Starpharma Holdings Limited
Baker Building
75 Commercial Road, Melbourne
VIC 3004 Australia
Telephone +61 3 8532 2700
Facsimile +61 3 9510 5955
www.starpharma.com
Starpharma AnnuAl RepoRt 2007
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STARPHARMA HOLDINGS LIMITED
ABN 20 078 532 180
Corporate direCtory
ContentS
About Starpharma
Chairman’s Statement
CEO’s Review
Directors’ Report
Corporate Governance Statement
Financial Report
Shareholder Information
Intellectual Property Report
Corporate Directory
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04
05
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Company Name
Directors
Starpharma Holdings Limited ABN 20 078 532 180
P T Bartels AO – Chairman
J K Fairley – Chief Executive Officer
J W Raff – Deputy Chairman
Company Secretary
Registered office
Notice of Annual General Meeting
Share Register
Auditor
Solicitors
P M Colman
R Dobinson
L Gorr
R A Hazleton
P J Jenkins
B P Rogers
Baker Building
75 Commercial Road, Melbourne, Victoria 3004
The annual general meeting of Starpharma Holdings Limited will be held at:
Blake Dawson Waldron
Level 39, 101 Collins Street, Melbourne
Time: 4.00pm
Date: Wednesday 14 November 2007
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
Deacons
RACV Tower, 485 Bourke Street
Melbourne VIC 3000 Australia
Greenberg Traurig LLP
MetLife Building, 200 Park Avenue,
New York, NY 10166 USA
Bankers
Commonwealth Bank of Australia
Stock exchange listing
National Australia Bank
Wachovia Bank, USA
ASX Limited
Level 45, South Tower, Rialto, 525 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
Starpharma
is a world leader in the development of dendrimer
products for pharmaceutical, life science and other
applications.
2006–07 HIGHLIGHTS
• Acquires Dendritic Nanotechnologies Inc (DNT)
D
NT fully integrated and The Dow Chemical Company now largest shareholder
• VivaGel™ is safe and well-tolerated in men
36 men tested with VivaGelTM in safety trial
• VivaGel™ condom coating agreement
Deal within leading developed world country
• First trial of VivaGel™ for genital herpes
Two-site trial commenced – in San Francisco (US) and Kisumu (Kenya)
• Further financial support for VivaGel™
Microbicide Trials Network conducts NIH-funded trial in US and Puerto Rico
• siRNA reagent deal with EMD biosciences
PrioFect™ transfection reagents for research sales launch due by end 2007
• US investment profile strengthens
Joins premium market tier OTCQX; US investment bank initiates coverage
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
02
ABOUT STARPHARMA
existing revenue streams
Starpharma continues to receive steady
revenue from royalty-bearing licences
and anticipates early growth in such
revenue streams in the diagnostic and life
sciences areas.
Industrial applications of dendrimers
Starpharma has several products in
late-stage product evaluation with large
multi national corporations to exploit
in industrial areas the technologies
acquired with DNT. Due to their large
size, the markets for the type of
specialty chemicals involved in such
applications represent substantial
near-term commercial opportunities in
diverse areas. For example, Starpharma
recently announced the awarding of a
US$1.3 million-contract to DNT and the
Central Michigan University Research
Corporation to develop water remediation
technology using DNT’s Priostar
dendrimer-based nanotechnology. The
dendrimer will be used as a ‘sponge’ to
soak up toxic chemicals in groundwater,
leaving the water purer and useable.
Additionally, dendrimers are being used
to amplify, and increase the duration of,
the signal produced by existing products
in the multi-billion dollar fluorescent
reagents market. Fluorescent reagents
are used extensively in laboratories for
high-throughput screening.
Starpharma is a nanotechnology
company with principal operations in
Melbourne, Australia, and Michigan,
United States. It is a world leader in the
development of dendrimer products for
pharmaceutical, life science and other
applications.
Dendrimers are man-made chemical
particles of a size measured in
nanometres. One nanometre equals
one billionth of a metre. Dendrimers
are approximately spherical and have
precisely defined functional groups
on their surface that are capable of
supporting a wide range of applications,
from healthcare and personal care to
manufacturing and electronics.
With the acquisition of investee company
DNT in 2006, Starpharma gained access
to the significant new IP, commercial
products and other key assets of that
company. Importantly, ownership of DNT
has also opened up opportunities in
siRNA and industrial markets. Starpharma
could not have reached these markets
through its proprietary technology at the
time of the acquisition.
STaRPHaRMa’S ValUe DRIVeRS
VivaGel™ (SPl7013 Gel)
VivaGel™ is the most advanced product
in Starpharma’s pharmaceutical
pipeline. It is a vaginal microbicide under
development for prevention of the spread
of genital herpes and HIV, both of which
are sexually transmitted infections. It is
intended that VivaGel™ will be marketed
widely in both developed and developing
countries.
PrioFect™ transfection reagent:
To be effective as pharmaceuticals,
genetic materials such as DNA and short
interfering RNA (siRNA) must first enter
the target cell, but they need help to do
so. PrioFect™ is a so-called transfection
reagent that transfers genetic materials
into cells effectively and with low toxicity.
siRNA is used widely in the laboratory
and is of increasing interest to the
pharmaceutical industry at this time since
it holds potential as the basis of a whole
new class of drugs.
PrioFect™ dendrimers were the subject
of a licensing transaction between
Starpharma and EMD Biosciences
in 2007. The deal included upfront
payments and royalty provisions for
the sale of PrioFect™ as a laboratory
reagent. All rights to applications of
PrioFect™ in human therapy remain with
Starpharma. In anticipation that markets
for therapies involving PrioFect™ will be
larger than those of the current research
applications, the company is directing
technical and business development
resources toward development of the
therapeutic opportunities.
Drug delivery and drug optimisation
technologies
Starpharma has made substantial
progress in the area of drug delivery and
optimisation in the last year. Researchers
have collected new data on how
dendrimers can alter the pharmacokinetic
properties of both small molecule drugs
and protein therapeutics, and potential
partners have displayed strong interest
in the early results. As with PrioFect™,
this technology may be licensable to
multiple pharmaceutical companies for
addressing the common difficulties that
often arise with drugs under development,
such as solubility, stability and distribution
between tissues of the body.
03
CHAIRMAN’S STATEMENT
The Board and management believe that the
acquisition of DNT propelled Starpharma into a new
league and opened up wide-ranging commercial
opportunities for the combined entity. We have, in
one step, considerably expanded our pipeline and
internationalised our business.
Dear Shareholder,
On behalf of the Board and management
of Starpharma, I am pleased to present
the 2006-07 annual report for your review.
I am also pleased to report that FY2007
has been one of transformation with
several significant achievements on a
number of fronts. For me, the completion
of Starpharma’s acquisition was a
defining moment for the company.
With its dendrimer and nanotechnology
focus, its US presence and existing
relationship with Starpharma, our investee
company, Dendritic Nanotechnologies Inc
(DNT) was a natural target for acquisition.
The knowledge and expertise of our
Board members were key factors in the
successful resolution of negotiations.
I travelled with the CEO to the US and
visited DNT at the time of the acquisition
and was able to see at first hand the
level of exciting opportunities that the
company presented. I also met Richard
Hazleton, the Chairman of the DNT Board
at the time and now a member of the
Starpharma Board.
To have Richard accept the offer of
appointment to Starpharma’s Board was
a very positive outcome for Starpharma
as a strategic component of integration
activities associated with the acquisition,
and beyond.
As the retired chairman and CEO
of Dow Corning, he brings a huge
amount of experience to an already
strong Board in the areas of technology
commercialisation and international
management. The Board and
management believe that the acquisition
of DNT propelled Starpharma into
a new league and opened up wide-
ranging commercial opportunities for the
combined entity. We have, in one step,
considerably expanded our pipeline
and internationalised our business.
The resultant portfolio of commercial
opportunities is evidence of the
extraordinary versatility of our technology.
Our lead product VivaGel™ has also
made solid progress. We have multiple
clinical trials under way, or completed, in
Australia, the US and Kenya and expect
to roll out the results over the coming
months as a forerunner to efficacy trials.
Additionally, the prospect of VivaGelTM as
a contraceptive and condom coating has
expanded our future commercialisation
and market opportunities.
Operationally, Starpharma has made
significant progress, however, the
biotechnology sector remains unfairly
rated in Australia. We must work hard
to educate investors about the many
prospects of Starpharma in parallel with
a continued effort to expand our profile
and opportunities in the US, where we are
experiencing considerable investor and
corporate interest.
Peter T Bartels, AO
Chairman
Over the next year, our aim is to achieve
further scale-up, and to progress our
clinical trial program for VivaGel™, which
is critical in moving our commercialisation
strategy forward. Revenues generated
through our products already on the
market combined with ongoing support
from the US National Institutes of Health
will provide a solid platform for progress.
Finally, I’d like to thank my fellow Board
members, CEO Jackie Fairley and her
management team, and our entire staff
both in Australia and the US for their
collective efforts over the last 12 months.
We enter the financial year with a strong
and visionary team and a clear strategic
direction, and believe we are well placed
for impressive growth.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
04
Jackie Fairley
Chief Executive Officer
these meetings with the clear message
that Starpharma’s nanoscale dendrimer
technology and achievements, especially
the level of NIH funding, coupled with
the opportunity for VivaGel™ in the US,
particularly for genital herpes, are front of
mind with US investors.
Building on this interest, Starpharma was
one of the first companies in the world to
qualify for listing on OTCQX (Starpharma’s
code is OTCQX:SPHRY), the new US
premium market tier listing service for Level
1 ADR companies.
In June 2007, Starpharma received for the
first time coverage from a US investment
bank, with Merriman Ford Curhan and Co
initiating coverage. This was a significant
milestone in terms of raising our profile in
the US.
CEO’S REvIEw
The outlook for the year ahead is firmly focused on
continued hard work to advance our clinical program
and expand commercial opportunities for our exciting
and strengthened portfolio. We are confident that the
year ahead will be one of further significant progress
for Starpharma.
When we released the previous annual
report, I had only recently been appointed
as CEO of Starpharma. June 30 2007
marked the end of my first full financial
year in the role and the end of a very busy
period in the growth and maturation of the
company.
Highlights of the year were the acquisition
of Dendritic Nanotechnologies Inc, the
commencement in October 2006 of the
first clinical trial of VivaGel™ under the
genital herpes development program, and
the associated expansion of Starpharma’s
commercialisation opportunities,
particularly into siRNA transfection and
condom coatings.
Shareholders were strongly in favour
of Starpharma’s offer to acquire 100%
ownership of DNT through the issue
of Starpharma shares and there is no
doubt that the acquisition was a defining
event in positioning Starpharma as a truly
international dendrimer nanotechnology
company. It opened up a range of
commercialisation opportunities in the
pharmaceutical, drug delivery, life science
and industrial sectors.
An important consequence of the
acquisition has been that The Dow
Chemical Company is now Starpharma’s
largest shareholder, holding 8.02% of
shares on issue.
FY2007 has also seen a significant push
on our part to increase the business focus
in the US, which is particularly relevant now
that we have a US-operating subsidiary.
There has been strong growth in the
issuance of new ADRs (American
Depository Receipts) and ongoing interest
from US investors. The annual growth
showed an increase of 45.5% in the
number of ADRs issued for the 12 months
to July 2007, taking to 10.6% the proportion
of issued capital held as ADRs. In fact,
Starpharma’s growth was described by our
depositary bank, the Bank of New York, as
‘exceptional’, and it placed us as the most
successful Level 1 ADR program amongst
Australian biotechs.
In line with the interest in Starpharma stock
following the DNT acquisition, we launched
a major Investor Relations program in the
US, which continues to be an area of focus
for investment.
In the past year I have traveled to the
US every 2-3 months for business
development and IR activities. The trips
have enabled me to make contact with a
number of fund managers with an interest
in biotechnology, life sciences and other
growth sectors in Boston, New York and
San Francisco. I have come away from
05
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CEO’S REvIEw
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ACTIVE SECURITIES TRADED ASX V ADRS
US DEMAND
MARCH
APRIL
MAY
JUNE
JULY
SHAREHOLDERS BY LOCATION
SEPTEMBER 2007
As detailed elsewhere in this report, this
year we have continued to make good
progress in the development of VivaGel™.
REVENUE & INCOME
In July 2007, we reported the completed
male study at the International AIDS
Society meeting in Sydney, to mark the
first occasion on which Starpharma had
presented the results of a clinical trial at an
international meeting of such high calibre.
On the commercial front, FY2007 was also
a period of crystallisation of opportunities
for dendrimer technologies. In February
2007, Starpharma signed a deal with EMD
F07
Biosciences for the inclusion of Priostar™
OTHER
dendrimers in their siRNA transfection kits.
0.5%
USA
25.3%
F06
F07
8
10
AUSTRALIA
Shareholders may be aware that siRNA
74.2%
technology is considered a very exciting
development for the industry and the level
of recent corporate activity in this area
indicates a strong interest amongst large
pharmaceutical companies.
4
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REVENUE & INCOME
-
12%
10%
8%
6%
4%
2%
0%
REVENUE & INCOME
The company now has several royalty-
bearing licences for dendrimer technology
including with EMD, Qiagen and Dade
Behring, and has also extended a pre-
existing commercial deal with Sigma
SHAREHOLDERS BY LOCATION
Aldrich for the sale of dendrimers into new
NOVEMBER 2006
product lines.
In July 2007, our first deal was sealed with
USA
a market leading condom manufacturer to
20.5%
explore the use of VivaGel™ as a coating
for condoms.
AUSTRALIA
74.2%
OTHER
0.4%
AUSTRALIA
74.2%
REVENUE & INCOME
AUSTRALIA
79.1%
During the past year, changes to our
management team have resulted in a
more streamlined leadership group with
the skills, drive and experience to take the
new merged company to its next stage of
development. In Australia, we welcomed
Dr David Owen in the newly created role of
Vice President of Research and in the US,
Dr Robert Berry, President of DNT.
F07
F06
US DEMAND
ACTIVE SECURITIES TRADED ASX V ADRS
The outlook for the year ahead is firmly
focused on continued hard work to
advance our clinical program and
expand commercial opportunities for our
exciting and strengthened portfolio. We
are confident that the year ahead will be
one of further significant progress for
Starpharma.
REVENUE & INCOME
MARCH
APRIL
MAY
JUNE
JULY
F04
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F07
F04
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F07
US DEMAND
ACTIVE SECURITIES TRADED ASX V ADRS
US DEMAND
ACTIVE SECURITIES TRADED ASX V ADRS
MARCH
APRIL
MAY
JUNE
JULY
MARCH
APRIL
MAY
JUNE
JULY
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
06
SHAREHOLDERS BY LOCATION
SEPTEMBER 2007
SHAREHOLDERS BY LOCATION
NOVEMBER 2006
USA
25.3%
OTHER
0.5%
USA
20.5%
OTHER
0.4%
AUSTRALIA
74.2%
AUSTRALIA
79.1%
SHAREHOLDERS BY LOCATION
SEPTEMBER 2007
SHAREHOLDERS BY LOCATION
SEPTEMBER 2007
SHAREHOLDERS BY LOCATION
NOVEMBER 2006
SHAREHOLDERS BY LOCATION
NOVEMBER 2006
USA
25.3%
USA
25.3%
OTHER
0.5%
OTHER
0.5%
AUSTRALIA
79.1%
AUSTRALIA
79.1%
USA
20.5%
OTHER
0.4%
USA
20.5%
OTHER
0.4%
diversification
Beyond pharmaceutical applications,
our dendrimer technology can be
applied to improving plastics and
adhesives and removing impurities
from water.
07
STARPHARMA’S ACqUISITION Of DNT
“What particularly drew me to DNT was the realisation that when
I joined Dow Corning, silicones were at a similar stage to that of
dendrimers today. I had the opportunity to participate in the growth of
a second revolutionary technology.”
Starpharma has had a long-standing
relationship with US-based Dendritic
Nanotechnologies (DNT) in which it
held a 33% stake before acquiring the
company in October 2006. The second
largest shareholder in DNT at that time
was The Dow Chemical Company, with a
30% stake.
When Starpharma acquired 100% of
DNT, Dow and other DNT shareholders
received Starpharma shares valued at
approximately US$6.97 million.
Given the complementary platform
technologies of Starpharma and DNT
and the opportunities to rationalise
development programs, it was natural
that Starpharma’s management would
consider the acquisition, as noted by
several industry commentators after
the event.
