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
2010
hIGh LIGhtS 2009 –10
Starpharma and Lilly sign new drug delivery collaboration
Starpharma’s dendrimer drug delivery technology will be applied to enhance compounds in Lilly’s human pharmaceutical portfolio
VivaGel® coated condom – good progress towards market
Starpharma’s partner, SSL International has also strengthened its global market position for Durex®
VivaGel® retains activity following human administration
Antiviral activity retained for hIv and herpes following vaginal administration in 24 hour study
VivaGel® BV Phase II trial commences following FDA clearance
Clinical study to investigate treatment of bacterial vaginosis (Bv), the most common vaginal infection globally
Successful VivaGel® study in sexually active women
vivaGel® study shows safety and tolerability comparable with a matched placebo in sexually active women
A$15.6 million capital raising completed
Cash position strengthened through institutional placement: A$22.8 million
Agrochemical collaboration signed
Agreement with multi-billion dollar uS-based agrochemical company using Priostar® dendrimers to enhance existing products
Key patents granted & extended
vivaGel® uS patent extended to 2024; first grant of condom coating patent
Funding awarded for Monash University collaboration
$420,000 Australian Research Council funding awarded for drug delivery collaboration
Starpharma is a world leader in the development of
dendrimer products for pharmaceutical, life science
and other applications.
Starpharma Holdings Limited
ABN 20 078 532 180
Starpharma Holdings Limited is listed on the Australian Securities Exchange
(ASX:SPL) and its securities also trade in the United States under the
American Depository Receipts (ADR) Program on the OTCQX (OTCQX:
SPHRY).
The Company has a valuable platform technology based on dendrimers,
which are man-made, highly defined nano-sized compounds. The unique
properties of this technology are widely applicable both as enhancements to
existing products and as entirely new products.
The Company aims to create shareholder value through the
commercialisation of proprietary products based on its technology.
Contents
(cid:190) Chairman’s Report
(cid:190) CEO’s Report
(cid:190) Corporate and Social Responsibility
(cid:190) Directors’ Report
(cid:190) Corporate Governance Statement
(cid:190) Annual Financial Report
(cid:190) Shareholder Information
(cid:190)
Intellectual Property Report
(cid:190) Corporate Directory
ANNUAL REPORT 2010
2
3
6
7
22
26
64
66
67
1
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Starpharma’s dr
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ks to develop p
ndustry, and with
ating the develop
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holder value.
rug delivery tech
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of focus over th
artnerships with
h the potential t
pment of produc
licensing and u
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over the last twe
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Jackie Fairley a
ommitment to th
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we look forward
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Pet
Cha
O
ter T Bartels, AO
airman
2
CEO’s Report
Over the last 12 months Starpharma has remained focused on
maintaining and building the momentum of the previous year;
advancing the development of our lead products VivaGel® and the
VivaGel® -coated condom, progressing the application of
Starpharma’s dendrimer technology platform to drug delivery,
agriculture and a range of other uses through an active and strong
partnering program. This strategy has continued to produce
significant results for Starpharma throughout the period and l am
delighted to report to our shareholders on the Company’s progress
in the 2009/10 financial year.
ANNUAL REPORT 2010
The VivaGel® product range
Potential of VivaGel®-coated condom market grows steadily:
Starpharma continues to work closely with its partner for the
VivaGel®-coated condom, SSL International (SSL), to complete
development and product launch.
SSL has strengthened its market position and global sales in the
last year. SSL now holds approximately 40-42% of the global
branded condom market following completion of acquisitions in
Russia and Ukraine, and reported an increase in total sales across
its entire product portfolio (at the close of their financial year) of
more than 24.9% from the same period the year before.
Additionally, Starpharma is looking to build this opportunity further
through active discussions with various parties regarding
commercial rights to the VivaGel®-coated condom for markets
outside of SSL’s territory.
Successful VivaGel® clinical trials: The successful completion of
a clinical trial of VivaGel® in sexually active women produced
promising results in March 2010, adding to the existing body of
positive evidence regarding the safety and tolerability of VivaGel®
and its active ingredient, SPL7013.
In the study, VivaGel® was shown to be comparable in terms of
safety and tolerability to its matched placebo gel without the
SPL7013 active ingredient. In addition, both gels were compared
with an alternative experimental placebo based on hydroxyethyl
cellulose. All three gels were found to be comparable in terms of
percentage of women who had one or more abnormal genital
finding observed during pelvic exams. There was no statistically
significant difference in the proportion of women with other local
signs or symptoms related to administration of gels.
These results are significant and will support the ongoing
development of VivaGel® as both a stand-alone gel targeting
genital herpes, HIV and bacterial vaginosis; and as a condom
coating.
Further analysis of the study data has also demonstrated that the
active ingredient of VivaGel®, SPL7013, was not absorbed into the
blood following vaginal administration, confirming previous clinical
and non-clinical study results that indicate the drug remains at the
intended site of action.
Bacterial vaginosis – a new application of VivaGel®:
Starpharma announced in November 2009 that it will pursue
clinical trials of VivaGel® as a treatment of bacterial vaginosis (BV)
- the most common vaginal infection worldwide. The use of
VivaGel® for this application, rather than as a preventative only, is
an important broadening of the gel’s utility, and will complement
the development program of VivaGel® for the prevention of
sexually transmitted infections. This new application represents a
considerable market opportunity for Starpharma with the global
market for topical BV treatments alone, estimated at approximately
US$300-$350 million.
More than 21 million women in the US are infected with BV, with
an infection rate of 51% reported in certain demographics. While
there are antibiotic treatments for BV currently on the market, there
are significant disadvantages associated with many of these
including: low cure rates and a high rate of recurrence; adverse
effects of treatment occurring such as gastrointestinal side effects
and adverse reactions with alcohol; and incompatibility with
condoms.
Preliminary data from other clinical studies has suggested that use
of VivaGel® tended to restore the normal balance of bacteria in
women who had asymptomatic BV at the time of enrolment in the
trial.
In July 2010 Starpharma announced it had received clearance
from the US Food and Drug Administration (FDA) to commence
the Phase 2 BV trial for VivaGel®. The study will be conducted
under an investigational new drug application (IND) at a number of
sites in US and will enrol approximately 132 women.
Partnerships in drug delivery and agrochemicals
Throughout the year Starpharma has demonstrated the diversity of its dendrimer technology pipeline through its broad application in the
development of drugs, and to a range of other applications.
Improving human pharmaceuticals: In February 2010,
Starpharma announced that its dendrimer drug delivery technology
will be applied to enhance compounds in Lilly’s human
pharmaceutical portfolio.
Under the terms of the agreement Lilly will fund a collaborative
research and development program with the aim of creating
improved drugs incorporating Starpharma’s proprietary delivery
technology, to be commercialised by Lilly.
This agreement is separate and additional to the contract signed in
May 2009 in which it was agreed that Starpharma and Lilly’s
animal health division, Elanco, would work together to develop
new animal health products with enhanced properties.
Starpharma has a growing list of pharmaceutical companies that
are actively exploring the use of the Company’s proprietary drug
delivery technology to enhance and improve their pharmaceutical
products.
Agrochemicals – a new application of Starpharma’s
dendrimers: In November 2009, Starpharma announced the
signing of a research and collaboration agreement with a
prominent multi-billion dollar US based agricultural chemicals
company. The terms of the agreement prevent Starpharma from
disclosing the name of the company.
The collaboration will see Starpharma’s Priostar® dendrimer
technology used to enhance the performance of existing
pesticides. The Priostar® technology is used to extend the
persistence of an active molecule, potentially reducing the amount
of active that is required for a given effect.
The global market for pesticides is valued at US$35.8 billion,
representing a significant commercial opportunity for Starpharma’s
proprietary technology in a completely new market. This
agreement is restricted to specific classes of pesticides allowing
Starpharma to explore other opportunities for the
commercialisation of its dendrimer technology in other parts of the
agricultural chemicals sector.
3
STARPHARMA HOLDINGS LIMITED
Dendrimer technology advancing in vitro diagnostics:
Starpharma is already receiving royalties for the use of its
dendrimer technology to enhance the performance of in vitro
diagnostics (IVD) through a licence agreement with Siemens
Healthcare.
Studies have shown that dendrimer technology significantly
improves the performance of IVD tests; reducing the number of
incorrect diagnoses by correctly orienting key detection molecules
in the test kit.
IVD development offers a significant business opportunity for
Starpharma, with the industry valued at US$17.6B in the US alone,
and a regulatory path allowing for more rapid new product
development and time-to-market.
Starpharma is in the process of developing its IVD business
further, focusing on generating commercial deals for this
application of its dendrimer technology.
OVERVIEW OF FINANCIAL RESULTS
For the period ended 30 June 2010, the key metric of cash burn for
the year, adjusting for foreign exchange movements, was $3.8
million, down from the prior year figure of $4.2 million.
Starpharma reported a net loss after tax of $6.4 million (2009: $4.1
million) and experienced net cash outflows of $3.6 million from
operations (2009: $4.0 million). This was consistent with the
company’s strategic plans and budget estimates. Cash reserves of
$22.8 million at 30 June 2010 (2009: $11.6 million) are a result of
prudent management of cash, a successful capital raising and
continuing partnering revenues and interest received throughout
the year.
The increase in the reported net loss after tax for the period is
largely due to the expensing of share-based payments in the
current year and foreign exchange gains booked in the prior year.
Starpharma successfully raised $15.6 million through the
completion of an institutional share placement in November 2009
The placement was led by Orbis, an existing Starpharma
shareholder, and Acorn Capital, the company’s largest shareholder
also participated along with several other existing and new
institutional investors. These funds will be primarily used to fund
the clinical trial program developing VivaGel® for bacterial
Drug delivery collaboration with Monash University receives
ARC funding: Starpharma’s Melbourne-based chemistry team
has been working with a team of researchers from the Monash
Institute of Pharmaceutical Science (MIPS) to advance certain
aspects of Starpharma’s proprietary dendrimers in drug delivery.
