2011 annual report

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2011 annual report

  1. 1. For personal use only algae.tec limited a renewable and sustainable energy company
  2. 2. contents Company Details 3For personal use only SECTION 1 - OVERVIEW Chairman’s Letter 6 Review of Operations 8 SECTION 2 - CORPORATE GOVERNANCE INFORMATION Corporate Governance Statement 14 Corporate Governance and Board Practices 17 Directors’ Report 20 SECTION 3 - CONSOLIDATED STATEMENT INFORMATION Consolidated Statement of Comprehensive Income 32 Consolidated Statement of Financial Position 33 Consolidated Statement of Equity 34 Consolidated Statement of Cash Flows 35 SECTION 4 - NOTES ON FINANCIALS STATEMENTS Notes of the Financial Statements 38 Director’s Declaration 66 Auditor’s Independence Declaration 67 Independent Auditor’s Report 68 SECTION 5 - SHAREHOLDER INFORMATION Shareholder Information 72 ALGAE.TEC ANNUAL REPORT - 30.06.11 | 1
  3. 3. “Algae.Tec uses COmpaNy DETailS water, sunlight and nutrients to DirECTOrSFor personal use only grow algae that Roger Stroud Executive Chairman produces high- Peter Hatfull Managing Director value sustainable Earl McConchie Timothy Morrison Executive Director Non Executive Director fuels such as biodiesel and COmpaNy SECrETary jet fuel.” Peter Hatfull priNCipal rEgiSTErED OffiCE iN auSTralia Suite 9, 3 Centro Avenue Subiaco WA 6008 SharE rEgiSTEr Computershare Investor Services Pty Limited Level 2, 45 St George’s Terrace Perth WA 6000 auDiTOrS Somes and Cooke Jack Milner 1304 Hay Street 1400 Buford Highway, Suite G-4 West Perth WA 6005 Sugar Hill, GA 30518-8727 BaNkErS National Australia Bank Commonwealth Bank of Australia International Operations Business and Private Banking Level 3, Building B, Level 1, 38 Adelaide Street Rhodes Corporate Park Fremantle WA 6160 1 Homebush Bay Drive Rhodes NSW 2138 SECuriTiES ExChaNgE Australian Securities Exchange Frankfurt Stock Exchange New York Stock Exchange ASX FSE NYSE Level 5, 20 Bridge Street 60485 Frankfurt am Maim 11 Wall Street Sydney NSW 2000 Germany New York NY 10005 AEB GZA:GR ALGXY:US 2 | ALGAE.TEC ANNUAL REPORT - 30.06.11 ALGAE.TEC ANNUAL REPORT - 30.06.11 | 3
  4. 4. OvErviEw OvErviEw Section 1 Section 1For personal use only OvErviEw LETTER FROM THE CHAIRMAN 6 REVIEW OF OPERATIONS 8 4 | ALGAE.TEC ANNUAL REPORT - 30.06.11 ALGAE.TEC ANNUAL REPORT - 30.06.11 | 5
  5. 5. lETTEr frOm ThE ChairmaN Dear Shareholders I have just returned from visiting our excellent facility in Atlanta, Georgia in theFor personal use only United States. The research and development and training facility in Atlanta has How time flies when your AlgaeTec team is building an exciting company. been developed to a high standard by Earl McConchie and his team. The Facility is Since listing we have worked hard to achieve all the goals outlined in the prospectus. a credit to the company, and as an algae facility, ranks very high in its technical and Additionally, we have been assiduously developing a strategic network with significant manufacturing excellence. carbon emitters and large biofuel (biodiesel and jet fuel) consumers. The containers prepared for the Shoalhaven One Demonstration program, will be, AlgaeTec has attained a listing on the Frankfurt stock exchange, and on the OTC shortly after you receive this annual report, on the high seas bound for Sydney. as an American Depository Receipt (ADR) in the United States. We have maintained Permitting procedures have been completed, and should have been approved by the strong shareholder support in a very volatile and unpredictable stock market for time you read this letter. most of 2011. During the prospectus period onwards, AlgaeTec engaged an investor relations When the focus in our country and globally turns to fuel and energy, the phrase “we company, Dateline Media. This has raised the market’s awareness of the company’s live in interesting times” takes on a very topical resonance. Over this year there have potential, significantly. The dynamic AlgaeTec website reflects an extensive media been strategic developments in various countries in the arena of Carbon Abatement. coverage in Australia and abroad, in print, radio and through the visual mediums. We China and South Korea are considering some form of carbon tax, as is California. encourage all shareholders to refer to the website regularly. Both Australia and the United States have committed to specific financial support for We thank all shareholders for their support to date, and believe that the projects involved in the production of advanced biofuels (Algae in particular). Additional next 12 months will be very positive for AlgaeTec’s development towards a financial support in the form of fuel subsidies exists in both countries for fuel products profitable company. from algae. The genesis of AlgaeTec Limited’s algae production technology was over 8 years ago. During this time two specific global resource issues, namely food and water, have been critically focused upon. Many countries have embraced solutions enthusiastically, and in a manner consistent with their politically varied structures. Food and water are linked to the global population number and its extraordinary exponential growth. These commodities are inextricably linked to energy in all its forms, and