A year on, Starpharma believes strongly
that the acquisition was good value and
that the transaction represents a very
positive development for the company
and its shareholders.
Post-acquisition, Starpharma has
increased the diversity and extent of its
pipeline in pharmaceutical, life science
and other industrial applications, the
opportunities for near-term revenue, and
the size of its IP portfolio, confirming
the company as the global leader in
dendrimer-based nanotechnology. In
addition, Starpharma has grown to a total
of 52 employees –16 in the US and 36 in
Australia.
Dick Hazleton, former CEO of Dow Corning and now
Starpharma director, on his belief of the significance
of the dendrimer technologies now owned by
Starpharma.
THe DOw CHeMICal COMPaNY
8.02%
STaRPHaRMa HOlDINGS lIMITeD
aSX:SPl
OTCQX:SPHRY
DeNDRITIC
NaNOTeCHNOlOGIeS INC
STaRPHaRMa PTY lTD
MOUNT PLEASANT, MICHIGAN
MELBOURNE, AUSTRALIA
Increased US presence
DNT provided an entrée to the US that
improves not only Starpharma’s profile,
but also its access to current and future
industry partners and financial markets. In
recognition of the importance of the US in
the nanotechnology space, Starpharma’s
strategy includes enhancement of its US
links and growth of its US shareholder
base. The appointment to the board
of Dick Hazleton, retired Dow Corning
Chairman and CEO, was a significant
step toward that end.
Ongoing involvement of The Dow
Chemical Company (Dow)
As a result of the acquisition, Dow
became Starpharma’s largest
shareholder, and this enhanced
Starpharma’s profile within the industry,
and among potential funding partners.
THe STRUCTURe OF STaRPHaRMa
HOlDINGS POST aCQUISITION
OF DNT
The benefits of the now merged
company are:
Diversified product portfolio
DNT’s product portfolio included the
newly developed Priostar™ technology,
which established a viable commercial
price point for industrial applications
as well as opportunities for additional
short-term revenues. These have already
borne fruit in Starpharma’s licensing
deal with EMD Biosciences. Specifically,
DNT’s portfolio enabled Starpharma to
diversify risk and increase the likelihood
of commercial success.
Rationalisation of business strengths
The combined internal resources
are world class, with expertise in
commercialisation, regulatory, scale-up
and discovery facets of the company.
extensive IP portfolio
Starpharma’s IP portfolio is the strongest
of the dendrimer technology industry as a
result of the acquisition.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
08
progress
09
IN PROfILE VIVAGEL™
The primary objective of the VivaGel™
program is to enable women to protect
themselves from sexually transmitted
infections through the use of a vaginal
microbicide, VivaGel™ (SPL7013 gel).
The gel is initially being developed to
prevent infection by HIV and the virus that
causes genital herpes (HSV-2).
Meanwhile, many influential individuals
and organisations are placing great
store on stemming the rise in HIV and
HSV infection through other means,
particularly the availability of an effective
microbicide. Microbicides are perceived
to have an advantage because their use
can be initiated and managed by women.
HIV
HIV, the virus that causes AIDS, is
thought to infect about 40 million people
worldwide. In the US, AIDS is the number
one cause of death among African-
American women aged 25 to 34. Sexual
transmission is a major contributor to the
spread of HIV/AIDS.
The spread of both HIV and HSV-2
continues apace, despite the allocation
of vast international resources to solving
the problem. Researchers in academia
and industry have been attempting for
many years to develop vaccines for the
prevention of AIDS and genital herpes.
However, their attempts to date have
been largely unsuccessful, and it is
unlikely that efficacious vaccines will be
available in the foreseeable future.
GeNITal HeRPeS
Genital herpes (HSV-2) is a recurrent,
lifelong, prevalent viral infection,
estimated to infect 15% to 25% of male
and female adults in developed countries,
or about 45 million people in the US
alone. In the US, where the disease is at
near-epidemic proportions, this figure is
expected to rise substantially to almost
40% for males and 50% for females
by 2025, unless effective preventative
measures are found. HSV-2 infection
has been associated with increased
susceptibility to infection by HIV and
increased risk of HIV transmission,
making HSV-2 an important target to
slow the spread of both viral infections.
THe TeCHNOlOGY beHIND
VIVaGel™
The active ingredient of VivaGel™,
SPL7013, is a dendrimer. Dendrimers
are man-made, nanoscale spherical
molecules that have many potential
applications in medicine and industry.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
10
commercialisation
11
DENDRIMER AS A DRUG
EG. ThE ANTI-VIRAL ACTIVE INGREDIENT VIVAGEL™
LEFT A representation of VivaGel™’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.
Similarly, the development of VivaGel™
for the prevention of genital herpes is also
in collaboration with the NIAID, through
its Division of Microbiology and Infectious
Diseases (DMID).
A clinical trial of VivaGel™ is under way at
two sites – San Francisco in the US and
Kisumu, Kenya. This trial involving sexually
abstinent women is progressing well.
Starpharma has actively pursued the
potential use of VivaGel™ as a condom
coating and has recently signed an
agreement with a leading manufacturer
of condoms in connection with SPL7013
as a condom coating agent. And
under an NIH grant of US$5.4 million,
research is continuing into the potential
for combination microbicides using
dendrimer technology to prevent HIV
infection.
DeVelOPMeNT STRaTeGY FOR
VIVaGelTM
Starpharma’s objective is to demonstrate
the safety and efficacy of VivaGel™ as a
vaginal microbicide for the prevention of
HIV and HSV-2 infection. The opportunity
may also exist to extend its use to the
prevention of other sexually transmitted
infections.
The finding in animal studies that VivaGel™
has a potent contraceptive effect is a
positive outcome for the product, since
certain market segments have indicated
that contraception would be a desirable
attribute for a microbicidal gel.
The economic considerations
surrounding the active ingredient,
formulation and applicator for VivaGel™
indicate its suitability for mass marketing.
As explained below, Starpharma
continues to work to demonstrate
safety of VivaGel™ in larger clinical trials
enrolling men and women.
PROGReSS TO MaRKeT OF
VIVaGelTM (SPl7013 Gel)
The development of VivaGel™ as a
microbicide for the prevention of infection
by HIV or HSV-2 advanced substantially
during the reporting period.
The program for assessing VivaGel™ for
the prevention of HIV is being undertaken
with funding from a number of sources
beyond those of shareholders, including
a US$20.3 million-contract with the
US National Institutes of Health (NIH),
through the National Institute of Allergy
and Infectious Diseases (NIAID), Division
of AIDS (DAIDS).
A trial of the safety of VivaGel™ in healthy
males conducted between August 2006
and February 2007 showed that once
daily topical application of the gel to the
penis for seven days was well tolerated
and indicated that the product was safe
for continued development.
In February 2007, Starpharma established
a collaboration with the Microbicide Trials
Network (MTN) in the US, through NIAID
and the National Institute of Child Health
and Human Development (NICHD), to
advance the development of VivaGel™
for the prevention of HIV. Under the MTN
collaboration, VivaGel™ will be assessed
for the first time in sexually active young
women, a target population for the
product. The trial commenced in July 2007
in Florida in the US, and Puerto Rico.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
12
high impact
13
DENDRIMER NANOTECHNOLOGy
One definition of nanotechnology is the manipulation of matter on the scale
of the nanometre, which is one billionth of a metre. Dendrimers are nanoscale
molecules of defined structure for which the chemical and physical properties are
determined during their synthesis. Starpharma is exploiting the unique properties
of dendrimers in the pharmaceutical, bioscience and other industries.
STARPHARMA’S PIPELINE: BALANCED fOR RISK
Pharmaceutical & Medical Products
Proof of conceptpt
Lead
Clinical Trials
Sales
VivaGel™
• Genital Herpes prevention
• HIV prevention
• condom coating & other line extensions
ADME Engineering™
• Therapeutic protein PK optimisation
Drug Delivery – Small Molecules
• Cancer therapeutic
Drug Optimisation
• Enhanced solublisation
In–vivo and in vitro Diagnostics
• Stratus CS® (Cardiac Diagnostic)
• MRI imaging (Ovarian cancer & cardiovascular disease)
Life-Science Products etc
Proof of conceptpt
Prototype
Pre-launch
Sales
Gene Transfection Reagents
• SuperFect®
siRNA Transfection Reagents
• PrioFect™
Materials Sciences Products
Early
Intermediate
Advanced, Partnered Sales
Specialty & Fine Chemicals
• Priostar™ Dendrimers (multiple applications)
• Starburst™ Dendrimers (catalogue of over 200 products)
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
14
research
15
IN PROfILE – PRIOFECT™ FOR siRNA DELIVERy
In February 2007, Starpharma signed a
license and supply agreement with EMD
Biosciences for the use of PrioFect™
reagents for the research market.
PrioFect™ reagents constitute a new
generation of transfection reagents,
which are used to facilitate the transfer
of nucleic acids such as DNA and RNA
into cells. The market for such reagents is
estimated at US$200 million.
The deal was the first commercial
application of Starpharma’s new
Priostar™ technology.
PrioFect™ reagents are of great interest
for the delivery of siRNA (small interfering
RNA), which activates the natural cellular
process (RNAi: ‘i’ for interference) that
causes degradation of specific RNA
molecules to prevent the expression of
the corresponding genes.
The siRNA technology has the potential
to provide highly specific medicines that
can stop the production of deleterious
proteins associated with disease states.
The first step in using RNAi as a research
tool to interfere with gene expression is
the transfection of siRNA into cells.
There are literally thousands of different
cell types, some of which are ‘hard’ to
transfect while others are relatively ‘easy’.
One feature that sets PrioFect™ apart
from other transfection reagents is their
availability in different sizes that can
be optimised for individual cell types.
Starpharma’s research has demonstrated
that changing reagent size in nanometer
increments has a dramatic effect on
transfection efficiency across cell lines.
Starpharma is now developing PrioFect™
for potential therapeutic applications of
siRNA. The area of siRNA research is one
of rapid growth and the technology has
enormous potential in the hunt for new,
highly-specific medicines. Conceptually,
siRNA can be used to target almost any
protein for which the gene is defined.
The researchers who first reported the
biological process of RNAi were awarded
the 2006 Nobel Prize for Physiology
or Medicine. Already there has been
significant corporate activity in siRNA as
large pharmaceutical companies such as
Merck Inc. Roche and Astra Zeneca race
to gain advantage over one another’s
technology.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
16
a Jackie Fairley
b Robert Berry
c Nigel Baade
d Paul Barrett
e Jeremy Paull
f David Owen
g Ben Rogers
a
c
e
d
b
g
f
team
17
MANAGEMENT
Starpharma’s management team provides the expertise and experience
necessary to fulfil its commitment to create value through the development
and commercialisation of new pharmaceutical products based on
dendrimers. During the year, we welcomed David Owen to the team as
well as Bob Berry, who continues to run the DNT operation in the US.
Jeremy Paull Vice President
Development and Regulatory Affairs,
BSc(hons), PhD
Jeremy has 7 years’ experience in
drug and device development, quality
assurance, and regulatory and clinical
affairs and is currently the Principal
Investigator for Starpharma’s two
NIH-funded programs. He has been
instrumental in the VivaGel™ development
program and was responsible for the first
clinical trials of the product under the IND
application to the US FDA. Jeremy has
a PhD in pharmacology, and previously
worked on the development of a medical
device for transdermal drug delivery.
ben Rogers Company Secretary and
Chief Financial Officer
Ben has extensive experience in finance
and human resources management with
the CSIRO research laboratories. He also
operated his own consulting business
providing services to Co-operative
Research Centres and CSIRO Divisions.
Ben joined Starpharma in 1997.
Jackie Fairley Chief Executive Officer,
BSc, BVSc(hons), MBA
Jackie has over 17 years’ experience in
the pharmaceutical and biotechnology
industries, working in business
development and senior management
roles with companies including CSL
and Faulding (now Mayne Hospira).
Before joining Starpharma in 2005,
she was Chief Executive Officer of
Cerylid Biosciences which generated in
excess of $20 million in revenues from
companies such as Chiron, Chugai and
Aventis. Jackie also spent five years as
a Vice President for Faulding’s injectable
division and more than five years with
CSL in various executive roles.
Nigel baade Financial Controller, BCom,
CPA, GradDipArts (Development)
Nigel is a CPA-qualified accountant
with extensive experience in the
pharmaceutical and biotechnology
industries. He was previously finance
manager of Cerylid Biosciences; and
Manager Accounting, International
Business Development for Faulding
(now Mayne Hospira). Before joining
Starpharma in January 2006, Nigel had a
corporate planning role with multinational,
Hagemeyer.
Paul barrett Vice President Business
Development, BSc(hons), PhD
Paul has 6 years experience in
marketing and business development
gained from working with 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.
Robert berry President of DNT, PhD
Robert has been involved in the
technology and research field for more
than 25 years. In that time, he has
founded four companies and consortia
to advance the use of technology and
research. Bob most recently served
as the president and CEO of the
Central Michigan University Research
Corporation and as the chief technology
officer at Central Michigan University.
He received his doctorate from Northern
Arizona University, where he was a faculty
member and was Assistant Director of
Research.
David Owen Vice President Research,
BSc(hons), PhD
David has extensive experience in
medicinal chemistry, biochemistry
and managing teams focussed on
commercial drug discovery. He started in
the biotech industry as a senior chemist
with Mimotopes, where he managed
programs major pharmaceutical
companies. He later became head of
chemistry at Cerylid, and later at Glykoz,
where he worked on a new class of
antibacterial agents. David’s expertise
covers the synthesis of a wide range of
compound types. He is a co-author on
several publications and patents.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
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 2007.
P T Bartels (Chairman)
P M Colman
R Dobinson
J K Fairley
L Gorr
P J Jenkins
J W Raff
R A Hazleton was appointed a director on 1 December 2006
and continues in office at the date of this report.
dendrimer opportunities in materials science with applications
in areas such as adhesives, lubricants and water remediation.
These activities are managed by the Company’s wholly owned
subsidiaries Starpharma Pty Ltd. in Melbourne, Australia and
Dendritic Nanotechnologies (“DNT”), Inc in Michigan, USA.
Products based on the Company’s dendrimer technology are
on the market in the form of diagnostic elements and laboratory
reagents.
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 development
and commercialisation of dendrimer products for
pharmaceutical, life-science and other applications. Activities
within the Company are directed towards the development of
precisely defined nano-scale materials, with a particular focus
on the development of its topical vaginal microbicide VivaGelTM
for the prevention of genital herpes, HIV and the application of
dendrimers to drug delivery and other life science applications.
More broadly, through partners the company is also exploring
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 2007 the consolidated entity
incurred an operating loss after income tax of $7,244,996
(June 2006: $7,522,789).
Significant changes in the state of affairs
On 20 October 2006 the Company signed an agreement to
acquire the associated company DNT through the issue of 20.1
million Starpharma Holdings Limited shares. At this time the
Company owned 33% of DNT and The Dow Chemical Company
was the other major shareholder with a 30% equity stake.
On completion of the transaction DNT became a wholly owned
operating subsidiary of Starpharma Holdings Limited and the
Dow Chemical Company became a substantial shareholder in
Starpharma Holdings Ltd with approximately 8.6% of the issued
shares of the Company.
In the opinion of the directors there were no other significant
changes in the state of affairs of the consolidated entity that
occurred during the financial year under review not otherwise
disclosed in this report or in the financial statements.
19
DIRECTORS’ REPORT
Matters subsequent to the end of the financial year
On 22 August 2007 Starpharma Holdings Limited raised an
additional $3.8 million in capital through the issue of 11,881,167
ordinary shares in a private placement to a US-based institution
and an existing Australian institutional shareholder at a price of
$0.3212 per share. Attached to the placement were unlisted
options of 7,567,119. The options have an exercise price of
$0.4346 per option with an expiry date of 21 August 2012.
programs, in particular drug delivery, its PrioFect™ siRNA
delivery technology and the condom coating line extension
of VivaGel™.
No further matters or circumstances have arisen since 30 June
2007 that have significantly affected, or may significantly affect:
(a) the consolidated entity’s operations in future financial
years, or
The proceeds of the placement will principally be used to
support the further development of Starpharma’s dendrimer
(b) the results of the operations in future financial years, or
(c) the consolidated entity’s state of affairs in future financial
years.
Likely developments and expected results of operations
In the opinion of the directors, the consolidated entity will
continue its activities as described. Further information on likely
developments in the operations of the consolidated entity and
the expected results of operations have not been included in
this report because the directors believe it would be likely to
result in unreasonable prejudice to the consolidated entity.