The collaboration was awarded an Australian Research Council
funding grant of A$420,000 in June 2010 for the purpose of
advancing a new drug delivery method that has the potential for
application for particular types of cancer, HIV and lymphatic
conditions world-wide.
In its latest research, the team’s work suggests that the careful
design of the size and surface characteristics of certain dendrimers
provides an opportunity to boost delivery to the lymphatic system.
The ability to target therapeutics in this manner offers the potential
to maximise drug concentration at sites of action while minimising
concentrations elsewhere, potentially reducing side effects and
toxicity and resulting in improved patient outcomes.
This discovery is an important finding in the field of drug delivery
and demonstrates a novel feature of Starpharma’s dendrimers.
Accordingly, Starpharma continues to explore new applications of
its dendrimer technology via commercial relationships, partnering
with leading companies with the aim of combining a partner’s
pharmaceuticals with Starpharma’s dendrimers to yield enhanced
products.
vaginosis, support the broader product pipeline, and assist in
advancing further partnering opportunities.
The reduction in grant income for the year reflects a lower R&D
spend under the National Institutes of Health grants. Interest
revenue increased $600,000 for the period on the increased cash
reserves and higher interest rates for deposits.
Revenue from partners continues to be an important component in
developing and commercialising our pipeline while minimising cash
flows. This revenue in the prior year was higher due to the receipt
of a signing milestone for the VivaGel®-coated condom
partnership.
In the last 12 months Starpharma has cemented the commercial
relevance of its dendrimer technology platform by securing a
number of research and commercial partnerships with leading
organisations in a range of industries. Partnering not only provides
Starpharma with means to gain financial strength through its
impact on cash flow, but offers access to products and external
expertise to capture new markets quickly and effectively.
Starpharma’s partnership model with organisations that produce
world-leading research and products continues to prove valuable
in accelerating the development of its products and in building
additional value from its dendrimer platform.
Cash at 30 June 2010
$22.8M
Cash Burn for 2010
$3.9M
4
3 Y
Year Financial S
Summary
Roy
yalty, customer
and licence rev
venue
Gra
ant income
Inte
erest revenue
Tot
tal revenue & in
come
Exp
penditure
Inco
ome tax credit
Net
t loss after tax
Net
t cash outflow b
before new capit
tal (Cash Burn)
Cas
sh Burn adjuste
ed for exchange
rate movement
ts
New
w share capital
net proceeds
Cas
sh at end of yea
ar
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ANNUAL REPORT
2010
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5
STARPHARMA HOLDINGS LIMITED
Corporate and Social Responsibility
Starpharma is a world leader in the development of dendrimer
products for pharmaceutical, life science and other applications,
and aims to create value through the commercialisation of its
proprietary products. In striving for this objective, Starpharma
acknowledges its role within society and believes its success will
deliver long term positive benefits to all stakeholders.
Starpharma’s corporate governance principles and code of
conduct set the framework for how the company, management and
employees are expected to conduct themselves: always ethically
and responsibly.
Our People
The employees of Starpharma are critical for achieving business
success. To ensure Starpharma remains a safe, healthy, and
attractive workplace for our employees, Starpharma has
established work place policies and practices. Policies assist to
ensure employees have engaging and satisfying roles, receive
periodic assessments and feedback on performance, provide
ongoing training and career development, and ensure a balanced
work and home life.
Employees are rewarded for their performance, dedication, and
contribution to the results of Starpharma. Employees are recruited
into and retained in positions based on merit. A balance of skills,
The Community
The very nature of Starpharma products affords the opportunity of
changing lives for the better. Through innovative research and
development, Starpharma is creating products for needs which are
currently unmet, either within the public health, medical, life
sciences or other markets.
Our Partners
Starpharma has established important business and scientific
partnerships with leading global companies, international scientific
and medical research organisations and key governmental and
non-governmental departments and institutions. These
The Environment
The broad application of Starpharma’s dendrimer research
expands into projects that may also assist the environment.
Research in the fields of agrochemical and water may improve and
reduce the negative impact of current practices on the
environment.
expertise and opinion, as well as gender and diversity are viewed
as important cultural elements within the collegiate team
environment. Employee equity schemes also allow all staff to
share in the business success and assists in aligning employees
with shareholders.
Occupational health and safety is considered every employee’s
responsibility, with active committees to eliminate, reduce or
mitigate risks associated with Starpharma’s activities. Committee
members represent all sections of the workplace including
management, and employees are encouraged to rotate on and off
the committees.
All of our pharmaceutical products and our clinical research
activities comply with strict regulatory and ethical approval
processes. These include the FDA in the United States and other
regulatory bodies as applicable.
relationships offer critical analysis of research concepts from world
experts in their field and provide the pathway for products to enter
the market and change daily lives.
All wastes generated from research and operations (albeit
relatively minor in volume) are disposed of strictly in accordance
with relevant environment regulations.
Choices for Women
VivaGel® represents a potential breakthrough in women’s health. VivaGel® is a microbicide in development to prevent the transmission of
STIs including HIV and genital herpes worldwide. VivaGel® has application in both the developed and developing countries with the
potential to offer a safe, affordable and discreet means for women to protect themselves against important diseases.
6
ANNUAL REPORT 2010
Directors’ Report
Your directors have pleasure in presenting this report on the consolidated entity (referred to hereafter as the group) consisting of Starpharma
Holdings Limited and the entities it controlled at the end of, or during, the year ended 30 June 2010.
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:
P T Bartels (Chairman)
R Dobinson
J W Raff (Deputy Chairman)
P J Jenkins
J K Fairley (Chief Executive Officer)
R A Hazleton
Principal Activities
The principal activities of the group consist of development and
commercialisation of dendrimer products for pharmaceutical, life-
science and other applications. Activities within the group are
directed towards the development of precisely defined nano-scale
materials, with a particular focus on the development of its topical
vaginal microbicide VivaGel® for the prevention of genital herpes
and HIV, the treatment of bacterial vaginosis, and the application
Business Objective
of dendrimers to drug delivery and other life science applications.
More broadly, through partners the group is also exploring
dendrimer opportunities in materials science with applications in
areas such as coatings, lubricants and water remediation.
Products based on the group’s dendrimer technology are on the
market in the form of diagnostic elements and laboratory reagents.
The Company aims to create value for shareholders through the commercial exploitation of proprietary products based on its dendrimer
technology in pharmaceutical, life science and other applications.
Dividends
No dividends were paid or declared during the period and no dividends are recommended in respect to the financial year ended 30 June 2010.
(2009: Nil)
Review of Operations
Achievements and significant events during the 2010 financial year
included:
protected in the US for an additional five years until 2024, with a
possible further 12 month extension to 2025.
August 2009 VivaGel® demonstrates anti-HIV and herpes activity
following human administration
November 2009 Signs agrochemicals deal
Results of a clinical study designed to assess retention of antiviral
activity following vaginal administration of VivaGel® in women
showed that cervicovaginal fluid samples (CVS) obtained
immediately after vaginal administration of VivaGel® provided
effectively complete inhibition of HIV and HSV infection in vitro. At
1 and 3 hours following administration of product, the initial high
level of inhibition of HIV and HSV was retained in all women
tested. Even at 12 and 24 hours following administration, more
than 90% of the initial antiviral activity was retained for both HIV
and HSV in more than half of the women tested. This was the first
clinical study to demonstrate potent antiviral activity of any
microbicide beyond one hour after administration of the product in
humans. The study in 12 women was designed to determine the
timescale over which VivaGel® retains activity against HIV and
HSV-2 (genital herpes) following vaginal administration. The
objective of the trial was to give an indication of how long before
sex VivaGel® could be applied to prevent infection, as well as
providing a potential surrogate for antiviral efficacy ahead of Phase
3 clinical studies.
These data indicate the potential for VivaGel® to be used other
than immediately prior to sexual intercourse (i.e., as a coitally
dissociated microbicide). However, future testing in clinical efficacy
studies is required to confirm this. There were no serious adverse
events during the study, and the data indicate VivaGel® was safe
and well-tolerated in the study.
September 2009 US patent grant extends VivaGel® coverage to
year 2024
A key patent relating to the use of SPL7013 to dendrimers to
protect against sexually transmitted infections was approved in the
US. The granting of this patent means that any product
presentation of SPL7013 (the active ingredient in VivaGel®) is now
The signing of a research and collaboration agreement between
Starpharma’s wholly owned US subsidiary, DNT Inc, and a
prominent, US-based agricultural chemical company. Under the
agreement the parties will use DNT’s Priostar® dendrimer
technology to enhance the performance of existing pesticides. The
approach is a natural extension of Starpharma’s drug delivery
work, in which dendrimers extend the persistence of an active
molecule, potentially reducing the amount of active that is required
for a given effect.
November 2009 Equity raising of A$15.6 million by a share
placement
$15.6 million was raised from institutional and sophisticated
investors from the placement of 30 million shares at $0.52 per
share. The placement was led by Orbis, an existing Starpharma
shareholder, and Acorn Capital, the company’s largest shareholder
also participated along with several other existing and new
institutional investors. The funds raised will primarily be used to
finance a clinical trial program to develop VivaGel® for the
treatment of bacterial vaginosis (BV) and to further strengthen the
balance sheet for future development and partnering opportunities.
February 2010 Starpharma and Lilly Sign New Drug Delivery
Collaboration for Human Pharmaceuticals
The signing of a new agreement with Eli Lilly and Company
(NYSE: LLY) under which Starpharma’s dendrimer drug delivery
technology will be applied to enhance compounds in Lilly’s human
pharmaceutical portfolio. Under the terms of the agreement Lilly
will fund a collaborative research and development program with
the aim of creating improved drugs incorporating Starpharma’s
proprietary delivery technology, to be commercialised by Lilly.
