More annual reports from Santander Bank Polska:
2023 ReportPeers and competitors of Santander Bank Polska:
Xtant Medical Holdings108/03 Star AR'03 page by page 29/9/03 1:08 PM Page 1
starpharma
leading the World in nanomedicine
Annual Review 2003
AIMS Business Aims >2
PROFILE The Company and Our Technologies >3 Highlights 2002/03 >3
REPORTS Chairman’s Message >4 CEO’s Report >6
PRODUCTS Product Update: VivaGelTM >8 Product Pipeline >10 Licensing Opportunities >12
DNT Dendritic Nanotechnologies, Inc. >13 QUALITY Quality Assurance and Regulatory Capabilities >15
108/03 Star AR'03 page by page 29/9/03 1:08 PM Page 2
i
s
m
A
s
s
e
n
s
u
B
i
Starpharma aims to create value for
shareholders from dendrimer-based
nanotechnology through:
> the development of high-value dendrimer
nanodrugs to address unmet market needs;
> partnering with pharmaceutical
companies to create new opportunities
and solutions to problems with the
application of dendrimer nanotechnology;
> extending our core skills and know-how
through licensing and partnering with
others;
> parallel investment in non-pharmaceutical
applications of dendrimer nanotechnology.
2
108/03 Star AR'03 page by page 29/9/03 1:08 PM Page 3
l
y
g
o
o
n
h
c
e
T
r
u
O
d
n
a
y
n
a
p
m
o
C
e
h
T
3
0
/
2
0
0
2
s
t
h
g
i
l
h
g
H
i
Starpharma is an Australian company leading
the world in the creation of polyvalent dendrimer
nanodrugs for human illnesses. Starpharma was
established in 1996 as a pooled development
fund to invest in the research, development and
commercialisation of dendrimers for pharmaceutical
applications. In 2001, investee company Dendritic
Nanotechnologies was established and is now
a U.S.-based company commercialising
dendrimers for a wide range of applications.
Dendrimers are synthetic, nanoscale structures
(1-100 nanometres) that can be tailored for
many pharmaceutical and non-pharmaceutical
applications. Specialised chemistry techniques
allow for precise control of the physical and
chemical properties of the dendrimers.
Pharmaceuticals reliant on multiple simultaneous
binding events (polyvalence) interact with
common biological structures, such as viruses
and cells, in a manner that mimics natural
processes.
In this context, Starpharma’s dendrimer
technologies offer a unique ability to design
functionalised, polyvalent dendrimers as defined
species for specific biological and disease
targets, which means they could be safer and
more effective pharmaceuticals.
• Starpharma submits an Investigational New
Drug (IND) application for VivaGel™ (topical
microbicide gel – SPL7013) to the United
States Food & Drug Administration (FDA).
• Starpharma and Industrial Research Limited
(IRL) establish a major nanotechnology alliance,
supported by a multi-million dollar grant to
IRL from the New Zealand government.
• DNT selected as an industrial partner of the
Massachusetts Institute of Technology’s
Institute for Soldier Nanotechnologies.
• DNT converted to a U.S. registered entity,
Dendritic Nanotechnologies, Inc. Starpharma
remains the largest shareholder of DNT.
• Starpharma’s third U.S. patent granted:
No. 6,464,971 – Anionic or Cationic Dendrimer
Antimicrobial or Antiparasitic Compositions.
• Starpharma appoints new Head Chemist,
Guy Krippner, Ph.D.
• Starpharma granted U.S. patent: No. 6,426,067
– Angiogenic Inhibitory Compounds.
• Starpharma completes U.S. nanotech venture,
with Donald A. Tomalia, Ph.D., granting
intellectual property licences to DNT for the
rights to 33 patent families involving 182
granted patents worldwide, related to
dendrimers and dendritic polymers.
3
108/03 Star AR'03 page by page 29/9/03 1:08 PM Page 4
e
g
a
s
s
e
M
s
’
n
a
m
r
i
a
h
C
4
Peter T Bartels CHAIRMAN
Dear Shareholder,
We are pleased to present to you Starpharma’s 2002/03 Annual Report, which includes our
financial results and news of significant achievements for the company in the past year.
In August 2003, Richard Oliver, AM, retired as Chairman of Starpharma’s Board. Richard was
Chairman of Starpharma since its establishment in 1996. In that time, Starpharma has grown from
a virtual company to an established company with in-house capabilities across all areas required for
drug development and commercialisation. I am honoured to replace Richard as Chairman of the
Board of Starpharma at this exciting time for the company.
On June 27, 2003, Starpharma submitted an Investigational New Drug (IND) application to the
United States Food & Drug Administration (FDA) for its topical microbicide product known as
VivaGel™. Following a 30-day review period, the IND was allowed to proceed to human clinical trials.
This IND application was the first assessment of a dendrimer nanodrug by the FDA.
In early 2003, Dendritic Nanotechnologies Limited was converted to a U.S. entity, Dendritic
Nanotechnologies, Inc. (DNT). DNT was established in 2001 as a venture between U.S. dendrimer
pioneer, Donald A. Tomalia, Ph.D., and Starpharma as an investment in complementary applications
of dendrimers. DNT has been recognised as a substantial participant in the development of
nanotechnologies in the U.S., and has received significant grant income from the U.S. Army and
other sources. Dendrimer research products supplied by DNT are now available for sale through
leading chemicals supplier, Sigma-Aldrich.
In the past year, the profile of polyvalent pharmaceuticals grew significantly. Dendrimers are defined
molecular species capable of polyvalent interaction with biological targets. These properties result
in pharmaceuticals with improved therapeutic properties such as potency, duration of activity and
safety. In the year ahead, Starpharma is well placed to form partnerships and licensing deals to
advance the commercial application of our polyvalent dendrimer nanotechnology.
We thank you for your continuing support as a shareholder.
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 5
...Starpharma is well placed
to form partnerships
and licensing deals
5
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 6
t
r
o
p
e
R
s
’
O
E
C
John W Raff PhD CHIEF EXECUTIVE OFFICER
Dear Shareholder,
The year 2002/03 was a particularly challenging year for the biotechnology industry, including Starpharma. However, it was also the
year in which we made our most significant achievements. As a result, I believe the company has matured into an internationally
competitive biotechnology business.
Starpharma has established outstanding in-house capabilities in medicinal chemistry, drug development, pharmaceutical regulatory
practices and quality systems. The company has also established Australian and international research, corporate and financial
relationships, which are essential for the company’s future.
Starpharma’s specific focus and area of expertise is the development of drugs based on polyvalent dendrimer nanostructures.
This area has moved from being a largely unknown scientific curiosity, to a key technology that has the potential to change the
competitive positions of major pharmaceutical companies. One of the largest pharmaceutical deals for many years was recently
made in the area of polyvalent pharmaceuticals.
Starpharma’s achievement in taking a completely new class of drug through the U.S. Food and Drug Administration regulatory system
into human trials demonstrates the talents of our staff and the depth of the company’s in-house capabilities.
Starpharma’s lead product VivaGel™ is an HIV preventive vaginal microbicide. HIV is a major international health crisis, with over
42 million people infected. The VivaGel™ microbicide has the potential to empower women to protect themselves against HIV and
other sexually transmitted diseases. The VivaGel™ product also highlights the unique opportunities of polyvalent nanotechnology.
SPL7013, the active ingredient of VivaGel™, is a precisely defined molecule capable of multiple disease targeting. In addition to
being active against HIV, it has also been shown to be active in animal trials against genital Herpes and Chlamydia. It is also highly
specific in that it does not interfere with the beneficial natural organisms in the vagina.
Numerous studies have shown that the potential market for an effective vaginal microbicide is large in both developed and developing
countries. We also recognise that preventive medicine has not been a focus of major pharmaceutical companies. We believe this
situation is likely to change rapidly as governments around the world insist on pharmaceutical companies’ assistance in this area
of enormous community benefit.
Starpharma’s microbicide is a scientifically based, fully defined molecule, in contrast to potentially competitive products in development.
This definition provides potential for greater safety and regulatory acceptance, and will be important in attracting large pharmaceutical
companies. We are currently developing tripartite relationships between government agencies, pharmaceutical companies and
Starpharma in the development of VivaGel™.
Other development projects showing considerable promise include: drugs against respiratory viruses, anti-cancer drugs, and various
biodefence applications.
A further major achievement of Starpharma during the year is the establishment of Dendritic Nanotechnologies, Inc. as a company at
the heart of the U.S. nanotechnology industry. DNT has made the transition from being a research based organisation to a significant
commercial enterprise. Starpharma has a major asset in its 49.9% equity of DNT and also has the commercialisation rights to
pharmaceutical applications arising from DNT’s technology. I am delighted with the scientific and commercial calibre of the personnel
joining DNT and during the next year a number of major developments will arise regarding DNT.
6
Starpharma’s core skill base is medicinal chemistry, regulatory development and project management and our core business is drug
development and licensing drug candidates. We now have the skills and financial support to rapidly move forward. In the year ahead
partnerships in drug development and licensing will be a major focus of the company.
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 7
...Starpharma’s expertise
is the development of drugs
based on polyvalent
dendrimer nanostructures
7
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 8
M
T
l
i
e
G
a
v
V
:
e
t
a
d
p
U
t
c
u
d
o
r
P
8
Starpharma’s lead product, VivaGel™
(previously known as SPL7013), is now
recognised as an Investigational New Drug
(IND) by the United States regulatory agency,
the Food & Drug Administration (FDA).
CMAX is a clinical trial facility in Adelaide,
South Australia, and was selected because of
the centre’s track record of excellence in
performing human trials of pharmaceutical
products.
This recognition follows the submission in June
2003 of an IND application to the FDA and
provides clearance for Starpharma to proceed
with human clinical trials of VivaGel™ under
relevant U.S. regulations.
While the main focus of the VivaGel™
development program is HIV prevention,
the product also has potential as a preventive
for other sexually transmitted diseases,
including Herpes and Chlamydia.
Starpharma’s IND application was the first for
a dendrimer-based nanodrug to be assessed by
the FDA and will allow the active pharmaceutical
ingredient of VivaGel™, SPL7013, to become
the first dendrimer-based drug to be tested in
human clinical trials anywhere in the world.
There is also an opportunity to combine the
active ingredient of VivaGel™, the dendrimer
SPL7013, with other microbicide agents that
have a complementary mode of action.
The resulting combination product would be
a second generation microbicide with the potential
for greater efficacy than either product alone.
VivaGel™ is a topical microbicide gel product
that has been developed for women as a
preventive against the sexual transmission of
Human Immunodeficiency Virus (HIV), the virus
that causes AIDS.
The initial Phase 1 clinical trials of VivaGel™
will begin in 2004 and will assess its safety in
healthy human subjects. The initial trials will be
conducted at CMAX, a division of the Institute
of Drug Technology Australia Ltd (IDT).
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 9
... the active pharmaceutical
ingredient of VivaGelTM, SPL7013
... the first dendrimer-based drug
to be tested in human clinical trials
In recent animal trials, an intravaginal application
of VivaGel™ containing 5% SPL7013 was
shown to protect 100% of macaques exposed
to SHIV, a humanised strain of Simian
Immunodeficiency Virus (SIV), the virus that
causes AIDS in primates. In contrast, all animals
not treated with VivaGel™ or the placebo gel
were infected after exposure to the virus.
These results in this animal model of HIV
infection indicate the potential for VivaGel™
to be an effective microbicide in humans.
Microbicides for Better Health
Starpharma’s microbicide, VivaGel™, is a topical agent that can potentially prevent or reduce
transmission of HIV and other sexually transmitted diseases (STDs) when applied to the vagina or
rectum prior to sexual intercourse. The figures in the table below highlight the pressing need for an
effective microbicide product.
Women are more vulnerable to HIV infection than men due to biological factors, as well as
sociological and cultural factors in some societies. A safe and effective microbicide will offer women
in all societies an alternative to dependence on male condoms for STD prevention.
Number of people worldwide living with HIV:
42,000,000 (including 3,200,000 children)
Number of new HIV infections in 2002:
5,000,000 (14,000 per day)
Number of women living with HIV:
19,200,000 (approx. 50% of adults infected)
Number of children infected with HIV in 2002:
Number of young people aged 15 to 24 infected with HIV in 2002:
Projected additional number of people to be infected with HIV 2003 to 2010:
2,000 every day
6,000 every day
45,000,000
Figures from the UNAIDS Epidemic Update published by the Joint United Nations Programme on AIDS (UNAIDS) and World Health Organization (WHO), December 2002.
9
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 10
e
n
i
l
i
e
p
P
t
c
u
d
o
r
P
A key competitive advantage for Starpharma
is our dendrimer and medicinal chemistry
team, leading the world in the development of
polyvalent dendrimer nanodrugs.
The value of this team to Starpharma is
demonstrated by a growing product pipeline.
Key areas of focus include the development of
dendrimers as therapy for Respiratory Syncytial
Virus (RSV), dendrimers as angiogenesis
inhibitors, and dendrimers with activity against
exotic diseases.
Starpharma’s R&D strategy is to examine the
activity of dendrimers in a wide range of disease
targets and our work with an extensive international
collaborative network has demonstrated the
significant potential of the technology platform.
In the past year, an improved dendrimer
synthesis program was established that will see
an expanded library of dendrimer compounds
with potential for development as lead
pharmaceutical compounds.