in particular, transport fuels. Careful management of these scarce resources at a national and international level has never been more important. It is with this background that AlgaeTec’s business takes on its current global relevance. Roger Stroud AlgaeTec’s strategic goal is to embrace transport fuels in a very practical manner. Your Executive Chairman company intends to initiate the development and operation of commercial facilities in several countries, predominantly by way of joint venture. The primary focus will be on Australia, the United States, China, Brazil and Southern Europe. The products will be primarily Biodiesel and Grade A Jet Fuel. Discussions are underway with several companies in the various countries mentioned above, with the intention of negotiating either a joint venture at a facility level or at the country level. The Chinese discussions, as mentioned variously before, have changed from one party to another, and are progressing very well. 6 | ALGAE.TEC ANNUAL REPORT - 30.06.11 ALGAE.TEC ANNUAL REPORT - 30.06.11 | 7
  6. 6. rEviEw Of OpEraTiONS rEviEw Of OpEraTiONS • Group overview • ASX Listing • Manildra Group • Chinese Strategic PartnersFor personal use only The year to 30 June 2011 was an extremely Algae.Tec Ltd released a prospectus On 20 August 2010, the Group announced On 20 August 2010, the Group announced significant period for Algae.Tec Ltd as it on 26 July 2010 with the aim of raising that it had signed a memorandum of the signing of a strategic relationship completed the transition to a publicly listed $7.5 million and listing on the Australian understanding with the Manildra Group. agreement with Pacific Minerals, a Group, and commenced the building of its Securities Exchange. The issue closed This MOU details the collaboration Hong Kong based Group, regarding the first full scale modules. in December 2010 once the minimum between the parties to build 2 full size commercialisation of its technology in of $5 million and 500 shareholders had demonstration modules at the Manildra China. The parties agreed to set up a Great strides have been made in following site in Nowra NSW. This arrangement joint venture company in China with the the goals set in our prospectus of positioning been achieved. The $5 million was adequate for the initial goals of the Group was strengthened in June 2011 when aim of identifying and progressing with Algae.Tec Limited at the forefront of the MOU was upgraded to a collaboration commercial applications of its technology. developing sustainable energy solutions, due to favourable exchange rates and considerable cost savings being achieved agreement. This agreement firms up and in developing a state of the art research details regarding the demonstration Roger Stroud visited China during the year and development and manufacturing centre through strategic partners. Shares were at the invitation of our joint venture partners issued at $0.20 with 28,346,668 receiving facility and details the understanding in Atlanta, Georgia. to build a commercial size plant on the and visited potential sites. The duration of quotation. With another 219,575,000 this specific MOU has since expired, but The period also saw the continuation of shares being issued to original founders same site once the demonstration plant is successful. negotiations are continuing with certain negotiations with a number of strategic and seed investors which were subject to identified parties and Roger Stroud is again partners to add certainty to each link in its restriction agreements, the total shares on These first modules are being built in the visiting China in October 2011. supply and value chain, and to form long issue post listing were 247,921,668 and Group’s facility in Atlanta and are on track to term strategic partnerships. giving a market capitalisation at listing of be shipped to the Nowra site in October 2011. $49,584,334. At the time of this report the It is anticipated that they will be operational on shareholders have grown to approximately target in the first quarter of 2012. This was 750 and the market capitalisation to a crucial step for the Group as it will allow it approximately $90 million, a very positive to obtain external validation of the Group’s result in a very negative market period. technology and commercial capability. “Algae.Tec Limited at the forefront of developing sustainable energy solutions.” The bLuE LINE represents the price or value of the security over the requested time frame. The actual price or value is shown on the left axis. The DARk GREEN bARS represent the turnover for the primary security. 8 | ALGAE.TEC ANNUAL REPORT - 30.06.11 ALGAE.TEC ANNUAL REPORT - 30.06.11 | 9
