Period at any time before the end of the Offer
	Period.
	In addition, there will be an automatic extension of the Offer
	Period if within the last 7 days of the Offer Period:
	� ARfuels improves the consideration offered under the Offer;
	or
	� ARfuels’ voting power in Wentworth Shares increases to
	more than 50%.
	If either of these events occurs, the Offer Period will be
	automatically extended so that it ends 14 days after the date on
	which the event occurs.
What are the conditions to	The Offer conditions are set out in section 11.8 of the Bidder’s
the Offer?	Statement. In summary, the Offer is subject to the following
	conditions:
	� 90% minimum acceptance
	� no prescribed occurrences
	� Wentworth conducting its business in the ordinary course
	� Wentworth not making or declaring, or announcing an
	intention to make or declare, any distribution
	� Wentworth having net cash of at least $14 million at all
	times untilthe end ofthe Offer Period
What happens if the	If the conditions attached to the Offer are not satisfied or waived
conditions of the Offer are	by the end of the offer period, your acceptance of the Offer will
not satisfied or waived?	not result in a binding contract, and cannot be enforced against
	you. You will be free to deal with your Wentworth Shares at your
	discretion.

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**Question **	Answer
What are the risks	If you accept the Offer and become an ARfuels Shareholder,
associated with becoming	your investment will become subject to the risks associated with
an ARfuels Shareholder?	ARfuels’ business.
	Further information about the risks associated with an
	investment in ARfuels is set out in Section 6.2 and in more
	detail in section 8 of the Bidder’s Statement.
Can I be forced to sell my	You cannot be forced to sell your Wentworth Shares unless
Wentworth Shares?	ARfuels acquires a relevant interest in at least 90% of all
	Wentworth Shares. ARfuels will then (and subject to certain
	legal requirements) be entitled to proceed to compulsory
	acquisition of the Wentworth Shares held by Wentworth
	Shareholderswho didnot accept the takeoverbid.
When will I be sent my	If you accept the Offer, and the Offer becomes unconditional,
consideration if I accept the	you will receive the Offer Consideration to which you are
Offer?	entitled at the earlier of:
	� within one month of the later of the date you accept the
	Offer and the date the Offer becomes unconditional; or
	� assuming the conditions of the Offer are satisfied or waived,
	within 21days ofthe end ofthe Offer Period.
What are the tax	If you accept the Offer you may be liable to pay capital gains tax
implications of accepting	or income tax. It is the directors’ understanding (although no
the Offer?	formal advice has been received concerning this matter) that
	CGT roll-over relief should be available to Wentworth
	Shareholders who accept the Offer. Wentworth Shareholders
	should seek independent tax advice, however, prior to
	accepting the Offer.
What if I am a foreign	The Bidder’s Statement provides that ARfuels will only issue
Wentworth Shareholder?	ARfuels Shares to Wentworth Shareholders that accept the
	Offer with an address in Australia or its external territories or
	New Zealand (unless ARfuels otherwise determines). If you are
	a Wentworth Shareholder who has a registered address outside
	of those countries and accept the Offer, the Bidder’s Statement
	provides that your ARfuels Shares will be sold by a nominee
	appointed by ARfuels and the net proceeds of that sale
	forwarded to you.

.

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3 Your choices as a Wentworth Shareholder

Wentworth encourages you to consider your personal risk profile, investment strategy, tax position and financial circumstances before making any decision in relation to your Wentworth Shares. As a Wentworth Shareholder, you currently have three choices available to you.

1. CHOICE 1: Accept the Offer

You may choose to accept the Offer. This is the approach unanimously recommended by your Wentworth Directors in the absence of a Superior Proposal and a Material Adverse Event. Details of the Offer Consideration that you will receive if you accept the Offer are set out in Section 7.1 as well as in the Bidder’s Statement. You will only receive the Offer Consideration if the conditions of the Offer are all either satisfied or waived.

The consequences of accepting the Offer are discussed in Section 7. If you accept the Offer, you will not be able to sell your Wentworth Shares unless, at the time you decide that you no longer wish to accept the Offer, you have the right to withdraw your acceptance and you exercise that right. The limited circumstances in which acceptances of the Offer may be withdrawn are set out in Section 7.5.

Details on how to accept the Offer are set out on page 5 as well as in the Bidder's Statement and the Acceptance Form provided to you by ARfuels.

2. CHOICE 2: Sell Your Wentworth Shares

During the Offer Period you may sell your Wentworth Shares on market for cash if you have not already accepted the Offer for your Wentworth Shares.

Wentworth Shareholders who sell their Wentworth Shares on market:

• (a) may be liable for CGT or income tax on the sale;

• (b) may incur a brokerage charge; and

• (c) will not receive the benefits of the Offer or any potential superior offer from ARfuels or any potential higher competing offer for their Wentworth Shares than has been currently made by ARfuels.

Wentworth Shareholders who wish to sell their Wentworth Shares on market should contact their broker or other professional adviser and their tax adviser to determine the tax implications from such a sale.

3. CHOICE 3: Take no action

If you do not wish to sell your Wentworth Shares and do not wish to accept the Offer, you should take no action. You should note that:

• (a) if you choose not to accept the Offer, ARfuels will not be able to acquire your Wentworth Shares unless the Offer is unconditional and ARfuels holds 90% of the Wentworth Shares at the end of the Offer Period. In this event, ARfuels will become entitled to compulsorily acquire those Wentworth Shares that it does not already own (see Section 7.6 for further information regarding compulsory acquisition);

• (b) if ARfuels acquires more than 50% but less than 90% of the Wentworth Shares and all of the defeating conditions of the Offer are satisfied or waived, and you continue to hold Wentworth Shares, you will be exposed to the risks associated with being a minority Shareholder of Wentworth. Some of these risks are explained in Section 7.7; and

• (c) if the Offer fails and there are no other offers for Wentworth, Wentworth will remain a listed public company. If this occurs, the Wentworth Directors will continue to work to generate value for Wentworth Shareholders.

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4 Wentworth Directors’ Recommendations, Intentions and Interests

4.1 Directors recommendation

Having considered the terms of the Offer and the matters discussed in this Target’s Statement (including the Independent Expert’s Report), each of the Wentworth Directors feels justified in making the following recommendation in relation to the Offer.

Each of the Directors recommends that you ACCEPT the Offer, in the absence of a Superior Proposal and a Material Adverse Event.

In considering whether you wish to follow that recommendation, you should:

• (a) read the whole of this Target’s Statement (including the Independent Expert’s Report) and the Bidder’s Statement;

• (b) consider your individual risk profile, portfolio strategy, tax position and financial circumstances;

• (c) consider your choices set out in Section 3 of this Target’s Statement; and

• (d) consult with your legal, financial or other professional adviser if you believe that is necessary.

4.2 Directors intentions

Each Director of Wentworth has signed a Pre-Bid Agreement in respect of all Wentworth Shares they hold or control, representing an aggregate of 7.04% of Wentworth Shares. See section 8.1 for further details.

4.3 Interest and dealings in Wentworth Shares by Directors

As at the date of this Target’s Statement, the Directors have a Relevant Interest in Wentworth Shares as follows:

**Director **	Wentworth Shares	Nature of Relevant Interest
Vaughan Webber	216,424	Direct
Colin NCowden	5,982,009	Indirect
Hugh W Robertson	5,689,145	Indirect
Nigel WSharp	5,380,724	Indirect

No Director has acquired or disposed of a relevant interest in any Wentworth Shares in the 4 month period ending on the date immediately before the date of this Target’s Statement other than as follows:

• Mr Robertson is a director of Gisborne Park Pty Limited. Gisborne Park Pty Limited acts, inter alia, as the trustee of Mr Robertson’s deceased father’s discretionary trust. Mr Robertson has no beneficial interest in this discretionary trust.

• Gisborne Park Pty Limited disposed of 100,000 Wentworth Shares on 17 October 2012,300,000 Wentworth Shares on 5 November 2012 and 440,000 Wentworth Shares between 7 and 11 December 2012, on market.

4.4 Interest and dealings in ARfuels Shares by Directors

As at the date immediately before the date of this Target’s Statement, neither Wentworth nor any Director had a Relevant Interest in any ARfuels Shares.

No Director has acquired or disposed of a Relevant Interest in any ARfuels Shares in the 4 month period ending on the date immediately before the date of this Target’s Statement other than as follows:

• Hugh Robertson had a Relevant Interest in 2,000,000 ARfuels Shares, which were disposed of on 19 September 2012 on market.

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4.5 Benefits and agreements

(a) Benefits in connection with retirement from office

Other than as set out below, as a result of the Offer, no person has been or will be given any benefit (other than a benefit which can be given without member approval under the Corporations Act) in connection with the retirement of that person, or someone else, from the Board or managerial office of Wentworth.

(b) Agreements connected with or conditional on the Offer

Other than as set out below, there are no agreements made between any Director of Wentworth and any other person in connection with, or conditional upon, the outcome of the Offer other than in their capacity as a holder of Wentworth Shares.

(c) Benefits from ARfuels

Other than as set out below, none of the Directors has agreed to receive, or is entitled to receive, any benefit from ARfuels which is conditional on, or is related to, the Offer, other than in their capacity as a holder of Wentworth Shares.

Mr Vaughan Webber (Wentworth Non-Executive Chairman) has been invited, and will accept the role as an ARfuels director upon successful completion of the Bid.

(d) Material interests of Directors in contracts with ARfuels

None of the Directors has any material interest in any contract entered into by ARfuels.

In the ordinary course of business, ARfuels appointed InvestorFirst Securities Limited (‘Investorfirst’) to act as financial adviser concerning this Offer. Investorfirst is entitled to receive a success fee of $280,000 (deemed to be a market fee), intended to be satisfied by the issue of 18,666,667 ARfuels Shares to it or its nominee at a price of 1.5 cents for each ARfuels Share, payable on the successful completion of the Offer. Vaughan Webber, the non-executive Chairman of Wentworth and Hugh Robertson, non-executive director of Wentworth, are directors of InvestorFirst Limited, the parent entity of Investorfirst.

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5 Information about Wentworth

5.1 Introduction and history

Wentworth was incorporated under the name Wavecrest Holdings Pty Ltd in Australia on 22 September 1997. Wentworth became a public listed company on 27 November 1999 under the name Sales Pursuit Limited. Wentworth’s most recent business was that of real estate property management.

In June 2011, the Wentworth Board announced they would undertake a strategic review of its business. The strategic review concluded that the then current business and associated assets of Wentworth would be best operated outside the listed public company domain. A sub committee of the Wentworth Board was convened and the business and assets discretely marketed for sale.

After due consideration, the Board concluded (subject to shareholder approval), an offer made by Combined Rental Pty Ltd, a company associated with Mr Charles Tarbey (former Executive Director), to acquire Wentworth’s property management business was the most attractive in terms of value and risk and was in the best interests of shareholders. The transaction was approved by shareholders on 15 December 2011 and completed on 23 December 2011.

The 6 months following completion of the transaction were spent actively working to identify a new undertaking for Wentworth. In the course of this activity, against a backdrop of continuing economic uncertainty, it became apparent:

• (a) there were limited quality businesses suitable for Wentworth;

• (b) quality businesses considered by Wentworth were typically at above market valuations and therefore deemed too expensive, particularly given the economic outlook; and

• (c) there were opportunities to invest in entities (both listed and unlisted) at attractive valuations that would likely provide more reliable longer term returns (capital and income) and less volatility through diversification.

On the basis of the above, subject to shareholder and regulatory approval, it was proposed that Wentworth change its main undertaking to that of an investment company. This was approved by shareholders on 6 August 2012.

Since Wentworth became an investment company, an investment committee was formed by the Wentworth Board and regular meetings have been held. To date, Wentworth has continued to hold only cash investments and cash at call. As at 31 October 2012, Wentworth had $14.324 million in cash.

5.2 Capital structure

As at the date of this Target’s Statement, the capital structure of Wentworth is as follows:

Class	Number
Wentworth Shares 223,351,239
Wentworth Options * 15,000,000

• The Wentworth Options are held by Charles Michael Tarbey (former Executive Director of Wentworth). The Wentworth Options have an exercise price of 6 cents and expire no later than 20 January 2013. If exercised, the Offer will extend to any Wentworth Shares issued on their exercise.

5.3 Substantial shareholders

As at the business day prior to the date of this Target’s Statement, the substantial shareholders of Wentworth as notified to the ASX were are follows:

**Shareholder **	Wentworth Shares	Percentage interest
ThorneyHoldingsPtyLtd	54,887,978	24.58%
John Rubino Superannuation Fund	30,745,743	13.77%

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**Shareholder **	Wentworth Shares	Percentage interest
Ticudi Pty Limited	16,716,165	7.48%

5.4 Wentworth Group Structure

As at the date of this Target’s Statement, the group structure of Wentworth is as follows:

Wentworth has two wholly owned subsidiaries; Wentworth Franchisors Pty Limited and Wentworth Group Properties Pty Limited. These entities are dormant and are in the process of being voluntarily liquidated.

5.5 Summary of Wentworth’s assets

As at 31 October 2012, Wentworth had assets of approximately $14.387 million including $14.324 million in cash. As at 30 November 2012, Wentworth had cash of $14.280 million and expects to have over $14 million cash (excluding the exercise price of any options) when the proposed transaction is completed, after allowing for transaction costs and operating expenses.

5.6 Directors

• (a) Vaughan Webber - Non-Executive Chairman

Vaughan Webber is an experienced finance professional with a background in chartered accounting at a major international accountancy firm and more recently in corporate finance servicing Australian capital markets. Vaughan is a director of Anchor Resources Limited (appointed 19 August 2011) and Investorfirst Limited (appointed 19 October 2012). Vaughan was also a director of Golden West Resources Limited (24 July – 26 November 2009) and Style Limited (23 October 2009 – 4 March 2010).

(b) Colin N Cowden - Non-Executive Director Colin Cowden is an Associate of the Institute of Chartered Secretaries, a Certified Practicing Accountant and is a Fellow of the Australian and New Zealand Institution of Insurance and Finance. Colin has over 40 years experience in the insurance industry and has been involved in the management of both private and public companies. Colin was a director of Centamin Egypt Limited until 26 May 2011.

• (c) Hugh W Robertson - Non-Executive Director

Hugh Robertson has over 25 year experience in the stock broking industry and is a director of Rattoon Holdings Limited (delisted 8 March 2011) and Investorfirst Limited (appointed 2 May 2011). Hugh was also a director of NSX Limited until 25 May 2009.

• (d) Nigel W Sharp - Non-Executive Director

Nigel Sharp has over 30 years experience in the property industry including property management, property development, listed property trust management, property valuations and sustainability solutions for property.

5.7 Risks associated with being a Wentworth Shareholder

A number of the risks outlined in Section 8 of the Bidder’s Statement associated with being an ARfuels Shareholder also apply to being a Wentworth Shareholder. Specifically, as they relate to Wentworth, they are market price, economic uncertainties, government legislation policy changes, reliance on key personnel and general market risks.

(a) Risks relevant to Wentworth Shareholders who do not accept the Offer and remain a Shareholder of Wentworth, assuming the Offer has become unconditional:

(i) Less than 100% ownership

It is possible that ARfuels will acquire less than 100% of Wentworth Shares under the Offer. The impact on ARfuels of acquiring less than 100% of Wentworth Shares will depend on the level of ownership acquired. ARfuels may

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not be able to implement all of its intentions for Wentworth if it acquires less than 100% of Wentworth Shares.

(ii) Minority shareholders in Wentworth

Depending on the level of acceptance of the Offer, you will become part of a locked-in minority in Wentworth. In such a case, the liquidity of Wentworth Shares may be materially diminished.

(iii) Delisting from ASX

Subject to the ASX Listing Rules, depending on the level of acceptances of Wentworth Shares received at the end of the Offer Period, ARfuels intends to take steps to have Wentworth removed from the official list of the ASX. ARfuels also intends to vote in favour of any resolution put to Wentworth Shareholders for its delisting if applicable.

(b) General risks relevant to Wentworth Shareholders, assuming the Offer lapses and Wentworth continues as an investment company:

(i) Individual Investment Risk

Individual investments that may be made by Wentworth may fall in value for many reasons such as changes in the entity’s internal operations, management or in its business environment. If this occurs, the value of the net tangible assets of Wentworth will fall which is likely to have a negative effect on Wentworth’s share price.

(ii) Interest Rate Risk

Changes in interest rates can have an impact directly or indirectly on investment valuations and returns on any cash deposits held by Wentworth.

• (iii) Liquidity

Wentworth may invest in unlisted securities or in companies whose securities are thinly traded. Therefore, its ability to sell securities may be restricted.

(iv) Strategic Alliances/Joint Ventures

Wentworth may in the future seek to enter into strategic alliances, with other parties, including joint venturers, some of which may be corporations much larger than Wentworth. There is a risk in managing strategic alliances and ventures with large corporations.

Should other participants in any strategic alliance not act in the best interests of Wentworth, this may have a material adverse effect on Wentworth’s operations.

The Wentworth Directors are unable to predict the risk of financial failure or default by a participant in any strategic alliance or joint venture to which Wentworth may become a party.

(v) Absolute Performance versus Relative Performance

It is the objective of Wentworth to show positive returns on its investment regardless of the underlying movement in value of the investment markets. With such an objective, the value of the investment portfolio cultivated by Wentworth may not change in line with the overall movements in the market and its performance may differ significantly from funds that seek to measure performance against the broader share market.

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6 Information about ARfuels

6.1 Overview of ARfuels

ARfuels is an ASX listed biodiesel company with plants in Victoria, South Australia and Western Australia. In operation since 2005, ARfuels has a combined potential annual fuel production capacity of 150 million litres.

Please refer to sections 1 and 2 of the Bidder’s Statement for detailed information on ARfuels including details in relation to ARfuels Shares.

6.2 Risks associated with becoming an ARfuels Shareholder

There are certain risks associated with holding ARfuels Shares. Those risks are outlined in section 8 of the Bidder’s Statement. In summary they include:

• (a) the sale price of biodiesel is directly linked to the market price of mineral diesel and price fluctuations in the Singaporean benchmark price. Terminal gate prices for mineral diesel regularly fluctuate and are driven by several factors including the price of global crude oil;

• (b) ARfuels’ reliance on renewing current contracts plus the achievement of new sales contracts will be required to achieve stated growth. The introduction of new biodiesel producers to the Australian market or the importation of biodiesel fuel to Australia could result in ARfuels facing increased competition which may adversely affect margins. Whilst the market and demand for alternative and environmentally friendly fuels remains buoyant, any negative view with this sentiment may adversely affect ARfuels;

• (c) the production of biodiesel is based on the conversion of agricultural commodity byproducts into fuel, with ARfuels primary feed stock being tallow and used/waste vegetable oils. ARfuels may be affected should there be significant shortages of raw materials required to manufacture biodiesel;

• (d) ARfuels may be negatively effected by a prolonged downturn in economic conditions and by credit and financial markets;

• (e) ARfuels can be negatively affected by adverse securities investments and share markets and by macro-economic and political factors; and

• (f) changes in industry related policy by the Government may negatively affect the performance of ARfuels.

The Wentworth Directors encourage Wentworth Shareholders to consider section 8 of the Bidder’s Statement before deciding on their course of action in relation to the Offer.

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7 Important information about the Offer

7.1 The Offer

On 15 November 2012, Wentworth and ARfuels announced the Offer, being an offer to Wentworth Shareholders to acquire all of the Wentworth Shares. The consideration being offered to you under the Offer is 5.7 ARfuels Shares for each Wentworth Share you hold.

The Offer is to acquire all Wentworth Shares, including any rights attaching to them. You may only accept the Offer for all of your Wentworth Shares. You cannot accept the Offer for only some of your Wentworth Shares. For further details in relation to the ARfuels Shares you should refer to the Bidder's Statement.

The Offer Consideration will only become payable to you if all of the conditions of the Offer are satisfied or waived. These conditions are summarised in section 11.8 of the Bidder's Statement. In summary they include:

• (a) 90% minimum acceptance;

• (b) no prescribed occurrences;

• (c) Wentworth conducting its business in the ordinary course;

• (d) Wentworth not making or declaring, or announcing an intention to make or declare, any distribution; and

• (e) Wentworth having net cash of at least $14 million at all times until the end of the Offer Period.

Mr Vaughan Webber (Wentworth Non-Executive Chairman) has been invited and will accept the role as an ARfuels director upon successful completion of the Bid.

The Offer is scheduled to close within the timeframe set out in the Bidder's Statement, unless ARfuels extends the Offer Period in accordance with the Corporations Act. ARfuels may be able to withdraw its Offer with the written consent of ASIC, subject to the conditions (if any) specified in such consent.

The Offer will lapse if, at the end of the Offer Period, the conditions to which the Offer is subject are not satisfied or waived. If this occurs then any contracts resulting from acceptance of the Offer by Wentworth Shareholders will become void. If the Offer lapses then Wentworth Shareholders who have accepted the Offer will continue to own the Wentworth Shares that are the subject of any such acceptances and will be free to deal with them as they choose.

7.2 Consequences of conditions not being satisfied

There is a risk that some of the conditions of the Offer may not be satisfied or waived. You should be aware that, even if the conditions of the Offer are not satisfied or are triggered, as appropriate, they may be waived by ARfuels. If any condition is unsatisfied or has been triggered and has not been waived, ARfuels can decide whether or not to proceed with the acquisition of Wentworth Shares under its Offer or allow its Offer to lapse as a result of unsatisfied conditions.

7.3 Notice of status of conditions

ARfuels needs to give a Notice of Status of Conditions by no later than seven days prior to the end of the Offer Period. ARfuels is required to set out in its Notice of Status of Conditions:

• (a) whether the Offer is free of any or all of the conditions of the Offer;

• (b) whether, so far as ARfuels knows, any of the conditions have been fulfilled; and

• (c) ARfuels' then current voting power in Wentworth.

If the Offer Period is extended before the time by which that notice is to be given, the date that ARfuels must give its Notice of Status of Conditions will be taken to be postponed for the same period. In the event of such an extension, ARfuels is required, as soon as reasonably practicable

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after the extension, to give a notice to the ASX and Wentworth that states the new date for giving the Notice of Status of Conditions.

In addition, if a condition of the Offer is fulfilled during the Offer Period but before the date on which the Notice of Status of Conditions is required to be given, ARfuels must, as soon as practicable, give the ASX and Wentworth a notice that states that the particular condition has been fulfilled.

7.4 Extension of the Offer Period

ARfuels may extend the Offer Period at any time before giving the Notice of Status of Conditions while the Offer is subject to conditions. However, if the Offer is unconditional (that is, all the conditions are satisfied or waived), ARfuels may extend the Offer Period at any time before the end of the Offer Period.