Starpharma’s dendrimer expertise was critical to
the formation of a trans-Tasman nanotechnology
alliance between Starpharma and New Zealand’s
Industrial Research Limited (IRL), a leader in the
field of carbohydrate nanotechnology.
The partnership was supported by a NZ$5.9
million dollar grant to IRL from the New Zealand
government.
Starpharma and IRL will work together to develop
nanoscale, carbohydrate functionalised dendrimers
for targeted drug delivery.
As well as Starpharma’s existing global network
of research collaborations, the dendrimer
chemistry team will also work with scientists
at the Victorian College of Pharmacy, Monash
University, to develop dendrimers as drug
delivery agents.
Other potential research collaborations are
being investigated with biotechnology industry
partners. These partnerships will provide
synergistic opportunities for the development
of targeted pharmaceutical products in a range
of disease areas.
Starpharma’s analytical and bioanalytical chemistry
team is expert in the field of dendrimer analysis
and has developed regulatory compliant assays
allowing consistent analysis of dendrimers in
a range of matrices. An in-house mass
spectrometry facility is now a routine analysis
tool for dendrimer synthesis.
10
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 11
11
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 12
s
e
i
t
i
n
u
t
r
o
p
p
O
g
n
s
n
e
c
L
i
i
The initial success of VivaGel™ in the first
assessment of a dendrimer-based nanodrug
by the United States Food & Drug
Administration (FDA) is a key milestone in the
development of dendrimers as pharmaceuticals.
Starpharma’s commercialisation strategy is to
develop a limited number of drug candidates to
early clinical stage to demonstrate the potential
of dendrimers as pharmaceuticals.
These opportunities target diseases for which
there is significant unmet medical need.
Starpharma is committed to partnering with
companies with expertise in disease areas in
which a polyvalent solution will deliver a
competitive advantage through superior product
performance.
Starpharma has licensing opportunities related
to both its platform technology and development
products (see box).
Starpharma has generated a series of novel
chemotherapeutic compounds including lead
compounds with physico-chemical properties
expected of orally bioavailable drugs.
Starpharma is working with Biocomm Services
(www.biocomm.com.au, an Australian life
science business development company)
to out-license these anti-proliferative compounds
to a biotechnology or pharmaceutical company.
Starpharma enjoys a strong strategic position on
the field of application of dendrimers as
pharmaceuticals. The company’s patent portfolio
covers the use of dendrimers as drugs with
activity against a wide range of disease targets.
Starpharma’s significant dendrimer know-how
is also available to Starpharma’s development
partners.
Unique Technology & Product
Licensing Opportunities
Technology Opportunities
> Polyvalent presentation of multiple active
groups
> Other platform opportunities include the
delivery of small molecules, as a “toolbox”
for rational drug design and other
nanotechnology applications in life sciences
Product Opportunities
> VivaGel™, a topical microbicide for
prevention of HIV and other STDs in women
> Dendrimers targeting a broad range of viral
respiratory diseases
> Novel chemotherapeutic agents
> Dendrimers as angiogenesis inhibitors
> Dendrimers targeting a range of tropical and
exotic diseases, and as biodefense agents
12
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 13
.
c
n
I
l
i
s
e
g
o
o
n
h
c
e
t
o
n
a
N
c
i
t
i
r
d
n
e
D
DNT is a U.S. Delaware incorporated company
with research and development operations
located at the Center for Applied Research
and Technology (CART) at Central Michigan
University (CMU) in Mount Pleasant, Michigan,
USA.
DNT was established by Starpharma with the
pioneer of dendrimer nanotechnology,
Donald A. Tomalia, Ph.D. In October 2002,
the Australian PDF Registration Board gave
permission for Starpharma to remain the largest
shareholder of DNT (49.99%) after its conversion
to a U.S. incorporated company.
Starpharma invested in the creation of DNT to
create value for shareholders of Starpharma by
advancing the development and commercialisation
of non-pharmaceutical applications of dendrimer
nanotechnology. Starpharma established DNT
with a total capital investment of A$3.8 million.
Starpharma’s investment in DNT is a significant
asset with considerable growth potential.
DNT’s objectives are to create value from
dendrimer and dendritic polymer technology by
creating novel dendritic IP through innovative
design and synthesis, by being the leading
supplier of high quality, innovative new dendrimers,
and by establishing commercialisation
partnerships, joint ventures and spinning out
new companies in the areas of energy storage,
drug delivery and light generation.
DNT is now recognised as a major participant
of nanotechnology development in the U.S.
DNT was a beneficiary of a U.S. biodefense
grant worth US$3.5 million, which will help
establish DNT and CMU as a Center for
Dendrimer Nanotechnology. DNT was also
selected as an industrial partner of
Massachusetts Institute of Technology’s (MIT)
Institute for Soldier Nanotechnologies.
DNT has established a team of high profile
individuals with extensive commercial
experience. Charles Burke, Ph.D., (CEO),
has previous experience in the start-up and
management of successful U.S. biotechnology
companies. Mr Gifford E. Brown, former Vice-
President of Planning & Finance and CFO of
Dow Corning, is now the CFO of DNT, while
Mr Richard Hazleton, former President and
CEO of Dow Corning is a Director of DNT.
The Board and CFO of DNT, Inc.
FROM LEFT: Richard Hazleton, Ken Wang, Charles Burke Ph.D. (CEO),
Donald A. Tomalia Ph.D. (President & CTO), Peter Colman Ph.D.,
Gifford Brown (CFO) and John Raff Ph.D.
13
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 14
14
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 15
l
y
r
o
t
a
u
g
e
R
/
A
Q
s
e
i
t
i
l
i
b
a
p
a
C
Starpharma’s Regulatory Affairs and Quality
Assurance (QA) team has continued to apply
the highest standard of regulatory compliance
to the company’s product development
activities.
The Investigational New Drug (IND) application
submitted to the FDA was the product and
culmination of several years’ work dedicated to
determining the safety and efficacy of SPL7013,
as well as the development of regulatory
compliant manufacturing and analytical methods.
Starpharma’s regulatory and QA team assured
that all the information included in the IND
application was accurate and that all work was
performed in compliance with relevant U.S.
regulations, where required.
The IND was compiled in a highly organised
manner that ensured efficient review of the
document by the FDA.
In the past year, Starpharma completed its first
in-house study performed in compliance with
U.S. FDA Good Laboratory Practice (GLP)
regulations.
Further studies are underway and Starpharma is
in a position to perform regulatory compliant
bioanalytical work in support of the first human
clinical trials of VivaGel™ in 2004.
Starpharma’s regulatory and QA capabilities,
and the resulting ability to assure the quality of
work performed in-house and by contractors,
are rare in Australian biotechnology companies.
These capabilities will ensure that Starpharma’s
products are afforded the best chance of
regulatory approval at all stages of development.
Starpharma will apply the highest standard of
quality to the upcoming clinical trials, ensuring
Good Clinical Practice (GCP) guidelines and
relevant regulations are complied with at all
times.
Licensees and industry partners can feel
confident about the quality and regulatory
compliance of Starpharma’s products.
15
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 16
Starpharma Pooled Development Limited
ABN 20 078 532 180
Level 6, Baker Heart Research Building
Commercial Road, Melbourne VIC 3004 Australia
T +61 3 8532 2700 F +61 3 9510 5955 W www.starpharma.com
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 1
starpharma
Annual Report 2003
Corporate Governance Statement >13 Financial Report >17 Directors’ Declaration >46
Independent Audit Report to the Members >47 Shareholder Information >48
Company Particulars >2 Directors’ Report >3
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 2
Company Particulars
COMPANY NAME
Starpharma Pooled Development Limited
ABN 20 078 532 180
DIRECTORS
P T Bartels (Chairman)
P M Colman BSc (Hons), PhD, FAA, FTSE
R Dobinson B Bus (Acc)
P J Jenkins MB, BS (Melb), FRACP
L Gorr B Juris LLB, M.Admin
J W Raff Dip Ag Sc, BSc, PhD
CHIEF EXECUTIVE OFFICER
J W Raff Dip Ag Sc, BSc, PhD
SECRETARY
B P Rogers
REGISTERED OFFICE
Level 6, Baker Heart Research Building
Commercial Road, Melbourne Victoria 3004
Telephone (03) 8532 2700
Facsimile (03) 9510 5955
The annual general meeting of Starpharma Pooled Development Limited
will be held at: ASX Theatrette (530 Collins Street, Melbourne)
Time: 4:00pm
Date: Wednesday 19 November 2003
Computershare Registry Services Pty Ltd
Level 12
565 Bourke Street
Melbourne VIC 3000
Telephone (03) 9615 5970
Facsimile (03) 9611 5710
Australian Stock Exchange Limited (ASX)
Level 3, 530 Collins Street
Melbourne VIC 3000 Australia
ASX Code: SPL
PricewaterhouseCoopers
333 Collins Street
Melbourne VIC 3000 Australia
Blake Dawson Waldron
Level 39, 101 Collins Street
Melbourne VIC 3000 Australia
Commonwealth Bank of Australia
www.starpharma.com
NOTICE OF ANNUAL
GENERAL MEETING
SHARE REGISTER
STOCK EXCHANGE LISTING
AUDITOR
SOLICITORS
BANKERS
WEBSITE
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 3
Directors’ Report
Your directors present their report on the consolidated accounts of Starpharma Pooled Development Limited (“the Company”) and the
entities it controlled at the end of, or during, the year ended 30 June 2003.
DIRECTORS
The following persons were directors of the Company during the whole of the financial year and up to the date of this report:
P M Colman
R Dobinson
L Gorr
P J Jenkins
J W Raff
R J D Oliver was a director from the beginning of the financial year until his retirement on 6 August 2003.
P T Bartels was appointed a director on 6 August 2003 and continues in office at the date of this report.
PRINCIPAL ACTIVITIES
During the year the principal activity of the consolidated entity consisted of investment in, and management and funding of dendrimer
based research, development and commercialisation.
REVIEW OF OPERATIONS AND CONSOLIDATED RESULTS
Operating Loss
For the year ended 30 June 2003 the consolidated entity incurred an operating loss after income tax of $7,719,783
(2002: $7,906,131). Expenditure on direct research activities was $5,713,405 (2002: $6,227,723).
Revenue
Revenue from ordinary activities was $1,510,420 (2002: $1,328,618) and consisted of grant income from a Commonwealth
Government R&D START Grant of $839,251 (2002: $383,646), interest revenue of $558,674 (2002: $943,915), and other revenue
of $112,495 (2002: $1,057).
Material factors affecting the revenues and expenses of the consolidated entity for the current period were as follows:
•
•
Investigational New Drug application (IND) for VivaGel™
Expenditure for the period included significant outlays by the controlled entity Starpharma Pty Ltd for Scale-up Good
Manufacturing Practice (GMP) synthesis, pre-clinical toxicology studies and preparation of a successful Investigational New Drug
application (IND) to the US Food and Drug Administration for VivaGel™, a topical microbicide gel containing the dendrimer
SPL7013 that has been developed to be used as a preventative against the transmission of HIV during sexual intercourse.
Loss of Control of Dendritic Nanotechnologies Ltd
On 27th March 2003 the controlled entity Dendritic Nanotechnologies Ltd (“DNT Ltd”) became a wholly owned subsidiary of the
US entity Dendritic Nanotechnologies Inc. (“DNT Inc”). The Company acquired 49.99% of the issued shares of DNT Inc in
exchange for its shares of DNT Ltd. The revenues and expenses of DNT Ltd have been included in the consolidated results from
3
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 4
Directors’ Report cont.
the beginning of the current period until 27th March 2003. The Directors of the Company have resolved that control in DNT Ltd
ceased on 27th March 2003 and that the accounts of DNT Ltd and DNT Inc be excluded from the consolidated accounts from that
date.
Material factors affecting the assets, liabilities and equity of the consolidated entity for the current period were as follows:
•
Capital investments
- Expenditure of $1,195,769 for fit-out of the new chemistry laboratory and corporate headquarters on Level 6 of the Baker
Heart Research Building;
- Equity investment in the company that was then a subsidiary company (DNT Ltd) and subsequently in the associated company
DNT Inc. The amount invested during the current period was $2,507,660 which brought the total investment by the Company
in DNT Inc. to $3,868,048 at the end of the current period.
•
DNT Inc – Associated Entity
DNT Inc has been treated as an associated company with effect from 28th March 2003, and the investment in DNT Inc has been
valued in the accounts of the consolidated entity at the cost of the investment at that date, less equity accounted losses incurred
from that date until the end of the current period.
Corporate Structure
The consolidated entity is structured as a Pooled Development Fund (“PDF”) registered under the PDF Act 1992 (Cth). Starpharma
Pooled Development Limited has four wholly-owned subsidiary companies – Starpharma Pty Ltd, Viralstar Pty Ltd, Angiostar Pty Ltd,
and Preclin Pty Ltd. From the commencement of the year until 27th March 2003 the consolidated entity also included the subsidiary
company Dendritic Nanotechnologies Limited (“DNT Ltd”). In October 2002, the PDF Registration Board approved Starpharma Pooled
Development Limited entering into a transaction whereby it was issued with shares in a foreign company in exchange for its shares in
DNT Ltd. From 27th March 2003 DNT Ltd became a wholly owned subsidiary of DNT Inc and Starpharma Pooled Development
Limited held 49.99% of the issued shares in DNT Inc.
