2012 ANNUAL REPORT
QRxPharma Limited
is a commercial-
stage specialty
pharmaceutical
company focused on
the development and
commercialisation of
new treatments for
pain management.
Based on a development strategy that focuses on enhancing
and expanding the clinical utility of currently marketed
compounds, the Company’s product portfolio includes both
late and early stage clinical drug candidates with the potential
for reduced risk, abbreviated development paths, and
improved patient outcomes.
QRxPharma entered into a strategic collaboration with
Actavis Inc. in December 2011 for the commercialisation of
immediate release MOXDUO® in the US acute pain market.
Additionally, the Company’s clinical pipeline includes an
intravenous (IV) and continuous release (CR) formulation of
MOXDUO. For more information, visit www.qrxpharma.com.
QRxPHARMA LIMITED
ABN 16 102 254 151
TABLE OF
CONTENTS
Corporate directory
Letter from the Chairman
CEO review
Directors’ report
Auditor’s independence declaration
Corporate governance statement
Financial report
Directors’ declaration
Independent auditor’s report to the members of QRxPharma Limited
Shareholder information
1
2
4
7
24
25
32
69
70
72
CORPORATE
DIRECTORY
DIRECTORS
Peter C Farrell PhD, ScD, AM
Non-Executive Chairman
John W Holaday PhD
Managing Director and Chief Executive Offi cer
R Peter Campbell FCA, FTIA
Gary W Pace PhD
Michael A Quinn MBA
SECRETARY
Chris J Campbell CA
NOTICE OF ANNUAL GENERAL MEETING
The annual general meeting of QRxPharma Limited
will be held at
time
date
DibbsBarker
Level 8, Angel Place,
123 Pitt Street, Sydney
10.00am
Wednesday, 7 November 2012
PRINCIPAL REGISTERED OFFICE IN AUSTRALIA
QRxPharma Limited
Level 1, 194 Miller St, North Sydney NSW 2060
SHARE REGISTER
Link Market Services Limited
Level 12, 680 George Street, Sydney NSW 2000
AUDITOR
PricewaterhouseCoopers
Darling Park Tower 2, 201 Sussex Street
Sydney NSW 2000
SOLICITORS
DibbsBarker
Level 8, Angel Place, 123 Pitt Street
Sydney NSW 2000
Bryan Cave LLP
1155 F Street, N.W.
Washington, D.C. 20004, U.S.A
BANKERS
Westpac Banking Corporation
Level 9 Keycorp Tower, 799 Pacifi c Highway
Chatswood NSW 2067
Silicon Valley Bank
3003 Tasman, Santa Clara
California 95054, U.S.A
STOCK EXCHANGE LISTINGS
QRxPharma Limited shares are listed on the
Australian Securities Exchange.
Listing Code: QRX
QRxPharma Limited American Depositary
Receipts are listed on the OTCQX.
Symbol: QRXPY
WEBSITE ADDRESS
www.qrxpharma.com
www.qrxpharma.com
www.qrxpharma.com
1
1
LETTER
FROM THE
CHAIRMAN
Dear Shareholder,
On behalf of QRxPharma’s Board and management, I am pleased to provide
you with our 2012 annual report.
This year has presented the Company with both challenges and achievements
as we continue on our path to commercialise our acute pain drug candidate,
immediate release MOXDUO®. Regarding the former, in June 2012 we found
out that we were not successful in obtaining FDA approval for MOXDUO on
our fi rst go around with the US Food and Drug Administration (FDA). However,
we believe we are making positive progress in our follow-up discussions with the
FDA; I will further expand on that point below. With respect to achievements,
we are quite excited about our previously reported strategic partnership
with Actavis Inc. which was inked at the end of 2011. Along with Actavis, the
QRxPharma team stands well prepared to drive MOXDUO through approval
and commercial launch in the coming year to deliver patient benefi t, as well as
signifi cant revenues and long-term value.
After four years of Phase 3 clinical development, all coordinated with the FDA,
we achieved all objectives and initiated the fi ling of our New Drug Application
(NDA) for immediate release MOXDUO in July 2011. This was a milestone for
the Company, and could only have been achieved with the excellent clinical
results that culminated from years of effort by the team.
As already mentioned, we entered into a signifi cant strategic collaboration
with Actavis, one of the world’s leading generic pharmaceutical companies
which has an established branded US presence with Kadian®, a chronic pain
opioid. This collaboration is a cornerstone of our commercialisation strategy for
MOXDUO in the US acute pain market.
Actavis is proving an ideal partner, with experience in manufacturing,
distribution, marketing and sales of both patented and generic opioid products.
Their background and experience bodes well for a strong working relationship
and both parties are keen to achieve early revenues.
After the QRxPharma/Actavis strategic partnership was signed, it was
announced that Actavis would be acquired by Watson Pharmaceuticals, Inc
(NYSE: WPI), a leading US pharmaceutical company and among the top four
generic companies in the world. This development, we believe, will not only serve
to further enhance the synergies we have developed with Actavis, during the
past year, but also provide further marketing muscle as we launch MOXDUO in
the branded drug marketplace.
While the fi nding by the FDA in June was a disappointment, we were
encouraged by the outcomes of our post-submission review meeting with
the FDA in August 2012, where the steps needed for approval were clarifi ed.
Importantly, at this meeting it was confi rmed that there were no unexpected
or problematic safety issues in any of the studies submitted as part of the
MOXDUO NDA, nor were we asked to do further clinical trials.
2 QRxPharma Annual Report 2012
LETTER
FROM THE
CHAIRMAN
(CONTINUED)
The FDA did request, however, further information regarding data fi led as
part of the MOXDUO NDA as well as additional analysis of trials completed
to date that were targeted to meet drug requirements for approvals in Europe
and Australia. In particular, results from study 022, a comparative study of
MOXDUO with single equi-analgesic doses of morphine and oxycodone,
indicated that MOXDUO resulted in less severe respiratory depression than
either morphine or oxycodone given separately. Our case now rests on the merits
of solid clinical results, as well as the strength of the additional data submissions,
coupled with further dialogue with the FDA. As an aside, Actavis has confi rmed
support for our MOXDUO FDA strategy and are fully engaged with our efforts to
address the FDA’s concerns.
The Board and I are optimistic about the Company’s future as we prepare to
transition from a clinical stage company to a commercial entity with revenues.
In fact, changing regulations for acute pain opioids are creating even greater
market opportunity for our Dual Opioid product portfolio. For example, the FDA
are requiring that all combination paracetamol (acetaminophen) / opioid acute
pain products containing more than 325mg of paracetamol are to be removed
from the market by January 2014, due to concerns over the safety of paracetamol.
As the US $2.5 billion acute pain market continues its annual growth of 5%,
and medical needs grow for alternative pain therapies with fewer side effects, I
remain confi dent that we are on the right path to ensure the ongoing success of
QRxPharma as we develop plans to launch MOXDUO in 2013.
The Company retains $23 million in cash reserves at 30 June 2012. The balance
was reinforced by a successful share placement and rights issue which raised $26.5
million during July and August 2011 and the receipt of $5.9 million (US$ 6 million)
from Actavis on the signing of the binding Letter of Intent in December 2011.
I would like to take this opportunity to thank fellow Board members, senior
management, and the entire QRxPharma staff in both Australia and the US.
We also greatly appreciate your continued support as shareholders, and look
forward with cautious optimism to the successful approval of immediate release
MOXDUO in the coming year.
Peter C Farrell, PhD, ScD, AM
Chairman
www.qrxpharma.com 3
www.qrxpharma.com 3
CEO
REVIEW
4 QRxPharma Annual Report 2012
Although 2012 presented new challenges for QRxPharma, I would like to
reaffi rm our confi dence in and commitment to the successful launch of
immediate release MOXDUO® into the acute pain marketplace in 2013. This
confi dence is due in large part to the strength of our organisation in both the
United States and Australia, which continues to build a solid foundation for
the company as we progress toward commercialisation of MOXDUO.
The receipt of the Complete Response Letter (CRL) in June 2012 from the
US Food and Drug Administration (FDA) in response to our MOXDUO New
Drug Application (NDA) was an obvious disappointment. However, we are
encouraged by our most recent FDA meeting, a post submission review, in
August 2012 during which the Agency confi rmed our Combination Rule Study
(Study 008) satisfi ed effi cacy requirements and there were no unexpected
or problematic safety issues in any of the studies submitted as part of the
MOXDUO NDA. This is consistent with clinical data that demonstrates
MOXDUO has the potential to be a safe, effective alternative to other
opioids. With our science intact, the core value holds, and what remains is the
vigilant effort to reinforce our case to the FDA as we plan for the approval of
MOXDUO in 2013.
While considering additional strategies to manage the regulatory process
and enhance the likelihood of NDA approval, QRxPharma is working through
additional data for the FDA incorporating more extensive information on
Study 022, which evaluated oxygen desaturation levels in patients receiving
MOXDUO compared to those administered morphine or oxycodone alone
at equi-analgesic doses. Oxygen desaturation is a primary indicator of
respiratory depression, a medically important adverse event and a leading
cause of death from high opioid doses.
Analysis of Study 022 was fi nalised after completion of the MOXDUO NDA
fi ling in August 2011, although early safety data were included in the 120-
day update fi led last December. Accordingly, additional effi cacy and safety
information from this study was of signifi cant interest to the FDA. We believe
the results of this study provide further safety data that support the approval
of MOXDUO.
Regardless of recent regulatory hurdles, our strategic partner, Actavis Inc.,
stands by us. We maintain open and frequent dialogue regarding product
commercialisation while they maintain the infrastructure required for launch
in 2013. We are excited about the pending acquisition of Actavis by Watson
Pharmaceuticals (NYSE: WPI). The expanded resources brought about by the
Watson acquisition are welcome additions which will prove benefi cial to the
market success of MOXDUO once it is approved.
QRxPharma and Actavis realise the partnership structure offers a signifi cant
opportunity for both companies, and that immediate release MOXDUO is
very well suited to the experience and expertise of Actavis’ marketing and
sales teams. Actavis has exclusive rights to commercialise and further develop
immediate release MOXDUO for the US market while assuming all costs for
product launch as well as ongoing marketing and sales efforts in the US. As a
leading manufacturer of branded and generic opioids, Actavis may also serve
as a contract supplier for MOXDUO in the US. QRxPharma retains a co-
promotion / profi t share right, whereby the Company can create its own sales
force and provide up to 25% of the effective selling effort to US prescribers at any
time following the fi rst 12 months after product launch. Additionally, the Company
retains full fl exibility to market Immediate Release MOXDUO outside the US. The
Agreement also provides Actavis an option to partner for US marketing and sales
rights of QRxPharma’s chronic pain controlled release Dual Opioid, MOXDUO CR,
as well as its hospital-based intravenous formulation, MOXDUO IV. The exercise
of the option for MOXDUO CR by Actavis is contingent upon its achievement of
certain sales milestones of immediate release MOXDUO.
In addition to advancing MOXDUO, our leadership recognises we must continue
to enhance our foundation in science and innovation by demonstrating the clinical
benefi ts of our other product candidates. During the year, the Company successfully
completed two Phase I studies for MOXDUO CR. This “controlled-release”
formulation is designed to provide at least 12 hours of analgesia in patients suffering
from moderate to severe chronic pain including cancer, lower back, osteoarthritis
and neuropathic pain. The studies were conducted in healthy volunteers to evaluate
the rate at which key components of the MOXDUO CR formulation were absorbed,
distributed, metabolised and eliminated by the body.
The results of these early trials exceeded our expectations. MOXDUO CR
demonstrated superior bioavailability and sustained blood levels for well over 12
hours, especially in the 12 – 24 hour period, when compared directly to OxyContin®,
the largest selling opioid for chronic pain. These outcomes indicate that MOXDUO
CR will be effective as a once or twice a day chronic pain drug, as opposed to
OxyContin, which despite labelling for twice daily dosing, is actually prescribed
three times a day to almost a third of patients, according to IMS Health.
The MOXDUO CR tablets used in these clinical tests also included QRxPharma’s
proprietary Abuse Deterrence Formulation (ADF) technology. As an indication
of tamper resistance, attempts to extract morphine or oxycodone by crushing and
solubilising in water or alcohol resulted in very limited drug recovery of less than 15%.
In addition, the ADF technology did not impair human bioavailability of the opioids
following oral administration.
Opioids remain the gold standard for managing pain, but their use is limited by
extensive side effects. For immediate release MOXDUO, QRxPharma’s clinical trials
have clearly demonstrated a 25% to 75% reduction in nausea, vomiting, dizziness,
headaches and sleepiness compared to equal analgesic doses of widely prescribed
acute pain opioids. The respiratory advantages of immediate release MOXDUO as
demonstrated in Study 022 further indicate that MOXDUO provides a signifi cant
safety benefi t with less clinical respiratory risk than either morphine or oxycodone.
Our focus for the coming year remains the commercialisation of immediate release
MOXDUO, and we are committed to bringing this product to the market. Acute
pain affects 75 million people in the US alone, and collectively the acute and chronic
global opioid pain market is estimated to be worth over US $14 billion, with a
compound annual growth rate of more than 5%.
Because of acute liver toxicity, the FDA mandated the removal of all combination
higher strength paracetamol (acetaminophen) / opioids from the market by
2014 that contain over 325 mg paracetamol. This accounts for over 100 million
prescriptions for Vicodin® alone, the predominant acute pain opioid. Without
the high doses of paracetamol, Vicodin is not as effective in relieving acute pain.
www.qrxpharma.com 5
Furthermore, a potential rescheduling of Vicodin, currently the most prescribed
drug in the US, from Schedule 3 to Schedule 2 will make it harder to prescribe
in the US. These two factors will create a void of about 50% of the acute pain
market that MOXDUO has the potential to address.
We continue to be vigilant in protecting our intellectual property portfolio and
enhancing patent protection for MOXDUO. During 2012, the United States
Patent and Trademark Offi ce (USPTO) issued the Company US Patent No
8,182,837, expiring in 2023. This newly issued patent is directed to a pain
treatment method that utilises MOXDUO’s composition as a defi ned ratio of
morphine/oxycodone (3/2). The patent covers oral administration of two Dual
Opioid compositions: (1) immediate release MOXDUO for the treatment of
acute pain and (2) MOXDUO CR (Controlled Release) for the treatment of
chronic pain.
I am excited for the year ahead and eager to overcome the regulatory hurdles
with the FDA as we progress our transition to a commercial stage company.
The core of this company that we have built together remains strong, and
we continue to demonstrate our product’s safety and effi cacy. As a result, I
believe that FDA approval for immediate release MOXDUO is within reach
and the elements for a successful launch are in place. I would like to take
this opportunity to thank you, our shareholders, for your fi rm support of
QRxPharma and I look forward sharing our future success with you.
John W Holaday, PhD
Managing Director and Chief Executive Offi cer
CEO
REVIEW
(CONTINUED)
6 QRxPharma Annual Report 2012
6 QRxPharma Annual Report 2012
DIRECTORS’
REPORT
Your directors present their report on the consolidated entity (referred to hereafter as the
Group) consisting of QRxPharma Limited (referred to hereafter as the Company) and
the entities it controlled at the end of, or during, the year ended 30 June 2012.
DIRECTORS
The following persons were directors of QRxPharma Limited during the whole of the
fi nancial year and up to the date of this report:
Peter C Farrell
R Peter Campbell
Gary W Pace
Michael A Quinn
John W Holaday
PRINCIPAL ACTIVITIES
During the year the principal continuing activities of the Group consisted of the
development and commercialisation of biopharmaceutical products based on largely
Australian research, targeting global markets with the initial efforts being focused on the
US and European markets.
DIVIDENDS QRXPHARMA LIMITED
No dividends were paid or declared since the start of the fi nancial year (2011: $nil).
REVIEW OF OPERATIONS
The Group has made a loss from continuing operations after income tax for the year of $16
million (2011: loss of $25.6 million). The loss was in line with the expectations of the board of
directors and resulted from fulfi lling research and development activities in the progression of
the Company’s clinical pipeline candidates and preclinical stage drugs.
Further information on the operations and fi nancial position of the Group and its business
strategies and prospects is set out on pages 4 to 6 of this annual report.
LOSS PER SHARE
(a) Basic loss per share
Loss from continuing operations attributable
to the ordinary equity holders of the Company
(b) Diluted loss per share
Loss from continuing operations attributable
to the ordinary equity holders of the Company
2012
Cents
2011
Cents
(11.2)
(21.7)
(11.2)
(21.7)
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
No signifi cant changes in the state of affairs of the Group were noted during the fi nancial
year that have not otherwise been disclosed in this report or in the fi nancial statements.
www.qrxpharma.com 7
www.qrxpharma.com 7
DIRECTORS’
REPORT
(CONTINUED)
8 QRxPharma Annual Report 2012
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
No other matter or circumstance has arisen since 30 June 2012 that has signifi cantly
affected, or may signifi cantly affect:
(a) the Group’s operations in future fi nancial years, or
(b) the results of those operations in future fi nancial years, or
(c) the Group’s state of affairs in future fi nancial years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
Information on likely developments in the operations of the Group and the expected
results of operations have not been included in this annual report because the directors
believe it would be likely to result in unreasonable prejudice to the Group.
ENVIRONMENTAL REGULATION
There are no particular and signifi cant environmental regulations under a law of the
Commonwealth or of a State or Territory of Australia affecting the Group.
INFORMATION ON DIRECTORS
PETER C FARRELL PhD, ScD, AM.
Non-Executive Chairman.
Experience and expertise
Dr Farrell has over 35 years executive and consulting experience in the medical device
industry.
Dr Farrell is a Fellow of several professional bodies, including the Australian Academy of
Technological Sciences and Engineering, and the Australian Institutes of Management
and Company Directors. He is Chair of the Executive Council of the Division of Sleep
Medicine at Harvard Medical School, serves on the Boards of the Rady Management
and the Jacobs Engineering Schools of the University of California, San Diego (UCSD)
and is also on the Health Sciences Advisory Board of UCSD’s School of Medicine.
Dr Farrell is a Visiting Professor at the University of New South Wales (UNSW) and is
also Chair of the UNSW Centre for Innovation and Entrepreneurship.
In 1994, the Australian Institution of Engineers awarded Dr Farrell the honour of
National Professional Engineer of the Year and, in 1997, he received the David Dewhurst
Award (Biomedical Engineer of the Year) from the same institution. He was also
named San Diego Entrepreneur of the Year for Health Sciences in 1998, Australian
Entrepreneur of the Year for 2001, and US National Entrepreneur of the Year for Health
Sciences for 2005. Dr Farrell was admitted to membership of the Order of Australia
in 2004. He holds Bachelors and Masters degrees in chemical engineering from the
University of Sydney and the Massachusetts Institute of Technology (MIT) respectively,
a PhD in bioengineering from the University of Washington in Seattle, and a ScD from
the UNSW for research related to dialysis and renal medicine.
Other current directorships
Dr Farrell is the Chairman of ResMed Inc (ASX and NYSE: RMD), which he founded in
1989. He is also a Director of Nuvasive Inc (NASDAQ: NUVA) (director since January
2005) serving on the nominations and governance committees.
Former directorships in last 3 years
Pharmaxis Limited (ASX: PXS) from March 2006 to October 2009.
Special responsibilities
Chairman of the board.
Chairman of nominations committee.
Chairman of remuneration committee.
Special responsibilities
Managing Director and Chief Executive Offi cer.
President of QRxPharma, Inc.
Member of remuneration committee.
Interests in shares and options
1,865,367 ordinary shares and 754,089 options over
ordinary shares.
JOHN W HOLADAY PhD.
Managing Director and Chief Executive Offi cer.
Experience and expertise
Dr Holaday brings four decades of experience as a scientist, founder
and executive manager of biotechnology and biopharmaceutical
companies, and as a banker. Dr Holaday served as a Captain
in the US Army, until 1972, and as managing founder of the
Neuropharmacology Branch at the Walter Reed Army Institute
of Research until 1988. Dr Holaday has extensive experience in
building private and publicly traded biopharmaceutical companies.
In 1988, Dr Holaday co-founded Medicis Pharmaceutical
Corporation (NYSE: MRX), where he served as Director and as
Senior Vice President for Research and Development. In 1992,
Dr Holaday founded EntreMed Inc (NASDAQ: ENMD), where he
served as President, Chief Executive Officer, and Chairman of the
board until 2002. Dr Holaday also founded MaxCyte Inc, a cell
therapy company, where he served as Chairman until 2003.
Dr Holaday was founder, Chairman and Chief Executive Offi cer of
CNSCo, Inc, a private company which was acquired by QRxPharma
Limited in April 2007.