  7. 7. “Australian rEviEw Of OpEraTiONS price on Carbon to • Frankfurt Exchange Projects have been set up to evaluate all accelerateFor personal use only methods of producing algae, not just the On 21 February, Algae.Tec Ltd was accepted to list on the Frankfurt Stock Exchange. Group’s enclosed bio reactor technology, up take of Germany has successfully positioned itself and this will allow us to be at the forefront of new developments. Numerous species Algae.Tec as the cleantech leader in the European Union and Algae.Tec Ltd considered it to be of algae are also continuously being grown and tested to ensure that we have the best Technology.” important to be listed on this exchange as strain for the required product. part of its globally focussed path. European governments continue to discuss • ADR Facility methods of restricting polluting companies and ways to encourage clean technologies Following the Group’s globalisation strategy, and it was considered important to raise our on 27 April 2011, the Group announced profile in Europe and have an easy trading that it had set up an American Depository platform for European investors. Receipt platform with the Bank of New York Mellon as managers of the programme. This level one programme will allow • Atlanta Facility American investors to invest directly in the One of the reasons for the listing of the Group Group’s stock. This also recognises the was to raise funds for the establishment of awareness and appetite for this technology a first class research and development and in this market place. The Group is currently commercial facility. On 17 March 2011 evaluating the benefits of improving this Algae.Tec Limited announced the opening of ADR platform to a full OTCQX listing. its 18,000sq ft facility in Atlanta Georgia. This facility is currently being used to build the first • DMG Media Marketing full size modules that will be established on the Manildra site in Nowra, NSW. During the year Algae.Tec Limited appointed DMG to handle our worldwide The facilities at this site have already led investor relations and media requirements. to further improvements to the Algae.Tec DMG have achieved a tremendous uplift in Limited technology, and new innovations the Group’s profile and in the awareness are always being devised and tested. of Algae.Tec Limited and its technology around the world. As partial compensation for the services received, and in recognition of the value of service, Algae.Tec Limited issued 1,000,000 shares to DMG on 9 March 2011. 10 | ALGAE.TEC ANNUAL REPORT - 30.06.11 ALGAE.TEC ANNUAL REPORT - 30.06.11 | 11
  8. 8. COrpOraTE COrpOraTE Section 2 Section 2For personal use only gOvErNaNCE gOvErNaNCE iNfOrmaTiON iNfOrmaTiON COrpOraTE gOvErNaNCE iNfOrmaTiON CORPORATE GOVERNANCE STATEMENT 14 CORPORATE GOVERNANCE AND bOARD PRACTICES 17 DIRECTOR’S REPORT 20 12 | ALGAE.TEC ANNUAL REPORT - 30.06.11 ALGAE.TEC ANNUAL REPORT - 30.06.11 | 13
  9. 9. COrpOraTE gOvErNaNCE STaTEmENT COrpOraTE gOvErNaNCE STaTEmENT The Algae.Tec Limited Board is committed SharEhOlDErS COmpOSiTiON Of ThE BOarD iNDEpENDENTFor personal use only to protecting shareholders interests and The Shareholders of the Group elect Election of Board members is substantially prOfESSiONal aDviCE keeping investors fully informed about the Directors at the Annual General Meeting the province of the Shareholders in general Subject to the Chairman’s approval (not to be performance of the Group’s business. in accordance with the Constitution. All meeting, however, subject thereto, the Group unreasonably withheld), the Directors, at the The Directors have undertaken to perform directors, other than the Managing Director is committed to the following principles; Group’s expense, may obtain independent their duties with honesty, integrity, care and are subject to re-election by rotation within professional advice on issues arising in the three years. • The Board is to comprise of Directors course of their duties. diligence, according to the law and in a with a blend of skills, experience and manner that reflects the highest standards The Annual General meetings are held in attributes appropriate for the Group and iNTErNal CONTrOlS aND of governance. Perth. Shareholders have the opportunity its business; and maNagEmENT Of riSkS ThE BOarD Of DirECTOrS to express their views, ask questions The Board’s collective experience will enable about Group business and vote on items of • The principal criterion for the The Group’s Board of Directors is accurate identification of the principal risks business for resolution by shareholders at appointment of new Directors is their responsible for the corporate governance of that may affect the Group’s business. Key the Annual General Meeting. ability to add value to the Group and its the Group. The Board develops strategies operational risks and their management will business. for the Group, reviews strategic objectives be recurring items for deliberation at Board COmmuNiCaTiON wiTh and monitors performance against those No formal nomination committee or procedures meetings. SharEhOlDErS objectives. The goals of the corporate have been adopted for the identification, Algae.Tec Limited is committed to EThiCal STaNDarDS governance processes are to: complying with the continuous disclosure appointment and review of the Board membership, but an informal assessment The Board is committed to the establishment “The Board is obligations of the Corporations Act and • Maintain and increase Shareholder value the Australian Securities Exchange process, facilitated by the Chairman in consultation with the Group’s professional and maintenance of appropriate ethical standards. committed to the • Ensure a prudential and ethical basis for the Group’s conduct and activities; and Listing Rules. advisors, has been committed to by the Board. DirECTOrS’ SharE DEaliNgS establishment • Ensure compliance