Regulatory Environment
There were no significant changes in laws or regulations during
2006/07 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 is subject to environmental regulations and other
licences in respect of its laboratory facilities in Melbourne
(Victoria) and Mt Pleasant (Michigan, USA). There are adequate
systems in place to ensure compliance with relevant
Commonwealth, State and Federal 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 OH&S Committees 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 40 of this annual report.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
20
DIRECTORS’ REPORT
Information on Directors
Peter T Bartels, AO, FaISM, FRS.
Chairman – Non-executive, age 66.
Experience and expertise
Independent non-executive director and Chairman for four
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 of listed entities
None.
Former directorships of listed entities 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.
Non-executive director age 58.
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. Chairman,
BioMelbourne Network. Also founder and investor in a number
of other start-up technology companies.
Other current directorships of listed entities
None.
Former directorships of listed entities in last 3 years
None.
Special Responsibilities
Deputy Chairman
Interests in shares and options
5,706,689 ordinary shares in Starpharma Holdings Limited
Jacinth K fairley
b.Sc., b.V.Sc.(Hons), Mba
Chief executive Officer, age 44.
Experience and expertise
Chief Operating Officer of Starpharma from 4 July 2005 to 30
June 2006. Chief Executive Officer since 1 July 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 Hospira). 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 of listed entities
None
Former directorships of listed entities in last 3 years
None.
Special Responsibilities
Chief Executive Officer
Member of research committee
Interests in shares and options
30,250 ordinary shares in Starpharma Holdings Limited
800,000 options over ordinary shares in Starpharma Holdings
Limited
350,000 options over ordinary shares in Starpharma Holdings
Limited (subject to shareholder approval at the next Annual
General Meeting of the Company)
21
Information on Directors (continued)
Peter M Colman
bSc(Hons), PhD, Faa, FTSe.
Independent non-executive director, age 63.
Experience and expertise
Non-executive director for ten 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.
Ross Dobinson
b. bus (acc)
Independent Non-executive director, age 55.
Experience and expertise
Non-executive director for ten 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 63.
Experience and expertise
Non-executive director for six years. Non-executive director of
Starpharma Pty Ltd for ten years. Senior Partner, Herbert Geer &
Rundle. 34 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.
DIRECTORS’ REPORT
Other current directorships of listed entities
None.
Former directorships of listed entities in last 3 years
None.
Special Responsibilities
Member of research committee.
Interests in shares and options
5,992,286 ordinary shares in Starpharma Holdings Limited
Other current directorships of listed entities
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 of listed entities in last 3 years
None.
Special Responsibilities
Chairman of audit & risk management committee.
Chairman of remuneration & nomination committee.
Interests in shares and options
2,720,976 ordinary shares in Starpharma Holdings Limited
Other current directorships of listed entities
None.
Former directorships of listed entities 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 2007
22
DIRECTORS’ REPORT
Information on Directors (continued)
Richard A Hazleton
bSChe, MSChe, HonDrengr, HonDrCommSci
Independent Non-executive director, age 65.
Experience and expertise
Independent non-executive director since 1 December 2006.
former chairman of US-based global corporation Dow Corning.
Joined Dow Corning in 1965 and held numerous positions in
engineering, manufacturing and finance, both in the US and
Europe, before becoming Chief Executive Officer of the
company in 1993, and Chairman of the Board of Directors and
CEO in 1994. Retired from Dow Corning in 2001. Chairman of
Dendritic Nanotechnologies Inc (DNT) from 2004 until
Starpharma’s acquisition of the company in October 2006.
Has served on the Boards of the American Chemistry Council
and the Chemical Bank and Trust Company (Midland, MI, USA)
as well as several non-profit social service agencies in Michigan
and Belgium.
Peter J Jenkins
Mb, bS (Melb), FRaCP
Independent Non-executive director, age 61.
Experience and expertise
Independent non-executive director for ten 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.
Other current directorships of listed entities
None
Former directorships of listed entities in last 3 years
None.
Interests in shares and options
42,616 ordinary shares in Starpharma Holdings Limited
Other current directorships of listed entities
Non-executive director of bio-pharmaceutical company
Anadis Ltd (director since 1994).
Former directorships of listed entities 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
23
Company Secretary
The Company Secretary is Mr Ben Rogers. Age 59. He has
extensive experience in finance, corporate governance and HR
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 was a
member of Starpharma’s start-up/IPO management team and
has been Company Secretary since February 1998, with
responsibilities that include the role of Chief Financial Officer.
Mr Rogers is an affiliate of Chartered Secretaries Australia.
DIRECTORS’ 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 2007,
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
J Fairley
L Gorr
R Hazleton
P J Jenkins
J W Raff
A
B
9
7
8
9
8
4
8
9
9
9
9
9
9
4
9
9
A
*
*
2
*
2
*
2
*
B
*
*
2
*
2
*
2
*
A
3
*
3
2
*
*
*
B
3
*
3
3
*
*
*
A
*
4
*
4
*
*
4
*
B
*
4
*
4
*
*
4
*
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 Leon Gorr retires by rotation as director at the annual general
meeting and, being eligible, offers himself for re-election.
Dr Peter Jenkins retires by rotation as director at the annual
general meeting and, being eligible, offers himself for re-election.
Mr Richard Hazleton was appointed a director on 1 December
2006. In accordance with the Constitution Mr Hazleton retires
as a director at the annual general meeting and, being eligible,
offers himself for re-election.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
24
DIRECTORS’ 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 – audited
The objective of the company’s remuneration policy is to ensure
appropriate and competitive reward for the results delivered.
The framework aligns executive reward with achievement of
strategic objectives and the creation of value for shareholders.
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
$450,000 which was approved by shareholders on 15
November 2006. 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 $320,000 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. There are no
guaranteed base pay increases in any executives’ contracts.
Starpharma Employee Share Option Plan
Information on the Starpharma Employee Share Option Plan is
set out in note 38 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
DIRECTORS’ REPORT
B. Details of remuneration – audited
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.
N J baade
Financial Controller
C P barrett
VP, Business Development
R I berry
President
Dendritic Nanotechnologies, Inc
The key management personnel of Starpharma Holdings
Limited includes the directors as per pages 21 to 23.
J K Fairley
CEO
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:
O T Grogan
VP, Commercial Development & Licensing
(until 12 Jan 2007)
G Y Krippner Head of Chemistry (until 8 December 2006)
T D McCarthy VP, Drug Development (until 17 November 2006)
D J Owen
VP, Research (from 15 Feb 2006)
J R Paull
VP, Development and Regulatory Affairs
b P Rogers
Company Secretary and CFO
Directors and Key management personnel of Starpharma Holdings Limited
2007
Name
Short-term benefits
Post-employment
long-term
benefits
Share-
based
payment
Cash salary
and fees
$
Cash
bonus #
$
Non-monetary
benefits
$
Super-
annuation
$
Retirement
Benefits
$
Long service
leave
$
Options #
leave
$
Total
$
Non-executive directors
P T Bartels Chairman
P M Colman
R Dobinson
L Gorr
P J Jenkins
R A Hazleton 1
(from 1/12/2006 – 30/6/2007)
–
36,697
40,000
36,697
36,697
23,333
Subtotal non-executive directors
173,424
executive directors
J W Raff Deputy Chairman 2
(from 1/7/2006 – 30/6/2007)
J K Fairley 3
(from 1/7/2006 – 30/6/2007)
Totals
19,776
306,230
499,430
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
80,000
3,303
–
3,303
3,303
–
–
–
89,909
–
–
–
–
–
–
–
664
40,172
140,000
–
–
–
–
–
–
–
–
–
–
–
–
–
80,000
40,000
40,000
40,000
40,000
– 23,333
–
263,333
–
200,612
4,041
43,769
–
964
124,015 479,019
4,705
173,850
140,000
964
124,015
942,964
# All performance related remuneration, including cash bonuses and options granted are at risk.
1 R Hazleton was appointed non-executive director on 1 December 2006.
2 J W Raff retired as CEO on 1 July 2006 and was appointed Deputy Chairman. $40,000 contributed to J W Raff’s superannuation
was his Director’s remuneration. He was paid $60,627 on retirement for accrued long service leave entitlements.
3 J K Fairley was appointed CEO and Executive Director on 1 July 2006.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
26
DIRECTORS’ REPORT
B. Details of remuneration – audited (continued)
Directors and Key management personnel of Starpharma Holdings Limited or subsidiary companies
2007
Name
Short-term benefits
Post-employment
long-term
benefits
Share-
based
payment
Cash salary
and fees
$
Cash
bonus #
$
Non-monetary
benefits
$
Super-
annuation
$
Retirement
Benefits
$
Long service
leave
$
Options #
leave
$
Total
$
Non-executive directors
P T Bartels Chairman
– –
–
80,000
–
–
–
80,000
P M Colman
R Dobinson
L Gorr
P J Jenkins
R Hazleton 1
(from 1/12/2006–30/6/2007)
Subtotal non-executive
directors
executive directors
J W Raff Deputy Chairman 2
(from 1/7/2006–30/6/2007)
J K Fairley 3
(from 1/7/2006–30/6/2007)
36,697 –
–
3,303
–
–
–
40,000
40,000 –
–
–
–
–
–
40,000
36,697 –
–
3,303
–
–
–
40,000
36,697 –
–
3,303
–
–
–
40,000
23,333
–
– –
–
–
–
23,333
173,424
–
–
89,909
–
–
–
263,333
19,776
–
664
40,172
140,000
–
–
200,612
306,230
–
4,041
43,769
–
964
124,015
479,019
Other Key Management Personnel
B P Rogers
J R Paull
C P Barrett
N J Baade
D J Owen 4
(from 15/2/2006–30/6/2007)
R I Berry 5
(from 20/10/2006–30/6/2007)
T D McCarthy
(from 1/7/2006–17/11/2006)
G Y Krippner
(from 1/7/2006–8/12/2006)
O T Grogan
(from 1/7/2006–12/1/2007)
64,159
–
27,354 70,165
–
3,815
10,439
175,932
137,210
–
4,115 23,249
–
10,153
13,962
188,689
130,818
–
383 19,182
–
383
18,299
169,065
110,005 10,000
7,219 23,559
–
344
10,439
161,566
43,091
–
– 3,878
–
117
3,393
50,479
151,797
–
14,488
–
–
–
21,855
188,140
63,216
–
15,802 9,215
–
–
–
88,233
52,176
–
11,933 5,220
–
–
(23,930)
45,399
85,964
–
20,427 15,432
–
–
(25,330)
96,493
Totals
1,337,866 10,000
106,426
343,750
140,000
15,776
153,142 2,106,960
# All performance related remuneration, including cash bonuses and options granted are at risk.
1 R Hazleton was appointed non-executive director on 1 December 2006.
2 J W Raff retired as CEO on 1 July 2006 and was appointed Deputy Chairman. $40,000 contributed to J W Raff’s superannuation
was his Director’s remuneration. He was paid $60,627 on retirement for accrued long service leave entitlements.
3 J K Fairley was appointed CEO and Executive Director on 1 July 2006.
4 D J Owen was appointed VP, Research on 15 February 2007.
5 R I Berry is President of Dendritic Nanotechnologies Inc, which became a wholly owned subsidiary on 20 October 2006.
27
B. Details of remuneration – audited (continued)
Directors and 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
$
DIRECTORS’ REPORT
Non-executive directors
P T Bartels Chairman
P M Colman
R Dobinson
L Gorr
P J Jenkins
–
36,697
40,000
36,697
36,697
Subtotal non-executive
directors
150,091
executive directors
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
–
1,860
38,340 B
28,648
20,991
32,019 C
11,187
29,411 D
11,832
7,155
365,707
21,602
322,270
11,962
231,240
41,170
213,067
18,714
208,315
37,427
177,516
14,971
172,072
7,494
121,687
–
52,177
153,340
2,203,479
Totals
1,395,162
54,000
235,270
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.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
28
DIRECTORS’ REPORT
C. Service Agreements – audited
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 including participation,
when eligible, in the Starpharma Holdings Employee Option Plan. Other major provisions of the agreements relating to remuneration
are set out below.
J K fairley Chief executive Officer
– No fixed term of agreement
– Base salary, inclusive of superannuation, per annum as at
30 June 2007 of $350,000, to be reviewed annually by the
remuneration committee.
– Fringe benefits – on-site car parking
– Subject to termination at any time by:
(i)
the Executive giving to the Company twelve months’
notice in writing; or
(ii) the Company giving to the Executive six months’ notice
in writing.
If the Company gives notice in accordance with this
clause, the Executive will be entitled to a termination
payment upon the expiration of the notice period, of an
amount equal to 6 months’ total remuneration.
– The Executive’s employment may be terminated by the
Company at any time without notice if the Executive:
(i)
(ii) becomes unable to pay the Executive’s debts as they
is guilty of serious misconduct;
become due; or
(iii) is found guilty be a court of a criminal offence.
R I Berry President and CeO – Dendritic
Nanotechnologies, Inc
– No fixed term of agreement.
– Minimum annual base salary, at 30 June 2007 of US$175,000.
– Subject to termination by the Company without cause by
giving the Executive 30 days notice, in which case the
Executive shall be entitled to payment of salary for six months.
– Subject to termination by the Executive giving the Company
90 days written notice.
– Subject to termination by the Company for serious breach
of obligations to the Company or conviction of a felony
involving moral turpitude, other criminal acts or illegal acts
that are injuries to the Company, in which case the Executive
shall receive salary and benefits including unused vacation
through to the effective date of such termination, and no
severance amount or termination payments or benefits
of any nature.
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 2007 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.
J R Paull VP – Regulatory and Clinical affairs
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at
30 June 2007 of $175,000, to be reviewed annually by the
remuneration committee.
– Subject to termination at any time by:
(i)
the Executive giving to the Company not less than three
months written notice; or
(ii) the Company giving to the Executive written notice, or
payment in lieu of that notice, which notice period shall
be six months.
– The Executive’s employment may be terminated by the
Company at any time without notice for serious breach of
obligations to the employer, wilful neglect of duty, serious
misconduct or bankruptcy.
C P Barrett VP – business Development
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at
30 June 2007 of $150,000, to be reviewed annually by the
remuneration committee.
– Subject to termination at any time by:
(i)
the Executive giving to the Company not less than two
months written notice; or
(ii) the Company giving to the Executive written notice, or
payment in lieu of that notice, which notice period shall
be four months.
– The Executive’s employment may be terminated by the
Company at any time without notice for serious breach of
obligations to the employer, wilful neglect of duty, serious
misconduct or bankruptcy.
D J Owen vP Research
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at
30 June 2007 of $135,000, to be reviewed annually by the
remuneration committee.
– Subject to termination at any time by:
(i)
the Executive giving to the Company not less than three
months written notice; or
(ii) the Company giving to the Executive written notice, or
payment in lieu of that notice, which notice period shall
be three months.
– The Executive’s employment may be terminated by the
Company at any time without notice for serious breach of
obligations to the employer, wilful neglect of duty, serious
misconduct or bankruptcy.
29
DIRECTORS’ REPORT
C. Service Agreements – audited (continued)
N J Baade Financial Controller
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at
30 June 2007 of $140,000, to be reviewed annually by the
remuneration committee.
– Subject to termination at any time by:
(i)
the Executive giving to the Company not less than two
months written notice; or
(ii) the Company giving to the Executive written notice, or
payment in lieu of that notice, which notice period shall
be four months.
– The Executive’s employment may be terminated by the
Company at any time without notice for serious breach of
obligations to the employer, wilful neglect of duty, serious
misconduct or bankruptcy.
O T Grogan VP – Commercial Development & licensing
(from 1 July 2006 – 12 January 2007)
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at
12 January 2007 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.
D. Share-based compensation – audited
G y Krippner Head of Chemistry
(from 1 July 2006 – 8 December 2006)
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at
8 December 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.
T D McCarthy VP – Drug Development
(from 1 July 2006 – 17 November 2006)
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at
17 November 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.
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
granted under the plan for no consideration. Options are usually
granted for a three to 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
4 July 2005
18 July 2005
4 July 2010
18 July 2010
6 October 2006
6 October 2010
17 November 2006
30 June 2009
4 April 2007
4 April 2011
$0.9375
$0.9375
$0.9375
$0.5013
$0.4508
$0.5013
$0.4648
$0.1456
$0.1574
$0.2393
$0.2044
$0.1426
9 February 2006
5 July 2007
19 July 2007
6 October 2008
1 July 2007
4 April 2009
Options granted under the Plan carry no dividend or voting rights.