Business Objectives
The consolidated entity aims to create value for shareholders from dendrimer-based nanotechnology through:
•
•
•
•
the development of high-value dendrimer nanodrugs to address unmet market needs;
partnering with pharmaceutical companies to create new opportunities and solutions to problems with the application of
dendrimer nanotechnology;
extending in-house core skills and know-how through licensing and partnering with other companies;
parallel investment in non-pharmaceutical applications of dendrimer nanotechnology.
Research, Development and Commercialisation Activities
The consolidated entity’s research, development and commercialisation activities are managed by the controlled entity Starpharma
Pty Ltd, and are directed towards the application of dendrimer nanotechnologies to develop drugs against major diseases.
Starpharma Pty Ltd’s business strategy is to prove the dendrimer pharmaceutical concept in clinical trials for its lead product, prior to
licensing. The strategy also involves working with partners and licensees to achieve commercialisation of the dendrimer technology
4
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 5
Directors’ Report cont.
across a broad range of pharmaceutical applications. This will involve collaborating at an early stage with pharmaceutical partners for
the development of Starpharma Pty Ltd’s other dendrimer-based products, as well as assisting these partners to integrate dendrimer
technology into their own product portfolios.
Starpharma Pty Ltd
•
VivaGel™ Drug Product
Starpharma Pty Ltd has developed a topical microbicide gel containing the dendrimer SPL7013 for prevention of the transmission
of sexually transmitted diseases such as HIV. An Investigational New Drug Application (IND) was submitted to the US Food and
Drug Administration (FDA) on 27 June 2003 for approval to commence Phase I human safety trials of this product.
FDA clearance was obtained on 31 July 2003, and an agreement was subsequently signed with an Australian company, namely
Institute of Drug Technology Ltd to conduct the Phase I clinical trials.
• Other Development Programs
Other development programs conducted by Starpharma Pty Ltd focus on compounds with therapeutic activity in the following
disease areas:
- Sexually Transmitted Diseases (Herpes, Chlamydia)
- Respiratory Viruses (Influenza, Adenovirus, Respiratory Syncitial Virus)
- Systemic Viral Diseases (eg Hepatitis B Virus)
- Oncology (angiogenesis inhibitors, small molecule anti-proliferatives)
- Biodefense and Tropical Diseases (toxins, exotic viruses)
Starpharma Pty Ltd also has exclusive rights for the development and commercialisation of certain dendrimers which exhibit
pharmaceutical activity and which are generated from intellectual property of the associated company Dendritic
Nanotechnologies Inc. This relationship will allow Starpharma Pty Ltd to be a participant in a number of commercialisation
projects such as drug delivery, biological thin film coatings and allergen skin testing.
Dendritic Nanotechnologies Inc.
At the date of this report Starpharma Pooled Development Limited owned 49.99% of the issued shares of DNT Inc, which has been
treated as an associated company with effect from 28th March 2003. DNT Inc is a Delaware incorporated company with research
and development operations located at the Center for Applied Research and Technology at Central Michigan University in Mount
Pleasant, Michigan, USA.
The strategy of DNT Inc is to facilitate the commercialisation of dendrimer nanotechnology across a broad range of life-sciences and
non-life-sciences fields of application. Its immediate objectives are to generate revenue through the sale of high value, research
grade dendrimer products, to create new intellectual property for a range of dendrimer applications and to enter into commercial
development partnerships.
DIVIDENDS
No dividend has been paid or declared since the end of the previous financial year, and the directors do not recommend the
declaration of a dividend.
5
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 6
Directors’ Report cont.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Loss of Control of Dendritic Nanotechnologies Ltd
This change is described in the Review of Operations and Consolidated Results section of the Directors’ Report.
In the opinion of the directors there were no other significant changes in the state of affairs of the consolidated entity that occurred
during the financial year under review not otherwise disclosed in this report or in the financial statements.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
Success of US FDA Application for Human Trials of VivaGel™
On 31st July 2003 the Company announced that it had gained clearance to proceed with human clinical trials of a new dendrimer
nanodrug - VivaGel™ - which has been developed to be used as a preventative against the transmission of HIV during sexual
intercourse.
New Chairman
On 6th August 2003 the Company announced the appointment of Mr Peter T. Bartels as a Director and Chairman of the Board,
to replace Mr Richard Oliver who retired on that date.
Share Placement
On 10th September 2003 the Company announced the placement of 13,335,000 new shares at $0.52 per share to Australian
institutional and sophisticated investors, raising $6.9 million before issue expenses.
Alliance with Institute of Drug Technology Australia Limited to Conduct Human Trials
On 16th September 2003 the Company announced the signing of a clinical trial agreement with an Australian based company,
namely Institute of Drug Technology Australia Limited (IDT) for IDT to conduct Phase I human clinical trials on Starpharma’s vaginal
microbicide SPL7013 gel (VivaGel™) at CMAX, their Adelaide based clinical trial unit.
AGT Biosciences Ltd and Starpharma Announce Collaboration to Develop New Drug Therapies For Type 2 Diabetes
On 18th September 2003 the Company made a joint announcement with AGT Biosciences Ltd that the companies have agreed to
collaborate in the development of drug therapies for Type 2 Diabetes.
No other matter or circumstance has arisen since 30 June 2003 that has significantly affected, or may significantly affect:
(a) the consolidated entity’s operations in future financial years, or
(b) the results of those operations in future financial years, or
(c) the consolidated entity’s state of affairs in future financial years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
In the opinion of the directors, the consolidated entity will continue its activities as described. Further information on likely
developments in the operations of the consolidated entity and the expected results of operations have not been included in this report
because the directors believe it would be likely to result in unreasonable prejudice to the consolidated entity.
6
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 7
Directors’ Report cont.
INFORMATION ON DIRECTORS
The names and particulars of the Directors of the Company during or since the end of the financial year are:
DIRECTOR
EXPERIENCE
SPECIAL RESPONSIBILITIES
Richard JD Oliver AM
(retired 6 August 2003)
Peter M Colman
BSc(Hons), PhD, FAA, FTSE
Ross Dobinson
B. Bus (Acc)
Leon Gorr B. Juris
LLB, M.Admin
Non-executive director for 6 years.
Former Executive Chairman, Richard
Oliver International Pty Ltd, a global
risk management consulting group
that he had established in 1972 and
Willis Corroon Richard Oliver Pty Ltd.
Non-executive director for 6 years.
Head, Structural Biology Division,
The Walter & Eliza Hall Institute of
Medical Research. Former Executive
Director, Biomolecular Research Institute.
Published widely in the field of structural
biology. In 1983 his Laboratory determined
the structure of the surface proteins
of influenza virus, and a major result of
that work was the discovery of Relenza.
One of the founding directors of
Biota Holdings Ltd.
Non-executive director for 6 years.
Merchant banker with a background in
investment banking and stockbroking.
Has acted as corporate director for two
leading stockbrokers, and was an
executive director of the NAB’s corporate
advisory subsidiary. Later headed the
Corporate Advisory Division of Dresdner
Australia Ltd. Managing Director of
TSL Group Ltd, a corporate advisory
company specialising in establishing
and advising life sciences companies.
Also a director of Acrux Ltd,
Nutrihealth Pty Ltd, Plantic
Technologies Ltd, and Roc Oil Company Ltd.
Non-executive director since May 2000.
Senior Partner, Herbert Geer & Rundle.
30 years’ experience as a solicitor.
Extensive experience in providing advice
on the negotiation and interpretation of
technology licensing agreements.
Clients include investors in, and advisors
to the biotechnology industry.
PARTICULARS OF
DIRECTORS' INTERESTS
IN SHARES AND OPTIONS
OPTIONS
SHARES
4,520,000
Nil
Non-executive Chairman.
Chairman of Remuneration
and Nomination Committee
(until 6 August 2003)
Member of Research Committee
5,982,482
Nil
Chairman of Audit Committee,
member of Remuneration
and Nomination Committee
3,505,289
Nil
Member of Audit Committee
5,825,300
Nil
7
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 8
Directors’ Report cont.
DIRECTOR
EXPERIENCE
SPECIAL RESPONSIBILITIES
PARTICULARS OF
DIRECTORS' INTERESTS
IN SHARES AND OPTIONS
OPTIONS
SHARES
694,250
Nil
Peter J Jenkins
MB, BS (Melb), FRACP
John W Raff
Dip. Ag. Sc., BSc. PhD
Peter T Bartels
(appointed
6 August 2003)
Chairman of Research Committee
(from 6 August 2003)
Non-executive director for 6 years.
Consultant physician and gastroenterologist. Member of Audit Committee
Holds a number of clinical and research
positions with the Alfred Hospital and
has held clinical positions with the Baker
Medical Research Centre.
Foundation director of Anadis Ltd, a listed
bio-pharmaceutical company.
Judge of the Australian Technology Awards.
Currently Executive Director of AusBio Ltd,
an unlisted public biotechnology company.
Chief Executive Officer,
Member of Research Committee
4,161,081
Nil
Previously General Manager of the
Biomolecular Research Institute.
Co-founder, director and major
shareholder of a technology based
agricultural seed company.
Also founder and investor in a
number of other start-up technology
companies.
80,000
Nil
Non-executive Chairman.
Chairman of Remuneration
and Nomination Committee
(from 6 August 2003)
Previously CEO and Managing Director
of Coles Myer Ltd and before that
CEO and Managing Director of Fosters
Brewing Company Ltd.
He has also had broad-based
experience in the pharmaceutical industry
in previous roles with DHA Pharmaceuticals
and Abbott Laboratories.
Chairman of the Australian Sports
Commission, the Australian Institute
of Sport, the Commonwealth Heads
of Government Committee for Sport
and Central City Studios.
Immediate past chairman of the Women's
and Children's Health Service.
Also a Director of the Australian Grand Prix
Corporation and Melbourne Business School
(Melbourne University).
Directors’ Interests in Shares and Options in the above table are current at the date of signing of this report and include all securities
in which the director has a relevant interest within the meaning of section 9 of the Corporations Act 2001.
The number of shares differs from the aggregate number of shares disclosed in Note 25 to the Financial Statements as that note sets
out the number of shares at balance date and takes into account shares held by Directors and Director-related entities as defined
in AASB1017 - Related Party Disclosures.
8
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 9
Directors’ Report cont.
DIRECTORS’ MEETINGS
The number of meetings of the Company’s Board of directors and of each committee held during the year ended 30 June 2003,
and the numbers of meetings attended by each director were:
FULL MEETINGS OF DIRECTORS
MEETINGS OF COMMITTEES
Mr Richard Oliver
Prof Peter Colman
Mr Ross Dobinson
Mr Leon Gorr
Dr Peter Jenkins
Dr John Raff
A
16
15
15
16
17
16
B
17
17
17
17
17
17
AUDIT
REMUNERATION
RESEARCH
A
*
*
2
2
*
*
B
*
*
2
2
*
*
A
3
*
3
*
*
*
B
3
*
3
*
*
*
A
*
12
*
*
12
11
B
*
12
*
*
12
12
A = Number of meetings attended
B = Number of meetings held during the time the director held office or was a member of the committee during the year.
* = Not a member of the relevant committee.
RETIREMENT, ELECTION AND CONTINUATION IN OFFICE OF DIRECTORS
Mr Richard Oliver retired as a director on 6 August 2003 and did not offer himself for re-election.
Mr Peter Bartels was appointed a director on 6 August 2003 to fill the vacancy caused by the retirement of Mr Richard Oliver.
In accordance with the Constitution Mr Bartels retires as a director at the annual general meeting and, being eligible, offers himself
for re-election.
Prof Peter Colman retires by rotation as director at the annual general meeting and, being eligible, offers himself for re-election.
Mr Ross Dobinson retires by rotation as director at the annual general meeting and, being eligible, offers himself for re-election.
DIRECTORS' AND EXECUTIVES' EMOLUMENTS
The Remuneration and Nomination Committee, consisting of two non-executive directors, advises the Board on remuneration policies
and practices generally, and makes specific recommendations on remuneration packages and other terms of employment for
executive directors, other senior executives and non-executive directors.
Executive remuneration and other terms of employment are reviewed annually against goals set at the start of the year, relevant
comparative information and if required independent expert advice. As well as a base salary, remuneration packages include
superannuation, retirement and termination entitlements, performance-related bonuses and fringe benefits. Executives are also
eligible to participate in the Starpharma Pooled Development Limited Employee Share Option Plan.
Remuneration packages are set at levels that are intended to attract and retain executives capable of managing the consolidated
entity's operations.
9
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 10
Directors’ Report cont.
Remuneration and other terms of employment for the Chief Executive Officer and certain other senior executives are formalised in
service agreements.
Remuneration of non-executive directors is determined by the Board within the maximum amount approved by the shareholders from
time to time. This maximum currently stands at $135,000.
The Board undertakes an annual review of its performance and the performance of the Board Committees against goals set at the
start of the year. Bonuses are not payable to non-executive directors.
Details of the nature and amount of each element of the emoluments of each non-executive director of Starpharma Pooled
Development Limited and each of the 5 executive officers of the Company and the consolidated entity receiving the highest
emoluments are set out in the following tables.
NON-EXECUTIVE DIRECTORS OF STARPHARMA POOLED DEVELOPMENT LIMITED
NAME
Mr Richard Oliver CHAIRMAN
Prof Peter Colman
Mr Ross Dobinson
Mr Leon Gorr
Dr Peter Jenkins
BASE FEE
35,000
23,148
23,148
23,148
23,148
COMMITTEE FEES
-
-
-
-
-
SUPERANNUATION
-
1,852
1,852
1,852
1,852
TOTAL
35,000
25,000
25,000
25,000
25,000
EXECUTIVE DIRECTORS OF STARPHARMA POOLED DEVELOPMENT LIMITED
NAME
BASE SALARY MOTOR VEHICLE SUPERANNUATION
BONUS
OPTIONS OTHER BENEFITS
TOTAL
$
$
$
Dr John Raff
215,967
31,541
38,500
$
-
$
-
$
4,631
$
290,639
10
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 11
Directors’ Report cont.