7
STARPHARMA HOLDINGS LIMITED
March 2010 Successful Completion of VivaGel® Study in Sexually
Active Women
Release of positive results of a clinical trial showing 3% SPL7013
gel (VivaGel®) was comparable in terms of safety and tolerability
with its matched placebo when administered vaginally, twice daily
for 14 days in sexually active women. The study enrolled 61
healthy women who vaginally applied VivaGel®, a matched
placebo gel without the SPL7013 active ingredient, or an
alternative experimental placebo based on hydroxyethyl cellulose
(HEC). All three groups were found to be comparable in terms of
the percentage of women with one or more abnormal genital
findings observed by the investigators during a pelvic examination
which were related to the study gels. In addition, there was no
statistically significant difference in the proportion of women who
had one or more sign and/or symptom of genital irritation
Financial Summary
considered to be possibly, probably or definitely related to
administration of gels between the VivaGel®, matched placebo gel,
and HEC gel treatment groups. The incidence of genital signs and
symptoms reported with VivaGel® in this study is in line with that
reported in previous safety studies of VivaGel®, and of other
topical vaginal products.
June 2010 Starpharma and Monash University collaboration
receives ARC funding grant
Starpharma and Monash Institute of Pharmaceutical Sciences
(MIPS) were awarded a $420,000 Australian Research Council
(ARC) funding grant for the purpose of advancing a new drug
delivery method that may benefit thousands of patients with
particular types of cancer, HIV and lymphatic conditions world-
wide.
For the year ended 30 June 2010 the consolidated entity incurred an operating loss after income tax of $6,378,000 (June 2009: $4,127,000).
Income statement
Revenue from continuing operations
Other income
Research and development expenses
Administration expenses
Finance costs
Income tax credit
Loss attributable to members
Year Ended 30 June
2009
$’000
2,124
7,691
(9,988)
(4,128)
(28)
202
(4,127)
2010
$’000
2,103
3,805
(5,723)
(6,548)
(18)
3
(6,378)
Income statement
Revenue consisted of royalty, licensing and research income from
partners including SSL International, Lilly, Siemens Healthcare,
Qiagen, EMD Biosciences and Elanco. Other income consisted of
grant income from United States and Australian Government
grants, which partly offset research and development expenditure.
The majority of US Government grants were from the US National
Institutes of Health for VivaGel® development costs. All research
and development expenditure, including patenting costs, were fully
expensed in the current and prior year. Administration expenditure
includes the amortisation of patent intangibles, expensing of share-
based payments and gains and losses from foreign exchange
movements.
Balance sheet
At 30 June 2010 the group’s cash position was $22,851,000 (2009:
$11,595,000). There was an increase in contributed equity of
$16,126,000 (2009: $6,973,000) on the completion of a private
placement in November 2009.
Statement of cash flows
Net operating cash outflow for the year was $3,630,000 (2009:
$4,029,000). Unfavourable exchange rate movements resulted in
an overall cash burn of $3,866,000 (2009: $2,860,000) for the
year. Cash flow from financing activities included the proceeds
from the issue of shares.
Earnings per share
Basic loss per share
Diluted loss per share
Net tangible assets
Net tangible asset backing per ordinary share
8
2010
($0.03)
($0.03)
2010
$0.09
2009
($0.02)
($0.02)
2009
$0.05
Significant changes in the state of affairs
There was an increase in contributed equity of $16,126,000 (2009: $6,973,000) with the majority due to the completion of a private placement in
November 2009. The fully paid ordinary shares were issued at a price of $0.52 per share.
ANNUAL REPORT 2010
Matters subsequent to the end of the financial year
On 15 July 2010 Starpharma announced it had received clearance
from the US Food and Drug Administration (FDA) to commence a
phase 2 study to investigate VivaGel® for the treatment of bacterial
vaginosis (BV). VivaGel® is under investigation for both the short
term treatment and longer term suppression of recurrence of BV in
women. This initial phase of the clinical program will investigate
the treatment of BV with a once daily for seven days treatment of
VivaGel® and its findings will guide further investigation of
suppression of recurrence. The study will be conducted under an
investigational new drug application (IND) at sites in US and will
enrol 132 women.
No other matters or circumstances have arisen since 30 June
2010 that have significantly affected, or may significantly affect:
(a) the consolidated entity’s operations in future financial years, or
(b) the results of those operations in future financial years, or
(c) the consolidated entity’s state of affairs in future financial years.
Likely developments and expected results of operations
In the opinion of the directors, the group will continue its activities
as described.
Additional comments on expected results of operations of the
group are included in this report under the review of operations.
Further information on likely developments in the operations of the
group and the expected results of operations have not been
included in this annual financial report because the directors
believe it would be likely to result in unreasonable prejudice to the
group.
Regulatory Environment
There were no significant changes in laws or regulations during the
2010 financial year or since the end of the year affecting the
business activities of the group, and the directors are not aware of
any such changes in the near future.
Environmental regulation
The group is subject to environmental regulations and other
licences in respect of its facilities in Melbourne (Victoria, Australia)
and Mt Pleasant (Michigan, USA). There are adequate systems in
place to ensure compliance with relevant Federal, State and Local
environmental regulations and the Directors are not aware of any
breach of applicable environmental regulations by the group.
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 the group 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 25 of this annual financial report.
Information on Directors
Peter T Bartels, AO, FAISM, FRS (age 69)
Independent non-executive director
Chairman
Member of remuneration & nomination committee
Member of audit & risk committee
129,804 ordinary shares in Starpharma Holdings Limited
Independent non-executive director and Chairman for seven 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. Past Chairman of the Australian Sports Commission, the Australian Institute of Sport,
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
John W Raff Dip. Ag Sc, BSc, PhD (age 61)
Non-executive director
Deputy Chairman
7,280,777 ordinary shares in Starpharma Holdings Limited
Former CEO of Starpharma, holding the position for nine years until his 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 of the
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
9
STARPHARMA HOLDINGS LIMITED
Jacinth (Jackie) K Fairley BSc, BVSc (Hons), MBA (age 47)
Executive director
Chief Executive Officer
1,482,321 ordinary shares in Starpharma Holdings Limited
750,000 rights over ordinary shares in Starpharma Holdings Limited
350,000 options over ordinary shares in Starpharma Holdings Limited
Dr Fairley was appointed Chief Executive Officer of Starpharma on 1 July 2006 after serving in the role of Chief Operating Officer from July
2005. As CEO and a Director of the Board, Jackie's responsibilities include involvement in setting strategic direction, oversight of operations and
financing activities for the group. She is also plays an active role in driving key commercial negotiations and development programs and
corporate activity. Jackie has more than 20 years’ experience in the pharmaceutical and biotechnology industries working in business
development and senior management roles with companies including CSL and Faulding (now Hospira). Former CEO of Cerylid Biosciences,
Jackie also spent 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 and Veterinary Science, and has an MBA from the Melbourne Business School (MBS) where she was the
recipient of the Clemenger Medal. In 2010, Jackie was appointed to the board of directors of MBS.
Other current directorships of listed entities: None
Former directorships of listed entities in last 3 years: None
Ross Dobinson B Bus (Acc) (age 58)
Independent Non-executive director
Chairman of audit & risk committee
Chairman of remuneration & nomination committee
Nil ordinary shares in Starpharma Holdings Limited
Non-executive director for thirteen 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.
Other current directorships of listed entities:
Non-executive director of Acrux Ltd (director since 2000 and Chairman since 31 January 2006)
Executive Chairman of Hexima Limited since 21 July 2010
Former directorships of listed entities in last 3 years: Roc Oil Company Limited (director June 1997 to 31 December 2007)
Richard A Hazleton BSChE, MSChE, HonDrEngr, HonDrCommSci (age 68)
Independent Non-executive director
Member of remuneration & nomination committee
142,616 ordinary shares in Starpharma Holdings Limited
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.
Other current directorships of listed entities: None
Former directorships of listed entities in last 3 years: None
Peter J Jenkins MB, BS (Melb), FRACP (age 64)
Independent Non-executive director
Member of audit & risk committee
1,426,000 ordinary shares in Starpharma Holdings Limited
Independent non-executive director for thirteen years. Consultant physician and gastroenterologist. Holds clinical and research positions with
the Alfred Hospital and has held clinical research 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: Nil
Former directorships of listed entities in last 3 years: Non-executive director and chairman of bio-pharmaceutical company Immuron (formerly
Anadis Ltd), resigned February 2009
Company Secretary
The Company Secretary is Mr Ben Rogers (age 62). He was a member of Starpharma’s start-up/IPO management team and has been
Company Secretary since February 1998, with responsibilities that included the role of Chief Financial Officer until 31 December 2008. Mr
Rogers has extensive experience in finance, corporate governance and HR management with CSIRO research laboratories and Co-operative
Research Centres and is an affiliate of Chartered Secretaries Australia.
10
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 2010, and the
numbers of meetings attended by each director were:
ANNUAL REPORT 2010
Name
P T Bartels
J W Raff
J K Fairley
R Dobinson
P J Jenkins
R A Hazleton
Full meetings of directors
Meetings of committees
Audit & risk
Remuneration &
nomination
7 of 7
7 of 7
7 of 7
7 of 7
7 of 7
7 of 7
2 of 2
N/A
N/A
2 of 2
2 of 2
N/A
2 of 2
N/A
N/A
2 of 2
N/A
2 of 2
The table above illustrates the number of meetings attended compared with the number of meetings held during the period that the director held
office or was a member of the committee. N/A denotes that the director is not a member of the relevant committee.