When exercisable, each option is convertible into one ordinary
share of the Company to be allotted not more than ten business
days after exercise.
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.
The weighted average remaining contractual life of share
options outstanding at the end of the period was 2.78 years
(2006: 2.65 years).
Fair value of options granted
The weighted average assessed fair value at grant date of
options granted during the year ended 30 June 2007 was $0.21
per option (2006: $0.15 ). The fair value at grant date is
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 three to five
year life and become exercisable on the first or second
anniversary of the date of grant.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
30
DIRECTORS’ REPORT
D. Share-based compensation – audited (continued)
Options granted to each director of the company and the key management personnel of the group
during the year ended 30 June 2007 and the prior year were:
Options granted on:
4 July 2005
18 July 2005
6 October 2006
17 November 2006
4 april 2007
Number of options granted
300,000
100,000
700,000
500,000
550,000
2006
2007
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 2010
18 July 2010
6 October 2010
4 April 2011
4 April 2011
$0.9375
$0.9375
$0.5013
$0.4508
$0.5035
46.9%
5.2%
–
$0.5000
$0.1456
46.9%
5.2%
–
$0.5200
$0.1574
42.5%
5.5%
–
$0.5500
$0.2393
44.0%
5.5%
–
$0.4500
$0.2044
38.8%
6.2%
–
$0.4300
$0.1426
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.
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
N J Baade
C P Barrett
J K Fairley
O T Grogan
G Y Krippner
T D McCarthy
J R Paull
B P Rogers
2007
100,000
200,000
500,000
–
100,000
–
200,000
200,000
2006
100,000
100,000
300,000
–
–
–
–
–
2007
2006
–
–
–
–
–
–
–
–
–
–
–
–
200,000
100,000
80,000
220,000
31
DIRECTORS’ REPORT
D. Share-based compensation – audited (continued)
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 30. No options
have been granted to directors or key management personnel
since the end of the year.
No other directors or key management personnel hold options
under the Plan.
Two tranches of Employee Share Options as set out below were
offered to Dr J K Fairley subject to shareholder approval at the
next Annual General Meeting of the Company. The options
were offered on 4 April 2007 and 8 August 2007.
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: 50.35 cents per share
– 150,000 Options: Exercise period:
From 4 April 2009 to 4 April 2011.
– 200,000 Options: Exercise period:
From 8 August 2009 to 8 August 2011.
E. Additional Information – unaudited
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 significant 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
N J Baade
C P Barrett
R I Berry
J K Fairley
O T Grogan
G Y Krippner
T D McCarthy
D J Owen
J R Paull
B P Rogers
a
Remuneration
consisting of options
b
Value at
grant date
$
C
Value at
exercise date
$
D
Value at
lapse date
$
e
Total of
columns b to D
$
6.5%
10.8%
11.6%
25.9%
(0.3%)
(0.5%)
–
6.7%
7.4%
5.9%
38,191
38,191
59,836
102,203
–
23,934
–
28,513
43,030
38,191
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
38,191
38,191
59,836
102,203
–
23,934
–
28,513
43,030
38,191
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 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.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
32
DIRECTORS’ REPORT
E. Additional Information – unaudited (continued)
Details of remunerations: cash bonuses and options
For each cash bonus and grant of options included in the tables
on pages 26 to 32, 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.
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 2007 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.
Name
N J Baade
C P Barrett
R I Berry
J K Fairley
O T Grogan
G Y Krippner
T D McCarthy
D J Owen
J R Paull
B P Rogers
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
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2007
2006
2007
2007
2006
2007
2002
2005
2004
2007
2002
2004
2007
2004
2007
2004
–
–
–
–
–
100
–
–
–
100
–
–
100
–
100
–
–
–
–
–
–
–
100
100
100
100
100
100
–
–
–
–
–
2009
30/06/2008
30/06/2009
30/06/2009
30/06/2008
30/06/2008
–
–
–
–
–
–
30/06/2009
30/06/2006
30/06/2009
–
30/06/2009
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
27,752
409
27,752
37,981
299
–
nil
nil
nil
nil
nil
25,120
–
29,068
–
27,752
Shares under option
Unissued ordinary shares of Starpharma Holdings Limited under option at the date of this report are as follows:
Date options granted
expiry date
Issue price of shares
Number under option
6 February 2004
8 February 2004
31 December 2008
8 February 2009
31 December 2004
31 December 2009
4 July 2005
18 July 2005
17 November 2006
6 October 2006
2 January 2007
2 January 2007
4 April 2007
21 August 2007
4 July 2010
18 July 2010
30 June 2009
6 October 2010
2 January 2009
2 January 2011
4 April 2011
21 August 2012
$0.7300
$0.9375
$0.9375
$0.9375
$0.9375
$0.4508
$0.5035
$0.5200
$0.5200
$0.5035
$0.4346
Total:
200,000
410,000
147,000
300,000
100,000
500,000
1,194,000
45,000
20,000
590,000
7,567,119
11,073,119
No option holder has any right under the options to participate in any other issue of the company or of any other entity.
33
DIRECTORS’ REPORT
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.
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 APES 110
Code of Ethics for Professional Accountants.
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
Audits performed by other auditors of controlled entities:
2007
$
107,000
57,500
26,859
2006
$
114,990
7,500
–
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 office in accordance with
section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of the
Directors.
Peter T Bartels, AO
Director
26th September 2007
Melbourne
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
34
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
Auditor’s Independence Declaration
As lead auditor for the audit of Starpharma Holdings Limited for the year ended 30
June 2007, I declare that to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations
Act 2001 in relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the
audit.
This declaration is in respect of Starpharma Holdings Limited and the entities it
controlled during the period.
SC Bannatyne
Partner
PricewaterhouseCoopers
Melbourne
26 September 2007
Liability limited by a scheme approved under Professional Standards Legislation
35
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 CGC Recommendations”).
The Corporate Governance Statement set out below describes
the Company’s current corporate governance principles and
practices which the Board considers to comply with the CGC
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.
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.
1.1.2 Responsibilities
The responsibilities of the Board include:
– Contributing to the development of and approving the
corporate strategy;
– Reviewing and approving business plans, the annual budget
and financial plans including available resources and major
capital expenditure initiatives;
– Overseeing and monitoring organisational performance and
the achievement of the Group’s strategic goals and
objectives;
– Monitoring financial performance including approval of the
annual and half-year financial reports and liaison with the
Company’s auditors;
– Appointment, performance assessment and, if necessary,
1.1 Board charter
removal of the CEO;
The Board of Starpharma Holdings Limited operates in
accordance with the charter set out below.
1.1.1 Board Composition
– Ensuring there are effective management processes in place
and approving major corporate initiatives;
– Enhancing and protecting the reputation of the Group;
– Overseeing the operation of the Group’s systems for
compliance and risk management;
– The Board is to be composed of both executive and non-
– Reporting to shareholders.
executive directors with a majority of non-executive directors.
– In recognition of the importance of independent views and the
Board’s role in supervising the activities of management the
Chairman must be an independent non-executive director, the
majority of the Board must be independent of management
and all directors are required to bring independent judgement
to bear in their Board decision making.
– The Chairman is elected by the full Board and meets
regularly with the CEO.
– The Board may decide to appoint one of the non-executive
directors as Deputy Chairman.
– The Company is to maintain a mix of directors on the Board
from different backgrounds with complementary skills and
experience.
– The Board is to undertake an annual Board performance
review and consider the composition, structure, and role of
the Board and individual responsibilities of directors.
– The minimum number of directors is three and the maximum
is fifteen unless the Company passes a resolution varying
that number.
– There is no requirement for a director to hold shares in the
Company.
1.2 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 seven non-executive directors, six of
whom are deemed independent under the principles set out
below, and one executive director at the date of signing the
directors’ report.
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.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
36
CORPORATE GOVERNANCE STATEMENT
1. The Board of Directors (continued)
1.3 Directors’ independence
1.6 Commitment
The Board held nine meetings during the year. Meetings are
held at the Company’s corporate offices and laboratory facility
in the Baker Building, 75 Commercial Road, Melbourne,
Australia. Mr Richard Hazleton, a US resident director, has
attended four meetings since his appointment on 1 December
2006. Of these meetings Mr Hazleton attended one in person
and the other three by telephone conference. The number of
meeting of the Board and of each Board committee held during
the year ended 30 June 2007, 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 their
appointment to the Board and are reviewed each year as part of
the annual performance assessment. Prior to appointment or
being submitted for re-election each non-executive director is
required to specifically acknowledge that they have and will
continue to have the time available to discharge their
responsibilities to the Company.
1.7 Conflict of interests
Directors are expected to avoid any action, position or interest
that may result 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 and is precluded from participating in discussions or
decision making on such dealings.
1.8 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.
1.9 Performance assessment
The Board undertakes an annual self assessment of its
performance. Each director is asked to consider matters
such as composition, structure and role of the Board, and
performance of individual directors. The Chairman then meets
individually with each director to discuss the assessment.
The CEO’s performance is assessed taking into account
attainment of predetermined targets or goals based on various
financial and other measurable indicators related to the
Company. The CEO meets with the remuneration and
nomination committee annually to discuss attainment of key
performance indicators of both the CEO and the senior
management team.
The Company has adopted specific principles for assessing the
independence of directors: To be deemed independent, a
director must be a non-executive and:
– Not be a substantial shareholder of the company or an officer
of, or otherwise associated directly with, a substantial
shareholder of the company;
– within the last three years, not have been employed in an
executive capacity by the Company, or been a director after
ceasing to holder any such employment;
– within the last three years, not have been a principal of a
material professional adviser or a material consultant to the
Company, or an employee materially associated with the
service provided;
– not be a material supplier or customer of the Company, or an
officer of or otherwise associated directly or indirectly with a
material supplier or customer;
– must have no material contractual relationship with the
Company other than as a director;
– be free from any interest and any business or other
relationship which could, or could reasonably be perceived
to, materially interfere with the director’s ability to act in the
best interests of the company.
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 substantial shareholder for the purposes of applying these
criteria is a person with a substantial shareholding as defined in
section 9 of the Corporations Act.
The Company has also considered directors’ periods of service
on the board, particularly in the context of the long term nature
of the Company’s research, development and
commercialisation activities, and has concluded that length of
service does not, and should not reasonably be perceived to,
adversely impact upon a director’s ability to act in the best
interests of the company.
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 1 July 2006.
1.4 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.
1.5 Chairman and Chief Executive Officer (CEO)
The current Chairman Mr Peter Bartels is an independent
non-executive director appointed in 2003. The CEO Dr Jackie
Fairley was appointed as a director and CEO on 1 July 2006.
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 Company’s senior
executives. The CEO is responsible for implementing Company
strategies and policies. The Board policy is for these separate
roles to be undertaken by separate people.
37
2. Corporate reporting
The Company prepares audited financial statements for each
year ending 30 June, and reviewed financial statements for
each half year period ending 31 December. In accordance with
ASX Listing Requirements the annual financial statements
(preliminary final report) is lodged with the ASX by 31 August,
and half year statements are lodged with the ASX by 28
February each year.
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 subsequent Board
meeting, and where applicable 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
– 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
CORPORATE GOVERNANCE STATEMENT
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
– 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.
> 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
– report to the Board on matters relevant to the committee’s
role and responsibilities.
In fulfilling its responsibilities, the audit and risk management
committee:
– receives regular reports from management and the external
auditors;
– meets with the external auditors twice a year, or more
frequently if necessary;
– reviews the processes the CEO and CFO have in place to
support their certifications to the board;
– reviews any significant disagreements between the auditors
and management, irrespective of whether they have been
resolved;
– meets separately with the external auditors at least twice a
year without the presence of management;
– provides the external auditors with a clear line of direct
communication at any time to either the Chairman of the
committee or the Chairman of the board.
The audit and risk management committee has authority, within
the scope of its responsibilities, to seek any information it
requires from any employee or external party.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
38
CORPORATE GOVERNANCE STATEMENT
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 page 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
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. Each 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.
– conduct an annual review of and conclude on the
3.3 Research committee
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.
The research committee consists of the following directors:
Dr Peter Jenkins (Chairman)
Independent non-executive director
Prof Peter Colman
Independent non-executive director
Dr Jackie Fairley
Chief Executive Officer and director
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 ASX
Listing Rules.
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. The
current auditors are PricewaterhouseCoopers who have been
the external auditors of the Company since it commenced
operations. 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
proactive approach in managing material business risks, and
aims to ensure that effective risk management practices are a
key element of the Company’s culture. Health and Safety (see
item 6) are considered to be of paramount importance and are
the focus of significant risk management activities within the
An analysis of fees paid to the external auditors, including a
break-down of fees for non-audit services, is provided in note
29 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.
company. Other risk areas that are addressed include business
continuity and disaster recovery, reputation, intellectual
property, product development and clinical trials.
Adherence to the Code of Conduct (see item 7) is required at all
times and the board actively promotes a culture of quality and
integrity.
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.
39
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
environmental regulations. In order to conduct activities in
Australia the wholly owned subsidiary Starpharma Pty Ltd has
obtained the necessary accreditations, laboratory certifications
and licenses from the applicable Commonwealth and State
authorities. DNT has obtained the necessary accreditations,
laboratory certifications and licenses as applicable from Central
Michigan University, State of Michigan and US federal
authorities. 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 OH&S committees at each
of its sites as part of its overall approach to workplace safety.
The committees 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.
7. Code of conduct
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. 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. Areas covered include
employment practices, equal opportunity, harassment and
bullying, conflicts of interest, use of company assets and
disclosure of confidential information. The code of conduct is
available in the Corporate Governance section of the
Company’s website.
8. Trading in Company securities
The purchase and sale of Company securities by directors,
executives and employees is only permitted (subject also to
complying with applicable laws) during the thirty day period
following the annual general meeting and the release to the
market of the half yearly and annual financial results, unless
prior approval is given to each transaction by the Chairman.
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).
Except with the prior approval of the Chairman, no director or
executive may enter into any transaction which would have the
The Company’s share trading policy is discussed with each
new employee as part of their induction training.
9. Continuous disclosure and shareholder communication
The Board has appointed the Company Secretary as the person
responsible for disclosure of information to the ASX Limited.
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. 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.
All ASX announcements are posted on the Company’s website
as soon as practicable after release to the ASX.
Announcements are also posted on the OTCQX website (www.
otcqx.com) in order to provide timely disclosure to US investors
trading in the Company’s Level One ADRs (OTCQX:SPHRY).
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
40
ANNUAL fINANCIAL REPORT
30 June 2007
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
79
80
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.
Starpharma Holdings Limited is a company limited by shares,
incorporated and domiciled in Australia. Its registered office
and principal place of business is:
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.
The financial report was authorised for issue by the directors
on 26th September 2007. 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
Income statements
For the year ended 30 June 2007
Revenue from continuing operations
Other income
Administration expense
Notes
5
5
FINANCIAL REPORT
Consolidated
2007
$
2006
$
2007
$
Parent
2006
$
1,462,771
571,837
580,687
526,606
8,090,536
6,422,066
–
–
(5,325,403)
(3,906,186)
(1,899,381)
(2,037,530)
Research and development expense
(11,983,590)
(9,945,396)
–
–
Provision for impairment of investment
10
–
–
(4,443,060)
(7,996,332)
Finance costs
(32,738)
(23,285)
Share of results of associates accounted
for using the equity method
loss before income tax
Income tax credit
loss for the year
33
6
7
–
–
–
–
(178,446)
(641,825)
(7,966,870)
(7,522,789)
(5,761,754)
(9,507,256)
721,874
–
–
–
(7,244,996)
(7,522,789)
(5,761,754)
(9,507,256)
Loss attributable to minority interests
–
–
–
–
loss attributable to members of
Starpharma Holdings limited
loss per share for loss from continuing
operations attributable to ordinary
equity holders of the company
(7,244,996)
(7,522,789)
(5,761,754)
(9,507,256)
Basic loss per share
Diluted loss per share
37
($0.04)
($0.04)
($0.06)
($0.06)
The above income statements should be read in conjunction with the accompanying notes.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
42
FINANCIAL REPORT
Balance Sheets
As at 30 June 2007
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
Deferred tax assets
Other financial assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Provisions
Deferred income
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Deferred income
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
equity
Contributed equity
Reserves
Accumulated losses
Total equity
Notes
Consolidated
2007
$
2006
$
2007
$
Parent
2006
$
8
9
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
10,072,893
14,283,824
5,584,431
12,361,134
1,334,725
2,824,267
1,436,423
94,292
11,407,618
17,108,091
7,020,854
12,455,426
1,110,801
1,431,124
–
–
17,785,573
4,086,538
3,688,680
4,086,538
76,286
2,387,312
43,201
–
–
–
–
–
–
–
16,291,538
5,208,750
19,015,861
7,904,974
19,980,218
9,295,288
30,423,479
25,013,065
27,001,072
21,750,714
1,854,515
1,897,819
1,369,731
1,484,154
68,587
356,463
980,161
142,092
331,447
661,337
–
–
–
–
–
–
3,259,726
3,032,695
1,369,731
1,484,154
260,147
57,257
168,946
953,373
315,412
107,630
241,342
–
1,439,723
664,384
–
–
–
–
–
–
–
–
–
–
4,699,449
3,697,079
1,369,731
1,484,154
25,724,030
21,315,986
25,631,341
20,266,560
76,226,627
65,375,467
76,226,627
65,375,467
1,299,253
497,374
697,213
421,838
(51,801,850)
(44,556,855)
(51,292,499)
(45,530,745)
25,724,030
21,315,986
25,631,341
20,266,560
The above balance sheets should be read in conjunction with the accompanying notes.