OTHER EXECUTIVES OF STARPHARMA POOLED DEVELOPMENT LIMITED OR SUBSIDIARY COMPANIES
NAME
BASE SALARY MOTOR VEHICLE SUPERANNUATION
BONUS
OPTIONS OTHER BENEFITS
TOTAL
$
$
$
$
$
$
$
121,793
20,517
20,307
20,500
49,894
15,942
248,953
Mr Tim Grogan
MANAGER, INTELLECTUAL
PROPERTY AND BUSINESS
DEVELOPMENT
Dr Thomas McCarthy 71,908
DEVELOPMENT MANAGER
24,897
14,908
500
42,820
4,578
159,611
Mr Ben Rogers
COMPANY SECRETARY
Dr Belinda Braggs
SCIENTIFIC AFFAIRS
MANAGER
88,260
29,354
18,112
-
-
4,381
140,107
91,585
-
21,161
500
8,210
1,553
123,009
The amount included in remuneration for options reflects an apportionment of the value of options as at the date of issue over the
period from date of issue to the date on which the options were first capable of being exercised.
Share options have been valued using the Black-Scholes valuation model. This has been determined as the most appropriate
methodology based upon the nature of the options on issue. Certain assumptions as to share price volatility have been made in
determining option values.
Share options granted to directors and the most highly remunerated officers
There have been no options over unissued ordinary shares of Starpharma Pooled Development Limited granted during or since the
end of the financial year to any of the directors or the 5 most highly remunerated executive officers of the Company and consolidated
entity.
Shares under option
Unissued ordinary shares of Starpharma Pooled Development Limited under option at the date of this report are as follows:
Starpharma Pooled Development Limited Employee
Share Option Plan (ASX code SPLAM)
NUMBER ISSUE PRICE OF SHARES
240,000 93.75 cents
240,000 93.75 cents
200,000 93.75 cents
EXPIRY DATE
31 December 2005
11 April 2007
30 June 2007
240,000 options are exercisable during the period from 1 January 2003 to 31 December 2005. 240,000 options are exercisable
during the period from 12 April 2004 to 11 April 2007 and 200,000 options are exercisable during the period from 1 July 2002 to
30 June 2007. No option holder has any right under the options to participate in any other issue of the Company or of any other entity.
Shares Issued on the Exercise of Options
No shares in Starpharma Pooled Development Limited have been issued on the exercise of options during the year ended
30 June 2003 and up to the date of this report.
11
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 12
Directors’ Report cont.
INSURANCE OF OFFICERS
During the financial year Starpharma Pooled Development Limited and officers of the Company and related bodies corporate
arranged a Directors’ and Officers’ Liability insurance policy to indemnify certain officers of the Company and related bodies
corporate. It is a condition of the policy that the Company not publish details of the nature of the liabilities insured by the policy
or the amount of the premium paid.
The officers of the Company covered by the insurance policy include the directors and executive officers.
AGREEMENT TO INDEMNIFY OFFICERS
The Company has agreed to indemnify the directors of the company and its controlled entities (subject to certain qualifications):
(i)
(ii)
against all liabilities incurred in the capacity of an officer of the company or any related body corporate of the company unless
liability arises out of conduct involving lack of good faith; and
for costs and expenses incurred by a director in defending any proceedings in which judgment is given in favour of the director
or in which the director is acquitted.
Under the agreements the Company must maintain a Directors' and Officers' Liability insurance policy while the director holds office
and for a further 7 years after the directors ceases to be a director of the company or of any related bodies corporate.
ENVIRONMENTAL REGULATIONS
The Directors believe that the consolidated entity has adequate systems in place to ensure compliance with Commonwealth and State
environmental regulations and are not aware of any breach of applicable environmental regulations.
AUDITOR
PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of the Directors.
Peter T Bartels
DIRECTOR
Melbourne, 29th September 2003
12
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 13
Corporate Governance Statement
Starpharma Pooled Development Limited (the Company) and the Board are committed to achieving and demonstrating the highest
standards of corporate governance. This Corporate Governance Statement reflects the corporate governance practices that have been
in place throughout the financial year ended 30 June 2003. On 31 March 2003, the ASX Corporate Governance Council released its
“Principles of Good Corporate Governance and Best Practice Recommendations”. Whilst the Company's current practices substantially
accord with these principles and recommendations, the Company has undertaken a process to review its corporate governance
practices and will make a full statement on its compliance with the best practice recommendations in its 2004 Annual Report.
A description of the Company’s main corporate governance practices is set out below. All these practices, unless otherwise stated,
were in place for the entire year.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board is responsible for the overall corporate governance of the Company and its controlled entities, including development of
corporate strategies, establishing goals for management and monitoring progress towards the achievement of these goals.
COMPOSITION OF THE BOARD
Details of the members of the Board, their experience, qualifications and term of office are set out in the Directors’ Report under the
heading “Information on Directors”. The Constitution of the Company requires that one third of directors (or if their number is not a
multiple of three then the number nearest to one third) retire at every annual general meeting and be eligible for re-election.
The minimum number of directors is three and the maximum is fifteen unless the Company passes a resolution varying that number.
The Chairman is an independent non-executive director who is elected by the full Board and meets regularly with the Chief Executive
Officer.
At the date of signing the Directors’ Report the Board consisted of five non-executive directors and one executive director,
Dr J W Raff. Details of the directors at the date of this statement are set out in the directors’ report under the heading “Information
on Directors”.
RESPONSIBILITIES OF THE BOARD
The responsibilities of the Board include:
•
•
Contributing to the development of and approving the corporate strategy;
Reviewing and approving business plans, the annual budget and financial plans including available resources and major capital
expenditure initiatives;
• Overseeing and monitoring organisational performance and the achievement of the Group’s strategic goals and objectives;
• Monitoring financial performance including approval of the annual and half-year financial reports and liaison with the Company’s
auditors;
Ensuring there are effective management processes in place and approving major corporate initiatives;
Enhancing and protecting the reputation of the Company;
Ensuring the significant risks facing the Company, including those associated with its legal compliance obligations have been
identified and appropriate and adequate control, monitoring, accountability and reporting mechanisms are in place;
Reporting to shareholders.
•
•
•
•
13
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 14
Corporate Governance Statement cont.
COMMITMENT
Board meetings are held on a monthly basis, or more frequently if required. The number of meeting of the Board and of each Board
committee held during the year ended 30 June 2003, and the number of meetings attended by each director is disclosed in the
Directors’ Report. The commitments of non-executive directors are considered by the Remuneration and Nomination Committee prior
to the directors’ appointments to the Board and are reviewed each year as part of an annual performance assessment.
Prior to appointment or being submitted for re-election each non-executive director is required to specifically acknowledge that they
have and will continue to have the time available to discharge their responsibilities to the Company.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
The Chairman is responsible for leading the Board, ensuring that Board activities are organised and efficiently conducted and
ensuring directors are properly briefed for meetings. The Chief Executive Officer is responsible for implementing Company strategies
and policies. The Board policy is for these separate roles to be undertaken by separate people.
ADMINISTRATIVE STRUCTURE AND INTERNAL CONTROL FRAMEWORK
Detailed management reports are prepared by senior management and distributed with Board papers prior to each meeting.
The Chief Executive Officer and the Company Secretary attend all Board meetings. Other senior executives may be asked to attend
Board meetings to report on or discuss specific agenda items.
CONFLICT OF INTERESTS
Entities associated with Prof Peter Colman, Mr Ross Dobinson and Mr Leon Gorr had business dealings with the consolidated entity
during the year, as described in note 25 to the financial statements. The directors concerned declared their interests in those dealings
to the Company and took no part in decisions relating to them or the preceding discussions. In addition, those directors did not
receive any Board papers relating to those dealings.
INDEPENDENT PROFESSIONAL ADVICE
Directors and Board committees have the right, in connection with their duties and responsibilities, to seek independent professional
advice at the Company’s expense. Prior approval of the Chairman is required, but this approval will not be unreasonably withheld.
CORPORATE REPORTING
The Chief Executive Officer and the Company Secretary have made the following certifications to the Board:
•
•
that the Company’s financial reports are complete and present a true and fair view, in all material respects, of the financial
condition and operational results of the Company and consolidated entity;
that the above statement is founded on a sound system of internal control and risk management which implements the policies
adopted by the board and that the Company’s risk management and internal control is operating efficiently and effectively in all
material respects.
The Company adopted this reporting structure for the year ended 30 June 2003.
14
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 15
Corporate Governance Statement cont.
ETHICAL STANDARDS
The directors are committed to the principles underpinning best practice in corporate governance, with a commitment to the highest
standards of legislative compliance and financial and ethical behaviour.
TRADING IN COMPANY SECURITIES
The purchase and sale of Company securities by directors, executives and employees is only permitted during the thirty day period
following the annual general meeting and the release of the half yearly and annual financial results to the market, unless prior
approval is given to each transaction by the Chairman.
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. The committee structure and membership is reviewed on an annual basis. All matters determined by committees are
submitted to the full Board as recommendations for Board decisions. Current committees of the Board are the following:
Audit Committee
The Audit Committee consists of Mr Ross Dobinson (Chairman) and Mr Leon Gorr. The Committee meets at least twice a year,
and has direct access to the Company’s auditors. The charter of the Audit Committee is:
•
•
•
to review and report to the Board on the annual report and financial statements, and to review the adequacy of external audit
arrangements, particularly the scope and quality of the audit.
to provide assurance to the Board that it is receiving adequate, up to date and reliable information;
to assist the Board in reviewing the effectiveness of the organisation’s internal control environment covering:
- effectiveness and efficiency of operations
- reliability of financial reporting
- compliance with applicable laws and regulations;
•
to assist the Board in the development and monitoring of risk management, statutory compliance and ethics programs.
Subsequent to the end of the financial year Dr Peter Jenkins joined the Audit Committee as an additional member.
Remuneration and Nomination Committee
At 30 June 2003 and until his retirement as a director on 6 August 2003 Mr Richard Oliver was Chairman of the Remuneration
and Nomination Committee. At the date of this report the Committee consisted of:
Mr Peter Bartels (Chairman) (from 6 August 2003)
Mr Ross Dobinson
15
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 16
Corporate Governance Statement cont.
The main responsibilities of the committee are to:
•
•
•
propose candidates for Board vacancies;
oversee board succession including the succession of the Chairman;
conduct annual reviews of Board membership having regard to present and future needs of the Company and make
recommendations on Board composition and appointments;
advise the Board on remuneration policies and practices generally,
•
• make specific recommendations on remuneration packages and other terms of employment for executive directors, other senior
executives and non-executive directors.
When the need for a new director is identified or an existing director is required to stand for re-election, the committee reviews the
range of skills, experience and expertise on the Board, identifies its needs and prepares a short-list of candidates with appropriate
skills and experience. Where necessary, advice is sought from independent search consultants.
Each member of the senior executive team has signed a formal employment contract covering a range of matters including their
duties, rights, responsibilities and any entitlements on termination. The standard contract refers to a specific formal position description.
Research Committee
This is a Committee of the Board of the controlled entity Starpharma Pty Ltd and consists of Dr Peter Jenkins (Chairman),
Prof Peter Colman and Dr John Raff. The charter of the Research Committee is:
•
•
to ensure that the Boards of Starpharma Pooled Development Limited and its controlled entities are kept fully informed of
developments relating to the Company's research activities and development progress against milestones; and
to advise the Board of Starpharma Pooled Development Limited on scientific matters in relation to the Company's continuous
disclosure obligations under the listing rules of the Australian Stock Exchange.
THE ENVIRONMENT, OCCUPATIONAL HEALTH AND SAFETY
The Board recognises the importance of environmental and occupational health and safety issues and is committed to the highest
levels of performance. The Company has adopted an Occupational Health and Safety (OH&S) Policy and has established an OH&S
Committee as part of its overall approach to workplace safety. This Committee meets regularly to ensure the development and
implementation of OH&S policy and procedures, and to ensure compliance with relevant legislation and guidelines.
The Chief Executive Officer is represented on the OH&S Committee by the Company Secretary.
CONTINUOUS DISCLOSURE
The Company Secretary has been appointed as the person responsible for communications with the Australian Stock Exchange
Limited (ASX). This person is also responsible for ensuring compliance with the continuous disclosure requirements in the ASX Listing
Rules and overseeing and co-ordinating information disclosure to the ASX, analysts, brokers, shareholders, the media and the public.
16
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 17
Contents
FINANCIAL REPORT 30 JUNE 2003
Statements of Financial Performance >18
Statements of Financial Position >19
Statements of Cash Flows >20
Notes to the Financial Statements >21
Directors’ Declaration >46
Independent Audit Report to the Members >47
Shareholder Information >48
This financial report covers both Starpharma Pooled Development Limited as an individual
entity and the consolidated entity consisting of Starpharma Pooled Development Limited
and its controlled entities.
Starpharma Pooled Development Limited is a company limited by shares, incorporated
and domiciled in Australia. Its registered office and principal place of business is:
Starpharma Pooled Development Limited
Level 6
Baker Heart Research Building
Commercial Road
Melbourne Victoria 3004
Australia
A description of the nature of the consolidated entity’s operations and its principal
activities is included in the directors’ report on pages 3-12.