with the Group’s legal The Group keeps the market informed through its annual report, half year report BOarD COmmiTTEES The Board has adopted a Code of Conduct for Directors which establishes guidelines and maintenance The Board has established a separate and regulatory objectives. and by disclosing material developments to the ASX and the media as they occur. Audit Committee consisting of the for their conduct in matters such as ethical standards and conflicts of interests. The of appropriate Consistent with these goals, the Board assumes the following responsibilities: Chairman, the Managing Director and the independent Director. Code is based on that developed by the ethical • Developing initiatives for profit and rEmuNEraTiON arraNgEmENTS Australian Institute of Company Directors. standards.” asset growth • Directors must consult with the Chairman The remuneration of an Executive Director of the Board before dealing in shares or will be decided by the Board, without the • Reviewing the corporate, commercial and other securities of the Group affected Executive Director participating in financial performance of the Group on a that decision-making process. • Dealings in the Group’s shares or other regular basis; securities by related persons may be The total maximum remuneration of Non- • Acting on behalf of, and being carried out other than the period 2 executive Directors is the subject of a accountable to the Shareholders; and weeks prior and 1 day following the Shareholder resolution in accordance with date of announcement of the Group’s • Identifying business risks, and the Group’s Constitution, the Corporations annual or half yearly results or a major implementing actions to manage those Act and the ASX Listing Rules, as applicable. announcement leading, in the opinion of risks and corporate systems to assure The determination of Non-executive the Board, to a fully informed market. quality. Directors’ remuneration within that maximum will be made by the Board having Directors are prohibited from buying or The Group is committed to the circulation regard to the inputs and value to the Group selling Algae.Tec Limited shares at any of relevant materials to Directors in a of the respective contributions by each Non- time if they were aware of price sensitive timely manner to facilitate Directors’ executive Director. information that has not been made public. participation in the Board discussions on In accordance with the Corporations a fully-informed basis. The Board may award additional remuneration Act and the ASX Listing Rules, Directors to Non-executive Directors called upon to advise the Group of any transactions perform extra services or make special conducted by them in shares in the Group, exertions on behalf of the Group. which then informs the ASX of the details of the transaction. 14 | ALGAE.TEC ANNUAL REPORT - 30.06.11 ALGAE.TEC ANNUAL REPORT - 30.06.11 | 15
  10. 10. COrpOraTE gOvErNaNCE STaTEmENT COrpOraTE gOvErNaNCE aND BOarD praCTiCES rETirEmENT, ElECTiON aND Algae.Tec Limited aims for best practice 1. lay SOliD fOuNDaTiONS fOr experience. The Group intends to seekFor personal use only CONTiNuaTiON iN OffiCE Of in the area of corporate governance and maNagEmENT aND OvErSighT out and appoint independent directors in DirECTOrS enhancement of its shareholders’ interest. The Directors monitor the business affairs the future. However, due to the current In accordance with the Constitution of Algae. The Chairman, the Directors’ and Company of the Group on behalf of the Shareholders limited size of the Group’s operations, it may Tec Limited, at each Annual General Meeting, Secretary are responsible for ensuring that and have formally adopted a corporate not be appropriate to appoint a majority of one-third (or a number nearest one-third the Group complies with best practice in its governance policy which is designed to independent directors for some time. The (excluding any other Director appointed by corporate governance on a day to day basis. encourage Directors to focus their attention Group feels the range of skills and breadth of the Directors either to fill a vacancy or as and on accountability, risk management and industry and professional expertise held by The Group’s main corporate governance and the Board members provides a sound basis addition to the existing Directors) must retire Board practices in place during the fiscal ethical conduct. by rotation: and for increasing the Group’s value. year 2011 are described in the next section The objective of Algae.Tec Limited’s governance • Any other Director who has held office and where appropriate, elsewhere in our framework is to allow the Board to: 3. prOmOTE EThiCal aND for three years or more since last being annual report, as indicated. rESpONSiBlE DECiSiON-makiNg elected; and • Provide strategic guidance for the Group Algae.Tec Limited is committed to We regularly review and update our corporate and effective oversight of management maintaining high ethical standards in its • Any other Director appointed to fill a governance practices. The Board evaluates • Facilitate board and management internal operations and its interaction with casual vacancy or as an addition to the and, where appropriate, implements relevant accountability to our shareholders