In addition, there will be an automatic extension of the Offer Period if, within the last seven days of the Offer Period, ARfuels improves the consideration under the Offer or ARfuels’ voting power in Wentworth increases to more than 50%. If either of these two events occurs within the last seven days of the Offer Period, the Offer Period is automatically extended so that it ends 14 days after the relevant event occurs.

7.5

Effect of acceptance and rights of withdrawal

Accepting the Offer would (subject to the withdrawal rights discussed below):

• (a) prevent you from accepting any higher takeover bid that may be made by a third party or any alternative transaction proposal that may be recommended by the Wentworth Directors;

• (b) relinquish control of your Wentworth Shares to ARfuels with no guarantee of receipt of the Offer Consideration until the Offer becomes, or is declared, unconditional;

• (c) if the conditions of its Offer are not satisfied, give ARfuels the option to either keep your Wentworth Shares (by waiving the conditions) or allow the Offer to lapse (as discussed in Section 7.2); and

• (d) prevent you from selling your Wentworth Shares.

If you accept the Wentworth Offer, you will have a right to withdraw your acceptance in some circumstances. Those withdrawal rights comprise general statutory withdrawal rights under the Corporations Act. In summary, under the Corporations Act, you may withdraw your acceptance of the Offer if the Offer is conditional and ARfuels varies its Offer in a way that postpones, for more than one month, the time when ARfuels needs to meet its obligations under the Offer. This will occur if ARfuels extends the Offer Period by more than one month and the Offer is still subject to conditions. In those circumstances, you will have a period of one month after the date that the Offer is extended to withdraw your acceptance. Your statutory withdrawal rights will terminate upon the expiry of that one month period, although if the Offer Period is then further extended you will receive further statutory withdrawal rights (that is, a further month long withdrawal right for each and every extension thereafter provided the Offer is still conditional).

If ARfuels improves the Offer Consideration, all Wentworth Shareholders who accept the Offer (whether or not they have accepted prior to that improvement) will be entitled to the benefit of that improved consideration.

The effect of acceptance of the Offer is set out in more detail in section 11.5 of the Bidder's Statement. You should read those provisions in full to understand the effect that acceptance will have on your ability to exercise the rights attaching to your Wentworth Shares and the representations and warranties that you are deemed to give to ARfuels by accepting the Offer.

7.6 Compulsory acquisition

ARfuels may compulsorily acquire all remaining Wentworth Shares under Part 6A.1 of the Corporations Act if, by the end of the Offer Period, ARfuels acquires a Relevant Interest in at least 90% or more of the Wentworth Shares and has acquired 75% of the Wentworth Shares which ARfuels offered to acquire under the Offer.

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ARfuels has stated in its Bidder's Statement that it intends to compulsorily acquire the remaining Wentworth Shares if it becomes entitled to do so. Compulsory acquisition is commenced by lodging a compulsory acquisition notice with ASIC and sending the notice to the ASX and all remaining Wentworth Shareholders who did not accept the Offer. Wentworth Shareholders have statutory rights to challenge compulsory acquisition, but if ARfuels establishes to the satisfaction of a court that the consideration being offered for the securities represents fair value, the court must approve the compulsory acquisition on those terms. Wentworth Shareholders should be aware that if their Wentworth Shares are compulsorily acquired, they are not likely to receive payment until at least one month after the compulsory acquisition notice is issued by ARfuels.

7.7 Implications if ARfuels acquires less than 90% of the Wentworth Shares

In Section 6 of the Bidder's Statement, ARfuels sets out its intentions if it were to declare the Offer free from the 90% minimum acceptance condition and gain effective control of Wentworth, but not receive sufficient acceptances to proceed to compulsory acquisition.

ARfuels has stated that it reserves the right to declare its Offer free from the 90% minimum acceptance condition (or any other condition).

If ARfuels obtains a majority shareholding in Wentworth of less than 90%, those Wentworth Shareholders who do not accept the Offer will become minority shareholders in Wentworth. This has a number of possible implications, including:

• (a) ARfuels will be in a position to cast the majority of votes at a general meeting of Wentworth. This will enable it to control the composition of the Wentworth Board and senior management, and control the strategic direction of the businesses of Wentworth and its subsidiaries, subject to the fiduciary duties of the newly composed Wentworth Board;

• (b) subject to the ASX Listing Rules, depending on the level of acceptances of Wentworth Shares received at the end of the Offer Period, ARfuels intends to take steps to have Wentworth removed from the official list of the ASX. ARfuels also intends to vote in favour of any resolution put to Wentworth Shareholders for its delisting if applicable;

• (c) under the Merger Implementation Deed, if the Offer is unconditional, Wentworth must reconstitute the Wentworth Board in accordance with ARfuels’ instructions until such time as ARfuels is entitled to proceed to compulsory acquisition and ARfuels has expressed the desire to exercise this right; and

• (d) it is possible that, even if ARfuels is not entitled to proceed to compulsory acquisition of minority holdings after the end of the Offer Period under Part 6A.1 of the Corporations Act, it may subsequently become entitled to exercise rights of general compulsory acquisition under Part 6D.2 of the Corporations Act. For example, this may occur as a result of acquisitions of Wentworth Shares in reliance on the “3% creep” exception in item 9 of Section 611 of the Corporations Act. If this opportunity arises, ARfuels has stated that it intends to exercise those rights to the extent it is able to do so.

7.8

Tax implications

You should note that scrip-for-scrip capital gains tax roll-over relief should be available if you accept the Offer. The tax consequences for you will depend on your individual circumstances. Section 9 of the Bidder’s Statement sets out a general overview of the Australian tax implications of a Wentworth Shareholder accepting the Offer. You should not rely on it as advice on your own affairs. It does not deal with the position of all Wentworth Shareholders. You should seek your own independent financial and taxation advice, which takes into account your personal circumstances, before making a decision as to whether or not to accept the Offer for your Wentworth Shares.

7.9

Foreign ineligible shareholders

Wentworth Shareholders who are Foreign Ineligible Shareholders will not be entitled to receive ARfuels Shares as consideration for their Wentworth Shares pursuant to the Offer, unless ARfuels otherwise determines. A Wentworth Shareholder is a Foreign Ineligible Shareholder for

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the purposes of the Offer if their address as shown in the register of members of ARfuels is in a jurisdiction other than Australia or its external territories or New Zealand (unless ARfuels determines otherwise). However, such a person will not be a Foreign Ineligible Shareholder if ARfuels is satisfied that it is not legally or practically constrained from making the Offer to a Wentworth Shareholder in the relevant jurisdiction and to issue ARfuels Shares to such a shareholder on acceptance of the Offer, and that it is lawful for the shareholder to accept the Offer in such circumstances in the relevant jurisdiction. Notwithstanding anything else in this Bidder's Statement, ARfuels is not under any obligation to spend any money, or undertake any action, in order to satisfy itself concerning any of these matters.

The ARfuels Shares which would otherwise have been issued to Foreign Ineligible Shareholders will instead be issued to a nominee approved by ASIC, who will sell these shares. The net proceeds of the sale of such shares will then be remitted to the relevant Foreign Ineligible Shareholders. See section 11.7 of the Bidder’s Statement for further details.

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8 Additional Information

8.1 Pre-bid Agreements

ARfuels has entered into pre-bid acceptance agreements with a number of Wentworth Shareholders (including all Wentworth Directors) ( Pre-Bid Agreements ). Under the Pre-Bid Agreements, certain Wentworth Shareholders agreed that if ARfuels publicly announces the Offer at no less than 5.7 ARfuels Shares for each Wentworth Share and on conditions no less favourable than the conditions set out in section 11.8 of the Bidder’s Statement, those Wentworth Shareholders will accept the Offer in respect of 43,349,750 Wentworth Shares, representing 19.4% of Wentworth’s share capital, within five Business Days of the Offer being open for acceptance.

8.2 Merger implementation deed, exclusivity and break fee arrangements

As announced on 15 November 2012, Wentworth and ARfuels have entered into a Merger Implementation Deed in relation to the Offer. A full copy of the Merger Implementation Deed was announced by both Wentworth and ARfuels to ASX and is available on the ASX website www.asx.com.au.

Under the Merger Implementation Deed, Wentworth entered into an exclusivity and break fee agreement with ARfuels. The exclusivity arrangements are standard no-shop and no-talk agreements. These arrangements are summarised in section 10.1 of the Bidder's Statement and are set out in full in the Merger Implementation Deed.

8.3 Transaction expenses

The Offer has resulted in Wentworth incurring expenses that would not otherwise arise from trading. These transaction-related expenses are anticipated to be approximately $100,000 subject to any change or new development in the transaction. These expenses include fees incurred in obtaining legal, financial and tax advice in connection with the Offer, in relation to the preparation of the Independent Expert’s Report and in relation to the printing and despatch of this Target’s Statement (including the Independent Expert’s Report) and related documents, and associated share registry costs.

These transaction-related expenses will have a negative impact on the after tax earnings of Wentworth for the current financial year ending 30 June 2013.

8.4 Disclosing entity

Wentworth is a disclosing entity and as such is subject to regular reporting and disclosure obligations under the Corporations Act and ASX Listing Rules. Copies of the documents filed with the ASX may be obtained from the ASX website at www.asx.com.au or Wentworth’s website at www.wentworthholdings.com.au.

Copies of the documents lodged with ASIC in relation to Wentworth may be obtained from, or inspected at, an ASIC office.

Wentworth Shareholders may obtain a copy of:

• (a) the 2012 Annual Report of Wentworth;

• (b) the constitution of Wentworth; and

• (c) any document lodged by Wentworth with the ASX between the release of the 2012 Annual Report to the ASX and the date of this Target’s Statement (a list of which is included in a schedule to this Target’s Statement),

free of charge upon request by contacting Wentworth’s secretary (Ron Hollands – 0420 961 617) or on the ASX website at www.asx.com.au. Copies of documents lodged with ASIC in relation to Wentworth may be obtained from, or inspected at, an ASIC office for a fee.

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8.5 Wentworth Share Trading

Wentworth is a disclosing entity for the purposes of the Corporations Act and the Wentworth Shares are enhanced disclosure securities quoted on ASX.

The highest and lowest market sale prices of Wentworth Shares on ASX during the 4 months immediately preceding the date of lodgement of this Target’s Statement with ASIC and the respective dates of those sales were:

Highest: 5.9 cents per Share 11 December 2012 Lowest: 5.0 cents per Share 4 October2012

The latest available closing sale price of Wentworth Shares on ASX prior to the lodgement of this Target’s Statement with the ASIC was 5.9 cents on 14 December 2012.

8.6 Material changes in financial position of Wentworth

Wentworth’s financial report for the year ending 30 June 2012 is available on Wentworth’s website. If you do not have internet access, you can obtain a copy of these reports by contacting Wentworth’s secretary, Ron Hollands on 0420 961 617.

A consolidated statement of financial position as at 30 June 2012 is set out in Schedule 2 of this Target’s Statement. It is an extract only and full financial accounts for Wentworth, which include the notes to the accounts, can be found in Wentworth’s 2012 annual report released to ASX on 28 September 2012. To the knowledge of each of the Wentworth Directors, the financial position of Wentworth has not materially changed since 30 June 2012 (the date on which the most recent annual financial report was prepared).

8.7 Material litigation

The Wentworth Directors do not believe that there is any current dispute or litigation against Wentworth or its Subsidiaries which is material in the context of the Wentworth Group taken as a whole, and the Wentworth Directors have no knowledge of any such potential material dispute or litigation.

8.8 Other information relevant to the making of a decision by Wentworth Shareholders

There is no other information material to the making of a decision by a Wentworth Shareholder whether or not to accept the Offer, being information that is within the knowledge of any of the Wentworth Directors that has not previously been disclosed to Wentworth Shareholders, other than as set out in the Bidder’s Statement and elsewhere in this Target’s Statement and the Independent Expert’s Report.

The Directors have assumed, for the purposes of preparing this Target’s Statement, that the information in the Bidder’s Statement is accurate (unless they have expressly indicated otherwise in this Target’s Statement). However, the Directors do not take any responsibility for the contents of the Bidder’s Statement and are not to be taken as endorsing, in any way, any or all statements contained in it.

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9 Consents and Approval

9.1 Consents and disclaimers

• (a) This Target’s Statement contains statements made by, or statements based on statements made by, each of the Wentworth Directors. Each of the Wentworth Directors have consented to the inclusion of each such statement in the form and context in which the statements appear and have not withdrawn that consent at the date of this Target’s Statement.

• (b) This Target’s Statement is accompanied by the Independent Expert’s Report and contains statements made by, or statements based on statements made by, the Independent Expert. The Independent Expert has consented to the annexure of the Independent Expert’s Report and the inclusion of each such statement in the form and context in which the statements appear and has not withdrawn that consent at the date of this Target’s Statement.

• (c) Mills Oakley has given and has not, before the date of this Target’s Statement, withdrawn its consent to the inclusion of its name and to all references to it in this Target’s Statement in the form and context in which it appears and does not make, or purport to make, any statement in this Target’s Statement or any statement on which a statement in this Target’s Statement is based and to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Target’s Statement.

• (d) ARfuels has consented to be named in this Target’s Statement in the form and context in which it is named and has not withdrawn that consent as at the date of this Target’s Statement.

9.2 Approval

This Target's Statement has been approved by a resolution of the Wentworth Directors.

Date: 18 December 2012

Signed for and on behalf of

Wentworth Holdings Limited

==> picture [114 x 36] intentionally omitted <==

Vaughan Webber Non-Executive Chairman

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10 Definitions and Interpretation

10.1 Defined terms

Where the following terms are used in this Target’s Statement they have the following meanings:

Term	**Definition **
Acceptance Form	The transfer and acceptance form enclosed with the Bidder's
	Statement.
Adviser	A financial, legal, accounting, technical, or other professional or
	expert adviserto a person.
Announcement Date	The date of the announcement of the offer to acquire all of the
	sharesin WentworthbyARfuels, being15November 2012.
ARfuels	Australian Renewable Fuels Limited ABN 66 096 782 188.
ARfuels Board	The board ofdirectors of ARfuels.
**ARfuels Director **	A director of ARfuels.
ARfuels Group	ARfuels andits Subsidiaries.
ARfuels Option	An option to subscribe for an ARfuels Share, details of which are
	set outinsection 2.2(b) oftheBidder’s Statement.
ARfuels Share	A fully paid ordinary shareinthe capitalof ARfuels.
**ARfuels Shareholder **	A person holding ARfuels Shares.
ASIC	theAustralianSecurities andInvestments Commission
ASX	ASX Limited, or the Australian Securities Exchange, as the context
	requires.
ASX Listing Rules	The listing rules of the ASX.
ASX Settlement	ASXSettlementPtyLimited.
ASX Settlement Rules	The operating rules of the settlement facility provided by ASX
	Settlement.
Bid	An off-market takeover bid in accordance with the Corporations
	Actin respect ofalloftheWentworthShares.
Bid Conditions	Conditions of the Offer which are set out in section 11.9 of the
	Bidder’s Statement.
Bidder’s Statement	The statement of ARfuels under Part 6.5 Division 2 of the
	CorporationsActrelating to the Offer.
**Broker **	A person who is a share broker and participant in CHESS.
Business Day	A day which is not a Saturday, Sunday or public holiday in
	Melbourne, Victoria.
**CGT **	Capitalgains tax.
CHESS	The Clearing House Electronic Subregister System operated by
	ASX Settlement, which provides for the electronic transfer,
	settlement and registration of securities.
CHESS Holding	A holding ofshares onthe CHESS Subregisterof Wentworth.
**CHESS Subregister **	Has themeaning set outintheASXSettlement OperatingRules.

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Term	**Definition **
Closing Date	The closing date of the Offer as set out in section 11.2 of the
	Bidder’s Statement.
Competing Proposal	Any expression of interest, offer or proposal by any person (other
	than ARfuels or its associates):
	(a) to consider or enter into any transaction which, if ultimately
	completed, will have the result that;
	(i) any person or two or more persons who are associates
	(other than ARfuels or its associates) will, or would
	reasonably be expected to, acquire voting power in 50% or
	more of Wentworth Shares; or
	(ii) a person (other than ARfuels or its associates) will, or
	would reasonably be expected to, acquire control of
	Wentworth, within the meaning of section 50AA of the
	Corporations Act,
	including by way of a takeover bid, scheme of
	arrangement, amalgamation, merger, capital
	reconstruction, consolidation, shareholder-approved
	Wentworth Share acquisition or issuance, share buy-back
	or repurchase, reverse takeover, establishment of a new
	holding entity for Wentworth or any other transaction or
	arrangement with Wentworth;
	(b) to acquire, have a right to acquire or obtain an economic
	interest in (whether directly or indirectly) all or a substantial
	part of the assets or business of the Wentworth Group; or
	(c) to form a dual listed company structure, stapled security
	structure or other form of synthetic merger having the same
	or substantially the same effect as a takeover bid for, or
	scheme of arrangement or merger in respect of,
	Wentworth.
Controlling Participant	Has themeaning set outintheASXSettlement OperatingRules.
Corporations Act	_Corporations Act 2001 (Cth). _
Foreign Ineligible	A Wentworth Shareholder whose address as shown in the register
Shareholder	of members of Wentworth is in a jurisdiction other than Australia or
	its external territories or New Zealand, unless ARfuels otherwise
	determines (in its absolute discretion) after being satisfied that it is
	not unlawful, not unduly onerous and not unduly impracticable to
	make the Offer to a Wentworth Shareholder in the relevant
	jurisdiction and to issue ARfuels Shares to such a Wentworth
	Shareholder on acceptance of the Offer, and that it is not unlawful
	for such an Wentworth Shareholder to accept the Offer in such
	circumstancesintherelevant jurisdiction.
Independent Expert	Leadenhall Corporate Advisory Pty Ltd appointed by Wentworth to
	prepare an expert's report to be included in this Target's
	Statement.
Issuer Sponsored	A holding of Wentworth Shares on Wentworth’s issuer sponsored
Holding	subregister.

Wentworth Holdings Limited - Target’s Statement

Page 26

Term	**Definition **
Material Adverse Event	Any change, event, effect, occurrence or state of facts that is, or
	expected to be, material and adverse to the assets, liabilities
	(including contingent liabilities that may arise through outstanding,
	pending or threatened litigation or otherwise), business,
	operations, financial condition or prospects of ARfuels or any of its
	subsidiaries takenas awhole.
Melbourne Time	Eastern Daylight Savings Time in Melbourne, Victoria.
Merged Group	The combination of ARfuels and Wentworth and their related
	bodies corporate, which will exist as a result of the Offer, should
	the proposedmergerproceed toits conclusion.
Merger Implementation	The Merger Implementation Deed entered into between
Deed	WentworthandARfuels on 13November 2012.
Offer	The offer for Wentworth Shares made under the Bid and the terms
	and conditions containedinsection 11oftheBidder’s Statement.
Offer Consideration	The consideration payable under the Offer as detailed in section 7
	oftheBidder’s Statement.
Offer Period	The period during which the Offer will remain open for acceptance
	inaccordancewithsection 11.2oftheBidder’s Statement.
Pre-Bid Agreement	Has the meaning given in Section 8.1 of this Target's Statement.
Relevant Interest	Has the same meaning as given in sections 608 and 609 of the
	Corporations Act.
Subsidiary	Has the same meaning as in the Corporations Act and includes a
	controlled entity of the relevant person.
Superior Proposal	A Competing Proposal which the Wentworth Board in good faith
	determines is, or is reasonably likely to result in, a proposal by the
	person making the Competing Proposal that is more favourable to
	Wentworth Shareholders than the Offer, taking into account all
	terms and conditions of the Competing Proposal and having
	obtainedwrittenadvicefrom itsfinancialadvisers.
Target’s Statement	This target's statement prepared by Wentworth in accordance with
	the CorporationsActin response to theBid.
**Wentworth **	Wentworth Holdings Limited ABN 41 080 167 264.
Wentworth Board	The board ofdirectors of Wentworth.
**Wentworth Director **	Adirectorof Wentworth.
Wentworth Group	Wentworth and its Subsidiaries.
Wentworth Share	A fully paid ordinary shareinthe capitalof Wentworth.
Wentworth	A person holding Wentworth Shares.
**Shareholder **

10.2 Interpretation

In this Target’s Statement, headings and boldings are for convenience only and do not affect the interpretation of this Target’s Statement, and unless the context requires otherwise:

• (a) other words and phrases have the meaning (if any) given to them in the Corporations Act;

• (b) words importing a gender include any gender;

Wentworth Holdings Limited - Target’s Statement

Page 27

• (c) words importing the singular include the plural and vice versa;

• (d) other parts of speech and grammatical forms of a word or phrase defined in this Target’s Statement have a corresponding meaning;

• (e) an expression importing a natural person includes any company, partnership, joint venture, association, corporation or other body corporate and vice versa;

• (f) a reference to a section, clause, annexure and schedule is a reference to a section of, clause of and an annexure and schedule to this Target’s Statement as relevant;

• (g) a reference to any statute, regulation, proclamation, ordinance or by-law includes all statutes, regulations, proclamations, ordinances, or by-laws amending, varying, consolidating or replacing it and a reference to a statute includes all regulations, proclamations, ordinances and by-laws issued under that statute;

• (h) a reference to a document includes all amendments or supplements to, or replacements or novations of, that document;

• (i) a reference to a body (including an institute, association or authority), whether statutory or not:

• (i) that ceases to exist; or

• (ii) the powers or functions of which are transferred to another body, is a reference to the body that replaces it or substantially succeeds to its powers or functions;

• (j) a reference to time is a reference to Melbourne Time; and

• (k) a reference to dollars, $, A$, AUD, cents, ¢ and currency is a reference to the lawful currency of the Commonwealth of Australia.