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 18
Statements of Financial Performance
for the year ended 30 June 2003
CONSOLIDATED
PARENT ENTITY
NOTES
2003
$
2002
$
2003
$
2002
$
Revenue from ordinary activities
Administration expense
Research and development expense
Occupancy expense
Investment expense
Share of results of associates accounted
for using the equity method
Depreciation and amortisation
Borrowing costs expense
Other expense from ordinary activities
PROFIT(LOSS) FROM ORDINARY ACTIVITIES BEFORE TAX
Income tax attributable to ordinary activities
2
3
3
3
3
3
3
4
1,510,420
1,328,618
4,381,200
893,899
(2,026,347)
(5,713,405)
(439,175)
-
(2,837,138)
(6,227,723)
(14,836)
-
(240,137)
-
-
(9,107,660)
(966,621)
-
-
(17,860,494)
(230,530)
(604,642)
(15,529)
(25,513)
-
(173,372)
-
(34,838)
-
-
-
-
-
-
-
-
(7,544,721)
(7,959,289)
(4,966,597)
(17,933,216)
-
-
-
-
PROFIT (LOSS) FROM ORDINARY ACTIVITIES AFTER INCOME TAX
(7,544,721)
(7,959,289)
(4,966,597)
(17,933,216)
(Profit) Loss attributable to outside equity interest
18
(175,062)
53,158
-
-
NET PROFIT (LOSS) ATTRIBUTABLE TO MEMBERS OF
STARPHARMA POOLED DEVELOPMENT LTD
17
(7,719,783)
(7,906,131)
(4,966,597)
(17,933,216)
Basic Earnings/(Loss) per share
Diluted Earnings/(Loss) per share
30
30
CENTS
(8.68)
CENTS
(8.90)
(8.68)
(8.60)
The above statements of financial performance should be read in conjunction with the accompanying notes
18
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 19
Statements of Financial Position
as at 30 June 2003
ASSETS
CURRENT ASSETS
Cash assets
Receivables
Other
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Receivables
Property, plant and equipment
Investments accounted for using the equity method
Other financial assets
Other
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Payables
Provisions
Other
Interest-bearing liabilities
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Interest-bearing liabilities
TOTAL CURRENT LIABILITIES
CONSOLIDATED
PARENT ENTITY
NOTES
2003
$
2002
$
2003
$
2002
$
5
6.1
7.1
6.2
8
9
10
7.2
11
12
13
14.1
14.2
7,891,543
420,257
147,540
8,459,340
17,434,235
150,384
252,993
17,837,612
6,744,920
571,957
53,581
7,370,458
15,907,244
196,165
53,295
16,156,704
-
2,005,400
250,700
-
-
2,256,100
-
947,581
-
-
74,240
1,021,821
-
-
-
3,868,048
-
3,868,048
-
-
-
-
-
-
10,715,440
18,859,433
11,238,506
16,156,704
720,809
205,729
282,243
60,007
1,268,788
203,522
203,522
1,243,982
178,365
170,759
-
1,593,106
212,462
-
-
-
212,462
164,063
-
-
-
164,063
-
-
-
-
-
-
TOTAL LIABILITIES
1,472,310
1,593,106
212,462
164,063
NET ASSETS
EQUITY
9,243,130
17,266,327
11,026,044
15,992,641
Contributed Equity
Foreign currency translation reserve
Retained profits (Accumulated losses)
Outside Equity Interests In Controlled Entities
TOTAL EQUITY
15
16
17
18
33,034,058
(46,609)
(23,744,319)
-
9,243,130
33,034,058
-
(16,024,536)
256,805
17,266,327
33,034,058
-
(22,008,014)
-
11,026,044
33,034,058
-
(17,041,417)
-
15,992,641
The above statements of financial position should be read in conjunction with the accompanying notes.
19
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 20
Statements of Cash Flows
as at 30 June 2003
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from trade and other debtors
Grant income (Inclusive of GST)
Payments to suppliers and employees
(Inclusive of GST)
Interest received
Interest expense
NET CASH INFLOWS (OUTFLOWS) FROM
OPERATING ACTIVITIES
CONSOLIDATED
PARENT ENTITY
NOTES
2003
$
2002
$
125,086
948,285
1,057
880,109
2003
$
126
-
2002
$
-
-
(8,687,731)
646,677
(15,529)
(9,080,254)
888,419
-
(599,847)
599,275
-
(948,362)
829,223
-
23
(6,983,212)
(7,310,669)
(446)
(119,139)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments to acquire shares in subsidiaries
Loans advanced to subsidiaries
Cash eliminated on deconsolidation
Proceeds from sale of property, plant and equipment
Payments for property, plant and equipment
NET CASH INFLOWS (OUTFLOWS) FROM
INVESTING ACTIVITIES
5
-
-
(933,239)
40,411
(1,610,181)
-
-
-
-
(884,713)
(3,507,660)
(5,654,218)
-
-
-
(7,860,488)
-
-
-
-
(2,503,009)
(884,713)
(9,161,878)
(7,860,488)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Payments on finance leases
Share issue transaction costs
NET CASH INFLOWS (OUTFLOWS) FROM
FINANCING ACTIVITIES
-
(56,471)
-
242,151
-
(25,000)
(56,471)
217,151
-
-
-
-
-
-
-
-
NET INCREASE (DECREASE) IN CASH HELD
CASH AT THE BEGINNING OF THE FINANCIAL YEAR
(9,542,692)
17,434,235
(7,978,231)
25,412,466
(9,162,324)
15,907,244
(7,979,627)
23,886,871
CASH AT THE END OF THE FINANCIAL YEAR
Non-cash financing activities
5
27
7,891,543
17,434,235
6,744,920
15,907,244
The above statements of cash flows should be read in conjunction with the accompanying notes.
20
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 21
Notes to the Financial Statements
for the year ended 30 June 2003
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This general purpose financial report has been prepared in accordance with Accounting Standards, other authoritative pronouncements
of the Australian Accounting Standards Board, Urgent Issues Group Consensus Views and the Corporations Act 2001.
It is prepared in accordance with the historical cost convention. The accounting policies adopted are consistent with those of the
previous year. Comparative information is reclassified where appropriate to enhance comparability.
(a) Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all entities controlled by Starpharma Pooled
Development Limited (‘the Company’ or ‘Parent Entity’) as at 30 June 2003 and the results of all controlled entities for the year
then ended. Starpharma Pooled Development Limited and its controlled entities together are referred to in this financial report as
the consolidated entity. The effects of all transactions between entities in the consolidated entity are eliminated in full.
Where control of an entity ceases during the financial year, its results are included for that part of the year during which control
existed.
Investments in associates are accounted for in the consolidated financial statements using the equity method. Under this method,
the consolidated entity’s share of the post-acquisition losses of its associate is recognised in the consolidated statement of
financial performance, and its share of post-acquisition movements in reserves is recognised in consolidated reserves.
The cumulative post-acquisition movements are adjusted against the cost of the investment. Associates are those entities over
which the consolidated entity exercises significant influence, but not control.
(b) Income tax
Tax effect accounting procedures are followed whereby the income tax expense in the statement of financial performance
is matched with the accounting profit or loss after allowing for permanent differences. The future tax benefit relating to tax losses
is not carried forward unless the benefit is virtually certain of realisation.
(c) Receivables
The debtors comprise grants receivable, amounts due from related and sundry parties and they are recognised as they are due
for settlement.
(d) Acquisition of assets
The cost method of accounting is used for all acquisitions regardless of whether shares or other assets are acquired. Cost is
determined as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus
incidental costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the value of the
instruments is their market price as at the acquisition date, unless the notional price at which they could be placed in the market
is a better indicator of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.
(e) Revenue recognition
Amounts disclosed as revenue are payments under the Federal Government R&D START grant, interest income on short term
deposits and sundry items. Revenue is recognised for the major business activities as follows:
21
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 22
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
(i) Grant Funding
Grant funding is provided under the consolidated entity’s agreements with the Commonwealth of Australia.
Grant funding is capped and equivalent to 50% of the consolidated entity’s spend on eligible research.
Grant revenue is recognised when eligible research expenditure has been incurred.
(f) Recoverable amount of non-current assets
The recoverable amount of an asset is the net amount expected to be recovered through the net cash inflows arising from its
continued use and subsequent disposal. Where the carrying amount of a non-current asset is greater than its recoverable
amount, the asset is revalued to its recoverable amount. The decrement in the carrying amount is recognised as an expense in
the statement of financial performance in the reporting period in which the recoverable amount write down occurs.
In assessing recoverable amounts the relevant cash flows have not been discounted to their present value.
(g) Depreciation and amortisation of property, plant and equipment
Depreciation is calculated on a straight line basis to write off the net cost of each item of property, plant and equipment over its
expected useful life to the consolidated entity. The expected useful life of items of property, plant and equipment ranges from
4 to 8 years.
(h) Leasehold Improvements
The costs of improvements to or on leasehold properties is amortised over the unexpired period of the lease or the estimated
useful life of the improvement to the consolidated entity, whichever is the shorter. Leasehold improvements held at the reporting
date are being amortised over 6 years.
(i) Employee entitlements
(i) Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be
settled within 12 months of the reporting date are recognised in respect to employees’ services up to the reporting date, and
are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave
are recognised when the leave is taken and measured at the rates paid or payable.
(ii) Superannuation
The consolidated entity contributes to employee superannuation on the basis of legal and contractual requirements.
(iii) Long Service Leave
The liability for long service leave expected to be settled within 12 months of the reporting date is recognised in the provision
for employee entitlements, and is measured in accordance with (i) above. A liability for long service leave expected to be
settled more than 12 months from the reporting date is recognised in the provision for employee entitlements, and is
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 interest rates on national government guaranteed
securities with terms to maturity that match, as closely as possible, the estimated future cash outflows.
(iv) Equity based compensation plans
Equity based compensation benefits are provided in relation to the Starpharma Pooled Development Limited Employee Share
Option Plan (‘ESOP’). Information relating to this plan is set out in note 29.
22
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 23
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
No accounting entries are made in relation to the ESOP until options are exercised, at which time the amounts receivable from
employees are recognised in the statement of financial position as share capital.
Directors’ remuneration disclosed in the Financial Statements has been calculated in accordance with UIG Abstract 14
Directors’ Remuneration. In particular, remuneration excludes monetary amounts for options granted on the basis that the
granting does not involve a cost to the entity. This basis of calculation differs from the remuneration disclosed in the
Directors’ Report due to the requirement of ASIC Practice Note 68 to value options granted to directors and executives
and to include this value in the determination of executives and directors’ remuneration disclosed in the Directors’ Report.
(j) Research expenditure
Research expenditure is charged against income when incurred except where future benefits are expected beyond any
reasonable doubt to exceed those costs, in which case they are deferred and amortised over future periods on a basis related to
expected future benefits.
(k) Trade and other creditors
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial
year which are unpaid. These amounts are unsecured and are paid in accordance with supplier terms.
(l) Cash
For the purpose of the statements of cash flows, cash includes deposits at call which are readily convertible to cash on hand
and are subject to an insignificant risk of changes in value.
(m) Transaction costs arising in relation to the issue of equity
Transaction costs in relation to the future issue of equity are deferred and recognised directly as a reduction against the proceeds
of the future capital raising to which they relate.
(n) Investments
Investments in controlled entities and associates are accounted for in the consolidated financial statements in the manner set out
in Note 1(a).
(o) Earnings per share
(i) Basic Earnings per Share
Basic Earnings per share is determined by dividing the net loss after income tax attributable to members of the company,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.
(ii) Diluted Earnings per Share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive ordinary shares and the weighted
average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
(p) Foreign Currency Translation
As the foreign associated entity is self-sustaining, its assets and liabilities are translated into Australian currency at rates of
exchange current at balance date, while its revenues and expenses are translated at the average of rates ruling during the year.
Exchange differences arising on translation are taken to the foreign currency translation reserve.
23
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 24
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
Upon disposal or partial disposal of a self-sustaining foreign operation, the balance of the foreign currency translation reserve relating
to the operation, or to the part disposed of, is transferred to retained profits.
(q) Web Site Costs
Costs in relation to web sites controlled by a controlled entity are charged as expenses in the period in which they are incurred
unless they relate to the acquisition of an asset, in which case they are capitalised and amortised over the period of expected
benefit. As at the reporting date, all costs relating to web site development and maintenance for the controlled entities have been
expensed.
(r) Leased Non-Current Assets
A distinction is made between finance leases which effectively transfer from the lessor to the lessee substantially all the risks
and benefits incident to ownership of leased non-current assets, and operating leases under which the lessor effectively retains
substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the present value of minimum lease payments.
Lease payments are allocated between the principal component of the lease liability and the interest expense.
The lease asset is amortised on a straight line basis over the term of the lease, or where it is likely that the consolidated entity
will obtain ownership of the asset, the life of the asset. Lease assets held at the reporting date are being amortised over a period
of 5 years.
Other operating lease payments are charged to the statement of financial performance in the periods in which they are incurred,
as this represents the pattern of benefits derived from the leased assets.
(s) Borrowing Costs
Borrowing costs are recognised as expenses in the period in which they are incurred.
Borrowing costs include finance lease charges.