43
FINANCIAL REPORT
Statements of changes in equity
For the year ended 30 June 2007
Consolidated
2007
$
2006
$
2007
$
Parent
2006
$
Notes
Total equity at the beginning of the year
21,315,986
9,965,965
20,266,560
11,017,082
Exchange differences on translation
of foreign operations
Revaluation of identifiable net assets of an
associate on acquisition of remaining assets
25
25
(1,688,014)
116,075
2,214,519
–
Net income recognised directly in equity
526,505
116,075
–
–
–
–
–
–
loss for the year
Total recognised income and
expense for the year
Transactions with equity holders in their
capacity as equity holders:
Share based payments
Contributions of equity, net of transaction
costs
(7,244,996)
(7,522,789)
(5,761,754)
(9,507,256)
(6,718,491)
(7,406,714)
(5,761,754)
(9,507,256)
25
24
275,374
203,223
275,374
203,223
10,851,160
18,553,512
10,851,160
18,553,512
Total equity at the end of the year
25,724,029
21,315,986
25,631,340
20,266,560
The above statements of changes in equity should be read in conjunction with the accompanying notes.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
44
FINANCIAL REPORT
Cash flow Statements
For the year ended 30 June 2007
Consolidated
2007
$
2006
$
Notes
Cash flow from operating activities
Receipts from trade and other debtors
1,042,324
110
Grant income (inclusive of GST)
10,567,298
4,360,527
2007
$
–
–
Parent
2006
$
–
–
Payments to suppliers and employees
(inclusive of GST)
Interest received
Interest paid
(15,591,264)
(12,405,980)
(1,462,830)
(1,046,208)
636,152
(34,704)
574,151
(18,756)
544,904
538,295
–
–
Net cash outflows from operating activities
35
(3,380,194)
(7,489,948)
(917,926)
(507,913)
Cash flow from investing activities
Loans advanced to subsidiaries
Loans advanced from subsidiaries
–
–
–
–
Receipts from property, plant and equipment
1,010
25,904
Payments for property, plant and equipment
(182,185)
(463,184)
(5,597,031)
(7,683,238)
–
–
–
50,129
–
–
–
Payments for transaction costs on acquisition
of subsidiary (net of cash acquired)
27
(90,986)
–
(231,630)
Net cash outflows from investing activities
(272,161)
(437,280)
(5,828,661)
(7,633,109)
Cash flow from financing activities
Proceeds from issue of shares
Share issue transaction costs
Lease repayments
Net cash inflows / (outflows) from financing
activities
Net increase / (decrease) in cash and cash
equivalents held
Cash and cash equivalents at the beginning of
the period
Effects of exchange rate changes on cash and
cash equivalents
Cash and cash equivalents at the end
of the period
–
–
(126,739)
14,990,045
(810,413)
(134,839)
(126,739)
14,044,793
–
–
–
–
14,990,045
(810,413)
–
14,179,632
(3,779,094)
6,117,565
(6,746,587)
6,038,610
14,283,824
8,166,259
12,361,134
6,322,524
(431,837)
–
(30,116)
–
10,072,893
14,283,824
5,584,431
12,361,134
The above cash flow statements should be read in conjunction with the accompanying notes.
45
Notes to the financial statements
FINANCIAL REPORT
30 June 2007
Contents
1. Summary of significant accounting policies
2. Financial Risk Management
3. Critical accounting estimates and judgments
4. Segment information
5. Revenue
6. Expenses
7.
Income tax expense
8. Current assets – Cash and cash equivalents
9. Current assets – Trade and other receivables
10. Non-current assets – Receivables
11. Non-current assets – Property, plant and equipment
12. Non-current assets – Intangible assets
13. Non-current assets – Investments accounted for using the equity method
14. Non-current assets – Deferred tax assets
15. Non-current assets – Other financial 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. Non-current liabilities – Deferred tax liabilities
24. Contributed equity
25. Reserves
26. Accumulated Losses
27. Business Combination
28. Key management personnel disclosures
29. Remuneration of auditors
30. Contingencies
31. Commitments
32. Subsidiaries
33. Investments in associates
34. Events occurring after the balance sheet date
35. Reconciliation of profit after income tax to net cash inflow from operating activities
36. Non–cash financing activities
37. Earnings per share
38. Share-based payments
39. Related party transactions
Page
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STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
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.
(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 International Financial Reporting
Standards (“IFRS”)
Australian Accounting Standards include Australian equivalents
to International Financial Reporting Standards (“AIFRS”).
Compliance with AIFRS ensures that the consolidated financial
statements and notes of Starpharma Holdings Limited under
AIFRS comply with IFRS. The parent entity financial statements
and notes also comply with IFRS, except that it 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.
Early adoption of standards
The Group has elected to apply the following pronouncement to
the annual reporting period beginning 1 July 2006:
Revised AASB101 Presentation of Financial Statements
(issued October 2006)
This includes applying the pronouncement to the comparatives
in accordance with AASB 108 Accounting Policies, Changes
in Accounting Estimates and Errors. No adjustments to any
of the financial statements were required for the above
pronouncement, but certain disclosures are no longer required
and have therefore been omitted.
Historical cost convention
These financial statements have been prepared under the
historical cost convention.
Critical accounting estimates
The preparation of financial statements in conformity with AIFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process
of applying the Group’s accounting policies. The areas
involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the financial
statements are disclosed in note 3.
(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 2007 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.
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
47
of more than one-half of the voting rights. The existence and
effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Group
controls another entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated
from the date that control ceases.
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.
(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.
1. Summary of significant accounting policies (continued)
FINANCIAL REPORT
(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.
(iii) Group companies
Assets and liabilities of subsidiary 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
in equity.
(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. Licence revenue is recognised in accordance with
the underlying agreement. Upfront payments are brought to
account as revenues unless there is a correlation to ongoing
research and both components are viewed as one agreement,
in which case the licence income is amortised over the
anticipated period of the associated research program.
Unamortised licence revenue is recognised on the balance
sheet as deferred income. 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.
(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.
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.
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.
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 31). 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 31). 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 2007
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 common 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
Goodwill and intangible assets that have an indefinite life
are not subject to amortisation and are tested annually for
impairment. Other assets 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 inflows (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 8.
(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
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.
(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 9 and 10).
(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.
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.
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)).
49
1. Summary of significant accounting policies (continued)
FINANCIAL REPORT
(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.
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 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 impairment 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 4 to 15 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.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
50
FINANCIAL REPORT
1. Summary of significant accounting policies (continued)
(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.
(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”). Information relating to these
plans is set out in note 38 and section D of the Remuneration
report under the Directors’ Report.
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. The impact of the revision to original estimates,
if any, is recognised in the income statement with a
corresponding adjustment to equity.
(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.
51
1. Summary of significant accounting policies (continued)
FINANCIAL REPORT
(z) New accounting standards and
interpretations
AASB 8 Operating Segments and AASB 2007-3 Amendments
to Australian Accounting Standards arising from AASB 8 AASB 8
and AASB 2007-3 are effective for annual reporting periods
commencing on or after 1 January 2009. AASB 8 will result in a
significant change in the approach to segment reporting, as it
requires adoption of a “management approach” to reporting on
the financial performance. The information being reported will
be based on what the key decision-makers use internally for
evaluating segment performance and deciding how to allocate
resources to operating segments. The Group has not yet
decided when to adopt AASB 8. Application of AASB 8 may
result in different segments, segment results and different type
of information being reported in the segment note of the
financial report. However, it will not affect any of the amounts
recognised in the financial statements.
Certain new accounting standards have been published that
are not mandatory for 30 June 2007 reporting periods. The
Group’s assessment of the impact of these new standards and
interpretations is only relevant to the below:
Revised AASB 101 Presentation of Financial Statements
A revised AASB 101 was issued in October 2006 and is
applicable to annual reporting periods beginning on or after 1
January 2007. The Group has not adopted the standard early.
Application of the revised standard will not have any impact on
the Group’s financial statements.
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 use derivative financial
instruments to hedge such exposures. The directors are
regularly monitoring the potential impact of movements in
foreign exchange exposure.
AASB 2007-4 Amendments to Australian Accounting Standards
arising from ED 151 and Other Amendments and AASB 2007-7
Amendments to Australian Accounting Standards [AASB 1,
AASB 2, AASB 4, AASB 5, AASB 107 & AASB 128]
AASB 2007-4 is applicable to annual reporting periods
beginning on or after 1 July 2007. The Group does not intend to
apply any of the new options now available. As a consequence,
application of the revised standards will not affect any of the
amounts recognised in the financial statements, but it may
remove some of the disclosures that are currently required. In
relation to the discount rates used in the measurement of
employee benefit obligations, the Group has not yet reached a
conclusion as to whether there is a deep market in corporate
bonds in Australia and hence has not yet determined the
financial effect, if any, on the obligations from the adoption of
AASB 2007-4. This is not expected to be material for the Group.
AASB 2007-7 Amendments to Australian Accounting Standards
[AASB 1, AASB 2, AASB 4, AASB 5, AASB 107 & AASB 128]
AASB 2007-7 amendments to AASB 1, AASB 2, AASB 4, AASB
5, AASB 107 and AASB 128 are applicable to annual reporting
periods beginning on or after 1 July 2007. The Group has not
adopted the standards early. Application of the standards will
not affect any of the amounts recognised in the financial
statements, but may impact the type of information disclosed in
relation to the Group’s financial statements.
(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 and royalty receivables from large, well respected
institutions.
(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.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
52
FINANCIAL REPORT
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 4–15
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 2007 is
$17,785,573 (2006: $4,086,538).
ii) Impairment of Goodwill
The group tests annually whether goodwill has suffered any
impairment. In accordance with the accounting policy stated in
notes 1(j) and 1(q). Impairment of goodwill is considered based
on the fair value less cost to sell of the cash generating units
over which the goodwill is allocated. Performing the assessment
of fair value less costs to sell requires the use of assumptions.
Refer to note 12 for details of these assumptions.
iii) Income Taxes
The Group is subject to income taxes in Australia and the United
States of America. There are transactions and calculations
undertaken during the ordinary course of business for which the
ultimate tax determination may be uncertain. Where the final tax
outcome of these matters is different from the amounts that
were initially recorded, such differences will impact the current
and deferred tax provisions in the period in which such
determination is made.
4. Segment information
Business Segment
The consolidated entity operates in one business segment,
being the discovery, development and commercialisation of
dendrimers for pharmaceutical and other life science
applications.
The Group has recognised deferred tax assets relating to
carried forward losses to the extent there are sufficient taxable
temporary differences (deferred tax liabilities) relating to the
same taxation authority and the same subsidiary against which
the unused tax losses can be utilised. However, utilisation of the
tax losses also depends on the ability of the entity to satisfy
certain tests at the time the losses are recouped.
(b) Critical accounting judgments in applying
accounting policies
i) Fair value of intellectual property in purchase price
allocation of subsidiary
The Group engaged a professional firm to undertake a valuation
of the fair value of the intellectual property assets recognised
on acquisition of the remaining share of the US based associate
Dendritic Nanotechnologies (“DNT”). The methodology used
was a discounted cash flow analysis based on the future
potential revenue derived from the intellectual property to
support the fair value of the asset acquired. To allocate the
purchase price of the business combination, management
attributed a value of $14.9 million being the mid point of the
experts’ valuation range.
ii) Impairment of Assets
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.
Geographic Segment
The consolidated entity operates in Australia, with the exception
of Dendritic Nanotechnologies Inc. (“DNT’) which operates in
the United States of America (“USA”). The results of DNT were
accounted for by the equity method up until it became a wholly
owned subsidiary of the consolidated group.
Following the 100% acquisition of DNT, it has been determined
that on the basis of monitoring of the USA operations, these
operations represent a separate geographical segment. In prior
periods, the results of DNT were equity accounted.
53
4. Segment information (continued)
FINANCIAL REPORT
Secondary reporting format-geographical segments
2007
Australia
$
USA
$
Inter-segment
Eliminations
$
Total
$
Revenue and other income
8,362,199
1,246,346
(55,238)
9,553,307
Expenses
Share of results of associates
Loss before income tax
Segment net assets
5. Revenue
Revenue and Other Income
Royalty, Customer & License revenue
Interest Revenue
Other Revenue
Total Revenue
Australian Government Grants
USA Government Grants
Total Other Income
Total Revenue/Other Income
(13,992,334)
(5,630,135)
(3,404,635)
(2,158,289)
55,238
(17,341,731)
–
(7,788,424)
13,354,060
12,404,984
(35,014)
25,724,030
(178,446)
(7,966,870)
2007
$
859,465
598,917
4,389
1,462,771
276,278
7,814,258
8,090,536
9,553,307
Consolidated
2006
$
–
571,337
500
571,837
554,003
5,868,063
6,422,066
6,993,903
2007
$
–
580,687
–
580,687
–
–
–
Parent
2006
$
–
526,606
–
526,606
–
–
–
580,687
526,606
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.
6. Expenses
Loss from ordinary activities before income tax
expense includes the following items:
Depreciation
Amortisation
Rental expense on operating leases
Consolidated
2006
$
2007
$
646,557
1,372,880
440,566
434,596
530,736
385,495
2007
$
–
397,858
–
Parent
2006
$
–
287,342
–
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
54
FINANCIAL REPORT
7. Income tax expense
a) Income tax expense (credit)
Current Tax
Deferred Tax
Under (over) provision in prior years
Income tax expense is attributable to:
Profit from continuing operations
Profit from discontinued operations
Aggregate income credit
Deferred income tax (revenue) expense
included in income tax expenses comprises:
Decrease (increase) in deferred tax assets
(Decrease) increase in deferred tax liabilities
14
23
Consolidated
Parent entity
Notes
2007
$
2006
$
2007
$
2006
$
–
(721,874)
–
(721,874)
(721,874)
–
(721,874)
–
(721,874)
(721,874)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
b) Numerical reconciliation to income tax prima facie tax payable
Loss from continuing operations before
income tax
(7,966,870)
(7,522,789)
(5,761,755)
(9,507,256)
Tax at the Australian tax rate of 30%
(2,390,061)
(2,256,837)
(1,728,527)
(2,852,177)
Tax effect of amounts which are not deductible
(taxable) in calculating taxable income
Professional and legal fees
Equity accounted loss
Write down in carrying value of investments
–
81,079
–
(42,941)
209,217
–
Gain in dilution of equity investments
(27,545)
(16,670)
–
–
–
–
(42,941)
–
48,000
–
Write down in carrying value of loans
Share-based payments
Difference in overseas tax rates
Future income tax benefits not brought
to account
–
82,612
87,445
–
1,332,918
2,350,900
60,967
–
–
–
–
–
1,444,596
2,046,264
395,609
496,218
Income tax credit
(721,874)
–
–
–
c) amounts recognised directly in equity
Reduction of deferred tax liabilities of $131,253 arising due to foreign exchange movments have been recognised within the foreign
currency translation reserve in equity.