Wentworth Holdings Limited - Target’s Statement

Page 28

Schedule 1 Announcements since lodgement of 2012 Annual Report

Date Announcement title
12/12/2012 Change of Director's Interest Notice
05/12/2012 Net Tangible Asset Backing
27/11/2012 Results of Meeting
23/11/2012 Response to ASX Diversity Policy
19/11/2012 Letter to Shareholders
15/11/2012 Becoming a substantial holder from ARW
15/11/2012 ARW: Merger Implementation Deed
15/11/2012 ARW: Merger Announcement
13/11/2012 Trading Halt Request
13/11/2012 Trading Halt
08/11/2012 Net Tangible Asset Backing
05/11/2012 Change of Director's Interest Notice
23/10/2012 Notice of Annual General Meeting/Proxy Form
22/10/2012 Final share buy-back notice - Appendix 3F
17/10/2012 Change of Director's Interest Notice
16/10/2012 Net Tangible Asset Backing

Wentworth Holdings Limited - Target’s Statement

Page 29

Schedule 2 Wentworth consolidated statement of financial position

position
	30 June 2012 30 June 2011 $’000 $’000
Assets Current Assets Cash and cash equivalents Trade and other receivables Other current assets Total Current Assets Non Current Assets Plant and equipment Goodwill Other intangible assets Other financial assets Deferred tax assets Total Non Current Assets Total Assets Liabilities Current Liabilities Trade and other payables Borrowings Provisions Income tax Total Current Liabilities Non Current Liabilities Borrowings Provisions Total Non Current Liabilities Total Liabilities Net Assets Equity Capital and reserves Issued capital Reserves Accumulated losses Equity attributable to owners of the Company Total Equity	13,937 740 780 255 174 325
	14,891 1,320
	- 230 - 9,801 - 6,003 - 4 - 1,585
	- 17,623
	14,891 18,943
	157 796 - 648 11 1,562 - 576
	168 3,582
	- 3,042 - 86
	- 3,128
	168 6,710
	14,723 12,233
	78,602 78,763 531 472 (64,410) (67,002)
	14,723 12,233
	14,723 12,233

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Page 30

Annexure A Independent Expert’s Report

Wentworth Holdings Limited - Target’s Statement

Page 31

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WENTWORTH HOLDINGS LIMITED Proposed Merger with Australian Renewable Fuels Limited

Independent Expert’s Report and Financial Services Guide

17 December 2012

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17 December 2012

The Directors Wentworth Holdings Limited Level 29, 55 Collins Street Melbourne VIC 3000

Dear Directors,

Independent Expert’s Report for Wentworth Holdings Limited

1. Introduction

Wentworth Holdings Limited (“ Wentworth ”) is a public company listed on the Australian Securities Exchange (“ ASX ”). Since 23 December 2011, after announcing to the market the completion of the sale of its real estate property management business and associated assets/liabilities, Wentworth’s board has actively sought a new undertaking. Australian Renewable Fuels Limited (“ ARW ”) approached Wentworth with a proposal and, after each party conducted due diligence on the other, the Wentworth board agreed to a proposed merger with ARW by way of an off-market takeover bid (“ The Proposed Transaction ”).

ARW’s principal activity involves the production and sale of biodiesel. In November 2011, ARW completed the acquisition of Biodiesel Producers Limited (“ BPL ”) to enhance its production capabilities. This increased the capacity of ARW to a total of 150 million litres per annum. ARW has three production facilities nationwide, namely Barnawartha (Victoria), Picton (Western Australia) and Largs Bay (South Australia).

Wentworth and ARW have agreed the terms of a proposed merger comprising a scrip offer by ARW for all the issued shares in Wentworth on the basis of 5.7 ARW shares for each Wentworth share (“ The Effective Consideration ”). This will result in Wentworth shareholders (“ Shareholders ”) owning approximately 36% in the combined entity of Wentworth and ARW (“ The Proposed Merged Entity ”).

The merger was unanimously recommended by the directors of Wentworth (in the absence of a superior proposal or a material adverse event) and will be implemented by way of an off-market takeover of Wentworth by ARW. ARW entered into pre-bid acceptance agreements with certain shareholders and directors of Wentworth for approximately 19% of Wentworth’s issued shares. On full acceptance, the merger will provide ARW with a cash injection of approximately $14 million to repay debt, fund working capital and substantially strengthen its balance sheet.

The Proposed Transaction is subject to a number of conditions including:

• 90.0% minimum acceptance;

• Wentworth maintaining a net cash balance above $14 million at all times until the end of the offer period; and

• no prescribed occurrences.

Further details on the terms of the Proposed Transaction are provided in Section 1 of this report.

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Wentworth Holdings Limited Independent Expert’s Report and Financial Services Guide 17 December 2012

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2. Purpose of the Report

Wentworth has engaged Leadenhall Corporate Advisory Pty Ltd (“ Leadenhall ”) to prepare an independent expert’s report (“ IER ”) to evaluate whether the Proposed Transaction is fair and reasonable to current shareholders of Wentworth. The IER is to accompany the Target’s Statement to be issued by Wentworth under Part 6.5 of the Corporations Act in response to the takeover bid made by ARW that will be sent to Shareholders. Our report cannot be used for any other purpose unless Leadenhall has provided written consent. We are not responsible to Wentworth, or any other third party, whether for our negligence or otherwise, if this report is used by any other party or for any other purpose.

Further details on the purpose of this report are provided in Section 2.1 of this report.

3. Basis of Evaluation

In order to assess whether the Proposed Transaction is fair and reasonable we have:

• assessed whether the Proposed Transaction is fair by determining whether the value of the Effective Consideration offered is equal to, or greater than, our assessed Fair Market Value of Wentworth; and

• assessed it as reasonable if it is fair, or, despite not being fair, the expected benefits to Shareholders outweigh the disadvantages that may result from the Proposed Transaction.

The Effective Consideration will be shares in the merged ARW / Wentworth entity. We have referred to this combined entity as the Proposed Merged Entity.

4. Summary and Conclusion

The Proposed Transaction is Fair

The Proposed Transaction is fair because the value of the Effective Consideration offered is within the range of the value of a Wentworth share.

Value of Wentworth on a standalone basis

We have assessed the value of a Wentworth share before the Proposed Transaction, on a control basis, to be in the order of 6.37 cents per share. We have estimated the Fair Market Value of Wentworth on a going concern basis using the Net Tangible Assets methodology (“ NTA ”). We have also considered the reasonableness of this value by reference to recent trading in Wentworth shares. Further details of our valuation of Wentworth are provided in Section 8 of this report.

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Value of the Effective Consideration Offered

The Effective Consideration offered to Shareholders will be 5.7 ARW shares for each Wentworth share. The components of the Effective Consideration are detailed in Table 1 below.

Table 1: Components of Effective consideration

Table 1: Components of Effective consideration
	Low $ ‘000 High $ ‘000 30,379 41,833 15,183 15,183
Value of equity in ARW on a control basis (Note 1) Add: Value of Wentworth’s NTA on a control basis Value of Proposed Merged Entity on a control basis Less: Discount for Lack of Control Value of Proposed Merged Entity on a listed portfolio basis Number of ARW shares on issue, including options (millions) (Note 2) Number of Wentworth shares on issue (millions) (Note 3) Number of ARW shares to be issued per Wentworth share New ARW shares to be issued to Wentworth shareholders Total ARW shares on issue post Proposed Transaction (million) Value per ARW share post Proposed Transaction (cents) Number of ARW shares issued per Wentworth share Value of Effective Consideration per share (cents)
	45,562 57,016 20% 15%
	36,450 48,464
	2,641.3 2,641.3 238.4 238.4 5.7 5.7 1,358.6 1,358.6
	3,999.9 3,999.9
	0.91 1.21 5.7 5.7
	5.19 6.91
Source: Leadenhall analysis Notes:

1. Includes notional proceeds from exercise of in-the-money options

2. 2,441.3 million shares and 200 million options which are in-the-money (see section 9.12 for further details)

3. 223.4 million shares and 15 million options (see section 8.2 for further details)

Shareholding in the Proposed Merged Entity

Should the Proposed Transaction proceed, the existing shareholders of Wentworth would own 35.75% of the Proposed Merged Entity, while the current shareholders of ARW would hold the remaining 64.25% as shown in Table 2 below.

Table 2: Post Proposed Transaction Holdings

Table 2: Post Proposed Transaction Holdings
	Number (millions) % 2,441.3 64.25% 1,358.6 35.75%
Number of ARW shares on issue New ARW shares issued to Wentworth shareholders Total ARW shares on issue post Proposed Transaction
	3,799.9 100%

Source: Leadenhall analysis Notes:

1. Assumes that outstanding Wentworth options are exercised before the Offer close date

We have applied the discounted cash flow “ DCF ” methodology in determining the value of ARW. In applying the discounted cash flow methodology, we applied a nominal post-tax discount rate in the range from 15.1% to 18.2% to discount projected after tax cash flows to determine their present value. This yielded an equity value of $30.4 million to $41.8 million, for ARW on a controlling basis before the Proposed Transaction (including the notional proceeds from exercising options which are in-the-money at our selected valuation range).

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We cross-checked our valuation range for ARW derived using the DCF methodology by determining the implied multiples of ARW’s forecast earnings and comparing the multiples to comparable companies. The implied earnings multiples were consistent with, although slightly higher than the comparable companies’ multiples due to ARW’s forecast growth being higher.

As a result of the analysis discussed above, we have determined the Fair Market Value of the equity in the Proposed Merged Entity on a listed portfolio basis to be in the range from $36.5 million to $48.5 million, after including the value of Wentworth’s Net Tangible Assets and applying a discount for lack of control in the range from 15% to 20%.

In determining the value of the Effective Consideration per share, we have considered the total number of ARW shares on issue post Proposed Transaction, after new ARW shares are issued to Wentworth shareholders.

Based on this analysis, we have assessed the value per share of Effective Consideration offered to be in the range from 5.19 cents to 6.91 cents per Wentworth share. Further details of our valuation of the Effective Consideration are provided in Section 10 of this report.

Conclusion on Fairness

We set out below in Table 3 a comparison of our assessed Fair Market Value of Wentworth with our assessed Fair Market Value of the Effective Consideration offered.

Table 3: Comparison of the Effective Consideration offered with the value of Wentworth

Reference	Low (cents) High (cents) 5.19 6.91 6.37 6.37
Fair Market Value of the Effective Consideration per share Table 1 Fair Market Value per issued share in Wentworth Table 17 Difference
	(1.18) 0.54

Source: Leadenhall analysis

Since the value of a Wentworth share is within the range of the value of the Effective Consideration offered, the Proposed Transaction is fair to Shareholders.

The Proposed Transaction is Reasonable

We have defined the Proposed Transaction as being reasonable if it is fair, or, if despite not being fair, the overall advantages of the proposal outweigh its disadvantages from the perspective of Shareholders. We have therefore considered the following advantages and disadvantages to Shareholders in assessing the reasonableness of the Proposed Transaction.

Advantages of the Proposed Transaction

We set out below the main advantages to Shareholders of approving the Proposed Transaction:

• Active business operation – the Proposed Transaction will offer Shareholders an opportunity to be involved in a company with an ongoing business operation, growth prospects and access to an experienced and qualified management team with a proven track record in operating biodiesel plants.

• Additional growth opportunities – ARW has identified and has started exploring opportunities for the sale and off take of output from its Picton and Largs Bay plants.

• Accumulated tax losses – ARW has not been profitable historically and therefore has accumulated a tax loss balance of $64 million loss that may be used to offset against future tax payable, subject to satisfying relevant taxation regulations.

• Increased liquidity – the Proposed Merged Entity is likely to have a market capitalisation significantly in excess of the current market capitalisation of Wentworth. This may attract greater analyst coverage and may enhance the profile of the Proposed Merged Entity and therefore should result in increased liquidity and greater trading depth than Wentworth on a standalone basis.

• Alternative options – no formal alternative offers or approaches by potential acquirers have been received subsequent to the announcement of the Proposed Transaction. In the absence of a superior offer, Shareholders are unlikely to realise their shares in Wentworth for an amount in excess of the Effective Consideration in the foreseeable future.

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Disadvantages of the Proposed Transaction

The main disadvantages to Shareholders of the Proposed Transaction are summarised below:

• Different business from that of Wentworth – the Proposed Merged Entity will be a biodiesel processing company. It will expose Shareholders to additional risks such as technology risk, regulatory risk and commodity price risk.

• Loss of control – after the Proposed Transaction, Shareholders will own 35.75% of the Proposed Merged Entity. The majority of the shares in the Proposed Merged Entity (64.25%) will be held by the existing shareholders of ARW. They could therefore become a controlling shareholder group with the ability to control the assets and the strategic direction of the company.

• Use of cash – a significant part of the $14 million cash held by Wentworth will be used to pay off bank overdrafts ($6.8 million as at 31 October 2012) and the amount due for the acquisition of BPL ($3.4 million). ARW will still have over $14 million of debt (relating to a convertible note) subsequent to the Proposed Transaction.

• No value for listed shell – companies in Wentworth’s position are often able to obtain a premium for having a “listed shell” which can be in the order of $1 million. Since ARW is already listed it has no need for Wentworth’s listed status and hence Shareholders will forego the opportunity to receive a premium over its NTA.

• Commodity product – biodiesel is essentially a commodity product. A commodity type business generally does not have any business monopoly or competitive advantage in the market with its product. It does leave room for competitors to enter the market with similar products, leading to a fall in prices and affecting company profits.

• Depends on Government Tax Rebates – A change in the government tax policy could affect ARW’s operations adversely. Currently, ARW benefits from the ‘Clean Fuels Grant’ which makes its biodiesel competitive in the market.

Conclusion on reasonableness

Since the Proposed Transaction is fair it is also reasonable.

Opinion

The Proposed Transaction is fair and reasonable to Shareholders.

An individual shareholder’s decision in relation to the Proposed Transaction may be influenced by their own particular circumstances. If in doubt the shareholder should consult an independent financial adviser.

This opinion should be read in conjunction with our detailed report which sets out our scope, analysis and findings in more detail.

Yours faithfully

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Hamish Blair Tim Lebbon Director Chairman

Tim Lebbon

Note: All amounts stated in this report are Australian dollars unless otherwise stated.

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LEADENHALL CORPORATE ADVISORY PTY LTD

ABN 11 114 534 619

Australian Financial Services Licence No: 293586

FINANCIAL SERVICES GUIDE

Leadenhall Corporate Advisory Pty Ltd (“ Leadenhall ” or “ we ” or “ us ” or “ ours ” as appropriate”) has been engaged to issue general financial product advice in the form of a report to be provided to you.

Financial Services Guide

In providing this report, we are required to issue this Financial Services Guide (“ FSG ”) to retail clients. This FSG is designed to help you to make a decision as to how you might use this general financial product advice and to ensure that we comply with our obligations as a financial services licensee.

This FSG includes information about:

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• remuneration that we and/or our employees and any associates receive in connection with the general financial product advice;

• any relevant associations or relationships we have; and

• our complaints handling procedures and how you may access them.

Financial Services We are Licensed to Provide

We hold Australian Financial Services Licence 293586 which authorises us to provide financial product advice in relation to:

• interests in managed investments schemes (excluding investor directed portfolio services); and

• securities (such as shares and debentures).

We provide financial product advice by virtue of an engagement to issue a report in connection with a financial product of another person. Our report will include a description of the circumstances of our engagement and the person who has engaged us. You will not have engaged us directly but will be provided with a copy of the report because of your connection to the matters in respect of which we have been engaged to report.

Any report we provide is provided on our own behalf as a financial service licensee authorised to provide the financial product advice contained in that report.

General Financial Product Advice

The advice produced in our report is general financial product advice, not personal financial product advice, because it has been prepared without taking into account your personal objectives, financial situation or needs. You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice. Where the advice relates to the acquisition or possible acquisition of a financial product, you should also obtain a product disclosure statement relating to the product and consider that statement before making any decision about whether to acquire the product.

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We charge fees for providing reports. These fees will be agreed with the person who engages us to provide the report. Fees will be agreed on either a fixed fee or time cost basis and set out in the report that we have been engaged to provide. Leadenhall is entitled to receive a fixed fee of $66,000 (incl. GST) for preparing this report.

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As the holder of an Australian Financial Services Licence, we are required to have a system in place for handling complaints from persons to whom we have provided reports. All complaints must be in writing, to the following address:

Leadenhall Corporate Advisory Pty Ltd Level 1, 31 Franklin Street Adelaide SA 5000

We will try to resolve your complaint quickly and fairly and will endeavour to settle the matter within 14 days from the time the matter is brought to our attention.

If you do not get a satisfactory outcome, you have the option of contacting the Financial Ombudsman Service (“ FOS ”). The FOS will then be able to advise you as to whether or not they can assist in this matter. The FOS can be contacted at the following address:

Financial Ombudsman Service GPO Box 3

Melbourne VIC 3001 Telephone: 1300 780 808 Email: info@fos.org.au

Compensation arrangements

Leadenhall holds professional indemnity insurance in relation to the services we provide. The insurance cover satisfies the compensation requirements of the Corporations Act 2001.

17 December 2012

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Contents

1.		Terms of the Proposed Transaction ........................................................................... 11
	1.1.	Background ......................................................................................................................................................................... 11
	1.2.	Proposed Effective Consideration ............................................................................................................................. 11
	1.3.	Impact of the Proposed Transaction on Corporate Structure ...................................................................... 12
2.		Scope of the Report ...................................................................................................... 12
	2.1.	Purpose of the Report ..................................................................................................................................................... 12
	2.2.	Basis of Evaluation ........................................................................................................................................................... 12
	2.3.	Individual Investors’ Particular Circumstances .................................................................................................. 13
	2.4.	Limitations and Reliance on Information .............................................................................................................. 13
3.		Profile of the Global Biodiesel Industry..................................................................... 15
	3.1.	About Biodiesel .................................................................................................................................................................. 15
	3.2.	History ................................................................................................................................................................................... 15
	3.3.	Production process .......................................................................................................................................................... 15
	3.4.	Performance and Emission Characteristics: Advantages ............................................................................... 15
	3.5.	Performance and Emission Characteristics: Disadvantages ......................................................................... 16
	3.6.	Usage ...................................................................................................................................................................................... 16
	3.7.	Demand Drivers ................................................................................................................................................................ 17
4.		Profile of the Australian Biodiesels Industry ............................................................ 19
	4.1.	Overview............................................................................................................................................................................... 19
	4.2.	The Larger Energy Picture............................................................................................................................................ 19
	4.3.	Biofuel Production ........................................................................................................................................................... 20
	4.4.	Vehicle adaptability ......................................................................................................................................................... 21
	4.5.	Barriers to industry ......................................................................................................................................................... 21
	4.6.	Production logistics ......................................................................................................................................................... 21
	4.7.	Imports .................................................................................................................................................................................. 21
	4.8.	Legislation and Policy Initiatives ............................................................................................................................... 21
5.		Profile of ARW ............................................................................................................. 23
	5.1.	Overview............................................................................................................................................................................... 23
	5.2.	History ................................................................................................................................................................................... 23
	5.3.	Operations ........................................................................................................................................................................... 24
	5.4.	Capital Structure and Shareholders ......................................................................................................................... 24
	5.5.	Management and Personnel ........................................................................................................................................ 25
	5.6.	SWOT Analysis of ARW .................................................................................................................................................. 28
	5.7.	Financial Performance ................................................................................................................................................... 29
	5.8.	Financial Position ............................................................................................................................................................. 30
6.		Profile of Wentworth ................................................................................................... 32
	6.1.	Capital Structure and Shareholders ......................................................................................................................... 32
	6.2.	Management and Personnel ........................................................................................................................................ 32
	6.3.	Historical Financial Statements ................................................................................................................................. 33
	6.4.	Financial Performance ................................................................................................................................................... 33
	6.5.	Financial Position ............................................................................................................................................................. 34
7.		Valuation Methodology ............................................................................................... 35
	7.1.	Available Valuation Methodologies .......................................................................................................................... 35
	7.2.	Selection of Valuation Methodologies – Wentworth......................................................................................... 35
	7.3.	Selection of Valuation Methodologies – ARW ...................................................................................................... 35
	7.4.	The Proposed Merged Entity ....................................................................................................................................... 35

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8. Valuation of Wentworth .............................................................................................. 36	8. Valuation of Wentworth .............................................................................................. 36
8.1.	Net Assets as at 31 October 2012 .............................................................................................................................. 36
8.2.	Outstanding Options ....................................................................................................................................................... 36
8.3.	Control Premium .............................................................................................................................................................. 36
8.4.	Comparison to Share Market Trading ..................................................................................................................... 37
9. Valuation of ARW........................................................................................................ 38
9.1.	Background ......................................................................................................................................................................... 38
9.2.	Discounted Cash Flow .................................................................................................................................................... 38
9.3.	Projected Cash Flows ...................................................................................................................................................... 38
9.4.	Discount Rate...................................................................................................................................................................... 41
9.5.	Terminal Value ................................................................................................................................................................... 41
9.6.	Surplus Assets .................................................................................................................................................................... 41
9.7.	Net Debt ................................................................................................................................................................................ 42
9.8.	Other – Royalties Payable ............................................................................................................................................. 42
9.9.	Control Premium .............................................................................................................................................................. 42
9.10.	DCF - Valuation conclusion of ARW ..................................................................................................................... 42
9.11.	Discount for lack of Control .................................................................................................................................... 43
9.12.	Outstanding Options................................................................................................................................................... 44
9.13.	Implied Earnings Multiples ..................................................................................................................................... 44
9.14.	Comparable Earnings Multiples ............................................................................................................................ 44
9.15.	Comparison to Share Market Trading ................................................................................................................ 45
10. Valuation of Effective Consideration ......................................................................... 46
10.1.	Background .................................................................................................................................................................... 46
10.2.	Discount for lack of Control .................................................................................................................................... 46
10.3.	Value of the Proposed Merged Entity ................................................................................................................. 46
10.4.	Number of Shares ........................................................................................................................................................ 46
10.5.	Value of Effective Consideration per share of Wentworth ........................................................................ 47
11. Evaluation ..................................................................................................................... 48
11.1.	Fairness ............................................................................................................................................................................ 48
11.2.	Reasonableness of assumptions ........................................................................................................................... 48
11.2.1	Advantages of the Proposed Transaction ......................................................................................................... 48
11.2.2	Disadvantages of the Proposed Transaction ................................................................................................... 48
11.3.	Conclusion on Reasonableness .............................................................................................................................. 49
11.4.	Opinion ............................................................................................................................................................................. 49
Appendix 1: Glossary ............................................................................................................ 50
Appendix 2: Sources of Information .................................................................................... 51
Appendix 3: Valuation Methodologies ................................................................................. 52
Appendix 4: Comparable Entities ........................................................................................ 55
Appendix 5: Discount Rates .................................................................................................. 58
Appendix 6: Qualifications, Declarations and Consents .................................................... 63

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1. Terms of the Proposed Transaction

1.1. Background

Wentworth is a public company listed on the ASX. Since 23 December 2011, after announcing to the market the completion of the sale of its real estate property management business and associated assets/liabilities, Wentworth’s board has actively sought a new undertaking to generate profit and provide a return for shareholders.

ARW’s principal activity involves the production and sale of biodiesel. In November 2011, ARW completed the acquisition of BPL to enhance its production capabilities. ARW produces clean and sustainable alternative fuels. ARW currently owns three plants: one in Adelaide, South Australia, one in Picton, Western Australia and the third in Barnawartha, Victoria. The main operating plant is Barnawartha, whilst ARW plans to ramp up production from Picton and Largs Bay in 2013. The total capacity of ARW is 150 million litres per annum. The Barnawartha plant which was part of the BPL acquisition has a capacity of 60 million litres per annum and the other two plants can operate at 45 million litres per annum each.