Retirement, election and continuation in office of Directors
Mr R Dobinson retires by rotation as director at the annual general meeting and, being eligible, offers himself for re-election.
Mr R A Hazleton retires by rotation as director at the annual general meeting and, being eligible, offers himself for re-election.
11
STARPHARMA HOLDINGS LIMITED
Remuneration Report
The Remuneration report is set out under the following main headings:
A.
B.
C.
D.
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service Agreements
Share-based compensation
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.
A. Principles used to determine the nature and amount of remuneration
The objective of the company’s remuneration policy is to ensure
appropriate and competitive reward for the results delivered. The
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. 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 bonuses share options or other forms of equity
securities. Non-executive directors’ fees are reviewed annually by
the remuneration and nomination committee. An increase in non-
executive directors’ fees took affect from 1 January 2010 after a
review of comparable data from the biotechnology sector. The fees
were last increased in 1 January 2004 and were halved for the six
month period from January 2009 to June 2009. Fees and
payments are determined within an aggregate non-executive
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 paid to non-executive directors for the year
ended 30 June 2010 was $300,000 (2009: $180,000). Non-
executive directors do not receive any performance-related
remuneration or retirement allowances. Superannuation
contributions required under the Australian superannuation
guarantee legislation continue to be made and are deducted from
the directors’ overall fee entitlements.
Relationship between executive reward and company
financial performance
The Company’s remuneration policy aligns executive reward with
the interests of shareholders. The primary focus is on sustained
growth in shareholder value through achievement of R&D and
commercial milestones, and therefore the remuneration policy is
not necessarily directly linked to financial performance determined
by losses or short term share price performance. The Company
has incurred losses in this financial year and in the previous 5
financial years and has no certainty that this will change in the
near term. Remuneration is set based on key performance
indicators (KPIs) which include (but are not limited to) successful
negotiations of commercial contracts, achieving key research and
development milestones, and ensuring the availability of adequate
capital to achieve stated objectives.
Executive pay structure
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 equity plans, and
– superannuation.
Other factors taken into account in determining remuneration
packages include demonstrated record of performance, internal
relativities, data from a national biotechnology salary survey and
the Company’s ability to pay. With the exception of the CEO,
executive service agreements do not include pre-determined
bonus or equity allocations, but cash incentives (bonuses) may be
awarded, or equity offered at the end of the performance review
cycle for specific contributions, or upon achievement of significant
Company milestones at the discretion of the Board. Following a
performance evaluation, the amount of possible bonus payable to
each executive is determined by the remuneration and nomination
committee, taking into account factors including the
accountabilities of the role and impact on the Company. There are
no guaranteed base pay increases in any executives’ contracts.
Starpharma CEO Equity Incentive Plan
On 25 March 2010 the CEO Equity Incentive Plan was approved
by shareholders for the issue of 1,428,571 fully paid ordinary
shares and 750,000 performance rights (being rights to receive
fully paid ordinary shares subject to continued employment with
the Company and the satisfaction of certain performance hurdles
over a specified period). The CEO, Dr Jacinth Fairley was granted
the shares and rights on 31 March 2010. The shares and
performance rights were issued for no consideration. Dr Fairley
was engaged as the Company’s Chief Executive Officer in July
2006 and charged with a brief to commercialise Starpharma’s
technology portfolio, it was agreed as part of her remuneration
package Dr Fairley would be rewarded for her performance with an
entitlement to equity of between $1 million and $2 million within
three years provided certain goals were met. These long term and
short term goals are typical of a biotechnology company in
Starpharma’s lifecycle. The Board has the view that the Company
has achieved superior performance under the stewardship of Dr
Fairley and has achieved a number of significant milestones during
this period. Accordingly, the Board is of the view that Dr Fairley’s
performance has been outstanding during the period. The plan
contains two tranches to recognise her achievements and to
provide the appropriate incentives for future performance.
Starpharma Employee Performance Rights Plan
In 2010 the Board approved the introduction of the Starpharma
Employee Performance Rights Plan. All executives and staff are
eligible to participate in the Plan. Except for the performance rights
outlined under the CEO Equity Incentive Plan, no allocations have
been made in the current year; however an allocation to other
employees has been made subsequent to the end of the financial
year. The objective of the Plan is to assist in the recruitment,
reward, retention and motivation of employees of the company.
The Plan allows for the issue of performance rights to fully paid
ordinary shares (being rights to receive shares subject to
continued employment with the Company and the satisfaction of
certain performance hurdles over a specified period). A further
holding lock period may also be applied to restrict disposal at the
end of the vesting period. Performance rights are granted under
the Plan for no consideration.
Starpharma Employee Share Plan ($1,000 Plan)
All executives and staff, excluding directors, are eligible to
participate in the Starpharma Employee Share Plan ($1,000 Plan).
The objective of the $1,000 Plan is to assist in the reward,
retention and motivation of employees of the company. The $1,000
Plan was established during the current year as a part
replacement for the Starpharma Employee Share Option Plan after
recent adjustments to relevant employee share scheme legislation.
An annual allocation of up to $1,000 of shares may be granted and
12
ANNUAL REPORT 2010
taxed on a concessional basis. Shares are granted under the
$1,000 Plan for no consideration and are escrowed for 3 years
while participants are employed by the Company.
the volume-weighted average price (VWAP) of the shares in the 15
days preceding the approval to grant the options. No allocations
under the Plan were made in the current year.
Starpharma Employee Share Option Plan
Options are granted under the Starpharma Holdings Limited
Employee Share Option Plan (ASX code SPLAM) which was
approved by shareholders at the 2007 annual general meeting. All
executives and staff 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. The exercise
price of options granted under the Plan must be not less than the
market price at the time the decision is made to invite a participant
to apply for options. The exercise price is usually calculated on
the basis of 15% above market price. Market price is calculated as
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 salary
review towards the end of the cycle. The objective of the salary
review is to ensure that all employees are appropriately
remunerated for their contribution to the company, that
remuneration is competitive within the relevant industry sector, and
that increases in employees’ skills and responsibilities are
recognised. During the year an evaluation of all executives and
other staff took place in accordance with this process.
B. Details of remuneration
Details of the nature and amount of each element of the
remuneration of each director of Starpharma Holdings Limited and
the key management personnel (as defined in AASB 124 Related
Party Disclosures) and the specified executives of Starpharma
Holdings Limited and the consolidated entity are set out in the
following tables. The key management personnel of Starpharma
Holdings Limited include the directors as per pages 9 to 10. The
key management personnel of the Starpharma Holdings Limited
group include the directors as per pages 9 to 10 above and the
following executive officers, which include the five highest paid
executives of the entity:
N J Baade
C P Barrett
J K Fairley
D J Owen
J R Paull
B P Rogers
Chief Financial Officer
VP, Business Development
Chief Executive Officer
VP, Research
VP, Development and Regulatory Affairs
Company Secretary
Directors and Key management personnel of Starpharma Holdings Limited
2010
Short-term benefits
Post-
employment
Long-term
benefits
Share-based payments
Name
Cash salary
& fees
$
Cash
bonus#
$
Non-monetary
benefits
$
Super-
annuation
$
Long
service
leave
$
Options#
$
Shares#
$
Performance
Rights#
$
Total
$
Non-executive directors
P T Bartels
73,395
J W Raff
–
R Dobinson
50,000
P J Jenkins
–
R A Hazleton
50,000
Executive directors
–
–
–
–
–
–
–
–
–
–
26,605
50,000
–
50,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100,000
50,000
50,000
50,000
50,000
J K Fairley
343,396
200,0001
6,393
24,961
9,842
2,059
985,714
81,556 1,653,921
Totals
516,791
200,000
6,393
151,566
9,842
2,059
985,714
81,556 1,953,921
1 In 2010, the Board offered an additional $50,000 bonus to J K Fairley above the contractual $150,000 payable per year on the achievement of
predetermined objectives. In the prior year, J K Fairley offered and the Board agreed to reduce the maximum bonus payable to $50,000 in view
of the Company’s cash reserves at that time.
# All performance related remuneration, including cash bonuses, shares, performance rights and options granted, are determined to be an ‘at
risk’ component of total remuneration.
There were no retirement benefits paid in the current or prior year.
13
STARPHARMA HOLDINGS LIMITED
2009
Name
Non-executive directors
P T Bartels
J W Raff
R Dobinson
P J Jenkins
R A Hazleton
Executive directors
J K Fairley
Totals
Short-term benefits
Post-
employment
Long-term
benefits
Share-based
payment
Cash salary
& fees
$
Cash
bonus#
$
Non-monetary
benefits
$
Super-
annuation
$
Long service
leave
$
Options#
$
Total
$
–
–
30,000
–
30,000
–
–
–
–
–
–
–
–
–
–
60,000
30,000
–
30,000
–
301,777
50,000
3,442
49,998
361,777
50,000
3,442
169,998
–
–
–
–
–
412
412
–
–
–
–
–
60,000
30,000
30,000
30,000
30,000
32,212
437,841
32,212
617,841
# All performance related remuneration, including cash bonuses and options granted are determined to be an ‘at risk’ component of total
remuneration.