Dr Holaday serves as an offi cer and Fellow in several biomedical
societies, has authored and edited over 200 scientifi c articles
in journals and books, and holds over 60 patents. He served as
Chairman of the Maryland BioAlliance representing over 360
biotech companies. He was a Judge for the Ernst and Young
Entrepreneur of the Year Award (2003 to 2008) and was named to
the Ernst and Young Entrepreneur of the Year Hall of Fame in 2006.
Dr Holaday was formerly an Associate Professor of Anaesthesiology
and Critical Care Medicine and Senior Lecturer in Medicine at
The Johns Hopkins University of Medicine and remains as Adjunct
Professor of Psychiatry at the Uniformed Services University School
of Medicine, Bethesda, Maryland. He has received numerous
honours and awards, including the 2008 Algernon Sydney Sullivan
award as outstanding alumnus of the University of Alabama. Dr
Holaday obtained his Doctorate in Pharmacology at the University
of California, San Francisco in 1977.
Other current directorships
Director of Neuren Pharmaceuticals Limited.
Former directorships in last 3 years
Nil
Interests in shares and options
7,609,635 ordinary shares (including ordinary shares held by
John Holaday, John Holaday as trustee for the John Holaday
Foundation and Dorinda Holaday) and 1,605,452 options over
ordinary shares.
R PETER CAMPBELL FCA, FTIA.
Non-Executive Director.
Experience and expertise
Mr Campbell is a Chartered Accountant and company director
with more than 40 years of business consulting and advisory
experience, and operates his own chartered accountancy
practice based in Sydney. He is a Fellow of both the Institute of
Chartered Accountants in Australia and the Taxation Institute of
Australia and is a registered company auditor.
Other current directorships
Director of Silex Systems Limited (ASX: SLX) (ex Chairman,
director since July 1996) and Chairman of Sonic Healthcare
Limited (ASX: SHL) (director since January 1993).
Special responsibilities
Chairman of audit committee.
Member of nominations committee.
Interests in shares and options
183,380 ordinary shares (including shares held by Mithena
Holdings Pty Limited) and 391,635 options over ordinary shares.
GARY W PACE PhD.
Non-Executive Director and Consultant.
Experience and expertise
Dr Pace is a co founder of QRxPharma Limited and continues to
work with the Group.
Dr Pace is a seasoned biopharmaceutical executive with over 35
years of experience in the industry. He has co-founded a number
of early stage life science companies where he built products
from the laboratory to commercialisation.
Dr Pace is an elected Fellow of the Australian Academy of
Technological Sciences and Engineering, author and co-author
of over 50 research papers, reviews and patents. In 2003,
Dr Pace was awarded a Centenary Medal by the Australian
Government for service to Australian society in research and
development. Dr Pace holds a Bachelor of Science (Honours)
from the University of New South Wales (UNSW) and a PhD
from Massachusetts Institute of Technology (MIT), where he was
a Fulbright Scholar.
www.qrxpharma.com 9
Other current directorships
Director of ResMed Inc (ASX and NYSE: RMD) (director since 1995), Transition
Therapeutics Inc (TSX and NASDAQ: TTH) (director since 2002), Pacira
Pharmaceuticals (NASDAQ: PCRX) (director since 2009).
Former directorships in last 3 years
Celsion Corp (NASDAQ: CLSN) (2002 – August 2010) and Peplin Limited (ASX: PEP)
(2004 – December 2009).
Special responsibilities
Nil
Interests in shares and options
3,526,827 ordinary shares and 552,726 options over ordinary shares.
MICHAEL A QUINN MBA.
Non-Executive Director.
Experience and expertise
Mr Quinn is managing partner of Innovation Capital and has more than 35 years
executive experience in technology companies in Australia, the US and the UK. Mr
Quinn holds a Bachelor of Science, a Bachelor of Economics, and an MBA from
Harvard. Mr Quinn is Chairman of the New South Wales Entrepreneurship Centre
Limited, a not-for-profi t organisation that trains entrepreneurs. In 1983 he co founded
Memtec Limited (NYSE and ASX), and has also served as Chief Executive Offi cer of
an ASX listed manufacturer and distributor of health care and scientifi c products. Mr
Quinn has been a Director of several listed companies in Australia, the US and the UK
and numerous unlisted life science and other technology based companies.
Other current directorships
Director of ResMed Inc (ASX and NYSE: RMD) (director since 1992) where he chairs
the audit committee, and Chairman of CAP-XX Limited (AIM: CPX) (director since
November 1998).
Former directorships in last 3 years
Nil.
Special responsibilities
Member of nominations committee.
Member of audit committee.
Member of remuneration committee.
Interests in shares and options
8,505,322 ordinary shares (including ordinary shares held by Innovation Capital
Limited, Innovation Capital Associates Pty Limited, Innovation Capital LLC,
Kaylara Pty Limited and Rosemary Quinn). 552,726 options over ordinary shares
(including options held by Innovation Capital Limited and Innovation Capital LLC).
DIRECTORS’
REPORT
(CONTINUED)
10 QRxPharma Annual Report 2012
COMPANY SECRETARY
Chris J Campbell holds a Bachelor of Commerce and is an Associate of the Institute of Chartered Accountants in Australia. He also holds
the position of Chief Financial Offi cer of QRxPharma Limited. He has over 30 years’ experience with major accounting fi rms and as
Chief Financial Offi cer of publicly traded companies.
MEETINGS OF DIRECTORS
The numbers of meetings of the Company’s board of directors and of each board committee held during the year ended
30 June 2012, and the numbers of meetings attended by each director were:
Full meetings of
directors
Meetings of
non-executive
directors
MEETINGS OF COMMITTEES
Audit and risk
Nominations
Remuneration
A
7
7
7
7
7
B
7
7
7
7
7
A
4
4
4
4
B
4
4
4
4
A
**
**
7
**
7
B
7
7
A
1
**
1
**
1
B
1
1
1
A
7
7
**
**
7
B
7
7
7
Peter C Farrell
John W Holaday*
R Peter Campbell
Gary W Pace
Michael A Quinn
A = Number of meetings attended
B = Number of meetings held during the time the director held offi ce or was a member of the committee during the year
* = Not a non-executive director
** = Not a member of the relevant committee
REMUNERATION REPORT
The directors are pleased to present the Group’s 2012 remuneration report which sets out remuneration information for QRxPharma
Limited’s non-executive directors, executive director and other key management personnel.
DIRECTORS AND KEY MANAGEMENT PERSONNEL DISCLOSED IN THIS REPORT
NAME
POSITION
Non-executive and executive directors – see pages 8 to 10 above
Other key management personnel
Chris J Campbell
Chief Financial Offi cer
Edward M Rudnic (from 13 February 2012)
Chief Operating Offi cer
M. Janette Dixon
Richard A Paul
Vice President Global Business Development
Executive Vice President Drug Development
Changes since the end of the reporting period
There have been no changes since the end of the reporting period.
www.qrxpharma.com
11
DIRECTORS’
REPORT
(CONTINUED)
12 QRxPharma Annual Report 2012
Role of the remuneration committee
The remuneration committee is a committee of the board. It is primarily responsible for
making recommendations to the board on:
• remuneration levels of executive directors and other key management personnel
• the over-arching executive remuneration framework and operation of the incentive plan,
and
• key performance indicators and performance hurdles for the executive team.
Their objective is to ensure that remuneration policies and structures are fair and
competitive and aligned with the long-term interests of the Company. In doing this, the
remuneration committee may seek advice from independent remuneration consultants.
The Corporate Governance Statement provides further information on the role of this
committee.
Non-executive directors remuneration policy
Fees and payments to non executive directors refl ect the demands which are made on,
and the responsibilities of, the directors. The fees were set on 27 April 2007 ahead of the
Company completing its initial public offering. There is an annual base fee payable six
months in arrears, currently $60,000 for the Chairman and $40,000 for the other non-
executive directors (which also covers serving on a committee) and long term incentives
through participation in the QRxPharma Limited Employee Share Option Plan.
Non-executive directors’ fees are determined within an aggregate directors’ fee pool limit,
which is periodically recommended for approval by shareholders. The maximum currently
stands at $400,000 per annum and was approved by shareholders at the Annual General
Meeting on 24 April 2007.
Retirement allowances for non-executive directors
There are no retirement allowances for non-executive directors, in line with guidance
from the ASX Corporate Governance Council on non-executive directors’ remuneration.
Superannuation contributions required under the Australian superannuation guarantee
legislation continue to be made.
Executive remuneration policy and framework
As a Company building a speciality pharmaceutical business to compete internationally,
QRxPharma Limited requires a board and senior management team that have both the
technical capability and relevant business experience to execute the Group’s strategy.
The objective of the Group’s executive reward framework is to ensure reward for
performance is competitive and appropriate for the results delivered. The framework aligns
executive reward with achievement of strategic objectives and the creation of value for
shareholders, and conforms with market practice for delivery of reward. The board ensures
that executive reward satisfi es the following key criteria for good reward governance
practices:
• competitiveness and reasonableness
• acceptability to shareholders
• performance linkage / alignment of executive compensation
• transparency
• capital management
The Group has structured an executive remuneration framework that is market competitive and complementary to the reward strategy of
the organisation.
Alignment to shareholders’ interests:
• focuses on sustained growth in share price as well as focusing the executive on key non fi nancial drivers of value
• attracts and retains high calibre executives.
Alignment to program participants’ interests:
• rewards capability and experience
• refl ects competitive reward for contribution to growth in shareholder wealth
• provides recognition for contribution.
The framework provides a blend of fi xed pay, and short and long-term incentives.
The executive pay and reward framework has three components:
• base pay and benefi ts, including superannuation
• short-term performance incentives, and
• long-term incentives through participation in the QRxPharma Limited Employee Share Option Plan.
The combination of these comprises the executive’s total remuneration.
Base pay and benefi ts
Structured as a total employment package which may be delivered as a combination of cash and prescribed non-fi nancial benefi ts at the
executives’ discretion.
Executives are offered a competitive base pay that comprises the fi xed component of pay and rewards. Base pay for executives is reviewed
annually and every two years a market survey is conducted to ensure the executive’s pay is competitive with the market. An executive’s pay is also
reviewed on promotion.
There are no guaranteed base pay increases included in any executives’ contracts.
Executives receive benefi ts including health insurance and tax advisory services.
Superannuation
The Group does not maintain a Group superannuation plan. The Group makes fi xed percentage contributions for Australian resident
employees to complying third party superannuation funds and where requested, for US resident employees to complying pension plans.
Short-term incentives
A variable cash incentive component is payable annually dependent upon achievement of performance targets. Individual performance targets
are set by reference to components of the Group’s business plan for which the individual executive is responsible. Maximum available bonuses
vary from a fi xed amount of $108,150 to 50% of base pay.
Each executive has a target short-term incentive opportunity depending on the accountabilities of the role and impact on the organisation. Each
year, the remuneration committee considers the appropriate targets and key performance indicators (KPIs) for each executive. For the year
ended 30 June 2012, the KPIs were based on meeting group and individual milestone achievements.
The remuneration committee is responsible for assessing whether the KPIs are met. To help make this assessment, the committee receives
detailed reports on performance from management.
www.qrxpharma.com
www.qrxpharma.com
13
13
DIRECTORS’
REPORT
(CONTINUED)
Long-term incentives
Long-term incentives are provided to certain employees through participation in the QRxPharma Limited Employee Share Option Plan,
which was approved by shareholders at the extraordinary general meeting of members held on 24 April 2007.
The QRxPharma Limited Employee Share Option Plan is designed to provide long-term incentives for executives to deliver long-term
shareholder value and as an additional mechanism to attract and retain high calibre executives. Participation in the plan is at the
board’s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefi ts. The vesting
period for each option issued up to 31 December 2008 is 3 years, or as varied by the board, one-third vesting 12 months from the date of
grant and the balance vesting equally each year over the remaining two year period. Options issued from 1 January 2009 generally vest
over 3 years with the initial vesting on the fi rst anniversary of the date of the grant and subsequent vestings in 8 equal tranches on the
fi rst day of each calendar quarter over the following 2 years. Most option grants generally have a seven year life, after which time, if they
are not exercised, the options are forfeited. Options are granted under the plan for no consideration.
Voting and comments made at the Company’s 2011 Annual General Meeting
QRxPharma Limited received more than 86% of “yes” votes on its remuneration report for the 2011 fi nancial year. The company did not
receive any specifi c feedback at the AGM or throughout the year on its remuneration practices.
DETAILS OF REMUNERATION
Details of the remuneration of the directors and the key management personnel (as defi ned in AASB 124 Related Party Disclosures) of
QRxPharma Limited and the Group are set out in the following tables.
Key management personnel and other executives of QRxPharma Limited and the Group are the same
SHORT-TERM EMPLOYEE BENEFITS
POST-
EMPLOYMENT BENEFITS
LONG-
TERM BENEFITS
SHARE-
BASED
PAYMENTS
Cash salary
and fees
Cash
bonus
Non-monetary
benefi ts Other
Super-
annuation
Retirement
benefi ts
Long service
leave
Options
Total
20122012
Name
Non-executive directors
Peter C Farrell
R Peter Campbell
Michael A Quinn
Gary W Pace ^
$
60,000
40,000
40,000
40,000
$
-
-
-
-
-
Sub-total non-executive directors
180,000
Executive directors
John W Holaday
Other key management personnel (Group)
Chris J Campbell
Edward M Rudnic °
(from 13 February 2012)
M. Janette Dixon *
Richard A Paul
368,170
190,054
227,057
108,150
121,895
63,605
271,511
288,057
123,251
119,311
Total key management personnel
compensation (Group)
1,456,690
604,371
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
3,600
-
-
3,600
-
30,169
-
-
-
33,769
$
-
-
-
-
-
-
-
-
-
-
-
$
$
$
-
-
-
-
-
-
-
-
-
-
-
46,416
46,416
46,416
46,416
106,416
90,016
86,416
86,416
185,664
369,264
233,609
791,833
118,183
75,997
483,559
261,497
163,231
194,350
557,993
601,718
971,034
3,065,864
^ Gary Pace was paid $81,202 for consulting services provided to the Company during the year in addition to the amount above.
° Edward M Rudnic was appointed Chief Operating Offi cer on 13 February 2012. In addition to the amounts recorded above, from 1 July 2011 to 12 February 2012, he was engaged as a
consultant for which he received consulting fees of $210,412 and options of $76,349. Additionally he received a fee of $10,161 and options of $19,359 during the fi nancial year as a member
of the Company’s Scientifi c Advisory Board.
* Fees and bonus payments were made to M Janette Dixon pursuant to consultancy agreements held with BioComm Pacifi c Pte Limited.
14 QRxPharma Annual Report 2012
Key management personnel and other executives of QRxPharma Limited and the Group were the same in 2011
SHORT-TERM EMPLOYEE BENEFITS
POST-
EMPLOYMENT BENEFITS
LONG-
TERM BENEFITS
SHARE-
BASED
PAYMENTS
Cash salary
and fees
Cash
bonus
Non-
monetary
benefi ts
Other
Super-
annuation
Retirement
benefi ts
Long service
leave
Options
Total
2011
Name
Non-executive directors
Peter C Farrell
R Peter Campbell
Michael A Quinn
Gary W Pace^
Sub-total non-executive directors
Executive directors
John W Holaday
Other key management personnel (Group)
Chris J Campbell ^
M. Janette Dixon*
Richard A Paul˜
(from 15 November 2010)
$
60,000
40,000
40,000
40,000
180,000
$
-
-
-
-
-
342,957
148,634
210,734
105,000
270,389
196,757
153,918
50,753
Total key management personnel
compensation (Group)
1,200,837
458,305
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
3,600
-
-
3,600
-
26,053
-
-
29,653
$
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,321
50,321
50,321
50,321
110,321
93,921
90,321
90,321
201,284
384,884
182,323
673,914
77,207
122,483
90,166
418,994
546,790
337,676
673,463
2,362,258
^
*
˜
Gary Pace was paid $82,699 for consulting services provided to the Company during the year in addition to the amount above.
Fees and bonus payments were made to M. Janette Dixon pursuant to consultancy agreements held with BioComm Pacifi c Pte Limited.
Richard A Paul joined the Group on 15 November 2010. He assumed the position of Executive Vice President Drug Development on 1 April 2011.
The relative proportions of remuneration that are linked to performance and those that are fi xed are as follows:
FIXED REMUNERATION
AT RISK–STI
AT RISK–LTI
Name
Directors of QRxPharma Limited
Peter C Farrell
R Peter Campbell
Michael A Quinn
Gary W Pace
John W Holaday
Other key management personnel of the Group
Chris J Campbell
Edward M Rudnic (from 13 February 2012)
M. Janette Dixon
Richard A Paul
20122012
56%
48%
46%
46%
46%
52%
47%
49%
48%
2011
54%
46%
44%
44%
51%
55%
-
50%
58%
20122012
2011
20122012
2011
-
-
-
-
24%
24%
24%
22%
20%
-
-
-
-
22%
27%
-
28%
15%
44%
52%
54%
54%
30%
24%
29%
29%
32%
46%
54%
56%
56%
27%
18%
-
22%
27%
Since the long term incentives are provided exclusively by way of options, the percentages disclosed also refl ect the value of the remuneration
consisting of options, based on the value of options expensed during the year.
www.qrxpharma.com
15
DIRECTORS’
REPORT
(CONTINUED)
SERVICE AGREEMENTS
On appointment to the board, all non executive directors enter into a service agreement with the Company in the form of a letter of
appointment. The letter summarises the board policies and terms, including compensation, relevant to the offi ce of director.
Remuneration and other terms of employment for the Managing Director and Chief Executive Offi cer and the other key management
personnel are also formalised in service agreements. Each of these agreements provide for the provision of performance-related cash
bonuses, other benefi ts including health insurance and tax advisory services, and participation, when eligible, in the QRxPharma
Limited Employee Share Option Plan. Other major provisions of the agreements relating to remuneration are set out below.
John W Holaday, Managing Director and Chief Executive Offi cer
• Term of agreement – 2 years to 28 February 2014 (with annual extension) renegotiated from 28 February 2012.
• Base salary, inclusive of retirement or pension contribution, for the year ended 30 June 2012 of US$400,000, to be reviewed
annually by the remuneration committee.
• Payment of a termination benefi t on early termination by the Company, other than for gross misconduct, equal to the annual
base salary.
Chris J Campbell, Chief Financial Offi cer
• Term of agreement – ongoing, commencing 1 March 2007.
• Base salary, inclusive of superannuation, for the year ended 30 June 2012 of $239,499, to be reviewed annually by the
remuneration committee.
• Payment of a termination benefi t on early termination without notice by the Company, other than for gross misconduct,
equal to three months’ salary.
• Contract can be terminated by either party with three months’ notice.
Edward M Rudnic, Chief Operating Offi cer
• Term of agreement – 2 years (with annual extension) from 13 February 2012.
• Base salary, inclusive of retirement or pension contribution, for the year ended 30 June 2012 of US$330,000, to be reviewed
annually by the remuneration committee.
• Payment of a termination benefi t on early termination without notice by the Company, other than for gross misconduct,
equal to the annual base salary.
M. Janette Dixon, Vice President Global Business Development
• Term of agreement – ongoing, commencing 17 August 2009 with QRxPharma Limited, and 1 October 2009 with Venomics Pty
Limited. Agreements are held with M. Janette Dixon as the principal of BioComm Pacifi c Pte Limited.
• Base consulting fee for the contract with QRxPharma Limited for the year ended 30 June 2012 of US$283,250 per annum (pro rata).
• Each agreement can be terminated by either party with two months’ notice.
Richard A Paul, Executive Vice President Drug Development
• Term of agreement – 2 years to 1 March 2014 (with annual extension) renegotiated from 1 March 2012.
• Base salary, inclusive of retirement or pension contribution, for the year ended 30 June 2012 of US$310,000, to be reviewed annually
by the remuneration committee.
• Payment of a termination benefi t on early termination by the Company, other than for gross misconduct, equal to the annual
base salary.
Gary W Pace, Non-Executive Director, Consultant
• Term of agreement – 1 year, renegotiated from 25 May 2012.
• Base consulting fee for the contract year ending 25 May 2012 of US$83,000 per annum (pro rata).
• Agreement can be terminated by either party with one month’s notice.
• No termination benefi t payable on early termination by the Company.
16 QRxPharma Annual Report 2012
SHARE-BASED COMPENSATION
Options
Options over shares in QRxPharma Limited are granted under the QRxPharma Limited Employee Share Option Plan (ESOP). The
ESOP is designed to provide long-term incentives for executives to deliver long-term shareholder returns.