On 15 November 2012, Wentworth announced that it had agreed the terms of a proposed merger comprising a scrip offer by ARW for all the issued shares in Wentworth on the basis of 5.7 ARW shares for each Wentworth share.

The merger was unanimously recommended by the directors of Wentworth (in the absence of a superior proposal or a material adverse event) and will be implemented by way of an off-market takeover of Wentworth by ARW. ARW entered into pre-bid acceptance agreements with certain shareholders and all directors of Wentworth for approximately 19% of Wentworth’s issued shares. On full acceptance, the merger will provide ARW with a cash injection of approximately $14 million to prepay debt, fund working capital, future growth and substantially strengthen its balance sheet.

The Proposed Transaction is subject to a number of conditions including:

• 90.0% minimum acceptance;

• Wentworth maintaining a net cash balance above $14 million at all times until the end of the Offer period; and

• no prescribed occurrences.

1.2. Proposed Effective Consideration

If the Proposed Transaction is approved, ARW will acquire Wentworth by issuing new shares to Wentworth’s Shareholders, such that Wentworth’s current shareholders will own approximately 35.75% of the Proposed Merged Entity.

The Effective Consideration to Shareholders will therefore be equal to a 35.75% minority interest in the Proposed Merged Entity.

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1.3. Impact of the Proposed Transaction on Corporate Structure

The existing and proposed corporate structures of Wentworth and ARW are outlined below in Figure 1

Figure 1: Impact on Corporate Structure of the Proposed Transaction

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----- Start of picture text -----

Before Proposed Transaction After Proposed Transaction
Wentworth ARW Wentworth ARW
Shareholders shareholders Shareholders Shareholders
100% 100%
35.75% 64.25%
Wentworth ARW ARW
----- End of picture text -----

Source: Leadenhall Analysis

Note: The impact of exercise of in the money options has been considered in calculation the post Proposed Transaction shareholding

2. Scope of the Report

2.1. Purpose of the Report

Although there is no legal requirement for Wentworth to provide an IER to its Shareholders, the Directors of Wentworth have requested Leadenhall to prepare an IER as though it was required.

Accordingly we have prepared our IER in accordance with Section 640 of the Corporations Act 2001 (“ Section 640 ”) and Regulatory Guide 111: Content of Expert Reports (“ RG111 ”) issued by the Australian Securities and Investments Commission (“ASIC”).

Section 640 and paragraphs 10 to 17 of RG111 provide guidance to experts as to how a takeover should be evaluated. Since the Proposed Transaction will result in ARW taking over Wentworth we have evaluated the Proposed Transaction using these requirements.

This report is to accompany the Target’s Statement to be issued by Wentworth under Part 6.5 of the Corporations Act in response to the takeover bid made by ARW that will be sent to Shareholders and has been prepared for the exclusive purpose of assisting Shareholders in their consideration of the Proposed Transaction. We are not responsible to you, or anyone else, whether for our negligence or otherwise, if the report is used by any other person or for any other purpose.

2.2. Basis of Evaluation

For a takeover offer such as the Proposed Transaction, RG 111 requires a separate assessment of whether a takeover offer is ‘fair’ and whether it is ‘reasonable’. We have therefore considered the concepts of “fairness” and “reasonableness” separately as discussed below.

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Fairness

RG 111 defines a takeover offer as being fair if the value of the consideration is equal to or greater than the value of the securities subject to the offer. This comparison must be made based on a 100% interest in the target company. Accordingly, Leadenhall has assessed whether the Proposed Transaction is fair by comparing the value of Wentworth on a controlling basis to the value of the Effective Consideration on a liquid minority basis (i.e. excluding a control premium). In this case the Effective Consideration is a 35.75% share of the Proposed Merged Entity after the Proposed Transaction is completed. This represents what Wentworth Shareholders would own should the Proposed Transaction occur. We have assessed the values of Wentworth and the Proposed Merged Entity at Fair Market Value, which is defined by the International Glossary of Business Valuation Terms as:

The price, expressed in terms of cash equivalents, at which property would change hands between a hypothetical willing and able buyer and a hypothetical willing and able seller, acting at arms’ length in an open and unrestricted market, when neither is under compulsion to buy or sell and when both have reasonable knowledge of the relevant facts.

This definition of Fair Market Value is consistent with the definition in RG 111 at paragraph 57.

Special value is defined as the amount a specific purchaser is willing to pay in excess of Fair Market Value. Such specific purchasers may be willing to pay a premium over Fair Market Value as a result of potential economies of scale, reduction in competition or other synergies they may enjoy arising from the acquisition of the asset. However, to the extent a pool of hypothetical purchasers could all achieve the same level of synergies; these synergies should be included in Fair Market Value. Special value is typically not considered in forming an opinion on the Fair Market Value of an asset and our valuations of Wentworth and the Proposed Merged Entity do not include any special value.

Reasonableness

In accordance with RG 111, we have defined the Proposed Transaction as being reasonable if it is fair, or if, despite not being fair, Leadenhall believes that there are sufficient reasons for Shareholders to vote for the proposal. To assess the reasonableness of the Proposed Transaction we have considered the following significant factors recommended by RG 111:

• A small number of the shareholders of ARW also have an interest in Wentworth shares, although this overlap is unlikely to bring any strategic value to the Proposed Merged Entity given Wentworth is effectively a “cash box”;

• the significant shareholding blocks in Wentworth;

• the liquidity of the market in Wentworth’s shares;

• any special value of Wentworth to ARW;

• the likely market price of Wentworth shares if the Proposed Transaction is rejected; and

• the value of Wentworth to an alternative bidder and likelihood of an alternative offer.

We have also considered the other significant advantages and disadvantages to Shareholders of the Proposed Transaction.

2.3. Individual Investors’ Particular Circumstances

We have evaluated the Proposed Transaction for Shareholders as a whole and have not considered its effect on the particular circumstances of individual investors.

Due to their particular circumstances, individual investors may place a different emphasis on various aspects of the Proposed Transaction from the one adopted in this report. Accordingly, individuals may reach different conclusions to ours on whether the Proposed Transaction is fair and reasonable. If in doubt investors should consult an independent financial adviser.

2.4. Limitations and Reliance on Information

Leadenhall’s opinion is based on current economic, market and other conditions prevailing at the date of this report. Such conditions can change significantly over a relatively short period of time. Any such changes subsequent to the issue of this report could change our opinion.

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In preparing this report we have considered the information set out in Appendix 2. We have undertaken limited analysis and enquiry in relation to this information. However, our procedures and enquiries do not include verification work nor constitute an audit in accordance with Australian Auditing Standards.

This report should be read in conjunction with the declarations outlined in Appendix 6.

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3. Profile of the Global Biodiesel Industry

3.1. About Biodiesel

Biodiesel is a renewable fuel that can be used instead of diesel fuel. Biodiesel consists of chemicals known as fatty acid methyl esters “(FAME)” that can be used as a diesel fuel substitute or diesel fuel additive. Biodiesel can be made from vegetable oils, animal fats, or greases. About half of biodiesel producers are able to make biodiesel from used oils or fats, including recycled restaurant grease. Biodiesel can be made from virtually any feedstock that contains an adequate amount of free fatty acids, which are the raw materials that are converted to biodiesel through a chemical process.

Pure biodiesel is referred to as B100, which is most often blended with petroleum diesel in ratios of 2% “(B2)”, 5% “(B5)”, or 20% “(B20)”. Biodiesel fuels can be used in regular diesel vehicles without making any changes to the engines. It can also be stored and transported using diesel tanks and equipment.

3.2. History

Fuelling engines with biodiesel has started to become more popular in recent times, but it is not a new idea. Before petroleum diesel fuel became popular, Rudolf Diesel, the inventor of the diesel engine in 1897, experimented with using vegetable oil (biodiesel) as fuel. However, due to the discovery of vast resources of petroleum, mineral diesel became popular.

3.3. Production process

Biodiesel can be produced by several processes. Vegetable oils or fats can be converted to fatty acids, which in turn are converted to esters. Oils or fats can also be converted to methyl or ethyl esters directly, using an acid or base to accelerate the transesterification reaction. Base catalysation is preferred, because the reaction is quick and thorough. It also occurs at lower temperature and pressure than other processes, resulting in lower capital and operating costs for the biodiesel plant.

The most common method of producing biodiesel is to react animal fat or vegetable oil with methanol in the presence of sodium hydroxide. This reaction is a base-catalysed transesterification that produces methyl esters and glycerine. If ethanol is substituted for methanol, ethyl esters and glycerine are produced.

3.4. Performance and Emission Characteristics: Advantages

Autoignition

One of the most important characteristics of diesel fuel is its ability to autoignite, a characteristic that is quantified by a fuel’s cetane number or cetane index, where a higher cetane number or index means that the fuel ignites more quickly. U.S. petroleum diesel typically has a cetane index in the low 40s, and European diesel typically has a cetane index in the low 50s. Research indicates that the cetane number for biodiesel ranges from 45.8 to 56.9 for soybean oil methyl esters, with an average of 50.9. By comparison the cetane index for petroleum diesel ranges from 40 to 52. This implies that careful production control could result in biodiesel products with cetane numbers in the high end of the range, whereas petroleum diesel tends toward the low end of the range.

Lubricity

Lubricity, another important characteristic of diesel fuel, is a measure of lubricating properties. Fuel injectors and some types of fuel pumps rely on fuel for lubrication. Biodiesel has better lubricity than current low-sulphur petroleum diesel, which contains 500 parts per million (ppm) sulphur by weight. The petroleum diesel lubricity problem is higher with ultra-low-sulphur petroleum diesel. A 1- or 2-percent volumetric blend of biodiesel in low-sulphur petroleum diesel improves lubricity substantially. It should be noted, however, that the use of other lubricity additives may achieve the same effect at lower cost.

Eco-friendly

From the environmental perspective, biodiesel is nontoxic and biodegradable. Compared to diesel fuel made from petroleum, biodiesel produces fewer air pollutants like particulates, carbon monoxide, sulphur dioxide, hydrocarbons, and air toxics. However, it does slightly increase emissions of nitrogen oxides. From the sensory perspective, biodiesel does not smell as bad as regular fuel when it burns.

Carbon neutral

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Biodiesel made from plant sources may be considered to be carbon-neutral as the plants that are used to make biodiesel, such as soy beans and palm oil trees, absorb Carbon Dioxide (“CO2”) as they grow and offset the CO2 produced while making and using biodiesel. However, a caveat is that in some parts of the world, large areas of natural vegetation and forests have been cleared and burned to grow soybeans and palm oil trees to make biodiesel. The negative environmental impacts of these activities may be greater than any potential benefits from using the biodiesel produced from the plants grown to make biodiesel.

3.5. Performance and Emission Characteristics: Disadvantages

Chemical properties

B100 and biodiesel blends are sensitive to cold weather and may require a special type of anti-freeze, just like petroleum-based diesel fuel does. Biodiesel acts like a detergent additive, loosening, and dissolving sediments in storage tanks. Because biodiesel is a solvent, B100 may cause rubber and other components to fail in older vehicles. Petroleum diesel forms deposits in vehicular fuel systems and, because biodiesel can loosen those deposits, they can migrate and clog fuel lines and filters. The problem can be reduced with biodiesel blends, which dilute the solvent effect of B100.

Fuel economy

Another disadvantage of biodiesel is that it tends to reduce fuel economy. Energy efficiency is the percentage of the fuel’s thermal energy that is delivered as engine output and biodiesel has shown no significant effect on energy efficiency. The energy content per litre of biodiesel is approximately 11 percent lower than that of petroleum diesel. Vehicles running on B20 are therefore expected to achieve 2.2 percent (20 percent x 11 percent) fewer kilometres per litre of fuel.

Emissions

About 11 percent of the weight of B100 is oxygen. The presence of oxygen in biodiesel improves combustion and therefore reduces hydrocarbon, carbon monoxide, and particulate emissions but oxygenated fuels also tend to increase nitrogen oxide emissions.

3.6. Usage

Low-level biodiesel blends like B2 (2%) through B5 (5%) are popular fuels in the trucking industry because biodiesel has excellent lubricating properties, and therefore usage of the blends can be beneficial for engine performance.

As shown in Table 4 , the U.S. Energy Information Administration estimates that in 2010, 5.36 billion1 gallons of biodiesel were consumed in about 65 countries; 54% was consumed in five countries.

Table 4: World Biodiesel consumption (2010)

	Billion Gallons	Share of Total
Germany	0.77	14%
Brazil	0.65	12%
France	0.61	11%
Italy	0.46	9%
Spain	0.40	7%
All Others	2.47	46%
World Total	5.36	100%

Source: www.eia.gov

The global production of biofuel has increased substantially from the years 2000 to 2010, as shown in Figure 2 below.

1 Unit of volume. 1 US gallon = 3.78541 litres

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Figure 2: Global biofuel production 2000-2010

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Source: IEA

The International Energy Agency estimates that by the year 2050, biofuels will provide 27% of total transport fuel and avoid around 2.1 gigatonnes of CO2 emissions per year when produced sustainably.

3.7. Demand Drivers

Government subsidies and regulations

Biodiesels are subsidised by governments in a number of developed and developing countries. By actively providing research and development grants and other direct financial benefits, many governments reduce the investment risk for biodiesel projects. In addition, governments may also mandate compulsory blending of biodiesel and provide suitable tax incentives. Support policies for biofuels are often driven by energy security concerns, coupled with the desire to sustain the agricultural sector and revitalise the rural economy. More recently, the reduction of CO2 emissions, especially in the transport sector has become an important driver for biofuel development, particularly for countries belonging to the OECD.

Fuel Prices

Ethanol and biodiesel blended fuels are sold mainly into the transport fuels market in competition with traditional fuels, such as petrol and diesel. Consequently, the price that biofuels producers are able to obtain for their product will depend on the domestic prices of petrol and diesel; prices that are in turn related to the world oil price. Traditional fossil fuels dominate the liquid fuels production and distribution industry. Crude oil is still the most important and valuable feedstock. The EIA estimates that more than 650 refineries located in 116 countries have the capacity to refine 86 million barrels of crude per day. However, the steady increases in the prices of traditional fossil fuels over the past two decades have made biofuels more economically viable.

Cost of production

The cost of producing biofuels includes both capital and operating costs of establishing and operating plants, including storage and transportation costs. Depending on how B100 is delivered to customers (which must blend B100 to produce B5 or B20), there may also be a need for the producer and / or customer to invest in storage and blending facilities. Biofuel producers use a variety of inputs depending on their geographic location, and the costs of sourcing. Producers in grain belts use grains such as sorghum and wheat as feedstocks, while others may use molasses derived from sugarcane. As referred to earlier, biodiesel producers use a variety of fats and oils as feedstocks including used cooking oil, tallow and oilseeds, depending on availability and seasonal conditions.

Over the past decade, the prices of many feedstocks, particularly grains and oilseeds have gone up. Such higher prices for agricultural feedstocks has led to increased costs of production for biodiesel. In addition, the matter of diverting food grains for biofuel production has also led to a number of ethical questions being raised in the media.

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Environmental concerns

The growing concerns about environmental conservation and the impetus to reduce carbon emissions has increased the appeal of biodiesels, especially those processed from waste materials and with no toxic waste products.

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4. Profile of the Australian Biodiesels Industry

4.1. Overview

As at 1 January 2012, there were 7 biodiesel plants in Australia with a combined total installed capacity of 500 megalitres and one renewable diesel plant. However, only four of these plants were operating, producing about 115 ML of biodiesel from tallow and used cooking oil. Figure 3 shows the geographical spread of these plants. The closer each facility is to end markets, the more competitive the B100 supplied, although trucking costs are generally more expensive than shipping costs (due to economies of scale).

Figure 3: Biodiesel plants in Australia 2012

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Source: www.biofuelsassociation.com.au

A substantial part of the current production of Australian biofuels is derived from waste streams and there is no conflict with the ‘food for fuel’ argument. Questions about the destruction of native flora and fauna are also not applicable to the local industry. The main feedstocks used in Australia are tallow[2] , used cooking oil and oilseeds.

4.2. The Larger Energy Picture

From the broader perspective, Australia’s overall energy production continues to exceed domestic energy consumption, making Australia a significant net energy exporter. In terms of energy sustainability, Australia’s proven reserves of brown coal, black coal and conventional gas are expected to last 500 years, 100 years and 60 years respectively.

Despite the energy surplus, Australia is a net importer of liquid hydrocarbons (including crude oil, liquid petroleum gas (LPG) and other refined and semi-refined petroleum products). Australian reserves of crude oil and condensate represent only a small proportion of total world reserves.

2 In industry terms, tallow is a rendered form of animal fat that conforms to certain technical criteria, including its melting point.

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In 2012, Australia is estimated by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), to produce 26,856 million litres (ML) of crude oil and condensate, up from 25,192 ML for 2011. Exports of crude oil were estimated at about 20,718 ML (also up on the previous year) and imports estimated at 32,125 ML. This places Australian consumption of crude oil and condensate at around 38,263 ML. Long term projections have production peaking at 30,221 ML in 2013/14, exports peaking at 22,341 ML in 2013/14 and imports peaking at 30,803 ML in 2016/17.

4.3. Biofuel Production

Biofuels production for 2012 is estimated at 555ML, comprised of about 440 ML of ethanol (largely unchanged from the previous year) and 115 ML of biodiesel (up from an estimated 80 ML in 2011). According to an Australian government report, biofuel accounts for around 0.4% of total transport fuel consumption.

Bioethanol

The USDA Foreign Agricultural Service estimates that the production of bioethanol in Australia is expected to increase over the longer term as the availability of feedstock improves following the conclusion of a near decade-long drought as shown in Table 5 below

Table 5: Conventional & Advanced Bioethanol in Australia (million litres)

Year End July	2007	2008	2009	2010	2011	2012
Production	84	149	203	380	440	440
Imports	0	0	0	0	0	0
Exports	0	0	0	0	0	0
Consumption	84	149	203	380	440	440
Ending stocks	2	3	4	5	6	7
Production Capacity	(Conventional Fuel)
Number of Biorefineries	4	4	4	3	3	3
Capacity	120	189	456	440	440	456

Source: Australian Government, the Department of Resources, Energy and Tourism / USDA FAS estimate

Biodiesel

The USDA FAS estimates Australian Biodiesel capacity for 2012 at 280 ML as shown in Table 6 below, while production is estimated well below capacity at 115 ML. Although the Biofuels Association estimates capacity at above 500 ML, the USDA believes that much of this capacity is unlikely to come into production.

Table 6: Conventional & Advanced Biodiesel in Australia (million litres)

Year End July	2007	2008	2009	2010	2011	2012
Production	43	54	98	80	80	115
Imports	5	4	11	8.5	25	20
Exports	0	0	0	0	0	0
Consumption	47	58	109	88.5	105	125
Ending stocks	2	2	6	7	9	10
Production Capacity	(Conventional Fuel)
Number of Biorefineries	7	9	8	6	7	7
Capacity	174	136	283	215	215	280

Source: Australian Government, the Department of Resources, Energy and Tourism / USDA FAS estimate

Supplies of inputs for biodiesel, such as tallow, are likely to increase in the future due to improved seasonal conditions and the prospect of fatter slaughter cattle. However, this is likely to be balanced by lower slaughter figures. Supplies of waste vegetable oil, the other large feedstock source, are likely to remain largely unchanged.

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4.4. Vehicle adaptability

From the consumer’s perspective, the Biofuels Association notes that since 1986, the vast majority of vehicles can use blended fuels. For instance, in 2009, 99.44% of the cars produced in Australia could run on a 10% ethanol blend. There is no requirement to convert or modify the car in order to use biofuels.

4.5. Barriers to industry

Unlike oil refining, biofuel processing plants can operate economically on a smaller scale. Thus the financial barriers are comparatively lower. However, potential barriers do exist to a viable biofuels industry in Australia, namely:

• Consumer confidence in using “new” products;

• Fuel consumption and pricing;

• High levels of commercial risk associated with market entry due to the need to obtain customer contracts in order to underpin the necessary volumes;

• Impact of fuel taxation reforms;

• Lack of access to infrastructure and fuel distribution networks; and

• The availability of feedstock at competitive prices to ensure a margin can be earned.

4.6. Production logistics

The proximity and availability of feedstock sources and end user markets are an important consideration when selecting a production site. The viability of biofuel production can be dependent upon transport distances for both feedstock and by-products. Biofuels producers are generally price takers as biofuels are relatively priced to mainstream transport fuels as well as the landed price of imported biofuels. Additional transportation costs could erode producer margins.

4.7. Imports

During 2010, Australia’s Customs and Border Protection Service imposed a dumping duty on US biodiesel after an official investigation found that shipments of heavily subsidised biodiesel had been sold into Australia. The EU had also imposed anti-subsidy duties on U.S. imports in 2009.

However, according to official trade statistics, imports of biodiesel continue despite the recently introduced protective trade measures. The USDA FAS estimates biodiesel imports into Australia for 2011 at 25 ML. Industry sources advise that the high Australian dollar supports imports from the United States despite the customs measures.

4.8. Legislation and Policy Initiatives

In July 2011, the biofuels industry in Australia was given an extension whereby the current taxation arrangements for renewable fuels (ethanol, biodiesel and renewable diesel) would continue for the next 10 years, until June 2021. In this way, the industry pays its full excise and it is then returned, thus resulting in a neutral position for the taxpayer. Currently, a production grant of 38.143 cents per litre, equal to the excise duty rate, is available to domestic producers of fuel ethanol. Methanol would continue to be untaxed. This is referred to as the ‘Cleaner Fuels grant scheme’.

The Government will undertake a review of these taxation and grant arrangements for ethanol, biodiesel, renewable diesel and methanol after 30 June 2021. In addition, the Government will consider the carbon emissions of alternative fuels as part of its consideration of arrangements of fuel under a carbon price. The impact of these rebates is to make biodiesel prices competitive when compared to traditional fossil fuels.

On 13 September 2011 a Memorandum of Understanding (“MoU”) was signed between the United States of America and Australia to conduct research and development activities to support the safe use of sustainable aviation alternative fuels to meet the demands for safe and efficient use of such fuels. The principal objectives of this MoU are to provide opportunities to exchange ideas, information, skills and techniques to collaborate on problems and projects of mutual interest in relation to sustainable aviation alternative fuels development, production and use, with both parties having a collective interest in moving toward carbon neutral or carbon negative growth for aviation, and to enter into co-operative agreements.