shareholders, investors, stakeholders and existing Directors. proposals with the aim of ensuring that we through clearly defined roles and regulatory bodies. The Group does not continue to demonstrate our commitment to Accordingly, at the 2010 Annual General responsibility for the Board and executive consider the small size of the board and good corporate governance, having regard Meeting, Mr Roger Sydney Stroud, Mr Peter management; and management warrants a separate code to developments in market practice and Ernest Hatfull, Mr Garnet Earl McConchie of conduct. The Group has adopted and regulation. • Ensure a balance of appropriate authority and Mr Timothy Morrison retired as Directors applies a Corporate Governance Policy, a by rotation. All Directors being eligible We comply with the ASX Corporate to avoid individuals having sole authority. Trading Policy and the directors’ operate offered themselves for re-election and were Governance Council’s “Revised Principles under the Directors’ Code of Conduct. 2. STruCTurE ThE BOarD re-elected. of Good Corporate Governance and Best TO aDD valuE The Board meets on a regular basis and Practice Recommendations”. These Mr Roger Sydney Stroud and Mr Garnet As at the date of this report, the Board follows meeting guidelines set down to provisions require listed companies to report Earl McConchie, being the longest serving comprises four directors. Algae.Tec Limited’s ensure all directors are made aware of and on their main corporate governance practices Directors will retire by rotation at the 2011 constitution provides for a minimum of three have all necessary information to participate and require a Group to highlight any areas of Annual General Meeting and, being eligible, directors and not more than nine directors. in informed discussions on all agenda items. departure from the Recommendations of the will offer themselves for re-election. Council and explain that departure. The Board consists of an independent non- The Board and Management understand executive Director, Mr Timothy Morrison, the obligations for ethical and responsible who is not a major shareholder (i.e. neither decision making. he nor his associates hold more than 5% of the Group’s paid up capital and he has no association with any major shareholder). The Chairman, Mr Roger Stroud is currently not “The global independent nor are the other two directors, Mr Peter Hatfull and Mr Earl McConchie. market for Each of them are shareholders of the Group. Algae is poised Each of the directors has been appointed for their particular skills, expertise and for explosive growth in the next 10 years.” 16 | ALGAE.TEC ANNUAL REPORT - 30.06.11 ALGAE.TEC ANNUAL REPORT - 30.06.11 | 17
  11. 11. COrpOraTE gOvErNaNCE aND BOarD praCTiCES COrpOraTE gOvErNaNCE aND BOarD praCTiCES 4. SafEguarD iNTEgriTy iN 6. auDiT aND COmpliaNCE 8. rESpECT ThE righTS Of 10. rEmuNEraTE fairly aNDFor personal use only fiNaNCial rEpOrTiNg COmmiTTEE SharEhOlDErS rESpONSiBly The Audit Committee assists the Board in Due to the current size of the organisation, The Directors recognise that for The Board has not established a fulfilling its responsibilities relating to the the creation of a separate audit committee shareholders of Algae.Tec Limited to be Remuneration Committee at this point in accounting and financial reporting practices was not seen as necessary for the year able to make informed decisions regarding the Group’s development. It is considered of the Group and monitors necessary to 30 June 2011. However, the Board their investment, they need relevant and that the size of the Board along with the statutory and regulatory compliance. currently regularly; timely information. The Board has approved level of activity of the Group renders this the use of third party Investor Relation impractical and the full Board considers The Audit committee functions include: • Monitor and review the effectiveness firms to ensure appropriate and frequent in detail all of the matters for which the of the Group’s control environment, communication with shareholders. directors are responsible. Remuneration • Providing assistance to the Board in reporting practices and responsibilities fulfilling its corporate governance and to the independent Director is by way of in the areas of accounting, risk The Group updates its website with all Director Fees only, with the level of such oversight responsibilities in relation to management and safeguard of assets. media releases during the year and has the Group’s risk management systems, fees, having been set by the Board to an made several presentations to market amount it considers to be commensurate for financial reporting, internal control • Review and approve internal audit plans representatives and financial analysts. structure and the internal and external including identified audit risk areas. a Group of its size and level of activity. audit functions. 