55
7. Income tax expense (continued)
FINANCIAL REPORT
Consolidated
Parent entity
Notes
2007
$
2006
$
2007
$
2006
$
d) Tax losses
Unused tax losses for which no deferred tax
asset has been recognised (as recovery is
currently not probable)
43,414,602
38,124,998
3,283,536
Potential tax benefit
13,024,381
11,437,499
985,061
2,124,498
637,349
e) Unrecognised temporary differences
Temporary differences for which no deferred
tax asset has been recognised as recoverability
is not probable
Unrecognised deferred tax relating to the
temporary differences
773,247
519,072
176,386
129,548
231,974
155,722
52,916
38,864
Potential future income tax benefits attributable to tax losses carried forward have not been brought to account at 30 June 2007
because the directors do not believe that it is appropriate to regard realisation of the 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.
Further, realisation of the benefit of tax losses would be subject to the Company satisfying the conditions for deductibility imposed by
tax legislation and no subsequent changes in tax legislation adversely affecting the Company.
The Company made an assessment as to the satisfaction of deductibility conditions at 30 June 2006, however no such similar
assessment has been made at 30 June 2007.
8. Current assets – Cash and cash equivalents
Cash at bank and on hand
Deposits at call
Consolidated
Parent entity
2007
$
4,018,903
6,053,990
10,072,893
2006
$
1,500,259
12,783,565
14,283,824
2007
$
61,287
5,523,144
5,584,431
2006
$
79,012
12,282,122
12,361,134
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 6.10% to 6.26% (2006: 5.00% to 5.86%). These deposits are of 30–90
day maturities.
Cash not available
There is $328,734 of cash not available for use due to restrictions associated with a finance lease which is guaranteed by term
deposit (2006: $481,879).
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
56
FINANCIAL REPORT
8. Current assets – Cash and cash equivalents (continued)
Interest rate risk
30 June 2007
Fixed interest maturing
Financial assets
Notes
Floating
interest rate
$
1 year
or less
$
1 to 2
years
$
2 to 3
years
$
3 to 4
years
$
4 to 5
years
$
More than
5 years
$
Non-interest
bearing
$
Total
$
Cash and deposits
Receivables
Weighted average
interest rate
8
9
703,315
6,053,990
–
–
703,315
6,053,990
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,315,588
10,072,893
1,334,725
1,334,725
4,650,313
11,407,618
5.0%
5.8%
0.0%
0.0%
0.0% 0.0%
0.0%
0.0%
Financial liabilities
Payables and
provisions
Borrowings
Deferred income
16/18/21
17/20
19/22
Weighted average
interest rate
30 June 2006
–
–
–
–
–
–
–
–
68,587
73,426
78,604 108,117
–
–
–
–
68,587
73,426
78,604 108,117
–
–
–
–
–
–
–
–
2,268,235
2,268,235
–
328,734
1,149,107
1,149,107
3,417,342
3,746,076
0.0%
7.2%
7.2%
7.2%
7.2% 0.0%
0.0%
0.0%
Fixed interest maturing
Financial assets
Notes
Floating
interest rate
$
1 year
or less
$
1 to 2
years
$
2 to 3
years
$
3 to 4
years
$
4 to 5
years
$
More than
5 years
$
Non-interest
bearing
$
Total
$
Cash and deposits
Receivables
Weighted average
interest rate
8
9
487,673 12,783,565
–
–
487,673 12,783,565
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,012,586 14,283,824
2,824,267
2,824,267
3,836,853 17,108,091
5.5%
5.8%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Financial liabilities
Payables and
provisions
Borrowings
Deferred income
16/18/21
17/20
19/22
Weighted average
interest rate
–
–
–
–
–
–
–
–
–
142,092 68,979
73,844 79,052 93,537
–
–
–
–
–
142,092 68,979
73,844 79,052 93,537
–
–
–
–
2,336,896
2,336,896
–
457,504
902,679
902,679
3,239,575
3,697,079
0.0%
6.7%
7.2%
7.2%
7.2%
0.0%
0.0%
0.0%
57
9. Current assets – Trade and other receivables
FINANCIAL REPORT
Trade and grant receivable
Interest receivable
Prepayments
Loans to controlled entities
Other receivables
Consolidated
Parent entity
2007
$
865,356
13,489
435,843
–
20,037
2006
$
2,628,146
29,054
160,445
–
6,622
2007
$
–
58,030
64,457
1,254,228
59,708
1,334,725
2,824,267
1,436,423
2006
$
–
22,247
72,045
–
94,292
Trade and grant receivables
Trade receivables comprise of customer royalty and licence revenue and are subject to normal terms of settlement within 30 to 90
days. Grant receivables comprise expenditure reimbursable under grants from USA National Institutes of Health (“NIH”) and
Australian P3 and 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
10. Non-current assets – Receivables
Loans to controlled entities
Provision for doubtful debts
Consolidated
Parent entity
2006
$
–
–
–
2007
$
2006
$
31,249,961
26,806,901
(31,249,961)
(26,806,901)
–
–
2007
$
–
–
–
Interest rate risk
Current and non-current receivables are non-interest bearing. Information concerning the effective interest rate is detailed in note 8.
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.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
58
FINANCIAL REPORT
11. Non-current assets – Property, plant and equipment
Plant and
equipment
$
leasehold
improvements
$
Plant and equipment
under finance lease
$
Total Plant and
equipment
$
Consolidated
At 1 July 2005
Cost
1,766,727
Accumulated depreciation and amortisation
(1,248,823)
Net book amount
517,904
Year ended 30 June 2006
Opening net book amount
Additions
Disposals
Depreciation and amortisation
Closing net book amount
At 30 June 2006
Cost
517,904
455,740
(24,906)
(347,433)
601,305
1,946,944
Accumulated depreciation and amortisation
(1,345,639)
Net book amount
601,305
Year ended 30 June 2007
Opening net book amount
Exchange differences
Acquisition of subsidiary
Additions
Disposals
Depreciation and amortisation
Closing net book amount
At 30 June 2007
Cost
601,305
(7,966)
150,841
180,460
(1,858)
(302,883)
619,899
2,251,267
Accumulated depreciation and amortisation
(1,631,368)
Net book amount
619,899
The parent entity has no plant and equipment in 2007 (2006: Nil).
12. Non-current assets – Intangible assets
1,128,512
(541,652)
586,860
586,860
7,444
–
(211,530)
382,774
1,135,956
(753,182)
382,774
320,000
(192,000)
128,000
128,000
438,072
–
(119,027)
447,045
758,072
(311,027)
447,045
3,215,239
(1,982,475)
1,232,764
1,232,764
901,256
(24,906)
(677,990)
1,431,124
3,840,972
(2,409,848)
1,431,124
382,774
447,045
1,431,124
–
–
4,757
–
(192,066)
195,465
–
–
–
–
(151,608)
295,437
(7,966)
150,841
185,217
(1,858)
(646,557)
1,110,801
1,140,713
(945,248)
195,465
758,072
(462,635)
295,437
4,150,052
(3,039,251)
1,110,801
Consolidated
At 1 July 2005
Cost
Accumulated depreciation and amortisation
Net book amount
59
Patents & licences
$
Goodwill
$
Total Intangibles
$
–
–
–
–
–
–
–
–
–
12. Non-current assets – Intangible assets (continued)
FINANCIAL REPORT
Consolidated
Year ended 30 June 2006
Opening net book amount
Additions
Depreciation and amortisation
Closing net book amount
At 30 June 2006
Cost
Accumulated depreciation and amortisation
Net book amount
Year ended 30 June 2007
Opening net book amount
Acquisition of subsidiary
Exchange differences
Depreciation and amortisation
Closing net book amount
At 30 June 2007
Cost
Accumulated depreciation and amortisation
Net book amount
Patents & licences
$
Goodwill
$
Total Intangibles
$
–
4,373,880
(287,342)
4,086,538
4,373,880
(287,342)
4,086,538
4,086,538
14,900,000
(1,582,831)
(1,372,880)
16,030,827
17,634,125
(1,603,298)
16,030,827
–
–
–
–
–
–
–
–
1,971,737
(216,991)
–
1,754,746
1,754,746
–
1,754,746
–
4,373,880
(287,342)
4,086,538
4,373,880
(287,342)
4,086,538
4,086,538
16,871,737
(1,799,822)
(1,372,880)
17,785,573
19,388,871
(1,603,298)
17,785,573
During the current year, the intellectual property acquired through the DNT business combination was fair valued at $14,900,000.
The carrying value of $12,342,147 at 30 June 2007 is adjusted for the year end closing USD:AUD exchange rate of $0.8487 and is
net of amortization charged from 20 October 2006 to year end. Goodwill of $1,971,737 was booked on the acquisition of DNT,
representing the difference between the fair value and the net identifiable assets including the intellectual property. Refer to note 27
Business combination for additional details.
Identifiable intangible assets with finite lives are carried at cost less accumulated amortisation and adjusted for any accumulated
impairment loss. The assets are assessed at each reporting date as to whether there is any indication that the asset is impaired.
Goodwill is tested annually for impairment based on the fair value less costs to sell of the cash generating units over which the
goodwill is allocated.
The Group operates in one business segment being the discovery, development and commercialisation of dendrimers for
pahrmaceutical and other life science applications. Following the acquisition of the DNT business during the year, the Group has
operations in both Australia and the United States – these geographical segments are also determined to be the Cash Generating
Units (CGUs) of the Starpharma Group.
The directors have determined that the goodwill arising on the acquisition of the remaining share of the DNT business should be
allocated across these CGUs as the business combination gives rise to synergies within both Starpharma’s Australian operations
and the DNT business in the United States. Allocation of the goodwill across geographical segments is considered appropriate as
the goodwill is allocated across the same business segment.
The market capitalisation of the Starpharma Group is used to determine an approximation of the fair value less costs to sell of the two
CGUs which make up the Starpharma Group. Given the excess of the market capitalisation of Starpharma Holdings Ltd over the
carrying value of total assets (including goodwill) at 30 June 2007, goodwill is not considered to be impaired at year end.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
60
FINANCIAL REPORT
12. Non-current assets – Intangible assets (continued)
Parent
At 1 July 2005
Cost
Accumulated depreciation and amortisation
Net book amount
Year ended 30 June 2006
Opening net book amount
Additions
Depreciation and amortisation
Closing net book amount
At 30 June 2006
Cost
Accumulated depreciation and amortisation
Net book amount
Year ended 30 June 2007
Opening net book amount
Depreciation and amortisation
Closing net book amount
At 30 June 2007
Cost
Accumulated depreciation and amortisation
Net book amount
Patents & licences
$
Goodwill
$
Total Intangibles
$
–
–
–
–
4,373,880
(287,342)
4,086,538
4,373,880
(287,342)
4,086,538
4,086,538
(397,858)
3,688,680
4,373,880
(685,200)
3,688,680
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,373,880
(287,342)
4,086,538
4,373,880
(287,342)
4,086,538
4,086,538
(397,858)
3,688,680
4,373,880
(685,200)
3,688,680
13. Non-current assets – Investments accounted for using the equity method
Shares in associated entities
Consolidated
Parent entity
Notes
33
2007
$
2006
$
76,286
2,387,312
2007
$
–
2006
$
–
Shares in associates
Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting and
carried at cost less provision for impairment by the parent entity (refer to note 33).
14. Non-current assets – Deferred tax assets
Temporary differences recognised on the
acquisition of subsidiary during the year
Total deferred tax asset
2007
$
43,201
43,201
Consolidated
2006
$
–
–
2007
$
–
–
Parent
2006
$
–
–
The Group has brought the temporary differences to account for DNT because it is probable that the future income tax benefit
benefits will be released. The Group has other substantial future income tax benefits not brought to account at balance date
because the directors do not believe it is probable that the benefit of these losses will be realised in the near future.
61
15. Non-current assets – Other financial assets
FINANCIAL REPORT
Other non-traded investments
Shares in controlled entities
Provision for impairment in value
Shares in associated entities
Notes
32
33
Consolidated
2007
$
2006
$
Parent entity
2006
$
2007
$
–
–
–
–
–
–
–
–
33,751,641
17,500,106
(17,500,106)
(17,500,106)
40,003
16,291,538
5,208,750
5,208,750
At 30 June 2007 and 2006, 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 2007 and 2006, 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, excluding DNT,
remain written down to nil as at 30 June 2007 and 2006.
16. Current liabilities – Trade and other payables
Consolidated
Parent entity
Trade creditors
1,854,515
1,897,819
Loans from controlled entities
–
–
2007
$
2006
$
2007
$
716,077
653,654
2006
$
830,499
653,655
1,854,515
1,897,819
1,369,731
1,484,154
17. Current liabilities – Borrowings
Finance lease liability (secured)
Consolidated
Parent entity
2007
$
68,587
2006
$
142,092
2007
$
–
2006
$
–
Details of the security relating to each of the secured liabilities are set out in Note 20.
18. Current liabilities – Provisions
Employee entitlements
356,463
331,447
2007
$
2006
$
2007
$
–
2006
$
–
Consolidated
Parent entity
19. Current liabilities – Deferred income
Deferred grant income
980,161
661,337
2007
$
2006
$
2007
$
–
2006
$
–
Consolidated
Parent entity
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
62
FINANCIAL REPORT
20. Non-current liabilities – Borrowings
Finance lease liability (secured)
260,147
315,412
2007
$
2006
$
2007
$
–
2006
$
–
Consolidated
Parent entity
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. The carrying value of leased assets is $328,734 at 30 June 2007 (2006: $457,504).
2007
Floating
Interest rate
Fixed interest rate
Lease Liabilities
Weighed average interest rate
2006
Lease Liabilities
Weighed average interest rate
Notes
17/20/31
Notes
17/20/31
1 year
or less
Over 1–2
years
Over 2–3
years
Over 3–4
years
Over 4–5
years
Over 5
years
Total
–
–
68,587
73,426
78,604
108,117
7.2%
7.2%
7.2%
7.2%
–
–
– 328,734
–
Floating
Interest rate
Fixed 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
6.7%
7.2%
7.2%
7.2%
7.2%
-
-
-
21. Non-current liabilities – Provisions
Employee entitlements
2007
$
57,257
Consolidated
Parent entity
2006
$
107,630
2007
$
–
2006
$
–
22. Non-current liabilities – Deferred income
Deferred grant income
2007
$
168,946
Consolidated
Parent entity
2006
$
241,342
2007
$
–
2006
$
–
63
23. Non-current liabilities – Deferred tax liabilities
FINANCIAL REPORT
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
Recognised during the year on the acquisition of
subsidiary due to the difference in fair value of intangible
asset and its tax base
Offset of deferred tax asset arising from tax losses on
acquisition
Reduction in deferred tax liability arising from
Amortisation of intangible asset
Impacts of foreign exchange
Offset of deferred tax asset arising from post acquisition
tax losses
Net deferred tax liability
24. Contributed equity
(a) Share Capital
3,177,845
(1,371,345)
(325,017)
(131,253)
(396,857)
953,373
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Parent entity
Parent entity
2007
Shares
2006
Shares
2007
$
2006
$
Share Capital
Ordinary shares – fully paid
167,833,986
147,739,245
76,226,627
65,375,467
(b) Movements in ordinary share capital
Date
Details
1-Jul-05
Opening Balance
10-Oct-05
BRI Share Placement
17-Nov-05
Share Placement
less Transaction costs
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)
29-Dec-05
Share Placement and Share Placement Plan
19,818,995
$0.51
10,107,687
less Transaction costs
Balance at 30 June 2006
20-Oct-06
DNT acquisition share placement
Balance at 30 June 2007
147,739,245
20,094,741
167,833,986
(566,296)
65,375,467
$0.54
10,851,160
76,226,627
There was a placement of 20,094,741 shares for the remaining equity of DNT. The value of the shares issued was measured at the
published market price on the date of the exchange. Refer to Note 27 Business combination for additional details.
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 2007 there were 167,833,986 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.
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.
(d) Options
Information relating to the Starpharma Holdings Limited Employee Share Option Plan and Individual option deeds, 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 38.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
64
FINANCIAL REPORT
25. Reserves
(a) Reserves
Share-based payments reserve
Foreign currency translation reserve
Asset revaluation reserve
(b) Movement in reserves
2007
$
697,213
(1,612,478)
2,214,518
1,299,253
Consolidated
Parent entity
2006
$
421,838
75,536
–
2007
$
2006
$
697,213
421,838
–
–
–
–
497,374
697,213
421,838
Share-based payments reserve
Notes
Balance at 1 July
Option expense
Balance at 30 June
Consolidated
Parent entity
2007
$
421,838
275,374
697,212
2006
$
218,615
203,223
421,838
2007
$
421,839
275,374
697,213
2006
$
218,615
203,223
421,838
Foreign currency translation reserve
Balance at 1 July
75,536
(40,539)
Currency translation differences arising
during the year
33 (c)
(1,688,014)
116,075
Balance at 30 June
(1,612,478)
75,536
asset revaluation reserve
Balance at 1 July
Uplift in fair value of the identifiable net
assets of DNT on acquisition of the
remaining share in associate
Balance at 30 June
–
2,214,519
2,214,519
–
–
–
–
–
–
–
–
–
–
–
–
(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 associate/subsidiary are taken to the foreign currency translation reserve,
as described in Note 1(d). The reserve is recognised in income statement when the net investment is disposed of.