The maximum number of options available to be issued under the ESOP is 10% of diluted ordinary share capital in the Company as at
the date of issue of the relevant options. All employees and directors are eligible to participate in the ESOP, but do so at the invitation
of the Remuneration Committee. The terms of option issues are determined by the Remuneration Committee.
Options issued up to 31 December 2008 were generally granted for no consideration and generally vest annually over 3 years in equal
proportions with the initial vesting on the fi rst anniversary of the date of grant. Options issued from 1 January 2009 have also been
issued for no consideration and generally vest over 3 years with the initial vesting on the fi rst anniversary of the date of the grant and
subsequent vestings in 8 equal tranches on the fi rst day of each calendar quarter over the following 2 years. The exercise price is set
by the Remuneration Committee but being not less than the market price of ordinary shares immediately prior to the grant date of the
options.
Options granted under the plan carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary share.
The terms and conditions of each grant of options affecting remuneration in the previous, this or future reporting periods are as follows:
Grant date
31 March 2007
14 April 2007
25 May 2007
25 May 2007
1 September 2007
1 October 2007
9 October 2007
1 January 2008
1 April 2008
1 April 2008
1 October 2008
4 November 2008
1 January 2009
1 January 2009
31 August 2009
1 October 2009
16 November 2009
1 January 2010
17 February 2010
24 March 2010
1 July 2010
24 August 2010
1 October 2010
25 October 2010
8 November 2010
1 January 2011
1 January 2011
7 July 2011
28 September 2011
18 November 2011
23 January 2012
23 January 2012
1 April 2012
Vested and
exercisable
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 6 months
Over 6 months
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Over 3 years
Expiry date
Exercise price
Value per option
at grant date
% Vested
31 March 2014
14 April 2014
25 May 2014
25 May 2014
1 September 2014
1 October 2014
9 October 2014
1 January 2015
1 April 2015
1 April 2015
1 October 2015
4 November 2015
1 January 2016
1 January 2016
31 August 2016
1 October 2016
16 November 2016
1 January 2017
17 February 2017
24 March 2014
1 July 2017
24 August 2017
1 October 2017
25 October 2014
8 November 2017
1 January 2018
1 January 2015
7 July 2018
28 September 2018
18 November 2018
23 January 2019
23 January 2016
1 April 2019
$1.42
$1.00
$1.00
$2.00
$1.70
$1.45
$1.34
$1.11
$1.05
$1.04
$0.60
$0.37
$0.20
$0.20
$0.65
$0.90
$1.12
$0.78
$0.84
$1.26
$1.15
$0.95
$0.93
$1.24
$1.00
$1.40
$2.00
$1.70
$1.22
$1.60
$1.50
$2.15
$1.72
$1.31
$1.46
$1.46
$1.15
$0.98
$0.83
$0.77
$0.64
$0.60
$0.60
$0.24
$0.07
$0.10
$0.10
$0.44
$0.61
$0.76
$0.53
$0.57
$0.38
$0.88
$0.72
$0.71
$0.48
$0.75
$1.07
$0.77
$1.30
$0.93
$1.20
$1.12
$0.80
$1.29
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
92%
92%
83%
83%
75%
75%
58%
58%
50%
50%
50%
50%
50%
0%
0%
0%
0%
0%
0%
The exercise price in respect of an option granted shall be the market price for a share prevailing at the time of grant unless the board decides
otherwise. Options will lapse if they are not exercised before the expiration date or if the option holder leaves the employment of the Group.
www.qrxpharma.com
17
DIRECTORS’
REPORT
(CONTINUED)
SHARE BASED COMPENSATION (continued)
Details of options over ordinary shares in the company provided as remuneration to each director of QRxPharma Limited and each of the key
management personnel of the parent entity and the Group are set out below. When exercisable, each option is convertible into one ordinary
share of QRxPharma Limited. Further information on the options is set out in note 30 to the fi nancial statements. The plan rules contain a
restriction on removing the “at risk” aspect of instruments granted to executives. Plan participants may not enter into any transaction designed
to remove the “at risk” aspect of an instrument before it vests.
Number of options
granted during
the year
Value of options at
grant date*
$
Number of options
vested during the
year
Number of options
lapsed during the
year
Value at lapse
date**
$
Directors of QRxPharma Limited
Peter C Farrell
R Peter Campbell
Michael A Quinn
Gary W Pace
John W Holaday
Other key management personnel
Chris J Campbell
Edward M Rudnic∞
(from 13 February 2012)
M. Janette Dixon
Richard A Paul
-
-
-
-
-
-
-
-
75,000
75,000
75,000
75,000
250,000
300,000
225,000
200,000
160,000
143,750
350,000
451,500
-
200,000
200,000
224,000
224,000
191,667
125,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
∞ Edward M Rudnic also received 200,000 share options for his services as a consultant and 10,000 share options for his role as a member of the Scientifi c Advisory Board during
the fi nancial year.
* The value at grant date calculated in accordance with AASB 2 Share-based Payments of options granted during the year as part of remuneration.
** The value at lapse date of options that were granted as part of remuneration and that lapsed during the year because a vesting condition was not satisfi ed. The value is
determined at the time of lapsing, but assuming the condition was satisfi ed.
The assessed fair value at grant date of options granted to the individuals is allocated equally over the period from grant date to vesting
date, and the amount is included in the remuneration tables above. Fair values at grant date are independently determined using a
Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share
price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for
the term of the option.
18 QRxPharma Annual Report 2012
Shares provided on exercise of remuneration options
Details of ordinary shares in the company provided as a result of the exercise of remuneration options to each director of QRxPharma
Limited and other key management personnel of the Group are set out below.
Directors of QRxPharma Limited
Peter C Farrell
R Peter Campbell
Michael A Quinn
Gary W Pace
John W Holaday
Date of
exercise of
options
Number of ordinary
shares issued on
exercise of options
during the year
Value at exercise
date*
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other key management personnel
Chris J Campbell
Edward M Rudnic (from 13 February 2012)
M. Janette Dixon
Richard A Paul
3 February 2012
50,000
68,000
-
-
-
-
-
-
-
-
-
* The value at the exercise date of options that were granted as part of remuneration and were exercised during the year has been determined as the intrinsic value of the options at
that date.
The amounts paid per ordinary share by each director and other key management personnel on the exercise of options at the date of
exercise were as follows:
Exercise date
3 February 2012
Amount paid per share
$0.20
No amounts are unpaid on any shares issued on the exercise of options.
Details of remuneration: bonuses and share-based compensation benefi ts
For each cash bonus and grant of options included in the tables on pages 14, 15 and 18, the percentage of the available bonus or
grant that was paid, or that vested, in the fi nancial year, and the percentage that was forfeited because the person did not meet the
service and performance criteria is set out below. No part of the bonus is payable in future years. The vesting period for each option
issued up to 31 December 2008 is 3 years, or as varied by the board, one third vesting 12 months from the date of grant and the
balance vesting equally each year over the remaining two year period. Options issued from 1 January 2009 generally vest over 3 years
with the initial vesting on the fi rst anniversary of the date of the grant and subsequent vesting’s in 8 equal tranches on the fi rst day of
each calendar quarter over the following 2 years. No options will vest if the conditions are not satisfi ed, hence the minimum value of
the option yet to vest is nil. The maximum value of the options yet to vest has been determined as the amount of the grant date fair
value of the options that is yet to be expensed.
www.qrxpharma.com
19
DIRECTORS’
REPORT
(CONTINUED)
SHARE-BASED COMPENSATION (continued)
BONUS
SHARE-BASED COMPENSATION BENEFITS
(OPTIONS)
Paid
%
Forfeited
%
Year Granted
Vested
%
Forfeited
%
Financial years
in which options
may vest
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2011
2007
2011
2007
2011
2007
2011
2007
2012
2011
2010
2007
2012
2011
2010
2009
2007
2012
2012
2011
2010
2010
2009
2012
2011
50%
100%
50%
100%
50%
100%
50%
100%
-
50%
83%
100%
-
50%
75%
100%
100%
-
-
50%
75%
92%
100%
-
50%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2013- 2014
-
2013- 2014
-
2013- 2014
-
2013- 2014
-
2013- 2015
2013- 2014
2013
-
2013- 2015
2013- 2014
2013
-
-
2013-2015
2013- 2015
2013- 2014
2013
2013
-
2013 - 2015
2013 - 2014
Name
Directors of QRxPharma Limited
Peter C Farrell
R Peter Campbell
Michael A Quinn
Gary W Pace
-
-
-
-
-
-
-
-
John W Holaday
100%
Other key management personnel
Chris J Campbell
Edward M Rudnic
(from 13 February 2012)
M. Janette Dixon
Richard A Paul
100%
75%
100%
100%
20 QRxPharma Annual Report 2012
Shares under option
Unissued ordinary shares of QRxPharma Limited under option at the date of this report are as follows:
DATE OPTIONS
GRANTED
31 March 2007
14 April 2007
25 May 2007
25 May 2007
1 September 2007
1 October 2007
9 October 2007
1 January 2008
1 April 2008
1 April 2008
1 January 2009
31 August 2009
1 October 2009
16 November 2009
1 January 2010
17 February 2010
24 March 2010
1 July 2010
24 August 2010
1 October 2010
25 October 2010
8 November 2010
1 January 2011
1 January 2011
7 July 2011
28 September 2011
18 November 2011*
23 January 2012*
23 January 2012*
1 April 2012*
EXPIRY DATE
31 March 2014
14 April 2014
25 May 2014
25 May 2014
1 September 2014
1 October 2014
9 October 2014
1 January 2015
1 April 2015
1 April 2015
1 January 2016
31 August 2016
1 October 2016
16 November 2016
1 January 2017
17 February 2017
24 March 2014
1 July 2017
24 August 2017
1 October 2017
25 October 2014
8 November 2017
1 January 2018
1 January 2015
7 July 2018
28 September 2018
18 November 2018
23 January 2016
23 January 2019
1 April 2019
ISSUE PRICE OF
SHARES
NUMBER UNDER
OPTION
$1.42
$1.00
$1.00
$2.00
$1.70
$1.45
$1.34
$1.11
$1.04
$1.05
$0.20
$0.65
$0.90
$1.12
$0.78
$0.84
$1.26
$1.15
$0.95
$0.93
$1.24
$1.00
$1.40
$2.00
$1.70
$1.22
$1.60
$2.15
$1.50
$1.72
402,726
2,013,630
502,726
1,398,450
50,000
75,000
50,000
200,000
75,000
600,000
100,000
334,650
150,000
300,000
100,000
460,834
295,000
225,000
50,000
150,000
25,000
850,000
1,320,000
310,000
150,000
15,000
250,000
300,000
1,400,000
350,000
12,503,016
No option holder has any right under the options to participate in any other share issue of the Company or any other entity.
*Included in these options were options granted to key management personnel which are disclosed on page 18.
www.qrxpharma.com 21
www.qrxpharma.com 21
DIRECTORS’
REPORT
(CONTINUED)
Shares issued on the exercise of options
The following ordinary shares of QRxPharma Limited were issued during the year ended 30 June 2012 on the exercise of options
granted under the QRxPharma Limited Employee Option Plan. No further shares have been issued since that date. No amounts are
unpaid on any of the shares.
Date options granted
1 October 2008
1 January 2009
31 August 2009
17 February 2010
Issue price of shares
$0.60
$0.20
$0.65
$0.84
Number of shares issued
50,000
195,000
116,183
104,166
465,349
INDEMNIFICATION
The Company has entered into Deeds of Access, Indemnity and Insurance with each of the directors and executive offi cers of the
Group against all liabilities to another person (other than the Company or a related body corporate) that may arise from their
position as directors and executive offi cers of the Company and its controlled entities, except where the liability arises out of conduct
involving a lack of good faith. The agreement stipulates that the Company will meet the amount of any such liabilities, including costs
and expenses.
INSURANCE OF OFFICERS
The directors have not included details of the nature of liabilities covered nor the amount of the premium paid in respect to Directors
and Offi cers liability insurance contracts, as such disclosure is prohibited under the terms of the contracts.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
company, or to intervene in any proceedings to which the company is a party, for the purpose of taking responsibility on behalf of the
company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the company with leave of the Court under section 237 of the
Corporations Act 2001.
NON-AUDIT SERVICES
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s
expertise and experience with the company and/or the Group are important.
Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for non audit services provided during the year are
set out below.
The board of directors has considered the position and, in accordance with advice received from the audit committee, is satisfi ed
that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001. The directors are satisfi ed that the provision of non-audit services by the auditor, as set out below, did not
compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the auditor
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants.
22 QRxPharma Annual Report 2012
(a) PricewaterhouseCoopers Australia
Taxation services
Tax compliance services
Tax consulting and tax advice
Total remuneration for taxation services
(b) Related practices of PricewaterhouseCoopers Australia
Taxation services
Tax compliance services
International tax consulting and tax advice
Total remuneration for taxation services
Total remuneration for non-audit services
20122012
$
9,270
106,788
116,058
33,974
11,006
44,980
161,038
2011
$
8,000
25,280
33,280
35,022
42,336
77,358
110,638
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 24.
ROUNDING OF AMOUNTS
The Company is a kind referred to in Class order 98/100, issued by the Australian Securities and Investments Commission, relating
to the “rounding off” of amounts in the fi nancial or directors report. Amounts in the directors’ report have been rounded off in
accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.
AUDITOR
PricewaterhouseCoopers continues in offi ce in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors.
Peter C Farrell
Director
Sydney
30 August 2012
www.qrxpharma.com 23
24 QRxPharma Annual Report 2012
CORPORATE
GOVERNANCE
STATEMENT
QRxPharma Limited (Company) and the board are committed to achieving and
demonstrating the highest standards of corporate governance. The board continues to review
the framework and practices to ensure they meet the interests of shareholders. The Company
and its controlled entities together are referred to as the Group in this statement.
A description of the Group’s main corporate governance practices is set out below. All these
practices, unless otherwise stated, were in place for the entire year. They comply with the ASX
Corporate Governance Principles and Recommendations.
PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND
OVERSIGHT
The relationship between the board and senior management is critical to the Group’s
long term success. The directors are responsible to the shareholders for the performance
of the Group in both the short and the longer term and seek to balance sometimes
competing objectives in the best interests of the Group as a whole. Their focus is to
enhance the interests of shareholders and other key stakeholders and to ensure the
Group is properly managed.
The responsibilities of the board include:
• providing strategic guidance to the Group including contributing to the development of
and approving the corporate strategy
• reviewing and approving business plans, the annual budget and fi nancial plans
includingavailable resources and major capital expenditure initiatives
• overseeing and monitoring:
• organisational performance and the achievement of the Group’s strategic goals
and objectives
• compliance with the Company’s Code of conduct
• progress in relation to the Company’s diversity objectives and compliance with its
diversity policy
• progress of major capital expenditures and other signifi cant corporate projects
including any acquisitions or divestments
• monitoring fi nancial performance including approval of the annual and half-year
fi nancial reports and liaison with the Company’s auditors
• appointment, performance assessment and, if necessary, removal of the managing
director
• ratifying the appointment and/or removal and contributing to the performance
assessment for the members of the senior management team including the Chief
Executive Offi cer (CEO) and the Company Secretary
• ensuring there are effective management processes in place and approving major
corporate initiatives
• enhancing and protecting the reputation of the organisation
• overseeing the operation of the Group’s system for compliance and risk management
reporting to shareholders
• ensuring appropriate resources are available to senior management
Day to day management of the Group’s affairs and the implementation of the corporate
strategy and policy initiatives are formally delegated by the board to the Chief Executive
Offi cer and senior executives as set out in the Group’s delegations policy. These
delegations are reviewed on an annual basis.
A performance assessment for senior executives last took place in May 2012 during the
remuneration committee’s annual assessment of performance bonuses. To help make this
assessment, the committee receives detailed reports on performance from management.
www.qrxpharma.com 25
www.qrxpharma.com 25
CORPORATE
GOVERNANCE
STATEMENT
(CONTINUED)
26 QRxPharma Annual Report 2012
PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE
The board operates in accordance with the broad principles set out in its charter which
together with all other charters and policies referred to in this Statement are available
from the corporate governance information section of the company website at www.
qrxpharma.com. The charter details the board’s composition and responsibilities.
Board composition
The charter states:
• the board is to be comprised of both executive and non-executive directors with a majority
of non-executive directors. Non-executive directors bring a fresh perspective to the board’s
consideration of strategic, risk and performance matters
• in recognition of the importance of independent views and theboard’s role in supervising the
activities of management, the Chair must be an independent non-executive director, the
majority of the board must be independent of management and all directors are required to
exercise independent judgement and review and constructively challenge the performance
of management
• the Chair is elected by the full board and is required to meet regularly with the managing
director
• the Company aims to maintain a mix of directors on the board from different genders, age
groups, ethnicity and cultural and professional backgrounds who have complementary skills
and experience
• the board is to establish measurable board gender diversity objectives and assess annually
the objectives and progress in achieving them
• the board is required to undertake an annual board performance review and consider
the appropriate mix of skills required by the board to maximise its effectiveness and its
contribution to the Group.
The board seeks to ensure that:
• at any point in time, its membership represents an appropriate balance between directors
with experience and knowledge of the Group and directors with an external or fresh
perspective
• the size of the board is conducive to effective discussion and effi cient decision making.
Directors’ independence
The board has adopted specifi c principles in relation to directors’ independence. These
state that to be deemed independent, a director must be a non-executive and the board
should consider whether the director:
• is a substantial shareholder of the Company or an offi cer of, or otherwise associated directly
with, a substantial shareholder of the Company
• is or has been employed in an executive capacity by the Company or any other Group
member, within three years before commencing to serve on the board
• within the last three years has been a principal of a material professional adviser or a
material consultant to the Company or any other Group member, or an employee
materially associated with the service provided
• is a material supplier or customer of the Company or any other Group member, or an offi cer
of or otherwise associated directly or indirectly with a material supplier or customer
• has a material contractual relationship with the company or a controlled entity other than as
a director of the Group
• is free from any business or other relationship which could, or could reasonably be perceived
to, materially interfere with the director’s ability to act in the best interests of the Group.
At present, materiality for these purposes is determined as a relationship or contract where
the Company or Group pays in excess of $100,000.
The board regularly assesses director independence having regard to the criteria outlined
in the Principles. To enable this process, the directors must provide all information that
may be relevant to the assessment. During the fi nancial year
ended 30 June 2012, three non-executive directors; Peter C
Farrell, R Peter Campbell and Gary W Pace were considered to be
independent.
Board members
Details of the members of the board, their experience, expertise,
qualifi cations, term of offi ce, relationships affecting their
independence and their independent status are set out in the
directors’ report under the heading “Information on directors” on
pages 8 to 10. At the date of signing the directors’ report, there is one
executive director and four non-executive directors.
Non-executive directors
The four non-executive directors met four times during the year, in
scheduled sessions without the presence of management, to discuss
the operation of the board and a range of other matters. Relevant
matters arising from these meetings were shared with the full board.
Term of offi ce
The Company’s Constitution specifi es that all directors excluding
the CEO must retire from offi ce no later than the third annual
general meeting (AGM) following their last election.
Chair
The Chair of the board of the Company is an independent, non-
executive director.
advice. With the approval of the Chairman this advice will be at the
expense of the Company.
Avoidance of confl ict of interest
In addition to the issue of independence, the directors have a
continuing responsibility to avoid confl icts of interest (both real
and apparent) between their duty to the Company and their own
interests. Directors are required to disclose any actual or potential
confl ict of interest on appointment and are required to keep this
disclosure up to date. A director that has an actual or potential
confl ict must immediately inform the board and remove themselves
from any discussions or decision making in relation to the actual or
potential confl ict.
Performance assessment
The board undertakes an annual self-assessment of its collective
performance, the performance of the Chairman and its committees.
The results and any action plans are documented together with
specifi c performance goals which are agreed for the coming year.
Board committees
The board has established a number of committees to assist in
the execution of its duties and to allow detailed consideration
of complex issues. Current committees of the board are the
nominations, remuneration and audit and risk committees. The
nominations and audit and risk committees are comprised entirely
of non-executive directors.
The Chair is responsible for leading the board, ensuring directors
are properly briefed in all matters relevant to their role and
responsibilities, facilitating board discussions and managing the
board’s relationship with the Group’s senior executives. In accepting
the position, the Chair has acknowledged that it will require a
signifi cant time commitment and has confi rmed that other positions
will not hinder his effective performance in the role of the Chair.
Each committee has its own written charter setting out its role and
responsibilities, composition, structure, membership requirements
and the manner in which the committee is to operate. All of these
charters are reviewed on an annual basis and are available on
the Company website. All matters determined by committees
are submitted to the full board as recommendations for board
decisions.
