Starpharma Annual Report 2006
STARPHARMA HOLDINGS LIMITED
ABN 20 078 532 180
Contents
Review of Operations
Directors’ Report
Corporate Governance Statement
Financial Report
Shareholder Information
Patent Report
Corporate Directory
02
19
36
41
80
82
85
2005–06 Highlights
HIV Funded: $26m
Genital Herpes Funded
National Institutes of Health (NIH) funds VivaGel™ HIV Development: $26m non-dilutive funding
NIH funds VivaGel™Genital Herpes Development
HIV Fast–tracked
US regulator, FDA designates VivaGel™ a fast track product.
Herpes IND Cleared
FDA clears VivaGel™ genital herpes IND
Contraceptive Activity Identifi ed
VivaGel™ shown to be a potent contraceptive in animals
Future Revenues Improved
Royalty for stock swap: future revenues enhanced
$15m Funds Raised
$15m raised in institutional and SPP capital raising
Patent Estate Expanded
Substantial program of patent fi ling completed
Priostar™ Rolled Out
Investee company DNT rolls out Priostar™industrial dendrimer platform
ADRs: Near 10%
US uptake of ADRs nears 10% of SPL capital
Starpharma
uses dendrimer
nanotechnology to
discover, develop
and commercialise
pharmaceuticals
for serious human
illness.
Starpharma Holdings Limited Annual Report 2006
2
“The environment
for VivaGel™ has
greatly improved from
a funding, clinical,
regulatory and global
awareness perspective”
3 Starpharma Holdings Limited Annual Report 2006
CEO and Chairman’s Report
Dear Shareholder,
It is with pleasure that we present the Starpharma Annual Report
2005–2006.
It has been a year in which the environment for our lead product
VivaGel™ (SPL7013 Gel) has greatly improved from a funding,
clinical, regulatory and global awareness perspective. We have a
product that is scientifi cally and commercially viable and gaining
signifi cant international interest, especially in the USA.
In October 2005, Starpharma secured A$26m of non-dilutive funding
from the US-based National Institute of Allergy and Infectious
Diseases (NIAID), part of the National Institutes of Health (NIH), for
the development of VivaGel™ against HIV. This award provides many
of the benefi ts of a commercial licensing deal – security of
development funding, validation of product concept, access to
clinical expertise and infl uence – but without the loss of product
ownership that is the usual cost of such transactions.
VivaGel™ continues to make good clinical progress and we are now
preparing for new clinical trials to begin for both HIV and genital
herpes indications. These trials have already commenced in Australia
and will be extended shortly into the USA and Kenya. Starpharma
believes that VivaGel™ is the fi rst microbicide to have both NIH
funding and a Food and Drug Administration (FDA) IND application
for the genital herpes indication, a disease affecting 45 million
Americans today.
VivaGel™’s attraction to end users and to potential licensees was
further enhanced by the discovery that its active ingredient is a potent
contraceptive in rabbits. The proposition that VivaGel™ could protect
against sexually transmitted infections and unplanned pregnancy
could result it becoming a very attractive product for sexually active
women globally.
Additionally, through DNT we also benefi t from an extensive portfolio
of dendrimer products for industrial and other life science
applications. Already earning revenues, the commercial prospects for
DNT’s technology have been substantially boosted this year by the
launch of Priostar™ for a range of applications. We continue to view
our equity stake in DNT as a highly valuable and complementary
asset in Starpharma’s portfolio.
The combination of successful fundraising activity in November 2005
– where Starpharma raised $15million through a share placement
and share purchase plan – together with the funding allocated from
the NIH for VivaGel™, means that Starpharma has a solid fi nancial
basis for the commercialisation of VivaGel™ and the development
of additional applications of dendrimers.
We strengthened our intellectual property position by acquiring the
outright ownership of technology from the Biomolecular Research
Institute (BRI). As a result Starpharma will not need to pay
any future royalties to the BRI and this is anticipated to result
in much greater value for shareholders.
US interest in Starpharma continues to grow with an extremely
successful American Depositary Receipts program that now
represents almost 10% of the company’s equity – more than double
that reported in last year’s annual review.
Finally, on behalf of the board we would like to thank staff and
management for their contribution to an excellent year. In particular
we thank Dr John Raff, who retired as CEO in July 2006 for his
enormous contribution to Starpharma’s success: in many ways the
company as it stands today is his creation. We consider it a privilege
to build upon this foundation, and to turn the investment that has
been made in the company and its technology into a valuable return
for shareholders. We also look forward to John’s continued support
on the Starpharma Board.
Signifi cantly, the demand for the accelerated development of
microbicides has gained momentum with world leaders such as
former US president Bill Clinton and Microsoft founder Bill Gates
further emphasizing the importance of prevention strategies such
as microbicides in the fi ght against HIV/AIDS.
Beyond VivaGel™ Starpharma’s long term growth will come from
our own discovery pipeline and from investee company Dendritic
Nanotechnologies Inc (DNT). Starpharma’s pipeline holds great
promise in areas as diverse as cancer, ophthalmology, infectious
diseases and diagnostics.
Peter T Bartels AO
Chairman
Jackie Fairley B.Sc., B.V.Sc.(Hons), MBA.
Jackie Fairley B.Sc., B.V.Sc.(Hons), MBA.
Chief Executive Offi cer
Starpharma Holdings Limited Annual Report 2006
4
“Australian scientists
are at the vanguard
of microbicide
development.”
Sir Gus Nossal, December 2005
Revenue and other income:
A$7.0M (up from A$2.0M)
Research and development
costs: A$9.9M (up from A$7.0M)
Loss from ordinary activities:
Down 3% to A$7.5M
Cash at hand: Up A$6M to
A$14.2M
Financial Snapshot
Cash Balances
F06
F05
F04
F06
F05
F04
-
5
10
15
20
Millions
Grant Income
-
1
2
3
4
5
6
7
Millions
5 Starpharma Holdings Limited Annual Report 2006
About Starpharma
Below Starpharma’s
Dendrimer particles are
a few nanometres in
size. This makes them
very applicable to the
modifi cation of biological
interactions, for example
those of the surface
proteins of viruses.
The virus shown here is
approximately 100nm
in size.
Starpharma is an Australian-based
bio-nanotechnology company.
Starpharma’s objective is to discover, develop
and commercialise profi table products based
on dendrimers. Dendrimers are man-made
chemical particles in the nanometre size
range – that is, around one billionth of a
metre. They have precisely-defi ned surface
features and wide range of applications
from healthcare and personal care to
manufacturing and electronics.
Much of Starpharma’s value comes from its
opportunities for substantial revenues from
three key areas:
VivaGel™ (SPL7013 Gel):
The most advanced product in Starpharma’s
pipeline. It is being developed as a vaginal
microbicide intended to prevent the
transmission of the sexually transmitted
infections genital herpes and HIV. This is a
mass-market application in both developed
and developing countries.
Other Medical and Life Science
Applications:
Within its own discovery pipeline, Starpharma
is pursuing promising leads in fi elds such as
cancer, ophthalmology and targeted
diagnostics. Its investee companies, including
Dendritic Nanotechnologies, Inc (DNT), also
provide additional avenues of commercialisation,
for example, in drug delivery, transfection
reagents and contrast agents. Contrast
agents improve the ability of diagnostic
imaging tools to discern features in the body,
improving diagnoses and patient outcomes. It
is expected that returns will be made in these
areas primarily by licensing rights to
successful innovations to third parties.
Industrial Applications of Dendrimers:
This is an opportunity being exploited
through our investee company DNT.
The market for these kinds of specialty
chemicals tends to be larger volume, and
hence also represents a very substantial
commercial opportunity. Dendrimers may
have applications in areas such as
electronics, oil and plastics industries, just to
name a few.
Together Starpharma and DNT hold a strong
Intellectual Property (IP) position with regard
to dendrimers and their applications.
Stock Exchange Listing
Starpharma is listed on the Australian Stock
Exchange (ASX:SPL) and its American
Depository Receipts trade under the symbol
SPHRY.
Starpharma Holdings Limited Annual Report 2006
6
“If I had a magic
bullet to accelerate
something it would be
the microbicide.”
Bill Gates, July 2006
7 Starpharma Holdings Limited Annual Report 2006
VivaGel™
The product
Below HIV virus (purple)
including gp–120 protein
(yellow). Dendrimers
are believed to bind
to gp–120, preventing
transmission of the
HIV virus.
Starpharma’s aim is for women to be
able to use VivaGel™ (SPL7013 Gel)
as a “Vaginal Microbicide” to protect
themselves from sexually transmitted
infections (STIs), such as genital herpes
and HIV. There are currently no vaginal
microbicides available to women.
A global medical problem
The spread of genital herpes and AIDS
(caused by HSV-2 and HIV viruses
respectively) continues apace, despite
education campaigns designed to promote
safe-sex messages and practices. Around
the world, researchers in academia and
industry have been attempting to develop
vaccines for these diseases, so far with
limited or no success.
Genital Herpes
Approximately 45 million Americans are
infected with HSV-2. Genital herpes is a
recurrent, lifelong viral infection and one
of the most prevalent sexually transmitted
infections, estimated to infect between
15% and 25% of male and female adults,
respectively, in developed countries. This
fi gure is expected to rise to almost 40% for
males and 50% for females by 2025, unless
effective preventive measures can reverse
the trend. Additionally, HSV-2 infection can
make people more susceptible to infection
by HIV, making its prevention even more
important.
HIV
HIV infection is a major health burden in
both the Western world and developing
countries. Approximately 40 million people
worldwide are infected with HIV. In the US,
AIDS is the number one cause of death
among African-American women aged
25 to 34.
The United Nations has estimated that as
many as 90 million people in Africa alone
may be infected with HIV over the next
20 years if the spread cannot be stopped.
AIDS is diffi cult and expensive to treat and
there is no cure.
Prevention is better than cure
A new approach is required to control the
spread of HIV/AIDS and genital herpes. With
no available cure and limited success of
existing strategies for prevention of HIV and
HSV-2 infection, a vaginal microbicide is
recognised as a key element in the fi ght to
slow the spread of genital herpes and AIDS.
Starpharma’s goal is to show that VivaGel™
is a safe and effective vaginal microbicide
that women could use to protect themselves
from these infections, and to address the
problem at its source. Much work is already
done: in very stringent animal models for
these diseases the gel has proven very
effective. It has also been successfully
tested for safety in animals and in an initial
human trial. Starpharma and expert partners
are now working on a program to
demonstrate safety in larger populations,
and to determine whether VivaGel™ is in fact
as effective in women as animal studies
have indicated.
Another important feature of microbicides
such as VivaGel™, if approved, is that it
would be women who would most directly
manage their use (unlike condoms), giving
them more power to protect themselves
from Sexually Transmitted Infections (“STIs”).
VivaGel™ would be used with a single-use,
pre-fi lled vaginal applicator. The economics
of the product – active ingredient,
formulation and applicator – are seen to be
well matched to a mass market application.
VivaGel™ has also been shown to be a
contraceptive in rabbits, and compatible
with condoms in laboratory tests.
The active ingredient of VivaGel™ is a
dendrimer. Dendrimers are carefully-
assembled tiny particles with many potential
applications in medicine and industry.
The surface of the active dendrimer in
VivaGel™ is covered with regions that are
thought to bind to the HIV or HSV-2 viruses.
Scientists believe that the microbicidal
activity already proven in animals arises
because the viruses cannot enter cells when
the dendrimer is attached, and so cannot
cause infection.
Starpharma Holdings Limited Annual Report 2006
8
VivaGel™ clinical trial commencing for HSV-2 San Francisco
Microbicide safety test development Texas
“You shouldn’t wait
for a vaccine”
Eric Goemaere,
Médecins Sans Frontières,
July 2006 on the future of
HIV medicine.
VivaGel™ finished product manufacturing Kentucky
Dendritic NanoTechnologies Inc Head Office Michigan
Additional Microbicide indication development Baltimore Maryland
NIH Funding – HSV-2 Bethesda Maryland
NIH Funding – HIV Bethesda Maryland
FDA designates VivaGel™ “Fast Track” Maryland
VivaGel™ contraceptive testing Baltimore, Maryland
Microbicide safety testing Washington State
Further VivaGel™ patents issued Europe
VivaGel™ clinical trial commencing for HSV-2 Kisumu, Kenya
VivaGel™ clinical trial planned for HIV Bangkok Thailand
Clinical trial commencing for HIV Melbourne
Starpharma Head Office Melbourne
Additional Microbicide indication development Melbourne
VivaGel™ active ingredient manufacturing Wellington
9 Starpharma Holdings Limited Annual Report 2006
VivaGel™
Progress to market
Below A representation
of VivaGelTM’s active
ingredient SPL7013.
Shown here in red and
yellow are active groups
that are believed to bind
to HIV and HSV-2 viruses,
rendering them inactive.
The VivaGel™ (SPL7013 Gel) development
plan is conducted with the aim of approval
by the US-based Food and Drug
Administration and other major regulatory
authorities around the world. Starpharma
works closely with these authorities to
ensure that their needs are properly met
in the data that is compiled.
The program for VivaGel™’s clinical
development includes trials in both
developing and developed countries: USA,
Kenya, Thailand and Australia. The data
from all these locations will be drawn upon
to support the case for its approval for
marketing.
The map (opposite) illustrates the global
nature of VivaGel™ related activities.
Beyond the safety trial in men and the
genital herpes safety trial in women
described previously, a number of further
clinical trials are proposed to start in the
coming year, including a safety trial in HIV
positive women conducted through the
Thai Red Cross Aids Research Centre in
Bangkok.
VivaGel™ development timeline
Previously
October 2005
January 2006
April 2006
*July 2006
*July 2006
Extensive safety and efficacy trials in animals.
Phase I randomized clinical trial involving 36 healthy female
volunteers showed VivaGel™ to be safe and well tolerated over a
range of doses of active component, when applied vaginally once
daily for seven consecutive days.
Starpharma received an award of A$26 million toward the
development of VivaGel™ from the National Institute of Allergy and
Infectious Diseases of the US NIH. This is one of the largest awards
ever made in Australia by the NIAID. The NIH is the primary Federal
agency in the US for conducting and supporting medical research,
comprising 27 institutes and centres.
VivaGel™ was designated as a Fast Track product by the US FDA for
use against HIV, meaning that the New Drug Application to the FDA
can be reviewed within a shorter time period (as short as 6 months
compared to a more usual 13).
Starpharma signed a second agreement with the NIAID for clinical
trial funding of VivaGel™ for genital herpes.
In a recent independent study undertaken at Johns Hopkins
University in the USA, the active ingredient in VivaGel™, SPL7013,
exhibited a potent contraceptive effect in animals. The proposition
that VivaGel™ could provide protection from STIs and also
contraceptive protection may make the product particularly attractive
to women.
The FDA allowed an IND to conduct a clinical trial for genital herpes.
The trial will be run concurrently in Kenya (Kisumu), and the USA
(San Francisco), and is expected to commence shortly.
*August 2006
Commencement of a safety trial in men for VivaGel™ following
successful review by local ethics committees, the FDA and the NIH.
* Post June 30 2006 events.
Starpharma Holdings Limited Annual Report 2006
10
Nanotechnology:
“ Research and
technology
development at the
atomic, molecular or
macromolecular levels,
in the length scale of
approximately 1–100
nanometer range.
“ Creating and using
structures, devices
and systems that have
novel properties and
functions because
of their small and/or
intermediate size.
Ability to control or
manipulate on the
atomic scale.”
US National Nanotechnology Initiative
definition of nanotechnology.
11 Starpharma Holdings Limited Annual Report 2006
Dendrimer Nanotechnology
Potential applications of Dendrimers
Personal and Household
· Cleaners and lotions
· Cosmetics
· Pigments and Dyes
· UV absorber
· Sacrifi cial Carrier
(Nutritionals)
· Surfactancy
· Improved binders
Medical and Health
· Pharmaceuticals
· Diagnostic imaging
· Diagnostic sensing
· Drug delivery
· Drug discovery
· Remote and in-vivo devices
· Transfection
· Tissue engineering
· Controlled release
Environment
· Chemical sensors and
biosensors
· Environmental sensing
· Remediation
· Clean water (ion exchange)
· Clean air (super absorbers)
· Improved catalysts
Energy and Electronics
· Fuel cells (membranes,
catalysts)
· Energy storage (hydrogen)
· Solid state lighting
· Thermal management for
devices
· LEDs, displays, Electronic
inks
· Interlayer dielectric,
Photoresistors
· Molecular Electronics
· Telecom devices
(waveguides)
Nanotechnology can be defi ned as the
manipulation of matter at the atomic level.
It can also be defi ned with reference to a
size: nano-products or their components
are in the 1-100 nanometre range (i.e. from
1 billionth of a metre, to one hundred times
this size.)
Dendrimers are nanoscale molecular
building blocks with precisely defi ned
properties. They have applications in fi elds
as diverse as energy, electronics, food,
agriculture, fi ne chemicals, manufacturing,
environmental engineering, medicine,
health, as well as personal and household
applications.
Chemicals and Manufacturing
· High performance Chemical
Catalysis
· Chemical Separations
· Filtration Systems
· Petrochemical Processing
(nanocatalysts)
· Toxic leak sensors
· Highly selective control
sensors
Food and Agriculture
· Targeted, non-toxic
biodegradable
pesticides, herbicides
· Time-release fertilizers and
pesticides
· Packaging (microbe resistant
plastics)
· Freshness, Contamination,
and/or
tampering sensors
· Delivery of genes and drugs
to plants
and animals
Dendrimers
Many of Starpharma’s dendrimers are
constructed using one of the body’s own
building blocks, a constituent of protein
called lysine. Starpharma constructs
dendrimers by taking a small core
molecule, then repeatedly adding the
lysine branching unit until a spherical
nanoparticle is created. The well-defi ned
method of construction means each
nanoparticle is identical: it is this
fundamental manipulation of atoms into a
nanoscale structure that gives dendrimers
their versatility, reproducibility and power.
Starpharma has focused its dendrimer
research efforts to capture value from
applications of nanoparticles in
pharmaceutical and bioscience markets.
Other applications are exploited through
its investee company Dendritic
Nanotechnologies Inc (DNT).
Illustrative areas of Starpharma’s
dendrimer patent protection
Intellectual Property (IP)
During the year the Company signifi cantly
enhanced its patent portfolio as a result of
fi ling a further twelve patent applications.
These applications have arisen as a result of
the Company’s further substantial
development of its dendrimer technologies
in high value applications. In additon, the
Company’s patent portfolio has been
enhanced by the granting of various patents
in a range of jurisdictions. As at the date of
this report the Company owns 19 patent
families consisting of 36 granted patents
and 60 pending applications.
This augments the 196 dendrimer patents
transferred to DNT by the Dow Chemical
Company in 2005, from which Starpharma
has all rights for polyvalent pharmaceutical
applications.
VivaGel™
Dendrimers as
Drug Modifi ers
Dendrimers as
Drugs
Other Life Science
Applications
• Composition of
matter
• STI Prevention
HIV
HSV-2
Other STIs
• Contraception
• Condom coatings
• Drug Delivery
• ADME1
engineering and
Pharmacokinetic
modifi cation
• Solubility
enhancement
• GPCRs
• Angiogenesis
• The creation of
inhibitors
Age-related
Macular
Degeneration
Oncology
Infl ammation
Other
• Anti-toxins
macromolecules
with highly
defi ned, structural
surfaces
• Targeted
diagnostics
1 ADME: Adsorption, Distribution, Metabolism and Excretion
Refer to pages 82 to 84 for a full list of Starpharma Patents
Starpharma Holdings Limited Annual Report 2006
12
“Dendrimers can be
prepared with the
precision of small
organic molecules,
yet they behave like
macromolecules”
B.Helms and E.W. Meijer, Science,
August 2006
13 Starpharma Holdings Limited Annual Report 2006
Growth Strategy
Below Artist’s impression
of the dendrimer SPL7013
binding to HIV surface
proteins to inactivate them.
Without active surface
proteins HIV cannot infect
human cells.
Platforms and Products
Starpharma has created a number of
nanotechnology “platforms” that meet
important challenges in today’s
pharmaceutical and life-science industries.
As well as making them available to
partners, Starpharma applies these
platforms within its own laboratories to
address specific human diseases.
VivaGelTM is the most advanced such
product. Both the compounds arising
from this pipeline and also the underlying
platforms can yield revenues from
licensing.
Nanotechnology Platforms
Dendrimers are well-defined molecules
with many surface attachment locations.
They can be “adaptors” connecting
different elements together into a
multifunctional molecule. This capability
is of value in many pharmaceutical and
life-science applications but historically
has been difficult to achieve reproducibly.
Starpharma’s technology provides this
capability, and it is being developed as
four principal platforms.
Drug Delivery
Many drugs would be enhanced if more
accurately directed to their target tissues.
Efficacy could be increased and toxicity
reduced. Dendrimers may be a good
choice for drug delivery: they may be used
to transport drugs through the body, to be
released at an appropriate site or time.
Starpharma has demonstrated that both
small molecule drugs and “biologicals” can
be attached to dendrimers. Biologicals –
peptides, proteins and other compounds
derived from biological sources such as
antibodies – are of particular significance
because of growing interest in their use,
particularly in chronic diseases such as
Rheumatoid Arthritis and Cancer.