NOTE 2: REVENUE
CONSOLIDATED
PARENT ENTITY
2003
$
2002
$
2003
$
2002
$
839,251
558,674
-
40,411
72,084
1,510,420
383,646
943,915
-
-
1,057
1,328,618
-
513,026
3,868,048
-
126
4,381,200
-
893,899
-
-
-
893,899
REVENUE FROM OPERATING ACTIVITIES
Government grants
Interest revenue
Proceeds on sale of investments
Proceeds on sale of property, plant and equipment
Other
24
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 25
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
NOTE 3: LOSS FROM ORDINARY ACTIVITIES
(i) Net gains and expenses
Loss from ordinary activities before income tax
expense includes the following items:
NET GAINS
Gain on sale of property plant and equipment
Gain on sale of investment in controlled entity
The parent entity’s gain on sale of its investment in a
controlled entity includes the following revenue
and expense items:
Proceeds on sale of investment
Expense – carrying value of investment sold
Gain on sale of investment
EXPENSES
Depreciation (plant & equipment)
Amortisation (plant & equipment under finance lease)
Research and development expense
Rental expense on operating leases
Foreign exchange gain (loss)
Doubtful debts
Borrowing costs
Write down of investments in controlled entities
to recoverable amount
(ii) Share of results of associates accounted
for using the equity method
Gain on deconsolidation
Equity accounted loss
(iii) Auditors' remuneration
During the year the auditor of the parent entity
earned the following remuneration:
Audit or review of financial reports of the entity
or any entity in the consolidated entity
Taxation services, other support
CONSOLIDATED
PARENT ENTITY
2003
$
2002
$
2003
$
2002
$
14,898
-
-
-
-
1,360,388
3,868,048
(2,507,660)
1,360,388
-
-
-
-
35,424
5,600,000
-
540,642
64,000
5,713,405
424,742
35,647
-
15,529
173,372
-
6,227,723
284,596
7,395
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
17,860,494
3,340,209
(3,570,739)
(230,530)
-
-
-
-
-
-
-
-
-
70,950
52,046
77,124
44,229
70,950
52,046
77,124
44,229
25
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 26
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
NOTE 4: INCOME TAX
The income tax expense for the financial year differs from the amount calculated on the operating profit/(loss).
The differences are reconciled as follows:
CONSOLIDATED
PARENT ENTITY
2003
$
2002
$
2003
$
2002
$
(7,544,721)
(2,263,416)
(7,959,289)
(2,387,787)
(4,966,597)
(1,489,979)
(17,933,216)
(5,379,965)
Loss from ordinary activities before income tax
Income tax expense/(benefit) @ 30% (2002: 30%)
Tax effect of permanent differences:
Entertainment
Research and development allowance
Write down in carrying value of investments
Gain on sale of controlled entity
Gain on deconsolidation
Equity accounted loss
Write down in carrying value of loans
Other
650
(263,335)
-
-
(1,002,063)
1,071,222
-
-
3,777
(183,390)
-
-
-
-
-
6,663
INCOME TAX EXPENSE/(BENEFIT) ADJUSTED
FOR PERMANENT DIFFERENCES
Under/(over) provision arising in prior year
Less loss transferred to controlling entity
Future income tax benefits written off/not brought to account
Income tax expense/(benefit) attributable to operating profit/loss
(2,456,942)
-
-
2,456,942
-
(2,560,737)
2,291
-
2,558,446
-
-
-
300,000
(408,116)
-
-
1,680,000
-
81,905
-
(81,905)
-
-
-
-
5,358,148
-
-
-
-
6,633
(15,184)
-
-
15,184
-
FRANKING CREDITS AVAILABLE
Franking credits available for subsequent financial years
-
-
-
-
Tax consolidation legislation
As Starpharma Pooled Development Ltd is a Pooled Development Fund, the Company and its wholly owned subsidiaries are unable to
form a consolidated group for tax purposes. As a result, subsequent to 30 June 2003, the entities within the wholly owned group will
be unable to transfer tax losses to other entities within the group and accumulated tax losses as at that date will only be able to be
utilised by the entity which incurred them.
Future income tax benefits
Potential future income tax benefits of $6,212,924 (2002: $4,949,705) attributable to tax losses carried forward by controlled
entities have not been brought to account at balance date because the directors do not believe it appropriate to regard the realisation
of the future income tax benefits as virtually certain.
26
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 27
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
These benefits will only be obtained if:
i.
each controlled entity individually derives future assessable income of a nature and of an amount sufficient to enable the benefit
from the deduction of its own carry forward losses to be realised; and
each entity continues to comply with the conditions for deductibility imposed by the law; and
ii.
iii. no changes in tax legislation adversely affect the relevant entity in realising the benefit from the deductions for the loss.
NOTE 5: CURRENT ASSETS - CASH ASSETS
Cash at bank and on hand
Deposits at call
CONSOLIDATED
PARENT ENTITY
2003
$
2002
$
2003
$
2002
$
1,444,750
6,446,793
7,891,543
3,965,225
13,469,010
17,434,235
298,127
6,446,793
6,744,920
2,438,234
13,469,010
15,907,244
Balance of cash as shown in the statements
of cash flows
7,891,543
17,434,235
6,744,920
15,907,244
Deposits at call
The deposits are bearing floating interest rates of 4.75% (2002: 4.77%).
Cash eliminated on deconsolidation
As at 27 March 2003, the then controlled entity, DNT Limited had cash assets of $933,239. The loss of control of DNT Limited
on that date resulted in the consolidated entity having to eliminate this cash balance on deconsolidation.
NOTE 6.1: CURRENT ASSETS - RECEIVABLES
Interest receivable
Loans receivable from:
- controlled entities
- associates
Other receivables
CONSOLIDATED
PARENT ENTITY
2003
$
2002
$
2003
$
2002
$
23,047
111,050
20,804
107,053
-
299,805
97,405
420,257
-
-
39,334
150,384
251,348
299,805
-
571,957
39,872
49,240
-
196,165
Other receivables
The receivables comprise sundry debtors and are subject to normal terms of settlement within 60 days.
27
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 28
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
NOTE 6.2: NON-CURRENT ASSETS - RECEIVABLES
Loans to controlled entities
Provision for doubtful debts
NOTE 7.1: CURRENT ASSETS - OTHER
Prepayments
GST Claimable
Future Rental Benefit
NOTE 7.2: NON-CURRENT ASSETS - OTHER
Deferred costs of future capital raising
CONSOLIDATED
PARENT ENTITY
2003
2002
$
-
-
-
$
-
-
-
2003
$
5,600,000
(5,600,000)
-
CONSOLIDATED
PARENT ENTITY
2003
$
80,545
66,995
-
147,540
2002
$
47,492
137,690
67,811
252,993
2003
$
45,833
7,748
-
53,581
2002
$
-
-
-
2002
$
29,600
23,695
-
53,295
CONSOLIDATED
PARENT ENTITY
2003
$
-
2002
$
74,240
2003
2002
$
-
$
-
NOTE 8: NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT
Plant and equipment (at cost)
Less: Accumulated depreciation
Plant and equipment under finance lease
Less: Accumulated amortisation
28
CONSOLIDATED
PARENT ENTITY
2003
$
2002
$
2,418,301
(668,901)
1,749,400
320,000
(64,000)
256,000
2,005,400
1,206,961
(259,380)
947,581
-
-
-
947,581
2003
2002
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 29
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
Reconciliations
Reconciliations of the carrying amounts of plant & equipment at the beginning and end of the current financial year are set out below.
Consolidated
Carrying amount at 1 July
Additions
Disposals
Depreciation and amortisation
Elimination on Deconsolidation
Carrying amount at 30 June
PLANT & EQUIPMENT
2003
$
2002
$
947,581
1,930,181
(25,513)
(604,642)
(242,207)
2,005,400
236,240
884,713
-
(173,372)
-
947,581
NOTE 9: NON-CURRENT ASSETS - INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Shares in associated entities
Shares in associates
Investments in associates are accounted for in the consolidated
financial statements using the equity method of accounting
and are carried at cost by the parent entity (see Note 10).
Movements in the carrying amounts of investments
in associates
Carrying amount at the beginning of the financial year
Acquisition of investment in associates – 27 March 2003
Share of losses from ordinary activities after income tax
Foreign currency reserve (note 16)
Carrying amount at the end of the financial year
CONSOLIDATED
2003
$
250,700
2002
$
-
CONSOLIDATED
2003
$
2002
$
-
3,868,048
(3,570,739)
(46,609)
250,700
-
-
-
-
-
29
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 30
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
NOTE 10: NON-CURRENT ASSETS - OTHER FINANCIAL ASSETS
Non-traded Investments
Shares in controlled entities – at cost
Provision for diminution in value
Shares in associated entities – at cost
CONSOLIDATED
PARENT ENTITY
2003
2002
$
-
-
-
-
$
-
-
-
-
2003
$
2002
$
17,500,106
(17,500,106)
3,868,048
3,868,048
17,860,494
(17,860,494)
-
-
At 30 June 2003, directors undertook to assess the recoverable amount of the parent entity's investments in its subsidiaries. Each
subsidiary has a value which is directly linked to the potential cash flows which may be derived from the outcome of their respective
research and development activities. At 30 June 2003, directors have assessed that there is not sufficient certainty with respect to
those potential future cash flows to warrant the deferral of research and development expenditure (the recovery of which is not assured
beyond reasonable doubt) and similarly, to support the carrying value of the parent entity's investments in its subsidiaries. As a result
the carrying value of the parent entity's investments in its subsidiaries has been written down to nil as at 30 June 2003.
NOTE 11: CURRENT LIABILITIES – PAYABLES
Trade creditors
Loans payable to:
- controlled entities
GST Payable
CONSOLIDATED
PARENT ENTITY
2003
$
2002
$
2003
$
2002
$
669,586
1,208,041
104,544
164,063
-
51,223
720,809
-
35,941
1,243,982
107,918
-
212,462
-
-
164,063
NOTE 12: CURRENT LIABILITIES – PROVISIONS
Employee entitlements
205,729
178,365
2003
$
2002
$
2003
2002
$
-
$
-
CONSOLIDATED
PARENT ENTITY
30
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 31
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
NOTE 13: CURRENT LIABILITIES - OTHER
Deferred Grant Income
282,243
170,759
2003
$
2002
$
2003
2002
$
-
$
-
CONSOLIDATED
PARENT ENTITY
NOTE 14.1: INTEREST-BEARING LIABILITIES
Finance lease liability (secured)
NOTE 14.2: INTEREST-BEARING LIABILITIES
Finance lease liability (secured)
NOTE 15: CONTRIBUTED EQUITY
CONSOLIDATED
PARENT ENTITY
2003
$
60,007
2002
2003
2002
$
-
$
-
$
-
CONSOLIDATED
PARENT ENTITY
2003
$
203,522
2002
2003
2002
$
-
$
-
$
-
PARENT ENTITY
PARENT ENTITY
2003
SHARES
2002
SHARES
2003
$
2002
$
(a) Share Capital
Ordinary shares - fully paid
88,900,000
88,900,000
33,034,058
33,034,058
Former share premium account included in equity
2,500,000
2,500,000
31
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 32
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
(b) Movements in ordinary contributed capital of the company during the past two years were as follows:
DATE
DETAILS
NUMBER OF SHARES
30 June 2001
30 June 2003
Balance
Movement
Balance
88,900,000
-
88,900,000
$
33,034,058
-
33,034,058
Share rights
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.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote,
and upon a poll each share is entitled to one vote.
As at 30 June 2003 there were 88,900,000 issued ordinary shares.
Options
Information relating to the Starpharma Pooled Development Limited Employee Share Option Plan, including details of options issued,
exercised and expired during the financial year and options outstanding at the end of the financial year are set out in Note 22 and 29.
NOTE 16: RESERVES
Foreign currency translation reserve
Foreign currency translation reserve
Balance 1 July 2002
Net exchange differences on translation of
results of associated entity
Balance 30 June 2003
CONSOLIDATED
PARENT ENTITY
2003
$
(46,609)
-
(46,609)
(46,609)
2002
2003
2002
$
-
-
-
-
$
-
-
-
-
$
-
-
-
-
Exchange differences arising on translation of the foreign controlled entity are taken to the foreign currency translation reserve,
as described in note 1(p).
32
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 33
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
NOTE 17: RETAINED PROFITS (ACCUMULATED LOSSES)
CONSOLIDATED
PARENT ENTITY
2003
$
2002
$
2003
$
2002
$
Retained profits (accumulated losses) at beginning of the year
Net profit (loss) for the year
Retained profits (accumulated losses) at end of the year
(16,024,536)
(7,719,783)
(23,744,319)
(8,118,405)
(7,906,131)
(16,024,536)
(17,041,417)
(4,966,597)
(22,008,014)
891,799
(17,933,216)
(17,041,417)
NOTE 18: OUTSIDE EQUITY INTERESTS IN CONTROLLED ENTITIES
INTERESTS IN:
CONSOLIDATED
2003
Share Capital
Reserves
Retained Profits
OUTSIDE EQUITY INTEREST IN CONTROLLED ENTITIES
$
-
-
-
-
2002
$
309,963
-
(53,158)
256,805
PARENT ENTITY
2003
2002
$
-
-
-
-
$
-
-
-
-
Following the loss of control of DNT Limited on 27 March 2003, as at 30 June 2003, outside equity interests have no claim on share
capital, reserves of profits/(losses).