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A plan has been released by the US Navy to have an entire fleet of warships running on biofuels by 2016 – reported as ‘the great green fleet’. The plan will require the US Navy to source biofuel from Australian producers and potentially reduces the need to source fuel from countries which are considered unstable or unfriendly.

State governments have also been keen to ensure that biofuels are promoted. From October 2011, the NSW government had set a mandate that 6% of the total volume of petrol sold in the state is ethanol. A similar program for biodiesel was proposed under which the quantum of biodiesel sold in the state would be 5% of total volumes. However, in December 2011, the program had to be scaled back on account of concerns about production capacity.

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5. Profile of ARW

5.1. Overview

ARW currently owns and operates three plants: one in Adelaide, South Australia, one in Picton, Western Australia and the third in Barnawartha, Victoria. The total production capacity of ARW is 150 million litres per annum. The Barnawartha plant which was part of the BPL acquisition has a capacity of 60 million litres per annum and the other two plants can each operate at 45 million litres per annum.

ARW uses the Energea process in its Picton and Largs Bay plants. The technology converts tallow and waste cooking oil into quality diesel fuel that is significantly lower in toxic and greenhouse gas emissions than normal diesel. ARW has an exclusive operating and manufacturing agreement with Energea for the use of the technology in the Australasian region and parts of North America.

5.2. History

We summarise ARW’s corporate history in the figure below.

Figure 4: History of ARW

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----- Start of picture text -----

July 2009 - Wasabi Energy Limited and the AEH Group
March 2003 –ARW May 2005- ARW was listed secured significant interest in ARW’s shareholding
successfully completed on the Australian Securities throughout 2009, including via a major rights issue
equity raising for its Exchange (ASX). which raised a further $2.25 million.
first project.
June 2004 –The project was given substantial backing by the
Commonwealth Government, with an offer of $7.15 million in
assistance awarded to ARW under the first round of the
November 2012- Merger with
Australian Government's Biofuels Capital Grants Program.
Wentworth announced.
2001 2003 2004 2005 2006 2009 2011 2012
September 2004 – With
all funding 2006 – Construction of November 2011 – Acquisition of
arrangements and core ARW biodiesel plants was Biodiesel Producers Limited.
documentation in place, completed
the plant was ordered.
2001 – ARW December 2004- $16 million capital raising to further fund the growth of the business was
was founded by completed through a placement of non-interest-bearing Convertible Notes. These funds have
Amadeus Energy been used to establish the second biodiesel plant at Picton, in Western Australia's south west.
Limited.
----- End of picture text -----

February 2004 – Amadeus Energy Limited announced that debt funding had been approved by their US bankers, Wells Fargo Bank, for the first plant.

Source: ARW

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5.3. Operations

Plant operation

ARW has further optimised and developed the Energea process in order to facilitate a better conversion yield and eliminate environmental discharges. The extensive research and development helps to maintain ARW’s position amongst the most efficient producers in the industry. Currently, the Picton and Largs Bay plants can only process feedstock with 5% FFA[3] ; however ARW plans to upgrade these plants to be able to process feedstock with 20% FFAs (The same quality of feedstock that is used at the Barnawartha facility).

Feedstock and raw material

ARW is a price taker in terms of selling price, hence profitability depends in part on securing cost effective feedstock that is able to meet conversion specifications at a price which enables ARW to earn a reasonable margin. To ensure regular supply, ARW has entered into and continues to evaluate strategic supply relationships. While ARW currently utilises a range of feedstocks such as tallow, vegetable oils and used cooking oils, they continue to investigate new sources of supply. ARW funds and supports research into a variety of oilseeds, vegetable oils, algae and various other potential feedstocks.

Sales

ARW currently sells wholesale biodiesel to wholesalers and road transport operators. Eventually, ARW’s strategy is to expand to supply export markets, the major retail fuel distributors and other large users like mine operators.

Quality control

All biodiesel supplied by ARW complies with the Australian Biofuel Standard.

5.4. Capital Structure and Shareholders

As at 30 June 2012, ARW had the following securities on issue:

• 2.441 billion fully paid ordinary shares listed on the ASX; and

• 372,340,000 options over unissued shares, with exercise prices between 1 cent and 10 cents.

We set out below ARW’s top 10 shareholders as at 30 June 2012 in Table 7

Table 7: ARW Capital Structure (30 June 2012)

	Shares %
Lignol Energy Corporation UBS Nominees Pty Ltd (Thorney Group) Australian Enterprise Holdings Pty Ltd (Playoust Family TR A/c) Global Biofuels Trading (MiddleEast) Inc. ABN Amro Clearing Sydney Nominees Pty Ltd (Custodian A/c) Thirty-Fifth Celebration Pty Ltd (JC McBain Super Fund A/c) Seaspin Pty Ltd (Aphrodite A/c) Sweet Water Pty Ltd (Farmocean Super Fund A/c) Harley Clarke Enterprises Pty Ltd Arcourt Resources NL Total shareholding of the 10 largest shareholders	275,000,000 11.26% 233,670,951 9.57% 200,000,000 8.19% 200,000,000 8.19% 58,000,004 2.38% 56,605,217 2.32% 55,811,532 2.29% 50,000,000 2.05% 48,000,000 1.97% 47,644,353 1.95%
	1,224,732,057 50.17%

Source: ARW Annual Report 2012

3 Free Fatty Acids. The lower the number, the higher the quality. As FFA number increases, the extractable amount of biodiesel decreases.

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The top 10 shareholders account for over 50% of ARW’s shares.

5.5. Management and Personnel

The directors and key management personnel of ARW are detailed in Table 8 and Table 9

Table 8: Key Management Personnel of ARW

Name and Position	Experience
Mr. Andrew White	Mr. White was appointed to the Board on 1 July 2011. Andrew was most
(Managing Director and CEO)	recently a Director and Chief Operating Officer of Infrastructure Capital Group Limited, an investment management business with over $1 billion of equity funds under management and invested in infrastructure across Australia.
	He led Biodiesel Producers Limited (BPL), an unlisted public Company that
	manufactured biodiesel from tallow and waste cooking oil as the Managing
	Director. With contracts established with Shell, Finemores, Border Express,
	Greenfreight and other large users of fuels, BPL's acquisition has ensured that
	ARW’s geographic reach extends into the east-coast of Australia.
	Andrew has sat on the Board and Management Committees for various large
	energy projects including Neerabup Power Station (330mW), Kwinana Power
	Station (320mW) and the Esperance Energy Project (336km Kambalda to
	Esperance Gas Pipeline and energy station).
	With a chartered accounting background, Mr. White also worked for 8 years
	with Arthur Andersen and 9 years in senior executive roles including Finance
	Director and Strategic Planning Director with Mars Inc. in Australia and New
	Zealand.
Mr. Michael Burgess	Michael started as Chief Financial Officer of ARfuels in February 2012.
(CFO)	Michael has over 20 years of Accounting and Operations experience with 5 years’ experience as a Chief Financial Officer of listed entities. He has a
	Bachelor of Business (Accounting) and is a Chartered Accountant. After four
	years with Ernst & Young, he spent time working in a variety of finance roles
	within the funds management, sports marketing and management,
	manufacturing and advertising industries. In 1999 he joined MCM
	Entertainment Group Ltd (MCM) as Financial Controller and was integral to its
	listing on the ASX in December 2007. He became an Executive Director of
	MCM in February 2011.
Mr. Christopher Atwood	Chris joined ARfuels from Biodiesel Producers Limited (BPL) on 1 November
(COO)	2011. Chris has over 25 years of Engineering, Operations and Management experience with 2 years as General Manager of BPL. He has qualifications in
	Mechanical Engineering (Design) and has worked in a wide range of global
	projects in North and South America, Europe and Asia. Prior to joining BPL
	Chris worked in the food and fermentation industry in a variety of roles
	culminating in the position of Engineering Manager at Burns Philp and AB
	Mauri with responsibility for design and construction of a number of large
	green field projects in the Asian region.

Source: ARW Website and Annual Report

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Table 9: Board Members of ARW

Name and Position	Experience
Mr. Philip Garling	Mr. Garling was appointed as Non-Executive Director on 5 May 2011 and Non-
(Non-Executive Chairman)	Executive Chairman on 30 November 2011. Philip has 25 years' experience in Infrastructure Construction, Development, Operations and Investment Management, most recently as Global Head of Infrastructure at AMP Capital
	Investors. He has also been Chief Executive Officer of Tenix Infrastructure and
	prior to that he was a long term Senior Executive at Lend Lease Corporation
	culminating in his role as Chief Executive of Lend Lease Capital Services (the
	Development Capital, Infrastructure Development and Project Finance arm of
	Lend Lease).
	Philip is a former member of the Federal Government Environment Industry
	Action Agenda, and a former Councillor of Environment Business Australia.
	Philip has a Bachelor of Building from the University of NSW. He also
	completed an Advanced Management Program at the Australian Institute of
	Management and an Advanced Diploma from the Australian Institute of
	Company Directors. He is a Fellow of the Australian Institute of Company
	Directors, Australian Institute of Building and Institution of Engineers, Australia.
	Philip was the foundation Chair and remains a Director of the ASX listed DUET
	Group Limited. He is also a Director of Downer EDI Limited.
Mr. Michael Costello	Mr. Costello was appointed as Non-Executive Director on 5 May 2011. Before
(Independent Director)	his appointment to ActewAGL in 2008, Michael was Managing Director of ACTEW Corporation, a member of the ACTEW Board and a member of the
	ActewAGL Joint Venture Partnerships Board from 2003. Michael is a member of
	the Advisory Council of the Australian National University's Crawford School of
	Economics and Government.
	Michael was previously Deputy-Managing Director of the Australian Stock
	Exchange. He was Chief of Staff to the Hon Kim Beazley AC, the former Labor
	Opposition Leader and to the Hon Bill Hayden AC when he was the Minister for
	Foreign Affairs. Michael has been the Secretary of the Department of Foreign
	Affairs and Trade and the Department of Industrial Relations. He has held a
	number of diplomatic posts including Ambassador to the United Nations.
	Michael holds degrees in arts and law. He is a Fellow of the Australian Institute
	of Company Directors. He received an Order of Australia in 1996 for
	international relations.
Ms. Deborah Page	Ms. Page was appointed as Non-Executive Director and Chair of the Company's
(Independent Director)	Audit Committee on 21 March 2012. Deborah has extensive financial experience from a diverse range of Finance and Operational Executive roles, as well as
	external audit and corporate advisory roles.
	Deborah was a partner at Touche Ross/KPMG Peat Marwick until 1992 and
	subsequently held Senior Executive positions with the Lend Lease Group, Allen
	Allen and Hemsley and the Commonwealth Bank. Deborah has considerable
	corporate governance experience and is currently on the Boards of several listed
	and unlisted companies including Service Stream Limited, Investa Listed Funds
	Management Limited (responsible entity of Investa Office Fund), The Colonial
	Mutual Life Assurance Society Limited and Commonwealth Insurance Limited.
	Deborah is a Fellow of the Institute of Chartered Accountants, a member of the
	Institute of Company Directors and holds a Bachelor of Economics from Sydney
	University.

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Mr. Julien Playoust	Mr. Playoust was appointed as Non-Executive Director on 2 April 2009. Julien is
(Non-Executive Director)	Managing Director of AEH Group. His professional career includes Andersen Consulting and Accenture. He is also a Non-Executive Director of Tatts Group Limited.
	Julien is a Director of private equity Company MGB Equity Growth Pty Limited,
	Trustee of the Art Gallery NSW Foundation, Director of the National Gallery of
	Australia Foundation and is on the Advisory Board of The Nature Conservancy.
	He is a Fellow of the AICD and a member of the Australian Institute of
	Management, Royal Australian Institute of Architects and The Executive
	Connection. He holds a MBA from UNSW, Bachelor of Architecture and
	Bachelor of Science from Sydney University and a Company Director Course
	Diploma from the AICD.

Source: ARW Website and Annual Report

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5.6. SWOT Analysis of ARW

The table below sets out a strengths, weaknesses, opportunities and threats analysis (“ SWOT ”) for ARW

Table 10: SWOT Analysis of ARW

	Strengths		Weaknesses
	ARW has an exclusive operating and manufacturing		The historical financial performance of the company is
	agreement with Energea for the use of the technology in		weak. It has yet to turn an annual profit since its listing.
	the Australasian region and parts of North America.		It has a relatively high debt of $9.4 million including
	ARW has an experienced management team which has		bank overdrafts and amount payable on acquisition of
	many years in the biofuel industry.		BPL. In addition, it has also issued convertible notes to
	The Barnawartha facility can process animal and vegetable oil fat with an FFA of up to 20%. The other		the value of $13.65 million as consideration for the acquisition of BPL.
	facilities can also be upgraded to process similar inputs.		The storage capacities at the sites are quite low
	The company can thus take advantage of a wide range of		compared to production capacity. The company would
	input options and blend them to achieve cost		have to keep a continuous production and sale process.
	effectiveness. The company is actively researching new		A minor shutdown in one of the processes could result
	input materials that are cheaper to source		in a bottleneck and limit processing and production.
	The Barnawartha plant is very efficient resulting in little		If the quality of input stock is inconsistent, frequent
	waste products. The triglycerides are broken down into		maintenance of the machinery may be required, leading
	biodiesel with glycerine and potassium sulphite (used as		to more downtime and less production.
	fertiliser) as by-products and water as the only waste product. The glycerine and fertiliser is sold in the market and the water is of irrigation quality.		The company is yet to sign up any long term customer contracts or strategic partnerships for the Largs Bay and Picton facilities. At present, only the Barnawartha
	The quality of the biodiesel produced is consistently seen		facility is profitable on a standalone basis.
	to be above the benchmarks specified in the Australian
	Biofuel standards.
	Opportunities		Threats
	The carbon pricing and emissions trading regime could		The company does not have much pricing power, with
	increase the price of traditional fossil fuels, making		prices set relative to diesel prices. A fall in diesel prices
	biodiesel more viable.		could erode economic viability to the company. On the
	Legislation imposes a cap on the proportion of biodiesel		input side too, the company’s bargaining power is limited
	that can be blended. Current Australian federal
	regulations permit no technical or legal restriction up to a		Financial viability is dependent on volumes. Large
	5% blend of biodiesel (B5). If the government relaxes its		consumers like mining companies and logistics
	norms, it could lead to greater demand.		providers prefer to source their biodiesel and mineral
	A greater sense of environmental consciousness in society could catalyse consumer preference for biodiesel over traditional (fossil fuel) diesel.		oil fuel from the same supplier. To succeed, the company would require a strategic partnership with the major wholesalers or refiners. It would be easier to serve the market after setting up arrangements with one
	ARW could expand into newer geographic markets; possibly increase the export quantum.		or more of the major oil companies. But on the other hand, the oil majors do have the financial ability and the technology to set up their own plants, without
	The company could expand beyond its existing customer		relying on ARW.
	base of transport companies and oil refiners. Other large consumers like mining companies, construction companies and retailers could provide a lucrative market.		Change in government tax policy. Currently, ARW benefits from the clean fuels grant which makes B100 competitive in the market.

Source: Leadenhall analysis, ARW management

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5.7. Financial Performance

We set out below in Table 11 ARW’s audited financial performance for FY11 to FY12.

Table 11: ARW’s Audited Financial Performance

For the Year Ended 30 June Revenue from operations Cost of goods sold Inventory write off Gross Profit Direct costs Corporate and administration expenses Staff costs Other Revenue EBITDA Depreciation and amortisation expenses EBIT Finance Income Finance costs Profit Before Tax Corporate Tax Profit After Tax Gross Margin % EBIT Margin %	2011 AUD 000 (Actual) 2012 AUD 000 (Actual) 6,426 38,297 (4,507) (33,872) (527) -
	1,393 4,425 (3,810) (3,859) (2,496) (2,870) (2,304) (3,013) 142 1,781
	(7,076) (3,536) (1,016) (2,355)
	(8,092) (5,891) 70 87 (106) (1,431)
	(8,128) (7,236) - -
	(8,128) (7,236)
	21.7% 11.6% -125.93% -15.38%

Source: ARW Notes: EBIT – Earnings before interest and taxation Totals may not add due to rounding

In relation to the above statement of financial performance, we note the following:

• The acquisition of BPL during the 2012 financial year is largely responsible for the substantial growth in revenues (and Cost of Goods Sold) during the year.

• Depreciation increased reflecting the additional assets acquired through the BPL acquisition.

• A fire at the Largs Bay facility on 24 December 2011 affected operations for the year. The other income for the year included a business interruption insurance recovery of $876,642.

• Other income for 2012 also included Research and Development tax credit for $868,483.

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5.8. Financial Position

The financial position of ARW as at 30 June 2011 and 31 October 2012 is summarised in Table 12 below.

Table 12: ARW’s Statement of Financial Position

	30 June 2011 (AUD ‘000) 31 October 2012 (AUD ‘000) 3,528 904 872 5,363 1,742 3,394 437 2,481
Current assets Cash and cash equivalents Trade and other receivables Inventories Other Total Current Assets Non-current assets Property, plant and equipment Intangible assets Other Total non-current assets Total Assets Current liabilities Borrowings Trade and other payables Provisions Total current liabilities Non-current liabilities Borrowings Provisions Total non-current liabilities Total liabilities Net Assets Equity Share Capital Retained Earnings Total Equity
	6,579 12,142
	5,213 32,522 - - 721 707
	5,934 33,229
	12,513 45,372
	- 10,260 2,813 9,678 182 1,023
	2,995 20,961
	- 13,650 - 1,442
	- 15,092
	2,995 36,053
	9,518 9,318
	114,439 123,960 (104,921) (114,641)
	9,518 9,318
Source: ARW Note: Totals may not add due to rounding

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In relation to the above statements of financial position, we note the following:

• BPL was acquired by ARW on 1 November 2011. The consideration for the transaction included a cash fee of $3.44 million (yet to be paid; included in current borrowings) and convertible notes with a face value of $13.65 million (included in non-current borrowings). In addition, further payments to the holders of the convertible notes may be triggered if certain production benchmarks are surpassed at the Barnawartha plant. A provision to the extent of $2 million was provided ($0.7 million as current provision and $1.3 million as non-current provision).

• Property, plant & equipment have increased significantly due to the takeover of BPL. The write down of plant and equipment on account of the fire in Largs Bay was $3.4 million (gross carrying amount). Restitution works are complete and the plant has resumed operations. The restitution was fully funded under the damages claim submitted to the insurers.

• The acquisition also resulted in ARW taking over bank overdraft and trade payables to the extent of $15.5 million from BPL.

• The provisions also include employee entitlements in addition to the contingent payments to the holders of the convertible notes.

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6. Profile of Wentworth

Wentworth is an Australian public company listed on the ASX that historically provided real estate property management services. Wentworth announced the completion of the disposal of its real estate property management business on 23 December 2011. In the 6 months following completion of this transaction, the Wentworth Board actively sought to identify a new undertaking for Wentworth. On 6 August 2012, Wentworth’s shareholders approved the company becoming an investment company. Since Wentworth became an investment company, an investment committee was formed by the Wentworth Board and regular meetings have been held. However, to date, Wentworth has continued to hold only cash investments and cash at call of approximately $14.3 million.

6.1. Capital Structure and Shareholders

As at 4 December 2012, Wentworth had the following securities on issue:

• 223,351,239 fully paid ordinary shares listed on the ASX; and

• 15,000,000 options over unissued shares currently on issue, with an exercise price of 6 cents per share.

• Table 13 lists Wentworth’s top 10 shareholder groups for securities listed on the ASX as at 12 December 2012.

Table 13: Top 10 Shareholders of Wentworth

	Number of shares 000 % holding 54,888 24.6% 30,746 13.8% 16,716 7.5% 10,386 4.7% 10,244 4.6% 7,461 3.3% 7,260 3.3% 5,982 2.7% 5,381 2.4% 4,900 2.2%
Thorney Group John Rubino Superannuation Fund Ticudi Pty Limited (Charles Tarbey) Thirty-Fifth Celebration Pty. Ltd. (JC McBain Superannuation Fund) Berne No. 132 Nominees Pty Limited RBC Investor Services Brian Austin Superannuation Fund Ballina Groups, Blackcat Holdings, Conard Holdings (Colin Cowden) Nigel Sharp Superannuation Fund Incubator Capital Total
	153,964 69.1%

Source: Wentworth management

The top 10 shareholders account for almost 70% of Wentworth’s shares on issue. As shown in section 8.4 below, we consider the company’s shares to be thinly traded.

6.2. Management and Personnel

The key management personnel and board members of Wentworth are detailed below in Table 14 and Table 15

Table 14: Key management personnel of Wentworth

Name and Position	Experience
Mr. Ron Hollands	Mr. Hollands is a Chartered Accountant with over 20 years’ experience with a
CFO and Company	major international accountancy practice and with public and private companies.
Secretary

Source: Wentworth

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Table 15: Board members of Wentworth

Name and Position	Experience
Mr. Vaughan Webber Chairman	Mr. Webber is an experienced finance professional with a background in chartered accounting and corporate finance servicing the Australian capital markets. He has extensive equity capital markets experience, having been lead
	adviser on mergers and acquisition transactions, and managed IPOs, private
	placements and rights issues. Over the past 15 years, Mr. Webber served in
	senior management capacities with PricewaterhouseCoopers and Bell Potter
	Securities and has held non-executive directorships at Golden West Resources
	Ltd and Style Limited. He is currently a non-executive director of Investorfirst
	Limited and Anchor Resources Ltd.
Mr. Nigel Sharp	Mr. Sharp has over 30 years’ experience in the property industry including
Executive Director	property management, property development, listed property trust management and property valuations etc.
Mr. Hugh Robertson Non-Executive Director	Mr. Robertson is an experienced finance professional with over 25 years’ experience in the stock broking industry including at Bell Potter Securities and Investorfirst Limited. Hugh is an executive director of Investorfirst Limited and
	has held non-executive directorships at Rattoon Holdings Limited, NSX
	Limited and OAMPS Limited.
Mr. Colin Cowden	Mr. Cowden is an Associate of the Institute of Chartered Secretaries, a Fellow
Non-Executive Director	of the Australian Insurance Institute and the Australian and New Zealand Institute of Insurance and Finance, a qualified Practicing Insurance Broker and a
	Certified Practising Accountant and Chartered Secretary. Mr. Cowden has over
	40 years’ experience in the insurance industry and is involved in the
	management of both private and public companies. He was also on the board of
	OAMPS Ltd and Centamin Egypt Ltd.

Source: Wentworth

If the Proposed Transaction proceeds, then the Wentworth Chairman, Mr Vaughan Webber has been invited and has agreed to accept appointment as a a member of the ARW Board (and the remaining Directors will resign from Wentworth).