ADME Engineering™
The properties of a drug can be modified
by attaching it to a dendrimer more
permanently. Starpharma refers to this
technique as ADME Engineering™ (ADME:
“Absorption, Distribution, Metabolism,
Excretion”). For example, the rate at which
the body expels a drug can be minimised
allowing reduced dosing frequency.
Alternatively a drug can be excluded from
certain tissues or organs. This technology
has been demonstrated in a number of
applications by Starpharma and the
company is now investigating opportunities
to apply ADME Engineering™ within our
partners’ development programmes.
Targeted Diagnostics
Diagnostic imaging tools like MRI and PET
scans allow today’s clinicians to deliver
better patient outcomes through earlier
intervention and more tailored therapies.
The success of this approach is governed
by the quality of the images from the scans.
By introducing “contrast agents” into the
body – scan-visible compounds which
target defined tissues - the scans can be
enhanced. Starpharma’s Targeted
Diagnostics platform offers the opportunity
to connect “targeting” molecules to multiple
“signaling” molecules to improve scan
images and quality of care.
Polyvalency
Another beneficial property of dendrimers is
“polyvalency”. By arranging multiple copies
of a binding group on the surface of the
dendrimer, multiple simultaneous target-
binding events can be achieved (rather like
Velcro™) yielding potency far beyond that of
a single binding group. VivaGel™’s active
ingredient SPL7013 exemplifies this
approach: its surface groups have strong
anti-viral properties when multiply-presented
on SPL7013, but not as free molecules.
Biotechnology Product Applications
Starpharma’s “in-house” applications of these
platforms include:
Cancer Therapeutics – (based on Drug
Delivery and ADME Engineering™ platforms)
Starpharma is using dendrimers to improve
the characteristics of existing anticancer
drugs. Attaching established, marketed
oncology drugs to dendrimers may make
these drugs easier to administer whilst being
safer and more effective for the patient.
Ophthalmic Diseases – (based on
Polyvalency platform)
Starpharma has a range of dendrimer
molecules under development that have been
shown to reduce angiogenesis in in vivo
assays. One indication for this mode of action
is in ophthalmic disorders such as Age-related
Macular Degeneration (AMD) – a disease with
an estimated 15 million sufferers in the U.S.
alone – and Starpharma will work with
specialist partners to assist in the development
of this and other ophthalmic applications of
dendrimers.
Anti-virals – (based on Polyvalency platform)
Starpharma’s dendrimers have already
demonstrated convincing in vivo antiviral
activity in VivaGel™. Starpharma’s dendrimer
library has also shown in vitro or in vivo activity
against many other viruses in early studies
beyond HIV and HSV-2, including in RSV,
influenza, Hepatitis B, and other widespread,
lethal viral disorders. Starpharma will work with
partners to advance these opportunities into
preclinical and clinical studies.
Cardiovascular Diagnostics – (based on
Targeted Diagnostic platform)
Starpharma is developing a dendrimer based
contrast agent for targeted cardiovascular
diagnostics in association with a specialist
organisation in the area of cardiac health.
Starpharma Holdings Limited Annual Report 2006
14
“The majority
of dendrimer IP
is pooled in one
company, Dendritic
Nanotechnologies
(DNT)”
Lux Research, 2006
15
Starpharma Holdings Limited Annual Report 2006
Dendritic Nanotechnologies Inc
Below Artists
impression of a
“polyvalent” dendrimer
forming multiple
Velcro-like interactions
with proteins in a cell
membrane.
Dendritic Nanotechnologies Inc (DNT) is a
US based company founded by Starpharma
and dendrimer pioneer Don Tomalia, to
commercialise applications of dendrimers in
pharmaceutical as well as industrial settings.
In 2005 the Dow Chemical Company
became a major share holder of DNT,
assigning its entire dendrimer IP portfolio to
DNT in the process.
DNT also has particular value to Starpharma
providing a US base with important
commercial and fi nancial linkages.
Starpharma identifi es four key classes of
assets associated with DNT:
A dominance of the Intellectual Property
landscape with over 100 dendrimer
nanotechnology patents.
The portfolio was initially established by
Dr Donald Tomalia and the Dow Chemical
Company and was assigned by Dow in its
entirety to DNT in exchange for a share of
the company’s equity. As well as sharing in
the profi ts that will accrue from this dominant
position, Starpharma has exclusive right to
existing and future polyvalent
pharmaceutical applications of dendrimers.
Established revenue streams
DNT receives revenue each year both
through sales of dendrimer material, and
through existing licensing agreements.
As well as providing a contribution to the
company’s bottom line, this revenue stream
supports the view that dendrimers are
already a viable commercial proposition.
This is a major differentiator compared to
many other nanotechnology companies
today.
Relationships with key
industry corporations
DNT has a range of valuable commercial,
research and development relationships,
including with:
• Pfi zer,
• Sigma-Aldrich,
• Dharmacon,
• Dade Behring,
• Lumera, and
• Qiagen
DNT also has established relationships with
other organization such as the NIH, the
National Cancer Institute, the US Army and
Caltech.
Priostar™
Priostar™ is a particularly robust, low-cost,
versatile class of dendrimers very well suited
to large scale, industrial applications. DNT is
currently in commercial discussions with a
number of potential partners to apply this
technology in the areas of plastics, high
performance oil, and household products.
Extract from DNT’s
product catalogue
Starpharma Holdings Limited Annual Report 2006
16
Left to right
Guy Krippner
Tom McCarthy
Tim Grogan
Paul Barrett
Jeremy Paull
Jackie Fairley
Nigel Baade
Ben Rogers
Nigel Baade Financial Controller
B.Com, CPA, Grad. Dip. Arts (Development)
Nigel Baade is a CPA qualifi ed accountant with
experience in the pharmaceutical and biotechnology
industries. His previous roles have included Finance
Manager of Cerylid Biosciences; and Manager
Accounting, International Business Development
for Faulding (now Mayne Pharma). Prior to joining
Starpharma in January 2006, Nigel held a commercial
planning role with multinational, Hagemeyer.
Paul Barrett Vice President Business Development
B.Sc. (Hons), Ph.D.
Paul has 6 years’ experience in marketing and
business development gained in both start-up and
multinational technology companies in the UK.
His employers have included Nortel Networks,
Smiths Industries Aerospace and Bookham
Technology. His doctoral and post-doctoral studies
were conducted at Heriot-Watt University and the
University of Oxford, UK. Paul’s technical publications
range from molecular biology and bioinformatics to
photonics and telecommunications.
Headed by recently appointed CEO,
Dr Jackie Fairley, Starpharma’s
management team provides the
expertise and experience necessary
to fulfi ll its commitment to create
value, through the development and
commercialisation of new pharmaceutical
products based on dendrimers.
Jackie Fairley Chief Executive Offi cer
B.Sc., B.V.Sc.(Hons), MBA
Jackie has over 15 years’ experience in the
pharmaceutical and biotechnology industries working
in business development and senior management
roles with companies including CSL and Faulding
(now Mayne Pharma). Before joining Starpharma in
2005 she was Chief Executive Offi cer of Cerylid
Biosciences. She also spent 5 years as a Vice
President for Faulding’s injectable division and 5 years
with CSL in various executive roles. Jackie holds fi rst
class honours degrees in Science (pharmacology/
pathology) and Veterinary Science, and has an MBA
from the Melbourne Business School where she was
the recipient of the Clemenger Medal.
17 Starpharma Holdings Limited Annual Report 2006
Management Team
Left to right
Guy Krippner
Tom McCarthy
Tim Grogan
Paul Barrett
Jeremy Paull
Jackie Fairley
Nigel Baade
Ben Rogers
Tim Grogan Vice President Commercial
Development and Licensing LLB, B.Sc.
Tim has had extensive experience in business and
technology management including positions at
Monsanto Australia Ltd, Freehill Hollingdale & Page
and as a Director of Ag-Seed Research Pty Ltd.
Tim was a driving force behind Starpharma’s venture
with Donald Tomalia, Ph.D. which resulted in the
establishment of DNT. Tim completed his law and
science degrees at Melbourne University and was
admitted as a Barrister and Solicitor of the Supreme
Court of Victoria and High Court in 1991.
Guy Krippner Head of Chemistry BSc (Hons), Ph.D
Prior to joining Starpharma in 2002 Guy headed
Prana’s chemistry program targeting Alzheimer’s
disease. Previously he was a Senior Research
Scientist at Biota Holdings Ltd developing antiviral
therapeutics and diagnostics. Guy’s doctoral and
post doctoral research was conducted at the
University of Adelaide, South Australia and the
University of Oxford, UK.
Tom McCarthy Vice President Drug Development
B.Sc. (Hons), Ph.D.
Tom joined Starpharma in 2001. He is Principal
Investigator of Starpharma’s NIH grant “Development
of Dendrimer and Combination Microbicides, and of a
US$20.3M NIH contract to develop VivaGel™. Prior to
Starpharma at the Biomolecular Research Institute
Tom managed the discovery chemistry aspects of
in-house and collaborative projects, including with
Prana Biotechnology Ltd and the Austin Research
Institute. Tom’s early research was conducted at the
University of Oxford, UK and at CSIRO, Australia.
Jeremy Paull Vice President Regulatory
and Clinical Affairs B.Sc. (Hons), Ph.D.
Jeremy has several years’ experience in regulatory
affairs and quality assurance, gained at Starpharma
and previously at another Australian biotechnology
company, Norwood Abbey. At Starpharma, Jeremy
has been instrumental in the VivaGelTM development
program since its inception, and was responsible for
the implementation of the fi rst clinical trials conducted
by Starpharma under the IND. At Norwood Abbey he
worked on the development of a medical device which
was approved to improve transdermal drug delivery.
Jeremy received a Ph.D. in Pharmacology from Monash
University.
Ben Rogers Company Secretary
and Chief Financial Offi cer
Ben Rogers has extensive experience in fi nance and
human resources management with the CSIRO
research laboratories in Victoria, South Australia, and
Western Australia. He also operated his own consulting
business providing services to Co-operative Research
Centres and CSIRO Divisions. Ben joined Starpharma
on commencement of operations in April 1997 and was
appointed to the position of Company Secretary in
February 1998.
Starpharma Holdings Limited Annual Report 2006
Starpharma Holdings Limited Annual Report 2006
18
Directors’ report
Your directors have pleasure in presenting this report on the consolidated entity consisting of Starpharma Holdings Limited and the
entities it controlled at the end of, or during, the year ended 30 June 2006.
P T Bartels (Chairman)
P M Colman
R Dobinson
L Gorr
P J Jenkins
J W Raff
J K Fairley was appointed a director on 1 July 2006 and
continues in office at the date of this report.
applications, with a particular focus on the development of
topical vaginal microbicides for the prevention of HIV and other
sexually transmitted diseases. These activities are managed by
the wholly owned subsidiary Starpharma Pty Ltd.
Directors
The following persons were directors of Starpharma Holdings
Limited (“the Company”) during the whole of the financial year
and up to the date of this report:
Principal Activities
The principal activities of the Company consist of investment in,
and management and funding of dendrimer based research,
development and commercialisation. Activities within the
Company are directed towards the development of precisely
defined nano-scale materials for use in pharmaceutical
Dividends
No dividend has been paid or declared during or since the end
of the financial year.
Review of Operations
Information on the operations and financial position of the
Group and its business strategies and prospects is set out in
the review of the operations and activities on pages 2 to 18 of
this annual report.
Operating Loss
For the year ended 30 June 2006 the consolidated entity
incurred an operating loss after income tax of $7,522,789
(June 2005: $7,747,791).
Significant changes in the state of affairs
In the opinion of the directors there were no 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.
19 Starpharma Holdings Limited Annual Report 2006
Matters subsequent to the end of the financial year
On 1 July 2006, Dr J W Raff retired as Chief Executive Officer
(CEO) of the Company and the Chief Operating Officer,
Dr J K Fairley, was appointed to the position of CEO. Dr Fairley
was also appointed as a director. Dr Raff remained a director
of the Company and accepted the role of Deputy Chairman
of the Board.
No further matters or circumstances have arisen since 30 June
2006 that have significantly affected, or may significantly affect:
1. the consolidated entity’s operations in future financial years, or
2. the results of the operations in future financial years, or
3. 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.
Regulatory Environment
There were no significant changes in laws or regulations during
2005/06 or since the end of the year affecting the business
activities of the consolidated entity, and the directors are not
aware of any such changes in the pipeline.
Environmental regulation
The Company recognises the importance of environmental
issues and is committed to the highest levels of performance.
There are adequate systems in place to ensure compliance with
Commonwealth and State environmental regulations and the
Directors are not aware of any breach of applicable
environmental regulations by the consolidated entity.
Legal
At the date of the Directors’ Report there are no significant
legal issues.
Health and Safety
The Board, CEO and senior management team of Starpharma
are committed to providing and maintaining a safe and healthy
working environment for the Company’s employees and
anyone entering its premises or with connection to the
Company’s business operations. 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. Further details of the Company’s policy and
practices are set out in the corporate governance statement on
page 39 of the annual report.
Starpharma Holdings Limited Annual Report 2006
20
Director's report
Information on Directors
Peter T Bartels, AO
Chairman – Non-executive, Age 65.
Experience and expertise
Independent non-executive director and Chairman for three
years. Previously CEO and Managing Director of Coles Myer
Ltd and before that CEO and Managing Director of Fosters
Brewing Company Ltd. 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 and the Australian Institute
of Sport. Past chairman of the Commonwealth Heads
of Government Committee for Sport and the Women’s and
Children’s Health Service.
Other current directorships
None.
Former directorships in last 3 years
None.
Special Responsibilities
Chairman of the Board.
Member of remuneration & nomination committee.
Interests in shares and options
109,804 ordinary shares in Starpharma Holdings Limited
John W Raff
Dip. Ag. Sc., BSc., PhD.
Executive director (until 30 June 2006)
Non-executive director, (from 1 July 2006) Age 57.
Experience and expertise
Chief Executive Officer for nine years until retirement on 1 July
2006. 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.
Peter M Colman
BSc(Hons), PhD, FAA, FTSE.
Independent non-executive director, Age 62.
Experience and expertise
Non-executive director for nine 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
Limited.
Other current directorships
None.
Former directorships in last 3 years
None.
Special Responsibilities
Deputy Chairman
Non-executive director of Dendritic Nanotechnologies, Inc.
Member of research committee (until 30 June 2006)
Interests in shares and options
5,381,689 ordinary shares in Starpharma Holdings Limited
Other current directorships
None.
Former directorships in last 3 years
None.
Special Responsibilities
Member of research committee.
Non-executive director of Dendritic Nanotechnologies, Inc.
Interests in shares and options
5,992,286 ordinary shares in Starpharma Holdings Limited
21 Starpharma Holdings Limited Annual Report 2006
Information on Directors (continued)
Ross Dobinson
B. Bus (Acc)
Independent Non-executive director, Age 54.
Experience and expertise
Non-executive director for nine 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 a number of
unlisted companies.
Leon Gorr
B. Juris, LLB, M.Admin
Independent non-executive director, Age 62.
Experience and expertise
Non-executive director for five years. Non-executive director of
Starpharma Pty Ltd for nine years. Senior Partner, Herbert Geer
& Rundle. 33 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.
Director's report
Other current directorships
Non-executive director of two other public companies: Acrux
Ltd (director since 2000 and Chairman since 31 January 2006)
and Roc Oil Company Limited (director since 1997).
Former directorships in last 3 years
None.
Special Responsibilities
Chairman of audit & risk management committee.
Chairman of remuneration & nomination committee.
Interests in shares and options
2,905,976 ordinary shares in Starpharma Holdings Limited
Other current directorships
None.
Former directorships in last 3 years
None.
Special Responsibilities
Member of audit & risk management committee.
Member of remuneration & nomination committee.
Interests in shares and options
5,204,704 ordinary shares in Starpharma Holdings Limited
Starpharma Holdings Limited Annual Report 2006
22
Director's report
Information on Directors (continued)
Peter J Jenkins
MB, BS (Melb), FRACP
Independent Non-executive director, Age 60.
Experience and expertise
Independent non-executive director for nine years. Consultant
physician and gastroenterologist. Holds clinical and research
positions with the Alfred Hospital and has held clinical positions
with the Baker Medical Research Centre. Former judge of the
Australian Technology Awards. Executive Director of AusBio
Ltd, an unlisted public biotechnology company.
Jacinth K Fairley
B.Sc., B.V.Sc.(Hons), MBA
Chief Executive Officer (From 1 July 2006), Age 43.
Experience and expertise
Chief Operating Officer of Starpharma from 4 July 2005 to 30
June 2006. Over 15 years’ experience in the pharmaceutical
and biotechnology industries working in business development
and senior management roles with companies including CSL
and Faulding (now Mayne Pharma). Former Chief Executive
Officer of Cerylid Biosciences. 5 years as a Vice President for
Faulding’s injectable division and 5 years with CSL in various
executive roles. She holds first class honours degrees in
Science (pharmacology/pathology) and Veterinary Science,
and has an MBA from the Melbourne Business School where
she was the recipient of the Clemenger Medal.
Other current directorships
Non-executive director of bio-pharmaceutical company
Anadis Ltd (director since 1994).
Former directorships in last 3 years
None.
Special Responsibilities
Chairman of research committee.
Member of audit & risk management committee.
Interests in shares and options
1,635,608 ordinary shares in Starpharma Holdings Limited
Other current directorships
None
Former directorships in last 3 years
None.
Special Responsibilities
Chief Executive Officer
Member of research committee (from 1 July 2006)
Interests in shares and options
5,000 ordinary shares in Starpharma Holdings Limited
300,000 options over ordinary shares in Starpharma
Holdings Limited
500,000 options over ordinary shares in Starpharma Holdings
Limited (subject to shareholder approval at the next Annual
General Meeting of the Company)
23 Starpharma Holdings Limited Annual Report 2006
Company Secretary
The Company Secretary is Mr Ben Rogers. Age 58. He has
extensive experience in finance and human resources
management with CSIRO research laboratories in Victoria,
South Australia and Western Australia. He also operated his
own consulting business providing services to Co-operative
Research Centres and CSIRO Divisions. Mr Rogers joined
Starpharma on commencement of operations in April 1997 and
was appointed to the position of Company Secretary in February
1998. He is a member of the senior management team with
responsibilities that include the role of Chief Financial Officer.
Director's report
Meetings of Directors
The number of meetings of the Company’s Board of directors and of each committee held during the year ended 30 June 2006,
and the numbers of meetings attended by each director were:
Full meetings of directors
Meetings of committees
Audit & risk
management
Remuneration
& nomination
Research
Key
P T Bartels
P M Colman
R Dobinson
L Gorr
P J Jenkins
J W Raff
A
12
13
13
11
12
13
B
13
13
13
13
13
13
A
*
*
3
2
3
*
B
*
*
3
3
3
*
A
3
*
3
2
*
*
B
3
*
3
3
*
*
A
*
8
*
*
8
7
B
*
9
*
*
9
9
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 Peter Bartels retires by rotation as director at the annual
general meeting and, being eligible, offers himself for
re-election.
Dr John Raff retires by rotation as director at the annual general
meeting and, being eligible, offers himself for re-election.
Dr Jacinth Fairley was appointed a director on 1 July 2006. In
accordance with the Constitution Dr Fairley retires as a director
at the annual general meeting and, being eligible, offers herself
for re-election.
Starpharma Holdings Limited Annual Report 2006
24
Director's report
Remuneration report
The Remuneration report is set out under the following
main headings:
A. Principles used to determine the
nature and amount of remuneration
B. Details of remuneration
C. Service Agreements
D. Share-based compensation
E. Additional Information
The information provided under headings A–D includes
remuneration disclosures that are required under AASB 124
Related Party Disclosures. These disclosures have been
transferred from the financial report and have been audited. The
disclosures in Section E are additional disclosures required by
the Corporations Act 2001 and the Corporations Regulations
2001 which have not been audited.
A. Principles used to determine the nature and amount of remuneration
The objective of the company’s remuneration policy is to ensure
appropriate and competitive reward for the results delivered.
The remuneration and nomination committee, consisting of
three independent 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.
Directors’ fees
Fees and payments to non-executive directors reflect the
demands which are made on, and the responsibilities of, the
directors. Non-executive directors’ fees consist of a base yearly
amount plus additional amounts for membership of board
committees or membership of boards of associated entities.
The Chairman’s fees are determined independently to the fees
of non-executive directors based on comparative roles in the
external market. The Chairman is not present at any discussions
relating to determination of his own remuneration. Non-
executive directors do not receive share options or bonuses.
Non-executive directors’ fees are reviewed annually by the
Board, but have not been increased since 1 January 2004. Fees
and payments are determined within an aggregate directors’
fee pool limit, which is periodically recommended for approval
by shareholders. The aggregate amount currently stands at
$350,000 which was approved by shareholders on 19
November 2003. This amount (or some part of it) is to be
divided among the non-executive directors as determined by
the Board. The aggregate amount currently paid to non-
executive directors is $240,000 per annum.
Non-executive directors do not receive any performance-
related remuneration.
Executive pay
Remuneration packages are set at levels that are intended to
attract and retain executives capable of managing the Group’s
operations.
The executive pay and reward framework comprises:
– base pay and benefits,
– short term performance incentives,
– long term incentives through participation in the Starpharma
Employee Share Option Plan, and
– superannuation.