Chief Executive Offi cer (CEO)
The CEO is responsible for implementing Group strategies and
policies.
Commitment
The number of meetings of the Company’s board of directors
and of each board committee held during the year ended 30 June
2012, and the number of meetings attended by each director is
disclosed on page 11.
Minutes of committee meetings are tabled at the subsequent
board meeting. Additional requirements for specifi c reporting by
the committees to the board are addressed in the charter of the
individual committees.
Nominations committee
The nominations committee is currently comprised of Peter C Farrell
(Chairman), Michael A Quinn, and R Peter Campbell, all non-executive
directors.
The board will meet as frequently as required but must not meet less
than four times each year.
Details of these directors’ attendance at nomination committee
meetings are set out in the directors’ report on page 11.
The commitments of non-executive directors are considered by the
nomination committee prior to the directors’ appointment to the
board of the Company.
Independent professional advice
Directors and board committees have the right, in connection with
their duties and responsibilities, to seek independent professional
The main responsibilities of the committee include:
• conduct an annual review of the membership of the board having
regard to present and future needs of the Company and to make
recommendations on board composition and appointments
• conduct an annual review of and conclude on the independence of
each director
www.qrxpharma.com 27
CORPORATE
GOVERNANCE
STATEMENT
(CONTINUED)
28 QRxPharma Annual Report 2012
PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE (continued)
• propose candidates for board vacancies
• oversee the annual performance assessment program
• oversee board succession, including the succession of the Chair, and review whether
succession plans are in place to maintain an appropriately balanced mix of skills,
experience and diversity on the board
• manage the processes in relation to meeting board diversity objectives
• assess the effectiveness of the induction process.
Whilst the nominations committee may recommend new director candidates, it is the full
board that is responsible for the actual appointment of new directors and any candidate
appointed must stand for election at the next annual general meeting of the company.
The committee’s nomination of existing directors for reappointment is also not automatic
and is contingent on their past performance, contribution to the Company and the
current and future needs of the board and Company.
PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING
Code of Conduct
The Company has adopted a statement of values and a Code of conduct (the Code) on
17 August 2011 which has been fully endorsed by the board and applies to all directors and
employees. It is intended that the Code be regularly reviewed and updated as necessary to
ensure it refl ects the highest standards of behaviour and professionalism and the practices
necessary to maintain confi dence in the Group’s integrity and to take into account legal
obligations and reasonable expectations of the Company’s stakeholders.
In summary, the Code requires that at all times all Company personnel act with the utmost
integrity, objectivity and in compliance with the letter and the spirit of the law and Company
policies.
The Company maintains a Securities Trading Policy, which was amended on 31 December
2010, and is available on the Company website. It is contrary to the Company’s policy for
directors, offi cers and employees to be engaged in short term trading of the Company’s
securities. All directors, offi cers and employees are prohibited from dealing in any
QRxPharma Limited securities, except while not in possession of unpublished price sensitive
information. Directors, offi cers and employees may only then deal in the Company’s
securities during a specified period of 45 days after the release of the Company’s half-yearly
or annual results, after release of the Company’s Appendix 4C quarterly report for the
quarter ended 31 March, after the AGM, or during the period in which the Company has
a prospectus or other disclosure documents on issue under which people can subscribe for
securities. Directors must obtain the approval of the Chairman and employees the approval
of the Company Secretary prior to dealing in the Company’s securities outside those periods.
The directors are satisfi ed that the Group has complied with its policies on ethical standards,
including trading in securities.
Diversity Policy
The Company values diversity and recognises the benefi ts it can bring to the organisation’s
ability to achieve its goals. Accordingly the Company adopted a diversity policy on 17 August
2011. This policy outlines the establishment of the Company’s diversity objectives in relation
to gender, age, cultural background and ethnicity. It includes requirements for the board to
establish measurable objectives for achieving diversity, and for the board to assess annually
both the objectives, and the Company’s progress in achieving them.
The board has considered its responsibilities in relation to establishing measureable
objectives to achieve diversity and has decided not to create formal objectives given the
size of the Company’s workforce and its high staff retention rate.
Whilst the board has elected not to establish formal objectives
for diversity, it remains responsible for managing the diversity of
the Company’s workforce and will give due consideration to these
responsibilities in determining any future appointments.
PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL
REPORTING
Audit and risk committee
The audit and risk committee is currently comprised of R Peter
Campbell (Chairman), an independent, non-executive director,
and Michael A Quinn, a non-executive director.
Details of these directors’ qualifi cations and attendance at audit
committee meetings are set out in the directors’ report on pages
8 to 11.
The audit and risk committee has appropriate fi nancial expertise
and all members are fi nancially literate and have an appropriate
understanding of the industry in which the Group operates. The
Committee’s composition does not comply with the Principles in
that it does not include at least three members and does not have a
majority of independent directors. The board considers that the audit
and risk committee as represented by the two non-executive directors
noted above is suitably structured and qualifi ed to fully discharge its
responsibilities at this stage of the Company’s development.
The audit and risk committee operates in accordance with a charter
which is available on the Company website. The main responsibilities
of the committee include:
• review, assess and approve the annual full and concise reports,
the half-year fi nancial report and all other fi nancial information
published by the Company or released to the market
• assist the board in reviewing the effectiveness of the
organisation’s internal control environment covering:
• effectiveness and effi ciency of operations
• reliability of fi nancial reporting
• compliance with applicable laws and regulations
• oversee the effective operation of the risk management
framework
• recommend to the board the appointment, removal and
remuneration of the external auditors, and review the terms of
their engagement, the scope and quality of the audit and assess
performance
• consider the independence and competence of the external
auditor on an ongoing basis
• review and approve the level of non-audit services provided by
the external auditors and ensure it does not adversely impact on
auditor independence
• review and monitor related party transactions and assess their
propriety
• report to the board on matters relevant to the committee’s role
and responsibilities.
In fulfi lling its responsibilities, the audit and risk committee:
• receives regular reports from management and external auditors
• meets with the external auditors at least twice a year, or more
frequently if necessary
• reviews the process the CEO and CFO have in place to support
their certifi cates to the board
• reviews any signifi cant disagreements between the auditor and
management, irrespective of whether they have been resolved
• meets separately with the external auditors at least twice a year
without the presence of management
• provides the external auditors with a clear line of direct
communication at any time to either the Chair of the audit and
risk committe or the Chair of the baord
The audit committee has authority, within the scope of its
responsibilities, to seek any information it requires from any
employee or external party.
External auditors
The Company and audit and risk committee policy is to
appoint external auditors who clearly demonstrate quality
and independence. PricewaterhouseCoopers is the incumbent
external auditor. It is PricewaterhouseCoopers policy to rotate
audit engagement partners on listed companies at least every fi ve
years and in accordance with that policy a new audit engagement
partner was introduced for the current fi nancial year.
An analysis of fees paid to the external auditors, including a
breakdown of fees for non-audit services, is provided in the
directors’ report and in note 22 to the fi nancial statements. It is the
policy of the external auditors to provide an annual declaration of
their independence to the audit committee.
The external auditor will attend the annual general meeting and
be available to answer shareholder questions about the conduct
of the audit and the preparation and content of the annual report.
PRINCIPLES 5 AND 6: MAKE TIMELY AND BALANCED
DISCLOSURES AND RESPECT THE RIGHTS OF SHARE-
HOLDERS
Continuous disclosure and shareholder communication
The Company has written policies on information disclosure that
focus on continuous disclosure of any information concerning the
Group that a reasonable person would expect to have a material
effect on the price of the Company’s securities. These policies also
include the arrangements the Company has in place to promote
communication with shareholders and encourage effective
participation at general meetings. The Shareholder Communication
Policy and Continuous Disclosure Policy are available on the
Company’s website.
The Company Secretary has been nominated as the person
responsible for communications with the ASX. This role includes
responsibility for ensuring compliance with the continuous disclosure
www.qrxpharma.com 29
CORPORATE
GOVERNANCE
STATEMENT
(CONTINUED)
30 QRxPharma Annual Report 2012
PRINCIPLES 5 AND 6: MAKE TIMELY AND BALANCED DISCLOSURES AND
RESPECT THE RIGHTS OF SHAREHOLDERS (continued)
requirements in the ASX Listing Rules and overseeing and co ordinating information
disclosure to the ASX, analysts, brokers, shareholders, the media and the public.
All disclosures made to the ASX, and all information provided to analysts or the media
during briefi ngs are promptly posted on the Company’s website. Procedures have also been
established for reviewing whether any price sensitive information has been inadvertently
disclosed and, if so, this information is also immediately released to the market.
All shareholders have the option to receive a copy of the Company’s annual report. In
addition, the Company seeks to provide opportunities for shareholders to participate
through electronic means. All Company announcements, media briefi ngs, details of
Company meetings, press releases and fi nancial reports for the last three years are
available on the Company’s website. Where possible, the Company arranges for advance
notifi cation of signifi cant Group briefi ngs and makes them widely accessible, including
through the use of mass communication mechanisms as may be practical.
PRINCIPLE 7: RECOGNISE AND MANAGE RISK
The board is responsible for satisfying itself annually, or more frequently as required, that
management has developed and implemented a sound system of risk management and
internal control. Detailed work on this task is delegated to the audit and risk committee
and reviewed by the full board as detailed in the Risk Management Policy adopted by the
Company on 17 August 2011.
The audit and risk committee is responsible for ensuring there is an adequate framework
in relation to risk management, compliance and internal control systems. In providing
this oversight, the committee:
• reviews the framework and methodology for risk identifi cation, the degree of risk the
Company is willing to accept, the management of risk and the processes for auditing
and evaluating the Company’s risk management system
• reviews group-wide objectives in the context of the abovementioned categories of
corporate risk
• reviews and, where necessary, approves guidelines and policies governing the
identifi cation, assessment and management of the Company’s exposure to risk
• reviews and approves the delegations of fi nancial authorities and addresses any need to
update these authorities on an annual basis, and
• reviews compliance with agreed policies.
The committee recommends any actions it deems appropriate to the board for its
consideration.
Management is responsible for designing, implementing and reporting on the adequacy
of the Company’s risk management and internal control system and has to report to the
audit committee on the effectiveness of:
• the risk management and internal control system during the year, and
• the Company’s management of its material business risks.
Each member of the senior executive team signs a formal
employment contract at the time of their appointment covering
a range of matters including their duties, rights, responsibilities
and any entitlements on termination. The standard contract
refers to a specifi c formal job description. This job description
is reviewed by the remuneration committee on an annual basis
and, where necessary, is revised in consultation with the relevant
employee.
Further information on directors’ and executives’ remuneration
is set out in the Directors’ Report under the heading
‘’Remuneration Report’’. In accordance with Group policy,
participants in equity based remuneration plans are not
permitted to enter into any transactions that would limit the
economic risk of options or other unvested entitlements. Details
of this policy can be found on the Company’s website.
The committee also assumes responsibility for overseeing
management succession planning, including the implementation
of appropriate executive development programmes and ensuring
adequate arrangements are in place, so that appropriate
candidates are recruited for later promotion to senior positions.
This includes ensuring due consideration is given to diversity of
executives and staff below board level.
Corporate Reporting
In complying with recommendation 7.3, the CEO and Chief
Financial Offi cer (CFO) have provided the following written
declarations in accordance with section 295A of the
Corporations Act.
• that the Company’s fi nancial reports are complete and present
a true and fair view, in all material respects, of the fi nancial
condition and operational results of the Company and Group
and are in accordance with relevant accounting standards.
• that the above statement is founded on a sound system of
risk management and internal compliance and control which
implements the policies adopted by the board and that the
Company’s risk management and internal compliance
and control is operating effi ciently and effectively in all material
respects in relation to fi nancial reporting risks.
PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY
Remuneration Committee
The remuneration committee is currently comprised of
Peter C Farrell (Chairman), an independent, non-executive
director, Michael A Quinn, a non-executive director and
John W Holaday, the Managing Director.
The remuneration committee’s composition does not
comply with the Principles in that it does not have a majority
of independent directors. The board considers that the
remuneration committee as represented by an independent,
non-executive director, a non-executive director and the
Managing Director noted above is suitably structured and
qualifi ed to fully discharge its responsibilities at this stage of the
Company’s development.
Details of these directors’ attendance at remuneration committee
meetings are set out in the directors’ report on page 11.
The remuneration committee operates in accordance with
its charter which is available on the Company website. The
remuneration committee assists the board to discharge
its responsibilities to attract and retain senior executives
and directors who will create value for shareholders. The
remuneration committee advises the board on remuneration and
incentive policies and practices generally, and makes specifi c
recommendations on remuneration packages and other terms of
employment for senior executives and directors.
www.qrxpharma.com 31
FINANCIAL
REPORT
These fi nancial statements are the consolidated fi nancial
statements of the consolidated entity consisting of
QRxPharma Limited and its subsidiaries. The fi nancial
statements are presented in the Australian currency.
QRxPharma Limited is a company limited by shares,
incorporated and domiciled in Australia. Its registered
offi ce and principal place of business is:
QRxPharma Limited
Level 1, 194 Miller Street
North Sydney NSW 2060.
A description of the nature of the consolidated entity’s
operations and its principal activities is included in the
review of operations and activities on pages 4 to 6 and in
the directors’ report on pages 7 to 11, both of which are not
part of these fi nancial statements.
The fi nancial statements were authorised for issue by the
directors on 29 August 2012. The directors have the power
to amend and reissue the fi nancial statements.
Through the use of the internet, we have ensured that
our corporate reporting is timely and complete. All press
releases, fi nancial reports and other information are
available at the Investor Relations tab on our website:
www.qrxpharma.com.
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash fl ows
Notes to the consolidated fi nancial statements
Directors' declaration
Independent auditor's report to the members of
QRxPharma Limited
Shareholder information
33
34
35
36
37
69
70
72
32 QRxPharma Annual Report 2012
CONSOLIDATED
STATEMENT OF
COMPREHENSIVE
INCOME
For the year ended 30 June 2012.
Revenue from continuing operations
Other income
Research and development
Employee benefi ts expense
Depreciation and amortisation
Business development
Other expenses
Net foreign exchange (loss)
Income tax benefi t
Loss from continuing operations
Loss before income tax
Loss for the year
Other comprehensive income/(loss)
Exchange differences on translation of foreign operations
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive (loss) for the year
Loss for the year is attributable to:
Owners of QRxPharma Limited
Non-controlling interests
Total comprehensive (loss) is attributable to:
Owners of QRxPharma Limited
Non-controlling interests
Notes
5
6
8
8
8
8
9
20122012
$’000
1,919
2,266
(9,162)
(7,192)
(65)
(1,343)
(2,468)
-
(16,045)
-
(16,045)
(16,045)
2011
$’000
177
748
(15,008)
(5,827)
(66)
(1,651)
(1,918)
(2,090)
(25,635)
-
(25,635)
(25,635)
82
82
(15,963)
(48)
(48)
(25,683)
(15,949)
(96)
(16,045)
(15,867)
(96)
(15,963)
(25,573)
(62)
(25,635)
(25,621)
(62)
(25,683)
Earnings per share for loss attributable to the ordinary equity holders of the company:
Basic loss per share
Diluted loss per share
28
28
Cents
(11.2)
(11.2)
Cents
(21.7)
(21.7)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
www.qrxpharma.com 33
CONSOLIDATED
BALANCE
SHEET
As at 30 June 2012.
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Non-current assets
Available-for-sale fi nancial assets
Property, plant and equipment
Intangible assets
LIABILITIES
Current liabilities
Trade and other payables
Other current liabilities
EQUITY
Contributed equity
Reserves
Accumulated losses
Total current assets
Total non-current assets
Total assets
Total current liabilities
Total liabilities
Net assets
Capital and reserves attributable to owners of
QRxPharma Limited
Non-controlling interests
Total equity
Notes
10
11
12
13
14
15
16
17
18
19(a)
19(b)
20
20122012
$’000
22,950
1,187
483
24,620
-
191
-
191
24,811
2,558
4,055
6,613
6,613
18,198
144,281
11,269
(137,306)
18,244
(46)
18,198
2011
$’000
7,291
60
295
7,646
407
196
-
603
8,249
1,722
-
1,722
1,722
6,527
118,809
9,025
(121,357)
6,477
50
6,527
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
34 QRxPharma Annual Report 2012
CONSOLIDATED
STATEMENT OF
CHANGES IN
EQUITY
For the year ended
30 June 2012.
ATTRIBUTABLE TO THE OWNERS OF
QRXPHARMA LIMITED
Contributed
equity
$’000
99,969
-
Reserves
Accumulated
Losses
Total
$’000
7,489
-
$’000
(95,784)
(25,573)
$’000
11,674
(25,573)
Non-
controlling
interests
Total equity
$’000
105
(62)
$’000
11,779
(25,635)
-
-
(48)
(48)
-
(25,573)
(48)
(25,621)
-
(62)
(48)
(25,683)
Balance at 1 July 2010
Loss for the year as reported in
the 2011 fi nancial statements
Other comprehensive (loss)
Total comprehensive loss for the year
Transactions with owners in their capacity as owners:
18,840
Contributions of equity, net of
transaction costs
Employee share scheme
Transactions with non-
controlling interest reserve
Balance at 30 June 2011
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
-
1,591
(7)
1,536
9,025
-
82
82
-
-
-
(25,573)
(121,357)
(15,949)
18,840
1,591
(7)
(5,197)
6,477
(15,949)
-
82
-
-
7
18,840
1,591
-
(55)
50
(96)
-
(5,252)
6,527
(16,045)
82
(15,949)
(15,867)
(96)
(15,963)
-
-
18,840
118,809
-
-
-
Transactions with owners in their capacity as owners:
Contributions of equity, net of
transaction costs
Employee share scheme
Balance at 30 June 2012
25,472
-
-
25,472
-
25,472
-
25,472
144,281
2,162
2,244
11,269
-
(15,949)
(137,306)
2,162
11,767
18,244
-
(96)
(46)
2,162
11,671
18,198
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
www.qrxpharma.com 35
CONSOLIDATED
STATEMENT OF
CASH FLOWS
For the year ended 30 June 2012.
Cash fl ows from operating activities
Payments to suppliers and employees
(inclusive of goods and services tax)
Interest received
Grant received
License fee received
Net cash (outfl ow) from operating activities
Cash fl ows from investing activities
Payments for property, plant and equipment
Net cash (outfl ow) from investing activities
Cash fl ows from fi nancing activities
Proceeds from issue of shares
Payments made in relation to capital raising
Net cash infl ow from fi nancing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the fi nancial year
Effects of exchange rate changes on cash and cash equivalents
Notes
20122012
$’000
2011
$’000
6
27
18
18
(17,760)
114
-
5,918
(11,728)
(60)
(60)
26,750
(1,278)
25,472
13,684
7,291
1,975
(23,114)
169
748
-
(22,197)
(22)
(22)
19,830
(990)
18,840
(3,379)
12,760
(2,090)
7,291
Cash and cash equivalents at end of year
10
22,950
The above consolidated statement of cash fl ows should be read in conjunction with the accompanying notes.
36 QRxPharma Annual Report 2012
CONTENTS OF THE
NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
Summary of signifi cant accounting policies
Financial risk management
Critical accounting estimates and judgements
Segment information
Revenue
Other income
Derivative fi nancial instrument
Expenses
Income tax benefi t
Current assets – Cash and cash equivalents
Current assets – Trade and other receivables
Current assets – Other current assets
Non-current assets – Available-for-sale fi nancial asset
Non-current assets – Property, plant and equipment
Non-current assets – Intangible assets
Current liabilities – Trade and other payables
Other current liabilities
Contributed equity
Reserves and accumulated losses
Non-controlling interests
Key management personnel disclosures
Remuneration of auditors
Contingencies
Commitments
Related party transactions
Subsidiaries
Reconciliation of loss after income tax to net cash
outfl ow from operating activities
Loss per share
Parent entity fi nancial information
Share based payments
Events occurring after the balance sheet date
38
48
51
52
52
52
52
53
53
54
54
55
55
55
56
56
56
57
58
59
59
62
62
63
63
63
64
64
65
65
68
www.qrxpharma.com 37
NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
(CONTINUED)
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the consolidated
fi nancial statements are set out below. These policies have been consistently applied
to all the years presented, unless otherwise stated. The fi nancial statements are for the
consolidated entity consisting of QRxPharma Limited and its subsidiaries.
a) Basis of preparation
These general purpose fi nancial statements have been prepared in accordance
with Australian Accounting Standards, other authoritative pronouncements of the
Australian Accounting Standards Board, Urgent Issues Group Interpretations and the
Corporations Act 2001. QRxPharma Limited is a for-profi t entity for the purpose of
preparing the fi nancial statements.