6.3. Historical Financial Statements

Since the disposal of its real estate property management business in December 2011, Wentworth has changed its main undertaking to an investment company, but has no ongoing business operations and no significant assets or liabilities other than a cash balance. As at 31 October 2012, this amounted to approximately $14.3 million.

6.4. Financial Performance

The operating expenses of the business comprise Directors fees, the Chief Financial Officer/ Secretary, maintaining its public listing and audit/ tax costs. The operating costs of the business are covered by the interest income derived from the cash of $14.3 million held by Wentworth.

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6.5. Financial Position

The financial position of Wentworth as at 30 June 2012 and 31 October 2012 is summarised below in Table 16 :

Table 16: Consolidated Statement of Financial Position for Wentworth

Table 16: Consolidated Statement of Financial Position for Wentworth
	30 June 2012 (AUD ‘000) 31 October 2012 (AUD ‘000) 13,937 14,324 780 49 174 14
Current Assets Cash Receivables Other Total Current Assets Non-Current Assets Property, Plant & Equipment Total Non-Current Assets Total Assets Current Liabilities Payables Provisions Total Current Liabilities Non-Current Liabilities Provisions Total Non-Current Liabilities Total Liabilities Net Assets Equity Contributed Equity Reserves Accumulated Losses Total Equity
	14,891 14,387
	- -
	- -
	14,891 14,387
	(157) (94) (11) (10)
	(168) (104)
	- -
	- -
	(168) (104)
	14,723 14,283
	78,602 78,578 531 531 (64,410) (64,826)
	14,723 14,283

Source: Wentworth management and Wentworth 2012 annual report

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7. Valuation Methodology

7.1. Available Valuation Methodologies

To estimate the Fair Market Value of Wentworth, ARW and the Proposed Merged Entity, we have considered common market practice and the valuation methodologies recommended in RG 111. There are a number of methods that can be used to value a business including:

• the discounted cash flow method;

• the capitalisation of earnings method;

• asset based methods;

• analysis of share market trading; and

• industry specific rules of thumb.

Each of these methods is appropriate in certain circumstances and often more than one approach is applied, at least as a secondary cross-check to a primary method. The choice of methods depends on factors such as the nature of the business being valued, the return on the assets employed in the business, the valuation methodologies usually applied to value such businesses and the availability of the required information. A detailed description of these methods and when they are appropriate is provided in Appendix 3: Valuation Methodologies.

7.2. Selection of Valuation Methodologies – Wentworth

In selecting an appropriate valuation methodology to value Wentworth, we have considered the following factors:

• Since the disposal of its rent roll real estate property management business in December 2011, Wentworth has changed its main undertaking to an investment company but has no ongoing business operations and no significant assets or liabilities other than a cash balance of approximately $14.3 million. This means the discounted cash flow and capitalisation of earnings methods are not appropriate.

• Recent market trading in Wentworth shares (after the announcement of the Proposed Transaction) is not comparable to the trading pattern prior to the announcement.

Accordingly, we are of the opinion that the most appropriate methodology to value Wentworth is an asset based methodology. We have adopted a Net Tangible Assets methodology on a going concern method.

7.3. Selection of Valuation Methodologies – ARW

In selecting an appropriate valuation methodology to value ARW, we have considered the following factors:

• ARW has not made a profit in the last few years;

• the business has changed significantly since the acquisition of BPL in November 2011;

• ARW’s management has prepared long term forecasts for the business and are expecting a significant improvement in profitability in the foreseeable future; and

• The past financial results and financial position is not a good representation of the future value of the business.

Accordingly we are of the opinion that the most appropriate methodology to value ARW is the discounted cash flow analysis using the capitalisation of maintainable earnings as a cross check.

7.4. The Proposed Merged Entity

The Proposed Merged Entity will effectively consist of ARW and the Net Tangible Assets held by Wentworth and as such we have added the valuations of Wentworth and ARW to arrive at the value of the Proposed Merged Entity. We have also applied a discount for lack of control in the range from 15% to 20% to allow for the fact that the shareholders of Wentworth would be minority shareholders in Proposed Merged Entity.

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8. Valuation of Wentworth

As discussed in Section 7.2, our primary method for valuing Wentworth is the Net Tangible Assets on a going concern basis. We have assessed the value of a Wentworth share to be 6.37 cents on a fully diluted and controlling basis as detailed in Table 17 below

Table 17: Valuation of Wentworth (Control Basis)

	AUD $’000 14,283
Total equity Section 6.5 Value of 100% of issued shares in Wentworth Add cash from the exercise of options Section 8.2 Value of 100% of issued shares in Wentworth (including cash from options) Shares on issue (‘000) Add shares from the exercise of options (‘000) Total shares on issue – fully diluted Value per share (cents) – fully dilute basis
	14,283 900
	15,183
	223,351 15,000
	238,351
	6.37

Source: Leadenhall analysis

The majority of Wentworth’s total equity is represented by cash; hence we consider the company’s total equity position is representative of the Fair Market Value of its shares on a controlling basis. This excludes Wentworth’s carry forward tax losses as neither Wentworth nor a third party would likely be able to use them in the future.

8.1. Net Assets as at 31 October 2012

The pro-forma balance sheet of Wentworth shows its estimated net asset position of $14.3 million, represented mainly by cash.

8.2. Outstanding Options

Wentworth has 15 million options over unissued shares currently on issue, with an exercise price of 6 cents. The options are exercisable wholly or in part at any time from the day of issue and will expire three years from the date of issue. The options were issued on 20 January 2010. In order to value the outstanding shares of Wentworth it is necessary to adjust for the Fair Market Value of the outstanding options.

We note that if the Proposed Transaction proceeds, these options will be in the money based on our valuation of Wentworth’s shares, and therefore we have adjusted the value of Wentworth to take into account the dilution from the additional shares in anticipation that these options will be exercised.

8.3. Control Premium

A premium for control can be defined as an amount or a percentage by which the pro rata value of a controlling interest exceeds the pro rata value of a non-controlling interest in a business enterprise, to reflect the power of control. The requirement for an explicit valuation adjustment for a premium for control depends on the valuation methodology and approach adopted. A net assets based valuation implicitly assumes 100% control of the assets. It therefore incorporates a premium for control, thus no further adjustment is required.

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8.4. Comparison to Share Market Trading

The estimated value per share based on the above calculation is 6.4 cents on a controlling basis. As shown in Figure 5 below, this is within the share trading range of 4.0 cents to 6.6 cents within the last 18 months and is within the share trading range of 5.0 cents to 6.5 cents since the disposal of the rent roll business in December 2011. We therefore consider our outcome to be reasonable.

Figure 5: Share price movements and trading volumes of Wentworth

==> picture [453 x 320] intentionally omitted <==

----- Start of picture text -----

¢8.0 1,800
¢7.0 1,600
Estimated Value
1,400
¢6.0
1,200
¢5.0
1,000
¢4.0
800
¢3.0
600
¢2.0
400
¢1.0 200
¢0.0 0
ASX:WWM - Volume ASX:WWM - Share Pricing
(cents)
Share price
Trading Volumes (Thousands)
----- End of picture text -----

Source: Capital IQ

Over the past 12 months (Dec 2011 to Nov 2012), transactions involving Wentworth occurred on only 67 trading days. The total volume of shares traded in this period was 8.4 million, about 3.8% of the 223.4 million shares on issue. This indicates that the Wentworth’s shares are thinly traded.

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9. Valuation of ARW

9.1. Background

As discussed in Section 7.3, our primary method for valuing ARW is the discounted cash flow analysis using the capitalisation of maintainable earnings as a cross check.

9.2. Discounted Cash Flow

The discounted cash flow methodology requires:

• an analysis of projected cash flows;

• determination of an appropriate discount rate; and

• an analysis of a terminal value.

These are discussed in Sections 9.3 to 9.5 below.

9.3. Projected Cash Flows

The first step is to determine the future cash flow to be generated by the business. The directors of ARW have prepared a detailed business plan for FY13 to FY18 (“ the Explicit Forecast Period ”). Leadenhall has discussed the assumptions behind these forecasts with ARW’s management and considered the risks associated with achieving them in order to assess the likelihood of them being achieved. We have then prepared our own financial model based on the assumptions provided by ARW, but adjusted to reflect our views regarding likely production.

The key assumptions adopted in the preparation of our projected cash flows are discussed below:

Production Volumes

At present, only the Barnawartha plant is operating at a profitable level of production. The Picton and Largs Bay facilities are operating at or below breakeven levels of production (which is around 20% of nameplate capacity). The Largs Bay facility was set back by a fire, but restitution work is complete and production has resumed. Management is in discussions with potential customers for the sale of biodiesel from these facilities and once the contracts are finalised, production will be increased.

Therefore the critical issues which impact ARW’s future revenues, profitability and cash flows are:

• finding customers (domestic and export) to take volumes from Picton and Largs Bay;

• ensuring sufficient feedstock can be processed at appropriate prices to ensure production margins are sufficient; and

• ensuring the necessary equipment is in place to enable storage, delivery and blending of B100. This may include investing in the Coogee (Western Australia) terminal in order to provide integrated in-gantry blending. This would involve an approximate capital expenditure of $500,000 (Shell recently invested in a equipment for blending of B20 at its Newport facility near Melbourne).

Based on our discussions with ARW management, including their head of sales, an analysis of industry factors and consideration of Wentworth’s due diligence on ARW, we prepared a production profile scenario. This production profile reflects our view that in the longer term, ARW should be able to produce and sell a relatively high proportion of its capacity. However, it will take time to source customers and increase production. Our selected scenario for valuation purposes reflects production increasing from ~73 ML of B100 in FY14 (49% of total capacity) to 126 ML in FY18 (84% of total capacity) as shown in Figure 6 below. This implies a CAGR of 14.0% volume growth over the 5 years from FY13 to FY18.

Based on our selected production profile, the projected revenue for ARW over the period from FY13 to FY18 increases from approximately $75 million to $142.5 million, with EBITDA of $6.5 million in FY13 increasing to $14.7 million in FY18.

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Figure 6: Projected production volumes for ARW

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----- Start of picture text -----

100% Capacity
150
125
100
75
50
25
0
FY13 FY14 FY15 FY16 FY17 FY18
Barnawartha Largs Bay Picton
ML
----- End of picture text -----

Source: ARW, Leadenhall analysis

Revenue projections

The projected revenues assume that ARW will source new domestic and export customers and that the sales price of biodiesel per litre will be consistent with management’s estimates. Biodiesel producers by and large are price takers in the market. Diesel is still the preferred fuel for many end users and biodiesel prices are relatively priced to that of diesel. A significant part of the revenue increases would depend on new on-going sales contracts being signed for the Picton and Largs Bay facilities.

The price which can be achieved for B100 is therefore a function of:

• price for mineral diesel. This is set by the benchmark price out of Singapore, being the Mean Of Platts Singapore[4] price;

• the price of feedstocks; and

• transportation and logistics costs of alternative sources of B100 and feedstocks

Based on our selected production profile scenario, and ARW forecast price per litre, we set out the projected revenue we have adopted for valuation purposes as shown in Figure 7 below. This implies a CAGR of 13.9% revenue growth over the 5 years from FY13 to FY18.

4 MOPS or Mean of Platts Singapore is a measure of fuel oil pricing in Singapore. It refers to the mean price of oil traded through Singapore as per the data from Platts, a commodity information and trading company.

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Figure 7: Projected revenues for ARW

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----- Start of picture text -----

$ million
160
120
80
40
0
FY13 FY14 FY15 FY16 FY17 FY18
Barnawartha Largs Bay Picton
$ million
----- End of picture text -----

Source: ARW, Leadenhall analysis

Cost of Goods Sold and Operating Expenses

The forecasted cost of goods sold is based on historical prices of feedstock, which have tended to move in line with the MOPS price, allowing ARW to generate relatively consistent gross profits per litre. The other operating expenses at each facility and at the head office are expected to rise in line with inflation. Unless significant capacity expansions or maintenance works are undertaken, expenses are expected to remain relatively stable.

In this regard, we note that ARW’s operating leverage is relatively low and it can break even at a relatively low level of capacity (around 20% of capacity at each facility). The Largs Bay facility was not operational since December 2011 on account of a fire in the plant. Restitution works were completed in November 2012 and the plant has now commenced reoperating. The Picton facility only produced 4 million litres of biodiesel in FY2012 as against its capacity of 45 million litres.

Based on our selected production profile, the projected gross margin varies from 12.5% to 15.4% over FY13 to FY18, with an average of approximately 14%.

Working capital and investment

Due to the low capacity utilisation and lack of ongoing contracts in the past, the historical working capital requirements are not considered representative of the future needs. We have estimated the future working capital on the basis of expected revenues. Owing to the inconsistent nature of the raw material (tallow), the sensitive nature of the process machinery and the need to keep production ongoing, ARW would require to hold adequate quantities of feedstock and output, subject to storage restrictions. As ARW is a price taker on the raw material as well as on biodiesel, the credit terms are unlikely to be favourable, leading to higher working capital requirements. Due to the volatility in the price of feedstock ARW may purchase additional feedstock (subject to storage capacity) when prices are lower than normal as a hedge against increases in input prices. This would also lead to an increase in the required working capital.

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ARW’s management has not indicated any intentions to increase its capacity over 150 million litres. ARW management has provided us with their capital expenditure plans for the near term, which includes upgrading the Picton and Largs Bay facilities to process lower quality inputs at a cost of around $3 million each (total $6 million). ARW’s management estimates that they would invest $500,000 for the blending operations in Coogee terminal in FY13, the $3 million to upgrade the Largs Bay facility in FY14 and the $3 million upgrade to the Picton facility in FY15. In the longer term we have assumed that capital expenditure will be incurred to maintain the existing facilities.

Tax losses

The business has not been profitable historically and therefore has accumulated a tax loss balance of $64 million that may be used to offset against future tax payable. Subject to satisfying relevant taxation regulations, the unused tax losses are expected to be carried forward to future years and applied against future tax payable when the business makes a profit. We have included the benefit of these tax losses in our analysis.

Reasonableness of assumptions

We have not undertaken a review of the projections in accordance with AUS 804 – The Audit of Prospective Financial Information. In relation to prospective financial information, Leadenhall has been provided with projected financial information for ARW. Leadenhall has reviewed the main assumptions underpinning the projections for ARW, undertaken analytical procedures and held discussions with ARW’s Management to consider whether the projections are reasonable when taken as a whole for valuation purposes. Leadenhall has made various adjustments to ARW’s projections based on a lower production profile.

We note that the forecasts and projections supplied to us are, by definition, based upon assumptions about events and circumstances that have not yet transpired. Accordingly we give no assurance that any forecast results will be achieved and consequently any future variation between the actual results and any prospective financial information utilised in this report may affect the valuation conclusions included in this report.

In relation to the prospective financial information, actual results may be different from the prospective financial information of ARW referred to in this report since anticipated events frequently do not occur as expected and the variation may be material. The achievement of the prospective financial information is dependent on the outcome of the assumptions. Accordingly, we express no opinion as to whether the prospective financial information will be achieved.

However, except for the uncertainty surrounding the forecasted growth of sales volume and prices which has been reflected in the discount rate applied to the projected cash flows, nothing has come to our attention to suggest that the assumptions on which the projections are based have not been prepared on a reasonable basis.

9.4. Discount Rate

To determine the Fair Market Value of ARW, it is necessary to determine an appropriate discount rate to apply to the projected cash flows of its business. A discount rate is applied which discounts future earnings based on the level of risk in the business and the degree of risk in achieving the forecasts. As set out in Appendix 5 we have determined post-tax discount rates in the range from 15.1% to 18.2% to apply to ARW’s forecast cash flows before interest but after tax. This is based on a nominal post-tax cost of equity in the range from 16.1% to 19.6%.

9.5. Terminal Value

The terminal value represents the value of cash flows beyond the Explicit Forecast Period. Terminal values are commonly calculated based on the expected long-term growth rate of future cash flows. We expect that beyond the Explicit Forecast Period, there will be little real growth and the business will operate on a stable basis after attaining an optimum level of capacity utilisation.

9.6. Surplus Assets

Surplus assets are assets held by ARW that do not contribute to its maintainable earnings. We have not identified any surplus assets for ARW.

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9.7. Net Debt

As of October 2012, ARW has net debt to the extent of $9.4 million in aggregate. This consists of a bank overdraft of $6.8 million and the amount owed for the acquisition of BPL $3.4 million. This is offset by a cash balance of $0.9 million.

Separately, ARW has 273 convertible notes with an aggregate face value of $13.65 million which carries an annual interest rate of 10%. The face value is repayable on 1 November 2016. ARfuels has elected to capitalise the accrued interest payable to 1 December 2012, an amount totalling $1,365,000. On a net present value basis, we have determined the net present value of the convertible notes to be in the order of $11.7 million as at October 31 2012 (based on repayment of interest and principal, discounted at our selected mid-point cost of equity at 17.9%).

The conversion price of the convertible note is higher than our assessed value per ARW share and accordingly, we have treated the convertible note as a debt of the company.

9.8. Other – Royalties Payable

As part of acquiring BPL, ARW agreed to pay an additional royalty if certain production targets were achieved.

According to the ARW 2012 Annual Report, ‘The Contingent consideration is a further payment to holders of the convertible notes that may be triggered subject to certain criteria being achieved. Earn-out payments can be made to the noteholders if the plant at Barnawartha achieves production levels greater than 43.5 million litres per annum in each of the first three years from 1 November 201. These payments will be 16.33 cents per litre of production in excess of 43.5 million litres per annum for each year the excess is achieved. Should the average level of production over the first three years from 1 November 2011 exceed 49.3 million litres per annum, the potential earn-out payments period will extend for a further two years, taking the earn out program to five years. Management has assessed the likelihood of the earn-out payments and applied discount cashflow rate against the quantum of the payout to determine the Contingent consideration. This amount will be reviewed on an annual basis.’

The royalty payments are expected to be lower than the gross profit per litre, so even if the volumes produced triggered payment of the royalty, it is likely ARW would still make a margin on the increased volume.

At 30 June 2012, an amount was recorded to reflect the possible payment of the royalties. We note that since the Largs Bay plant is now operational, it may be possible for ARW to supply orders from Largs Bay and transport it to customers at a cheaper net cost than producing at Barnawartha. Accordingly, based on the terms of the agreement and our forecast production schedule, we have allowed a further $1 million as a provision for the amount of potential future royalties payable.

9.9. Control Premium

A premium for control can be defined as an amount or a percentage by which the pro rata value of a controlling interest exceeds the pro rata value of a non-controlling interest in a business enterprise, to reflect the power of control. The requirement for an explicit valuation adjustment for a premium for control depends on the valuation methodology and approach adopted. A discounted cash flow valuation analysis implicitly assumes 100% control of the assets. It therefore incorporates a premium for control, thus no further adjustment is required.

9.10. DCF - Valuation conclusion of ARW

Based on the analysis above, we have assessed the 100% value of ARW to be in the range of $30.4 million to $41.8 million on a controlling basis.

We set out our calculations in Table 18 below.

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Table 18: Valuation of ARW as at 31 October 2012

	Low $’000 High $’000 24,222 28,070 14,938 22,544
Present Value of forecast cash flows (FY13-FY18) Present Value of Terminal Value Enterprise Value (on a controlling basis) Less PV of Convertible Note Payments Add PV of accumulated Tax Losses Revised Enterprise Value Net Debt Surplus Assets Value of equity in ARW on a controlling basis ($000) Add cash from the exercise of options Value of 100% of issued shares in ARW (including cash from options)
	39,160 50,614 (11,774) (11,774) 10,350 10,350
	37,735 49,189 (9,356) (9,356) - -
	28,379 39,833 2,000 2,000
	30,379 41,833

Source: Leadenhall Analysis

9.11. Discount for lack of Control

In order to estimate the value of a minority interest, it is necessary to apply a discount for lack of control to the value of a 100% interest in the business. This discount takes into account the lack of control that a minority interest has in the affairs of the company. In determining an appropriate discount to value ARW shares we have considered the following:

• Australian studies indicate the premiums required to obtain control of companies range between 20% and 40% of the portfolio holding values. A minority interest discount is the inverse of a premium for control and generally ranges between 15% and 30%;

• given the high capital expenditures to be incurred from FY13 to FY15 it is unlikely that the company will pay a dividend in the near future. A lack of dividend will lead to a relatively high discount for lack of control; and

• the Company is relatively highly geared.

Having regard to the empirical evidence and the specific factors in relation to ARW, in our opinion a discount for lack of control towards the middle of the range is appropriate. We are of the view that a discount of 20% to 25% is required to be deducted from the 100% value for ARW to calculate the pro-rata value of ARW shares on a minority basis.

We have assessed the Fair Market Value of an ARW share to be in the range from 0.86 cents and 1.27 cents on a listed portfolio basis, as calculated in Table 19 below.

Table 19: Value per share in ARW

	Low High
ARF shares on issue (millions as on 30/6/12) Add shares from the exercise of options (millions) Total shares on issue (millions) Value of equity in ARW ($000) on a controlling basis Less: discount for lack of control Value of equity in ARW ($000) on a listed portfolio basis Value per share in ARW on a listed portfolio basis (cents)	2,441 2,441 200 200
	2,641 2,641
	30,379 41,833 25% 20%
	22,784 33,466
	0.86 1.27

Source: Leadenhall Analysis

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The number of shares included in the calculation above consists of the 2,441,300,361 fully paid ordinary shares listed on the ASX.

9.12. Outstanding Options

ARW also has 372.34 million options over unissued shares, with exercise prices between 1 cent and 10 cents. In order to value the outstanding shares of ARW it is necessary to adjust for the outstanding options from the total equity value. However, we note that:

• 172.34 million of these options have an exercise price of between 2 cents and 10 cents and will expire before March 2015. Compared to our assessed value for ARW, these options are significantly out of the money and their value is therefore negligible.

• The remaining 200 million options have an exercise price of 1 cent. We note that if the Proposed Transaction proceeds, these options will be in the money based on our valuation of ARW, and therefore we have adjusted the equity value of ARW to take into account the additional shares in anticipation these options will be exercised.

9.13. Implied Earnings Multiples

A common, albeit less thorough, valuation methodology is the capitalisation of earnings. Using the historical and forecast earnings from the DCF valuation and the valuation conclusion itself, implied earnings multiples can be calculated. These can then be used as a cross-check to ensure that the DCF valuation conclusion is reasonable. The table below outlines the implied valuation multiples from the DCF valuation (based on the midpoint of the valuation range).