Factors taken into account in determining remuneration
packages include demonstrated record of performance against
targets and key performance indicators (KPIs), internal
relativities, data from a national biotechnology salary survey
and the Company’s ability to pay. Service agreements for
executives do not include pre-determined bonus or option
allocations, but bonuses may be awarded, or options offered at
the end of the performance review cycle for specific
contributions, or upon achievement of a significant Company
milestone at the discretion of the Board and in line with the
principles disclosed in the directors’ report.
Starpharma Employee Share Option Plan
Information on the Starpharma Employee Share Option Plan is
set out in note 36 to the financial statements.
Performance review and development
Executives and all other staff participate in a formal two stage
performance review and development process consisting of an
objectives planning and development session at the
commencement of the annual cycle and a performance and
pay review towards the end of the cycle.
25 Starpharma Holdings Limited Annual Report 2006
Director's report
B. Details of remuneration
Details of the nature and amount of each element of the
remuneration of each director of Starpharma Holdings Limited
and the key management personnel (as defined in AASB 124
Related Party Disclosures) of the Company and the
consolidated entity are set out in the following tables.
The key management personnel of Starpharma Holdings
Limited includes the directors as per pages 21 to 23.
The key management personnel of Starpharma Holdings
Limited Group includes the directors as per pages 21 to 23
above and the following executive officers, which includes the
five highest paid executives of the entity:
N J Baade
C P Barrett
J K Fairley
O T Grogan
G Y Krippner
T D McCarthy
J R Paull
B P Rogers
Key management personnel of Starpharma Holdings Limited
2006
Name
Short-term benefits Post-employment
Share-based payment
Cash salary
and fees
$
Cash bonus
$
Non-monetary
benefits
$
Superannuation
$
Options
$
Total
$
Non-executive directors
P T Bartels Chairman
P M Colman
R Dobinson
L Gorr
P J Jenkins
Subtotal non-executive
directors
Executive directors
J W Raff
Totals
–
36,697
40,000
36,697
36,697
150,091
258,500
408,591
–
–
–
–
–
–
–
80,000
3,303
–
3,303
3,303
89,909
110,420
110,420
96,215 A
186,124
There were no retirement benefits paid during the year ended 30 June 2006.
A $49,983 of $96,215 contributed to J Raff’s superannuation was the result of a bonus.
–
–
–
–
–
–
–
80,000
40,000
40,000
40,000
40,000
240,000
465,135
705,135
Starpharma Holdings Limited Annual Report 2006
26
Director's report
B. Details of remuneration (continued)
Key management personnel of Starpharma Holdings Limited or subsidiary companies
2006
Name
Short-term benefits Post-employment
Share-based payment
Cash salary
and fees
$
Cash bonus
$
Non-monetary
benefits
$
Superannuation
$
Options
$
Total
$
Non-executive directors
P T Bartels Chairman
P M Colman
R Dobinson
L Gorr
P J Jenkins
Subtotal non-executive
directors
Executive directors
–
36,697
40,000
36,697
36,697
150,091
J W Raff
258,500
Other Key Management Personnel
J K Fairley 1
(from 4/7/05–30/6/06)
O T Grogan
B P Rogers
T D McCarthy
G Y Krippner
J R Paull
C P Barrett 2
(from 18/7/05–30/6/06)
N J Baade 3
(from 16/1/06–30/6/06)
233,776
163,749
106,681
119,882
103,872
113,088
102,361
43,162
–
–
–
–
–
–
24,000
–
10,000
10,000
–
10,000
–
–
80,000
3,303
–
3,303
3,303
89,909
–
–
–
–
–
80,000
40,000
40,000
40,000
40,000
240,000
110,420
96,215 A
–
465,135
4,552
26,881
34,225
27,700
25,030
4,602
38,340 B
28,648
20,991
32,019 C
11,187
29,411D
21,602
322,270
11,962
231,240
41,170
213,067
18,714
208,315
37,427
177,516
14,971
172,072
–
11,832
7,494
121,687
Totals
1,395,162
54,000
235,270
1,860
7,155
365,707
–
52,177
153,340
2,203,479
There were no retirement benefits paid during the year ended 30 June 2006.
A $49,983 of $96,215 contributed to J W Raff’s superannuation was the result of a bonus.
B $15,000 of $38,340 contributed to J K Fairley’s superannuation was the result of a bonus.
C $10,000 of $32,019 contributed to T D McCarthy’s superannuation was the result of a bonus.
D $10,000 of $29,411 contributed to J R Paull’s superannuation was the result of a bonus.
1 J K Fairley was appointed Chief Operating Officer on 4 July 2005.
2 C P Barrett was apponted VP, Business Development on 18 July 2005.
3 N J Baade was appointed Financial Controller on 16 January 2006.
27 Starpharma Holdings Limited Annual Report 2006
B. Details of remuneration (continued)
Key management personnel of Starpharma Holdings Limited or subsidiary companies
2005
Name
Short-term benefits Post-employment
Share-based payment
Cash salary
and fees
$
Cash bonus
$
Non-monetary
benefits
$
Superannuation
$
Options
$
Total
$
Director's report
Non-executive directors
P T Bartels Chairman
P M Colman
R Dobinson
L Gorr
P J Jenkins
Subtotal non-executive
directors
Executive directors
–
36,697
40,000
36,697
36,697
150,091
J W Raff
269,000
Other Key Management Personnel
O T Grogan
139,123
A Szabo
(1 Jul 04 to 31 Jan 05)
B P Rogers
T D McCarthy
G Y Krippner
J R Paull
Totals
97,964
99,666
96,421
99,346
104,739
1,056,350
–
–
–
–
–
–
–
–
–
–
–
–
–
80,000
3,303
–
3,303
3,303
89,909
78,524
92,350 A
22,373
–
27,368
24,897
19,920
–
21,711
8,670
20,065
18,682
10,734
9,426
–
–
–
–
–
–
80,000
40,000
40,000
40,000
40,000
240,000
439,874
3,589
186,796
12,966
43,585
19,811
39,622
15,849
119,600
190,684
159,811
169,622
130,014
173,082
271,547
135,422
1,636,401
There were no retirement benefits paid during the year ended 30 June 2005.
A $50,000 of $92,350 contributed to J W Raff’s superannuation was the result of a bonus
C. Service Agreements
Remuneration and other terms of employment for the CEO and
the specified executives are formalised in service agreements.
Each of these agreements provides for the provision of
performance-related cash bonuses, and other benefits
J W Raff Chief Executive Officer
– Fixed term of three years from 1 September 2004
– Base salary, inclusive of superannuation, per annum as
at 30 June 2006 of $333,218, to be reviewed annually and
increased by an amount no less than the annual increase
in the Consumer Price Index
– Fringe benefits – fully maintained motor vehicle and
on-site car parking
– Subject to termination by either party upon the giving of a
minimum notice period of one year, except that the Company
shall be entitled to terminate the executive’s employment
summarily in the following circumstances:
(i) The Executive wilfully disobeys or disregards a lawful
direction given to the Executive or is otherwise guilty
of serious misconduct;
(ii) The Executive has any direct or indirect interest in any
business or matter which conflicts with the proper
including participation, when eligible, in the Starpharma
Holdings Employee Option Plan. Other major provisions of the
agreements relating to remuneration are set out below.
performance of the Executive’s duties unless the
Executive has provided prior written disclosure of such
interest and the Company has waived any objection
to the Executive maintaining such an interest;
(iii) The Executive is guilty of any wilful breach or continued
neglect of the terms of this Agreement or of the duties
and obligations which the Executive is required to
perform or meet; or
(iv) The Executive becomes bankrupt or makes a
composition or arrangement with the Executive’s
creditors generally or takes advantage of any statute
for the relief of insolvent debtors such that, in the
reasonable opinion of the Company, the performance
of the Executive of the Executive’s duties and
responsibilities is adversely affected or the commercial
and business interests of the Company are prejudiced
and/or damaged.
Starpharma Holdings Limited Annual Report 2006
28
Director's report
C. Service Agreements (continued)
J K Fairley Chief Operating Officer
– No fixed term of agreement
– Base salary, inclusive of superannuation, per annum as at
30 June 2006 of $260,000, to be reviewed annually and
increased by an amount no less than the annual increase in
the Consumer Price Index
– Fringe benefits – on-site car parking.
– Payment of termination benefit on termination by the
employer, other than for serious breach of obligations to the
employer, wilful neglect of duty or serious misconduct, equal
to six months gross remuneration.
O T Grogan VP – Commercial Development & Licensing
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at
30 June 2006 of $214,675, to be reviewed annually by the
remuneration committee.
– Fringe benefits – on-site car parking.
– Payment of termination benefit on termination by the
employer, other than for serious breach of obligations to the
employer, wilful neglect of duty or serious misconduct, equal
to thirteen weeks gross remuneration.
B P Rogers Company Secretary and Chief Financial Officer
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at
30 June 2006 of $157,295, to be reviewed annually by the
remuneration committee.
– Fringe benefits – on-site car parking.
– Payment of termination benefit on termination by the
employer, other than for serious breach of obligations to the
employer, wilful neglect of duty or serious misconduct, equal
to thirteen weeks gross remuneration.
T D McCarthy VP – Drug Development
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at
30 June 2006 of $180,000, to be reviewed annually by the
remuneration committee.
– Fringe benefits – on-site car parking.
– Payment of termination benefit on termination by the
employer, other than for serious breach of obligations to the
employer, wilful neglect of duty or serious misconduct, equal
to thirteen weeks gross remuneration.
D. Share-based compensation
Options are granted under the Starpharma Holdings Limited
Employee Share Option Plan (ASX code SPLAM) (“the Plan”)
which was approved by shareholders at the 2004 annual
general meeting. All employees of the Company or associated
companies are eligible to participate in the plan. Options are
G Y Krippner Head of Chemistry
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at
30 June 2006 of $145,000, to be reviewed annually by the
remuneration committee.
– Fringe benefits – on-site car parking.
– Payment of termination benefit on termination by the
employer, other than for serious breach of obligations to the
employer, wilful neglect of duty or serious misconduct, equal
to thirteen weeks gross remuneration.
J R Paull VP – Regulatory and Clinical Affairs
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at
30 June 2006 of $145,000, to be reviewed annually by the
remuneration committee.
– Fringe benefits – on-site car parking.
– Payment of termination benefit on termination by the
employer, other than for serious breach of obligations to the
employer, wilful neglect of duty or serious misconduct, equal
to thirteen weeks gross remuneration.
C P Barrett VP – Business Development
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at
30 June 2006 of $125,725, to be reviewed annually by the
remuneration committee.
– Payment of termination benefit on termination by the
employer, other than for serious breach of obligations to the
employer, wilful neglect of duty or serious misconduct, equal
to thirteen weeks gross remuneration.
N J Baade Financial Controller
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at
30 June 2006 of $110,000, to be reviewed annually by the
remuneration committee.
– Fringe benefits – on-site car parking.
– Payment of termination benefit on termination by the
employer, other than for serious breach of obligations to the
employer, wilful neglect of duty or serious misconduct, equal
to four weeks gross remuneration.
granted under the plan for no consideration. Options are
normally granted for a four or five year period and become
exercisable on the second anniversary of the date of grant.
The terms and conditions of each grant of options affecting
remuneration of each director of the company and the key
management personnel of the group in this or future reporting
periods are as follows:
Grant date
Expiry date
Exercise price
Value per option at grant date
Date exercisable
8 February 2004
8 February 2009
12 May 2005
12 May 2010
4 July 2005
18 July 2005
4 July 2010
18 July 2010
$0.9375
$0.9375
$0.9375
$0.9375
Options granted under the Plan carry no dividend or voting rights.
29 Starpharma Holdings Limited Annual Report 2006
$0.46
$0.25
$0.15
$0.16
9 February 2006
13 May 2007
5 July 2007
19 July 2007
D. Share-based compensation (continued)
When exercisable, each option is convertible into one ordinary
share of the Company to be allotted not more than ten business
days after exercise.
The weighted average remaining contractual life of share options
outstanding at the end of the period was 2.65 years (2005: 2.99
years).
Director's report
Fair value of options granted
The weighted average assessed fair value at grant date of
options granted during the year ended 30 June 2006 was $0.15
cents per option (2005: $0.33 cents). The fair value at grant date
is independently determined using a Black-Scholes option
pricing model that takes into account the exercise price, the
term of the option, the impact of dilution, the share price at grant
date and the expected price volatility of the underlying share,
the expected dividend yield and the risk free rate for the term
of the option.
Options granted during the year ended 30 June 2006 were:
The expected price volatility is based on the historic volatility
(based on the remaining life of the options), adjusted for any
expected changes to future volatility due to publicly available
information.
Options are granted for no consideration, have a four or five
year life and become exercisable on the second anniversary of
the date of grant.
Options granted on:
Number of options granted
Expiry date
Exercise price
Expected price volatility of the company’s shares
Risk-free interest rate
Expected dividend yield
Share price at grant date
Assessed fair value
Options granted during the year ended 30 June 2005 were:
Options granted on:
Number of options granted
Expiry date
Exercise price
Expected price volatility of the company’s shares
Risk-free interest rate
Expected dividend yield
Share price at grant date
Assessed fair value
4 July 2005
300,000
4 July 2010
93.75 cents
46.9%
5.2%
–
50 cents
14.56 cents
18 July 2005
100,000
18 July 2010
93.75 cents
46.9%
5.2%
–
52 cents
15.74 cents
1 July 2004
31 Dec 2004
12 May 2005
100,000
1 July 2009
93.75 cents
75.0%
5.9%
–
192,000
100,000
31 Dec 2009
12 May 2010
93.75 cents
93.75 cents
47.6%
5.3%
–
46.9%
5.7%
–
74 cents
74 cents
66 cents
45.00 cents
30.52 cents
25.33 cents
Shares issues on the exercise of options
No shares in Starpharma Holdings Limited have been issued on the exercise of options in either the current or prior year.
Starpharma Holdings Limited Annual Report 2006
30
Director's report
D. Share-based compensation (continued)
Share options granted to directors and key management personnel
Details of options over unissued ordinary shares of Starpharma Holdings Limited provided as remuneration to any of the directors
or the key management personnel of the Company and consolidated entity with greatest authority as part of their remuneration were
as follows:
Number of options granted during the year
Number of options vested during the year
Name
C P Barrett
J K Fairley
O T Grogan
G Y Krippner
T D McCarthy
J R Paull
B P Rogers
2006
100,000
300,000
–
–
–
–
–
2005
–
–
100,000
–
–
–
–
2006
2005
–
–
–
200,000
100,000
80,000
220,000
–
–
–
–
–
–
–
The options were granted under the Starpharma Holdings
Limited Employee Share Option Plan on the dates indicated.
Details of options granted to the directors and the five most
highly remunerated officers of the Group can be found in
section D of the remuneration report on page 29. No options
have been granted since the end of the year.
No other directors or key management personnel hold options
under the Plan.
500,000 Employee Share Options were offered to Dr J K Fairley
subject to shareholder approval at the next Annual General
Meeting of the Company.
E. Additional Information – Unaudited
The options will be granted in accordance with the terms of the
Company’s Employee Share Option Plan and will include the
following terms and conditions:
– Issue price: nil.
– Exercise price: 45.08 cents per share (determined on the
basis of market value plus 15%. Market value is based on
a 15 day volume weighted average price of the Company’s
shares prior to 1 July 2006, the date of appointment of the
Executive to the position of CEO).
– Exercise period: From 1 July 2007 to 30 June 2009.
Principles used to determine the nature and amount of remuneration: relationship between remuneration
and company performance
Policies are structured to reward performance that could
reasonably be expected to increase shareholder value, and the
performance of the Company over the current and prior year
is taken into account in determining overall levels of executive
reward. As the company is in a research and development
phase and is not generating earnings, service agreements for
executives do not include pre-determined bonus or share
option allocations. Bonuses may be awarded or options
offered for outstanding performance that contributes to
achievement of specific milestones. Further details of the
company’s remuneration policy are set out in Section A of
the Remuneration Report on page 25.
Further details relating to options are set out below.
Name
J K Fairley
O T Grogan
B P Rogers
T D McCarthy
G Y Krippner
J R Paull
C P Barrett
N J Baade
A
Remuneration
consisting of options
14.97%
B
Value at
grant date
$
45,000
–
–
–
–
–
–
–
–
–
–
14.01%
–
16,000
–
C
Value at
exercise date
$
D
Value at
lapse date
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
E
Total of
columns B to D
$
45,000
–
–
–
–
–
16,000
–
31 Starpharma Holdings Limited Annual Report 2006
E. Additional Information – Unaudited (continued)
Director's report
A = The percentage of the value of remuneration consisting
of options, based on the value at grant date set out
in column B.
B = The value at grant date calculated in accordance with
AASB 2 Share-based payments of options granted during
the year as part of remuneration.
C = The value at exercise date of options that were granted
Details of remunerations: cash bonuses and options
For each cash bonus and grant of options included in the tables
on pages 26 to 31, the percentage of the available bonus or
grant that was paid, or that vested, in the financial year, and the
percentage that was forfeited because the person did not meet
the service and performance criteria is set out below. No part of
the bonuses is payable in future years.
as part of remuneration and were exercised during the year.
D = The value at lapse date of options that were granted as part
of remuneration and that lapsed during the year.
The options vest over the specified periods providing vesting
criteria are met. No options will vest if the conditions are not
satisfied, hence at 30 June 2006 the minimum value of the
options yet to vest is nil. The maximum value of the options yet
to vest has been determined assuming all conditions are met.
Cash bonus
Options
Paid
%
Forfeited
%
Year
Granted
Vested
%
Forfeited
%
Financial years in
which options
may vest
Minimum total
value of grant
yet to vest
Maximum total
value of grant
yet to vest
100
100
–
100
100
–
100
–
–
–
–
–
–
–
–
–
–
–
–
2006
2003
2005
2004
2004
2004
2004
2006
–
–
100
50
100
100
100
–
–
–
–
–
–
–
–
–
–
–
30/06/2008
–
30/06/2007
30/06/2008
–
–
nil
nil
nil
nil
nil
nil
nil
nil
–
–
22,081
nil
10,356
nil
nil
nil
nil
8,248
–
Name
J W Raff
J K Fairley
O T Grogan
B P Rogers
T D McCarthy
G Y Krippner
J R Paull
C P Barrett
N J Baade
Starpharma Holdings Limited Annual Report 2006
32
Director's report
E. Additional Information – Unaudited (continued)
Shares under option
Unissued ordinary shares of Starpharma Holdings Limited under option at the date of this report are as follows:
Date options granted
12 April 2002
21 June 2002
6 February 2004
8 February 2004
31 December 2004
12 May 2005
4 July 2005
18 July 2005
Expiry date
11 April 2007
30 June 2007
31 December 2008
8 February 2009
31 December 2009
12 May 2010
4 July 2010
18 July 2010
Issue price of shares
Number under option
$0.9375
$0.9375
$0.7300
$0.9375
$0.9375
$0.9375
$0.9375
$0.9375
Total:
220,000
200,000
200,000
720,000
167,000
100,000
300,000
100,000
2,007,000
No option holder has any right under the options to participate in any other issue of the company or of any other entity.
Insurance of officers
During the financial year, Starpharma Holdings Limited
arranged to insure the directors and executive officers of the
Company and related bodies corporate. The terms of the
policy prohibit disclosure of the amount of the premium paid.
The liabilities insured are legal costs that may be incurred
in defending civil or criminal proceedings that may be brought
against the officers in their capacity as officers of entities
in the Group, and any other payments arising from liabilities
incurred by the officers in connection with such proceedings.
This does not include such liabilities that arise from conduct
involving a wilful breach of duty by the officers or the improper
use by the officers of their position or of information to gain
advantage for themselves or someone else or to cause detriment
to the company.
Audit & non audit services
The Company may decide to employ the auditor on
assignments additional to their statutory audit duties where
the auditor’s expertise and experience with the Company
and/or the consolidated entity are important.
Details of the amounts paid or payable to the auditor
(PricewaterhouseCoopers) for audit and non-audit services
provided during the year are set out below.
Audit & non audit services (continued)
The board of directors has considered the position and, in
accordance with the advice received from the audit and risk
management committee is satisfied that the provision of the
non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act
2001. The directors are satisfied that the provision of non-audit
services by the auditor, as set out below, did not compromise
the auditor independence requirements of the Corporations
Act 2001 for the following reasons:
– all non-audit services have been reviewed by the audit &
risk management committee to ensure they do not impact
the impartiality and objectivity of the auditor
– none of the services undermine the general principles
relating to auditor independence as set out in Professional
Statement F1, including reviewing or auditing the auditor’s
own work, acting in a management or a decision-making
capacity for the Company, acting as advocate for the
Company or jointly sharing economic risk and rewards.
During the year the following fees were paid or payable for
services provided by the auditor (PricewaterhouseCoopers)
of the parent entity, its related practices and non-related
audit firms:
No taxation or advisory services have been provided in either the current or prior year.
Assurance Services
Audit or review of financial reports of the entity or any entity in the consolidated entity
under the Corporations Act 2001
Other assurance services:– Grant reviews & program audits
2006
$
114,990
7,500
2005
$
92,500
22,000
33 Starpharma Holdings Limited Annual Report 2006
Director's report
Auditors’ Independence Declaration
A copy of the auditors’ independence declaration as required
under section 307C of the Corporations Act 2001 is set out on
page 35.
