DATADOT TECHNOLOGY LIMITED — AGM Information 2011

Nov 3, 2011

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2011 ANNUAL GENERAL MEETING

Address by the Chairman

Mr Bruce Rathie

4 November 2011

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Ladies and Gentlemen,

2011 was a difficult year for the company. Our results were well below those attained in 2010 and still further below the Board and management’s budgeted target for the year.

But in the broader context, 2011 was also a difficult year for substantial sections of the domestic and international business community – in particular for manufacturers, exporters and retailers, for the wider non-mining sector generally and for global equity markets.

For DataDot, as for many other businesses, it was a deteriorating global economy that was the common and dominant factor in driving results lower – in particular the effects on confidence of a faltering recovery, reduced investment and demand, and rising unemployment.

In DataDot, these global economic effects were compounded by a natural disaster in Japan, which dislocated the supply chain in our core vehicle channel in four geographical markets.

None of that, however, called into question the soundness of the company’s strategic direction. On the contrary, the Board is confident that it has emerged from 2011 well placed to return the company to profit when trading conditions permit.

Over the course of the year we widened the range of products and solutions, extending our prospective market applications and customers.

We took the business into new geographical markets.

And we brought additional business development specialists into the business.

As a result of these strategic initiatives the business has a longer, more robust pipeline of opportunities than at any previous time.

In my remarks today, and in Ben’s more detailed CEO’s address that follows, our aim is to report to you as the company’s owners on the year in review and the year ahead, on the strategic direction the company is taking and on key operational developments.

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I shall begin with the customary review and analysis of the last annual accounts.

The DataDot Group recorded an annual net loss from continuing operations in 2011 of $583,399, which compares with a net profit in the previous year of $931,326.

This $1.5 million reversal was attributable to a decline in total revenues of $2.5 million, of which $2.2 million was a decline in sales revenue.

Cost of sales was lower by $796,000, commensurate with the reduction in production and sales, and total operating expenses increased by $421,000, or 8%.

However, after adjusting for the effects of carrying 100% of the expenses of DataTrace DNA Pty Limited for 7 months, and allowing for carrying all the expenses of AgTechnix Pty Limited in its first year, operating expenses were in line with those in 2010.

The decline in sales revenue was primarily due to two external factors that have had a material impact on businesses globally.

The first of these was the steadily worsening economic condition of the US and Europe throughout 2011, which led to reduced vehicle sales and consequently reduced the sale of DataDot DNA in those markets.

This alone accounted for an annual decline of $2.12 million in sales revenue, the effect of which was compounded by the rising value of the Australian dollar over the course of the year.

The other significant factor was the impact of the Japanese earthquake and tsunami, which disrupted Japanese production, caused a shortage of vehicle stocks in all Japanese export markets and led to reduced DataDotDNA sales in Australia, Taiwan, the US and South Africa. Having occurred in March and disrupted the supply chain for the remainder of the financial year, it eliminated the seasonal lift in sales that is usual in the second half.

Over the full year, sales revenue in the Asia Pacific region declined by $1.5 million.

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These two global events highlight the strategic risk of dependence on a narrow range of products, markets or customers and demonstrate all too clearly why the Board and management are committed to broaden and diversify the company’s revenue base.

It continues to be a strategic imperative for the company to generate both quantitative and qualitative growth in sales and revenue – to grow both the top and bottom lines while reducing the concentration risk and seasonal variability that arise from reliance on a narrow customer base.

That was the core strategy driving the company in 2011 and it remains the centrepiece of the company’s risk-managed growth strategy in 2012.

I can report that in 2011 significant groundwork was laid across a range of developments that the Board is confident will bring both diversified growth to the top line and improved results to the bottom line.

In his CEO’s address Ben will outline these promising opportunities as they affect each of our brands – DataDotDNA, DataTraceDNA and Intelliseed.

For a small company, operating globally, the choices it makes about market presence and resource deployment are critical.

Our strategic policies in relation to market presence and market development are therefore regularly reviewed against changes in the economic and financial global landscape – changes that have been increasingly characterised by shorter cycles and greater volatility.

In 2011 this review led to important decisions to increase the company’s presence in emerging markets.

With regard to Asia, it has been said before that the 21[st] century will belong to Asia as the 20[th] century belonged to the US and Europe. Certainly the trend is pronounced with many

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traditional Western markets in decline and Asian markets, especially those of China and India, in the ascendant.

We think this accelerating global shift presents exciting opportunities for DataDot Technology, in part due to our proximate geography to East and South Asia, but more especially because the widespread proliferation in Asia of counterfeit products and rising vehicle theft provides a natural fit with our specialty in developing product authentication and anti-theft solutions.

The Board decided that the appropriate strategic response to these growth opportunities is to establish a measured, low-cost physical presence in both China and India in partnership with proven, reliable local businesses and business leaders.

Accordingly, in 2011 we formed a joint venture company, DataDot Technology (Asia) Pte Limited, in partnership with our long-standing and successful Taiwanese distributor, and granted the company both DataDot and DataTrace distribution licences for China. The company now operates from headquarters in Shanghai, employs four business development staff, and is actively pursuing new customers and markets.

Its first significant business relationship has been established with Centenary Limited, a Hong Kong company that supplies packaging and other consumables to several major Chinese tobacco companies and has a stake in eliminating widespread counterfeiting in the Chinese tobacco industry. We think that Centenary is well placed to provide a DataTrace DNA product and brand authentication solution to the Chinese cigarette manufacturers that are its customers.

With other prospects in China also in the pipeline, the Board believes this joint venture offers great promise.

In India, while our strategic objective has been the same, execution has been a little different. DataDot has been most fortunate to secure the services of Dr J J Irani, a recently retired

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director of Tata & Sons, the parent company in the Tata Group, who has introduced our personnel and our three brands to a broad spectrum of prospective Indian customers.

As Ben will explain in greater detail, the response of Indian companies has been positive, to the extent that the Board has now decided to establish a wholly-owned subsidiary company in India that can develop markets and provide our customers with technical service in each of our three businesses on the sub-continent. I am delighted to announce that Dr Irani has accepted our invitation to Chair the subsidiary, which will be based in Hyderabad, capital of the State of Andhra Pradesh, and that the formal company incorporation process is underway. We expect the company will be established and operational in the second half of fiscal 2012.

The Board recognises that establishing operations in China and India is not without risk. For this reason it has taken care to align the company’s interests with those of successful operators in each market, ensure protection of our intellectual property and keep costs under tight management control. In the China CV the present operating costs are in fact being borne by our Taiwanese partner under the terms of our joint venture agreement.

We look forward with confidence to these new market ventures contributing positively to future growth in shareholder value.

As at the end of the first quarter in the current year revenues have improved to be broadly in line with the previous corresponding period and we expect revenues to continue to grow as Europe recovers.

Looking at the business by operating segment, revenues in the year to date in Asia Pacific and the Americas are broadly in line with the previous corresponding period and revenues generated by DataTrace are tracking ahead of last year, which is especially encouraging, showing that DataTrace is gaining traction in the product authentication market. European revenues, however, are tracking below the comparable period last year.

In addition, there are a number of highly prospective projects and potential clients being worked on which have the capability, if realised to our expectations, to drive sales revenue

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materially higher this year and in future years. Our challenge is to turn this potential into reality.

In conclusion, I would like to take this opportunity to thank the directors, management and staff of the company for their continuing hard work and of course shareholders for their continued support in difficult times.