We note that our value for ARW on a listed portfolio basis is $22.8 million to $33.5 million, implying an enterprise value of $31.6 million to $42.2 million on a listed portfolio basis. This range of enterprise value implies the following earnings multiples:

Table 20: Implied Multiples for ARW

	Historical FY12 (times) Current FY13 (times) Prospective FY14 (times) Prospective FY15 (times)
EV / EBITDA EV / EBIT	NM 5.7 5.5x 3.2x NM 9.7x 9.7x 4.3x

Source: Leadenhall analysis

Note: NM – note the business was loss making in FY12, therefore the implied multiple is not meaningful.

9.14. Comparable Earnings Multiples

We have identified multiples implied by the market prices of companies with similar activities to ARW that are publicly traded, as set out in Table 21 below:

Table 21: Comparable Earnings Multiples

	EBITDA Multiple EBIT Multiple
Location of operation Market Capitalisation
	Historical Current Historical Current
(A$ Million)
	FY12 FY13 FY12 FY13
Biopetrol Industries AG Switzerland 14.27 Petrotec AG Germany 25.35 VERBIO Vereinigte BioEnergie AG Germany 95.58 REX American Resources Corporation United States 145.54 Renewable Energy Group, Inc. United States 180.12 Equal Weighted Average Median	- 6.8x - 7.7x 4.9x - 8.1x - 12.1x 9.5x - - 4.1x - 5.6x 5.3x 5.2x 5.4x 6.3x 8.1x
	6.6x 7.2x 6.6x 8.6x 5.0x 7.0x 6.3x 7.9x

Source: CapitalIQ

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In relation to the trading multiples of comparable companies listed above we note the minimum current EBITDA multiple for a listed company set out in the table above is 4.0 times and the average current trading multiple is 6.6 times. The minimum current EBIT multiple for a listed company set out in the table above is 4.7 times and the average current trading multiple is 7.8 times. The average trading EBIT multiples of the comparable companies is lower than the implied current EBIT multiple of ARW despite being significantly larger and less risky. A possible explanation for the abnormality in the result is that there are no true comparable companies in Australia, given the sample selected above are predominately overseas. It may also reflect the high forecast growth for ARW compared to the comparable companies. When ARW’s FY14 and FY15 multiples are compared to the FY13 multiples for comparable companies they are more consistent which supports this view.

Differences in trading multiples of overseas comparable companies include the following:

• the accounting standards and reporting practices adopted by each country, as this will heavily influence the reported and forecast earnings of companies;

• the prevailing tax rates; and

• the economic factors and outlook relevant to the equity markets in different countries which can impact the trading multiples of the companies.

In addition to the trading multiples of comparable companies listed above, we have also considered transactions of similar companies in Australia; however we have not identified any transactions in recent history that would be indicative of a suitable multiple to be used for ARW. Similar transactions that arose before the GFC are not a suitable indication of a comparable multiple due to the aversion to risk evident in the current market, resulting in higher compensation demanded by investors for the perceived extra risk, and lower multiples for post GFC transactions.

Based on Leadenhall’s knowledge of valuation multiples generally and its understanding of ARW, particularly its size, risks and growth prospects, these implied multiples for ARW are reasonable and support the DCF valuation.

9.15. Comparison to Share Market Trading

The estimated value per ARW share based on the above calculation in Table 19 is in the range from 0.86 cents to 1.27 cents on a listed portfolio basis. This is within the current share trading price of 1.20 cents as set out in Figure 8 below.

Figure 8: Share price movements and trading volumes of ARW

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----- Start of picture text -----

c2.5 140
120
c2.0
100
Estimated Value
c1.5
80
60
c1.0
40
c0.5
20
c0.0 0
Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12
ASX:ARW - Volume ASX:ARW - Share Pricing
Share price (cents)
Trading Volumes (millions)
----- End of picture text -----

Source: Capital IQ

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10. Valuation of Effective Consideration

10.1. Background

If the Proposed Transaction proceeds, ARW will issue 5.7 ARW shares for each Wentworth share. The effect of the Proposed Transaction would be that Wentworth’s current shareholders would own a 35.75% minority interest in the Proposed Merged Entity. ARW’s existing shareholders would own the balance of 64.25% in the Proposed Merged Entity.

The Effective Consideration to Wentworth’s Shareholders will therefore be equal to a 35.75% minority interest in the Proposed Merged Entity, which will consist of the equity of ARW and Wentworth.

10.2. Discount for lack of Control

In order to estimate the value of a minority interest, it is necessary to apply a discount for lack of control to the value of a 100% interest in the business. This discount takes into account the lack of control that a minority interest has in the affairs of the company. In determining an appropriate discount to value a 35.75% interest in the Proposed Merged Entity we have considered the following:

• Australian studies indicate the premiums required to obtain control of companies typically range between 20% and 40% of the portfolio holding values. A minority interest discount is the inverse of a premium for control and generally ranges between 15% and 30%;

• The dividend prospects for the Proposed Merged Entity is relatively higher than that of the pre-transaction ARW;

• The Proposed Merged Entity will not be as highly geared as the pre-transaction ARW; and

• 64.25% of the Proposed Merged Entity will be held by the existing shareholders of ARW.

Having regard to the empirical evidence and the specific factors in relation to the Proposed Merged Entity, in our opinion a different discount for lack of control is appropriate for the Proposed Merged Entity to that applied to ARW standalone. We are of the view that a discount of 15% to 20% is required to be deducted from the 100% value for the Proposed Merged Entity to calculate the pro-rata value for a 35.75% interest in the Proposed Merged Entity on a minority basis.

10.3. Value of the Proposed Merged Entity

Based on the analysis above, we have valued the Proposed Merged Entity to be in the range from $36.5 million to $48.5 million on a listed portfolio basis as shown in Table 22 below. This is based on aggregating the value of ARW and Wentworth on a controlling basis, including the notional proceeds from exercising in-the-money options, and then applying a Discount for Lack of Control in the range from 15% to 20%

Table 22: Value of the Proposed Merged Entity (including exercised options)

	Low $’000 High $’000 30,379 41,833 15,183 15,183
Value of equity in ARW on a controlling basis Add: Value of Wentworth's NTA on a controlling basis Value of Proposed Merged Entity on a controlling basis Less Discount on Lack of Control Value of Proposed Merged Entity on a listed portfolio basis
	45,562 57,016 20% 15%
	36,450 48,464

Source: Leadenhall analysis

10.4. Number of Shares

The total number of ARW shares after the Proposed Transaction is calculated as follows:

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• The existing ARW shareholders collectively own 2,441.3 million shares, plus 200 million options that can be notionally exercised since they are in-the-money based on our selected value per ARW share. Hence we have notionally assumed that the options will be exercised in our analysis and included the cash proceeds from the notional exercising and increased the number of shares on issue.

• If the Proposed Transaction proceeds, the existing shareholders of Wentworth would be issued 5.7 shares in ARW for each share of Wentworth. As there are 238.4 million shares of Wentworth outstanding, including 15 million shares that can be issued on option exercise, the number of new ARW shares to be issued would be 1,358.6 million.

The total notional number of shares in the Proposed Merged Entity is 3,999.9 million shares as set out in Table 23 below.

Table 23: Notional number of shares post Proposed Transaction

			No. of shares
	Number of ARW shares (million) Number of Wentworth shares (million) Number of ARW shares issued per Wentworth share New ARW shares issued to Wentworth shareholders (million) Total ARW shares on issue post Proposed Transaction (million)		2,641.3 238.4 5.7 1,358.6
			3,999.9

Source: Leadenhall analysis

10.5. Value of Effective Consideration per share of Wentworth

We have determined the Fair Market Value of the Effective Consideration to be in the range from 5.19 cents to 6.91 cents on a listed portfolio basis as calculated in Table 24 below.

Table 24: Value of Effective Consideration (cents) per share

	Low $’000 High $’000 36,450 48,464 3,999.9 3,999.9 0.91 1.21 5.7 5.7
Value of Proposed Merged Entity on a listed portfolio basis Table 22 Total notional number of ARW shares on issue post Proposed Transaction (million) Table 23 Value per ARW share post Proposed Transaction (cents) Number of ARW shares issued per Wentworth share Table 22 Value of Effective Consideration per share (cents)
	5.19 6.91

Source: Leadenhall analysis

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11. Evaluation

11.1. Fairness

In order to assess whether the Proposed Transaction is fair we have compared our assessed Fair Market Value of a Wentworth share (on a control basis) with our assessment of the Fair Market Value of the Effective Consideration offered (on a listed portfolio basis), as set out in Table 25 below.

Table 25: Comparison of the Effective Consideration to the Value of Wentworth

	Low (cents) High (cents) 5.19 6.91 6.37 6.37
Fair Market Value of the Effective Consideration per share Table 24 Fair Market Value per share in Wentworth Table 17 Difference
	(1.18) 0.54

Source: Leadenhall analysis

Since the value of a Wentworth share is within the range of the value of the Effective Consideration offered, the Proposed Transaction is fair to Shareholders.

11.2. Reasonableness of assumptions

We have defined the Proposed Transaction as reasonable if it is fair, or if, despite not being fair, there are sufficient reasons for Shareholders to vote for the proposal. We have therefore considered the following advantages and disadvantages of the Proposed Transaction to Shareholders.

11.2.1 Advantages of the Proposed Transaction

We set out below the main advantages to Shareholders of approving the Proposed Transaction:

• Active business operation – the Proposed Transaction will offer Shareholders an opportunity to be involved in a company with an ongoing business operation, growth prospects and access to an experienced and qualified management team with a proven track record in operating biodiesel plants.

• Additional growth opportunities – ARW has identified and has started exploring opportunities for the sale and off take of output from its Picton and Largs Bay plants.

• Accumulated tax losses – ARW has not been profitable historically and therefore has accumulated a tax loss balance of $64 million loss that may be used to offset against future tax payable, subject to satisfying relevant taxation regulations.

• Increased liquidity – the Proposed Merged Entity is likely to have a market capitalisation significantly in excess of the current market capitalisation of Wentworth. This may attract greater analyst coverage and may enhance the profile of the Proposed Merged Entity and therefore should result in increased liquidity and greater trading depth than Wentworth on a standalone basis.

• Alternative options – no formal alternative offers or approaches by potential acquirers have been received subsequent to the announcement of the Proposed Transaction. In the absence of a superior offer, Shareholders are unlikely to realise their shares in Wentworth for an amount in excess of the Effective Consideration in the foreseeable future.

11.2.2 Disadvantages of the Proposed Transaction

The main disadvantages to Shareholders of the Proposed Transaction are summarised below:

• Different business from that of Wentworth – the Proposed Merged Entity will be a biodiesel processing company. It will expose Shareholders to additional risks such as technology risk, regulatory risk and commodity price risk.

• Loss of control – after the Proposed Transaction, Shareholders will own 35.75% of the Proposed Merged Entity. The majority of the stake (64.25%) will be held by the existing shareholders of ARW. They could therefore become a controlling shareholder group with the ability to control the assets and the strategic direction of ARW.

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• Use of cash – a significant part of the $14 million cash held by Wentworth will be used to pay off bank overdrafts ($6.8 million as at 31 October 2012) and amount due for the acquisition of BPL ($3.4 million). ARW will still have over $14 million of debt (relating to a convertible note) subsequent to the Proposed Transaction.

• No value for listed shell – companies in Wentworth’s position are often able to obtain a premium for having a “listed shell” which can be in the order of $1 million. Since ARW is already listed it has no need for Wentworth’s listed status and hence Shareholders will forego the opportunity to receive a premium over its NTA.

• Commodity product – biodiesel is essentially a commodity product. A commodity type business generally does not have any business monopoly or competitive advantage in the market with its product. It does leave room for competitors to enter the market with similar products, leading to a fall in prices and affecting company profits.

• Depends on Government Tax Rebates – A change in the government tax policy could affect ARW’s operations adversely. Currently, ARW benefits from the ‘Clean Fuels Grant’ which makes its biodiesel competitive in the market.

11.3. Conclusion on Reasonableness

Since the Proposed Transaction is fair, it is also reasonable.

11.4. Opinion

The Proposed Transaction is fair and reasonable to Wentworth’s Shareholders.

An individual shareholder’s decision in relation to the Proposed Transaction may be influenced by their own particular circumstances. If in doubt, the shareholder should consult an independent financial adviser.

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Appendix 1: Glossary Table 26: Glossary

Term	Term	Meaning
ABARES		Australian Bureau of Agricultural & Resource Economics & Sciences
AIFRS		Australian equivalent to international financial reporting
ARW		AR Fuels Limited
ASIC		Australian Securities and Investments Commission
ASX		ASX Limited
AUD		Australian Dollar
BPL		Biodiesel Producers Limited
CAPM		Capital Asset Pricing Model
CO2		Carbon Dioxide
Corporations Act		The Corporations Act 2001
EBIT		Earnings before interest and tax
EBITDA		Earnings before interest, tax, depreciation and amortisation
Effective Consideration		The effective consideration to Wentworth’s shareholders will be equal to a 33.97% minority interest in the
		Proposed Merged Entity, which will consist of the business of ARW plus the net assets of Wentworth
FFA		Free Fatty Acids
Fair Market Value		The price, expressed in terms of cash equivalents, at which property would change hands between a
		hypothetical willing and able buyer and a hypothetical willing and able seller, acting at arms’ length in an
		open and unrestricted market, when neither is under compulsion to buy or sell and when both have
		reasonable knowledge of the relevant facts
Explicit Forecast Period		FY13 to FY18
FOS		Financial Ombudsman Service
FSG		Financial Services Guide
FY		Financial year
Gallon		Unit of Volume, 1 US gallon = 3.78541 litres
IPO		Initial public offering
Item	7	Item 7 of Section 611 of the Corporations Act
Ke		Cost of Equity
KL		Kilo litres
Leadenhall		Leadenhall Corporate Advisory Pty Ltd
LPG		Liquefied Petroleum Gas
ML		Million Litres
MOPS		Mean of Platts Singapore; A measure of fuel oil pricing in Singapore
MoU		Memorandum of Understanding
NPAT		Net profit after tax
NTA		Net Tangible Assets
P / E		Price to Equity
PBT		Profit before tax
Proposed Merged Entity		The merged entity between Wentworth and ARW after the Proposed Transaction
Proposed Transaction		ARW’s offer to merge with Wentworth
RG74		Regulatory Guide 74: Acquisitions Approved by Members
RG111		Regulatory Guide 111: Content of Expert Reports
Section 606		Section 606 of the Corporations Act 2001
Shareholders		Current shareholders of Wentworth
SWOT		Strengths, weaknesses, opportunities and threats
USD		US Dollar
WACC		Weighted Average Cost of Capital
Wentworth , WWM		Wentworth Holdings Limited

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Appendix 2: Sources of Information

In preparing this report we have had access to the following principal sources of information:

• ABARE http://www.daff.gov.au/abares

• ACCC (Dec 2010); Monitoring of the Australian petroleum industry

• AR Fuels www.arfuels.com.au

• Australian Government Grants http://www.australiangovernmentgrants.org/Cleaner-Fuels-GrantsScheme.php

• Australian Institute of Petroleum www.aip.com.au

• Biodiesel magazine http://www.biodieselmagazine.com

• Biofuels Association of Australia http://www.biofuelsassociation.com.au/

• CapitalIQ www.capitalIQ.com

• CSIRO (2007); Biofuels in Australia - an overview of issues and prospects

• Energy Information Administration http://www.eia.gov

• International Energy Agency www.iea.org

• International Institute for Sustainable Development http://www.iisd.org/gsi/biofuel-subsidies/biofuels-whatcost

• Government of New South Wales, Office of Biofuels http://www.biofuels.nsw.gov.au/

• Slingerland, S and van Geuns, L (2005), Drivers for an International Biofuels Market, CIEP Future Fuel Seminar, Clingendael Institute

• United States Department of Agriculture Foreign Agricultural Service www.fas.usda.gov

• Wentworth Holdings www.wentworthholdings.com.au

• World Energy Outlook www.worldenergyoutlook.org

In addition, we have also referred to budgets, management accounts and the Audited Final Accounts for FY10, FY11 and FY12 of ARW and the management accounts of Wentworth. We have also visited ARW’s Barnawartha facility to understand the operations of the plant and have had discussions and correspondence with certain directors and executives of Wentworth and ARW, in relation to the above information and to current operations and prospects.

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Appendix 3: Valuation Methodologies

In preparing this report we have considered valuation methods commonly used in practice and those recommended by RG 111. These methods include:

• the discounted cash flow method;

• the capitalisation of earnings method;

• asset based methods;

• analysis of share market trading; and

• industry specific rules of thumb.

The selection of an appropriate valuation method to estimate Fair Market Value should be guided by the actual practices adopted by potential acquirers of the company involved.

Discounted Cash Flow Method

Description

Of the various methods noted above, the discounted cash flow method has the strongest theoretical standing. It is also widely used in practice by corporate acquirers and company analysts. The discounted cash flow method estimates the value of a business by discounting expected future cash flows to a present value using an appropriate discount rate. A discounted cash flow valuation requires:

• a forecast of expected future cash flows;

• an appropriate discount rate; and

• an estimate of terminal value.

It is necessary to project cash flows over a suitable period of time (generally regarded as being at least five years) to arrive at the net cash flow in each period. For a finite life project or asset this would need to be done for the life of the project. This can be a difficult exercise requiring a significant number of assumptions such as revenue growth, future margins, capital expenditure requirements, working capital movements and taxation.

The discount rate used represents the risk of achieving the projected future cash flows and the time value of money. The projected future cash flows are then valued in current day terms using the discount rate selected.

A terminal value reflects the value of cash flows that will arise beyond the Explicit Forecast Period. This is commonly estimated using either a constant growth assumption or a multiple of earnings (as described under capitalisation of future maintainable earnings below). This terminal value is then discounted to current day terms and added to the net present value of the forecast cash flows.

The discounted cash flow method is often sensitive to a number of key assumptions such as revenue growth, future margins, capital investment, terminal growth and the discount rate. All of these assumptions can be highly subjective sometimes leading to a valuation conclusion presented as a range that is too wide to be useful.

Use of the Discounted Cash Flow Method

A discounted cash flow approach is usually preferred when valuing:

• early stage companies or projects;

• limited life assets such as a mine or toll concession;

• companies where significant growth is expected in future cash flows; or

• projects with volatile earnings.

It may also be preferred if other methods are not suitable, for example if there is a lack of reliable evidence to support a capitalisation of future earnings approach. However, it may not be appropriate if:

• reliable forecasts of cash flow are not available and cannot be determined; or

• there is an inadequate return on investment, in which case a higher value may be realised by liquidating the assets than through continuing the business.

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Capitalisation of Earnings Method

Description

The capitalisation of earnings method is a commonly used valuation methodology that involves determining a future maintainable earnings figure for a business and multiplying that figure by an appropriate capitalisation multiple. This methodology is generally considered a short form of a discounted cash flow, where a single representative earnings figure is capitalised, rather than a stream of individual cash flows being discounted. The capitalisation of earnings methodology involves the determination of:

• a level of future maintainable earnings; and

• an appropriate capitalisation rate or multiple.

A multiple can be applied to any of the following measures of earnings:

Revenue – most commonly used for companies that do not make a positive EBITDA or as a cross-check of a valuation conclusion derived using another method.

EBITDA - most appropriate where depreciation distorts earnings, for example in a company that has a significant level of depreciating assets but little ongoing capital expenditure requirement.

EBITA - in most cases EBITA will be more reliable than EBITDA as it takes account of the capital intensity of the business.

EBIT - whilst commonly used in practice, multiples of EBITA are usually more reliable as they remove the impact of amortisation which is a non-cash accounting entry that does not reflect a need for future capital investment (unlike depreciation).

NPAT - relevant in valuing businesses where interest is a major part of the overall earnings of the group (e.g. financial services businesses such as banks).

Multiples of EBITDA, EBITA and EBIT are commonly used to value whole businesses for acquisition purposes where gearing is in the control of the acquirer. In contrast, NPAT (or P/E) multiples are often used for valuing minority interests in a company.

The multiple selected to apply to maintainable earnings reflects expectations about future growth, risk and the time value of money all wrapped up in a single number. Multiples can be derived from three main sources. Using the guideline public company method, market multiples are derived from the trading prices of stocks of companies that are engaged in the same or similar lines of business and that are actively traded on a free and open market, such as the ASX. The merger and acquisition method is a method whereby multiples are derived from transactions of significant interests in companies engaged in the same or similar lines of business. In Australia this has been called the comparable transaction methodology. It is also possible to build a multiple from first principles.

Use of the Capitalisation of Earnings Method

The capitalisation of earnings method is widely used in practice. It is particularly appropriate for valuing companies with a relatively stable historical earnings pattern which is expected to continue. This method is less appropriate for valuing companies or assets if:

• there are no suitable listed company or transaction benchmarks for comparison;

• the asset has a limited life;

• future earnings or cash flows are expected to be volatile; or

• there are negative earnings or the earnings of a business are insufficient to justify a value exceeding the value of the underlying net assets.

Asset Based Methods

Description

Asset based valuation methods estimate the value of a company based on the realisable value of its net assets, less its liabilities. There are a number of asset based methods including:

• orderly realisation;

• liquidation value;

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• net assets on a going concern basis;

• replacement cost; and

• reproduction cost.

The orderly realisation of assets method estimates Fair Market Value by determining the amount that would be distributed to shareholders, after payment of all liabilities including realisation costs and taxation charges that arise, assuming the company is wound up in an orderly manner. The liquidation method is similar to the orderly realisation of assets method except the liquidation method assumes the assets are sold in a shorter time frame. Since wind up or liquidation of the company may not be contemplated, these methods in their strictest form may not necessarily be appropriate. The net assets on a going concern basis method estimates the market values of the net assets of a company but does not take account of realisation costs.

The asset / cost approach is generally used when the value of the business’ assets exceeds the present value of the cash flows expected to be derived from the ongoing business operations, or the nature of the business is to hold or invest in assets. It is important to note that the asset approach may still be the relevant approach even if an asset is making a profit. If an asset is making less than an economic rate of return and there is no realistic prospect of it making an economic return in the foreseeable future, an asset / cost approach would be the most appropriate method.

Use of Asset Based Methods

An asset-based approach is a suitable valuation method when:

• an enterprise is loss making and is not expected to become profitable in the foreseeable future;

• assets are employed profitably but earn less than the cost of capital;

• a significant portion of the company’s assets are composed of liquid assets or other investments (such as marketable securities and real estate investments); or

• it is relatively easy to enter the industry (for example, small machine shops and retail establishments).

Asset based methods are not appropriate if:

• the ownership interest being valued is not a controlling interest, has no ability to cause the sale of the company’s assets and the major holders are not planning to sell the company’s assets; or

• a business has (or is expected to have) an adequate return on capital, such that the value of its future income stream exceeds the value of its assets.