Directors and Key management personnel of Starpharma Holdings Limited or subsidiary companies
2010
Short-term benefits
Post-
employment
Long-term
benefits
Share-based payments
Name
Cash salary
& fees
$
Cash
bonus#
$
Non-monetary
benefits
$
Super-
annuation
$
Long service
leave
$
Options#
$
Shares#
$
Performance
Rights#
$
Total
$
Non-executive directors
P T Bartels
73,395
J W Raff
–
R Dobinson
50,000
P J Jenkins
–
R A
Hazleton
50,000
Executive directors
–
–
–
–
–
–
–
–
–
–
26,605
50,000
–
50,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100,000
50,000
50,000
50,000
50,000
J K Fairley
343,396
200,0001
6,393
24,961
9,842
2,059
985,714
81,556 1,653,921
Other Key Management Personnel
B P Rogers
80,431
6,932
8,090
49,977
6,131
18,319
1,000
J R Paull
172,469
11,009
10,198
17,061
5,548
24,555
1,000
C P Barrett
183,132
13,761
–
17,720
5,302
24,555
1,000
N J Baade
153,662
11,009
8,875
15,272
4,244
21,243
1,000
D J Owen
153,165
13,761
528
15,023
407
21,243
1,000
–
–
–
–
–
170,880
241,840
245,470
215,305
205,127
Totals
1,259,650
256,472
34,084
266,619
31,474
111,974
990,714
81,556 3,032,543
1 In 2010, the Board offered an additional $50,000 bonus to J K Fairley above the contractual $150,000 payable per year on the achievement of
predetermined objectives. In the prior year, J K Fairley offered and the Board agreed to reduce the maximum bonus payable to $50,000 in view
of the Company’s cash reserves at that time.
# All performance related remuneration, including cash bonuses, shares, performance rights and options granted are determined to be an ‘at
risk’ component of total remuneration.
There were no retirement benefits paid in the current year.
14
ANNUAL REPORT 2010
Directors and Key management personnel of Starpharma Holdings Limited or subsidiary companies
2009
Name
Non-executive directors
P T Bartels
J W Raff
R Dobinson
P J Jenkins
R A Hazleton
Executive directors
Short-term benefits
Post-employment
Long-term
benefits
Share-based
payment
Cash salary
& fees
$
Cash
bonus#
$
Non-monetary
benefits
$
Super-
annuation
$
Retirement
Benefits
$
Long service
leave
$
Options#
$
Total
$
–
–
30,000
–
30,000
–
–
–
–
–
–
–
–
–
–
60,000
30,000
–
30,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
60,000
30,000
30,000
30,000
30,000
J K Fairley
301,777
50,000
3,442
49,998
– 412
32,212
437,841
Other Key Management Personnel
B P Rogers1
J R Paull
C P Barrett
N J Baade2
D J Owen
R I Berry3
(1/07/2008 – 16/12/2008)
63,561
6,932
9,935
79,894
–
4,125
11,929
176,376
158,381
11,927
10,326
23,048
–
3,240
12,464
219,386
160,380
11,927
1,030
31,259
148,858
10,092
138,764
9,174
235
493
14,306
13,314
–
–
–
219
228
191
13,571
218,386
11,937
185,656
14,150
176,086
107,209
–
8,025
18,150
117,026
–
8,022
258,432
Totals
1,138,930
100,052
33,486
349,969
117,026
8,415
104,285
1,852,163
# All performance related remuneration, including cash bonuses and options granted are determined to be an ‘at risk’ component of total
remuneration.
1 B P Rogers relinquished his responsibilities as Chief Financial Officer on 31 December 2008. He remains Company Secretary.
2 N J Baade was appointed Chief Financial Officer on 1 January 2009; he previously held the position of Financial Controller.
3 R I Berry was President of Dendritic Nanotechnologies Inc, until 16 December 2008.
C. Service Agreements
Remuneration and other terms of employment for the CEO and the specified executives are formalised in service agreements which include a
formal position description and set out duties, rights and responsibilities, and entitlements on termination. 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 Equity Plans. 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 2010 of $371,315, to be reviewed annually by the
remuneration and nomination committee.
– A cash bonus up to $150,000 per year, commencing on 1 July
2008 allocated proportionately on the achievement of
predetermined objectives.
– Fringe benefits consist of 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) is guilty of serious misconduct;
(ii) becomes unable to pay the Executive’s debts as they
become due; or
(iii) is found guilty by a court of a criminal offence.
B P Rogers Company Secretary
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at 30
June 2010 of $135,580 part-time, to be reviewed annually by the
remuneration and nomination committee.
– Fringe benefits consist of 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.
15
STARPHARMA HOLDINGS LIMITED
J R Paull VP – Development and Regulatory Affairs
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at 30
June 2010 of $198,050, to be reviewed annually by the
remuneration and nomination committee.
– Fringe benefits consist of on-site car parking.
– Subject to termination at any time by:
N J Baade Chief Financial Officer
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at 30
June 2010 of $176,018, to be reviewed annually by the
remuneration and nomination committee.
– Fringe benefits consist of on-site car parking.
– Subject to termination at any time by:
(i) the Executive giving to the Company not less than three
(i) the Executive giving to the Company not less than two months
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 2010 of $203,528, to be reviewed annually by the
remuneration and nomination 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. Share-based compensation
Options
Options are granted under the Starpharma Holdings Limited
Employee Share Option Plan (ASX code SPLAM) (“the Plan”)
which was approved by shareholders at the 2007 annual general
meeting. All employees of the group are eligible to participate in
the plan. Options are granted under the plan for no consideration
and when exercised, enable the holder to subscribe for one fully
paid ordinary share of the Company to be allotted not more than
ten business days after exercise, at the exercise price. The vesting
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 2010 of $176,400, to be reviewed annually by the
remuneration and nomination 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.
period is 1 to 2 years from the date of grant, and the exercise
period is 2 to 3 years from the end of the vesting period.
There were no options granted in the current year. 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
Date exercisable
Expiry date
Exercise price
Value per option at
grant date
% vested
4 July 2005
5 July 2007
4 July 2010
18 July 2005
19 July 2007
18 July 2010
6 October 2006
6 October 2008
6 October 2010
4 April 2007
4 April 2009
4 April 2011
14 November 2007
4 April 2009
4 April 2011
14 November 2007
8 August 2009
8 August 2011
1 January 2009
29 August 2010
28 August 2012
29 June 2009
29 June 2011
28 June 2014
$0.94
$0.94
$0.50
$0.50
$0.50
$0.50
$0.29
$0.37
$0.15
$0.16
$0.24
$0.14
$0.16
$0.17
$0.11
$0.23
100%
100%
100%
100%
100%
100%
Nil
Nil
Options granted under the Plan carry no dividend or voting rights. The weighted average remaining contractual life of share options outstanding
at the end of the year was 1.55 years (2009: 2.45 years).
16
Fair value of options granted
There were no options granted in the current year. The weighted
average assessed fair value at grant date of options granted to key
management personnel during the prior year ended 30 June 2009
was $0.17 per option. 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.
Information in assessing the fair value of options granted to each director of the company and the key management personnel of the group
during the prior year ended 30 June 2009 were as follows:
ANNUAL REPORT 2010
Options granted on:
Number of options granted
Expiry date
Exercise price
Expected price volatility of the company’s shares
Risk-free interest rate
Expected dividend yield
Share price at grant date
Assessed fair value
2009
1 January 2009
29 June 2009
600,000
600,000
28 August 2012
28 June 2014
$0.29
88.2%
5.7%
–
$0.20
$0.11
$0.37
92.4%
5.7%
–
$0.33
$0.23
Shares issued on the exercise of options
No shares in Starpharma Holdings Limited have been issued to the key management personnel of the group 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 group with greatest authority as part of their remuneration were as follows:
Name
J K Fairley
B P Rogers
J R Paull
C P Barrett
N J Baade
D J Owen
R I Berry
Number of options
granted during the year
Number of options
vested during the year
Number of options
lapsed during the year
2010
–
–
–
–
–
–
–
2009
–
200,000
275,000
275,000
225,000
225,000
–
2010
200,000
–
–
–
–
–
–
2009
150,000
200,000
200,000
200,000
200,000
200,000
250,000
2010
–
–
–
–
–
–
–
2009
500,000
220,000
80,000
–
–
–
–
The options were granted under the Starpharma Holdings Limited Employee Share Option Plan on the dates indicated. Details of options
granted to the directors and the five most highly remunerated officers of the group can be found in section D of the remuneration report on page
16. 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.
17
STARPHARMA HOLDINGS LIMITED
Shares and Performance Rights
Details of ordinary shares and performance rights over unissued ordinary shares of Starpharma Holdings Limited provided as remuneration to
any of the directors or the key management personnel of the group with greatest authority as part of their remuneration were as follows:
Name
J K Fairley
B R Rogers
J R Paull
C P Barrett
N J Baade
D J Owen
Number of shares
granted during the year
Number of performance rights
granted during the year
2010
1,428,571
1,418
1,418
1,418
1,418
1,418
2009
–
–
–
–
–
–
2010
750,000
–
–
–
–
–
2009
–
–
–
–
–
–
No performance rights have vested or lapsed; and no shares were issued on the exercise of performance rights in the current or prior year.
CEO Equity Incentive Plan (Performance Rights)
The terms and conditions of the grant of performance rights over unissued ordinary shares of Starpharma Holdings Limited in the current year
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
Vesting Date
Holding Lock
Expiry date
Number of
Rights
Performance
Measure
Value per right
at grant date
% vested
31 March 2010 31 December 2010
1 March 2013
262,500
Share Price ≥ $0.65
31 March 2010 31 December 2010
1 March 2013
262,500
Share Price ≥ $1.00
31 March 2010 31 December 2010
1 March 2013
225,000
Achievement of KPIs
$0.37
$0.09
$0.55
Nil
Nil
Nil
Principles used to determine the nature and amount of remuneration and the relationship between remuneration and company performance are
set out in section A of the remuneration report.
Details of remuneration: cash bonuses, shares, performance rights and options
For each cash bonus and grant of equity included in the tables on pages 13 to 19, 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 individual
performance objectives and in consideration of the group’s performance and ability to pay. 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 2010 the minimum value of the options yet to
vest is nil. The maximum value of the options yet to vest has been determined assuming all conditions are met.