Auditor
PricewaterhouseCoopers continues in offi ce in accordance with
section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of the
Directors.
Peter T Bartels, AO
Director
26th September 2006
Melbourne
Starpharma Holdings Limited Annual Report 2006
34
35 Starpharma Holdings Limited Annual Report 2006
Corporate Governance Statement
Starpharma Holdings Limited (the Company) and the Board
are committed to achieving and demonstrating the highest
standards of corporate governance. The Board guides
and monitors the Company’s activities on behalf of the
shareholders. In developing policies and setting standards
the Board considers the ASX Corporate Governance Council’s
Principles of Good Corporate Governance and Best Practice
Recommendations (“the ASX Recommendations”).
The Corporate Governance Statement set out below describes
the Company’s current corporate governance practices which
the Board considers to substantially accord with the ASX
Recommendations.
All these practices, unless otherwise stated, were in place for
the entire year. This corporate governance statement is
available on the Company’s website. A table at the end of this
statement provides a cross-reference of relevant sections of the
statement against the ASX Recommendations.
1. The Board of Directors
The relationship between the Board and senior management
is critical to the Group’s long term success. The directors are
responsible to the shareholders for the performance of the
Group in both the short and the longer term and seek to
balance sometimes competing objectives in the best interests
of the Group as a whole. Their focus is to enhance the interests
of shareholders and other key stakeholders and to ensure the
Group is properly managed.
Day to day management of the Group’s affairs and the
implementation of the corporate strategy and policy initiatives
are delegated by the Board to the Chief Executive Officer
(“CEO”) and senior executives. These delegations are reviewed
on an annual basis.
1.1 Board charter
The Board composition and responsibilities are set out
in the Board charter, which may be viewed in the Corporate
Governance section of the Company’s website.
1.2 Board meetings
Board meetings are held on a monthly basis, or more frequently
if required. A detailed management report is prepared by senior
management and distributed with board papers prior to each
meeting. The CEO and the Company Secretary attend all Board
meetings.
1.3 Board members
Details of the members of the Board, their experience,
qualifications, term of office and independent status are set out
in the directors’ report under the heading “Information on
Directors”. There are six non-executive directors, five of whom
are deemed independent under the principles set out below,
and one executive director at the date of signing the directors’
report. The composition of the Board changed on 1 July 2006
when Dr J K Fairley was appointed as a director and Dr J W Raff
reverted to a non-executive capacity.
The Board seeks to ensure that:
– at any point in time, its membership represents an
appropriate balance between directors with experience and
knowledge of the Group and directors with an external or
fresh perspective; and
– the size of the Board is conducive to effective discussion and
efficient decision-making.
1.4 Directors’ independence
The Company has adopted the criteria for assessing the
independence of a director as set out in the ASX
Recommendations. Materiality for the purposes of applying
these criteria is determined on both quantitative and qualitative
bases. An amount of 5% of the individual director’s net worth is
considered material, and in addition a transaction of any
amount or a relationship is deemed material if knowledge of it
may impact the shareholders’ understanding of the director’s
performance. A director is also not considered independent if
he has a substantial shareholding as defined in section 9 of the
Corporations Act or if he has been employed in an executive
capacity within the last three years. Under these criteria the
Board has determined that all non-executive directors were
independent at the date of this report with the exception of
Dr J W Raff, who was an executive director until 30 June 2006.
1.5 Term of office
The Company’s Constitution requires that one third of non-
executive 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.
1.6 Chairman and Chief Executive Officer
The Chairman is responsible for leading the Board, ensuring
directors are properly briefed in all matters relevant to their role
and responsibilities, facilitating Board discussions and
managing the Board’s relationship with the Group’s senior
executives. The CEO is responsible for implementing Group
strategies and policies. The Board policy is for these separate
roles to be undertaken by separate people.
1.7 Commitment
Board meetings are held on a monthly basis, or more frequently
if required. Meetings are held at the Company’s corporate
offices and laboratory facility in the Baker Building, 75
Commercial Road, Melbourne. The number of meeting of the
Board and of each Board committee held during the year ended
30 June 2006, 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 the annual
performance assessment.
Starpharma Holdings Limited Annual Report 2006
36
Corporate Governance Statement
1. The Board of Directors (continued)
1.7 Commitment (cotinued)
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.
1.8 Conflict of interests
Directors are expected to avoid any action, position or interest
that results in a conflict with an interest of the Company. A
director who has a material personal interest in a matter that
relates to the affairs of the Company must give notice of such
interest.
2. Corporate reporting
The CEO and the CFO 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 Group and are in accordance with relevant accounting
standards; and
3. 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. Board committees are chaired by
an independent director other than the Chairman of the Board.
Minutes of committee meetings are tabled at the following
Board meeting, and all matters determined by committees are
submitted to the full Board as recommendations for Board
decisions. Current committees of the Board are the following:
3.1 Audit and risk management committee
The audit and risk management committee consists of the
following independent non-executive directors:
Mr Ross Dobinson (Chairman)
Mr Leon Gorr
Dr Peter Jenkins
Details of these directors’ qualifications and attendance at
committee meetings are set out in the directors’ report pages
21 to 24.
The audit and risk management committee has appropriate
financial expertise and all members are financially literate and
have an appropriate understanding of the industry in which the
Group operates.
The committee meets at least twice a year, and has direct
access to the Company’s auditors. The charter of this
committee is to:
– review and report to the Board on the annual report, the half-
year financial report and all other financial information
published by the company or released to the market
37 Starpharma Holdings Limited Annual Report 2006
1.9 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.
1.10 Performance assessment
The Board undertakes an annual assessment of Board
performance. Each director completes a questionnaire on
matters such as composition, structure, and role of the Board
and performance of individual directors. These questionnaires
are reviewed by the remuneration & nomination committee and
the Chairman then meets individually with each director to
discuss the assessment.
– that the above statement is founded on a sound system of
risk management and internal compliance and control and
which implements the policies adopted by the Board and
that the Company’s risk management and internal
compliance and control is operating efficiently and effectively
in all material respects.
The Company adopted this reporting structure for the year
ended 30 June 2006.
– 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
– oversee the effective operation of the risk management
framework by:
> ensuring the effective implementation of the risk
management policy and program
> defining risk threshold levels for referral to the Board
> ensuring that an effective system of internal compliance
and control is in place
> ensuring staff charged with risk management
responsibilities have appropriate authority to carry out
their functions and have appropriate access to the audit
and risk management committee
> ensuring the allocation of sufficient resources for the
effective management of risk
– recommend to the Board the appointment, removal and
remuneration of the external auditors, and review the terms
of their engagement, the scope and quality of the audit and
assess performance
– consider the independence and competence of the external
auditor on an ongoing basis
– review and monitor related party transactions and assess
their propriety
– assist the Board in the development and monitoring of
statutory compliance and ethics programs
– provide assurance to the Board that it is receiving adequate,
up to date and reliable information
– oversee the Group’s transition to Australian equivalent to
International Financial Reporting Standards (AIFRS)
– report to the Board on matters relevant to the committee’s
role and responsibilities.
3. Board committees (continued)
3.2 Remuneration and nomination committee
The remuneration and nomination committee consists of the
following independent non-executive directors:
Mr Ross Dobinson (Chairman)
Mr Peter Bartels
Mr Leon Gorr
Details of these directors’ attendance at committee meetings
are set out in the directors’ report on pages 21 to 24.
The main responsibilities of the committee are to:
– conduct annual reviews of board membership having regard
to present and future needs of the Company and make
recommendations on board composition and appointments
– conduct an annual review of and conclude on the
independence of each director
– propose candidates for board vacancies
– oversee board succession including the succession of the
Chairman
– oversee the annual assessment of board performance
– advise the board on remuneration and incentive 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.
4. External auditors
The Company’s policy is to appoint external auditors who
clearly demonstrate quality and independence. The
performance of the external auditor is reviewed annually.
PricewaterhouseCoopers were appointed as the external
auditors at the commencement of the Company’s operations in
1996. It is PricewaterhouseCoopers policy to rotate audit
engagement partners on listed companies at least every five
years, and the current audit engagement partner assumed
responsibility for the conduct of the audit in 2005.
5. Risk assessment and management
The Board, through the audit and risk management committee,
is responsible for ensuring there are adequate policies in
relation to risk management, compliance and internal control
systems. The Company operates in a challenging and dynamic
environment, and risk management is viewed as integral to
realising new opportunities as well as identifying issues that
may have an adverse effect on the Company’s existing
operations and its sustainability. The Board is committed to a
Corporate Governance Statement
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.
The remuneration and nomination committee’s terms of
reference include responsibility for reviewing any transaction
between the organisation and the directors, or any interest
associated with the directors, to ensure the structure and the
terms of the transaction are in compliance with the Corporations
Act 2001 and are appropriately disclosed.
The Remuneration Report is set out on pages 25 to 33.
3.3 Research committee
The research committee consists of the following directors:
Dr Peter Jenkins (Chairman)
Independent non-executive director
Dr Jackie Fairley
Chief Executive Officer and director
(From 1 July 2006)
Prof Peter Colman
Independent non-executive director
Dr John Raff (Until 30 June 2006)
Director
(Chief Executive Officer until 30 June 2006)
The charter of the research committee is:
– to ensure that the Board is kept fully informed of
developments relating to the Company’s research activities
and development progress against milestones; and
– to advise the Board on scientific matters in relation to the
Company’s continuous disclosure obligations under the
listing rules of the Australian Stock Exchange Limited.
An analysis of fees paid to the external auditors, including a
break-down of fees for non-audit services, is provided in note
27 to the financial statements. It is the policy of the external
auditors to provide an annual declaration of their independence
to the audit and risk management committee.
The external auditor is requested to attend the annual general
meeting and be available to answer shareholder questions
about the conduct of the audit and the preparation and content
of the audit report.
proactive approach in managing material business risks, and it
aims to ensure that effective risk management practices are a
key element of the Company’s culture. The risk management
policy, which is available on the Company website, sets out the
responsibilities and authorities of the Board, the audit and risk
management committee, the CEO and Company Secretary,
and the senior management team. The Company Secretary is
responsible to the Board for the overall implementation of the
risk management program.
Starpharma Holdings Limited Annual Report 2006
38
Corporate Governance Statement
6. The environment, occupational health and safety
The Company recognises the importance of environmental
issues and is committed to the highest levels of performance.
There are adequate systems in place to ensure compliance with
Commonwealth and State environmental regulations and the
directors are not aware of any breach of applicable
environmental regulations.
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 monthly to review the development and implementation
of OH&S policy and procedures, to consider any work related
safety matters or incidents, and to ensure compliance with
relevant legislation and guidelines. The CEO is represented on
the OH&S committee by the Company Secretary.
7. Code of conduct
The Company has adopted a code of conduct reflecting the
core values of the Company and setting out the standards of
ethical behaviour expected of directors, officers and employees
in all dealings and relationships including with shareholders,
contractors, customers and suppliers, and with the Company.
The code of conduct is available in the Corporate Governance
section of the Company’s website.
8. 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.
9. Trading in Company securities
The purchase and sale of Company securities by directors,
executives and employees is only permitted (subject to also
complying with applicable laws) 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.
Except with the prior approval of the Chairman, no director or
executive may enter into any transaction which would have the
effect of hedging or otherwise transferring to any other person
the risk of any fluctuation in the value of:
(a) securities in the Company which are subject to a restriction
on disposal under an employee share or incentive plan; or
(b) options or performance rights (or any unvested securities in
the Company underlying them).
The Company’s share trading policy is discussed with each
new employee as part of their induction training.
10. Continuous disclosure and shareholder communication
The Board has appointed the Company Secretary as the person
responsible for disclosure of information to the Australian Stock
Exchange Limited (ASX). This role includes responsibility for
ensuring compliance with the continuous disclosure
requirements of the ASX Listing Rules and overseeing and co-
ordinating information disclosure to the ASX, analysts, brokers,
shareholders, the media and the public. All ASX announcements
are posted on the Company’s web site as soon as practicable
after release to the ASX. Procedures have been established
for reviewing whether there is any price sensitive information
that should be disclosed to the market, or whether any price
sensitive information may have been inadvertently disclosed.
39 Starpharma Holdings Limited Annual Report 2006
Corporate Governance Statement
11. Reporting against ASX Recommendations
The following table cross-references the Company’s corporate
governance statement against the ASX Recommendations. The
full text of the ASX Recommendations is available from http://
www.asx.com.au/CorporateGovernance.
Recommendation
Details
Corporate Governance Statement section
1.1
2.1
2.2
2.3
2.4
2.5
3.1
3.2
3.3
4.1
4.2
4.3
4.4
4.5
5.1
5.2
6.1
6.2
7.1
7.2
7.3
8.1
9.1
9.2
9.3
9.5
Functions of the Board and management
Independent directors
Independent chairperson
Role of the Chairman and CEO
Nomination Committee
Reporting on Principle 2
Code of conduct
Company security trading policy
Reporting on Principle 3
Attestations by CEO and CFO
Audit committee
Structure of audit committee
Audit committee charter
Reporting on Principle 4
Continuous disclosure
Reporting on Principle 5
Communications strategy
Auditor to attend general meetings
Risk oversight and management
CEO and CFO statements
Reporting on Principle 7
1.1
1.4
1.4
1, 1.1, 1.6
3.2
1.1–1.10
7
9
11
2
3.1
3.1
3.1
3.1, 11
10
Introduction, 11
10
4
2, 5
2
Introduction, 11
Performance evaluation of Board and executives
1.10, 3.2
Remuneration disclosures
Remuneration committee
Executive and non-executive directors’ remuneration
Reporting on Principle 9
10.1
Company code of conduct
3.2
3.2
3.2
3.2
7
Starpharma Holdings Limited Annual Report 2006
40
Financial Report
Annual Financial Report
30 June 2006
Contents
Income statements
Balance sheets
Statements of changes in equity
Cash flow statements
Notes to the financial statements
Directors’ declaration
Independent audit report to the members
42
43
44
45
46
77
78
This financial report covers both Starpharma Holdings Limited
as an individual entity and the consolidated entity consisting of
Starpharma Holdings Limited and its subsidiaries. The financial
report is presented in the Australian currency.
A description of the nature of the consolidated entity’s
operations and its principal activities is included in the review
of operations on pages 2–18 and in the directors’ report on
pages 19–34, both of which are not part of the financial report.
Starpharma Holdings Limited is a company limited by shares,
incorporated and domiciled in Australia. Its registered office
and principal place of business is:
The financial report was authorised for issue by the directors
on 26th September 2006. The company has the power to
amend and reissue the financial report.
Starpharma Holdings Limited
Baker Building, 75 Commercial Road
Melbourne, Victoria, 3004, Australia
41 Starpharma Holdings Limited Annual Report 2006
Income statements
For the year ended 30 June 2006
Financial Report
Consolidated
Parent Entity
Notes
2006
$
2005
$
2006
$
2005
$
5
6
8
Revenue from continuing operations
Other income
Administration expense
Research and development expense
Provision for diminution
Finance costs
Share of results of associates accounted
for using the equity method
Loss before income tax
Income tax expense
Loss for the year
Loss attributable to minority interests
Loss attributable to members
of Starpharma Holdings Limited
Loss per share for loss from continuing
operations attributable to the ordinary
equity holders of the company
571,837
639,454
526,606
601,679
6,422,066
1,409,844
–
–
(3,906,186)
(3,541,814)
(2,037,530)
(1,118,152)
(9,945,396)
(7,007,693)
–
–
–
–
(7,996,332)
(6,912,407)
(23,285)
(8,290)
(641,825)
760,708
–
–
–
–
(7,522,789)
(7,747,791)
(9,507,256)
(7,428,880)
–
–
–
–
(7,522,789)
(7,747,791)
(9,507,256)
(7,428,880)
–
–
–
–
(7,522,789)
(7,747,791)
(9,507,256)
(7,428,880)
Basic loss per share
Diluted loss per share
35
35
(5.69) cents
(6.97) cents
(5.69) cents
(6.97) cents
The above income statements should be read in conjunction with the accompanying notes.
Starpharma Holdings Limited Annual Report 2006
42
Financial Report
Balance Sheets
As at 30 June 2006
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Receivables
Property, plant and equipment
Intangible assets
Investments accounted for using the equity method
Other financial assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Borrowings
Deferred Income
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Deferred Income
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
Consolidated
Parent Entity
Notes
2006
$
2005
$
2006
$
2005
$
9
10
11
14
15
12
13
16
18
17
19
20
21
22
23
24
25
14,283,824
8,166,259
12,361,134
6,322,524
2,824,267
187,656
94,292
91,087
17,108,091
8,353,915
12,455,426
6,413,611
–
–
1,431,124
1,232,764
–
–
4,086,538
–
4,086,538
2,387,312
2,913,061
–
–
–
–
–
–
–
5,208,750
5,368,747
7,904,974
4,145,825
9,295,288
5,368,747
25,013,065
12,499,740
21,750,714
11,782,358
1,897,819
1,647,182
1,484,154
765,276
331,447
279,589
142,092
60,007
661,337
378,063
–
–
–
–
–
–
3,032,695
2,364,841
1,484,154
765,276
315,412
107,630
241,342
79,750
89,184
–
664,384
168,934
–
–
–
–
–
–
–
–
3,697,079
2,533,775
1,484,154
765,276
21,315,986
9,965,965
20,266,560
11,017,082
65,375,467
46,821,956
65,375,467
46,821,956
497,374
178,076
421,838
218,615
(44,556,855)
(37,034,067)
(45,530,745)
(36,023,489)
21,315,986
9,965,965
20,266,560
11,017,082
The above balance sheets should be read in conjunction with the accompanying notes.
43 Starpharma Holdings Limited Annual Report 2006
Financial Report
Statements of changes in equity
For the year ended 30 June 2006
Notes
Consolidated
2006
$
2005
$
Parent Entity
2006
$
2005
$
Total equity at the beginning of the year
9,965,965
17,592,496
11,017,082
18,284,163
Exchange differences on translation
of foreign operations
24
116,075
(40,539)
Net income recognised directly in equity
116,075
(40,539)
–
–
–
–
Profit (loss) for the year
Total recognised income
and expense for the year
Transactions with equity holders
in their capacity as equity holders:
Employee share options
Contributions of equity, net of transaction costs
(7,522,789)
(7,747,791)
(9,507,256)
(7,428,880)
(7,406,714)
(7,788,330)
(9,507,256)
(7,428,880)
24
23
203,223
161,799
203,223
161,799
18,553,512
–
18,553,512
–
Total equity at the end of the year
21,315,986
9,965,965
20,266,560
11,017,082
The above statements of changes in equity should be read in conjunction with the accompanying notes.
Starpharma Holdings Limited Annual Report 2006
44
Financial Report
Cash flow Statements
For the year ended 30 June 2006
Cash flow 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 paid
Consolidated
Parent Entity
Notes
2006
$
2005
$
110
23,411
4,360,527
1,787,906
2006
$
–
–
2005
$
13,772
–
(12,405,980)
(8,253,163)
(1,046,208)
(1,123,803)
574,151
641,547
538,295
610,391
(18,756)
(8,290)
–
–
Net cash outflows from operating activities
33
(7,489,948)
(5,808,589)
(507,913)
(499,640)
Cash flow from investing activities
Equity investment
Loans advanced to subsidiaries
Loans advanced from subsidiaries
Repayment of loans advanced to associated entity
Receipts from property, plant and equipment
Payments for property, plant and equipment
(1,500,699)
–
(1,500,699)
–
–
–
–
–
–
286,306
25,904
–
(463,184)
(405,294)
(7,683,238)
(6,750,608)
50,129
–
–
–
259,294
289,608
–
–
Net cash outflows from investing activities
(437,280)
(1,619,687)
(7,633,109)
(7,702,405)
Cash flows from financing activities
Proceeds from issue of shares
Share issue transaction costs
Payments of finance leases
14,990,045
(810,413)
–
–
14,990,045
(810,413)
(134,839)
(63,765)
–
Net cash inflows (outflows) from financing activities
14,044,793
(63,765)
14,179,632
–
–
–
–
Net increase (decrease) in cash and cash
equivalents held
Cash and cash equivalents at the beginning of the
period
6,117,565
(7,492,041)
6,038,610
(8,202,045)
8,166,259
15,658,300
6,322,524
14,524,569
Cash and cash equivalents at the end of the period
9
14,283,824
8,166,259
12,361,134
6,322,524
The above cash flow statements should be read in conjunction with the accompanying notes.
45 Starpharma Holdings Limited Annual Report 2006
Notes to the financial statements
Financial Report
30 June 2006
Contents
1. Summary of significant accounting policies
2. Financial Risk Management
3. Critical accounting estimates and judgments
4. Segment information
5. Revenue
6. Other income
7. Expenses
8.
