2011 annual report

For personal use only

algae.tec limited

a renewable and sustainable
energy company

contents

Company Details 3

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

“Algae.Tec uses COmpaNy DETailS

water, sunlight
and nutrients to DirECTOrS

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

OvErviEw OvErviEw
Section 1

Section 1

OvErviEw

LETTER FROM THE CHAIRMAN 6

REVIEW OF OPERATIONS 8


lETTEr frOm ThE ChairmaN

Dear Shareholders I have just returned from visiting our excellent facility in Atlanta, Georgia in the

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.


rEviEw Of OpEraTiONS rEviEw Of OpEraTiONS

• Group overview • ASX Listing • Manildra Group • Chinese Strategic Partners

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.


“Australian
rEviEw Of OpEraTiONS
price on
Carbon to
• Frankfurt Exchange Projects have been set up to evaluate all accelerate

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.


COrpOraTE COrpOraTE
Section 2

Section 2

gOvErNaNCE gOvErNaNCE
iNfOrmaTiON iNfOrmaTiON
COrpOraTE gOvErNaNCE iNfOrmaTiON

CORPORATE GOVERNANCE STATEMENT 14

CORPORATE GOVERNANCE AND bOARD PRACTICES 17

DIRECTOR’S REPORT 20


COrpOraTE gOvErNaNCE STaTEmENT COrpOraTE gOvErNaNCE STaTEmENT

The Algae.Tec Limited Board is committed SharEhOlDErS COmpOSiTiON Of ThE BOarD iNDEpENDENT

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.


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 seek

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.”


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 aND

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.


DirECTOrS’ rEpOrT DirECTOrS’ rEpOrT

The directors submit herewith the annual DiviDENDS iNfOrmaTiON ON DirECTOrS

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.



Subsequently Earl was employed with and overseeing the building of modern
Lockwood Greene and Foster Wheeler brickworks in Perth, Roger provided

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



iNSuraNCE aND iNDEmNiTiES Of OffiCErS aND DirECTOrS rEmuNEraTiON rEpOrT (auDiTED) Executive Directors Pay

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.



rEmuNEraTiON rEpOrT (CONT) rEmuNEraTiON rEpOrT (CONT)

TaBlE Of BENEfiTS aND paymENTS fOr ThE yEar ENDED 30 JuNE 2011 TaBlE Of BENEfiTS aND paymENTS fOr ThE yEar ENDED 30 JuNE 2010

Short term benefits post- Share-based Short term benefits post- Share-based
employment payment employment payment
benefits benefits
Salary Consulting Non Superannuation Shares/ Total Salary Consulting Non Superannuation Shares/ Total
and fees monetary Options and fees monetary Options
Directors Benefits Directors Benefits
fees fees
$ $ $ $ $ $ $ $ $ $ $ $
Key Management Key Management
Personnel Personnel
Roger Sydney - 135,000 - - - 135,000 Roger Sydney - 103,946 - - - 103,946
Stroud Stroud
Peter Ernest Hatfull 90,000 - - 8,100 - 98,100 Peter Ernest Hatfull - 20,000 - - - 20,000
Garnet Earl 154,945 - - 4,352 - 159,297 Garnet Earl - 142,047 - - - 142,047
McConchie McConchie
Tim Morrison - 30,000 - - - 30,000 Tim Morrison - - - - - -

Total 244,945 165,000 - 12,452 - 422,397 Total 265,993 265,993

SECuriTiES rECEivED ThaT arE pErfOrmaNCE rElaTED
No members of key management personnel are entitled to receive securities which are
performance-based as part of their remuneration package.
CaSh BONuSES, pErfOrmaNCE-rElaTED BONuSES aND
SharE-BaSED paymENTS
No cash bonuses, performance-related bonuses or share based payments were granted as
remuneration during the year to key management personnel.
SErviCE CONTraCTS
Remuneration and other terms of employment for the Managing Director, Executive Director and
other key management personnel are not formalised in service agreements. Service agreements
will be entered into as the Group matures.
OpTiONS aND righTS graNTED
No options or rights were granted to key management personnel during the year.


2011 annual report

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2011 annual report