Cash bonus
Paid
Forfeited
Grant date
value of
shares
granted
during
20103
Accounting values being
amortised in future years
Equity grants
in 2009 to be
expensed in
20114
Equity grants
in 2010 to be
expensed in
20114
Remuneration
consisting of
shares,
options &
rights5
Grant date
value of
options &
rights
granted
during
20103
Value of
options &
rights
exercised
during 2010
at exercise
date
Name
%
%
$
J K Fairley
100%1
–
985,714
$
–
$
%
$
164,904
65%
246,459
B P Rogers
J R Paull
C P Barrett
N J Baade
D J Owen
–2
–2
–2
–2
–2
–
–
–
–
–
1,000
12,752
1,000
1,000
1,000
1,000
16,212
16,212
15,668
15,668
–
–
–
–
–
11%
11%
10%
10%
11%
–
–
–
–
–
$
–
–
–
–
–
–
1 In 2010, the Board offered an additional $50,000 bonus to J K Fairley above the contractual $150,000 payable per year on the achievement of
predetermined objectives. In the prior year, J K Fairley offered and the Board agreed to reduce the maximum bonus payable to $50,000 in view
of the Company’s cash reserves at that time.
2 The bonuses paid are at the absolute discretion of the Board based on an individual’s performance within the year. There is no unpaid
component of the bonuses awarded.
18
ANNUAL REPORT 2010
3 The value at grant date calculated in accordance with AASB 2 Share-based Payments of shares and performance rights granted during the
year as part of remuneration.
4 The maximum value of options and performance rights is determined at grant date and is amortised over the applicable vesting period. The
amount which will be included in a given key management personnel’s remuneration for a given year is consistent with this amortisation amount.
No options or performance rights will vest if the conditions are not satisfied, hence the minimum value yet to vest is nil.
5 The percentage of the value of remuneration consisting of equity, based on the market value of shares at grant date, and the fair value of
options and performance rights expensed during the current year.
Shares under option
Unissued ordinary shares of Starpharma Holdings Limited under option at the date of this report are as follows:
Grant date
Expiry date
Issue price of shares
Number under options
6 October 2006
6 October 2010
2 January 2007
2 January 2011
4 April 2007
4 April 2011
21 August 2007
31 August 2012
31 October 2007
07 August 2011
14 November 2007
4 April 2011
14 November 2007
8 August 2011
1 January 2009
28 August 2012
29 June 2009
28 June 2014
$0.50
$0.52
$0.50
$0.43
$0.50
$0.50
$0.50
$0.29
$0.37
898,000
20,000
590,000
7,567,119
370,000
150,000
200,000
1,378,000
1,444,000
No option holder has any right under the options to participate in any other issue of the company or group.
Shares issued on the exercise of options
The following ordinary shares of Starpharma Holdings Limited were issued during the year ended 30 June 2010 on the exercise of options
granted under the Employee Share Option Plan. No further shares have been issued since that date. No amounts are unpaid on any of the
shares.
Date options granted
6 October 2006
31 October 2007
Issue price of shares
(Option exercise price)
Number of shares issued
$0.50
$0.50
130,000
40,000
Shares under rights
Unissued ordinary shares of Starpharma Holdings Limited under CEO Equity Incentive Plan and Employee Performance Rights Plan at the date
of this report are as follows:
Grant date
Vesting date
Holding Lock date
Issue price of shares
Number under options
31 March 2010
31 December 2010
1 March 2013
August 20101
31 August 2012
31 August 2013
$ -
$ -
750,000
830,800
1 Employees have been invited to participate in the Employee Performance Rights Plan. The number of rights granted will be dependent on the
level of employee acceptances, with the invitations totalling 830,800. The rights are expected to be granted on or around 31 August 2010.
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. It is not possible to
apportion the premium between amounts relating to the insurance
against legal costs and those relating to other liabilities.
19
STA
ARPHARMA HOLDIN
NGS LIMITED
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20
Auditor’s independence declaration
Independent auditor’s report to the members of
Starpharma Holdings Limited
Report on the financial report
ANNUAL REPORT 2010
PricewaterhouseCoopers
ABN 52 780 433 757
PricewaterhouseCoopers
Freshwater Place
ABN 52 780 433 757
2 Southbank Boulevard
SOUTHBANK VIC 3006
Freshwater Place
GPO Box 1331
2 Southbank Boulevard
MELBOURNE VIC 3001
SOUTHBANK VIC 3006
DX 77
GPO Box 1331
Telephone 61 3 8603 1000
MELBOURNE VIC 3001
Facsimile 61 3 8603 1999
DX 77
www.pwc.com/au
Telephone 61 3 8603 1000
Facsimile 61 3 8603 1999
www.pwc.com/au
Auditor’s Independence Declaration
We have audited the accompanying financial report of Starpharma Holdings Limited (the
company), which comprises the balance sheet as at 30 June 2010, and the income statement, the
As lead auditor for the audit of Starpharma Holdings Limited for the year ended 30 June 2010, I
statement of comprehensive income, statement of changes in equity and statement of cash flows
declare that to the best of my knowledge and belief, there have been:
for the year ended on that date, a summary of significant accounting policies, other explanatory
notes and the directors’ declaration for the Starpharma Holdings Group (the consolidated entity).
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
The consolidated entity comprises the company and the entities it controlled at the year's end or
from time to time during the financial year.
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
Directors’ responsibility for the financial report
This declaration is in respect of Starpharma Holdings Limited and the entities it controlled during
The directors of the company are responsible for the preparation and fair presentation of the
the period.
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 controls 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 (a), the directors also state, in accordance with Accounting Standard
Anton Linschoten
AASB 101 Presentation of Financial Statements, that the financial statements comply with
Partner
International Financial Reporting Standards.
PricewaterhouseCoopers
Melbourne
25 August 2010
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.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the financial 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 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
made by the directors, as well as evaluating the overall presentation of the financial report.
Our procedures include reading the other information in the Annual Report to determine whether it
contains any material inconsistencies with the financial report.
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
21
STARPHARMA HOLDINGS LIMITED
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 Australian
Securities Exchange (“ASX”) Corporate Governance Principles
and Recommendations (Second Edition 2007) (“the CGC
Recommendations”). The Corporate Governance Statement set
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”).
These delegations are reviewed on an annual basis.
1.1 Board charter
The charter of the Board of Starpharma Holdings Limited, matters
reserved for the board and matters delegated to the CEO are set
out below.
1.1.1 Board Composition
– The Board is to be composed of both executive and non-
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.
1.1.2 Functions Reserved for the Board
The Company has established matters reserved for the board.
These are:
(a) Strategic Issues
– approving the Company's corporate strategy;
– overseeing and monitoring organisational performance and the
achievement of the group’s strategic goals and objectives;
– approving any major transaction not included in the budget or
outside the ordinary course of the business;
– determining the structure of the Company and the definition of
the business;
(b) Shareholding Items
– issuing shares, options or performance rights;
– granting special rights to shares;
– determining the amount of a dividend;
(c) Financial Items
– approving the Company's credit policy;
– reviewing and approving the annual budget and financial plans
including available resources and major capital expenditure
initiatives;
– seeking credit in excess of $50,000;
out below describes the Company’s current corporate governance
principles and practices which the Board considers to comply with
the CGC Recommendations. All of these practices, unless
otherwise stated, were in place for the entire year. This corporate
governance statement is available on the Company’s website. The
company and its controlled entities together are referred to as the
group in this statement.
– giving any guarantee or letter of credit or any security over the
Company's assets;
(d) Expenditure Items
– approval of the annual and half-year financial reports;
– approving expenditure exceeding $100,000, unless reimbursable
by an external funding body in which case the limit is $250,000;
– approving divestments of assets exceeding $50,000;
(e) Audit
– approving appointment or removal of external auditors;
– considering any external audit reports;
(f) Board and Senior Management
– establishing corporate governance policies;
– appointment, performance assessment and, if necessary,
removal of the CEO
– determining remuneration of the CEO;
– ratifying the appointment and, if necessary, the removal of senior
executives;
1.1.3 Other Board Responsibilities
– enhancing and protecting the reputation of the group;
– overseeing the operation of the group, including its systems for
control, accountability, and risk management;
– monitoring financial performance;
– liaison with the Company’s auditors;
– ensuring there are effective management processes in place and
approving major corporate initiatives;
– reporting to shareholders.
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 five non-executive directors, four 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.
1.3 Directors’ independence
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 hold 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;
22
– 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, and has remained a director since ceasing employment
in an executive capacity.
1.4 Term of office
The Company’s Constitution specifies that all non-executive
directors must retire from office no later than the third annual
general meeting following their last election, and 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
Board has established the functions delegated to the CEO. The
CEO is responsible for implementing Company strategies and
policies, and for the day to day business operations of the group in
accordance with the strategic objectives of the group as approved
by the Board from time to time.
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 are lodged with the
ASX by 31 August, and half year statements are lodged with the
ASX by 28 February each year. The CEO and the CFO have made
the following certifications to the Board for the year ended 30 June
2010:
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. 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 committee
The Company has established an audit and risk committee, which
consists of the following independent non-executive directors:
Mr Ross Dobinson (Chairman)
Mr Peter Bartels
Dr Peter Jenkins
ANNUAL REPORT 2010
The Board policy is for these separate roles of Chairman and CEO
to be undertaken by separate people.
1.6 Commitment
The Board held seven meetings during the year. Meetings are
usually held at the Company’s corporate offices and laboratory
facility in the Baker Building, 75 Commercial Road, Melbourne,
Australia. The number of meetings of the Board and of each Board
committee held during the year ended 30 June 2010, 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.
During the year an assessment of the Board and its committees
was conducted in accordance with these procedures.
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.
– 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 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.
Details of these directors’ qualifications and attendance at
committee meetings are set out in the directors’ report pages 9 to
11. The audit and risk 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, and
> compliance with applicable laws and regulations.