Income tax expense
9. Current assets – Cash and cash equivalents
10. Current assets – Trade and other receivables
11. Non-current assets – Receivables
12. Non-current assets – Investments accounted for using the equity method
13. Non-current assets – Other financial assets
14. Non-current assets – Property, plant and equipment
15. Non-current assets – Intangible assets
16. Current liabilities – Trade and other payables
17. Current liabilities – Borrowings
18. Current liabilities – Provisions
19. Current liabilities – Deferred Income
20. Non-current liabilities – Borrowings
21. Non-current liabilities – Provisions
22. Non-current liabilities – Deferred Income
23. Contributed equity
24. Reserves
25. Accumulated Losses
26. Key management personnel disclosures
27. Remuneration of auditors
28. Contingencies
29. Commitments
30. Subsidiaries
31. Investments in associates
32. Events occurring after the balance sheet date
33. Reconciliation of profit after income tax to net cash inflow from operating activities
34. Non–cash financing activities
35. Earnings per share
36. Share-based payments
37. Related party transactions
38. Explanation of transition to Australian equivalents to IFRSs
Page
47
52
52
52
53
53
53
54
55
55
56
56
57
57
58
58
58
59
59
59
59
59
60
60
61
61
65
65
65
67
68
69
70
70
70
71
73
74
Starpharma Holdings Limited Annual Report 2006
46
Financial Report
1. Summary of significant accounting policies
The principal accounting policies adopted in the preparation
of the financial report are set out below. These policies have
been consistently applied to all periods presented, unless
otherwise stated. The financial report includes separate
financial statements for Starpharma Holdings Limited as
an individual entity and the consolidated entity consisting
of Starpharma Holdings Limited and its subsidiaries.
Subsidiaries are all those entities (including special purpose
entities) over which the Group has power to govern the financial
and operating policies, generally accompanying a shareholding
of more than one-half of the voting rights. The existence and
effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Group
controls another entity.
(a) Basis of preparation
This general purpose financial report has been prepared
in accordance with Australian equivalents to International
Financial Reporting Standards (AIFRS), other authoritative
pronouncements of the Australian Accounting Standards
Board, Urgent Issues Group Interpretations and the
Corporations Act 2001.
Compliance with IFRSs
Australian Accounting Standards include AIFRS. Compliance
with AIFRS ensures that the consolidated financial statements
and notes of Starpharma Holdings Limited comply with
international Financial Reporting Standards (IFRSs). The parent
entity financial statements and notes also comply with IFRSs
except that is has elected to apply the relief provided to parent
entities in respect of certain disclosure requirements contained
in AASB 132 Financial Instruments: Presentation and Disclosure.
Application of AASB 1 First-time Adoption of Australian
Equivalents to International Financial Reporting Standards
(AIFRS)
These financial statements are the first Starpharma Holdings
Limited financial statements to be prepared in accordance with
AIFRS. AASB 1 First time Adoption of Australian Equivalents to
International Financial Reporting Standards has been applied in
preparing these financial statements.
Financial statements of Starpharma Holdings Limited until 30
June 2005 had been prepared in accordance with previous
Australian Generally Accepted Accounting Principles (AGAAP).
AGAAP differs in certain respects from AIFRS. When preparing
the Starpharma Holdings Limited 2006 financial statements,
management has amended certain accounting, valuation and
consolidation methods applied in the previous AGAAP financial
statements to comply with AIFRS. With the exception of financial
instruments, the comparative figures in respect of 2005 were
restated to reflect these adjustments. The Group has taken the
exemption available under AASB 1 to only apply AASB 132
Financial Instruments: Disclosure and Presentation and AASB
139 Financial Instruments: Recognition and Measurement from
1 July 2005.
Reconciliations and descriptions of the effect of transition from
previous AGAAP to AIFRS on the Group’s equity and its net
income are given in note 38.
Historical cost convention
These financial statements have been prepared under the
historical cost convention.
(b) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the assets
and liabilities of all subsidiaries of Starpharma Holdings Limited
(“company” or “parent company”) as at 30 June 2006 and
the results of all subsidiaries for the year then ended.
Starpharma Holdings Limited and its subsidiaries together are
referred to in this financial report as the Group or the
consolidated entity.
47 Starpharma Holdings Limited Annual Report 2006
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated
from the date that control ceases.
The purchase method of accounting is used to account for the
acquisition of subsidiaries by the Group (refer to note 1(i)).
Intercompany transactions, balances and unrealised gains on
transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by
the Group.
Minority interests in the results and equity of subsidiaries are
shown separately in the consolidated income statement and
balance sheet respectively.
Investments in subsidiaries are accounted for at cost in the
individual financial statements of Starpharma Holdings Limited.
(ii) Associates
Associates are all entities over which the Group has significant
influence but not control, generally accompanying a
shareholding of between 20% and 50% of the voting rights.
Investments in associates are accounted for in the parent entity
financial statements using the cost method and in the
consolidated financial statements using the equity method of
accounting, after initially being recognised at cost. The Group’s
investment in associates includes goodwill (net of any
accumulated impairment loss) identified on acquisition
The Group’s share of its associates’ post-acquisition profits
or losses is recognised in the income statement, and its share
of post-acquisition movements in reserves is recognised
in reserves. The cumulative post-acquisition movements
are adjusted against the carrying amount of the investment.
Dividends receivable from associates are recognised
in the parent entity’s income statement, while in the
consolidated financial statements they reduce the carrying
amount of the investment.
When the Group’s share of losses in an associate equals
or exceeds its interest in the associate, including any other
unsecured receivables, the Group does not recognise further
losses, unless it has incurred obligations or made payments
on behalf of the associate.
Unrealised gains on transactions between the Group and its
associates are eliminated to the extent of the Group’s interest in
the associates. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset
transferred. Accounting policies of associates have been
changed where necessary to ensure consistency with the
policies adopted by the group.
Financial Report
1. Summary of significant accounting policies (continued)
(c) Segment reporting
A business segment is a group of assets and operations
engaged in providing products or services that are subject to
risks and returns that are different to those of other business
segments. A geographical segment is engaged in providing
products or services within a particular economic environment
and is subject to risks and returns that are different to those of
segments operating in other economic environments.
(g) Income Tax
The income tax expense or revenue for the period is the tax
payable on the current period’s taxable income based on the
national income tax rate for each jurisdiction adjusted by
changes in deferred tax assets and liabilities attributable to
temporary differences between the tax bases of assets and
liabilities and their carrying amounts in the financial statements,
and to unused tax losses.
(d) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the
Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the
functional currency’). The consolidated financial statements are
presented in Australian dollars, which is Starpharma Holdings
Limited’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised
in the income statement.
Deferred tax assets and liabilities are recognised for temporary
differences at the tax rates expected to apply when the assets
are recovered or liabilities are settled, based on those tax rates
which are enacted or substantively enacted for each
jurisdiction. The relevant tax rates are applied to the cumulative
amounts of deductible and taxable temporary differences to
measure the deferred tax asset or liability. An exception is made
for certain temporary differences arising from the initial
recognition of an asset or a liability. No deferred tax asset or
liability is recognised in relation to these temporary differences if
they arose in a transaction, other than a business combination,
that at the time of the transaction did not affect either
accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those
temporary differences and losses.
(iii) Group companies
Assets and liabilities of associated entities are translated into
Australian currency at rates of exchange current at balance date,
while their incomes and expenses are translated at the average
of rates during the year. Exchange differences arising on
translation are taken to the foreign currency translation reserve.
Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount and tax
bases of investments in controlled entities where the parent
entity is able to control the timing of the reversal of the
temporary differences and it is probable that the differences will
not reverse in the foreseeable future.
(e) Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable. Amounts disclosed as revenue are net
of returns, trade allowances and amounts collected on behalf of
third parties. Interest revenue is recognised on a time proportion
basis using the effective interest rate method.
All revenue is stated net of the amount of Goods and Services
Tax (GST).
(f) Government Grants
Government grants include contract income awarded by
government bodies for research and development projects.
Grants from the government are recognised at their fair value
where there is a reasonable assurance that the grant will be
received and the Group will comply with all attached conditions.
Government grants relating to costs are deferred and
recognised in the income statement over the period necessary
to match them with the costs that they are intended to
compensate.
Government grants relating to the purchase of property, plant
and equipment are included in non-current liabilities as deferred
income and are credited to the income statement on a straight
line basis over the expected lives of the related assets.
Current and deferred tax balances attributable to amounts
recognised directly in equity are also recognised directly in
equity.
Starpharma Holdings Limited and its wholly-owned Australian
controlled entities have not implemented the tax consolidation
legislation.
(h) Leases
Leases of plant and equipment where the Group has
substantially all the risks and rewards of ownership are
classified as finance leases (note 29). Finance leases are
capitalised at the lease’s inception at the lower of the fair value
of the leased property and the present value of the minimum
lease payments. The corresponding rental obligations, net
of finance charges, are included in other long term payables.
Each lease payment is allocated between the liability and
finance cost. The finance cost is charged to the income
statement over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability
for each period. The plant and equipment acquired under
finance leases is depreciated over the shorter of the asset’s
useful life and the lease term.
Leases in which a significant portion of the risks and rewards of
ownership are retained by the lessor are classified as operating
leases (note 29). Payments made under operating leases (net
of any incentives received from the lessor) are charged to the
income statement on a straight-line basis over the lease term.
Lease income from operating leases is recognised in income
on a straight-line basis over the lease term.
Starpharma Holdings Limited Annual Report 2006
48
Financial Report
1. Summary of significant accounting policies (continued)
(i) Business combinations
The purchase method of accounting is used to account for all
business combinations, including business combinations
involving entities or businesses under control, regardless of
whether equity instruments or other assets are acquired. Cost is
measured as the fair value of the assets given, shares issued or
liabilities incurred or assumed at the date of exchange plus
costs directly attributable to the acquisition. Where equity
instruments are issued in an acquisition, the fair value of the
instruments is their published market price as at the date of
exchange unless, in rare circumstances, it can be
demonstrated that the published price at the date of exchange
is an unreliable indicator of fair value and that other evidence
and valuation methods provide a more reliable measure of fair
value. Transaction costs arising on the issue of equity
instruments are recognised directly in equity.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date, irrespective of
the extent of any minority interest. The excess of the cost of
acquisition over the fair value of the Group’s share of the
identifiable net assets acquired is recorded as goodwill (refer to
note 1(q)). If the cost of acquisition is less than the fair value of
the net assets of the subsidiary acquired, the difference is
recognised directly in the income statement, but only after a
reassessment of the identification and measurement of the net
assets acquired.
Where settlement of any part of cash consideration is deferred,
the amounts payable in the future are discounted to their
present value as at date of exchange. The discount rate used is
the entity’s incremental borrowing rate, being the rate at which a
similar borrowing could be obtained from an independent
financier under comparable terms and conditions.
(j) Impairment of assets
Assets that have an indefinite useful life are not subject to
amortisation and are tested annually for impairment. Assets that
are subject to amortisation are reviewed for impairment
whenever events or changes in circumstance indicate that the
carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell
and value in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash generating units).
(k) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits
held at call with financial institutions and other short-term, highly
liquid investments with original maturities of three months or
less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
The amount of significant cash and cash equivalents not
available for use is disclosed in the note 9.
(l) Trade Receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost, less provision for
doubtful debts. Trade receivables are due for settlement no
more than 30 days from date of recognition.
Collectibility of trade receivables is reviewed on an ongoing
basis. Debts which are known to be uncollectible are written off.
A provision for doubtful receivables is established when there is
objective evidence that the Group will not be able to collect all
amounts due according to the original terms of receivables. The
amount of the provision is the difference between the asset’s
carrying amount and the present value of estimated future cash
flows, discounted at the effective interest rate. The amount of
the provision is recognised in the income statement.
(m) Investments and other financial assets
From 1 July 2004 to June 2005
The Group has taken the exemption available under AASB 1 to
apply AASB 132 and AASB 139 only from 1 July 2005. The
Group has applied previous AGAAP to the comparative
information on financial instruments within the scope of AASB
132 and AASB 139.
From 1 July 2005
The Group classifies its investments in the following categories:
financial assets at fair value through profit or loss, loans and
receivables, held-to-maturity investments, and available-for-sale
financial assets. The classification depends on the purpose for
which the investments were acquired. Management determines
the classification of its investments at initial recognition and re-
evaluates this designation at each reporting date.
(i) Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They arise when the Group provides money, goods or
services directly to a debtor with no intention of selling the
receivable. They are included in current assets, except for those
with maturities greater than 12 months after balance sheet date,
which are classified as non-current assets. Loans and
receivables are included in receivables in the balance sheet
(notes 10 and 11).
(n) Fair Value Estimation
The fair value of financial assets and financial liabilities must
be estimated for recognition and measurement or disclosure
purposes.
The nominal value less estimated credit adjustments of trade
receivables and payables are assumed to approximate their fair
values. The fair value of financial liabilities for disclosure
purposes is estimated by discounting the future contractual
cash flows at the current market interest rate that is available
to the Group for similar financial instruments.
(o) Property, Plant and Equipment
Property, plant and equipment is stated at historical cost less
depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items. Cost may also
include transfers from equity of any gains/losses on qualifying
cash flow hedges of foreign currency purchases of property,
plant and equipment.
Subsequent costs are included in the asset’s carrying amount
or recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the
item will flow to the Group and the cost of the item can be
measured reliably. All other repairs and maintenance are
charged to the income statement during the financial period in
which they are incurred.
49 Starpharma Holdings Limited Annual Report 2006
Financial Report
1. Summary of significant accounting policies (continued)
Depreciation is calculated using the straight-line method to
allocate their cost or revalued amounts, net of the residual
values, over their estimated useful lives. The expected useful
lives are 2 to 10 years.
The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount (note 1 (j)).
Gains and losses on disposals are determined by comparing
proceeds with the carrying amount. These are included in the
income statement. When revalued assets are sold, it is Group
policy to transfer the amounts included in other reserves in
respect of those assets to retained earnings.
(p) Leasehold improvements
The cost 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 between 5 to 6 years, whichever is shorter.
(q) Intangible Assets
(i) Goodwill
Goodwill represents the excess of the cost of an acquisition
over the fair value of the Group’s share of the net identifiable
assets of the acquired subsidiary/associate at the date of
acquisition. Goodwill on acquisitions of subsidiaries is included
in intangible assets. Goodwill on acquisitions of associates is
included in investments in associates. Goodwill acquired in
business combinations is not amortised. Instead, goodwill is
tested for impairment annually, or more frequently if events or
changes in circumstances indicate that it might be impaired,
and is carried at cost less accumulated impairment losses.
Gains and losses on the disposal of an entity include the
carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose
of impairment testing. Each of those cash-generating units
represents the Group’s investment in each company.
(ii) Patents and licences
Costs associated with patents are charged to the income
statement in the periods in which they are incurred. Licences
and acquired patents with a finite useful life are carried at cost
less accumulated amortisation and impaired losses.
Amortisation is calculated using the straight-line method to
allocate the cost of licences and patents over the period of the
expected benefit, which varies from 8 to 12 years.
(iii) Research and development
Expenditure on research activities, undertaken with the
prospect of obtaining new scientific or technical knowledge and
understanding, is recognised in the income statement as an
expense when it is incurred.
Expenditure on development activities, being the application of
research findings or other knowledge to a plan or design for the
production of new or substantially improved products or
services before the start of commercial production or use, is
capitalised if the product or service is technically and
commercially feasible and adequate resources are available to
complete development. The expenditure capitalised comprises
all directly attributable costs, including costs of materials,
services, direct labour and an appropriate proportion of
overheads. Other development expenditure is recognised in the
income statement as an expense as incurred. To date no
development costs have been capitalised.
(r) Trade and other payables
These amounts represent liabilities for goods and services
provided to the Group prior to the end of the reporting date
which are unpaid. The amounts are unsecured and are usually
paid within 30 days of recognition.
(s) Borrowings
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the
proceeds (net of transaction costs) and the redemption amount
is recognised in the income statement over the period of the
borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the group
has an unconditional right to defer settlement of the liability for
at least 12 months after the balance sheet date.
(t) Provisions
Provisions for legal claims are recognised when the Group has
a present legal or constructive obligation as a result of past
events when it is more probable than not that an outflow of
resources will be required to settle the obligation; and the
amount has been reliably estimated. Provisions are not
recognised for future operating losses.
Where there are a number of similar obligations, the likelihood
that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow with respect to
any one item in the same class of obligations may be small.
Provisions are measured at the present value of management’s
best estimate for the expenditure required to settle the present
obligation at the balance date. The discount rate used to
determine the present value reflects current market assessment
at the time, value of money, and the risks specific to liability.
The increase of the provision due to the passage of time is
recognised as interest expense.
(u) Employee benefits
(i) Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary
benefits and annual leave expected to be settled within 12
months of the reporting date are recognised in payables in
respect of employees’ services up to the reporting date and are
measured at the amounts expected to be paid when the
liabilities are settled.
(ii) Long service leave
The liability for long service leave is recognised in the provision
for employee benefits and measured as the present value of
expected future payments to be made in respect of services
provided by employees up to the reporting date using the
projected unit credit method. Consideration is given to
expected future wage and salary levels, experience of
employee departures and periods of service. Expected future
payments are discounted using market yields at the reporting
date on national government bonds with terms to maturity and
currency that match, as closely as possible, the estimated
future cash outflows.
Starpharma Holdings Limited Annual Report 2006
50
Financial Report
1. Summary of significant accounting policies (continued)
(iii) Superannuation
Group companies make the statutory superannuation
guarantee contribution in respect of each employee to their
nominated complying superannuation fund. In certain
circumstances pursuant to an employee’s employment contract
the group companies may also be required to make additional
superannuation contributions and/or agree to make salary
sacrifice superannuation contributions in addition to the
statutory guarantee contribution. The Group’s legal or
constructive obligation is limited to the above contributions.
Contributions to the employees’ superannuation plans are
recognised as an expense as they become payable. Prepaid
contributions are recognised as an asset to the extent that a
cash refund or reduction in future payments is available.
(iv) Employee benefits on-costs
Employee benefit on-costs, including payroll tax, are
recognised and included in other liabilities and costs when the
employee benefits to which they relate are recognised as
liabilities.
(v) Share-based payments
Share-based compensation benefits are offered to the directors
and employees via the Starpharma Holdings Limited Employee
Share Option Plan (“SPLAM”).
Share options granted before 7 November 2002
and/or vested before 1 January 2005
No expense is recognised in respect of these options. The
shares are recognised when the options are exercised and the
proceeds received allocated to share capital.
Share options granted after 7 November 2002
and vested after 1 January 2005
The fair value of options granted under SPLAM is recognised as
an employee benefit expense with a corresponding increase in
equity. The fair value is measured at grant date and recognised
over the period during which the employees become
unconditionally entitled to the options.
The fair value at grant date is determined using a Black-Scholes
option model that takes into account the exercise price, the
term of the option, the vesting and performance criteria, the
impact of dilution, the non-tradeable nature of the option, the
share price at grant date and expected price volatility of the
underlying share, the expected dividend yield and the risk-free
interest rate for the term of the option.
The fair value of the options granted excludes the impact of any
non-market vesting conditions (for example, profitability and
sales growth targets). Non-market vesting conditions are
included in assumptions about the number of options that are
expected to become exercisable. At each balance sheet date,
the entity revises its estimate of the number of options that are
expected to become exercisable. The employee benefit
expense recognised in each period takes into account the most
recent estimate.
(vi) Bonus payments
The Group recognises a liability and an expense for bonuses
based on a formula that takes into consideration performance
criteria that has been set. The group recognises a provision
where contractually obliged or where there is a past practice
that has created a constructive obligation.
(v) Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax,
from the proceeds. Incremental costs directly attributable to the
issue of new shares or options, for the acquisition of a business,
are not included in the cost of the acquisition as part of the
purchase consideration.
(w) Dividends
Provision is made for the amount of any dividend declared,
being appropriately authorised and no longer at the discretion
of the entity, on or before the end of the period but not
distributed at balance date.
(x) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the company, excluding any
costs of servicing equity other than ordinary shares, by the
weighted average number of ordinary shares outstanding
during the 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 tax effect of interest and other financing costs
associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been
issued for no consideration in relation to dilutive potential
ordinary shares.
(y) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the
amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is
recognised as part of the cost of acquisition of the asset
or as part of the expense.
Receivables and payables are stated inclusive of the amount of
GST receivable or payable. The net amount of GST recoverable
from, or payable to, the taxation authority is included with other
receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the taxation
authority, are presented as operating cash flow.
(z) New accounting standards and UIG
interpretations
Certain new accounting standards and UIG interpretations
have been published that are not mandatory for 30 June 2006
reporting periods. The Group’s assessment of the impact of
these new standards and interpretations is only relevant to the
below:
(i) UIG 4 Determining whether an Asset Contains a Lease
UIG 4 is applicable to annual periods beginning on or after 1
January 2006. The Group has not elected to adopt UIG 4 early.
It will apply UIG 4 in its 2007 financial statements and the UIG 4
transition provisions. The Group will therefore apply UIG 4 on
the basis of facts and circumstances that existed as of 1 July
2006. Implementation of UIG 4 is not expected to change the
accounting for any of the Group’s current arrangements.
51 Starpharma Holdings Limited Annual Report 2006
2. Financial risk management
The Group’s activities expose it to a variety of financial risks;
market risk (including currency risk, fair value, interest rate risk
and price risk), credit risk, liquidity risk and cash flow interest
rate risk. The Group’s overall risk management program
focuses on the unpredictability of financial markets and seeks
to minimise potential adverse effects on the financial
performance of the Group. The chief executive officer and
company secretary, under the guidance of the board, have
responsibility for the risk management program.