(i) New and amended standards adopted by the Group
None of the new standards and amendments to standards that are mandatory for
the fi rst time for the fi nancial year beginning 1 July 2011 affected any of the amounts
recognised in the current period or any prior period and are not likely to affect future
periods.
(ii) Compliance with IFRS
The consolidated fi nancial statements of QRxPharma Limited also comply with
International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB).
(iii) Historical cost convention
These fi nancial statements have been prepared under the historical cost convention,
as modifi ed by the revaluation of available-for-sale fi nancial assets and liabilities
(including derivative instruments) at fair value through profi t or loss.
(iv) Critical accounting estimates
The preparation of fi nancial statements in conformity with AIFRS requires the use
of certain critical accounting estimates. It also requires management to exercise
its judgment in the process of applying the Group’s accounting policies. The areas
involving a higher degree of judgment or complexity, or areas where assumptions and
estimates are signifi cant to the fi nancial statements are disclosed in note 3.
(v) Early adoption of standards
The Group has elected not to apply any pronouncement before their operative date in
the annual reporting period beginning 1 July 2011.
b) Going concern
The Group has experienced signifi cant recurring operating losses and negative cash fl ows
from operating activities since its inception. During the year the Company successfully raised
$25.5 million net of transaction costs, through a share placement and a rights issue and at
30 June 2012, the Group holds cash and cash equivalents of $23 million (2011: $7.3 million).
Having carefully assessed the fi nancial and operating implications of the above matters, the
directors consider that the Group will be able to pay its debts as and when they fall due for at
least 12 months following the date of these fi nancial statements and that it is appropriate for
the fi nancial statements to be prepared on a going concern basis.
38 QRxPharma Annual Report 2012
c) Principles of consolidation
(i) Subsidiaries
The consolidated fi nancial statements incorporate the assets and
liabilities of all subsidiaries of QRxPharma Limited (‘’company’’ or
‘’parent entity’’) as at 30 June 2012 and the results of all subsidiaries
for the year then ended. QRxPharma Limited and its subsidiaries
together are referred to in this fi nancial report as the Group or the
consolidated entity.
Subsidiaries are all those entities (including special purpose entities)
over which the Group has the power to govern the fi nancial and
operating policies, generally accompanying a shareholding of
more than one half of the voting rights. The existence and effect of
potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date that
control ceases.
Non-controlling interests in the results and equity of subsidiaries are
shown separately in the consolidated statement of comprehensive
income, statement of changes in equity and balance sheet respectively.
Investments in subsidiaries are accounted for at cost in the separate
fi nancial statements of QRxPharma Limited.
(ii) Changes in ownership interests
The Group treats transactions with non-controlling interests
that do not result in a loss of control as transactions with equity
owners of the Group. A change in ownership interest results in an
adjustment between the carrying amounts of the controlling and
non-controlling interests to refl ect their relative interests in the
subsidiary. Any difference between the amount of the adjustment
to non-controlling interests and any consideration paid or received
is recognised in a separate reserve within equity attributable to
owners of QRxPharma Limited.
When the Group ceases to have control, joint control or signifi cant
infl uence, any retained interest in the entity is remeasured to
its fair value with the change in carrying amount recognised
in profi t or loss. The fair value is the initial carrying amount
for the purposes of subsequently accounting for the retained
interest as an associate, jointly controlled entity or fi nancial
asset. In addition, any amounts previously recognised in other
comprehensive income in respect of that entity are accounted for
as if the Group had directly disposed of the related assets and
liabilities. This may mean that amounts previously recognised in
other comprehensive income are reclassifi ed to profi t or loss.
If the ownership interest in a jointly-controlled entity or an
associate is reduced but joint control or signifi cant infl uence is
retained, only a proportionate share of the amounts previously
recognised in other comprehensive income are reclassifi ed to
profi t or loss.
d) Segment reporting
Operating segments are reported in a manner consistent with
the internal reporting provided to the chief operating decision
maker. The chief operating decision maker who is responsible for
allocating resources and assessing performance of the operating
segments, has been identifi ed as the executive management
team.
e) Foreign currency translation
(i) Functional and presentation currency
Items included in the fi nancial statements of each of the
Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the
functional currency’). The consolidated fi nancial statements are
presented in Australian dollars, which is QRxPharma Limited’s
functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation
at year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the
statement of comprehensive income, except when they are
deferred in equity as qualifying cash fl ow hedges and qualifying
net investment hedges or are attributable to part of the net
investment in a foreign operation.
Foreign exchange gains and losses are presented in the income
statement on a net basis within other income or net foreign
exchange loss.
(iii) Group companies
The results and fi nancial position of all the Group entities
(none of which has the currency of a hyperinfl ationary
economy) that have a functional currency different from the
presentation currency are translated into the presentation
currency as follows:
• assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet
• income and expenses for each profi t and loss are translated
at average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income
and expenses are translated at the dates of the
transactions), and
• all resulting exchange differences are recognised in other
comprehensive income.
On consolidation, exchange differences arising from the
translation of any net investment in foreign entities, and of
borrowings and other fi nancial instruments designated as
hedges of such investments, are taken to other comprehensive
www.qrxpharma.com 39
NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
(CONTINUED)
40 QRxPharma Annual Report 2012
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
income. When a foreign operation is sold or any borrowings forming part of the
net investment are repaid, a proportionate share of such exchange differences
are recognised in the profi t and loss as part of the gain or loss on sale where
applicable.
f) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable.
Amounts disclosed as revenue are net of returns and trade allowances. The Group
recognises revenue when the amount of revenue can be reliably measured, it is
probable that future economic benefi ts will fl ow to the entity and specifi c criteria
have been met for each of the Group’s activities as described below. The Group
bases its estimates on current available information, taking into consideration the
type of customer, the type of transaction and the specifi cs of each arrangement.
Interest income
Interest income is recognised on a time proportion basis using the effective interest
method.
g) Income tax
The income tax expense or revenue for the period is the tax payable on the current
period’s taxable income based on the national income tax rate for each jurisdiction
adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences and to unused tax losses.
Deferred income tax is provided in full, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their carrying
amounts in the consolidated fi nancial statements. However, the deferred income
tax is not accounted for if it arises from initial recognition of an asset or liability in a
transaction other than a business combination that at the time of the transaction
affects neither accounting nor taxable profi t or loss. Deferred income tax is
determined using tax rates (and laws) that have been enacted or substantially
enacted by the balance sheet date and are expected to apply when the related
deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused
tax losses only if it is probable that future taxable amounts will be available to utilise
those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences
between the carrying amount and tax bases of investments in controlled entities
where the parent entity is able to control the timing of the reversal of the temporary
differences and it is probable that the differences will not reverse in the foreseeable
future.
Tax consolidation legislation
QRxPharma Limited and its wholly-owned Australian controlled entities have
implemented the tax consolidation legislation.
The head entity, QRxPharma Limited, and the controlled entities in the tax
consolidated group account for their own current and deferred tax amounts. These
tax amounts are measured as if each entity in the tax consolidated group continues
to be a stand-alone taxpayer in its own right.
h) Business combinations
The acquisition method of accounting is used to account for
all business combinations, including business combinations
involving entities or businesses under common control,
regardless of whether equity instruments or other assets are
acquired. The consideration transferred for the acquisition of a
subsidiary comprises the fair values of the assets transferred, the
liabilities incurred and the equity interests issued by the Group.
The consideration transferred also includes the fair value of any
contingent consideration arrangement and the fair value of any
pre-existing equity interest in the subsidiary. Acquisition-related
costs are expensed as incurred. Identifi able assets acquired
and liabilities and contingent liabilities assumed in a business
combination are, with limited exceptions, measured initially
at their fair values at the acquisition date. On an acquisition-
by-acquisition basis, the Group recognises any non-controlling
interest in the acquiree either at fair value or at the non-
controlling interest’s proportionate share of the acquiree’s net
identifi able assets.
The excess of the consideration transferred, the amount of any
non-controlling interest in the acquire and the acquisition-date
fair value of any previous equity interest in the acquiree over
the fair value of the Group’s share of the net identifi able assets
acquired is recorded as goodwill. If those amounts are less than
the fair value of the net identifi able assets of the subsidiary
acquired and the measurement of all amounts has been
reviewed, the difference is recognised directly in profi t or loss as a
bargain purchase.
Where settlement of any part of cash consideration is deferred,
the amounts payable in the future are discounted to their
present value as at the date of exchange. The discount rate used
is the entity’s incremental borrowing rate, being the rate at which
a similar borrowing could be obtained from an independent
fi nancier under comparable terms and conditions.
Contingent consideration is classifi ed either as equity or a
fi nancial liability. Amounts classifi ed as a fi nancial liability are
subsequently remeasured to fair value with changes in fair value
recognised in profi t or loss.
i) Impairment of assets
Assets are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount
by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s
fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels
for which there are separately identifi able cash infl ows which
are largely independent of the cash infl ows from other assets or
groups of assets (cash generating units). Non-fi nancial assets
other than goodwill that suffered an impairment are reviewed
for possible reversal of the impairment at each reporting date.
j) Grant income
Grants from the government are recognised at their fair value
where there is a reasonable assurance that the grant will be
received and the Group will comply with all attached conditions.
k) Cash and cash equivalents
For cash fl ow statement presentation purposes, cash and cash
equivalents includes cash on hand, deposits held at call with
fi nancial institutions, other short term, highly liquid investments
with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to
an insignifi cant risk of changes in value, and bank overdrafts.
Bank overdrafts are shown within borrowings in current liabilities
on the balance sheet.
l) Investments and other fi nancial assets
Classifi cation
The Group classifi es its investments in the following categories:
fi nancial assets at fair value through profi t or loss, loans and
receivables, held to maturity investments and available-for-sale
fi nancial assets. The classifi cation depends on the purpose for
which the investments were acquired. Management determines
the classifi cation of its investments at initial recognition and, in
the case of assets classifi ed as held-to-maturity, re-evaluates this
designation at each reporting date.
(i) Financial assets at fair value through profi t or loss
Financial assets at fair value through profi t or loss are fi nancial
assets held for trading. A fi nancial asset is classifi ed in this category
if acquired principally for the purpose of selling in the short term.
Derivatives are classifi ed as held for trading unless they are
designated as hedges.
(ii) Loans and receivables
Loans and receivables are non-derivative fi nancial assets with fi xed
or determinable payments that are not quoted in an active market.
They are included in current assets, except for those with maturities
greater than 12 months after the balance sheet date which are
classifi ed as non-current assets. Loans and receivables are included in
trade and other receivables in the balance sheet (note 11).
(iii) Held-to-maturity investments
Held-to-maturity investments are non-derivative fi nancial assets
with fi xed or determinable payments and fi xed maturities that the
Group’s management has the positive intention and ability to hold to
maturity. If the Group were to sell other than an insignifi cant amount
of held-to-maturity fi nancial assets, the whole category would be
tainted and reclassifi ed as available-for-sale. Held-to-maturity
fi nancial assets are included in non-current assets, except for those
with maturities less than 12 months from the reporting date, which are
classifi ed as current assets.
(iv) Available-for-sale fi nancial assets
Available-for-sale fi nancial assets, comprising principally equity
www.qrxpharma.com 41
NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
(CONTINUED)
42 QRxPharma Annual Report 2012
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
securities, are non-derivatives that are either designated in this category or not
classifi ed in any of the other categories. They are included in non-current assets unless
the investment matures or management intends to dispose of the investment within 12
months of the end of the reporting period. Investments are designated as available-
for-sale if they do not have fi xed maturities and fi xed or determinable payments and
management intends to hold them for the medium to long term.
Recognition and derecognition
Regular purchases and sales of fi nancial assets are recognised on trade-date – the
date on which the Group commits to purchase or sell the asset. Financial assets are
derecognised when the rights to receive cash fl ows from the fi nancial assets have
expired or have been transferred and the Group has transferred substantially all
the risks and rewards of ownership.
When securities classifi ed as available-for-sale are sold, the accumulated fair
value adjustments recognised in other comprehensive income are reclassifi ed to
profi t or loss as gains and losses from investment securities.
Measurement
At initial recognition, the Group measures a fi nancial asset at its fair value plus,
in the case of a fi nancial asset not at fair value through profi t or loss, transaction
costs that are directly attributable to the acquisition of the fi nancial asset.
Transaction costs of fi nancial assets carried at fair value through profi t or loss are
expensed in profi t or loss.
Loans and receivables and held to maturity investments are carried at amortised
cost using the effective interest method. Available-for-sale fi nancial assets and
fi nancial assets at fair value through profi t or loss are subsequently carried at
fair value. Gains or losses arising from changes in the fair value of the “fi nancial
assets at fair value through profi t or loss’ category are presented in profi t or loss
within other income or other expenses in the period in which they arise.
Impairment
The Group assesses at the end of each reporting period whether there is objective
evidence that a fi nancial asset or group of fi nancial assets is impaired. A fi nancial
asset or a group of fi nancial assets is impaired and impairment losses are incurred
only if there is objective evidence of impairment as a result of one or more events
that occurred after the initial recognition of the asset (a ‘loss event’) and that loss
event (or events) has an impact on the estimated future cash fl ows of the fi nancial
asset or group of fi nancial assets that can be reliably estimated. In the case of
equity investments classifi ed as available-for-sale, a signifi cant or prolonged
decline in the fair value of the security below its cost is considered an indicator
that the assets are impaired.
(i) Assets carried at amortised cost
For loans and receivables, the amount of the loss is measured as the difference
between the asset’s carrying amount and the present value of estimated future
cash fl ows (excluding future credit losses that have not been incurred) discounted
at the fi nancial asset’s original effective interest rate. The carrying amount of
the asset is reduced and the amount of the loss is recognised in the consolidated
income statement. If a loan or held-to-maturity investment has a variable interest
rate, the discount rate for measuring any impairment loss is the current effective
interest rate determined under the contract. As a practical expedient, the Group
may measure impairment on the basis of an instrument’s fair value using an
observable market price.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an
event occurring after the impairment was recognised (such as
an improvement in the debtor’s credit rating), the reversal of
the previously recognised impairment loss is recognised in the
consolidated income statement.
(ii) Assets classifi ed as available-for-sale
If there is objective evidence of impairment for available-for-sale
fi nancial assets, the cumulative loss – measured as the difference
between the acquisition cost and the current fair value, less any
impairment loss on that fi nancial asset previously recognised in profi t
or loss – is removed from equity and recognised in profi t or loss.
Impairment losses on equity instruments that were recognised in
profi t or loss are not reversed through profi t or loss in a subsequent
period.
If the fair value of a debt instrument classifi ed as available-for-sale
increases in a subsequent period and the increase can be objectively
related to an event occurring after the impairment loss was
recognised in profi t or loss, the impairment loss is reversed through
profi t or loss.
m) Property, plant and equipment
Property, plant and equipment are stated at historical costs less
depreciation.
Depreciation on plant and equipment is calculated using the straight
line method to allocate their cost, net of their residual values, over
their estimated useful lives, as follows:
Plant and equipment
4 years
The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date.
n) Intangible assets
(i) Intellectual property
Costs incurred in acquiring intellectual property are capitalised and
amortised on a straight line basis over the period of the expected
benefi t.
Costs include only those costs directly attributable to the acquisition
of the intellectual property.
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount (note 1(i)).
(ii) Research and development
Research expenditure on internal development projects is recognised
as an expense as incurred. Costs incurred on development projects
(relating to the design and testing of new or improved products) are
recognised as intangible assets when it is probable that the project
will, after considering its commercial and technical feasibility, be
completed and generate future economic benefi ts and its costs
can be measured reliably. The expenditure capitalised comprises
all directly attributable costs, including costs of materials, services,
direct labour and an appropriate proportion of overheads. Other
development expenditures that do not meet these criteria are
recognised as an expense as incurred. Development costs previously
recognised as an expense are not recognised as an asset in a
subsequent period. Capitalised development costs are recorded as
intangible assets and amortised from the point at which the asset is
ready for use on a straight line basis over its useful life.
o) Trade and other payables
These amounts represent liabilities for goods and services provided
to the Group prior to the end of fi nancial year which are unpaid.
The amounts are unsecured and are usually paid within 30 days of
recognition.
Trade and other payables are presented as current liabilities unless
payment is not due within 12 months from the reporting date.
p) Leases
Leases in which a signifi cant portion of the risks and rewards of
ownership are not transferred to the Group as lessee are classifi ed as
operating leases (note 24). Payments made under operating leases
(net of any incentive received from the lessor) are charged to the
income statement on a straight-line basis over the period of the lease.
q) Employee benefi ts
(i) Wages and salaries and annual leave
Liabilities for wages and salaries, including non monetary benefi ts
and annual leave expected to be settled within 12 months of the
reporting date are recognised in other payables in respect of
employees’ services up to the reporting date and are measured at the
amounts expected to be paid when the liabilities are settled.
(ii) Long service leave
The liability for long service leave is recognised in the provision for
employee benefi ts and measured as the present value of expected
future payments to be made in respect of services provided by
employees up to the reporting date. Consideration is given to
expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are
discounted using market yields at the reporting date on national
government bonds with terms to maturity and currency that match,
as closely as possible, the estimated future cash outfl ows.
(iii) Retirement benefi t obligations
The Group does not maintain a Group superannuation plan. The
Group makes fi xed percentage contributions for all Australian
resident employees to complying third party superannuation
funds and for US resident employees to complying pension funds if
requested. The Group’s legal or constructive obligation is limited to
these contributions.
www.qrxpharma.com 43
NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
(CONTINUED)
44 QRxPharma Annual Report 2012
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Contributions to complying third party superannuation funds and pension plans
are recognised as an expense as they become payable. Prepaid contributions are
recognised as an asset to the extent that a cash refund or a reduction in the future
payments is available.
(iv) Share-based payments
Share based compensation benefi ts are provided to employees via the QRxPharma
Limited Employee Share Option Plan. Information relating to this scheme is set out
in note 30.
The fair value of options granted under the QRxPharma Limited Employee Share
Option Plan is recognised as an employee benefi t expense with a corresponding
increase in equity. The fair value is measured at grant date and recognised over the
period during which the employees become unconditionally entitled to the options.
The fair value at grant date is independently determined using Black-Scholes option
pricing model that takes into account the exercise price, the term of the option, the
impact of dilution, the share price at grant date and expected price volatility of the
underlying share, the expected dividend yield and the risk free interest rate for the
term of the option.
The fair value of the options granted is adjusted to refl ect market vesting
conditions, but excludes the impact of any non market vesting conditions (for
example, profi tability and sales growth targets). Non market vesting conditions are
included in assumptions about the number of options that are expected to become
exercisable. At each balance sheet date, the entity revises its estimate of the number
of options that are expected to become exercisable. The employee benefi t expense
recognised each period takes into account the most recent estimate. The impact of
the revision to original estimates, if any, is recognised in the income statement with a
corresponding adjustment to equity.
(v) Bonus plans
The Group recognises a liability and an expense for bonuses in accordance
with the terms of employment contracts. The Group recognises a provision
where contractually obliged or where there is a past practice that has created a
constructive obligation.
(vi) Employee benefi t on-costs
Employee benefi t on-costs are recognised and included in the employee
benefi t liabilities and costs when the employee benefi ts to which they relate are
recognised.
(vii) Termination benefi ts
Termination benefi ts are payable when employment is terminated before the
normal retirement date, or when an employee accepts voluntary redundancy in
exchange for these benefi ts. The Group recognises termination benefi ts when
it is demonstrably committed to either terminating the employment of current
employees according to a detailed formal plan without possibility of withdrawal
or to providing termination benefi ts as a result of an offer made to encourage
voluntary redundancy. Benefi ts falling due more than 12 months after the end of
the reporting period are discounted to present value
r) Contributed equity
Ordinary shares are classifi ed as equity.
in accordance with that Class Order to the nearest thousand
dollars, or in certain cases, the nearest dollar.
Incremental costs directly attributable to the issue of new shares
or options are shown in equity as a deduction, net of tax, from
the proceeds.
w) Parent entity fi nancial information
The fi nancial information for the parent entity, QRxPharma
Limited, disclosed in note 29 has been prepared on the same basis
as the consolidated fi nancial statements, except as set out below.
s) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profi t
attributable to equity holders of the Company, excluding any
costs of servicing equity other than ordinary shares, by the
weighted average number of ordinary shares outstanding during
the fi nancial year, adjusted for bonus elements in ordinary
shares issued during the year.
(i) Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries are accounted for at cost in the
fi nancial statements of QRxPharma Limited.