NOTE 19: COMMITMENTS FOR EXPENDITURE
Operating Lease commitments
Commitments in relation to leases contracted for at the reporting date but not recognised as liabilities, payable:
Not later than one year
Later than one year and not later than five years
Later than five years
Representing cancellable operating leases
CONSOLIDATED
PARENT ENTITY
2003
$
286,226
353,659
-
639,885
2002
$
288,548
477,850
-
766,398
2003
2002
$
-
-
-
-
$
-
-
-
-
33
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 34
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
Finance Lease commitments
Commitments in relation to finance leases are payable as follows:
Not later than one year
Later than one year and not later than five years
Less: Future finance charges
Representing finance lease liabilities
Current (Note 14.1)
Non-Current (Note 14.2)
NOTE 20: CONTROLLED AND ASSOCIATED ENTITIES
Investments in Controlled Entities
CONSOLIDATED
PARENT ENTITY
2003
$
72,000
216,000
(24,471)
263,529
60,007
203,522
263,529
2002
2003
2002
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
COUNTRY
OF INCORPORATION
CLASS OF
SHARES
2003
EQUITY HOLDING
2002
EQUITY HOLDING
COST OF PARENT COST OF PARENT
ENTITY'S
HOLDING
INVESTMENT 2003 INVESTMENT 2002
ENTITY'S
HOLDING
Starpharma Pty. Limited
Angiostar Pty. Limited
Viralstar Pty. Limited
Preclin Pty. Limited
Dendritic Nanotechnologies
Pty. Limited
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Australia
Ordinary
100%
100%
100%
100%
-
100%
100%
100%
100%
55%
9,900,001
3,300,005
4,300,000
100
8,900,001
3,300,005
4,300,000
100
-
17,500,106
1,360,388
17,860,494
Investments in Associated Entities
COUNTRY
OF INCORPORATION
CLASS OF
SHARES
2003
EQUITY HOLDING
2002
EQUITY HOLDING
COST OF PARENT COST OF PARENT
ENTITY'S
HOLDING
INVESTMENT 2003 INVESTMENT 2002
ENTITY'S
HOLDING
Dendritic Nanotechnologies Inc. USA
Ordinary
49.99%
-
3,868,048
-
Loss of Control of Dendritic Nanotechnologies Ltd
On 27th March 2003 the controlled entity Dendritic Nanotechnologies Ltd (“DNT Ltd”) became a wholly owned subsidiary of the US
entity Dendritic Nanotechnologies Inc. (“DNT Inc”). The Company acquired 49.99% of the issued shares in DNT Inc in exchange for its
shares in DNT Ltd. The revenues and expenses of DNT Ltd have been included in the consolidated results from the beginning of the
current period until 27th March 2003. The Directors of the Company have resolved that control in DNT Ltd ceased on 27th March
2003 and that the accounts of DNT Ltd and DNT Inc be excluded from the consolidated accounts from that date.
34
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 35
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
NOTE 21: REMUNERATION OF DIRECTORS
DIRECTORS OF ENTITIES DIRECTORS OF
IN THE ECONOMIC ENTITY
PARENT ENTITY
2003
$
2002
$
2003
$
2002
$
Income paid or payable, or otherwise made available, to directors
of entities in the consolidated entity in connection with
the management of affairs of the parent entity
or its controlled entities
425,639
416,228
425,639
416,228
The numbers of parent entity directors whose total income from the parent entity or related parties was within the specified bands
are as follows:
$
20,000
30,000
280,000
290,000
$
- 29,999
- 39,999
- 289,999
- 299,999
2003
4
1
-
1
2002
4
1
1
-
The amounts disclosed as remuneration for directors in this note do not include the assessed fair value of options at the date they
were granted to directors.
NOTE 22: REMUNERATION OF EXECUTIVES
Remuneration received, or due and receivable from entities
in the consolidated entity and related parties by Australian based
executive officers (including directors) whose remuneration was
at least $100,000:
Executive officers of the parent entity
Executive officers of other entities in the consolidated entity
EXECUTIVE OFFICERS OF THE EXECUTIVE OFFICERS
CONSOLIDATED ENTITY
OF THE PARENT ENTITY
2003
$
2002
$
2003
$
2002
$
629,805
231,590
861,395
565,259
275,919
841,178
629,805
-
629,805
565,259
-
565,259
35
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 36
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
The numbers of Australian based executive officers (including directors) whose remuneration from entities in the consolidated entity
and related parties was within the specified bands are as follows:
110,000 - 119,999
120,000 - 129,999
140,000 - 149,999
150,000 - 159,999
190,000 - 199,999
280,000 - 289,999
290,000 - 299,999
EXECUTIVE OFFICERS OF THE EXECUTIVE OFFICERS
CONSOLIDATED ENTITY
OF THE PARENT ENTITY
2003
2002
2003
2002
$
2
-
1
-
1
-
1
$
1
1
-
2
-
1
-
$
-
-
1
-
1
-
1
$
-
1
-
1
-
1
-
Options are granted to executive officers under the Starpharma Pooled Development Limited Executive and Employee Share Option
Plan, details of which are set out in Note 29.
A summary of options granted and exercised by Australian based executive officers (with income of at least $100,000)
during the year ended 30 June 2003 is set out below.
OUTSTANDING
GRANTED NEW MEMBERS
EXPIRED OUTSTANDING
30 JUNE 2002
OF EXEC. TEAM
30 JUNE 2003
Australian based executive officers
of the parent entity
1,180,000
-
40,000
880,000
340,000
The amounts disclosed as remuneration of executive officers in this note do not include the assessed fair value of the options at the
date they were granted to executive officers
36
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 37
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
NOTE 23: CASH FLOW INFORMATION
Reconciliation of net cash flows from operating activities to operating profit/(loss) after income tax
Operating profit/(loss) after income tax:
Depreciation and amortisation:
Change in operating assets and liabilities, net of
effects of acquisitions and disposals of entities
(Increase) decrease in receivables and other
assets
Increase (decrease) in trade creditors
Increase (decrease) in employee provisions
Increase (decrease) in deferred income
Gain (loss) on deconsolidation
Gain on sale of property, plant and equipment
Gain on sale of investment
Provision for doubtful debts
Write down of investments in controlled entities
Net cash inflows/(outflows) from operating activities
CONSOLIDATED
PARENT ENTITY
2003
$
2002
$
2003
$
2002
$
(7,544,721)
604,642
(7,959,289)
173,372
(4,966,597)
-
(17,933,216)
-
86,435
(484,048)
27,364
111,484
230,530
(14,898)
-
-
-
(6,983,212)
41,183
149,809
113,497
170,759
-
-
-
-
-
(7,310,669)
(213,842)
(59,619)
-
-
-
-
(1,360,388)
5,600,000
1,000,000
(446)
(202,175)
155,758
-
-
-
-
-
-
17,860,494
(119,139)
NOTE 24: EVENTS SUBSEQUENT TO BALANCE DATE
Success of US FDA Application for Human Trials of VivaGel
On 31st July 2003 the Company announced that it had gained clearance to proceed with human clinical trials of a new dendrimer
nano-drug product - VivaGel - which has been developed to be used as a preventative against the transmision of HIV during sexual
intercourse.
New Chairman
On 6th August 2003 the Company announced the appointment of Mr Peter T. Bartels as a Director and Chairman of the Board,
to replace Mr Richard Oliver who retired on that date.
Share Placement
On 10th September 2003 the Company announced the placement of 13,335,000 new shares at $0.52 per share to Australian
institutional and sophisticated investors, raising $6.9 million before issue expenses.
Alliance with IDT Ltd to Conduct Human Trials
On 16th September 2003 the Company announced the signing of a clinical trial agreement with Victorian-based company, Institute of
Drug Technology Australia Limited (IDT) for IDT to conduct Phase I human clinical trials on Starpharma’s vaginal microbicide SPL7013
gel (VivaGel) at CMAX, their Adelaide based clinical trial unit.
37
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 38
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
AGT Biosciences and Starpharma Announce Collaboration to Develop New Drug Therapies For Type 2 Diabetes
On 18th September 2003 the Company made a joint announcement with AGT Biosciences Ltd that the companies have agreed
to collaborate in the development of drug therapies for Type 2 Diabetes.
NOTE 25: RELATED PARTIES
Directors
The names of persons who were directors of Starpharma Pooled Development Limited at any time during the financial year are as
follows: P M Colman, R Dobinson, L Gorr, P J Jenkins, R J D Oliver and J W Raff. All of these persons were also directors during the
year ended 30 June 2002.
Details of directors’ remuneration are set out in Note 21.
Transactions of Directors and Director-related entities concerning shares or share options
Aggregate numbers of shares of Starpharma Pooled Development Limited issued to and held directly, indirectly or beneficially by
directors of the Company or the economic entity or their director-related entities at balance date:
ACQUISITIONS
Ordinary shares
Options over ordinary shares
DISPOSALS
Ordinary shares
Options over ordinary shares
EXPIRY
Options over ordinary shares
CURRENTLY HELD
Ordinary shares
Options over ordinary shares
2003
2002
NUMBER
NUMBER
203,000
-
310,800
-
55,000
-
70,500
-
2,080,000
-
27,427,652
-
27,535,452
2,080,000
Other transactions with Directors and Director-related Entities
A director, Prof P M Colman is a Director of The Biomolecular Research Institute Limited, which provides some administrative services
to the consolidated entity. All such dealings with the consolidated entity are in the ordinary course of business and on normal terms
and conditions.
A director, Mr R Dobinson is a director of the company, TSL Group Limited which renders consulting services to the consolidated
entity. All such dealings with the consolidated entity are in the ordinary course of business and on normal terms and conditions.
A director, Mr L Gorr is a partner of the firm, Herbert Geer & Rundle, which renders legal services to the consolidated entity.
All such dealings with the consolidated entity are in the ordinary course of business and on normal terms and conditions.
38
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 39
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
Aggregate amounts of each of the above types of transactions with Directors and their Director-related entities are:
Contract research and research management services
Administrative Services
Consulting services
Legal fees
CONSOLIDATED
PARENT ENTITY
2003
$
-
46,880
41,643
15,070
2002
$
-
90,950
7,205
-
2003
2002
$
-
-
-
-
$
-
-
-
-
A director of the previously controlled subsidiary Dendritic Nanotechnologies Limited, Dr. Donald Tomalia, has provided consulting
services to the consolidated entity during the year ended 30 June 2003. In addition, Donald Tomalia entered into intellectual property
license deeds with DNT on 21 June 2002 under which DNT has obtained a licence to exploit the rights to 33 patent families involving
182 granted patents worldwide, related to dendrimers and dendritic polymers. In consideration for the acquisition of this right,
Donald Tomalia received a lump sum payment of $US100,000 on 21 June 2002 and will receive royalty payments of $US10,833
per month for so long as the agreement, at the parties discretion, remains in force. These royalty payments amounted to $172,014
during 2003. All such dealings with the consolidated entity are in the ordinary course of business and on normal terms and conditions.
Consulting fees
IP licence charges
CONSOLIDATED
2003
$
2002
$
31,444
172,014
168,932
177,399
Apart from the above no director has entered into a material contract with the consolidated entity since the end of the previous
financial year and there were no material contracts involving directors’ interests subsisting at year end.
Wholly owned group
The wholly-owned group consists of Starpharma Pooled Development Limited and its wholly-owned controlled entities, Angiostar Pty.
Limited, Starpharma Pty. Limited, Viralstar Pty. Limited and Preclin Pty. Limited. Ownership interests in these controlled entities
are set out in note 20.
Transactions between Starpharma Pooled Development Limited and other entities in the wholly-owned group during the years ended
30 June 2003 and 2002 consisted of:
•
•
loans advanced by Starpharma Pooled Development Limited;
loans repaid to Starpharma Pooled Development Limited;
The above transactions were made on normal commercial terms and conditions. However, there are no fixed terms for the repayment
of principle on loans advanced by Starpharma Pooled Development Limited.
The aggregate amount receivable by the parent entity from entities in the wholly-owned group at balance date is $5,851,348
(2002: $39,872).
39
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 40
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
The aggregate amount payable by the parent entity to entities in the wholly owned group at balance date is $107,918 (2002: $nil).
The parent entity has accounted for a doubtful debt provision of $5,600,000 (refer note 3) attributable to receivables from controlled
entities and has written down the carrying value of its investments in its wholly owned subsidiaries to nil. The investment write down
for 2003 is $1,000,000 (note 3).
Controlling entity
The ultimate parent entity in the wholly owned group is Starpharma Pooled Development Limited.
Associates
The aggregate amount receivable by the parent entity from associated entities at balance date is $299,805.
NOTE 26: FINANCIAL INSTRUMENTS
(a) Credit risk exposures
The credit risk on the financial assets of the company and consolidated entity which have been recognised on the balance sheet
is generally the carrying amount of those financial assets net of any provisions where raised.
(b) Interest rate risk
The Company’s and consolidated entity’s exposure to interest rate risk is limited to that exposure which arises from the holding of
cash balances and bills of exchange. Interest is earned on cash balances at the prevailing floating rate, which at 30 June 2003
was between 4.70% and 4.75% (2002: between 3% and 4.4%) and on bills of exchange at 4.75% (2002: 4.77%).
Cash balances are at call and bills of exchange have a maturity of no more than 60 days. The finance lease on property plant
and equipment has an implicit interest rate of 6.26%. All other financial assets and liabilities are non interest bearing.