(a) Market risk
Foreign exchange risk arises when future commercial
transactions and recognised assets and liabilities are
denominated in a currency that is not the entity’s functional
currency. The Group operates internationally and is exposed to
foreign exchange risk arising from currency exposures to major
currencies including the US dollar. On the basis of the nature of
these transactions, the Group does not consider that any
potential foreign exchange exposure is material and as a
consequence does not use derivative financial instruments to
hedge such exposures.
Financial Report
(b) Credit risk
The Group has no significant concentrations of credit risk as it
does not have significant third party receivables other than
under government funded research and development
programs.
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient
cash and marketable securities. The directors regularly monitor
the cash position of the consolidated entity, giving
consideration to the level of expenditure and future capital
commitments entered into.
(d) Cash flow interest rate risk
As the company has interest-bearing assets, the company’s
income and operating cash flows are subject to changes in
market interest rates. The company uses fixed rate term
deposits with maturities of no greater than three months.
3. Critical accounting estimates and judgments
Estimates and judgments are continually evaluated and are
based on historical experience and other factors, including
expectations of future events that may have a financial impact
on the entity and that are believed to be reasonable under the
circumstances.
(a) Critical accounting estimates and assumptions
The group makes estimates and assumptions concerning the
future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing material
adjustment to the carrying amounts of assets and liabilities
within the next financial year are discussed below.
i) Amortisation of finite life intangible assets
The Group’s management determines the estimated life of the
patents underlying the core technology of the business and
calculates amortisation accordingly. The estimate is based on
the period of expected benefit which currently stands at 8–12
years. This could change as a result of technical innovations
or competitor actions in response to severe industry cycles.
Management will increase amortisation charges when the
useful lives are less than previously estimated lives. The
carrying value of intangible assets at 30 June 2006 is
$4,086,538 (2005: nil).
4. Segment information
A change in accounting policy has been adopted for segment
reporting to be consistent with the Group’s stated goal of
discovery, development and commercialisation of dendrimers
for pharmaceuticals and other life science applications.
It is the view of the Directors that the risks and returns
associated with each of the previous segments is substantially
similar to one another. The previous segments do not reflect the
Group’s current strategies, including combining disease
indications within the one development program.
ii) Fair value of intellectual property in associate company
Prior to the application of the equity method of accounting to
the results of associated entities, management will consider the
underlying assets, liabilities and performance of the associated
entity under the requirements of AIFRS. The appropriate fair
valuation of Intellectual Property within US based associate
Dendritic Nanotechnologies (DNT) has been determined using
valuation techniques. The Group uses its judgment to select
methods and make assumptions based on conditions existing
at each balance sheet date. The Group has used a discounted
cash flow analysis based on the royalties derived from the
Intellectual Property to support the fair value of the asset.
(b) Critical accounting judgments in applying
accounting policies
The Group follows the guidance of AASB 136 on determining
when an investment is other-than-temporarily impaired.
This determination requires significant judgment. In making
these judgments, the Group evaluates, among other factors,
the duration and extent to which the fair value of an investment
is less than its cost and the financial health of the near-term
business outlook for the investee. This includes factors such
as industry performance, changes in technology, operating
and financing cash flow and recent transactions involving equity
instruments.
Hence, the nature of the change is the combining of all of
the previous segments of virology, angiogenesis, other
pharmaceuticals, dendritic nanotechnologies and unallocated
into the one segment.
The disclosure impact is that no additional information is
provided by segment reporting. The change in policy has no
financial impact on the Group.
The consolidated entity operates in Australia, with the
exeception of the associated entity DNT Inc., which operates in
the USA. The investment is accounted for by the equity method.
The carrying value of the investment in DNT, the aggregate of
losses and contribution to net profit/(loss) are outlined in note 31.
Starpharma Holdings Limited Annual Report 2006
52
Financial Report
5. Revenue
Revenue from continuing operations
Interest revenue
Other revenue
Total revenue
Other Income
Government grants
Total other income
Consolidated
2006
$
2005
$
571,337
500
571,837
616,043
23,411
639,454
6,422,066
1,409,844
6,422,066
1,409,844
Parent Entity
2006
$
2005
$
526,606
–
526,606
–
–
587,907
13,772
601,679
–
–
Total revenue and other income
6,993,903
2,049,298
526,606
601,679
6. Other income
Consolidated
2006
$
2005
$
Other income from government grants
USA Government NIH contract
4,372,797
–
USA Government NIH grant
1,495,266
1,409,844
Australian Government P3 grant
554,003
–
Total Government grants
6,422,066
1,409,844
With the exception of normal audit requirements, there are no unfulfilled conditions or other contingencies attached to the portions of
Government grant and contract incomes recognized above. The Group did not benefit from any other form of government
assistance.
7. Expenses
Loss from ordinary actvities before income tax expense
includes the following items:
Depreciation
Amortisation
Rental expense
Consolidated
Parent Entity
2006
$
2005
$
2006
$
2005
$
434,596
530,736
385,495
629,865
64,000
353,004
–
287,342
–
–
–
–
53 Starpharma Holdings Limited Annual Report 2006
8. Income tax expense
a) Income tax expense
Current Tax
Deferred Tax
Under (over) provision in prior years
Financial Report
Consolidated
Parent Entity
2006
$
2005
$
2006
$
2005
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
b) Numerical reconciliation to income tax prima facie tax payable
Loss from continuing operations before income tax
(7,522,789)
(7,747,791)
(9,507,256)
(7,428,880)
Tax at the Australian tax rate of 30%
(2,256,837)
(2,324,337)
(2,852,177)
(2,228,664)
Tax effect of amounts which are not deductible (taxable) in calculating
taxable income
Amortisation of intangibles
Professional and legal fees
Research and development allowance
Equity accounted loss
86,203
(42,941)
-
-
86,203
(42,941)
-
(284,579)
209,217
100,451
-
-
Write down in carrying value of investments
-
42,000
48,000
-
-
-
-
-
-
Gain in dilution of equity investments
Write down in carrying value of loans
Share-based payments
Sundry items
(16,670)
(370,663)
-
-
60,967
62,068
-
2,350,900
2,073,722
48,539
-
2,889
72,992
-
-
Future income tax benefits not brought to account
1,897,993
2,785,700
337,023
154,942
Income tax expense
-
-
-
-
c) Amounts recognised directly in equity
There are no amounts recognised directly in equity.
d) Tax losses
Unused tax losses for which no deferred tax asset has been recognised
(as recovery is currently not probable)
Potential tax benefit at 30%
38,124,998
34,586,777
2,124,498
11,437,499
10,376,033
637,349
644,707
193,412
Potential future income tax benefits attributable to tax losses carried forward have not been brought to account at 30 June 2006 because
the directors do not believe that it is appropriate to regard the realisation of future income tax benefit as probable. Similarly, future benefits
attributable to net temporary differences have not been brought to account as the directors do not regard the realisation of such benefits as
probable.
Starpharma Holdings Limited Annual Report 2006
54
Financial Report
8. Income tax expense (continued)
Consolidated
Parent Entity
2006
$
2005
$
2006
$
2005
$
e) Unrecognised temporary differences
Unrecognised temporary differences for which deferred tax assets have
not been recognised
519,072
406,575
129,548
19,380
Unrecognised temporary differences for which deferred liabilities have not
been recognised
(35,392)
(7,453)
(6,674)
(7,135)
9. Current assets – Cash and cash equivalents
Consolidated
2006
$
2005
$
Parent Entity
2006
$
2005
$
Cash at bank and on hand
1,500,259
2,042,795
79,012
199,060
Deposits at call
12,783,565
6,123,464
12,282,122
6,123,464
14,283,824
8,166,259
12,361,134
6,322,524
Consolidated
2006
$
2005
$
Parent Entity
2006
$
2005
$
Balance per statement of cash flows
14,283,824
8,166,259
12,361,134
6,322,524
Cash at bank and on hand
The cash is bearing floating interest rates based on current bank rates.
Deposits at call
The deposits are bearing floating interest rates ranging from 5.00% to 5.86% (2005: 5.58%). These deposits are of 30–90 day
maturities.
Cash not available
There is $481,879 of cash not available for use due to restrictions associated with a finance lease which is guaranteed by term
deposit (2005: nil).
10. Current assets – Trade and other receivables
Consolidated
Parent Entity
Grant receivable
Interest receivable
Prepayments
Other receivables
2006
$
2,628,146
29,054
160,445
6,622
2005
$
–
42,851
144,805
–
2,824,267
187,656
2006
$
–
22,247
72,045
–
94,292
2005
$
–
23,784
48,003
19,300
91,087
55 Starpharma Holdings Limited Annual Report 2006
Financial Report
10. Current assets – Trade and other receivables (continued)
Grant receivables
Grant receivables comprise expenditure reimbursable under grants from NIH and P3 are subject to normal terms of settlement within
30 to 90 days.
Other receivables
Other receivables comprise sundry debtors and GST claimable and are subject to normal terms of settlement within 30 to 90 days.
11. Non-current assets – Receivables
Consolidated
2006
$
2005
$
Parent Entity
2006
$
2005
$
Loans to controlled entities
Provision for doubtful debts
–
–
26,806,901
18,970,569
–
–
(26,806,901)
(18,970,569)
–
–
–
–
Interest rate risk
Current and non-current receivables are non-interest bearing.
Credit risk
The Group considers that there is no concentration of credit risk with respect to current and non-current receivables. Grant
receivables are with government bodies. Loans to controlled entities are assessed for recoverability and provisions are applied
as considered appropriate.
12. Non-current assets – Investments accounted for using the equity method
Shares in associated entities
Consolidated
2006
$
2005
$
2,387,312
2,913,061
Notes
31
Parent Entity
2006
$
–
2005
$
–
Shares in associates
Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting and
carried at carrying value by the parent entity (refer to note 31).
Consolidated
2006
$
2005
$
Notes
Movements in the carrying amounts
of investments in associates
Carrying amount at the beginning
of the financial year
2,913,061
692,194
Acquisition of investment in associates
–
1,500,699
Gain (loss) on issue of equity
by associate
Share of losses from ordinary
activities after tax
55,566
1,235,542
(697,390)
(334,835)
Foreign currency reserve
24
116,075
(40,539)
Write-down of investment in associate
–
(140,000)
Carrying amount at the end
of the financial year
2,387,312
2,913,061
Starpharma Holdings Limited Annual Report 2006
56
Financial Report
13. Non-current assets – Other financial assets
Other non-traded investments
Shares in controlled entities – at cost
Provision for diminution in value
Shares in associated entities
Consolidated
2006
$
2005
$
–
–
–
–
–
–
–
–
Parent Entity
2006
$
2005
$
17,500,106
17,500,106
(17,500,106)
(17,500,106)
5,208,750
5,368,747
5,208,750
5,368,747
At 30 June 2006 and 2005, the 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 2006 and 2005, the 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 2006 and 2005.
14. Non-current assets – Property, plant and equipment
Consolidated
2006
$
2005
$
Parent Entity
2006
$
2005
$
Plant and equipment (at cost)
1,946,944
1,766,727
Less: Accumulated Depreciation
(1,345,639)
(1,248,823)
601,305
517,904
Leasehold improvements (at cost)
1,135,956
1,128,512
Less: Accumulated Depreciation
(753,182)
(541,652)
Plant and equipment under finance lease
382,774
758,072
586,860
320,000
Less: Accumulated Depreciation
(311,027)
(192,000)
447,045
128,000
1,431,124
1,232,764
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Reconciliations of carrying amounts
Consolidated
Year ended 30 June 2006
Opening amount at 1 July 2005
Additions
Disposals
Depreciation and amortisation
Carrying amount at 30 June 2006
Plant and
Equipment
2006
$
517,904
455,740
(24,906)
(347,433)
601,305
Leasehold
improvements
Plant and Equipment
under finance lease
2006
$
586,860
7,444
–
(211,530)
382,774
2006
$
128,000
438,072
–
(119,027)
447,045
57 Starpharma Holdings Limited Annual Report 2006
14. Non-current assets – Property, plant and equipment (continued)
Financial Report
Consolidated
Year ended 30 June 2005
Opening amount at 1 July 2004
Additions
Disposals
Depreciation and amortisation
Carrying amount at 30 June 2005
Plant and
Equipment
2005
$
596,798
363,164
–
(442,058)
517,904
15. Non-current assets – Intangible assets
Patents and Licences
Less: Accumulated amortisation
Net book value
Opening amount at 1 July
Additions
Amortisation charge
Carrying amount at 30 June
Consolidated
2005
$
–
–
–
–
–
–
–
2006
$
4,373,880
(287,342)
4,086,538
–
4,373,880
(287,342)
4,086,538
Leasehold
improvements
Plant and Equipment
under finance lease
2005
$
767,467
7,200
–
(187,807)
586,860
2005
$
192,000
–
–
(64,000)
128,000
Parent Entity
2005
$
–
–
–
–
–
–
2006
$
4,373,880
(287,342)
4,086,538
–
4,373,880
(287,342)
4,086,538
Starpharma acquired outright ownership of its core technology
including the patents underlying the VivaGel™ family of
products and the 25% royalty that was payable to BRI under the
original licence was cancelled. The ownership rights were
acquired through the issue of Starpharma shares to BRI.
The value of the shares issued, measured at the published
market price on the date of the agreement, was recorded to
the balance sheet as an intangible asset. To the year end
amortisation of $287,342 has been recorded to the income
statement reducing the carrying value of the intangible asset
to $4,086,538.
16. Current liabilities – Trade and other payables
Consolidated
2006
$
2005
$
Trade creditors
1,897,819
1,647,182
Loans from controlled entities
–
–
1,897,819
1,647,182
17. Current liabilities – Borrowings
Consolidated
2006
$
2005
$
Finance lease liability (secured)
142,092
60,007
Details of the security relating to each of the secured liabilities are set out in Note 20.
Parent Entity
2005
$
111,622
653,654
765,276
2006
$
830,499
653,655
1,484,154
Parent Entity
2006
$
–
2005
$
–
Starpharma Holdings Limited Annual Report 2006
58
Financial Report
18. Current liabilities – Provisions
Employee entitlements
331,447
279,589
Consolidated
2006
$
2005
$
19. Current liabilities – Deferred Income
Consolidated
2006
$
2005
$
Deferred grant income
661,337
378,063
20. Non-current liabilities – Borrowings
Finance lease liability (secured)
315,412
79,750
Consolidated
2006
$
2005
$
Parent Entity
2005
$
–
Parent Entity
2005
$
–
2006
$
–
2006
$
–
Parent Entity
2006
$
–
2005
$
–
Lease liabilities are effectively secured as the rights to the leased assets recognised in the financial statements revert to the lessor in the
event of default.
Floating Interest rate
Fixed interest rate
2006
Lease Liabilities
(notes 17, 20 and 29)
Weighed average interest rate
1 year
or less
Over 1–2
years
Over 2–3
years
Over 3–4
years
Over 4–5
years
Over 5
years
Total
–
–
142,092
68,979
73,844
79,052
93,537
– 457,504
6.72%
7.20%
7.20%
7.20%
7.20%
–
Floating Interest rate
Fixed interest rate
2005
Lease Liabilities
(notes 17, 20 and 29)
Weighed average interest rate
1 year
or less
Over 1–2
years
Over 2–3
years
Over 3–4
years
Over 4–5
years
Over 5
years
Total
–
–
60,007
60,007
19,743
6.26%
6.26%
6.26%
–
–
–
–
– 139,757
–
21. Non-current liabilities – Provisions
Consolidated
2006
$
2005
$
Employee entitlements
107,630
89,184
22. Non-current liabilities – Deferred Income
Parent Entity
2006
$
–
2005
$
–
Deferred grant income (equipment purchase)
241,342
59 Starpharma Holdings Limited Annual Report 2006
2006
$
Consolidated
Parent Entity
2005
$
–
2006
$
–
2005
$
–
Financial Report
23. Contributed equity
(a) Share Capital
Parent Entity and
Consolidated
2006
Shares
2005
Shares
Parent Entity and
Consolidated
2006
$
2005
$
Share Capital
Ordinary shares – fully paid
147,739,245
111,235,000
65,375,467
46,821,956
Former share premium account included in equity
2,500,000
2,500,000
(b) Movements in ordinary share capital
Date
Details
Number of Shares
Issue Price
$
111,235,000
7,112,000
9,573,250
$0.62
$0.51
46,821,956
4,373,880
4,882,358
(244,118)
19,818,995
$0.51
10,107,687
147,739,245
(566,296)
65,375,467
The value of the shares issued, measured at the published
market price on the date of the agreement, was recorded to the
balance sheet as an intangible asset.
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.
1 July 2004
Opening Balance
10 October 2005
BRI Share Placement
17 November 2005
Share Placement
29 December 2005
Less: Transaction Costs
Share Placement and Share
Purchase Plan
Less: Transaction Costs
Under the BRI share placement, Starpharma acquired outright
ownership of its core technology including the patents
underlying the VivaGel™ family of products and the 25% royalty
that was payable to BRI under the original licence was
cancelled.
(c) Ordinary shares
As at 30 June 2006 there were 147,739,245 issued ordinary
shares.
Ordinary shares entitle the holder to participate in dividends
and the proceeds on winding up of the company in proportion
to the number of and amounts paid on the shares held.
(d) Options
Information relating to the Starpharma Holdings 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 36.
24. Reserves
(a) Reserves
Share-based payments reserve
Foreign currency translation reserve
Consolidated
2006
$
421,838
75,536
497,374
2005
$
218,615
(40,539)
178,076
Parent Entity
2006
$
2005
$
421,838
218,615
–
–
421,838
218,615
Starpharma Holdings Limited Annual Report 2006
60
Financial Report
24. Reserves (continued)
b) Movement in reserves
Share-based payments reserve
Balance 1 July
Option expense
Balance 30 June
Consolidated
2006
$
2005
$
218,615
203,223
421,838
56,816
161,799
218,615
Foreign currency translation reserve
Balance 1 July
(40,539)
–
Currency translation differences
arising during the year
Balance 30 June
116,075
75,536
(40,539)
(40,539)
Parent Entity
2006
$
2005
$
218,615
203,223
421,838
56,816
161,799
218,615
–
–
–
–
–
–
(c) Nature and purpose of reserves
(i) Share-base payments reserve
The share-based payments reserve is used to recognise the fair value of options issued but not exercised.
(ii) Foreign currency translation reserve
Exchange differences arising on translation of the foreign associated entity are taken to the foreign currency translation reserve,
as described in Note 1(d). The reserve is recognised in profit and loss when the net investment is disposed of.
25. Accumulated Losses
Consolidated
2006
$
2005
$
Parent Entity
2006
$
2005
$
Accumulated losses balance 1 July
(37,034,067)
(29,286,276)
(36,023,489)
(28,594,609)
Net loss for the year
(7,522,789)
(7,747,791)
(9,507,256)
(7,428,880)
Accumulated losses balance 30 June
(44,556,855)
(37,034,067)
(45,530,745)
(36,023,489)
26. Key management personnel disclosures
(a) Directors
The following persons were directors of Starpharma Holdings Limited during the financial year:
Name
PT Bartels
J W Raff
P M Colman
R Dobinson
L Gorr
P J Jenkins
Position
Chairman – non executive
Executive director, Chief Executive Officer
Non-executive director
Non-executive director
Non-executive director
Non-executive director
J W Raff retired from the position of Chief Executive Officer on 1 July 2006. He will remain a non-executive director and was
appointed Deputy Chairman.
J K Fairley was appointed to the position of Chief Executive Officer and Executive director on 1 July 2006.
61 Starpharma Holdings Limited Annual Report 2006
26. Key management personnel disclosures (continued)
(b) Other key management personnel
The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group, directly
or indirectly, during the financial year:
Financial Report
Name
J K Fairley
B P Rogers
O T Grogan
T D McCarthy
G Y Krippner
J R Paull
C P Barrett
N J Baade
Position
Chief Operating Officer (from 4 July 2005)
Company Secretary and Chief Financial Officer
VP – Commercial Development & Licensing
VP – Drug Development
Head of Chemistry
VP – Regulatory and Clinical Affairs
VP – Business Development (from 18 July 2005)
Financial Controller (from 16 January 2006)
Key management personnel during the year ended 30 June 2005 were:
Name
B P Rogers
O T Grogan
A Szabo
T D McCarthy
G Y Krippner
J R Paull
Position
Company Secretary and Chief Financial Officer
VP – Commercial Development & Licensing
VP – Business Development (ceased employment 31 January 2005)
VP – Drug Development
Head of Chemistry
VP – Regulatory and Clinical Affairs
(c) Key management personnel compensation
Consolidated
2006
$
2005
$
Short-term employee benefits
1,684,432
1,229,432
Post-employment benefits
Share-based payments
365,707
153,340
271,547
135,422
Parent Entity
2005
$
497,615
182,259
–
2006
$
519,011
186,124
–
2,203,479
1,636,401
705,135
679,874
The company has taken advantage of the relief provided by ASIC Class Order 06/50 and has transferred the detailed remuneration
disclosures to the directors’ report. The relevant information can be found in sections A-C of the remuneration report on pages 25 to 29.