(iii) Asset revaluation reserve
Uplift in fair value of the identifiable net assets of DNT on acquisition of the remaining share in associate.
26. Accumulated Losses
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
Accumulated losses balance at 1 July
(44,556,855)
(37,034,067)
(45,530,745)
(36,023,489)
Net loss for the year
(7,244,996)
(7,522,789)
(5,761,754)
(9,507,256)
Accumulated losses balance at 30 June
(51,801,850)
(44,556,855)
(51,292,499)
(45,530,745)
65
FINANCIAL REPORT
27. Business Combination
(a) Summary of acquisition
On 20 October 2006, Starpharma Holdings Ltd acquired the remaining 67% of equity in Dendritic Nanotechnologies Inc. (“DNT”), an
unlisted USA Delaware corporation, located in Michigan State, USA. DNT focuses on dendrimer nanotechnology applications, within
the life-science and other sectors. Pre the acquisition, Starpharma Holdings Ltd was a 33% shareholder in DNT.
From the date of acquisition, DNT contributed a net loss after tax of $3,124,898 to the end of the year based on the average
USD:AUD exchanges rate. If the acquisition had occurred on 1 July 2006, consolidated revenue and consolidated loss for the year
ended 30 June 2007 would have been $1,776,000 and $8,240,000 respectively. These amounts have been calculated using the
Group’s accounting policies and by adjusting the results of the subsidiary to reflect the additional amortisation that would have been
charged assuming the fair value adjustments to intangible assets had applied from 1 July 2006.
(b) Purchase consideration
The total cost of the acquisition was $11,082,790 comprising the issue of ordinary shares in Starpharma Holdings Ltd and the costs
directly attributable to the acquisition. The Group issued 20,094,741 shares with a fair value of $0.5400 per share, based on the
closing quoted price of Starpharma Holdings Ltd shares at the date of the exchange.
(c) Assets and liabilities acquired
The fair value of the identifiable assets and liabilities of DNT as at the date of acquisition were:
100% acquiree’s
carrying value
100% fair value
acquired
Recognised on
67% of acquisition
assets
Cash and cash equivalents
Trade & other receivables
Other assets
Property, plant & equipment
Intangible assets
Deferred tax asset
liabilities
Trade & other payables
Other current liabilities
Employee provisions
Deferred tax liability
Fair Value of identifiable net assets
Goodwill arising on consolidation
Cost of the combination:
Shares issued at fair value
Costs associated with the acquisition
Total cost of the acquisition
The cash outflow on the acquisition is as follows:
Net cash acquired with the subsidiary
Costs associated with the acquisition
Net cash outflow
140,644
357,387
52,918
150,841
5,837,456
–
(157,813)
(38,654)
(61,329)
–
6,281,450
140,644
357,387
52,918
150,841
14,900,000
1,371,345
(157,813)
(38,654)
(61,329)
(3,177,845)
13,537,494
94,607
240,403
35,596
101,466
10,022,747
918,801
(106,156)
(26,001)
(41,254)
(2,129,156)
9,111,053
1,971,737
10,851,160
231,630
11,082,790
140,644
(231,630)
(90,986)
The interim financial statements at 31 December 2006 disclosed provisional deferred tax assets acquired of $217,794 and goodwill
on acquisition of $2,677,216.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
66
FINANCIAL REPORT
27. Business Combination (continued)
Adjustment to the provisional values recognised on initial acquisition accounting has resulted in an adjusted deferred tax asset
balance on acquisition of $918,801 and an adjusted goodwill balance on acquisition of $1,971,737.
Prior to the business combination, Starpharma held a 33% investment in DNT. The identifiable net assets have been uplifted to fair
value; this has been recognised through the revaluation reserve.
The intellectual property acquired through the DNT business combination was valued at $14,900,000. The carrying value of
$12,342,147 at 30 June 2007 is adjusted for the year end closing USD:AUD exchange rate of $0.8487 and is net of amortisation
charged from 20 October 2006 to year end. Refer to Note 12 Intangible assets for additional detail on the movement and carrying
value of intangible assets.
28. Key management personnel disclosures
(a) Directors
The following persons were directors of Starpharma Holdings Limited during the financial year:
Name
P T Bartels
J K Fairley
J W Raff
P M Colman
R Dobinson
L Gorr
P J Jenkins
R A Hazleton
Position
Non-executive Chairman
Chief Executive Officer and Executive Director (appointed 1 July 2006)
Non-executive Deputy Chairman (retired Chief Executive Officer 1 July 2006)
Non-executive
Non-executive
Non-executive
Non-executive
Non-executive (appointed 1 December 2006)
J W Raff retired from the position of Chief Executive Officer on 1 July 2006. He remains 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.
(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:
Position
Company Secretary and Chief Financial Officer
VP – Development and Regulatory Affairs (Previously VP – Regulatory and Clinical Affairs)
VP – Business Development
Financial Controller
President DNT (from 20 October 2006)
VP – Research (from 15 February 2007)
VP – Drug Development (until 17 November 2006)
Head of Chemistry (until 8 December 2006)
VP – Commercial Development & Licensing (until 12 January 2007)
Name
B P Rogers
J R Paull
C P Barrett
N J Baade
R I Berry
D J Owen
T D McCarthy
G Y Krippner
O T Grogan
67
FINANCIAL REPORT
28. Key management personnel disclosures (continued)
Key management personnel during the year ended 30 June 2006 were:
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)
(c) Key management personnel compensation
Consolidated
Parent entity
Short term employee benefits
1,454,292
2007
$
Post employment benefits
Other long term benefits
Share based payments
483,750
15,776
153,142
2,106,960
2006
$
1,684,432
365,707
–
153,340
2,203,479
2007
$
504,135
313,850
964
124,015
942,964
2006
$
519,011
186,124
–
–
705,135
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 30.
(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 30 to 32.
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.
With the exception of J K Fairley, no director held options in the current year. No directors held options in the prior year.
2007
Name
balance at the
start of the year
Granted during
the year as
compensation
Directors of Starpharma Holdings Limited
J K Fairley
300,000
500,000
Other key management personnel of the Group
B P Roger
J R Paull
C P Barrett
N J Baade
R I Berry
D J Owen
T D McCarthy
G Y Krippner
O T Grogan
220,000
100,000
100,000
–
–
–
200,000
200,000
200,000
200,000
200,000
200,000
200,000
250,000
200,000
–
100,000
–
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
–
–
–
–
–
–
–
–
–
–
–
–
(20,000)
–
–
–
–
(200,000)
(300,000)
(200,000)
800,000
–
420,000
280,000
300,000
200,000
250,000
200,000
–
–
–
220,000
80,000
–
–
–
–
–
–
–
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
68
FINANCIAL REPORT
28. Key management personnel disclosures (continued)
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
–
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
–
–
J K Fairley
O T Grogan
B P Rogers
T D McCarthy
G Y Krippner
J R Paull
C P Barrett
N J Baade
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.
2007
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
J K Fairley
J W Raff
P M Colman
R Dobinson
L Gorr
P J Jenkins
R A Hazleton
109,804
5,000
5,381,689
5,992,286
2,905,976
5,204,704
1,635,608
–
Other key management personnel of the Group
Ordinary Shares
B P Rogers
J R Paull
C P Barrett
N J Baade
R I Berry
D J Owen
T D McCarthy1
G Y Krippner1
O T Grogan1
65,622
–
8,935
–
–
–
4,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
25,250
325,000
–
–
–
–
42,616
–
–
(8,935)
–
70,296
–
N/A
N/A
N/A
109,804
30,250
5,706,689
5,992,286
2,905,976
5,204,704
1,635,608
42,616
65,622
–
–
–
70,296
–
N/A
N/A
N/A
1 At 30 June 2007 these individuals were not key management personnel of the Group.
69
28. Key management personnel disclosures (continued)
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
FINANCIAL REPORT
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
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
–
No director has entered into a material contract with the consolidated entity in either the current or previous financial year and there
were no material contracts involving directors’ interests subsisting at year end.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
70
FINANCIAL REPORT
29. 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:
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
(a) Audit services
Audit or review of financial reports of the entity or any
entity in the consolidated entity
PricewaterhouseCoopers
Other auditors of controlled entities
Total remuneration for audit services
107,000
26,859
133,859
114,990
114,990
107,000
26,859
133,859
114,990
114,990
(b) Non-audit services
Non-audit services: Grant reviews & program audits
PricewaterhouseCoopers
Total remuneration for non-audit services
Total remuneration of auditors
57,500
57,500
191,359
7,500
7,500
–
–
–
–
122,490
133,859
114,990
30. Contingencies
The Company has no contingent liabilities.
31. Commitments
(a) Capital Commitments
There is no capital expenditure contracted for at the reporting date but not recognised as liabilities.
Property, plant and equipment
Within one year
Later than one year but not later than five years
later than five years
Consolidated
Parent entity
2007
$
–
–
–
–
2006
$
69,108
–
–
69,108
2007
$
–
–
–
–
2006
$
–
–
–
–
71
31. Commitments (continued)
(b) Lease Commitments
Commitments in relation to leases
contracted for at the reporting date but not
recognised as liabilities, payable:
Not later than one year
Later than one year and not later than five years
Later than five years
Representing:
Cancellable operating leases
Non-cancellable finance lease
Future finance charges on finance leases
FINANCIAL REPORT
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
573,461
323,228
–
423,681
683,283
–
896,689
1,106,964
567,955
378,302
(49,568)
896,689
649,461
539,745
(82,242)
1,106,964
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Operating leases
The Group leases laboratory and offices under a lease until 31 August 2008 and leases various plant and equipment
under cancellable operating leases.
Consolidated
Parent entity
2007
$
2006
$
2007
$
2006
$
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
504,872
63,083
–
287,246
362,215
–
Representing cancellable operating leases
567,955
649,461
–
–
–
–
–
–
–
–
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
72
FINANCIAL REPORT
31. Commitments (continued)
Finance Leases
The Group leases plant and equipment with a carrying amount of $328,734 (2006: $457,504) under a finance lease expiring within
four years.
Consolidated
Parent entity
Commitments in relation to finance
leases are payable as follows:
Notes
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
2007
$
89,443
288,859
–
2006
$
161,443
378,303
–
378,302
539,746
(49,568)
328,734
(82,242)
457,504
Representing finance lease liabilities:
Current
Non-Current
17
20
68,587
260,147
328,734
142,092
315,412
457,504
The weighted average interest rate implicit in the lease is 7.20% (2006: 6.26% to 7.20%).
2007
$
2006
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(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 29 and 30 for details of these commitments.
32. 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).
On 20 October 2006, Starpharma Holdings Ltd acquired the remaining 67% of equity in Dendritic Nanotechnologies Inc. (“DNT”).
Pre the acquisition, Starpharma Holdings Ltd was a 33% shareholder in DNT and accounted for using the equity method. Since
acquisition, DNT is accounted for as a wholly owned subsidiary. Refer to note 27 Business combination for additional details.
Name of entity
Country of
Incorporation
Class of Shares
Starpharma Pty Limited
Australia
Ordinary
Angiostar Pty Limited
Australia
Ordinary
Viralstar Pty Limited
Australia
Ordinary
Preclin Pty Limited
Australia
Ordinary
Dendritic Nanotechnologies Inc.
USA
Ordinary
2007
%
100.00%
100.00%
100.00%
100.00%
100.00%
equity Holding
Cost of Parent entity’s
Holding Investment
2006
%
2007
$
2006
$
100.00%
9,900,001
9,900,001
100.00%
3,300,005
3,300,005
100.00%
4,300,000
4,300,000
100.00%
100
100
32.91%
16,251,537
5,168,747
33,751,643
22,668,853
73
33. 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.
On 20 October 2006, Starpharma Holdings Ltd acquired the remaining 67% of equity in Dendritic Nanotechnologies Inc. (“DNT”).
Pre the acquisition, Starpharma Holdings Ltd was a 33% shareholder in DNT and accounted for using the equity method. Since
acquisition, DNT is accounted for as a wholly owned subsidiary. Refer to note 27 Business combination for additional details.
(a) Carrying amounts
FINANCIAL REPORT
Name of entity
Country of
Incorporation
Class of
Shares
Notes
Dendritic Nanotechnologies Inc. 32
USA
Dimerix Bioscience Pty Ltd
Australia
Ordinary
Ordinary
(b) Movements in carrying amounts
Movements in carrying amounts
of investments in associates
Notes
Carrying amount at the beginning of the financial year
Acquisition of associate previously equity accounted
Gain on issue of equity by associate
Share of losses from ordinary activities after related income tax
Foreign currency reserve
25
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
(d) Summarised financial information of associates
Dimerix bioscience Pty ltd
Profit (loss) from ordinary activities after related income tax expenses
Assets
Liabilities
equity Holding
2007
%
–
8.72%
2006
%
32.91%
22.00%
Cost of Parent entity’s
Holding Investment
2007
$
2006
$
–
5,168,747
40,003
40,003
40,003
5,208,750
2007
$
2,387,312
(2,057,044)
91,816
(270,262)
(75,536)
76,286
2007
$
75,536
(75,536)
–
2007
$
(293,574)
872,008
2,828
Consolidated
2006
$
2,913,061
–
55,566
(697,390)
116,075
2,387,312
Consolidated
2006
$
(40,539)
116,075
75,536
Consolidated
2006
$
(347,206)
507,758
104,943
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
74
FINANCIAL REPORT
34. Events occurring after the balance sheet date
On 22 August 2007 Starpharma Holdings Limited raised an additional A$3.8M in capital on the issue of 11,881,167 ordinary shares
in a private placement to a US-based institution and an existing Australian institutional shareholder at a price of $0.3212 per share.
Attached to the placement are unlisted options of 7,567,119. The options have an exercise price of $0.4346 per option with an expiry
date of 21 August 2012.
The proceeds of the placement will principally be used to support the further development of Starpharma’s dendrimer programs, in
particular drug delivery, its PrioFect™ siRNA delivery technology and the condom coating line extension of VivaGel™.
There are no other significant events occurring since 30 June 2007 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.
35. Reconciliation of profit after income tax to net cash inflow from operating
activities
Operating loss after tax:
Depreciation and amortisation
Exchange rates movement
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
2007
$
2006
$
2007
$
2006
$
(7,244,996)
(7,522,789)
(5,761,754)
(9,507,256)
2,019,437
965,333
501,542
275,375
–
203,223
397,858
30,116
–
287,342
–
(Increase) decrease in receivables and other assets
1,846,928
(2,602,581)
(87,891)
(3,208)
(Increase) decrease in deferred tax assets
(Decrease) increase in trade creditors
Increase (decrease) in deferred tax liabilities
Increase (decrease) in employee provisions
Increase in deferred income
Share in results of associates
Gain on sale of property, plant and equipment
Provision for doubtful debts
(43,201)
(217,316)
(852,127)
(86,686)
246,428
178,446
(4,024)
–
–
–
250,637
60,685
718,877
–
70,304
524,616
641,825
(20,516)
–
–
–
–
–
–
4,443,060
7,996,332
Net cash outflows from operating activities
(3,380,194)
(7,489,948)
(917,926)
(507,913)
36. Non–cash financing activities
Acquisition of property, plant and equipment by means
of finance lease
Outright acquisition of IP by means of share issue
Consolidated
Parent entity
2007
$
2006
$
–
–
438,000
4,373,880
2007
$
–
–
2006
$
–
4,373,880
Outright acquisition of associate by means of share issue
10,851,160
–
10,851,160
–
10,851,160
4,811,880
10,851,160
4,373,880
75
37. Earnings per share
Basic loss per share
Diluted loss per share
Net loss attributable to members of Starpharma Holdings Ltd 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
FINANCIAL REPORT
2007
$
(0.04)
(0.04)
Consolidated
2006
$
(0.06)
(0.06)
(7,244,996)
(7,522,789)
161,667,928
132,297,514
38. 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 three 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.
(b) Individual Option Deeds
The company infrequently issues options to key consultants of
the company. The objective of the option issues is to assist in the
reward, retention and motivation of consultants of the company.