Analysis of Share Trading

The most recent share trading history provides evidence of the Fair Market Value of the shares in a company where they are publicly traded in an informed and liquid market. There should also be some similarity between the size of the parcel of shares being valued and those being traded. Where a company’s shares are publicly traded then an analysis of recent trading prices should be considered, at least as a cross-check to other valuation methods.

Industry Specific Rules of Thumb

Industry specific rules of thumb are used in certain industries. These methods typically involve a multiple of an operating figure such as eyeballs for internet businesses, numbers of beds for hotels etc. These methods are typically fairly crude and are therefore usually only appropriate as a cross-check to a valuation determined using an alternative method.

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Appendix 4: Comparable Entities

SWW Energy Limited (ASX:SWW), Australia

SWW Energy Limited engages in the manufacture and sale of biodiesel in Australia, North America, and Asia. The company offers its biodiesel products primarily to fuel blenders who sell to commercial, retail, and government users. The company also provides biodiesel plant design and operational services; and a suite of supporting services, including operational training and services, business system advice, and quality management systems to project developers and project partners. It has a joint venture technology development agreement with Ridgeline Energy Services Inc. to develop waste water treatment processes and equipment for the petroleum and natural gas industry. The company was formerly known as Solverdi Worldwide Limited and changed its name to SWW Energy Limited on May 2, 2011. Solverdi Worldwide Limited is based in Baulkham Hills, Australia.

Biopetrol Industries AG (XTRA:B2I), Switzerland

Biopetrol Industries AG, together with its subsidiaries, produces and sells biodiesel and pharmaceutical-grade glycerine primarily in Germany, the Netherlands, and Switzerland. The company produces its products from renewable resources. It serves oil industry and oil traders, and large-scale fleet operators, as well as public shortdistance transportation, agricultural, construction, pharmaceuticals, and cosmetics industries. The company was founded in 2005 and is headquartered in Baar, Switzerland. Biopetrol Industries AG is a subsidiary of Glencore.

BioFuel Energy Corp. (NasdaqCM:BIOF), United States

BioFuel Energy Corp. produces and sells ethanol and its co-products in the United States. The company offers dried and wet distillers grains with solubles, corn oil, and carbon dioxide. It operates 2 ethanol production facilities located in Wood River, Nebraska and Fairmont, Minnesota with a combined production capacity of approximately 220 million gallons per year. The company sells its products to independent third party marketers and distributors. The company was founded in 2006 and is headquartered in Denver, Colorado.

Petrotec AG (DB:PT8), Germany

Petrotec AG, through its subsidiaries, engages in the manufacture and distribution of biodiesel from used cooking oil or other vegetable fats as the feedstock primarily in Germany. It processes a range of feedstocks into biodiesel, including yellow grease, animal fats, used cooking oil, and fresh vegetable oils. The company also offers by-products, such as glycerine and fatty acids. Petrotec AG sells its biodiesel directly to petroleum companies, wholesalers, and mineral oil dealers. Petrotec AG is headquartered in Borken-Burlo, Germany

Pacific Ethanol, Inc. (NasdaqCM:PEIX), United States

Pacific Ethanol, Inc. produces and markets low carbon renewable fuels in the United States. It sells ethanol to gasoline refining and distribution companies; provides ethanol transportation, storage, and delivery services in the Western United States, primarily in California, Arizona, Nevada, Utah, Oregon, Colorado, Idaho, and Washington; and markets ethanol co-products, including wet distiller grains and syrup to dairy operators and animal feed distributors. The company also provides operations, maintenance, and accounting services to a cellulosic integrated bio-refinery in Boardman, Oregon. Pacific Ethanol, Inc. was founded in 2003 and is headquartered in Sacramento, California.

Gevo, Inc., (NasdaqGM:GEVO), United States

Gevo, Inc., a development stage renewable chemicals and biofuels company, focuses on the development and commercialization of alternatives to petroleum-based products based on isobutanol produced from renewable feedstocks. The company develops Gevo Integrated Fermentation Technology, an integrated technology platform for the production and separation of isobutanol. Isobutanol is a four carbon alcohol for use as a specialty chemical or a value-added fuel blendstock, as well as could be converted into butanes, which are primary hydrocarbon building blocks used in the production of lubricants, rubber, plastics, fibres, other polymers, and hydrocarbon fuels. It also produces and sells ethanol and related products. Gevo, Inc. has a development agreement with BioFuel Energy Corp for production of isobutanol. The company was formerly known as Methanotech, Inc. and changed its name to Gevo, Inc. in March 2006. Gevo, Inc. was founded in 2005 and is headquartered in Englewood, Colorado.

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Aemetis, Inc. (OTCPK:AMTX), United States

Aemetis, Inc. engages in the production and sale of renewable fuels and chemicals in North America and India. It also engages in the acquisition, development, and commercialization of technologies that replace traditional petroleum-based products, and convert first-generation ethanol and biodiesel plants into biorefineries. The company owns and operates a biodiesel plant in Kakinada, India; and leases an ethanol plant in Keyes, California. Aemetis, Inc. sells biodiesel and crude glycerine to resellers, distributors, and refiners through its sales force and independent sales agents, as well as offers ethanol products. The company was formerly known as AE Biofuels, Inc. and changed its name to Aemetis, Inc. in November 2011. Aemetis, Inc. was founded in 2005 and is headquartered in Cupertino, California.

HydroDec Group plc. (AIM:HYR), United Kingdom

Hydrodec Group plc. together with its subsidiaries, operates as an industry oil re-refiner in Australia and the United States. It engages in the commercialization of the Hydrodec technology, a patented technology for the rerefining of used transformer oil into new SUPERfine oil. The company refines, markets, and distributes SUPERFINE transformer oil for use in new transformers, as well as for maintenance and retro-filling existing transformers; and naphthenic base oil that is used as a base oil in various industrial applications, such as lubricants manufacture, rubber processing, printing inks, explosives, spray oils, and concrete form spray. It also offers project and process solutions to persistent hazardous organic chemical by-product, waste, and contamination problems; and re-manufactures by-product and waste chemicals into high value end products. In addition, the company provides technical support and on line oil maintenance services to transformer owners and operators in Australia. Further, it offers a treatment process for polychlorinated biphenyl (PCB) contaminated oil and PCB related chemicals. The company has a strategic alliance agreement with Kobelco-Eco Solutions Ltd to establish plants in Japan. Hydrodec Group plc also exports its products and services to South East Asia, Canada, Mexico, the Caribbean, and South America. The company was founded in 2001 and is based in London, the United Kingdom.

Bio Dynamic Group Ltd. (SEHK:39), Hong Kong

Bio-Dynamic Group Limited, an investment holding company, engages in the manufacture, sale, and distribution of ethanol and ethanol by-products primarily in Mainland China. It also engages in the production and sale of animal feeds, such as forages. In addition, the company is involved in the sale, retail, and distribution of wine and liquor. As of December 31, 2011, it had 25 wine and liquor specialty stores; and 20 franchise stores in Guangzhou. The company was formerly known as Wealthmark International (Holdings) Limited and changed its name to Bio-Dynamic Group Limited in May 2008. The company is headquartered in Hong Kong, Hong Kong.

VERBIO Vereinigte BioEnergie AG (XTRA:VBK), Germany

VERBIO Vereinigte BioEnergie AG, through its subsidiaries, engages in the production and distribution of fuels and finished products based on organic raw materials in Europe. The company offers biodiesel, bioethanol, and biomethane; and glycerine, an alcohol for use in the cosmetic, food, and pharmaceutical industries. It is also involved in the trade of grain and oil seeds, and seeds and fertilizers. The company delivers its products directly to oil corporations, oil traders, independent filling stations, haulage companies, public utilities, and vehicle fleets. VERBIO Vereinigte BioEnergie AG is headquartered in Leipzig, Germany.

REX American Resources Corporation (NYSE:REX), United States

REX American Resources Corporation engages in the production and sale of ethanol and distillers grains. The company’s dry distillers grains with solubles are used as proteins in animal feed. It is also involved in the leasing of real estate properties. The company was formerly known as REX Stores Corporation and changed its name to REX American Resources Corporation in June 2010. The company was founded in 1980 and is based in Dayton, Ohio.

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Renewable Energy Group, Inc. (NasdaqGM:REGI), United States

Renewable Energy Group, Inc. produces and markets biodiesel primarily in the United States and Canada. It is also involved in purchasing and reselling biodiesel and raw material feed stocks produced by third parties; providing toll manufacturing services to third parties; and selling glycerine, free fatty acids, and other coproducts of the biodiesel production process. In addition, the company offers biodiesel facility management and operational services to biodiesel production facilities, as well as other clean-tech companies; and construction management and general contractor services for the construction of biodiesel production facilities. Renewable Energy Group, Inc. was founded in 1996 and is headquartered in Ames, Iowa.

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Appendix 5: Discount Rates

The selected discount rate range for ARW has been determined using the weighted average cost of capital (“ WACC ”) model. We have estimated the cost of equity with the capital asset pricing model (“ CAPM ”).

Summary of WACC concepts

The WACC of a firm is the expected cost of the various classes of its capital (i.e. equity and debt), weighted by the proportion of each class of capital to the total capital of the firm, and can be derived using the following formula:

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The components of the WACC formula are:

Table 27: Components of WACC

Input	Definition
Kd	The pre-tax cost of debt, which is the rate of return required by the providers of debt finance
Ke	The after-tax cost of equity, which is the rate of return required by the providers of equity capital
tc	The applicable corporate tax rate
D	The market value of debt
E	The market value of equity
D / V	The proportion of debt in the capital mix of the relevant business operation
E / V	The proportion of equity in the capital mix of the relevant business operation
V	D + E

Source: Leadenhall analysis

Post- tax cost of equity (Ke)

In the WACC formula shown above, the CAPM provides the means for estimating the cost of equity. CAPM is based on the assumption that investors require a premium for investing in equities rather than in risk free investments (such as government bonds). The cost of equity, K e , is the rate of return that investors require to make an equity investment in a firm.

The cost of equity capital under CAPM is determined using the following formula:

Ke = Rf + β x (Rm – Rf) + α

The components of the CAPM formula are:

Table 28: Components of CAPM

Input	Definition
Ke	The required post-tax return on equity
Rf	The risk free rate of return
Rm	The expected return on the market portfolio
MRP	The Market Risk Premium (Rm – Rf)
β	The beta, the systematic risk of a stock (this is an equity or levered beta)
α	The specific company risk premium, to allow for size, key person risk, key client risk, forecast risk etc.

Source: Leadenhall analysis

Each of the components in the above equation is discussed below.

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Risk free rate (Rf)

The relevant risk-free rate of return is the return on a risk-free security, typically for a long-term period. In practice, long dated government bonds are an acceptable benchmark for the risk-free security. As at 14 December 2012, the yield on ten year Australian Government bonds was 3.315%.

Equity market risk premium (MRP)

The MRP (Rm – Rf) represents the additional return that investors expect from an investment in a welldiversified portfolio of assets (such as a market index). It is the excess return above the risk free rate that investors demand for their increased exposure to risk when investing in equity securities. An MRP of 7% is adopted, which is the prevailing rate in 2012.

Beta estimate (β)

Description

The beta factor is a measure of the risk of an investment or business operation, relative to a well-diversified portfolio of investments. In theory, the only risks that are captured by beta are those risks that cannot be eliminated by the investor through diversification. Such risks are referred to as systematic, undiversifiable or uninsurable risk.

Beta is a measure of the relative riskiness of an asset in comparison to the market as a whole – by definition, the market portfolio has an equity beta of 1.0. The equity betas of various Australian industries listed on the ASX are reproduced below.

Figure 9: Industry Betas for various industries

2011 - 2012 Averages

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----- Start of picture text -----

1.40
1.20
Market Average
1.00
0.80
0.60
0.40
0.20
0.00
----- End of picture text -----

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Source: Beta data sourced from SIRCA

The Betas shown above are based on the historical volatility of the returns for each industry, relative to the returns of the All Ordinaries Index of the Australian Stock Exchange.

Betas derived from share market observations represent equity betas, which reflect the degree of financial gearing of the company. In order to control for this, a more valid analysis of betas can be obtained by “ungearing” or “unlevering” the equity beta by applying the following formula:

 a =  e / [1 + (D/E x (1-tc)]

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where:

Table 29: Components of Hamada formula

Input	Definition
D/E	The debt to equity ratio assumed (based on market values of debt and equity)
tc	The corporate tax rate
e	Equity (geared) beta
a	Asset (ungeared) beta

Source: Leadenhall analysis

The unlevering (ungearing) of betas involves removing the impact of financial gearing from the equity beta (  e) to obtain an asset beta (  a). The unlevered beta is a reflection of the underlying risk of the pre-financing cash flows of the entity. The asset beta is subsequently relevered (regeared) to a specified level of gearing (calculated below to be 20%) to determine the equity beta appropriate for the company being valued using the following formula:

 e =  a x [1 + (D/E x (1-tc)]

The asset and regeared (at our selected debt to equity ratio) betas of companies comparable to ARW are included in the following table.

Table 30: Betas of Comparable Companies

	Market	Asset Beta	Asset Beta	Equity Beta
	Capitalisation	Ungeared Beta		Equity Regeared
	(A$ Million)			Beta
SWW Energy Limited	1.95		0.60	0.64
Biopetrol Industries AG	14.27		0.24	0.26
Biofuel Energy Corp.	22.41		0.39	0.42
Australian Renewable Fuels Limited	29.30		0.79	0.84
Pacific Ethanol Inc.	42.82		0.36	0.38
Gevo Inc.	57.83		3.36	3.60
Aemetic Inc.	79.76		1.49	1.59
HydroDec Group plc	81.92		0.68	0.73
Bio Dynamic Group Ltd	94.24		2.39	2.56
VERBIO Vereinigte BioEnergie AG	95.58		0.63	0.68
REX American Resources Corporation	145.54		0.75	0.80
Equal Weighted Average			1.06	1.14
Median			0.68	0.73
Source: Capital IQ
The market capitalisation is taken as at 5 December 2012.
Note: The Equity Beta has been regeared on 10% Debt to EV ratio that has been assumed		for ARW.

Selected beta (β)

In selecting an appropriate beta for ARW we have considered the following:

• the geared beta for the energy sector (in which the oil and gas refining and marketing companies operate) in Australia is 1.21.

• the regeared betas of comparable companies range from 0.26 to 3.6, with a mean of 1.14 and a median of 0.73; and

• the relative riskiness of ARW compared to the biofuels and oil and gas refining and marketing sector and the specific companies highlighted above.

As a result we have selected an asset beta in the range from 0.90 to 1.10, which results in a geared beta in the range from 0.97 to 1.19 based on our selected debt to equity ratio.

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Specific company risk premium (α)

Size

Many studies have demonstrated that on average, smaller companies have higher rates of return than larger companies. A recent study by Leadenhall of companies listed on the Australian Stock Exchange indicated price/earnings multiples for companies in the lowest deciles were lower than the average of all companies, and significantly lower than the largest deciles. Morningstar publishes an annual study (based on US data) of the additional size risk premium to be added to the post-tax cost of equity, as set out in the table below.

Table 31: Evidence of Size Premium

		Summary statistics	of	annual returns
Decile	Market Cap range (US $m)	Arithmetic mean return (%)		Size premium (return in excess of CAPM)1 (%)
Largest (1st decile)	15,273-314,623	10.42		(0.38)
Large (2nd decile)	6,895-15,079	11.61		0.81
Mid-cap (3rd–5th decile)	1,779-6974	12.00		1.20
Low-cap (6th–8th decile)	478-1,776	12.78		1.98
Micro-cap (9th–10th decile)	1-478	14.87		4.07
Smallest (10th decile)4	1-236	17.16		6.36

Source: Market Results for Stocks, Bonds, Bills, and Inflation 2009 Yearbook, Morningstar SBBI

1. Size premium was calculated as the difference between the actual return and the return calculated using the CAPM

2. Market capitalisation was calculated as at 31 December 2010

3. Morningstar use the 20 year US government bond rate in determining the risk free rate

4. Morningstar provide a further breakdown of the 10th decile, noting that the size premium for the upper half of the 10th decile (decile 10a) was 4.55%, whereas the size premium for the lower half of the 10th decile (decile 10b) was 10.06%. However care must be taken in considering decile 10b due to the volatility of companies in this part of the market

As a result of these factors we have selected a size premium of 4.0% to 5.0% to apply to ARW.

We have also included a specific company risk premium of 2.0% to 3.0% to account for ARW’s additional risks to reflect the uncertainty regarding increasing production volumes and possible future regulatory changes.

Conclusion on cost of equity

The following table sets out our cost of equity estimate for ARW based on the assumptions and inputs discussed above:

Table 32: Estimated cost of equity for ARW

Discount Rate	Low High
Risk Free Rate Equity Beta Market Risk Premium Specific company risk premium (α) Selected cost of equity ( post-tax)	3.3% 3.3% 0.97 1.19 7.0% 7.0% 6.0% 8.0%
	16.1% 19.6%

Source: Leadenhall

Corporate tax rate (tc)

The annual income tax rate payable in Australia is 30%. In calculating the cost of capital for ARW, we have used this rate of 30%.

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Cost of debt capital (Kd)

The cost of borrowing is the expected future borrowing cost of the relevant project and/or business. We have assessed a cost of debt of 8%.

Debt and Equity Mix

The selection of an appropriate capital structure is a subjective exercise. The tax deductibility of the cost of debt means that the higher the proportion of debt, the lower the WACC for a given cost of equity. However, at significantly higher levels of debt, the marginal cost of borrowing would increase due to the greater risk which debt holders are exposed to. In addition, the cost of equity would also be likely to increase due to equity investors requiring a higher return given the higher degree of financial risk that they have to bear.

Ultimately for each company there is likely to be a level of debt/equity mix that represents the optimal capital structure for that company. In estimating the WACC, the debt/equity mix assumption should reflect what would be the optimal or target capital structure for the relevant asset. We have selected a debt to enterprise value ratio of 10%.

Calculation of WACC

The table below summarises the discount rate we have derived for ARW, based on the assumptions and inputs discussed above.

Table 33: Estimated WACC for ARW

Discount Rate	Low High
Adjusted Cost of Equity ( Post-Tax) Debt to Enterprise Value Ratio Pre-Tax Cost of Debt Tax Rate WACC Post tax Nominal	16.1% 19.6% 10.0% 10.0% 8.0% 8.0% 30.0% 30.0%
	15.1% 18.2%
Source: Leadenhall

Based on this analysis we have selected a post-tax discount rate of 15.1% to 18.2% for ARW, which we have applied to ARW’s projected net cash flows before interest but after tax. Our financial model assumes tax is payable, which we have offset with ARW’s carry forward tax losses (until they are fully utilised).

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Appendix 6: Qualifications, Declarations and Consents

Responsibility and Purpose

This report has been prepared only for the benefit of Shareholders for the purpose of assessing the fairness and reasonableness of the Proposed Transaction.

It therefore cannot be used for any purpose other than as described above unless Leadenhall has provided written consent. Other than as specifically identified elsewhere in this report, neither the whole nor any part of this report nor any reference thereto may be included in or with or attached to any document (including electronically), circular, resolution, letter or statement, or released externally to any other party without the prior written consent of Leadenhall as to the form and context in which it appears.

No responsibility to third parties

We are not responsible to you, or anyone else, whether for our negligence or otherwise, if the report is used for any other purpose or by any other person.

Reliance on Information – Accuracy and Completeness

The financial information supplied by Wentworth and ARW, as set out in Appendix 2, is the prime basis of this engagement. In preparing our analysis we have relied upon the accuracy and completeness of the information provided to us and we have assumed it has been prepared in accordance with applicable accounting standards and the Corporations Act.

We have assumed that there is no information or documentation that has been withheld from Leadenhall that potentially may have a material effect on our conclusions.

We have not performed anything in the nature of an audit, review or financial due diligence on the information provided for this report.

Prospective Information – Provision and Responsibility

In relation to prospective financial information, we have relied upon this information as detailed in Appendix 2, without verification by us of historical, budgeted or forecast information. Wentworth’s and ARW’s management is responsible for this financial information.

Statements and opinions contained in this report are given in good faith but, in the preparation of this report, Leadenhall has relied upon the completeness of the information provided by Wentworth, ARW and their officers, employees, agents or advisors which Leadenhall believes, on reasonable grounds, to be adequate, reliable, complete, accurate and not misleading for the purpose of this report.

Prospective Information – Procedures Undertaken

To the extent that this report refers to prospective financial information we have considered the prospective financial information and the basis of the underlying assumptions. The procedures involved in Leadenhall’s consideration of this information consisted of enquiries of Wentworth’s and ARW’s personnel.

These procedures and enquiries did not include verification work nor constitute an audit or a review engagement in accordance with Australian Auditing Standards. Based on these procedures and enquiries, Leadenhall considers that there are reasonable grounds to believe that the prospective financial information for ARW included in this report has been prepared on a reasonable basis.

Prospective Information – Not Audited or Verified

Leadenhall does not imply, nor should it be construed, that it has carried out any form of audit or verification on the information and records supplied to us. Drafts of our report were issued to Wentworth’s and ARW’s management for confirmation of factual accuracy. We have accepted the information at face value, and have not attempted to test its veracity. Whilst we believe the statements made in this report are accurate, no warranty of accuracy or reliability is given by Leadenhall or its affiliated companies and their respective officers and employees.

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Prospective Information – No Assurance on Achievability

We note that the forecasts and projections supplied to us are, by definition, based upon assumptions about events and circumstances that have not yet transpired. Accordingly we give no assurance that any forecast results will be achieved and consequently any future variation between the actual results and any prospective financial information utilised in this report may affect the valuation conclusions included in this report.

In relation to the prospective financial information, actual results may be different from the prospective financial information of ARW referred to in this report since anticipated events frequently do not occur as expected and the variation may be material. The achievement of the prospective financial information is dependent on the outcome of the assumptions. Accordingly, we express no opinion as to whether the prospective financial information will be achieved.

Market Conditions

The opinion of Leadenhall is based on prevailing market, economic and other conditions at the date of this report. Conditions can change over relatively short periods of time. Any subsequent changes in these conditions could impact upon value either positively or negatively.

Indemnities

In recognition that Leadenhall may rely on information provided by Wentworth, ARW and their officers, employees, agents or advisors, Wentworth has agreed that it will not make any claim against Leadenhall to recover any loss or damage which Wentworth may suffer as a result of that reliance and that it will indemnify Leadenhall against any liability that arises out of Leadenhall’s reliance on the information provided by Wentworth, ARW and their officers, employees, agents or advisors or the failure by Wentworth, ARW and their officers, employees, agents or advisors to provide Leadenhall with any material information relating to this report.

APES 225

This report has been prepared in accordance with APES 225 Valuation Services issued by the Accounting Professional and Ethical Standards Board Limited.

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