Virotec International Ld
27 November 2002
27 November 2002
VIROTEC INTERNATIONAL LTD
CHAIRMAN'S ADDRESS TO ANNUAL GENERAL MEETING
The Chairman of Virotec International Ltd (ASX/AIM: VTI) Mr Brian Sheeran, today
addressed the Company's Annual General Meeting. Mr Sheeran provided the meeting
with a verbal presentation of his letter to shareholders from the 2002 annual
report (as attached) and summarised the company's performance against its
'Vision 2005' as stated in Virotec's 2000 Annual Report.
The slide show presentation of the address is available from www.virotec.com.
For further information please contact Angus Craig, Company Secretary, Virotec
international Ltd on +617 5530 8014 or refer to www.virotec.com.
CHAIRMAN'S LETTER TO SHAREHOLDERS FROM 2002 ANNUAL REPORT
We are building a bigger, smarter, more responsive, more focused company and we
face an immense challenge - our growing size.
What drives Virotec today is the same as it has always been. A corporate
culture, with a unique perspective, that encourages and supports
interdisciplinary thinking. By merging engineering, materials science, organics
science and environmental science we deliver innovation. We deliver new ways to
recover and use materials from waste streams and new ways to make transformation
processes better. We deliver sustainable technologies.
Last year I stated that our greatest strength in the coming year would be the
quality of our people and our shared vision to deliver the potential of our
This year, I ask you to carefully digest the 2002 Annual Report. While many of
the world's most influential companies are accelerating the pace of external
investment to acquire new technologies to increase shareholder value, Virotec
has continued to invest in our scientists, who we believe, are amongst the most
innovative in the world.
I take this opportunity to thank all our people around the world for your
extraordinary contributions. The Board believes you have added substantially to
the intrinsic value of the company.
In summary, 2002 has been a year of considerable growth.
Virotec has established conclusively that Bauxsol(TM)Technology is a platform
technology and that Virotec is not a single product company. In 2002, Bauxsol
(TM)Technology delivered, and the ongoing research shows it will continue to
deliver, a broad suite of patentable technologies and products that will support
ongoing business expansion into many, diverse industry sectors.
We have responded, by steering a course to optimise the true value of the
company and we have initiated a clear corporate strategy to facilitate increased
We will continue to develop, manufacture and implement our new technologies in
commercial situations in Australia. We are committed to following through
complete vertical integration, from concept to customer, before taking proven
technologies to the global market.
To facilitate commercialization, we have established and will continue to
establish, new divisions within the company. Our new Virotec divisions, ViroMine
(TM), ViroSewage(TM), ViroFlow(TM) and ViroSoil(TM) represent clearly identified
market sectors. Each division is responsible for producing marketing materials
and providing technical support for industry.
Our strategic management team is charged with increasing our international
presence through strategic alliances, the sales of exclusive licenses or the
establishment of joint venture partnerships based on geographical criteria or
market dominance. To this end, the company is making steady progress.
In Europe, we have secured numerous, industry alliances for ViroMine(TM)
remediation and have made considerable progress with environmental regulators.
We also perceive that shorter lead times and a range of financial and
environmental drivers will impact favourably on the acceptance of our new
strategic alliance partners aimed at increasing market penetration within a
relatively short term (3-5years).
In Asia, Virotec is currently stepping up its presence via strong and
influential strategic alliances. Negotiations are underway in Hong Kong and
China to implement ViroSewage(TM) Technology into a region where anticipated
spending on the implementation of sewage treatment over the next 10-20 years
will exceed US $1 billion. Furthermore, the company has established several
significant regional alliances for the distribution of ViroFlow(TM) and
ViroMine(TM) product ranges.
In North America, several companies have undertaken extensive due diligence and
Virotec is negotiating with potential parties in regard to issuing licenses for
the right to use products in the ViroFlow(TM) and ViroMine(TM) product groups.
We will also be seeking to expand the ViroSewage(TM) Division throughout North
Growth is never a matter of simple expansion. We must strive to maintain our
culture in the face of growth and change, a culture that has created
opportunities for us in the past. This means not only forming strong, powerful
alliances but protecting our key scientific competencies. Our people want to
make a difference.