(ii) Tax consolidation legislation
QRxPharma Limited and its wholly-owned Australian controlled
entities have implemented the tax consolidation legislation.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the fi gures used in the
determination of basic earnings per share to take into account:
• the after income tax effect of interest and other fi nancing
costs associated with dilutive potential ordinary shares, and
• the weighted average number of additional ordinary shares
that would have been outstanding assuming the conversion
of all dilutive potential ordinary shares.
t) Derivatives
Derivatives that do not qualify for hedge accounting
Derivatives are initially recognised at fair value on the date
a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. Changes
in the fair value of any derivative instrument that does not qualify
for hedge accounting are recognised immediately in the income
statement and are included in other income or other expenses.
u) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount
of associated GST, unless the GST incurred is not recoverable
from the taxation authority. In this case it is recognised as part of
the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of
GST receivable or payable. The net amount of GST recoverable
from, or payable to, the taxation authority is included with other
receivables or payables in the balance sheet.
Cash fl ows are presented on a gross basis. The GST components
of cash fl ows arising from investing or fi nancing activities which
are recoverable from, or payable to the taxation authority, are
presented as operating cash fl ow.
v) Rounding of amounts
The company is a kind referred to in Class order 98/100, issued
by the Australian Securities and Investments Commission,
relating to the “rounding off” of amounts in the fi nancial
report. Amounts in the fi nancial report have been rounded off
The head entity, QRxPharma Limited, and the controlled entities
in the tax consolidated group account for their own current and
deferred tax amounts. These tax amounts are measured as if each
entity in the tax consolidated group continues to be a stand-alone
taxpayer in its own right.
(iii) Share based payments
The grant by the Company of options over its equity instruments to
the employees of subsidiary undertakings in the Group is treated
as a capital contribution to that subsidiary undertaking. The
fair value of employee services received, measured by reference
to the grant date fair value, is recognised over the vesting period
as an increase to investment in subsidiary undertakings, with a
corresponding credit to equity.
x) New accounting standards and interpretations
Certain new accounting standards and interpretations have been
published that are not mandatory for 30 June 2012 reporting
periods. The Group’s and the parent entity’s assessment of the
impact of these new standards and interpretations is set out below.
(i) AASB 9 Financial Instruments and AASB 2009-11
Amendments to Australian Accounting Standards arising from
AASB 9 (effective from 1 January 2013)
AASB 9 Financial Instruments addresses the classifi cation and
measurement of fi nancial assets and is likely to affect the Group’s
accounting for its fi nancial assets. The standard is not applicable
until 1 January 2013 but is available for early adoption. The Group
is yet to assess its full impact. However, initial indications are that
it may affect the Group’s accounting for its available-for-sale
fi nancial assets, since AASB 9 only permits the recognition of fair
value gains and losses in other comprehensive income if they relate
to equity investments that are not held for trading. The Group has
not yet decided when to adopt AASB 9.
www.qrxpharma.com 45
NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
(CONTINUED)
46 QRxPharma Annual Report 2012
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(ii) AASB 1053 Application of Tiers of Australian Accounting Standards and
AASB 2010-2 Amendments to Australian Accounting Standards arising from
Reduced Disclosure Requirements (effective from 1 July 2013)
On 30 June 2010 the AASB offi cially introduced a revised differential reporting
framework in Australia. Under this framework, a two-tier differential reporting
regime applies to all entities that prepare general purpose fi nancial statements.
QRxPharma Limited is listed on the ASX and is not eligible to adopt the new
Australian Accounting Standards – Reduced Disclosure Requirements. The two
standards will therefore have no impact on the fi nancial statements of the entity.
(iii) AASB 2010-6 Amendments to Australian Accounting Standards –
Disclosures on Transfers of Financial Assets (effective for annual reporting
periods beginning on or after 1 July 2011)
Amendments made to AASB 7 Financial Instruments: Disclosures in November 2010
introduce additional disclosures in respect of risk exposures arising from transferred
fi nancial assets. They are not expected to have any signifi cant impact on the Group’s
disclosures. The Group intends to apply the amendment from 1 July 2012.
(iv) AASB 2010-8 Amendments to Australian Accounting Standards – Deferred
Tax: Recovery of Underlying Assets (effective from 1 January 2012)
In December 2010, the AASB amended AASB 112 Income Taxes to provide a
practical approach for measuring deferred tax liabilities and deferred tax assets
when investment property is measured using the fair value model. AASB 112 requires
the measurement of deferred tax assets or liabilities to refl ect the tax consequences
that would follow from the way management expects to recover or settle the
carrying of the relevant assets or liabilities, that is through use or through sale. The
amendment introduces a rebuttable presumption that investment property which
is measured at fair value is recovered entirely by sale. The Group will apply the
amendment from 1 July 2012. It is currently evaluating the impact of the amendment.
(v) AASB 2010-9 Amendments to Australian Accounting Standards – Severe
Hyperinfl ation and Removal of Fixed Dates for First-time Adopters (effective
from 1 July 2011) and AASB 2010-10 Further Amendments to Australian
Accounting Standards – Removal of Fixed Dates for First-time Adopters
(effective from 1 July 2013)
AASB 1 First-time Adoption of Australian Accounting Standards was amended in
December 2010 by eliminating references to fi xed dates for one exemption and one
exception dealing with fi nancial assets and liabilities. The AASB also introduced
a new exemption for entities that resume presenting their fi nancial statements
in accordance with Australian Accounting Standards after having been subject
to severe hyperinfl ation. Neither of these amendments will affect the fi nancial
statements of the Group.
(vi) AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements,
AASB 12 Disclosure of Interests in Other Entities, revised AASB 127 Separate
Financial Statements and AASB 128 Investments in Associates and Joint
Ventures and AASB 2011-7 Amendments to Australian Accounting Standards
arising from the Consolidation and Joint Arrangements Standards (effective 1
January 2013)
In August 2011, the AASB issued a suite of fi ve new and amended
standards which address the accounting for joint arrangements,
consolidated fi nancial statements and associated disclosures.
AASB 10 replaces all of the guidance on control and consolidation
in AASB 127 Consolidated and Separate Financial Statements,
and Interpretation 12 Consolidation – Special Purpose Entities.
The core principle that a consolidated entity presents a parent
and its subsidiaries as if they are a single economic entity remains
unchanged, as do the mechanics of consolidation. However the
standard introduces a single defi nition of control that applies to
all entities. It focuses on the need to have both power and rights
or exposure to variable returns before control is present. Power is
the current ability to direct the activities that signifi cantly infl uence
returns. Returns must vary and can be positive, negative or both.
There is also new guidance on participating and protective rights
and on agent/principal relationships. While the Group does
not expect the new standard to have a signifi cant impact on its
composition, it has yet to perform a detailed analysis of the new
guidance in the context of its various investees that may or may
not be controlled under the new rules.
AASB 11 introduces a principles based approach to accounting for
joint arrangements. The focus is no longer on the legal structure of
joint arrangements, but rather on how rights and obligations are
shared by the parties to the joint arrangement.
Based on the assessment of rights and obligations, a joint
arrangement will be classifi ed as either a joint operation or joint
venture. Joint ventures are accounted for using the equity method,
and the choice to proportionately consolidate will no longer be
permitted. Parties to a joint operation will account their share of
revenues, expenses, assets and liabilities in much the same way
as under the previous standard. AASB 11 also provides guidance
for parties that participate in joint arrangements but do not share
joint control. As the Group is not party to any joint arrangements,
this standard will not have any impact on its fi nancial statements.
AASB 12 sets out the required disclosures for entities reporting
under the two new standards, AASB 10 and AASB 11, and
replaces the disclosure requirements currently found in AASB
128. Application of this standard by the Group will not affect any
of the amounts recognised in the fi nancial statements, but will
impact the type of information disclosed in relation to the Group’s
investments.
Amendments to AASB 128 provide clarifi cation that an entity
continues to apply the equity method and does not remeasure
its retained interest as part of ownership changes where a joint
venture becomes an associate, and vice versa. The amendments
also introduce a “partial disposal” concept. The Group is still
assessing the impact of these amendments.
The Group does not expect to adopt the new standards before
their operative date. They would therefore be fi rst applied in the
fi nancial statements for the annual reporting period ending 30
June 2014.
(vii) AASB 13 Fair Value Measurement and AASB 2011-8
Amendments to Australian Accounting Standards arising from
ASB 13 (effective 1 January 2013)
AASB 13 was released in September 2011. It explains how to
measure fair value and aims to enhance fair value disclosures.
The Group has yet to determine which, if any, of its current
measurement techniques will have to change as a result of the
new guidance. It is therefore not possible to state the impact, if
any, of the new rules on any of the amounts recognised in the
fi nancial statements. However, application of the new standard
will impact the type of information disclosed in the notes to the
fi nancial statements. The Group does not intend to adopt the new
standard before its operative date, which means that it would be
fi rst applied in the annual reporting period ending 30 June 2014.
(viii) Revised AASB 119 Employee Benefi ts, AASB 2011-10
Amendments to Australian Accounting Standards arising from
AASB 119 (September 2011) and AASB 2011-11 Amendments
to AASB 119 (September 2011) arising from Reduced
Disclosure Requirements (effective 1 January 2013)
In September 2011, the AASB released a revised standard on
accounting for employee benefi ts. It requires the recognition
of all remeasurements of defi ned benefi t liabilities/assets
immediately in other comprehensive income (removal of the
so-called ‘corridor’ method) and the calculation of a net interest
expense or income by applying the discount rate to the net
defi ned benefi t liability or asset. This replaces the expected
return on plan assets that is currently included in profi t or loss.
The standard also introduces a number of additional disclosures
for defi ned benefi t liabilities/assets and could affect the timing
of the recognition of termination benefi ts. The amendments will
have to be implemented retrospectively. The new rules will not
affect the fi nancial statements of the Group.
(ix) AASB 2011-9 Amendments to Australian Accounting
Standards – Presentation of Items of Other Comprehensive
Income (effective 1 July 2012)
In September 2011, the AASB made an amendment to AASB 101
Presentation of Financial Statements which requires entities to
separate items presented in other comprehensive income into
two groups, based on whether they may be recycled to profi t
or loss in the future. This will not affect the measurement of
any of the items recognised in the balance sheet or the profi t or
loss in the current period. The Group intends to adopt the new
standard from 1 July 2012.
www.qrxpharma.com 47
NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
(CONTINUED)
48 QRxPharma Annual Report 2012
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(x) AASB 2011-4 Amendments to Australian Accounting Standards to Remove
Individual Key Management Personnel Disclosure Requirements (effective 1 July
2013)
In July 2011 the AASB decided to remove the individual key management
personnel (KMP) disclosure requirements from AASB 124 Related Party
Disclosures, to achieve consistency with the international equivalent standard
and remove a duplication of the requirements with the Corporations Act 2001.
While this will reduce the disclosures that are currently required in the notes to
the fi nancial statements, it will not affect any of the amounts recognised in the
fi nancial statements. The amendments apply from 1 July 2013 and cannot be
adopted early. The Corporations Act requirements in relation to remuneration
reports will remain unchanged for now, but these requirements are currently
subject to review and may also be revised in the near future.
(xi) AASB 2011-5 Amendments to Australian Accounting Standards –
Extending Relief from Consolidation, the Equity Method and Proportionate
Consolidation and AASB 2011-6 Amendments to Australian Accounting
Standards – Extending Relief from Consolidation, the Equity Method and
Proportionate Consolidation – Reduced Disclosure Requirements
AASB 2011-5 and AASB 2011-6 provide relief from consolidation, the equity
method and proportionate consolidation to not-for-profi t entities and entities
reporting under the reduced disclosure regime under certain circumstances.
QRxPharma Limited is listed on the ASX and is not eligible to adopt the reduced
disclosure regime. Therefore this will not affect the fi nancial statements of the
Group.
(xii) Offsetting Financial Assets and Financial Liabilities (Amendments to
IAS 32) and Disclosures-Offsetting Financial Assets and Financial Liabilities
(Amendments to IFRS 7) (effective 1 January 2014 and 1 January 2013
respectively)
In December 2011, the IASB made amendments to the application guidance in
IAS 32 Financial Instruments: Presentation, to clarify some of the requirements
for offsetting fi nancial assets and fi nancial liabilities in the balance sheet. These
amendments are effective from 1 January 2014. They are unlikely to affect the
accounting for any of the entity’s current offsetting arrangements. However, the
IASB has also introduced more extensive disclosure requirements into IFRS 7
which will apply from 1 January 2013. The AASB is expected to make equivalent
changes to IAS 32 and AASB 7 shortly. When they become applicable, the Group
will have to provide a number of additional disclosures in relation to its offsetting
arrangements. The Group intends to apply the new rules for the fi rst time in the
fi nancial year commencing 1 July 2013.
2 FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of fi nancial risks: market risk (including
currency risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk
management programme focuses on the unpredictability of fi nancial markets and
seeks to minimise potential adverse effects on the fi nancial performance of the Group.
The Group uses derivative fi nancial instruments such as foreign exchange contracts
to hedge certain risk exposures. Derivatives are exclusively used for hedging purposes,
not as trading or other speculative instruments. Cash and cash equivalents are invested
exclusively with A rated fi nancial institutions, at a minimum, with capital preservation
being the stated investment objective. Risk management is carried out under policies
approved by the board of directors.
The Group holds the following fi nancial instruments:
20122012
$’000
2011
$’000
Financial assets
Cash and cash equivalents
Trade and other receivables
22,950
1,187
7,291
60
Available for sale fi nancial assets
-
407
Financial liabilities
Trade and other payables
Other current liabilities
24,137 7,758
2,558 1,722
4,055
-
6,613 1,722
(a) Market risk
(i) Foreign exchange risk
The Group is exposed to foreign exchange risk arising from currency exposure to the US dollar and Euro. Foreign exchange risk arises from
future commercial transactions and recognised assets and liabilities denominated in a currency that is not the entity’s functional currency.
During the year, the Group converted A$23.75 million at an average AUD to USD exchange rate of US$1.102
The Group’s exposure to foreign currency risk at the reporting date was as follows:
30 June 2012
30 June 2012
30 June 2011
USD
$’000
563
22,047
14
4,132
EUR
$’000
2
-
-
-
GBP
29
-
-
-
USD
$’000
239
6,716
10
-
EUR
$’000
-
105
-
-
GBP
-
-
-
-
Cash at bank
Term deposits
Trade payables
Other current liabilities
Group sensitivity
Based on the fi nancial instruments held at 30 June 2012, had the Australian dollar weakened / strengthened by 15% (2011 – 15%)
against the US dollar with all other variables held constant, the Group’s post-tax loss for the year would have been $4.6 million
lower / $3.4 million higher (2011 – $1.1 million lower / $0.8 million higher), mainly as a result of foreign exchange gains / losses on
translation of US dollar denominated fi nancial instruments as detailed in the above table. The Group’s exposure to other foreign
exchange movements is not material.
(ii) Price risk
The Group and the parent entity are not exposed to equity securities price risk or commodity price risk.
(iii) Cash fl ow and interest rate risk
The Group’s main interest rate risk arises from the holding of cash and cash equivalents. During the year, the Group held signifi cant bank
accepted term deposit interest-bearing assets exposing the Group’s income and operating cash fl ows to changes in market interest rates.
The value of borrowings at 30 June 2012 was $nil (2011 - $nil), thus limiting the Group’s exposure to any cash fl ow risk in relation to liabilities.
www.qrxpharma.com 49
NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
(CONTINUED)
50 QRxPharma Annual Report 2012
2 FINANCIAL RISK MANAGEMENT (continued)
Group sensitivity
As at 30 June 2012, if interest rates had changed by -25 / + 40 basis points (2011: -12 / + 40 basis
points) from the year-end rates with all other variables held constant, the post-tax loss for the
year would have been $21,000 higher / $13,000 lower (2011 – $5,000 higher / $1,000 lower),
mainly as a result of lower / higher interest income from cash and cash equivalents.
(b) Credit risk
Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents
and deposits with banks and fi nancial institutions. For banks and fi nancial institutions, only
independently rated parties with a minimum rating of ‘A’ are acceptable. At 30 June 2012, cash
equivalents were held with fi nancial institutions rated Aa2 by Moody’s.
(c) Liquidity risk
Prudent liquidity risk management implies maintaining suffi cient cash and marketable
securities.
The Group has experienced recurring operating losses and operating cash outfl ows since
inception to 30 June 2012. Due to negative operating cash fl ow position the Group has not
committed to any credit facilities and relied upon equity fi nancing through private and public
equity investors.
The Group entity’s exposure to liquidity risk is restricted to the value of outstanding trade
creditors. Trade payables generally have 30 day payment terms, and at 30 June 2012, the
Group had no overdue liabilities. The value of trade creditors at 30 June 2012 for the Group
was $757,000 (2011 - $935,000) which is payable within 1 month of year end and at 30 June
2012, the entity carried cash and cash equivalents of $23 million (2011 - $7.3 million). Other
payables for the Group include accruals for employee benefi ts and other accruals to the value
of $1,170,000 (2011 - $787,000).
The fair value of fi nancial instruments that are not traded in an active market is determined
using valuation techniques. The Group uses a variety of methods and makes assumptions that
are based on market conditions existing at the end of each reporting period. Quoted market
prices for similar instruments and recent transactions are used to estimate fair value. The Group
has fully impaired the available-for-sale fi nancial assets to $nil at 30 June 2012.
The carrying value of trade and other payables is assumed to approximate their fair values due
to their short-term nature.
Management monitors rolling forecasts of the Group’s liquidity reserve and cash and cash
equivalents on the basis of expected cash fl ows. The Group’s liquidity management policy
involves projecting cash fl ows in major currencies and considering the level of liquid assets
necessary to meet these.
(d) Fair value measurements
The fair value of fi nancial assets and fi nancial liabilities must be estimated for recognition and
measurement or for disclosure purposes.
AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level
of the following fair value measurement hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or
(b)
(c)
liabilities (level 1)
inputs other than quoted prices included within level 1 that are observable for
the asset or liability, either directly (as prices) or indirectly (derived from
prices) (level 2), and
inputs for the asset or liability that are not based on observable market data
(unobservable inputs) (level 3).
The fair value of fi nancial instruments that are not traded in an active market is determined using valuation techniques. The Group uses a
variety of methods and makes assumptions that are based on market conditions existing at the end of each reporting period. Quoted market
prices for similar instruments and recent transactions are used to estimate fair value.
The level 3 instrument was fully written down during the fi nancial period to 30 June 2012.
The carrying value of trade and other payables is assumed to approximate their fair values due to their short-term nature.
The following table summarises the sensitivity of the Group’s fi nancial assets and fi nancial liabilities to interest rate risk, foreign exchange risk
and other price risk.
FOREIGN EXCHANGE RISK
INTEREST RATE RISK
30 June 2012
Carrying amount
Profi t
Equity
$’000
$’000
$’000
-15%
Financial assets
Cash and cash equivalents
22,950
3,852
Financial liabilities
Trade payables
Other current liabilites
Total increase/(decrease)
757
4,055
2
716
4,570
-
-
-
-
Profi t
$’000
(2,847)
(2)
(529)
(3,378)
+15%
Equity
$’000
-25bps
Equity
$’000
+40bps
Profi t
Equity
$’000
$’000
Profi t
$’000
-
-
-
-
(13)
-
-
(13)
-
-
-
-
(1)
-
-
(1)
-
-
-
-
FOREIGN EXCHANGE RISK
+15%
-15%
INTEREST RATE RISK
+40bps
-12bps
30 June 2011
Carrying amount
Profi t
Equity
$’000
$’000
$’000
Profi t
$’000
Equity
$’000
Profi t
$’000
Equity
$’000
Profi t
Equity
$’000
$’000
Financial assets
Cash and cash equivalents
7,291
1,143
Financial liabilities
Trade payables
Total increase/(decrease)
935
2
1,145
-
-
-
(845)
1
(844)
-
-
-
(1)
-
(1)
-
-
-
5
-
5
-
-
-
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future
events that may have a fi nancial impact on the entity and that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by defi nition, seldom equal the
related actual results. The estimates and assumptions that have a signifi cant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next fi nancial year are discussed below.
Research and development expenditure
The Group has expensed all internal research and development expenditure incurred during the year as the costs relate to the initial expenditure
for research and development of biopharmaceutical products and the generation of future economic benefi ts are not considered certain. It was
considered appropriate to expense the research and development costs as they did not meet the criteria to be capitalised under AASB 138.
Impairment of intangible assets
The Group reviews defi nite life intangibles for impairment whenever events or changes in circumstances indicate that the carrying value may not
be recoverable. The Group makes estimates and assumptions about the recoverability of intellectual property. Where the carrying value of the
intellectual property exceeds the recoverable amount, an impairment loss is recognised to record the intellectual property at its recoverable amount.