(c) Carrying amounts and net fair values of financial asset and liabilities
The Company’s and the consolidated entity’s balance sheet reflect net assets. All balances stated in these balance sheets are,
respectively, considered to form part of the company’s and the consolidated entity’s net financial assets and liabilities with the
exception of property, plant and equipment assets, other receivables, employee entitlement liabilities and investments in
subsidiary companies (where included therein).
The carrying value of financial assets and liabilities as stated in the company’s and consolidated entity’s balance sheets
is equivalent to the net fair value of those financial assets and liabilities.
NOTE 27: NON-CASH FINANCING ACTIVITIES
Acquisition of plant and equipment by means of finance leases
320,000
2003
$
2002
2003
2002
$
-
$
-
$
-
CONSOLIDATED
PARENT ENTITY
40
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 41
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
NOTE 28: SEGMENT INFORMATION
The consolidated entity operates in the following business segments:
•
Virology – development and commercialisation of dendrimers for prevention and treatment of virus diseases, particularly sexually
transmitted diseases.
Angiogenesis – development and commercialisation of dendrimers that inhibit angiogenesis.
•
• Other Pharmaceuticals – development of dendrimers with novel pharmaceutical activity.
• Dendritic Nanotechnologies – development and commercialisation of dendrimers and dendritic polymer compounds with
applications including pharmaceutical, drug delivery and other potential applications across a broad range of industry sectors.
Although the consolidated entity’s business segments are managed from Australia, they operate in two main geographical locations
– Australia and United States of America. Dendritic Nanotechnologies Limited has its operations in the USA and all other operations
of the consolidated entity operate in Australia.
Segment Information for Year Ending 30 June 2003
PRIMARY BASIS –
VIROLOGY
ANGIOGENESIS
OTHER
DENDRITIC
UNALLOCATED
CONSOLIDATED
BUSINESS SEGMENTS
PHARMACEUTICALS NANOTECHNOLOGIES
TOTAL
REVENUE
External Revenue
Total Segment Revenue
SEGMENT RESULT
Profit/(Loss) from Ordinary
Activities before Income Tax
DEPRECIATION
& AMORTISATION
Depreciation
LIABILITIES
Total Segment Liabilities
ASSETS
Total Segment Assets
SEGMENT ASSETS
ACQUIRED DURING
THE REPORTING PERIOD
Property, Plant & Equipment
Investments in Associates
134,700
134,700
704,551
704,551
-
-
77,627
77,627
568,029
568,029
1,484,907
1,484,907
(3,216,985)
(966,975)
(1,689,574)
(2,118,634)
272,385
(7,719,783)
214,588
214,588
53,647
68,171
53,648
604,642
-
282,243
-
4,437,793
4,437,793
1,109,448
-
-
1,190,067
1,472,310
730,406
10,715,440
804,072
-
804,072
-
161,018
-
-
250,700
161,019
-
1,930,181
250,700
41
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 42
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
NOTE 28: SEGMENT INFORMATION (CONTINUED)
SECONDARY BASIS
– GEOGRAPHIC SEGMENTS
REVENUE
External Revenue
SEGMENT RESULT
Profit/(Loss) from Ordinary Activities
before Income Tax
ASSETS
Total Segment Assets
SEGMENT ASSETS ACQUIRED DURING
THE REPORTING PERIOD
Property, Plant & Equipment
AUSTRALIA
USA
CONSOLIDATED
TOTAL
1,407,280
77,627
1,484,907
(5,601,149)
(2,118,634)
(7,719,783)
10,715,440
1,930,181
-
-
10,715,440
1,930,181
Segment Information for Year Ending 30 June 2002
PRIMARY BASIS –
VIROLOGY
ANGIOGENESIS
OTHER
DENDRITIC
UNALLOCATED
CONSOLIDATED
BUSINESS SEGMENTS
PHARMACEUTICALS NANOTECHNOLOGIES
TOTAL
REVENUE
External Revenue
Total Segment Revenue
SEGMENT RESULT
Profit/(Loss) from
Ordinary Activities
before Income Tax
DEPRECIATION
& AMORTISATION
Depreciation
LIABILITIES
Total Segment Liabilities
ASSETS
Total Segment Assets
SEGMENT ASSETS
ACQUIRED DURING
THE REPORTING PERIOD
Property, Plant & Equipment
42
-
-
383,646
383,646
-
-
1,057
1,057
943,915
943,915
1,328,618
1,328,618
(4,104,037)
(1,415,488)
(1,232,156)
(1,089,255)
(118,353)
(7,959,289)
58,618
58,618
14,655
26,827
14,654
173,372
-
-
-
66,906
1,284,050
1,350,956
531,562
885,081
737,252
637,740
16,067,798
18,859,433
259,880
259,880
64,969
235,014
64,970
884,713
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 43
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
SECONDARY BASIS
– GEOGRAPHIC SEGMENTS
REVENUE
External Revenue
SEGMENT RESULT
Profit/(Loss) from Ordinary Activities
before Income Tax
ASSETS
Total Segment Assets
SEGMENT ASSETS ACQUIRED
DURING THE REPORTING PERIOD
Property, Plant & Equipment
NOTE 29: EMPLOYEE ENTITLEMENTS
(a) Employee entitlement liabilities
AUSTRALIA
USA
CONSOLIDATED
TOTAL
1,327,561
1,057
1,328,618
(6,870,034)
(1,089,255)
(7,959,289)
18,221,693
637,740
18,859,433
649,699
235,014
884,713
Provision for employee entitlements current (Note 12)
205,729
178,365
2003
$
2002
$
2003
2002
$
-
$
-
CONSOLIDATED
PARENT ENTITY
Employee Numbers
Number of employees at the reporting date
(b) Employee Option Plans
2003
2002
2003
2002
NUMBER
NUMBER
21
32
-
-
(i) Starpharma Pooled Development Limited Executive and Employee Option Plan
The establishment of the Starpharma Pooled Development Limited Executive and Employee Option Plan was approved by
members at the annual general meeting held on 25 November 1999.
Under the plan, directors of the parent entity may from time to time determine that an eligible person is entitled to participate
in the plan and will determine the number of employee options which may be granted to that person or any associate of that
person. In making these determinations the directors are required to have regard to the person’s
- length of service with the consolidated entity;
- record of employment with the consolidated entity;
- potential contribution to the future growth of the consolidated entity; and
to any other matters which tend to warrant the person’s participation in the plan.
43
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 44
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
Under the plan, eligible persons include employees of the consolidated entity, including directors and consultants acting
in management roles.
A total of 590,000 options were issued under the plan to 7 employees. Subsequent to the 4 for 1 share subdivision on
6 April 2000, the number of options on issue was adjusted on a consistent basis, resulting in 2,360,000 options on issue.
The options were issued for no consideration and were capable of being exercised no earlier than 1 February 2002.
Following the share subdivision, the exercise price of the options was reduced from $3.75 to $0.9375.
These options expired on 28 September 2002 without being exercised.
(ii) Starpharma Pooled Development Limited Employee Share Option Plan
The establishment of the Starpharma Pooled Development Limited Employee Share Option Plan was approved by
shareholders at the Annual General Meeting held on 16 November 2000. All full time or part time employees and directors
of the Company or associated companies are eligible to participate in the Plan.
The object of the Plan is to assist in the recruitment, reward, retention and motivation of employees of the Company.
Options are granted under the plan for no consideration.
Options granted under the plan carry no dividend or voting rights.
Each Option is personal to the Participant and is not transferable, transmissible, assignable or chargeable, except in
accordance with clause 5.2 or clause 5.3 of the Plan, or with the prior written consent of the Committee.
Each option is convertible into one ordinary share by the Participant giving to the Company a notice specifying that
it exercises the option accompanied by:
(a) the Option Certificate; and
(b) payment of the full amount of the Exercise Price by cheque made out in favour of the Company.
A total of 300,000 options were granted under the Plan on 7 February 2001. Of these, 60,000 lapsed on cessation of
employment of the participant leaving 240,000 of these options on issue. These options were issued for no consideration
and may be exercised on or before 31 December 2005.
A total of 240,000 options were granted under the plan on 12 April 2002. These options were issued for no consideration
and may be exercised on or before 11 April 2007.
A total of 200,000 options were granted under the plan on 21 June 2002. These options were issued for no consideration
and may be exercised on or before 30 June 2007.
At 30 June 2003 the total number of unissued shares under these options was 680,000. The exercise price under the plan
is 93.75 cents per share.
44
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 45
Notes to the Financial Statements
for the year ended 30 June 2003 cont.
NOTE 30: EARNINGS PER SHARE
Basic Earnings/(Loss) per share
Diluted Earnings/(Loss) per Share
CONSOLIDATED
2003
CENTS
(8.68)
(8.68)
2002
CENTS
(8.90)
(8.60)
2003
2002
NUMBER
NUMBER
Weighted average number of shares used
as the denominator
Weighted average number of shares used as the denominator
in calculating basic and diluted earnings per share
88,900,000
88,900,000
Potential ordinary shares not considered dilutive:
As at 30 June 2003, the company had on issue:
240,000 options over unissued capital exercisable on or before the 31 December 2005 at the price of 93.75 cents per ordinary
share. These options are not considered dilutive.
240,000 options over unissued capital exercisable on or before the 11 April 2007 at the price of 93.75 cents per ordinary share.
These options are not considered dilutive.
200,000 options over unissued capital exercisable on or before the 30 June 2007 at the price of 93.75 cents per ordinary share.
These options are not considered dilutive.
45
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 46
Directors’ Declaration
The Directors declare that the financial statements and notes set out on pages 17 to 45:
(a) Comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
(b) Give a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 2003 and of their
performance, as represented by the results of their operation and their cash flows, for the financial year ended on that date.
In the Director’s opinion:
(a)
the financial statements and notes are in accordance with the Corporations Act 2001; 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.
This statement is made in accordance with a resolution of the Directors.
Peter T Bartels
DIRECTOR
Melbourne, 29th September 2003
46
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 47
Independent Audit Report
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF STARPHARMA POOLED DEVELOPMENT LIMITED
PricewaterhouseCoopers
ABN 52 780 433 757
333 Collins Street,Melbourne VIC 3000
GPO Box 1331L, Melbourne VIC 3001
DX 77 Melbourne Australia
www.pwcglobal.com/au
Telephone +61 3 8603 1000
Facsimile +61 3 8603 1999
Direct Phone 8603-3859
Direct Fax 8603-3461
AUDIT OPINION
In our opinion, the financial report of Starpharma Pooled Development Limited:
•
gives a true and fair view, as required by the Corporations Act 2001 in Australia, of the financial position of Starpharma Pooled Development Limited and
the Starpharma Pooled Development Limited Group (defined below) as at 30 June 2003, and of their performance for the year ended on that date, and
is presented in accordance with the Corporations Act 2001, Accounting Standards and other mandatory financial reporting requirements in Australia, and
the Corporations Regulations 2001.
•
This opinion must be read in conjunction with the rest of our audit report.
SCOPE
The financial report and directors’ responsibility
The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows, accompanying notes to the
financial statements, and the directors’ declaration for both Starpharma Pooled Development Limited (the company) and the Starpharma Pooled Development
Limited Group (the consolidated entity), for the year ended 30 June 2003. The consolidated entity comprises both the company and the entities it controlled
during that year.
The directors of the company are responsible for the preparation and true and fair presentation of the financial report in accordance with the Corporations Act
2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and
error, and for the accounting policies and accounting estimates inherent in the financial report.
Audit approach
We conducted an independent audit in order to express an opinion to the members of the company. Our audit was conducted in accordance with Australian
Auditing Standards, in order to provide reasonable assurance as to whether the financial report is free of material misstatement. The nature of an audit is
influenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive
rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected.
We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001,
Accounting Standards and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the company’s
and the consolidated entity’s financial position, and of their performance as represented by the results of their operations and cash flows.
We formed our audit opinion on the basis of these procedures, which included:
•
•
examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report, and
assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting estimates made by the
directors.
When this audit report is included in an Annual Report, our procedures include reading the other information in the Annual Report to determine whether it
contains any material inconsistencies with the financial report.
While we considered the effectiveness of management’s internal controls over financial reporting when determining the nature and extent of our procedures,
our audit was not designed to provide assurance on internal controls.
Our audit did not involve an analysis of the prudence of business decisions made by directors or management.
INDEPENDENCE
In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.
PricewaterhouseCoopers
John Yeoman
PARTNER
Melbourne, 29 September 2003
Liability is limited by the Accountant’s Scheme under the Professional Standards Act 1994 (NSW)
47
108/03 Star AR'03 page by page 29/9/03 1:09 PM Page 48
Shareholder Information
Supplementary information as required by Australian Stock Exchange Listing Rules.
A. Distribution of equity shareholders
Analysis of numbers of equity security holders by size of holding as at 17th September 2003
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
CLASS OF EQUITY SECURITY
ORDINARY SHARES
SHARES
OPTIONS
145
829
616
801
104
-
-
-
8
3
2,495 11
As at 17th September 2003 there were 37 holders of less than a marketable parcel of ordinary shares.
B. Equity security holders
Twenty largest security holders
Top 20 shareholders as at 17th September 2003:
NUMBER HELD
PERCENTAGE OF ISSUED SHARES
ORDINARY SHARES
Peter Malcolm Colman
Arran Bay Pty Ltd
Gilridge Pty Ltd
National Nominees Ltd
John William Raff
Espasia Pty Ltd
Consolidated Gaming Pty Ltd
Commonwealth Custodial Services Ltd
Queensland Investment Corporation
Davambros Pty Ltd
Continue reading text version or see original annual report in PDF format above