9. rECOgNiSE aND maNagE riSk The remuneration for the executive directors • Oversee and appraise the quality of The Board acknowledges Principle 7 of is as disclosed in the Directors’ Report. • Monitoring compliance with the audits conducted and monitor their the ASX Corporate Governance Council Non – executive Directors do not receive Corporations Act, ASX Listing Rules and effectiveness. in its approach to risk management. The performance based bonuses and do not any matters outstanding with taxation • Monitor and evaluate compliance identification and effective management of participate in equity schemes of the Group, and other regulatory authorities. processes and adherence. risk is viewed as an essential part of the nor are they entitled to retirement allowances. • Nomination of external auditors; and Group’s approach to creating long-term There is currently no link between performance • An Audit Committee has been shareholder value. The Board determines and remuneration and there are no schemes • Overseeing the financial reporting established from 1 July 2011 however the Group’s risk profile and is responsible for for retirement benefits in existence. process. does not have a majority of independent overseeing and approving risk management Directors. strategy and policies, internal compliance The Board is responsible for determining the 5. NOmiNaTiON COmmiTTEE and internal control. remuneration of the Chief Executive Officer No formal nomination committee or 7. makiNg TimEly aND BalaNCED and senior executives. procedures have been adopted for the DiSClOSurE The Board’s collective experience will identification, appointment and review of The Group recognises the significance of enable accurate identification of the The Board of Directors and the Company the Board membership, but an informal continuous and timely disclosure and has principal risk that may affect the Group’s Secretary are responsible for the corporate assessment process, facilitated by the developed a strict Securities Trading Policy. business. Key operational risks and their governance of the Group and were guided Chairman in consultation with the Group’s This policy and ongoing formal and informal management will be recurring items for by the Director’s Code of Conduct, the professional advisors, has been committed meetings of the Directors and Management deliberation at Board Meetings. Corporate Governance Policy and the ASX to by the Board. ensures accountability and provision of Corporate Governance Council Revised relevant and timely information to all Principles of Good Corporate Governance shareholders and investors. during the financial year. The Board guides and monitors the business affairs of The Group includes continuous disclosure Algae.Tec Limited and its subsidiary on as a permanent item on the agenda for behalf of the shareholders to whom they Board meetings and in compliance with are accountable. ASX Listing rules. The Company Secretary is responsible for ensuring compliance with the continuous disclosure requirements and overseeing and authorising disclosure information to the ASX. All media releases which contain material price sensitive information must be approved by the Board prior to release to the ASX. 18 | ALGAE.TEC ANNUAL REPORT - 30.06.11 ALGAE.TEC ANNUAL REPORT - 30.06.11 | 19
  12. 12. DirECTOrS’ rEpOrT DirECTOrS’ rEpOrT The directors submit herewith the annual DiviDENDS iNfOrmaTiON ON DirECTOrSFor personal use only financial report of Algae.Tec Limited. In No dividends were paid or recommended by DETailS Of ThE DirECTOrS’ qualifiCaTiONS aND ExpEriENCE arE SET OuT aS fOllOwS: order to comply with the provisions of the the Directors. Corporations Act 2001, the Directors report is as follows: SigNifiCaNT EvENTS afTEr ThE BalaNCE DaTE DirECTOrS There have been no significant events The names and particulars of the directors of occurring after the balance date which have the Company as at 30 June 2011 and at the significantly affected or may significantly date of this report are as follows. Directors affect the Group’s operations or results of were in office for the entire period. those operations or the Group’s state of affairs in future financial years. Mr Timothy Morrison Non - Executive Director ENvirONmENTal rEgulaTiONS Mr Peter Ernest Hatfull aND pErfOrmaNCE Managing Director and Company Secretary Algae.Tec Ltd will not be subjected to significant environmental regulations TimOThy mOrriSON pETEr ErNEST haTfull Garnet Earl McConchie under both the Commonwealth and Non Executive Director Managing Director and Company Secretary Executive Director State legislation. Tim Morrison currently is the acting CEO of Peter has over 30 years experience in a range Roger Sydney Stroud RGM Media Limited, an ASX listed company. of senior executive positions with Australian and Executive Chairman Prior to this, Tim was Director of Research and international companies. He has an extensive Development at Murdoch University. He had skill-set in the areas of business optimisation, priNCipal aCTiviTiES responsibility for the provisions of high level capital raising and Group restructuring. The principal activity of the Group is to support to the Pro Vice Chancellor (Research) produce algal oil and algal biomass for sale in the management of research and the Prior to becoming Managing Director of Algae. as feedstock to producers of biodiesel, jet commercialisation of the University’s Intellectual Tec Ltd, Peter was recently Managing Director fuel and ethanol. Property. His primary responsibility in this position of a leading integrated metal recycling and was to extend existing research relationships and contracting company, CMA