Increasingly, our success will be linked, not just to the market adopting our
latest technological breakthroughs, but to the realization in the marketplace
that we lead the world in creating innovative, sustainable technologies to
provide solutions to some of society's main materials challenges.
As shareholders we own a growing bank of intellectual property that is of
fundamental importance to the prosperity of this company.
For instance, ViroSewage(TM) Technology is the result of 18 months of extensive
product development, at two commercial treatment facilities, and it represents a
breakthrough for sewage treatment that can be implemented throughout the world.
Increasing urbanisation and industrialisation have resulted in a dramatic
increase, not only in the volume of wastewater produced around the world, but
also in the volume of biosolids. The ViroSewage(TM) system not only overcomes
many of the long standing problems associated with traditional wastewater
treatment, it also paves the way for municipal councils to safely dispose of
biosolids and to efficiently recycle sewage nutrients. Although the technology
has only been announced to the market in the past month, the company believes
that sales momentum should build quickly.
Basecon(TM)Technology is another world class breakthrough achieved in 2002 and
the company is currently marketing the technology to the Alumina Industry.
Basecon(TM) Technology provides a 'walkaway' solution to an industry that
produces over 70 million tons of caustic waste every year and openly
acknowledges that it faces enormous challenges in relation to the storage of
this waste. With Basecon(TM) Technology, our scientists have clearly shown that
Virotec leads the world in innovative research into alumina refinery waste. We
have provided the alumina industry with an economic incentive to neutralise
refinery waste in such a way that it is no longer caustic and we have answered
another of the great materials handling challenges on the planet. We have also
developed an economic means to provide the non-caustic raw material needed by
Virotec for use in Bauxsol(TM) Technology.
It is hard to identify the company's single greatest achievement to date.
We certainly believe that Bauxsol(TM) Technology remains one of the world's
great environmental breakthroughs. It underpins the intellectual property that
forms the basis of our ViroMine(TM) Division, a world class business in mine
site remediation that provides world class solutions to acid mine drainage and
tailings dam remediation. This is a global market worth fighting for.
Like many shareholders, I have, at times, been frustrated by the long lead times
associated with implementing our new mining solutions into the marketplace.
However we have made important progress and I would like to publicly applaud
some of the key regulators that have been supportive and have shown a genuine
interest in embracing new environmental initiatives. These include the New
Zealand government, the Italian, Portuguese and UK governments in Europe and the
In addition to the integral progress we are making with key environmental
regulators, I am confident that global growth for ViroMine(TM) Solutions will be
further enhanced by the calibre of a powerful strategic partner.
Another new division of the company, established in 2002 and poised to generate
earnings growth, is the ViroFlow(TM) Division, which provides practical
solutions to industry for clean water and waste. Economic drivers and
environmental drivers push industry to adopt new technologies to increase
production capacity or reduce operating costs. In the last 12 months the
ViroFlow(TM) division has developed two new reagents, ViroChrome(TM) for the
tanning industry and ElectroBind(TM) for the electroplating industry. Both
reagents provide superior wastewater performance and reduce operational
bottlenecks. Furthermore, ElectroBind(TM) has demonstrated that it will
contribute to the customer's bottom line.
As we move forward into 2003, we are quite 'bullish' about our future. We have a
corporate strategy that will protect our core efficiencies, encourage market
growth and retain ownership of our key technologies. We have a cash reserve of
approximately $12 million and no borrowings. From day one, we have adopted
conservative accounting principles that have prompted the company to write off
over $3.3 million on research and development and this has added value to our
core assets. It also means lower charges against future revenue.
Virotec is committed to creating value by delivering diverse, multi-product
outcomes that tackle some of the great materials challenges of this century. It
is becoming more and more evident that the assimilative capacity of the earth's
environment is limited and we believe that mainstream economics will embrace the
economics of innovation. More and more, financial imperatives will factor in the
efficiency and viability of material flows and the potential for cost reductions
through the adoption of new technologies that recycle materials and achieve zero
At Virotec, we believe the optimal use of materials is fundamental to
environmental sustainability and we are proud of the global role we are playing
in shaping tomorrow.
Our technologies will change the way many businesses are conducted and we
believe our shareholders are well positioned to benefit from attractive growth.
Virotec International Ltd
ABN 81 004 801 398
PO Box 188
Sanctuary Cove QLD 4212
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