23
STARPHARMA HOLDINGS LIMITED
– oversee the effective operation of the risk management
framework by:
> ensuring the effective implementation of the risk
management policy and program,
> defining risk threshold levels for referral to the Board,
> ensuring that an effective system of internal compliance
and control is in place,
> ensuring staff charged with risk management
responsibilities have appropriate authority to carry out their
functions and have appropriate access to the audit and risk
committee, and
> 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;
3.2 Remuneration and nomination committee
The Company has established a remuneration and nomination
committee which consists of the following independent non-
executive directors:
Mr Ross Dobinson (Chairman)
Mr Peter Bartels
Mr Richard Hazleton
Details of these directors’ attendance at committee meetings are
set out in the directors’ report on page 11.
The charter of the remuneration and nomination committee is to:
– conduct annual reviews of board membership having regard to
present and future needs of the Company and make
recommendations on board composition and appointments;
– conduct an annual review of and conclude on the independence
of each director;
– propose candidates for board vacancies;
– oversee board succession including the succession of the
– review and monitor related party transactions and assess their
Chairman;
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 committee:
– receives regular reports from management and the external
auditors;
– 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 committee has authority, within the scope of its
responsibilities, to seek any information it requires from any
employee or external party.
4. External auditors
– 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. 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 which is reviewed by
the committee as necessary in consultation with the CEO and
relevant executive. The remuneration and nomination committee’s
terms of reference include responsibility for reviewing any
transaction between the organisation and the directors, or any
interests 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 12 to 19.
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 2010. An analysis of fees paid to the
external auditors, including a break-down of fees for non-audit
services, is provided in note 18 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 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.
5. Risk assessment and management
The Board, through the audit and risk 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 Company is committed to a proactive approach
towards risk management throughout its entire business
operations. The Board aims to ensure that effective risk
management practices become embedded in the Company culture
and in the way activities are carried out at all levels in the
Company. The Board and Management recognise the importance
that risk management plays in ensuring the business is able to fully
capitalise on the opportunities available to it as well as mitigating
potential loss. Health and Safety (see item 6) are considered to be
of paramount importance and are the focus of significant risk
management activities within the 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 Board has required management to design and
implement a risk management and internal control system to
manage the group’s material business risks. The risk
management policy, which is available on the Company website,
sets out policies for the oversight of material business risks, and
describes the responsibilities and authorities of the Board, the
audit and risk committee, the CEO, CFO, Company Secretary, and
the senior management team. The CEO, CFO and Company
Secretary are responsible to the Board for the overall
implementation of the risk management program. During the
financial year management has reported to the board as to the
effectiveness of the group’s management of its material risks.
24
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, and employees are encouraged to
actively participate in the management of environmental and
Occupational Health and Safety (OH&S) issues. In order to
conduct activities within Australia the wholly owned subsidiary
Starpharma Pty Ltd has obtained the necessary accreditations,
laboratory certifications and licenses from the applicable
Commonwealth and State authorities. In the US the wholly owned
subsidiary 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.
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 established 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
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. Except with the prior
approval of the Chairman, no director or executive may enter into
any transaction which would have the effect of hedging or
ANNUAL REPORT 2010
The Company has adopted an OH&S Policy and has established
OH&S committees at each of its sites as part of its overall
approach to workplace safety. These committees provide a forum
for management and employees to consult on health and safety
matters. The primary role of the committees is to coordinate 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. Each
committee includes representatives of executive management and
members representing each operational area generally in
proportion to the number of people working in the area and the
perceived safety risks associated with working in that area. The
OH&S committees meet on a monthly basis.
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 (www.starpharma.com).
otherwise transferring to any other person the risk of any
fluctuation in the value of:
(a) securities in the Company which are subject to a restriction
on disposal under an employee share or incentive plan; or
(b) options or performance rights (or any unvested securities in
the Company underlying them).
The Company’s share trading policy is discussed with each new
employee as part of their induction training.
9. Continuous disclosure and shareholder communication
The Company has developed a continuous disclosure and
shareholder communication policy to ensure compliance with the
ASX Listing Rules and to facilitate effective communication with
shareholders. A copy of this policy is available on the Company’s
website.
The Board has appointed the Company Secretary as the person
responsible for disclosure of information to the ASX. This role
includes responsibility for ensuring compliance with the continuous
disclosure requirements of the ASX Listing Rules and overseeing
and co-ordinating information disclosure to the ASX, analysts,
brokers, shareholders, the media and the public. 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).
25
STARPHARMA HOLDINGS LIMITED
Annual Financial Report
Contents
Income statement
Statement of comprehensive income
Balance sheet
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Directors’ declaration
Independent audit report to the members
27
28
29
30
31
32
61
62
This financial report covers the consolidated financial statements for the group 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:
Starpharma Holdings Limited
Baker Building, 75 Commercial Road
Melbourne, Victoria, 3004, Australia
A description of the nature of the group’s operations and its principal activities is included in the CEO’s Report on pages 3 to 5 and in the review
of operations in the directors’ report on pages 7 to 8, which are not part of this financial report.
The financial report was authorised for issue by the directors on 25 August 2010. The directors have the power to amend and reissue the
financial report.
Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All press releases, financial reports and
other information are available on our website: www.starpharma.com.
26
Income statement
For the year ended 30 June 2010
Revenue from continuing operations
Other income
Administration expense
Research and development expense
Finance costs
Loss before income tax
Income tax credit
Loss from continuing operations attributable to members of
Starpharma Holdings Limited
Loss per share for loss from continuing operations attributable to
the ordinary equity holders of the company
Basic loss per share
Diluted loss per share
Notes
5
5
7
24
24
The above income statement should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2010
Consolidated
2009
$'000
2,124
7,691
(4,128)
(9,988)
(28)
(4,329)
202
(4,127)
($0.02)
($0.02)
2010
$'000
2,103
3,805
(6,548)
(5,723)
(18)
(6,381)
3
(6,378)
($0.03)
($0.03)
27
STARPHARMA HOLDINGS LIMITED
Statement of comprehensive income
For the year ended 30 June 2010
Loss for the year
Notes
Other comprehensive income (loss), net of income tax
Foreign exchange differences on translation of foreign operations
15
Other comprehensive income (loss), net of income tax
2010
$'000
(6,378)
(667)
(667)
Consolidated
2009
$'000
(4,127)
2,061
2,061
Total comprehensive income (loss) for the year, net of income tax
(7,045)
(2,066)
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
28
Balance Sheet
As at 30 June 2010
Current Assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
Current Liabilities
Trade and other payables
Borrowings
Provisions (employee entitlements)
Deferred income
Total current liabilities
Non-current liabilities
Borrowings
Provisions (employee entitlements)
Deferred income
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
Notes
8
9
10
11
12
13
2010
$'000
22,851
1,379
24,230
219
13,118
13,337
37,567
1,581
160
295
629
2,665
13
-
58
-
58
2,723
34,844
101,766
2,876
(69,798)
34,844
14
15
16
The above balance sheet should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2010
Consolidated
2009
$'000
11,595
1,581
13,176
447
15,224
15,671
28,847
1,764
133
316
930
3,143
160
20
25
205
3,348
25,499
85,640
3,279
(63,420)
25,499
29
STARPHARMA HOLDINGS LIMITED
Statement of changes in equity
Consolidated
For the year ended 30 June 2010
Balance at 1 July 2009
Loss for the year
Other comprehensive income
Foreign exchange differences on translation of
foreign operations
Total comprehensive income (loss) for the
year
Transactions with owners, recorded directly
in equity
Contributions of equity, net of transaction costs
Employee share options plan
Employee share plans
Employee performance rights plan
Total transactions with owners
15
14
15
14
15
Notes
Contributed
capital
$'000
85,640
Reserves
Accumulated
losses
$'000
3,279
-
(667)
(667)
-
182
-
82
264
$'000
(63,420)
(6,378)
-
(6,378)
-
-
-
-
-
2010
Total
equity
$'000
25,499
(6,378)
(667)
(7,045)
15,122
182
1,004
82
16,390
-
-
-
15,122
-
1,004
-
16,126
Balance at 30 June 2010
101,766
2,876
(69,798)
34,844
For the year ended 30 June 2009
Balance at 1 July 2008
Loss for the year
Other comprehensive income
Foreign exchange differences on translation of
foreign operations
Total comprehensive income (loss) for the
year
Transactions with owners, recorded directly
in equity
Contributions of equity, net of transaction costs
Employee share options plan
Total transactions with owners
Notes
15
14
15
Contributed
capital
$'000
78,667
-
-
-
6,973
-
6,973
Reserves
Accumulated
losses
$'000
1,009
-
2,061
2,061
-
209
209
$'000
(59,293)
(4,127)
-
(4,127)
-
-
-
2009
Total
equity
$'000
20,383
(4,127)
2,061
(2,066)
6,973
209
7,182
Balance at 30 June 2009
85,640
3,279
(63,419)
25,499
The above statement of changes in equity should be read in conjunction with the accompanying notes.
30
Statement of cash flows
For the year ended 30 June 2010
Cash flow from operating activities
Receipts from trade and other debtors
Grant income (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest paid
Income tax paid
ANNUAL REPORT 2010
Notes
2010
$'000
1,524
3,719
(9,268)
Consolidated
2009
$'000
1,745
7,074
(12,898)
418
78
(18)
(5)
(28)
-
(4,029)
Net cash outflows from operating activities
23
(3,630)
Cash flow from investing activities
Receipts from disposals of property, plant and equipment
Payments for property, plant and equipment
Net cash outflows from investing activities
Cash flow from financing activities
Proceeds from issue of shares
Share issue transaction costs
Lease repayments
Net cash inflows from financing activities
Net increase (decrease) in cash and cash equivalents held
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the year
23
(27)
2
(49)
(4)
(47)
15,685
(563)
(157)
14,965
11,331
11,595
(75)
22,851
7,151
(178)
(162)
6,811
2,735
7,482
1,378
11,595
The above statement of cash flows should be read in conjunction with the accompanying notes.