Black-Scholes option pricing model
During the year, the Group expensed $2.2 million of share based payments as determined through the application of the Black-Scholes option
pricing model. The Black-Scholes model is dependent on a number of variables and estimates fully described in note 30.
Impairment of available-for-sale fi nancial assets
The Group follows the guidance of AASB 139 Financial Instruments: Recognition and Measurement to determine when an available-for-sale
fi nancial asset is impaired. This determination requires signifi cant judgement. In making this judgement, the Group evaluates, among other
www.qrxpharma.com 51
NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
(CONTINUED)
52 QRxPharma Annual Report 2012
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
factors, the duration and extent to which the fair value of an investment is less than its cost and
the fi nancial health of and short-term business outlook for the investee, including factors such
as industry and sector performance, changes in technology and operational and fi nancing
cash fl ows.
In the 2012 fi nancial year, the fair value of the relevant asset was assessed and determined to
be $nil at 30 June 2012.
Revenue recognition
The Group is recognising revenue associated with the receipt during the year of a non-
refundable, non-creditable up front signing fee of $5.9 million (US$6 million) from date of
receipt to the anticipated product launch date in 2013.
The Group recognised $1.8 million of revenue during the year and has deferred $4.1 million.
4 SEGMENT INFORMATION
Based on the internal reports that are reviewed and used by the executive management
team (the chief operating decision makers) in assessing performance and in determining
the allocation of resources, the Group has determined that it operates within a single
operating segment The operating segment is that of the research and development of
biopharmaceutical products for commercial sale. The Group’s operations during the year
were predominantly in Australia.
5 REVENUE
From continuing operations
License fee received
Interest
20122012
$’000
1,805
114
1,919
2011
$’000
-
177
177
On 20 December 2011, the Company signed a binding Letter of Intent (LOI) with Actavis
Inc to commercialise immediate release MOXDUO in the USA. The LOI was secured by
a non-refundable, non-creditable up front signing fee of $5.9 million (US$6 million). The
fee revenue will be recognised from the date of the signing of the LOI to the anticipated
immediate release MOXDUO product launch date. The Group has recognised $1.8 million
as revenue and $4.1 million as deferred revenue in the period to 30 June 2012.
6 OTHER INCOME
Sale of derivative fi nancial
instrument - see note 7
Foreign exchange gain
Grant income
20122012
$’000
291
1,975
-
2,266
2011
$’000
-
-
748
748
7 DERIVATIVE FINANCIAL INSTRUMENT
During the year the Group purchased a number of foreign exchange option contracts at
a cost of $152,000 to protect against adverse movements between the AU$ and US$.
These option contracts were not utilised during the period and were repurchased by the
bank for $291,000 netting the Group a gain on sale of foreign currency option contracts
of $139,000. There were no contracts on hand at 30 June 2012.
8 EXPENSES
20122012
$’000
Loss before income tax includes the following specifi c expenses:
2011
$’000
Depreciation and amortisation
Plant and equipment
Net foreign exchange loss
Employee benefi ts expense
Employee benefi ts expense
Defi ned contribution
superannuation expense
Share-based payments
Research and development
Research and development
expensed
65
-
66
2,090
4,965
65
4,175
61
2,162
7,192
1,591
5,827
9,162
15,008
Rental expenses relating to operating leases
Minimum lease payments
137
137
9 INCOME TAX BENEFIT
20122012
$’000
2011
$’000
(a) Numerical reconciliation of income tax expense to prima facie tax
payable
Loss from continuing operations before
income tax expense
Tax at the Australian tax rate of 30%
(2011 – 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable
income:
(16,045)
(4,814)
(25,635)
(7,690)
Share-based payments
Impairment of fi nancial asset
Adjustment for current tax of prior periods
Income tax losses not recognised
Income tax expense
(b) Tax losses
Unused tax losses for which no deferred tax
asset has been recognised
Potential tax benefi t @ 30%
649
122
(4,043)
1,083
2,960
-
476
-
(7,214)
910
6,304
-
20122012
$’000
2011
$’000
97,511
87,645
29,253
26,294
www.qrxpharma.com 53
NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
(CONTINUED)
9 INCOME TAX BENEFIT (continued)
No deferred tax asset has been recognised for the tax losses generated from operations
in both Australia and the USA, as the benefi t for tax losses will only be obtained if:
(i) the Group derives future assessable income of a nature and of an amount suffi cient
to enable the benefi t from the deductions for the losses to be realised, or
(ii) the Group continues to comply with the conditions for deductibility imposed by tax
legislation, and
(iii) no changes in tax legislation adversely affect the Group in realising the benefi t
from the deduction for the losses.
(c) Tax consolidation legislation
QRxPharma Limited and its wholly owned Australian controlled entities have
implemented the tax consolidation legislation as of 7 December 2002. The accounting
policy in relation to this legislation is set out in note 1(g).
10 CURRENT ASSETS - CASH AND CASH EQUIVALENTS
Cash at bank
Term deposits
20122012
$’000
796
2011
$’000
895
22,154
22,950
6,396
7,291
(a) Cash at bank
These bear an average interest rate of 4.07% (2011: 4.5%) for the AUD accounts and
0% (2011: 0%) for the USD accounts.
(b) Term deposits
These are term deposits held in US dollars, Australian dollars and Euros.
The USD deposits bear an average fi xed interest rate of 0.21%
(2011: 0.12%). These deposits have a maturity of less than 3 months.
The EUR deposits bear an average fi xed interest rate of 0.4%
(2011: 0.7%). These deposits have a maturity of less than 3 months.
The AUD deposits bear an average fi xed interest rate of 5.15%
(2011: 0%). These deposits have a maturity of less than 3 months.
11 CURRENT ASSETS - TRADE AND OTHER RECEIVABLES
Interest receivable
Other receivables
20122012
$’000
10
1,177
1,187
2011
$’000
11
49
60
54 QRxPharma Annual Report 2012
Information about the Group’s exposure to credit risk, foreign currency and
interest rate risk in relation to other receivables is provided in note 2.
Due to the short term nature of these receivables, their carrying amount is
assumed to approximate their fair value and at 30 June 2012 no receivables were
impaired or past due (30 June 2011: nil).
12 CURRENT ASSETS - OTHER CURRENT ASSETS
Prepayments
20122012
$’000
483
2011
$’000
295
13 NON-CURRENT ASSETS – AVAILABLE-FOR-SALE FINANCIAL ASSETS
Unlisted securities
Equity securities
20122012
$’000
2011
$’000
-
407
Investments in related parties
At 30 June 2012, the carrying value of the available-for-sale fi nancial asset, representing the 6.98% investment in Venomics Hong
Kong Limited by Venomics Pty Limited was assessed and determined to be $nil.
Accordingly, the investment has been fully impaired to $nil at 30 June 2012.
14 NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT
At 1 July 2010
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2011
Opening net book amount
Additions
Depreciation charge
Closing net book amount
At 30 June 2011
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2012
Opening net book amount
Additions
Depreciation charge
Closing net book amount
At 30 June 2012
Cost
Accumulated depreciation
Net book amount
$’000
456
(216)
240
240
22
(66)
196
478
(282)
196
196
60
(65)
191
538
(347)
191
www.qrxpharma.com 55
NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
(CONTINUED)
15 NON CURRENT ASSETS - INTANGIBLE ASSETS
Patents,
trademarks and
other rights
$’000
-
-
-
-
Other intangible
assets
Total
$’000
$’000
-
-
-
-
-
-
-
-
15,502
889
16,391
(15,502)
(889)
(16,391)
Year ended 30 June 2011
Opening net book amount
Impairment of intellectual property
Amortisation charge
Closing net book amount
At 30 June 2011
Cost
Accumulated amortisation and
impairment
Net book amount
-
-
-
Patents,
trademarks and
other rights
$’000
-
-
-
-
Other intangible
assets
Total
$’000
$’000
-
-
-
-
-
-
-
-
15,502
889
16,391
(15,502)
(889)
(16,391)
-
-
-
Year ended 30 June 2012
Opening net book amount
Impairment of intellectual property
Amortisation charge
Closing net book amount
At 30 June 2012
Cost
Accumulated amortisation and
impairment
Net book amount
16 CURRENT LIABILITIES - TRADE AND OTHER PAYABLES
20122012
$’000
757
1,025
776
2,558
Trade payables
Accrued employee benefi ts
Other payables
2011
$’000
935
595
192
1,722
Accrued employee benefi ts include accruals for annual leave. The entire obligation is
presented as current, since the Group does not have an unconditional right to defer
settlement. It is expected that employees will use the full amount of accrued leave within the
next 12 months.
17 OTHER CURRENT LIABILITIES
Deferred revenue – see note 5
20122012
$’000
4,055
2011
$’000
-
56 QRxPharma Annual Report 2012
18 CONTRIBUTED EQUITY
20122012
Shares
2011
Shares
20122012
$’000
2011
$’000
(a) Share capital
Ordinary shares - fully paid
144,577,206
125,824,127
144,281
118,809
(b) Movements in ordinary share capital:
Details
Number of shares
Issue price
Balance
102,475,000
Date
30 June 2010
7 October 2010
8 November 2010
8 November 2010
9 November 2010
19 November 2010
Share placement – Tranche 1
Exercise of employee options
Exercise of employee options
Share placement – Tranche 2
Share purchase plan
3,871,250
10,000
35,000
12,611,103
6,771,774
50,000
13 May 2011
Less: Transaction costs arising on issue of shares
30 June 2011
Exercise of employee options
Balance
125,824,127
28 July 2011
2 August 2011
2 August 2011
30 August 2011
26 September 2011
2 November 2011
2 November 2011
2 November 2011
19 December 2011
31 January 2012
31 January 2012
31 January 2012
1 February 2012
6 February 2012
6 February 2012
6 February 2012
3 March 2012
3 March 2012
19 March 2012
22 March 2012
22 March 2012
17 April 2012
17 April 2012
18 May 2012
Share placement
Exercise of employee options
Exercise of employee options
Rights Issue
Exercise of employee options
Exercise of employee options
Exercise of employee options
Exercise of employee options
Exercise of employee options
Exercise of employee options
Exercise of employee options
Exercise of employee options
Exercise of employee options
Exercise of employee options
Exercise of employee options
Exercise of employee options
Exercise of employee options
Exercise of employee options
Exercise of employee options
Exercise of employee options
Exercise of employee options
Exercise of employee options
Exercise of employee options
Exercise of employee options
17,241,379
30,000
20,000
1,046,351
20,000
8,000
5,000
50,000
33,333
7,000
3,125
8,333
25,000
50,000
50,000
10,000
3,125
8,333
16,600
25,000
15,000
20,000
20,000
37,500
$’000
99,969
3,291
7
7
10,719
5,756
50
(990)
118,809
25,000
6
13
1,517
4
2
3
42
22
1
2
7
5
30
10
2
2
7
11
5
10
13
4
32
$0.85
$0.65
$0.20
$0.85
$0.85
$1.00
$1.45
$0.20
$0.65
$1.45
$0.20
$0.20
$0.65
$0.84
$0.65
$0.20
$0.65
$0.84
$0.20
$0.60
$0.20
$0.20
$0.65
$0.84
$0.65
$0.20
$0.65
$0.65
$0.20
$0.84
Less: Transaction costs arising on issue of shares
30 June 2012
Balance
144,577,206
(1,278)
144,281
During the year ended 30 June 2012, QRxPharma Limited successfully raised $26.5 million (before expenses) as a result of a share
placement raising $25 million and a rights issue raising a further $1.5 million. The issue price under the placement and rights issue was
$1.45 per share resulting in the issue of 18.3 million new ordinary shares.
www.qrxpharma.com 57
NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
(CONTINUED)
18 CONTRIBUTED EQUITY (continued)
(c) Ordinary shares
Each ordinary shareholder maintains, when present in
person or by proxy or by attorney at any general meeting of
the company, the right to cast one vote for each ordinary
share held.
Ordinary shares entitle the holder to participate in
dividends and the proceeds on winding up of the company
in proportion to the number of and amounts paid on the
shares held.
(d) Options
Information relating to the QRxPharma Limited Employee
Share Option Plan, including details of options issued,
exercised and lapsed during the fi nancial year and options
outstanding at the end of the fi nancial year are set out in note
30. Ordinary shares have no par value and the Company does
not have a limited amount of authorised capital.
(e) Rights issue
On 22 July 2011 the Company invited its shareholders to
subscribe to a rights issue of 7,153,275 ordinary shares at an
issue price of $1.45 per share on the basis of 1 share for every 20
fully paid ordinary shares held, with such shares to be issued on,
30 August 2011.
(f) Capital risk management
The Group’s objectives when managing capital are to
safeguard their ability to continue as a going concern, so they
can continue to provide returns for shareholders and benefi ts
for other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital.
The Group predominantly uses equity to fi nance its projects.
In order to maintain or adjust the capital structure, the Group
may return capital to shareholders, issue new shares or sell
assets.
During the year QRxPharma Limited undertook a share
placement and a rights issue to strengthen the Company’s
capital. Refer 18(b) above for further details.
19 RESERVES AND ACCUMULATED LOSSES
20122012
$’000
2011
$’000
10,646
8,484
167
85
456
456
11,269
9,025
(a) Reserves
Share-based payments reserve
Foreign currency translation
reserve
Transactions with non-
controlling interest reserve
Movements:
Share-based payments reserve
Balance 1 July
Option expense
Balance 30 June
8,484
2,162
6,893
1,591
10,646 8,484
Foreign currency translation reserve
Balance 1 July
Currency translation
differences
arising during the year
Balance 30 June
85
133
82
(48)
167
85
Transactions with non-controlling interest reserve
Balance 1 July
Issue of options in
QRxPharma Limited to
employee of
Venomics Pty Limited
Balance 30 June
456
-
463
(7)
456
456
(b) Accumulated losses
Movements in accumulated losses were as follows:
Balance at 1 July 2011
Net loss for the year
Balance 30 June 2012
20122012
$’000
2011
$’000
(121,357)
(15,949)
(137,306)
(95,784)
(25,573)
(121,357)
58 QRxPharma Annual Report 2012
(c) Nature and purpose of reserves
(i) Share-based payments reserve
The share-based payment reserve is used to recognise:
• the fair value of options issued to employees but not exercised
• the fair value of shares issued to employees
(ii) Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled
entity are taken to the foreign currency translation reserve, as
described in note 1(e). The reserve will be recognised in profi t and
loss when the net investment is disposed.
(iii) Transactions with non-controlling interests
This reserve is used to record amounts which may arise as a result of
transactions with non-controlling interests that do not result in a loss of
control.
20 NON-CONTROLLING INTERESTS
(b) Other key management personnel
The following persons also had authority and responsibility for
planning, directing and controlling the activities of the Group,
directly or indirectly, during the fi nancial year:
Name
John W Holaday
Chris J Campbell
Edward M Rudnic
M. Janette Dixon
Richard A Paul
Position
Chief Executive Offi cer
Chief Financial Offi cer
Chief Operating Offi cer
(from 13 February 2012)
Vice President of Global
Business Development
Executive Vice President
Drug Development
All of the above persons except for Edward M Rudnic were also key
management persons during the year ended 30 June 2011.
Interests in:
Share capital
Reserves
Retained earnings
20122012
$’000
122
122
(290)
(46)
2011
$’000
122
122
(194)
50
c) Key management personnel compensation
20122012
$
2011
$
Short-term employee benefi ts
2,061,061
1,659,142
Post-employment benefi ts
33,769
29,653
Share-based payments
971,034
673,463
3,065,864
2,362,258
21 KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Directors
The following persons were directors of QRxPharma Limited during
the fi nancial year:
The Company has taken advantage of the relief provided by
Corporations Regulations and has transferred the detailed
remuneration disclosures to the directors’ report. The relevant
information can be found in the remuneration report on pages
11 to 20.
(i) Chairman - non-executive
Dr Peter C Farrell
(ii) Executive director
Dr John W Holaday, Managing Director and Chief
Executive Offi cer
(iii) Non-executive directors
Michael A Quinn
R Peter Campbell
Dr Gary W Pace, Consultant
(d) Equity instrument disclosures relating to key management
personnel
(i) Options provided as remuneration and shares issued on
exercise of such options.
Details of options provided as remuneration and shares issued
on the exercise of such options, together with terms and
conditions of the options, can be found in the remuneration
report on pages 17 to 20.
www.qrxpharma.com 59
NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
(CONTINUED)
21 KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)
(ii) Option holdings
The numbers of options over ordinary shares in the company held during the fi nancial year by each director of QRxPharma Limited
and other key management personnel of the Group, including their personally related parties, are set out below.
Name
Balance at start
of the year
Granted as
compensation Exercised
Forfeited Balance at end
of the year
Vested and
exercisable Unvested
20122012
Directors of QRxPharma Limited
Peter C Farrell
John W Holaday
Gary W Pace
Michael A Quinn
R Peter Campbell
754,089
1,355,452
552,726
552,726
391,635
-
250,000
-
-
-
-
-
-
-
-
Other key management personnel of the Group
Chris J Campbell
Edward M Rudnic
(from 13 February 2012)*
M. Janette Dixon
Richard A Paul
765,226
200,000
(50,000)
-
350,000
500,000
250,000
200,000
200,000
-
-
-
-
-
-
-
-
-
-
-
-
754,089
679,089
75,000
1,605,452
1,180,452
425,000
552,726
552,726
391,635
477,726
477,726
316,635
75,000
75,000
75,000
915,226
596,476
318,750
350,000
700,000
450,000
-
350,000
379,166
320,834
125,000
325,000
* Edward M Rudnic was appointed Chief Operating Offi cer on 13 February 2012. He was previously engaged as a consultant to the company for which he received
235,000 options. Additionally he has received 70,000 options as a member of the Company’s Scientifi c Advisory Board.
Name
Balance at start
of the year
Granted as
compensation Exercised
Forfeited Balance at end
of the year
Vested and
exercisable Unvested
2011
Directors of QRxPharma Limited
Peter C Farrell
John W Holaday
Gary W Pace
Michael A Quinn
R Peter Campbell
604,089
1,105,452
402,726
402,726
241,635
150,000
250,000
150,000
150,000
150,000
Other key management personnel of the Group
Chris J Campbell
M. Janette Dixon
Richard A Paul
(from 15 November 2010)
602,726
350,000
162,500
150,000
-
250,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
754,089
604,089
150,000
1,355,452
955,452 400,000
552,726
552,726
391,635
402,726
150,000
402,726
150,000
241,635
150,000
765,226
500,000
250,000
506,893
258,333
187,500
312,500
-
250,000
60 QRxPharma Annual Report 2012
(iii) Share holdings
The numbers of shares in the company held during the fi nancial year by each director of QRxPharma Limited and other key
management personnel of the Group, including their personally related parties, are set out below. There were no shares granted
during the reporting period as compensation.
Name
Directors of QRxPharma Limited
Ordinary shares
Peter C Farrell
John W Holaday
Gary W Pace
Michael A Quinn
R Peter Campbell
Other key management personnel of the Group
Ordinary shares
Chris J Campbell
Edward M Rudnic (from 13 February 2012)
M. Janette Dixon
Richard A Paul
Name
Balance at the
start of the year
Received during the
year on the exercise
of options
Other changes
during the year
Balance at the end
of the year
20122012
1,815,540
7,609,635
3,493,833
8,480,662
174,647
42,647
-
240,000
-
-
-
-
-
-
50,000
-
-
-
49,827
-
32,994
24,660
8,733
2,133
-
(170,000)
-
1,865,367
7,609,635
3,526,827
8,505,322
183,380
94,780
-
70,000
-
2011
Balance at the
start of the year
Received during the
year on the exercise
of options
Other changes
during the year
Balance at the end
of the year
Directors of QRxPharma Limited
Ordinary shares
Peter C Farrell
John W Holaday
Gary W Pace
Michael A Quinn
R Peter Campbell
Other key management personnel of the Group
Ordinary shares
Chris J Campbell
M. Janette Dixon
Richard A Paul (from 15 November 2010)
1,630,540
7,609,635
3,380,083
8,374,371
102,000
25,000
200,000
-
-
-
-
-
-
-
-
-
185,000
-
113,750
106,291
72,647
17,647
40,000
-
1,815,540
7,609,635
3,493,833
8,480,662
174,647
42,647
240,000
-
(e) Other transactions with key management personnel
During the year, the Company directly engaged and contracted the services of certain key management personnel to perform
consulting services for the Group. The total amount paid to key management personnel for contracted services rendered during the
year amounted to $301,775 (2011: $82,699).
www.qrxpharma.com 61
NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
(CONTINUED)
62 QRxPharma Annual Report 2012
22 REMUNERATION OF AUDITORS
(a) PricewaterhouseCoopers Australia
Audit & other assurance services
Audit and review of fi nancial reports and other
audit work under the Corporations Act 2001
Total remuneration for audit and other
assurance services
Taxation services
Tax compliance services
Tax consulting and advice
Total remuneration for taxation services
20122012
$’000
2011
$’000
111,000
129,000
111,000
129,000
9,270
106,788
116,058
8,000
25,280
33,280
Total remuneration of PricewaterhouseCoopers
Australia
227,058
162,280
(b) Related practices of PricewaterhouseCoopers
Australia
Taxation services
Tax compliance services
International tax consulting and advice
33,974
11,006
35,022
42,336
Total remuneration of related practices of
PricewaterhouseCoopers Australia
44,980
77,358
Total auditors remuneration
272,038
239,638
It is the Group’s policy to employ PricewaterhouseCoopers on assignments in addition to their
statutory audit duties where their expertise and experience with the Group are important.