Corporation Ltd, OpEraTiNg rESulTS based in Sydney, where he managed a period of to develop new links with business and industry. The consolidated comprehensive loss for dramatic growth and increased profitability. Prior His role was the key driver and catalyst for the year was $2,437,487 (2010: $410,174). The consolidated cash flow statement shows “The Directors University’s continuing development of global research and training, as well as its application to to this appointment, he held senior financial and Board positions in Australia, Africa and the UK. that cash and cash equivalents at year perform their economic and national benefit. He has particular experience in turnaround and slow growth situations, where companies have ending 30 June 2011 were $2,434,251 (2010: $9,779). duties with honesty, Prior to this position he was General Manager of Murdoch Link Pty Ltd, the commercial arm struggled to expand their business. This has required revitalising the business plan, attracting SigNifiCaNT ChaNgES iN integrity and care.” of Murdoch University, which is the dedicated investor funding and implementing profitable STaTE Of affairS provider of quality research consultancy services strategies. Peter is currently a director of GFR Please see ‘Review of Operations’ page 8. to the professions, industry and government. Group, Structerre Consulting, Barminco Pty Ltd and is based in Perth, WA. Tim has a BA (1st Hon) from Murdoch University, a Post Grad Diploma (Social Research Methods) from Peter graduated as a Chartered Accountant in the Murdoch, and an MBA (Financial Management) United Kingdom, where he worked for Coopers from the University of Western Australia and Lybrand (now PriceWaterhouseCoopers), and subsequently moved to Africa, where he interest in Shares and Options spent 8 years in Malawi. Peter moved to Perth Mr Timothy Morrison currently holds 2,000,000 in 1988. ordinary shares in Algae.Tec Limited. interest in Shares and Options Mr Peter Hatfull currently holds 9,557,865 ordinary shares in Algae.Tec Limited. 20 | ALGAE.TEC ANNUAL REPORT - 30.06.11 ALGAE.TEC ANNUAL REPORT - 30.06.11 | 21
  13. 13. DirECTOrS’ rEpOrT DirECTOrS’ rEpOrT Subsequently Earl was employed with and overseeing the building of modern Lockwood Greene and Foster Wheeler brickworks in Perth, Roger providedFor personal use only Corporation. Earl has over 10 years of advisory services to mining and specific technical and business experience in manufacturing businesses for a number the biodiesel and glycerine industry sectors. of years. In the late 1990s, Roger began He is a founding director and controlling the process of building businesses in the shareholder of Teco.Bio LLC, and is based in renewable fuel sector, primarily biodiesel. Atlanta, Georgia where he has co-ordinated This included floating two separate the microalgae development. biodiesel companies. Roger is a founding director and controlling shareholder of Earl has received a BSc (Chem. Eng) Teco.bio LLC , and is based in Perth, WA. garNET Earl mCCONChiE rOgEr SyDNEy STrOuD from Virginia Polytechnic Institute & State Executive Director University, and a ME Chemical Engineering Executive Chairman Roger has received a BSc from Sydney from Texas A & M University. He is a Roger has over 35 years experience in University, majoring in Chemistry and Earl has over 35 years experience over a registered Professional Engineer, Member a variety of industries. He spent over Geology and a BA (Economics) from broad field of chemistry and associated of the National Society of Professional 10 years in finance in a number of Macquarie University. He is currently technologies, including global markets, Engineers, The American Institute of areas including credit, money market chairman of the “Centre for Research bulk chemicals and plastics, differentiated Chemical Engineers, and the Society of and investment banking for CitiNational into Energy for Sustainable Transport”, commodities and intermediates, specialty Plastic Engineers. (Citibank/National Mutual) merchant a collaborative of Curtin and Murdoch chemicals, polymers and interaction with bank, predominantly in Sydney. Universities based on Murdoch Campus. environmental sectors. interest in Shares and Options Mr Earl McConchie controls Dot-Bio Inc Following the above, he floated a mining interest in Shares and Options Earl’s field experience includes international business management, plant operations, which holds 50% of Teco.Bio LLC which in company, with a head office based Mr Roger Stroud controls Teco Pty Ltd and project engineering in the US, Europe turn holds 200 million shares. in Sydney, and undertook the role of which holds 50% of Teco.Bio LLC which (especially Germany, Holland, Switzerland, Managing Director for 8 years. After in turn holds 200 million shares. An additional 4,500,000 shares are held by UK and CIS), Latin America (Brazil, Argentina floating a manufacturing company, the immediate family of Mr Earl McConchie. and Mexico) and Asia (Korea, China and Australia). Earl was employed with Dow Chemical Company for 25 years. He served mEETiNgS Of DirECTOrS as Global Director for chemicals and plastics in the latter part of his employment. During the year ended 30 June 2011, the number of meetings of the Board of Directors and the number of meetings attended by each of the Directors are as follows: DirECTOr’S mEETiNg Number of meetings held 8 Number of meetings attended Mr Timothy Morrison 8 Mr Peter Ernest Hatfull 8 Garnet Earl McConchie 8 Roger Sydney Stroud 8 22 | ALGAE.TEC ANNUAL REPORT - 30.06.11 ALGAE.TEC ANNUAL REPORT - 30.06.11 | 23