(d) Equity instrument disclosures relating to key management personnel
Options provided as remuneration and shares issued on exercise of such options
Details of options provided as remuneration and shares issued on the exercise of such options, together with terms and conditions of the
options, can be found in section D of the remuneration report on pages 29 to 31.
Starpharma Holdings Limited Annual Report 2006
62
Financial Report
26. Key management personnel disclosures (continued)
Option holdings
The numbers of options over ordinary shares in the company held during the financial year by each director of Starpharma Holdings
Limited and other key management personnel of the Group, including their personally related parties, are set out below.
No options are held by Directors in either the current or prior year.
2006
Name
Balance at the
start of the year
Granted during
the year as
compensation
Exercised
during the year
Other changes
during the year
Balance at the
end of the year
Vested and
exercisable at the
end of the year
Other key management personnel of the Group
J K Fairley
O T Grogan
B P Rogers
T D McCarthy
G Y Krippner
J R Paull
C P Barrett
N J Baade
2005
Name
–
300,000
300,000
220,000
220,000
200,000
100,000
–
–
–
–
–
–
–
100,000
–
–
–
–
–
–
–
–
–
–
(100,000)
–
(20,000)
–
–
–
–
300,000
200,000
220,000
200,000
200,000
100,000
100,000
–
–
100,000
220,000
200,000
200,000
100,000
–
–
Balance at the
start of the year
Granted during
the year as
compensation
Exercised
during the year
Other changes
during the year
Balance at the
end of the year
Vested and
exercisable at the
end of the year
Other key management personnel of the Group
O T Grogan
B P Rogers
A Szabo
T D McCarthy
G Y Krippner
J R Paull
200,000
220,000
5,000
220,000
200,000
100,000
100,000
–
100,000
–
–
–
–
–
–
–
–
–
–
–
(105,000)
–
–
–
300,000
220,000
–
220,000
200,000
100,000
200,000
–
–
120,000
–
20,000
63 Starpharma Holdings Limited Annual Report 2006
Financial Report
26. Key management personnel disclosures (continued)
Share holdings
The numbers of ordinary shares in the company held during the financial year by each director of Starpharma Holdings Limited and
other key management personnel of the Group, including their personally related parties, are set out below. There were no shares
granted during the reporting period as compensation.
2006
Name
Balance at the
start of the year
Received during the year
on the exercise of options
Other changes
during the year
Balance at the
end of the year
Directors of Starpharma Holdings Limited
Ordinary Shares
P T Bartels
P M Colman
R Dobinson
L Gorr
P J Jenkins
J W Raff
100,000
5,982,482
3,155,976
5,194,900
1,606,000
5,362,081
Other key management personnel of the Group
Ordinary Shares
J K Fairley
O T Grogan
B P Rogers
T D McCarthy
G Y Krippner
J R Paull
C P Barrett
N J Baade
2005
Name
5,000
–
61,700
4,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9,804
9,804
(250,000)
9,804
29,608
19,608
–
–
3,922
–
–
–
8,935
–
109,804
5,992,286
2,905,976
5,204,704
1,635,608
5,381,689
5,000
–
65,622
4,000
–
–
8,935
–
Balance at the
start of the year
Received during the year
on the exercise of options
Other changes
during the year
Balance at the
end of the year
Directors of Starpharma Holdings Limited
Ordinary Shares
P T Bartels
P M Colman
R Dobinson
L Gorr
P J Jenkins1
J W Raff1
80,000
5,982,482
3,505,976
5,560,500
1,654,000
5,322,081
Other key management personnel of the Group
Ordinary Shares
O T Grogan1
B P Rogers
A Szabo
T D McCarthy
G Y Krippner
J R Paull
–
41,700
–
4,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
20,000
–
(350,000)
(365,600)
(48,000)
40,000
–
20,000
–
–
–
–
100,000
5,982,482
3,155,976
5,194,900
1,606,000
5,362,081
–
61,700
–
4,000
–
–
1A difference from 2005 disclosures is due to a change in definition under AASB 124 Related Party Disclosures.
Starpharma Holdings Limited Annual Report 2006
64
Financial Report
26. Key management personnel disclosures (continued)
(e) Other transactions with key management personnel
A director, Mr L Gorr is a partner of the firm, Herbert Geer & Rundle, which rendered legal services to the consolidated entity.
All such dealings with the consolidated entity were in the ordinary course of business and on normal terms and conditions.
Aggregate amounts of each of the above types of other transactions with key management personnel of Starpharma Holdings
Limited and the Group.
Amounts recognised as expense
Legal fees
Consolidated
2006
$
2005
$
Parent Entity
2006
$
2005
$
–
1,901
–
–
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.
27. Remuneration of auditors
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s
expertise and experience with the Company and/or the consolidated entity are important.
Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for audit and non-audit services provided during
the year are set out below.
During the year the following fees were paid or payable for services provided by the auditor (PricewaterhouseCoopers) of the parent
entity, its related practices and non-related audit firms:
Assurance Services
Audit or review of financial reports of the entity
or any entity in the consolidated entity under the
Corporations Act 2001
Other assurance services:– Grant reviews
and program audits
Consolidated
2006
$
2005
$
Parent Entity
2006
$
2005
$
114,990
92,500
114,990
92,500
7,500
122,490
22,000
114,500
7,500
122,490
22,000
114,500
No Taxation or Advisory Services were provided in the current or previous year.
28. Contingencies
The Company has no contingent liabilities.
29. Commitments
(a) Capital Commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:
Property, plant and equipment
Within one year
Later than one year but not later than five years
Later than five years
65 Starpharma Holdings Limited Annual Report 2006
Consolidated
2005
$
–
–
–
–
2006
$
69,108
–
–
69,108
Parent Entity
2006
$
2005
$
–
–
–
–
–
–
–
–
29. Commitments (continued)
(b) Lease Commitments
Financial Report
Consolidated
2006
$
2005
$
Parent Entity
2006
$
2005
$
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
Non-cancellable finance lease
Future finance charges on finance leases
423,681
683,283
–
123,293
72,695
–
1,106,964
195,988
649,461
539,745
(82,242)
1,106,964
56,231
144,000
(4,243)
195,988
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Operating leases
The Group leases laboratory and offices under a lease until 31 August 2008 and leases various plant and equipment
under cancelable operating leases.
Consolidated
2006
$
2005
$
Parent Entity
2006
$
2005
$
Commitments for minimum lease
payments in relation to cancellable
operating leases are payable as follows:
Not later than one year
Later than one year and not later than five years
Later than five years
287,246
362,215
–
51,293
4,938
–
Representing cancellable operating leases
649,461
56,231
–
–
–
–
–
–
–
–
Starpharma Holdings Limited Annual Report 2006
66
Financial Report
29. Commitments (continued)
Finance Leases
The Group leases various plant and equipment with a carrying amount of $457,504 (2005: $139,757) under finance leases expiring
within one to five years.
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
Later than five years
Minimum lease payments
Future finance charges
Recognised as a liability
Representing finance lease liabilities:
Current (note 17)
Non-Current (note 20)
Consolidated
2006
$
2005
$
161,443
378,303
–
72,000
72,000
–
539,746
144,000
(82,242)
457,504
(4,243)
139,757
142,092
315,412
457,504
60,007
79,750
139,757
Parent Entity
2006
$
2005
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
The weighted average interest rates implicit in the leases range from 6.26% to 7.20% (2005: 6.26%).
(c) Expenditure Commitments
The Group has entered into various agreements for the research and development services. All material committed expenditure is
reimbursable under existing grant funding sources.
(d) Termination Commitments
The service contracts of key management personnel include benefits payable by the Group on termination of the employee’s
contract. Refer to section C of the remuneration report on pages 28 and 29 for details of these commitments.
30. Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with
the accounting policy described in note 1(b).
Name of entity
Country of
Incorporation
Class of Shares
Starpharma Pty. Limited
Australia
Angiostar Pty. Limited
Viralstar Pty. Limited
Preclin Pty. Limited
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Equity Holding
2006
%
100%
100%
100%
100%
2005
%
100%
100%
100%
100%
Cost of Parent Entity’s
Holding Investment
2006
$
2005
$
9,900,001
9,900,001
3,300,005
3,300,005
4,300,000
4,300,000
100
100
17,500,106
17,500,106
67 Starpharma Holdings Limited Annual Report 2006
31. Investments in associates
Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting and are
carried at carrying value by the parent entity. Information relating to the associates is set out below.
(a) Carrying amounts
Financial Report
Name of entity
Country of
Incorporation
Dendritic Nanotechnologies, Inc.
USA
Dimerix Bioscience Pty Ltd
Australia
Class of
Shares
Ordinary
Ordinary
Equity Holding
Carrying value
of Parent Entity’s
Holding Investment
2006
%
2005
%
2006
$
2005
$
32.91%
32.90%
5,168,747
5,168,747
22.00%
30.00%
40,003
200,000
5,208,750
5,368,747
The value of Dimerix Bioscience Pty Ltd has been reduced from its cost base of $200,000 to a carrying value of $40,003. A provision
for diminution of $159,997 has been booked in the year.
(b) Movements in carrying amounts
Movements in the carrying amounts of investments in associates
Carrying amount at the beginning of the financial year
Acquisition of investment in associates
Gain (loss) on issue of equity by associate
Share of losses from ordinary activities after tax
Foreign currency reserve (note 24)
Write-down of investment in associate
Carrying amount at the end of the financial year
(c) Reserves attributable to associates
Foreign currency reserve
Balance at the beginning of the financial year
Net exchange differences on translation of results of associated entity
Balance at the end of the financial year
Consolidated
2006
$
2005
$
2,913,061
692,194
–
1,500,699
55,566
1,235,542
(697,390)
(334,835)
116,075
(40,539)
–
(140,000)
2,387,312
2,913,061
Consolidated
2006
$
2005
$
(40,539)
116,075
75,536
–
(40,539)
(40,539)
Starpharma Holdings Limited Annual Report 2006
68
Financial Report
31. Investments in associates (continued)
(d) Summary of the performance and financial position of associates
Dendritic Nanotechnologies, Inc.
Profits (Loss) from ordinary activities after related income tax expenses
Assets
Liabilities
Dimerix Bioscience Pty Ltd
Profits (Loss) from ordinary activities after related income tax expenses
Assets
Liabilities
32. Events occurring after the balance sheet date
Consolidated
2006
$
2005
$
(1,877,870)
(785,278)
7,395,480
8,927,661
264,218
247,219
(347,206)
507,758
104,943
(49,980)
151,357
1,337
There are no other significant events occurring since 30 June 2006
that have significantly affected or may significantly affect the
operations of the Group, the results of those operations, or the state
of affairs of the Group.
Dr Jacinth Fairley was appointed Chief Executive Officer and
director on 1 July 2006. Dr J W Raff reverted to a non-executive
director capacity and was appointed Deputy Chairman.
500,000 Employee Share Options were offered to Dr J K Fairley
subject to shareholder approval at the next Annual General Meeting
of the Company.
The options will be granted in accordance with the terms of the
Company’s Employee Share Option Plan and will include the
following terms and conditions:
– Issue price: nil.
– Exercise Price: 45.08 cents per share.
(Determined on the basis of market value plus 15%. Market value is
based on a 15 day volume weighted average price of the
Company’s shares prior to 1 July 2006, the date of appointment of
the Executive to the position of CEO.)
– Exercise period: From 1st July 2007 to 30 June 2009.
69 Starpharma Holdings Limited Annual Report 2006
33. Reconciliation of profit after income tax to net cash inflow from operating activities
Financial Report
Operating loss after tax:
Depreciation and amortisation
Non-cash employee benefits -share-based payments
Change in operating assets and liabilities, net of effects
of acquisitions and disposals of entities:
Consolidated
Parent Entity
2006
$
2005
$
2006
$
2005
$
(7,522,789)
(7,747,791)
(9,507,256)
(7,428,880)
965,333
203,223
693,865
161,799
287,342
–
–
–
(Increase) decrease in receivables and other assets
(2,602,581)
141,980
Increase (decrease) in trade creditors
250,637
1,204,445
(3,208)
718,877
33,481
(16,648)
Increase in employee provisions
Increase in deferred income
Share in results of associates
Gain on sale of property, plant and equipment
Provision for doubtful debts
70,304
524,616
641,825
(20,516)
–
119,758
378,063
(760,708)
–
–
–
–
–
–
–
–
–
–
7,996,332
6,912,407
Net cash outflows from operating activities
(7,489,948)
(5,808,589)
(507,913)
(499,640)
34. Non–cash financing activities
Acquisition of property, plant and equipment by means of
finance lease
Outright acquisition of IP by means of share issue
35. Earnings per share
Consolidated
Parent Entity
2006
$
438,000
4,373,880
2005
$
–
–
2006
$
–
4,373,880
2005
$
–
–
Basic loss per share
Diluted loss per share
Net loss attributable to members of Starpharma Holdings Limited
used as the numerator in calculating diluted and basic earnings per share
Weighted average number of ordinary shares outstanding during the year
used as the denominator in calculating diluted and basic earnings per share
Consolidated
2006
Cents
(5.69)
(5.69)
2005
Cents
(6.97)
(6.97)
(7,522,789)
(7,747,791)
132,297,514
111,235,000
Starpharma Holdings Limited Annual Report 2006
70
Financial Report
36. Share-based payments
(a) Employee Option Plan
The establishment of the Starpharma Holdings Limited
Employee Share Option Plan was approved by shareholders
at the Annual General Meeting held on 17 November 2004.
All full-time or part-time employees and directors of the Company
or associated companies are eligible to participate in the Plan.
The objective 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 are normally granted for a four or five year period and
become exercisable on the second anniversary of the date
of grant.
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 with the written
consent of the remuneration and nomination committee.
Set out below are summaries of options granted under the plan:
2006
Grant Date
Expiry Date
Exercise
Price
Balance
at start of
the year
Granted
during
the year
Forfeited
during
the year
Expired
during
the year
Balance
at end of
the year
Exercisable
at end of
the year
Number
Number
Number
Number
Number
Number
Consolidated and parent entity
7 Feb 2001
31 Dec 2005
93.75 cents
220,000
12 Apr 2002
11 Apr 2007
93.75 cents
220,000
21 Jun 2002
30 Jun 2007
93.75 cents
200,000
6 Feb 2004
31 Dec 2008
73.00 cents
200,000
8 Feb 2004
8 Feb 2009
93.75 cents
730,000
31 Dec 2004
31 Dec 2009
93.75 cents
182,000
12 May 2005
12 May 2010
93.75 cents
100,000
–
–
–
–
–
–
–
4 Jul 2005
4 Jul 2010
93.75 cents
18 Jul 2005
18 Jul 2010
93.75 cents
–
–
300,000
100,000
–
–
–
–
10,000
15,000
–
–
–
220,000
–
–
–
–
–
–
–
–
–
–
220,000
220,000
200,000
200,000
200,000
200,000
720,000
720,000
167,000
100,000
300,000
100,000
–
–
–
–
Total
1,852,000
400,000
25,000
220,000
2,007,000
1,340,000
Weighted average exercise price
No options were exercised during the year.
2005
91.51
cents
93.75
cents
93.75
cents
93.75
cents
91.68
cents
90.65
cents
Grant Date
Expiry Date
Exercise
Price
Balance
at start
of year
Granted
during
the year
Forfeited
during
the year
Expired
during
the year
Balance
at end of
the year
Exercisable
at end of
the year
Number
Number
Number
Number
Number
Number
Consolidated and parent entity
7 Feb 2001
31 Dec 2005
93.75 cents
240,000
12 Apr 2002
11 Apr 2007
93.75 cents
220,000
21 Jun 2002
30 Jun 2007
93.75 cents
200,000
6 Feb 2004
31 Dec 2008
73.00 cents
200,000
8 Feb 2004
8 Feb 2009
93.75 cents
749,000
–
–
–
–
–
20,000
–
–
–
19,000
1 Jul 2004
1 Jul 2009
93.75 cents
31 Dec 2004
31 Dec 2009
93.75 cents
12 May 2005
12 May 2010
93.75 cents
–
–
–
100,000
100,000
182,000
100,000
–
–
Total
1,609,000
382,000
139,000
–
–
–
–
–
–
–
–
–
220,000
220,000
220,000
220,000
200,000
200,000
200,000
200,000
730,000
–
182,000
100,000
–
–
–
–
1,852,000
840,000
Weighted average exercise price
No options were exercised during the year.
71 Starpharma Holdings Limited Annual Report 2006
91.17
cents
93.75
cents
93.75
cents
–
cents
91.51
cents
88.81
cents
Financial Report
36. Share-based payments (continued)
The weighted average remaining contractual life of share options outstanding at the end of the period was 2.65 years (2005: 2.99 years).
Fair value of options granted
The weighted average assessed fair value at grant date of
options granted during the year ended 30 June 2006 was $0.15
per option (2005: $0.33). The fair value at grant date is
independently determined using a Black-Scholes option pricing
model that takes into account the exercise price, the term of the
option, the impact of dilution, the share price at grant date and
the expected price volatility of the underlying share, the
expected dividend yield and the risk free rate for the term of the
option.
Options granted during the year ended 30 June 2006 were:
The expected price volatility is based on the historic volatility
(based on the remaining life of the options), adjusted for any
expected changes to future volatility due to publicly available
information.
Options are granted for no consideration, have a four or five
year life and become exercisable on the second anniversary of
the date of grant.
Options granted on:
Number of options granted
Expiry date
Exercise price
Expected price volatility of the company’s shares
Risk-free interest rate
Expected dividend yield
Share price at grant date
Assessed fair value
Options granted during the year ended 30 June 2005 were:
Options granted on:
Number of options granted
Expiry date
Exercise price
Expected price volatility of the company’s shares
Risk-free interest rate
Expected dividend yield
Share price at grant date
Assessed fair value
4 July 2005
300,000
4 July 2010
93.75 cents
46.9%
5.2%
–
50 cents
14.56 cents
18 July 2005
100,000
18 July 2010
93.75 cents
46.9%
5.2%
–
52 cents
15.74 cents
1 July 2004
31 Dec 2004
12 May 2005
100,000
1 July 2009
93.75 cents
75.0%
5.9%
–
192,000
100,000
31 Dec 2009
12 May 2010
93.75 cents
93.75 cents
47.6%
5.3%
–
46.9%
5.7%
–
74 cents
74 cents
66 cents
45.00 cents
30.52 cents
25.33 cents
(b) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense
were as follows:
Options issued under employee option plan
Consolidated
Parent Entity
2006
$
2005
$
203,223
161,799
2006
$
–
2005
$
–
Starpharma Holdings Limited Annual Report 2006
72
Financial Report
37. Related Party Transactions
(a) Parent entity and subsidiaries
The parent entity of the Group is Starpharma Holdings Limited. Interests in subsidiaries are set out in note 30.
(b) Key management personnel
Disclosures relating to key management personnel are set out in note 26.
(c) Transactions with related parties
The following transactions occurred with related parties:
Other Transactions
Funds advanced to subsidiary
Funds advanced from subsidiary
Share-based payments
Management services to parent
Consolidated
Parent Entity
2006
$
2005
$
2006
$
2005
$
–
–
–
–
–
–
–
–
7,683,238
6,750,600
(50,129)
(259,290)
203,223
161,790
(640,467)
–
All transactions were made on normal commercial terms and conditions and at market rates, except that there are no fixed terms for
the repayment of outstanding balances.
(d) Outstanding balances arising from sales/
purchases of goods and services
Current Receivables
Management services to parent
Outstanding balances are payable in cash.