These assignments are principally in relation to tax advice where PricewaterhouseCoopers
is awarded assignments on a competitive basis. It is the Group’s policy to seek competitive
tenders for all major consulting projects.
23 CONTINGENCIES
The Group acquired on 26 April 2007 a 100% interest in CNS Co, Inc. and through this
acquisition now holds a license agreement with University of Alabama (USA). Under the
terms of this license agreement the Group is obligated to meet certain milestone payments as
advances against future royalties from the Torsin programme as follows:
(i) US $750,000 on commencement by the Group of Phase II clinical trial for any Torsin IP
product;
(ii) US $1,500,000 on commencement by the Group of Phase III clinical trial for any Torsin IP
product;
(iii) US $2,000,000 on the date of receipt by the Group of fi rst market approval for each
Torsin IP product.
The agreement may be terminated by the Group at any time on 6 months’ notice to the
University of Alabama and upon payment of all amounts due to University of Alabama
to the effective termination date. The agreement will expire on the last expiry date of the
patents licensed under the agreement.
24 COMMITMENTS
Operating leases
The Group leases offi ce premises in Sydney, Australia and New Jersey, USA. The leases have varying terms, escalation clauses and
renewal rights.
20122012
$’000
2011
$’000
77
205
282
74
5
79
Commitments for minimum lease payments in
relation to non-cancellable operating leases are
payable as follows:
Within one year
Later than one year but not later than fi ve years
25 RELATED PARTY TRANSACTIONS
(a) Subsidiaries
Interests in subsidiaries are set out in note 26.
(b) Key management personnel
Disclosures relating to key management personnel are set out in note 21.
(c) Outstanding balances
There are no outstanding balances at the reporting date in relation to transactions with related parties.
26 SUBSIDIARIES
The consolidated fi nancial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with
the accounting policy described in note 1(c):
Name of entity
Country of
incorporation
Class of
shares
Equity holding
The Lynx Project
Pty Limited
Haempatch Pty
Limited
QRxPharma, Inc.
Venomics Pty
Limited
Australia
Ordinary
Australia
USA
Ordinary /
Preference
Ordinary
Australia
Ordinary
2012
%
100
100
100
80
2011
%
100
100
100
80
www.qrxpharma.com 63
NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
(CONTINUED)
64 QRxPharma Annual Report 2012
27 RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH OUT-
FLOW FROM OPERATING ACTIVITIES
Loss for the year
Depreciation and amortisation
Non-cash employee benefi ts expense – share-based payments
Net exchange differences on cash and cash equivalents
Impairment of Venomics Hong Kong Limited
Change in operating assets and liabilities
(Increase)/decrease in other receivables and prepayments
(Decrease)/increase in trade creditors and accruals
20122012
$’000
2011
$’000
(16,045)
(25,635)
65
2,162
(1,892)
406
(1,315)
4,891
66
1,591
2,042
-
111
(372)
Net cash outfl ow from operating activities
(11,728)
(22,197)
28 LOSS PER SHARE
(a) Basic loss per share
Loss from continuing operations attributable to the
ordinary equity holders of the company
20122012
Cents
2011
Cents
(11.2)
(21.7)
(b) Diluted loss per share
Loss from continuing operations attributable to the
ordinary equity holders of the company
(11.2)
(21.7)
(c) Reconciliations of earnings used in calculating
earnings per share
Basic loss per share
Loss attributable to the ordinary equity holders of the
company used in calculating basic earnings per share
Diluted loss per share
20122012
$’000
2011
$’000
(15,949)
(25,573)
Loss attributable to the ordinary equity holders of the
company used in calculating diluted earnings per share
(15,949)
(25,573)
(d) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the
denominator in calculating basic loss per share
Weighted average number of ordinary shares and potential
ordinary shares used as the denominator in calculating
diluted loss per share
20122012
Number
2011
Number
142,820,519
117,611,534
142,820,519
117,611,534
(e) Information concerning the classifi cation of securities
Options
Options are considered to be potential ordinary shares. The
options are not included in the calculation of diluted earnings
per share because they are anti-dilutive. These options could
potentially dilute basic earnings per share in the future. Details
relating to the options are set out in note 30.
29 PARENT ENTITY FINANCIAL INFORMATION
(a) Summary fi nancial information
The individual fi nancial statements for the parent entity show
the following aggregate amounts:
Balance Sheet
Current assets
Total assets
Current liabilities
Total liabilities
20122012
$’000
22,817
24,313
6,111
6,111
2011
$’000
7,417
8,750
2,678
2,678
Shareholder’s equity
Issued capital
Share based payment reserve
Accumulated losses
(Loss) for the year
Total comprehensive (loss)
144,281
10,183
(136,262)
18,202
(15,503)
(15,503)
118,809
8,022
(120,759)
6,072
(25,992)
(25,992)
(b) Guarantees entered into by the parent entity
There are no guarantees entered into by the parent entity.
(c) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30
June 2012 or 30 June 2011.
(d) Commitments of the parent entity
The parent entity leases offi ce premises in Sydney, Australia.
20122012
$’000
2011
$’000
Commitments for minimum lease payments in relation
to non-cancellable operating leases are payable as
follows:
Within one year
14
17
Later than one year but
not later than fi ve years
-
17
3
17
(e) Convertible Note
During the year, QRxPharma Limited subscribed to 13,000 (2011:
37,500) convertible notes in Venomics Pty Limited at US$4 face
value per note. These notes carry an interest rate of 10% per annum
(compounding monthly). Each note is convertible at QRxPharma
Limited’s request and it also has the ability to require redemption
of some or all of the notes under certain conditions. 5,000 notes
mature on 1 December 2012 and 8,000 on 29 June 2013 (2011: 20
December 2012).
At 30 June 2012, QRxPharma Limited assessed the carrying value of
the notes and determined that these notes may not be recoverable.
Accordingly, it has fully impaired the value of these notes to $nil at
30 June 2012.
The convertible notes are carried in Venomics Pty Limited as a
liability at amortised cost and the embedded derivative at fair value.
30 SHARE-BASED PAYMENTS
(a) QRxPharma Employee Share Option Plan (ESOP)
The QRxPharma Limited Employee Share Option Plan (Limited
ESOP) was approved by shareholders at the extraordinary general
meeting of members held on 24th April 2007.
Under the Limited ESOP shares may be issued by the Company
to eligible employees at an exercise price as determined by the
remuneration committee, being not less than the share price on
the grant date of the options. Any person who is employed by,
or is a director, offi cer, executive or consultant of the Company
or any related body corporate of the Company and whom the
remuneration committee determines is eligible to participate in the
option plan are eligible to participate in the plan. Employees may
elect not to participate in the scheme.
The total number of shares that shall be reserved for issuance under
the option plan shall not exceed ten per cent (10%) of the Diluted
Ordinary Share Capital in the Company as at the date of issue of
the relevant options under the option plan, subject to changes in
capitalisation as provided in clause 16.3 of the option plan. The
approval of the Company’s shareholders must be obtained for any
amendment to the option plan in relation to:
(a) increasing the maximum aggregate number of
shares that may be issued under the option plan;
(b any change in the class of employees eligible to
receive options under the option plan;
(c) any change in the shares reserved for issuance
under the option plan; and
(d) substitution of another entity in place of the
Company as the issuer of shares under the
option plan.
Options will lapse if they are not exercised before the expiration
date or if the option holder leaves the employment of the Group.
The board reserves discretion to waiver the latter provisions.
www.qrxpharma.com 65
30 SHARE-BASED PAYMENTS (continued)
Options granted under the plan carry no dividend or voting rights. The vesting period
for each option issued up to 31 December 2008 is 3 years, or as varied by the board,
one third vesting 12 months from the date of grant and the balance vesting equally
each year over the remaining two year period. Options issued from 1 January 2009
generally vest over 3 years with the initial vesting on the fi rst anniversary of the date of the grant and subsequent vestings in 8 equal
tranches on the fi rst day of each calendar quarter over the following 2 years. When exercisable, each option is convertible into one
ordinary share and entitles the holder to the same ordinary share rights as set out in note 18. Shares issued under the scheme may be
sold at the expiration of any Restriction Agreement between the eligible employee and the Company. Such restrictions may be imposed
by the remuneration committee upon the grant of options under the option plan and such restrictions will be contained in the Option
Agreement between the eligible employee and the Company. In all other respects the shares rank equally with other fully paid ordinary
shares on issue (refer to note 18(c)).
(b) Set out below are summaries of options granted under the plans:
Grant Date
Expiry date
Exercise
price
Balance at
start of the year
Granted during
the year
Exercised
during the
year
Forfeited
during the
year
Balance at
end of the
year
20122012
Vested and
exercisable at end
of the year
Number
Number
Number
25 May 2014
$2.00
1,448,450
(50,000)
1,398,450
31 March 2007
31 March 2014
$1.42
$1.00
$1.00
Number
402,726
2,013,630
502,726
14 April 2014
25 May 2014
14 April 2007
25 May 2007
25 May 2007
1 September 2007
1 September 2014
1 October 2007
1 October 2014
9 October 2007
9 October 2014
1 January 2008
1 January 2015
1 April 2008
1 April 2008
1 October 2008
1 January 2009
31 August 2009
1 October 2009
1 April 2015
1 April 2015
1 October 2015
1 January 2016
31 August 2016
1 October 2016
16 November 2009
16 November 2016
1 January 2010
1 January 2017
17 February 2010
17 February 2017
24 March 2010
24 March 2014
1 July 2010
1 July 2017
24 August 2010
24 August 2017
1 October 2010
1 October 2017
25 October 2010
25 October 2014
08 November 2010
8 November 2017
$1.70
$1.45
$1.34
$1.11
$1.04
$1.05
$0.60
$0.20
$0.65
$0.90
$1.12
$0.78
$0.84
$1.26
$1.15
$0.95
$0.93
$1.24
$1.00
$1.40
50,000
75,000
50,000
200,000
75,000
600,000
50,000
295,000
467,500
150,000
300,000
100,000
565,000
295,000
225,000
50,000
150,000
25,000
850,000
1,330,000
310,000
1 January 2011
1 January 2011
7 July 2011
1 January 2018
1 January 2015
$2.00
7 July 2018
28 September 2011
28 September 2018
18 November 2011
18 November 2018
23 January 2012
23 January 2019
23 January 2012
23 January 2016
1 April 2012
Total
1 April 2019
Weighted average exercise price
66 QRxPharma Annual Report 2012
$1.70
$1.22
$1.60
$1.50
$2.15
$1.72
-
-
-
-
-
-
150,000
15,000
250,000
1,400,000
300,000
350,000
(116,183)
(16,667)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(50,000)
(195,000)
-
-
-
(104,166)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Number
402,726
2,013,630
502,726
50,000
75,000
50,000
200,000
75,000
600,000
-
100,000
334,650
150,000
300,000
100,000
460,834
295,000
225,000
50,000
150,000
25,000
850,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(10,000)
1,320,000
-
-
-
-
-
-
-
310,000
150,000
15,000
250,000
1,400,000
300,000
350,000
Number
402,726
2,013,630
502,726
1,398,450
50,000
75,000
50,000
200,000
75,000
600,000
-
100,000
306,763
137,500
250,000
83,333
345,626
221,250
131,250
29,167
75,000
12,500
425,000
660,000
155,000
-
-
-
-
-
-
10,580,032
2,465,000
(465,349)
(76,667)
12,503,016
8,299,921
$1.21
$1.63
$0.50
$1.63
$1.31
$1.24
Grant Date
Expiry date
Exercise
price
Balance at
start of the year
Granted during
the year
Exercised
during the
year
Forfeited
during the
year
Number
Number
Number
31 March 2007
31 March 2014
14 April 2007
25 May 2007
25 May 2007
$1.42
$1.00
$1.00
Number
402,726
2,013,630
552,726
14 April 2014
25 May 2014
25 May 2014
$2.00
1,448,450
50,000
75,000
50,000
200,000
75,000
600,000
50,000
330,000
477,500
150,000
300,000
100,000
565,000
295,000
1 September 2007
1 September 2014
1 October 2007
1 October 2014
9 October 2007
9 October 2014
1 January 2008
1 January 2015
1 April 2008
1 April 2008
1 October 2008
1 January 2009
31 August 2009
1 October 2009
1 April 2015
1 April 2015
1 October 2015
1 January 2016
31 August 2016
1 October 2016
16 November 2009
16 November 2016
1 January 2010
1 January 2017
17 February 2010
17 February 2017
24 March 2010
24 March 2014
1 July 2010
1 July 2017
24 August 2010
24 August 2017
1 October 2010
1 October 2017
25 October 2010
25 October 2014
8 November 2010
8 November 2017
$1.70
$1.45
$1.34
$1.11
$1.04
$1.05
$0.60
$0.20
$0.65
$0.90
$1.12
$0.78
$0.84
$1.26
$1.15
$0.95
$0.93
$1.24
$1.00
$1.40
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(50,000)
-
-
-
-
-
-
-
-
(35,000)
(10,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
225,000
50,000
150,000
25,000
850,000
1,330,000
310,000
Balance at
end of the
year
Number
402,726
2,013,630
502,726
1,448,450
50,000
75,000
50,000
200,000
75,000
600,000
50,000
295,000
467,500
150,000
300,000
100,000
565,000
295,000
225,000
50,000
150,000
25,000
850,000
1,330,000
310,000
20112011
Vested and
exercisable at end
of the year
Number
402,726
2,013,630
502,726
1,448,450
50,000
75,000
50,000
200,000
75,000
600,000
45,833
247,500
272,708
87,500
150,000
50,000
235,417
122,917
75,000
-
-
-
-
-
-
10,580,032
6,704,407
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 January 2011
1 January 2011
Total
1 January 2018
1 January 2015
$2.00
7,735,032
2,940,000
(95,000)
Weighted average exercise price
$1.17
$1.30
$0.67
$0.00
$1.21
$1.22
The weighted average share price at the date of exercise of options exercised during the year ended 30 June 2012 was $1.59
(2011 – $1.09)
The weighted average remaining contractual life of the share options outstanding at the end of the period was 3.88 years
(2011 – 4.23 years)
Fair value of options granted
The assessed fair value at grant date of options granted during the year ended 30 June 2012 was $1.11 per option (2011 - $0.78). The
fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise
price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share,
the expected dividend yield and the risk free interest rate for the term of the option.
www.qrxpharma.com 67
30 SHARE-BASED PAYMENTS (continued)
The model inputs for options granted during the year ended 30 June 2012 included:
(a) exercise price: $1.22 to $2.15 (2011 $0.90 to $2.00)
(b) grant date: 7 July 2011, 28 September 2011, 18 November 2011, 23 January 2012,
1 April 2012 (2011 - 1 July 2010, 24 August 2010, 1 October 2010,
25 October 2010, 8 November 2010, 1 January 2011)
(c) expiry date: 7 July 2018, 28 September 2018, 18 November 2018, 23 January 2019,
23 January 2016, 1 April 2019 (2011 - 1 July 2017, 24 August 2017, 1 October 2017,
25 October 2014, 8 November 2017, 1 January 2018, 01 January 2015)
(d) share price at grant date: $1.22 to $1.85 (2011 - $0.93 to $1.40)
(e) expected price volatility of the Company’s shares: 80% (2011 80%)
(f) expected dividend yield: nil% (2011 nil%)
(g) risk free interest rate: 4.09% (2011 - 5.3%)
The expected price volatility is based on the historic volatility (based on the remaining
life of the options), adjusted for any expected changes to future volatility due to
publicly available information.
(c) Expenses arising from share based payment transactions
Total expenses arising from share based payment transactions recognised during the
period as part of employee benefi t expense were as follows:
Options issued under employee option plan
2,162
1,591
20122012
$’000
2011
$’000
31 EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
No signigicant events have occured after the balance sheet date which would have a
material impact on the fi nancial results of the Group.
NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
(CONTINUED)
68 QRxPharma Annual Report 2012
DIRECTORS’
DECLARATION
In the directors’ opinion:
(a) the fi nancial statements and notes set out on pages 32 to 68 are in
accordance with the Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Act 2001 and other
mandatory professional reporting requirements; and
(ii) giving a true and fair view of the consolidated entity’s fi nancial position as at
30 June 2012 and of their performance for the fi nancial year ended on that
date; and
(b) there are reasonable grounds to believe that the company will be able to pay
its debts as and when they become due and payable; and
Note 1 (a) confi rms that the fi nancial statements also comply with International
Financial Reporting Standards as issued by the International Accounting
Standards Board.
The directors have been given the declarations by the chief executive offi cer and
chief fi nancial offi cer required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Peter C Farrell
Director
Sydney
30 August 2012
www.qrxpharma.com 69
70 QRxPharma Annual Report 2012
www.qrxpharma.com 71
SHAREHOLDER
INFORMATION
72 QRxPharma Annual Report 2012
The shareholder information set out below was applicable as at 18 September 2012.
A. DISTRIBUTION OF EQUITY SECURITIES
Analysis of numbers of equity security holders by size of holding:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Shares
337
637
429
732
130
2,265
Options
-
-
2
12
22
36
There are 255 holders of less than a marketable parcel of ordinary shares.
B. EQUITY SECURITY HOLDERS
Twenty largest quoted equity security holders.
The names of the twenty largest holders of quoted equity securities are listed below:
Name
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
Auckland Trust Company Limited
Dr John Holaday and Holaday Foundation
Citicorp Nominees Pty Limited
Werft Pty Ltd
Innovation Capital Limited
National Nominees limited
Uniquest Pty Limited
Four Hats Financial Services Pty Limited
Dr Gary Pace
Merrill Lynch (Australia) Nominees Pty Limited
UIIT Pty Limited
UBS Nominees Pty Limited
Spring Ridge Ventures I, LP
Jigley Holdings Pty Limited
Dr. Peter Farrell
Tesroff Pty Limited
Mr William Moulden & Mrs Carol Moulden
Mrs Dorinda Holaday
ORDINARY SHARES
Percentage
of
issued shares
10.81%
9.12%
5.04%
4.57%
4.37%
3.89%
3.64%
3.47%
3.32%
3.26%
2.44%
2.37%
1.81%
1.65%
1.47%
1.43%
1.29%
1.03%
0.69%
0.69%
Number held
15,627,276
13,191,282
7,288,750
6,609,635
6,319,042
5,619,315
5,269,090
5,013,631
4,805,399
4,720,003
3,526,827
3,420,148
2,610,408
2,388,847
2,128,673
2,067,647
1,865,367
1,495,055
1,000,000
1,000,000
95,966,395
66.38%
SHAREHOLDER
INFORMATION
(CONTINUED)
Unquoted equity securities
Options issued under the QRxPharma Limited
Employee Share Option Plan to take up
ordinary shares
* Number of unissued ordinary shares under the options.
** No person holds 20% or more of these securities.
Number on issue Number of holders
11,862,599*
36**
C. SUBSTANTIAL HOLDERS
Substantial holders in the company are set out below:
Ordinary shares
Mr LA Walker, Auckland Trust Company, Tesroff Pty
Limited and Werft Pty Limited
Allen Gray Investment Management
Innovation Capital Limited, Innovation Capital LLC,
and Innovation Capital Associates Pty Limited
Dr John W Holaday, Dorinda Holaday and Holaday
Foundation
Number held
Percentage
14,403,120
14,227,886
9.96%
9.84%
7,988,287
5.53%
7,609,635
5.26%
D. VOTING RIGHTS
The voting rights attaching to each class of equity securities are set out below:
(a) Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall
have one vote and upon a poll each share shall have one vote.
(b) Options
No voting rights.
www.qrxpharma.com 73
NOTES
74 QRxPharma Annual Report 2012
NOTES
www.qrxpharma.com 75
www.qrxpharma.com