  14. 14. DirECTOrS’ rEpOrT DirECTOrS’ rEpOrT iNSuraNCE aND iNDEmNiTiES Of OffiCErS aND DirECTOrS rEmuNEraTiON rEpOrT (auDiTED) Executive Directors PayFor personal use only The Group has not, during or since the financial year, in respect of any person who is or has been Principles used to determine the nature The remuneration of Executive Directors is a director, officer or auditor of the Group or a related body corporate, indemnified or made any and amount of remuneration fixed by the Directors and paid by way of relevant agreement for indemnifying against a liability incurred as a director, officer or auditor, salary or consultancy fee. The remuneration including costs and expenses in successfully defending legal proceedings. The Group is in the The Board is responsible for making recommendations on remuneration packages package properly reflects the person’s process of finalising Directors and Officers Liability Insurance at the date of this report. duties and responsibilities and that the and policies applicable to the Board members SharE OpTiONS and senior executives of the Group. remuneration is competitive in attracting, At the date of this report, the following options to acquire Ordinary shares of the Group retaining and motivating people of the The Board’s remuneration policy is to ensure highest quality. Directors and executives’ were on issue: the remuneration package reflects the remuneration is arrived at after consideration person’s duties and responsibilities and that of the level of expertise each director and graNT DaTE NumBEr ExErCiSE Expiry DaTE the remuneration is competitive in attracting, executive brings to the Group, the time priCE retaining and motivating people of the and commitment required to efficiently highest quality. Directors’ and executives’ and effectively perform the required tasks Unlisted Ordinary 12/01/2011 49,584,334 $ 0.75 12/01/2016 remuneration is arrived at after consideration and after reference to payments made to Options of the level of expertise each director and directors and executives in similar position executive brings to the Group, the time in other companies. Unlisted Ordinary 3/03/2011 5,000,000 $ 0.75 13/01/2014 and commitment required to efficiently Options and effectively perform the required tasks DETailS Of rEmuNEraTiON and after reference to payments made to Details of the remuneration of the directors of directors and executives in similar positions Algae.Tec Limited is set out in the following 54,584,334 in other companies. tables. The key management personnel of Algae.Tec Limited are: At this stage the remuneration reflects the prOCEEDiNgS ON BEhalf Of ThE grOup performance of the Group in a development Mr Peter Ernest Hatfull No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene stage in that the levels of remuneration are Managing Director and Company Secretary in any proceedings to which the Group is a party for the purpose of taking responsibility on behalf at the low end of the market. As the Group of the Group for all or any part of those proceedings. Garnet Earl McConchie becomes revenue producing and shareholder Executive Director wealth increases, regular reviews will The Group was not a party to any such proceedings during the year. be conducted as to the remuneration of Roger Sydney Stroud NON-auDiT SErviCES directors and executives. Executive Chairman The Board of Directors, in accordance with advice from the audit committee, is satisfied that Non Executive Directors Pay Mr Timothy Morrison the provision of non-audit services during the year is compatible with the generated standard of Non - Executive Director independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied The Group’s Constitution provides that the that the services disclosed below did not compromise the external auditor’s independence for the remuneration of non-executive Directors following reasons: will be not more than the aggregate fixed sum determined by a general meeting. The • All non-audit services are reviewed and approved by the Board prior to commencement to aggregate remuneration for non-executive ensure they do not adversely affect the integrity and objectivity of the auditor, and Directors has been set an amount not to exceed $150,000 per annum. The Group • The nature of the services provided does not compromise the general principles relating pays its non-executive Director, Mr Timothy to auditor independence in accordance with APES 110: Code of Ethics for Professional Morrison, a fee of $40,000 per year. Accountants set by the Accounting Professional and Ethical Standards Board. fuTurE DEvElOpmENTS The current strategy of continuous improvement and adherence to quality control in existing markets, are expected to assist in the achievement of the consolidated group’s long term goal and development of new business opportunities. 24 | ALGAE.TEC ANNUAL REPORT - 30.06.11 ALGAE.TEC ANNUAL REPORT - 30.06.11 | 25

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