Consolidated
Parent Entity
2006
$
2005
$
2006
$
2005
$
–
–
704,514
–
73 Starpharma Holdings Limited Annual Report 2006
38. Explanation of transition to Australian equivalents to IFRSs
1 Reconciliation of equity reported under previous Australian Generally Accepted Accounting
Principles (AGAAP) to equity under Australian equivalents to IFRSs (AIFRS)
(a) At the date of transition to AIFRS: 1 July 2004
Consolidated
Parent Entity
Financial Report
Notes
Previous
AGAAP
Effect of
transition
to AIFRS
AIFRS
Previous
AGAAP
$
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
15,658,300
584,183
16,242,483
Property, plant and equipment
1,556,265
Intangible assets
Investments accounted
for using the equity method
Other financial assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Borrowings
Deferred Income
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Deferred Income
Total non-current liabilities
Total liabilities
–
692,194
–
2,248,459
18,490,942
445,908
249,015
60,007
–
754,930
143,516
–
–
143,516
898,446
Net assets
17,592,496
Equity
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
15,658,300
14,524,569
584,183
414,259
16,242,483
14,938,828
1,556,265
–
692,194
–
2,248,459
–
–
–
3,868,048
3,868,048
18,490,942
18,806,876
445,908
249,015
60,007
–
522,713
–
–
–
754,930
522,713
143,516
–
–
143,516
898,446
–
–
–
–
522,713
17,592,496
18,284,163
Effect of
transition
to AIFRS
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
AIFRS
$
14,524,569
414,259
14,938,828
–
–
–
3,868,048
3,868,048
18,806,876
522,713
–
–
–
522,713
–
–
–
–
522,713
18,284,163
Contributed equity
46,821,956
–
46,821,956
46,821,956
–
46,821,956
Share based payment reserve
38.4(b)
–
56,816
56,816
Foreign currency translation reserve 38.4(a)
12,709
(12,709)
–
–
–
56,816
56,816
–
–
Accumulated losses
38.4(d)
(29,242,169)
(44,107)
(29,286,276)
(28,537,793)
(56,816)
(28,594,609)
Total equity
17,592,496
–
17,592,496
18,284,163
–
18,284,163
Starpharma Holdings Limited Annual Report 2006
74
Financial Report
38. Explanation of transition to Australian equivalents to IFRSs (continued)
(b) At the end of the last reporting period under previous AGAAP: 30 June 2005
Consolidated
Parent Entity
Notes
Previous
AGAAP
$
8,166,259
187,656
8,353,915
1,232,764
–
2,913,061
–
4,145,825
12,499,740
1,647,182
279,589
60,007
378,063
2,364,841
79,750
89,184
–
168,934
2,533,775
9,965,965
Effect of
transition
to AIFRS
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
AIFRS
$
Previous
AGAAP
$
8,166,259
6,322,524
187,656
91,087
8,353,915
6,413,611
1,232,764
–
2,913,061
–
4,145,825
–
–
–
5,368,747
5,368,747
12,499,740
11,782,358
1,647,182
765,276
279,589
60,007
378,063
–
–
–
2,364,841
765,276
79,750
89,184
–
168,934
–
–
–
–
2,533,775
765,276
9,965,965
11,017,082
Effect of
transition
to AIFRS
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
AIFRS
$
6,322,524
91,087
6,413,611
–
–
–
5,368,747
5,368,747
11,782,358
765,276
–
–
–
765,276
–
–
–
–
765,276
11,017,082
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Investments accounted
for using the equity method
Other financial assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Borrowings
Deferred Income
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Deferred Income
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
46,821,956
–
46,821,956
46,821,956
–
46,821,956
Share based payment reserve
38.4(b)
–
218,615
218,615
Foreign currency translation reserve
38.4(a)
(27,830)
(12,709)
(40,539)
–
–
218,615
218,615
–
–
Accumulated losses
38.4(d)
(36,828,161)
(205,906)
(37,034,067)
(35,804,874)
(218,615)
(36,023,489)
Total equity
9,965,965
–
9,965,965
11,017,082
–
11,017,082
75 Starpharma Holdings Limited Annual Report 2006
38. Explanation of transition to Australian equivalents to IFRSs (continued)
2 Reconciliation of loss for year ended 30 June 2005
Consolidated
Parent Entity
Financial Report
Notes
Previous
AGAAP
Effect of
transition to
AIFRS
$
$
AIFRS
$
Previous
AGAAP
$
Revenue from continuing
operations
38.4(c)
2,049,298
(1,409,844)
639,454
601,679
Other income
38.4(c)
–
1,409,844
1,409,844
–
Administration expense
38.4(b)
(3,380,015)
(161,799)
(3,541,814)
(1,118,152)
Effect of
transition to
AIFRS
$
–
–
–
–
AIFRS
$
601,679
–
(1,118,152)
–
Research and development
expense
Provision for diminution
Finance costs
Share of results of associates
accounted for using the
equity method
(7,007,693)
–
(8,290)
760,708
–
–
–
–
(7,007,693)
–
–
(6,750,608)
(161,799)
(6,912,407)
(8,290)
760,708
–
–
–
–
–
–
Loss before income tax
(7,585,992)
(161,799)
(7,747,791)
(7,267,081)
(161,799)
(7,428,880)
Income tax expense
Loss for the year
Loss attributable minority
interests
Loss attributable to
members of Starpharma
Holdings Limited
–
–
–
–
–
–
(7,585,992)
(161,799)
(7,747,791)
(7,267,081)
(161,799)
(7,428,880)
–
–
–
–
–
–
(7,585,992)
(161,799)
(7,747,791)
(7,267,081)
(161,799)
(7,428,880)
3 Reconciliation of cash flow statement
for the year ended 30 June 2005
The adoption of AIFRS has not resulted in any material
adjustments to the cash flow statement.
4 Notes to the reconciliations
(a) Foreign currency translation reserve: cumulative
translation differences
The Group has elected to apply the exemption in AASB 1
First-time Adoption of Australian Equivalents to international
Financial Reporting Standards. The cumulative translation
differences for all foreign operations represented in the foreign
currency translation reserve are deemed to be zero at the date
of transition to AIFRS. The effect is:
(i) At 1 July 2004
For the Group the balance of the $12,709 credit in the foreign
currency translation reserve is reduced to zero. Retained
earnings is decreased by this amount. There is no effect on
the parent entity.
(ii) At 30 June 2005
For the Group the balance of the foreign currency translation
reserve is reduced by $12,709. Retained earnings is decreased
by this amount. There is no effect on the parent entity.
(iii) For the year ended 30 June 2005
There is no effect on the Group or parent entity.
(b) Share-based payments
Under AASB 2 Share-based Payment from 1 July 2004 the
Group is required to recognise an expense for those options
that were issued to employees under the Starpharma Holdings
Limited Employee Option Plan after 7 November 2002 but that
had not vested by 1 January 2005. No such expense was
required to be recognised under previous AGAAP. The effect of
this is:
(i) At 1 July 2004
For the Group there has been a decrease in retained earnings
of $56,816 and a corresponding increase in reserves. The effect
is the same for the parent entity.
(ii) At 30 June 2005
For the Group there has been a decrease in retained earnings
of $218,615 and a corresponding increase in reserves. The
effect is the same for the parent entity.
(iii) For the year ended 30 June 2005
For the Group there has been an increase in administration
expense of $161,799. This is recognised in a wholly owned
subsidiary and accounted through intercompany transactions.
The effect for the parent entity is to increase the Provision for
diminution by $161,799.
Starpharma Holdings Limited Annual Report 2006
76
Financial Report
38. Explanation of transition to Australian equivalents to IFRSs (continued)
(c) Reclassifi cation of grant income
Under AIFRS from 1 July 2004 the Group is required to
recognise government grant income as other income, rather
than revenue from continuing operations. The effect of this is:
(i) At 1 July 2004
No impact, since the reclassifi cation in the income statement
does not affect retained losses.
(ii) At 30 June 2005
No impact, since the reclassifi cation in the income statement
does not affect retained losses.
(iii) For the year ended 30 June 2005
For the Group there has been a increase in other income of
$1,409,844 and a corresponding decrease in revenue from
continuing operations.
(d) Retained Earnings
The effect on retained earnings of the changes are set out above are as follows:
Foreign currency translation reserve
Share-based payments reserve
Total adjustment
Notes
38.4(a)
38.4(b)
Consolidated
Parent Entity
1 July 2004
$
30 June 2005
$
1 July 2004
$
30 June 2005
$
12,709
12,709
(56,816)
(218,615)
(56,816)
(218,615)
(44,107)
(205,906)
(56,816)
(218,615)
Attributable to members of Starpharma Holdings
Limited
(44,107)
(205,906)
(56,816)
(218,615)
5. Financial instruments
The Group has no fi nancial instruments that require restatement of comparatives for AASB 132 Financial Instruments: Disclosure and
Presentation and AASB 139 Financial Instruments: Recognition and Measurement.
Directors’ Declaration
In the directors’ opinion:
(a) the fi nancial statements and notes set out on pages 41 to 77 are in accordance with the Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
(ii) giving a true and fair view of the company’s and consolidated entity’s fi nancial position as at 30 June 2006 and of their
performance, as represented by the results of their operations, changes in equity and their cash flows, for the financial year
ended on that date; and
(b) there are reasonable grounds to believe that Starpharma Holdings Limited will be able to pay its debts as and when they
become due and payable; and
(c) the audited remuneration disclosures set out on pages 25 to 31 of the directors’ report comply with Accounting Standards
AASB 124 Related Party Disclosures and the Corporations Regulations 2001.
The directors have been given the declarations by the chief executive offi cer and chief fi nancial offi cer required by section 295A of
the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Peter T Bartels, AO
Director
Melbourne, 26th September 2006
77 Starpharma Holdings Limited Annual Report 2006
Independent audit report to the members of
Starpharma Holdings Limited
PricewaterhouseCoopers
ABN 52 780 433 757
Freshwater Place
2 Southbank Boulevard
SOUTHBANK VIC 3006
GPO Box 1331L
MELBOURNE VIC 3001
DX 77
Website:www.pwc.com/au
Telephone 61 3 8603 1000
Facsimile 61 3 8603 1999
Matters relating to the electronic presentation of the audited financial report
This audit report relates to the financial report and remuneration disclosures of Starpharma Holdings Limited
(the Company) and the Starpharma Holdings Group (defined below) for the financial year ended 30 June 2006
included on Starpharma Holdings Limited’s web site. The Company’s directors are responsible for the integrity
of the Starpharma Holdings Limited web site. We have not been engaged to report on the integrity of this web
site. The audit report refers only to the financial report and remuneration disclosures identified below. It does
not provide an opinion on any other information which may have been hyperlinked to/from the financial report
or the remuneration disclosures. If users of this report are concerned with the inherent risks arising from
electronic data communications they are advised to refer to the hard copy of the audited financial report and
remuneration disclosures to confirm the information included in the audited financial report and remuneration
disclosures presented on this web site.
Audit opinion
In our opinion:
1.
the financial report of Starpharma Holdings Limited:
•
•
gives a true and fair view, as required by the Corporations Act 2001 in Australia, of the financial
position of Starpharma Holdings Limited and the Starpharma Holdings Group (defined below) as at
30 June 2006, 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; and
2.
the remunerations disclosures that are contained on pages 25 to 31 of the directors’ report comply with
Accounting Standard AASB 124 Related Party Disclosures (AASB 124) and the Corporations Regulations
2001.
This opinion must be read in conjunction with the rest of our audit report.
Scope
The financial report, remunerations disclosures and directors’ responsibility
The financial report comprises the balance sheet, income statement, cash flow statements, statement of changes
in equity, accompanying notes to the financial statements, and the directors’ declaration for both Starpharma
Holdings Limited (the company) and the Starpharma Holdings Group (the consolidated entity), for the year
ended 30 June 2006. The consolidated entity comprises both the company and the entities it controlled during
that year.
Liability limited by a scheme approved under Professional Standards Legislation
The company has disclosed information about the remuneration of directors and executives (remuneration
disclosures) as required by AASB 124, under the heading “remuneration report” on pages 25 to 31 of the
directors’ report, as permitted by the Corporations Regulations 2001.
The directors of the company are responsible for the preparation and true and fa
report in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of
adequate accounti
the accounting policies and accounting estimates inherent in the financial report. The directors are also
responsible for the remuneration disclosures contained in the directors’ report.
ng records and internal controls that are designed to prevent and detect fraud and error, and for
ir presentation of the financial
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 assu
whether the financial report is free of material misstatement and the remuneration disclo
AASB 124 and the Corporations Regulations 200
1. 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. For further explanation of an audit, visit our website
http://www.pwc.com/au/financialstatementaudit.
sures comply with
rance as to
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, changes in equity and cash flows. We also performed procedures to assess whether the remuneration
disclosures comply with AASB 124 and the Corporations Regulations 2001.
We formed our audit opinion on the basis of these procedures, which included:
•
•
examining, on a test basis, information to provide evidence support
financial report and remuneration disclosures, and
ing the amounts and disclosures in the
assessing the appropriateness of the accounti
significant accounting estimates made by the directors.
ng policies and disclosures used and the reasonableness of
Our procedures include reading the other information in the Annual Report to determine whether it contains any
material in
consistencies 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 followe
pronouncements and the C
orporations Act 2001.
d applicable independence requirements of Australian professional ethical
PricewaterhouseCoopers
SC Bannatyne
Partner
Melbourne
26 September 2006
Shareholder Information
Shareholder information
The shareholder information set out below was applicable as at 14 September 2006
Supplementary information as required by Australian Stock Exchange listing requirements.
A. Distribution of equity shareholders
Analysis of numbers of equity security holders by size of holding as at 14 September 2006
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,000 and over
Class of equity security
Ordinary shares
Shares
Options
162
728
464
934
162
2,450
–
6
2
15
7
30
As at 14 September 2006 there were 169 holders of less than a marketable parcel of ordinary shares.
B. Equity security holders
Twenty largest security holders
Top 20 shareholders as at 14 September 2006:
1. ANZ Nominees Limited
2. National Nominees Ltd
3. Biomolecular Research Institute Limited
4. Peter Malcolm Colman
5. Arran Bay Pty Ltd
6. JPS Distribution Pty Ltd
7. Citicorp Nominees Pty Limited
8. Gilridge Pty Ltd
9. Biotech Capital Ltd
10. Queensland Investment Corporation
11. J P Morgan Nominees Australia Limited
12. Espasia Pty Ltd
13. Irrewarra Investments Pty Ltd
14. Citicorp Nominees Limited
15. UBS Wealth Management Australia Nominees Pty Ltd
16. Kenneth Nominees Pty Ltd
17. Ag-Sun Technologies Pty Ltd
18. Irrewarra Investments Pty Ltd
19. Applecross Secretarial Services Pty Ltd
20. Equity Trustees Limited
Unquoted equity securities
Number held Percentage of issued shares
Ordinary shares
17,690,522
11,210,619
7,112,000
5,522,286
3,690,204
3,567,831
3,416,267
3,035,054
3,000,000
2,841,031
2,791,200
2,788,700
2,320,000
1,651,250
1,215,500
1,200,000
1,150,250
1,129,196
1,077,000
1,031,812
11.97
7.59
4.81
3.74
2.50
2.41
2.31
2.05
2.03
1.92
1.89
1.89
1.57
1.12
0.82
0.81
0.78
0.76
0.73
0.70
77,440,722
52.42
Starpharma Holdings Limited Annual Report 2006
80
Shareholder Information
Shareholder information (continued)
Options issued under the Starpharma Holdings Limited
Employee Share Option Plan (ASX code SPLAM)
C. Substantial holders
Number on issue
Number of holders
2,007,000
30
The following information is extracted from the Company’s register of substantial shareholders as at 14 September 2006:
Number held
Percentage
10,303,608
7,112,000
7,112,000
9.26
4.81
4.81
Ordinary shares
Acorn Capital Limited
Biomolecular Research Institute Limited
Starpharma Holdings Limited (voluntary
escrow deed between the Company and
Biomolecular Research Institute Limited)
D. Voting rights
The voting rights attached to each class of equity securities are set out below:
(a) Ordinary shares
On a show of hands every member present at a meeting in person or by proxy
shall have one vote and on a poll each share shall have one vote.
(b) Options
No voting rights.
E. Securities subject to voluntary escrow
7,112,000 ordinary shares held by the Biomolecular Research Institute Limited are
subject to a voluntary escrow deed which expires on 10 October 2006.
81 Starpharma Holdings Limited Annual Report 2006
Patent Report
Current at 7 September 2006
Patent Report
Summary of Patents & Patent Applications Assigned to Starpharma Pty Limited
Title:
Granted Patents
Antiviral Dendrimers
Priority Date
& PCT Number:
15 June 1994
PCT/AU 95/00350
Angiogenic Inhibitory Compounds
17 July 1996
PCT/AU 97/00447
Antiviral Linear Polymers
17 July 1996
PCT/AU 97/00446
Country:
Number:
Status:
Australia
Brazil
Canada
China
Europe
Hong Kong
Japan
Mexico
New Zealand
Singapore
South Korea
USA
Australia
Brazil
Canada
China
Europe
Japan
Mexico
New Zealand
Singapore
South Korea
USA
Australia
Brazil
Canada
China
Europe
Japan
Mexico
New Zealand
Singapore
South Korea
USA
682970
PI9508031.7
2192446
Z L95194145.3
0765357
1002899
2005-268847
231031
287819
36429
0365028
6,190,650
715761
PI 9710375-6
2262862
Z L97196452.1
0927217
506372/98
990655
333488
61126
0564714
6,426,067
730899
PI 9710376-4
2262863
Z L97196437.8
97929037.6
506371/98
231030
333541
61123
0589022
6,740,635
Granted
Granted
Granted
Granted
Granted
Granted
Pending
Granted
Granted
Granted
Granted
Granted
Granted
Pending
Granted
Granted
Granted
Pending
Pending
Granted
Granted
Granted
Granted
Granted
Pending
Pending
Granted
Pending
Pending
Granted
Granted
Granted
Granted
Granted
Starpharma Holdings Limited Annual Report 2006
82
Patent Report
Patents & Patent Applications Assigned to Starpharma Pty Limited (continued)
Title:
Antimicrobial & Antiparasitic Agents
Priority Date
& PCT Number:
14 Sept 1998
PCT/AU 99/00763
Inhibition of Toxic Materials
or Substances
14 Sept 1998
PCT/AU 99/00762
Agents for the Prevention and
Treatment of Sexually Transmitted
Diseases – I
30 March 2001
PCT/AU 02/00407
Country:
Australia
Brazil
Canada
China
Europe
Japan
Mexico
New Zealand
Singapore
South Korea
USA
Australia
Brazil
Canada
China
Europe
Japan
Mexico
New Zealand
Singapore
South Korea
USA
Australia
Brazil
Canada
China
Europe
Hong Kong
Japan
Mexico
New Zealand
Singapore
South Korea
USA
Number:
767970
PI9913712-7
2343113
99812270.X
99945773.2
569824/00
PAA/2001/002667
510289
79613
10-2001-7003211
6,464,971
767971
P I9913718-6
2343205
99812271.8
99945772.4
569823/00
PAA/2001/002665
510376
79618
10-2001-7003255
09/786972
2002245932
PI0208411-2
2441357
02807728.8
02713925.2
04106895.9
2002-578313
PA/a/2003/008909
528230
99592
10-2003-7012867
10/472439
Status:
Granted
Pending
Pending
Pending
Pending
Pending
Pending
Granted
Granted
Pending
Granted
Granted
Pending
Pending
Pending
Pending
Pending
Pending
Granted
Granted
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Granted
Granted
Pending
Pending
83 Starpharma Holdings Limited Annual Report 2006
Patents & Patent Applications Assigned to Starpharma Pty Limited (continued)
Patent Report
Number:
2002325648
PI0212251-0
2457676
02816972.7
02759901.8
2003-523201
PA/a/2004/001583
530759
102800
10-2004-7002770
10/487644
Status:
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Granted
Pending
Pending
PCT/AU2006/000120
Pending
060100368
0212-2006
PI20060435
095103811
29356
Pending
Pending
Pending
Pending
Pending
PCT/AU2006/000636
Pending
PCT/AU2006/000637
PCT Filed
Title:
Chemotherapeutic Agents
Priority Date
& PCT Number:
30 August 2001
PCT/AU 02/01180
National Phase
PCT/Complete Filed
Delivery System
18 October 2005
PCT/AU2006/000120
Country:
Australia
Brazil
Canada
China
Europe
Japan
Mexico
New Zealand
Singapore
South Korea
USA
PCT
Argentina
Chile
Malaysia
Taiwan
Uruguay
Inhibitory Compounds
Modified Macromolecule
Provisional
Polymer
Dendrimer Polymers
Composition
21 Oct 2005
PCT/AU2006/000636
20 Jan 2006
PCT/AU2006/000637
PCT
PCT
25 Oct 2005
1 Feb 2006
Provisional filed
Provisional filed
22 March 2006
Provisional filed
Imaging Macromolecule
31 March 2006
Provisional filed
Therapeutic Macromolecules
7 April 2006
Provisional filed
Anti-viral Compounds
21 April 2006
Provisional filed
Ligand Bearing Macromolecules
15 June 2006
Provisional filed
Modified Macromolecule 2
11 August 2006
Provisional filed
Modified Macromolecule 3
11 August 2006
Provisional filed
Starpharma Holdings Limited Annual Report 2006
84
Corporate directory
Company Name
Starpharma Holdings Limited ABN 20 078 532 180
Directors
P T Bartels AO – Chairman
J K Fairley – Chief Executive Officer
J W Raff – Deputy Chairman
P M Colman
R Dobinson
L Gorr
P J Jenkins
B P Rogers
Baker Building
75 Commercial Road, Melbourne, Victoria 3004
Company Secretary
Registered office
Notice of Annual General Meeting The annual general meeting of Starpharma Holdings Limited will be held at:
Share Register
Auditor
Solicitors
Blake Dawson Waldron
Level 39, 101 Collins Street, Melbourne
Time: 4.00pm
Date: Wednesday 15 November 2006
Computershare Investor Services
452 Johnston Street, Abbotsford VIC 3067
1300 850 505 (within Australia)
+613 6415 4000 (outside Australia)
PricewaterhouseCoopers
Freshwater Place
Southbank VIC 3006 Australia
Blake Dawson Waldron
Level 39, 101 Collins Street,
Melbourne VIC 3000 Australia
Bankers
Commonwealth Bank of Australia,
National Australia Bank,
Wachovia Bank, USA
Stock exchange listing
Australian Stock Exchange Limited (ASX)
Level 3, 530 Collins Street, Melbourne, Vic 3000, Australia
ASX Code: SPL
Starpharma’s American Depositary Receipts (ADRs) trade under the code SPHRY (CUSIP number
855563102). Each Starpharma ADR is equivalent to ten ordinary shares of Starpharma as traded
on the Australian Stock Exchange. The Bank of New York is the depositary bank.
Website address
www.starpharma.com
85 Starpharma Holdings Limited Annual Report 2006