Options are granted for no consideration, usually in lieu of some
proportion of cash compensation.
Options are normally granted for a two to five year period, with
various exercisable dates.
Options granted 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
schemes:
2007
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
12 Apr 2002a
11 Apr 2007
21 Jun 2002a
30 Jun 2007
6 Feb 2004a
31 Dec 2008
8 Feb 2004a
8 Feb 2009
31 Dec 2004a
31 Dec 2009
12 May 2005a
12 May 2010
4 Jul 2005a
4 Jul 2010
18 Jul 2005a
18 Jul 2010
6 Oct 2006a
6 Oct 2010
17 Nov 2006a
30 Jun 2009
2 Jan 2007b
2 Jan 2009
4 Apr 2007a
4 Apr 2011
$0.94
$0.94
$0.73
$0.94
$0.94
$0.94
$0.94
$0.94
$0.50
$0.45
$0.52
$0.50
200,000
20,000
220,000
200,000
200,000
720,000
167,000
100,000
300,000
100,000
–
–
–
–
–
–
–
–
–
–
310,000
20,000
100,000
–
–
– 1,324,000
130,000
–
500,000
– 65,000
– 590,000
–
–
–
–
–
–
–
200,000
200,000
410,000
410,000
147,000
147,000
–
300,000
100,000
1,194,000
500,000
–
–
–
–
–
65,000
45,000
590,000
–
200,000
–
–
–
–
–
–
–
–
–
–
Total
2,007,000
2,479,000
760,000
220,000
3,506,000
802,000
Weighted average exercise price
$0.92
$0.49
$0.86
$0.94
$0.63
$0.86
a Options granted under the Employee Option Plan.
b Options granted under individual option deeds.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
76
FINANCIAL REPORT
38. Share-based payments (continued)
Set out below are summaries of options granted under the plan:
2006
Grant Date
expiry Date
Consolidated and parent entity
7 Feb 2001
31 Dec 2005
12 Apr 2002
11 Apr 2007
21 Jun 2002
30 Jun 2007
6 Feb 2004
31 Dec 2008
8 Feb 2004
8 Feb 2009
31 Dec 2004
31 Dec 2009
12 May 2005
12 May 2010
4 Jul 2005
4 Jul 2010
18 Jul 2005
18 Jul 2010
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
$0.94
$0.94
$0.94
$0.73
$0.94
$0.94
$0.94
$0.94
$0.94
220,000
220,000
200,000
200,000
730,000
182,000
100,000
–
–
–
–
–
–
–
–
–
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
$0.92
$0.94
$0.94
$0.94
$0.92
$0.91
All options in 2006 and prior years were granted under the Employee Option Plan.
No options were exercised during the current or prior year.
The weighted average remaining contractual life of share options outstanding at the end of the period was 2.78 years (2006: 2.65 years).
Fair value of options granted
The weighted average assessed fair value at grant date of options granted during the year ended 30 June 2007 was $0.21 per option
(2006: $0.15). 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.
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 typically become exercisable on the second anniversary of
the date of grant.
Options granted during the year ended 30 June 2007 were:
6 Oct 2006
17 Nov 2006
2 Jan 2007
2 Jan 2007
4 Apr 2007
1,324,000
500,000
$0.50
$0.45
45,000
$0.52
20,000
$0.52
590,000
$0.50
6 Oct 2010
30 Jun 2009
2 Jan 2009
2 Jan 2011
4 Apr 2011
42.5%
5.5%
0.0%
$0.55
$0.24
44.0%
5.5%
0.0%
$0.45
$0.20
44.1%
6.2%
0.0%
$0.47
$0.12
44.1%
6.2%
0.0%
$0.47
$0.18
38.8%
6.2%
0.0%
$0.43
$0.14
Option grant date
Number of options
Exercise price
Expiry date
Expected price volatility
of the company’s shares
Risk-free interest rate
Expected dividend yield
Share price at grant date
Assessed fair value
77
38. Share-based payments (continued)
Options granted during the year ended 30 June 2006 were:
Option grant date
Number of options
Exercise price
Expiry date
Expected price volatility of the company’s shares
Risk-free interest rate
Expected dividend yield
Share price at grant date
Assessed fair value
FINANCIAL REPORT
18 Jul 2005
100,000
$0.94
18 Jul 2010
46.9%
5.2%
0.0%
$0.52
$0.16
4 Jul 2005
300,000
$0.94
4 Jul 2010
46.9%
5.2%
0.0%
$0.50
$0.15
(b) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period were as follows:
Options issued under employee option plan
Options issued under deed
Consolidated
Parent entity
2007
$
269,150
6,224
275,374
2006
$
203,223
–
203,223
2007
$
–
–
–
2006
$
–
–
–
39. 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 32.
(b) Key management personnel
Disclosures relating to key management personnel are set out in note 28.
(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 from subsidiary
Management services to subsidiaries
Consolidated
Parent entity
2007
$
2006
$
2007
$
–
–
–
–
–
–
–
–
–
–
5,597,031
–
275,374
(552,778)
62,670
2006
$
7,683,238
(50,129)
203,223
(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.
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
78
FINANCIAL REPORT
39. Related Party Transactions (continued)
(d) Outstanding balances arising from sales/purchases of goods and services
Consolidated
Parent entity
2007
$
2006
$
2007
$
Current Receivables
Interest on loan to subsidiary
Loan to subsidiary
Management services to subsidiaries
Current Payables
Management services from subsidiary
Outstanding balances are payable in cash.
–
–
–
–
–
–
–
–
2006
$
–
–
–
47,730
1,254,228
59,696
539,119
704,514
Directors’ Declaration
In the directors’ opinion:
(a) the financial statements and notes set out on pages 41 to 79 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 financial position as at 30 June 2007 and of their
performance 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 32 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 officer and chief financial officer 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 2007
79
FINANCIAL REPORT
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
Independent auditor’s report to
the members of Starpharma Holdings Limited
Report on the financial report and the AASB 124 Remuneration disclosures
contained in the directors’ report
We have audited the accompanying financial report of Starpharma Holdings Limited (the company), which comprises the
balance sheet as at 30 June 2007, and the income statement, statement of changes in equity and cash flow statement for
the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’
declaration for both Starpharma Holdings Limited and the Starpharma Holdings Limited Group (the consolidated entity). The
consolidated entity comprises Starpharma Holdings Limited (the company) and the entities it controlled at the year's end or
from time to time during the financial year.
We have also audited the remuneration disclosures contained in the directors’ report. As permitted by the Corporations
Regulations 2001, the company has disclosed information about the remuneration of directors and executives
(“remuneration disclosures”), required by Accounting Standard AASB 124 Related Party Disclosures, under the heading
“remuneration report” in the directors’ report and not in the financial report. These remuneration disclosures are identified in
the directors’ report as being subject to audit. The remuneration report contains information also, for which an auditors’
opinion is not required and has not been formed. These disclosures have been identified as such.
Directors’ responsibility for the financial report and the AASB 124 Remuneration disclosures contained in the directors'
report
The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance
with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001.
This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of
the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the directors also
state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the
Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the
financial statements and notes, complies with International Financial Reporting Standards.
The directors of the company are also responsible for the remuneration disclosures contained in the directors’ report.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance
with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements
relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is
free from material misstatement. Our responsibility is to also express an opinion on the remuneration disclosures contained
in the directors’ report based on our audit.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report
and the remuneration disclosures contained in the directors’ report. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material misstatement of the financial report and the remuneration
disclosures contained in the directors’ report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the financial report and the
remuneration disclosures contained in the directors’ report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
Liability limited by a scheme approved under Professional Standards Legislation
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
80
FINANCIAL REPORT
made by the directors, as well as evaluating the overall presentation of the financial report and the remuneration disclosures
contained in the directors’ report.
Our procedures include reading the other information in the Annual Report to determine whether it contains any material
inconsistencies with the financial report. For further explanation of an audit, visit our website
http://www.pwc.com/au/financialstatementaudit.
Our audit did not involve an analysis of the prudence of business decisions made by directors or management. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
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)
for the financial year ended 30 June 2007 included on the Starpharma Holdings Limited 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 above. It
does not provide an opinion on any other information which may have been hyperlinked to/from the financial report or
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.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s opinion on the financial report
In our opinion:
(a)
the financial report of Starpharma Holdings Limited is in accordance with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2007 and
of their performance for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001; and
(b)
the consolidated financial statements and notes also comply with International Financial Reporting Standards as
disclosed in Note 1.
Auditor’s opinion on the AASB 124 Remuneration disclosures contained in the directors’ report
In our opinion, the remuneration disclosures contained in the directors’ report and identified as being subject to audit,
comply with Accounting Standard AASB 124.
PricewaterhouseCoopers
SC Bannatyne
Partner
81
Melbourne
26 September 2007
SHAREHOLDER INfORMATION
The shareholder information set out below was applicable as at 17 September 2007
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 17 September 2007
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
159
726
460
852
160
2,357
–
–
2
21
8
31
As at 17 September 2007 there were 206 holders of less than a marketable parcel of ordinary shares.
B. Equity security holders
Twenty largest security holders
Top 20 shareholders as at 17 September 2007:
1. ANZ Nominees Limited
2. The Dow Chemical Company
3. National Nominees Ltd
4. HSBC Custody Nominees (Australia) Limited - GSI ECSA
5. Peter Malcolm Colman
6. Commonwealth Scientific and Industrial Research Organisation
7. JPS Distribution Pty Ltd
8. J P Morgan Nominees Australia Limited
9. Gilridge Pty Ltd
10. Applecross Secretarial Services Pty Ltd
11. Biotech Capital Ltd
12. Citicorp Nominees Pty Limited
13. Queensland Investment Corporation
14. Kenneth Nominees Pty Ltd
15. Strategic Industry Research Foundation Limited
16. Irrewarra Investments Pty Ltd
17. Citicorp Nominees Limited
18. Mr Donald A Tomalia & Mrs Janet E Tomalia
19. Mr Peter Murray Jackson
20. UBS Wealth Management Australia Nominees Pty Ltd
Number held
Percentage of issued shares
Ordinary shares
24,826,543
14,406,827
13,893,271
8,799,389
5,522,286
4,514,698
3,567,831
3,193,790
3,035,054
3,004,000
3,000,000
2,896,263
2,841,031
2,600,000
2,597,302
1,995,859
1,738,409
1,325,460
1,250,000
1,166,694
13.81
8.02
7.73
4.90
3.07
2.51
1.99
1.78
1.69
1.67
1.67
1.61
1.58
1.45
1.45
1.11
0.97
0.74
0.70
0.65
106,174,707
59.10
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
82
SHAREHOLDER INFORMATION
Shareholder information (continued)
Unquoted equity securities
Number on issue
Number of holders
Options issued under the Starpharma Holdings Limited
Employee Share Option Plan (ASX code SPLAM)
Options issued under individual option deeds
Total
C. Substantial holders
3,441,000
7,632,119
11,073,119
31
6
37
The following information is extracted from the Company’s register of substantial shareholders as at 17 September 2007:
Ordinary shares
Acorn Capital Limited
The Dow Chemical Company
D. Voting rights
Number held
Percentage
17,151,577
14,406,827
9.54
8.02
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.
Release date
18 October 2007
18 April 2008
18 October 2008
18 October 2009
(b) Options
No voting rights.
E. Securities subject to voluntary escrow
The following ordinary shares are subject to voluntary escrow until the dates indicated:
Number of shares
Number of holders
2
29
1
1
4,860,894
284,396
3,601,707
7,203,403
83
INTELLECTUAL PROPERTy REPORT
Starpharma Patent Portfolio
With the acquisition of DNT, the Starpharma patent portfolio has grown to over 122 granted patents. Five new provisional patent applications
were filed during the year in areas such as platform technology, therapeutics, drug delivery, dyes and water remediation.
Key patents within the Starpharma portfolio comprise:
Title
VivaGel™ Patent Portfolio
Antiviral Dendrimers
Priority Date & International
Publication Number
Patents Granted
applications Pending
15 June 1994
WO95/34595
Australia, Austria, Brazil,
Canada, China, Europe,
Hong Kong, Mexico, New
Zealand, Singapore, South
Korea, USA
Japan
Antimicrobial & Antiparasitic Agents 17 September 1998
Agents for the Prevention &
Treatment of Sexually Transmitted
Diseases-I
Delivery System
Composition
WO00/15240
30 March 2001
WO02/079299
18 October 2005
WO07/045009
22 March 2006
WO07/082331
Platform Patent Portfolio
Macromolecules Compounds
having Controlled Stoichiometry
25 October 2005
WO07/048190
Modified Macromolecule 2
11 August 2006
(not yet published)
Dendritic Polymers with Enhanced
Amplification and Interior
Functionality (Priostar)
20 April 2005
WO06/065266
Dendritic Polymers with Enhanced
Amplification and Interior
Functionality (PEHAMS 2)
21 December 2005
WO06/115547
Process for Preparing Alkyne
Intermediates for Dendritic
Polymers
21 June 2006
(not yet published)
Australia, New Zealand,
Singapore, USA
Brazil, Canada, China, Europe,
Japan, Mexico, South Korea, USA
China, New Zealand,
Singapore
Australia, Brazil, Canada, Europe,
Hong Kong, Japan, Mexico, South
Korea, USA
Argentina, Chile, International
(PCT), Malaysia, Taiwan, Uruguay
International (PCT)
International (PCT)
International (PCT)
Argentina, Australia, Brazil,
Canada, China, Europe, Hong
Kong, Israel, India, Japan, Korea,
Mexico, New Zealand, Singapore,
Taiwan, USA
Argentina, Australia, Brazil,
Canada, China, Europe, Israel,
India, Japan, Korea, Mexico, New
Zealand, Singapore, Taiwan, USA
International (PCT)
STARPHARMA HOLDINGS LIMITED ANNUAL REPORT 2007
84
INTELLECTUAL PROPERTY REPORT
Intellectual Property Report (continued)
Title
Priority Date & International
Publication Number
Patents Granted
applications Pending
angiogenesis Project Patent Portfolio
Angiogenic Inhibitory Compounds 17 July 1996
WO98/03573
Australia, Brazil, Canada,
China, Europe, USA
Japan
Inhibitory Compounds
Imaging Project Patent Portfolio
Imaging Macromolecule
siRNa Project Patent Portfolio
Delivery of Biologically Active
Materials Using Core-Shell
Tecto(Dendritic Polymers)
21 October 2005
WO07/045010
2 April 2007
(not yet published)
3 March 2007
(not yet published)
Drug Delivery Project Patent Portfolio
Modified Macromolecule
20 January 2006
WO07/082331
Formulations Containing Hybrid
Dendrimers
20 June 2007
(not yet published)
International (PCT)
International (PCT)
International (PCT)
International (PCT)
International (PCT)
85
StARpHARMA HolDInGS lIMIteD
ABn 20 078 532 180
Corporate direCtory
ContentS
About Starpharma
Chairman’s Statement
Ceo’s Review
Directors’ Report
Corporate Governance Statement
Financial Report
Shareholder Information
Intellectual property Report
Corporate Directory
03
04
05
19
36
41
82
84
86
Company Name
Directors
Starpharma Holdings limited ABn 20 078 532 180
p t Bartels AO – Chairman
J K Fairley – Chief executive officer
J W Raff – Deputy Chairman
Company Secretary
Registered office
Notice of Annual General Meeting
Share Register
Auditor
Solicitors
p M Colman
R Dobinson
l Gorr
R A Hazleton
p J Jenkins
B p Rogers
Baker Building
75 Commercial Road, Melbourne, Victoria 3004
the annual general meeting of Starpharma Holdings limited will be held at:
Blake Dawson Waldron
level 39, 101 Collins Street, Melbourne
Time: 4.00pm
Date: Wednesday 14 november 2007
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
Deacons
RACV tower, 485 Bourke Street
Melbourne VIC 3000 Australia
Greenberg traurig llp
Metlife Building, 200 park Avenue,
new York, nY 10166 uSA
Bankers
Commonwealth Bank of Australia
Stock exchange listing
national Australia Bank
Wachovia Bank, uSA
ASX limited
level 45, South tower, Rialto, 525 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
Starpharma
is a world leader in the development of dendrimer
products for pharmaceutical, life science and other
applications.
Starpharma Holdings Limited
Baker Building
75 Commercial Road, Melbourne
VIC 3004 Australia
Telephone +61 3 8532 2700
Facsimile +61 3 9510 5955
www.starpharma.com
Starpharma AnnuAl RepoRt 2007
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