31
STARPHARMA HOLDINGS LIMITED
Notes to the financial statements
30 June 2010
Contents
1.
Summary of significant accounting policies
2.
3.
4.
5.
6.
7.
8.
9.
Financial risk management
Critical accounting estimates and judgments
Segment information
Revenue and other income
Expenses
Income tax expense
Current assets – Cash and cash equivalents
Current assets – Trade and other receivables
10.
Non-current assets – Property, plant and equipment
11.
Non-current assets – Intangible assets
12.
Current liabilities – Trade and other payables
13.
Current and non-current liabilities – Borrowings
14.
Contributed equity
15.
Reserves
16.
Accumulated losses
17.
Key management personnel disclosures
18.
Remuneration of auditors
19.
Contingencies
20.
Commitments
21.
Subsidiaries
22.
Events occurring after the balance sheet date
23.
Reconciliation of profit after income tax to net cash inflow from operating activities
24.
Earnings per share
25.
Share-based payments
26.
Related party transactions
27.
Parent entity financial information
32
33
37
38
38
39
40
40
41
43
44
45
46
46
47
48
48
49
52
52
53
54
54
55
55
55
59
60
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 is for the consolidated entity consisting
of Starpharma Holdings Limited and its subsidiaries.
(a) Basis of preparation
These general purpose financial statements have been prepared
in accordance with Australian Accounting Standards, other
authoritative pronouncements of the Australian Accounting
Standards Board, Urgent Issues Group Interpretations and the
Corporations Act 2001.
Compliance with IFRS
The consolidated financial statements of the Starpharma Holdings
Limited group comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting
Standards Board (IASB).
Historical cost convention
These financial statements have been prepared under the
historical cost convention.
Critical accounting estimates
The preparation of financial statements 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.
For the year ended 30 June 2010, the consolidated entity has
incurred losses of $6,378,000 (2009: $4,127,000) and experienced
net cash outflows of $3,630,000 from operations (2009:
$4,029,000), as disclosed in the balance sheet and statement of
cash flows, respectively. This is consistent with the consolidated
entity’s strategic plans and budget estimates, and the directors are
satisfied regarding the availability of working capital for the period
up to at least August 2011. Accordingly the directors have
prepared the financial report on a going concern basis in the belief
that the consolidated entity will realise its assets and settle its
liabilities and commitments in the normal course of business and
for at least the amounts stated in the financial report.
Financial statement presentation
The group has applied the revised AASB101 Presentation of
Financial Statements which became effective on 1 January 2009.
The revised standard requires the separate presentation of a
statement of comprehensive income and a statement of changes
in equity. All non-owner changes in equity must now be presented
in the statement of comprehensive income. As a consequence, the
group had to change the presentation of its financial statements.
Comparative information has been re-presented so that it is also in
conformity with the revised standard.
(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 entity”) as at 30 June 2010 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 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.
ANNUAL REPORT 2010
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.
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.
Investments in subsidiaries are accounted for at cost in the
separate financial statements of Starpharma Holdings Limited.
(c) Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker.
The chief operating decision maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Chief Executive Officer.
The group has adopted AASB 8 Operating Segments from 1 July
2009. AASB 8 replaces AASB114 Segment Reporting. The new
standard requires a ‘management approach’ under which segment
information is presented on the same basis as that used for
internal reporting purposes. Operating segments have previously
been reported under geographic segments based on the location
of the operations, which is consistent with the internal reporting
provided to the chief operating decision maker.
There have been no changes in the operating segments identified
by the group as a result of the adoption of AASB 8 Operating
Segments, so there is no impact on the number of segments
reported or the basis of organisation of segments for the current or
prior year.
(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 profit or loss.
(iii) Group companies
The results and financial position of all the group entities (none of
which has the currency of a hyperinflationary economy) that have
a functional currency different from the presentation currency are
translated into the presentation currency as follows:
•
assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet;
income and expenses for each income statement and
statement of comprehensive income are translated at
average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates prevailing
on the transaction dates, in which case income and expenses
are translated at the dates of the transactions); and
all resulting exchange differences are recognised in other
comprehensive income.
•
•
Goodwill and fair value adjustments arising on the acquisition of a
foreign entity are treated as assets and liabilities of the foreign
entities and translated at the closing rate.
33
STARPHARMA HOLDINGS LIMITED
(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 profit or loss 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
applicable income tax rate for each jurisdiction adjusted by
changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses. Deferred 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 other comprehensive income or equity are
also recognised directly in other comprehensive income or equity,
respectively. Starpharma Holdings Limited and its wholly-owned
Australian controlled entities have not implemented the tax
consolidation legislation.
(h) Leases
Leases of property, plant and equipment where the group has
substantially all the risks and rewards of ownership are classified
as finance leases (note 20). Finance leases are capitalised at the
lease’s inception at the lower of the fair value of the leased
property, or if lower the present value of the minimum lease
payments. The corresponding rental obligations, net of finance
charges, are included in short-term and long term payables. Each
lease payment is allocated between the liability and finance cost.
The finance cost is charged to profit or loss 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 property,
plant and equipment acquired under finance leases is depreciated
over the asset’s useful life or over the shorter of the asset’s useful
life and the lease term if there is no reasonable certainty that the
group will obtain ownership at the end of the lease term. Leases in
which a significant portion of the risks and rewards of ownership
34
are not transferred to the group as lessee are classified as
operating leases (note 20). Payments made under operating
leases (net of any incentives received from the lessor) are charged
to profit or loss on a straight-line basis over the period of the lease.
Lease income from operating leases where the group is a lessor is
recognised in income on a straight-line basis over the lease term.
(i) Impairment of assets
Goodwill and intangible assets that have an indefinite life are not
subject to amortisation and are tested annually for impairment or
more frequently if events or changes in circumstances indicate that
they might be impaired. Other assets are tested 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 which are largely independent of the cash inflows from
other assets or groups of assets (cash generating units).
(j) Cash and cash equivalents
For the purpose of presentation in the statement of cash flows,
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 note 8.
(k) Trade Receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment. Trade receivables
are generally due for settlement within 30 days. Collectibility of
trade receivables is reviewed on an ongoing basis. Debts which
are known to be uncollectible are written off by reducing the
carrying amount directly. An allowance account (provision for
impairment of trade receivables) is used when there is objective
evidence that the group will not be able to collect all amounts due
according to the original terms of the receivables. Significant
financial difficulties of the debtor, probability that the debtor will
enter bankruptcy or financial reorganisation, and default or
delinquency in payments (more than 30 days overdue) are
considered indicators that the trade receivable is impaired. The
amount of the impairment allowance is the difference between the
asset’s carrying amount and the present value of estimated future
cash flows, discounted at the original effective interest rate. Cash
flows relating to short-term receivables are not discounted if the
effect of discounting is immaterial. The amount of the impairment
loss is recognised in profit or loss within administration expenses.
When a trade receivable for which an impairment allowance had
been recognised becomes uncollectible in a subsequent period, it
is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against
other expenses in profit or loss.
(l) Investments and other financial assets
Classification
The group classifies its financial assets in the following categories:
financial assets at fair value through profit or loss, loans and
receivables, held-to-maturity investments and available-for-sale
financial assets. The classification depends on the purpose for
which the investments were acquired. Management determines
the classification of its investments at initial recognition and, in the
case of assets classified as held-to-maturity, re-evaluates this
designation at each reporting period.
(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 are included in current assets, except for those with
maturities greater than 12 months after the reporting date which
are classified as non-current assets. Loans and receivables are
included in trade and other receivables (note 9) in the balance
sheet.
(m) 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. The carrying
amount of any component accounted for as a separate asset is
derecognised when replaced. All other repairs and maintenance
are charged to profit or loss 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 3 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
(i)). Gains and losses on disposals are determined by comparing
proceeds with the carrying amount. These are included in profit or
loss.
(n) 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 group between 5 to 6 years,
whichever is shorter.
(o) 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 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. The allocation is made
to those cash-generating units or groups of cash-generating units
that are expected to benefit from the business combination in
which goodwill arose, identified according to operating segments
(note 4).
(ii) Patents and licences
Costs associated with patents are charged to profit or loss 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 profit or loss as an expense when it is incurred.
Costs incurred on development activities (relating to 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 are recognised as intangible assets when it is probable that
the project will, after considering its technically and commercially
feasible and adequate resources are available to complete
development, generate future economic benefits and its costs can
be measured reliably. The expenditure capitalised comprises all
directly attributable costs, including costs of materials, services,
direct labour and an appropriate proportion of overheads. Other
development expenditure is recognised in profit or loss as an
expense as incurred. To date no development costs have been
capitalised.
(p) Trade and other payables
These amounts represent liabilities for goods and services
provided to the group prior to the end of the financial year which
are unpaid. The amounts are unsecured and are usually paid
within 30 to 45 days of recognition.
ANNUAL REPORT 2010
(q) 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
profit or loss 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.
(r) Provisions
Provisions for legal claims, service claims and make good
obligations are recognised when the group has a present legal or
constructive obligation as a result of past events, 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 of 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.
(s) 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 after the
end of the period in which the employees render the related
service are recognised in respect of employees’ services up to the
period and are measured at the amounts expected to be paid
when the liabilities are settled. The liability for annual leave and
accumulating sick leave is recognised in the provision for
employee benefits. All other short-term employee benefit
obligations are presented as payables.
(ii) Other long-term employee benefit obligations
The liability for long service leave and annual leave which is not
expected to be settled within 12 months after the end of the period
in which the employees render the related services 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 end of the reporting
period 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 end of the
reporting period on national government bonds with terms to
maturity and currency that match, as closely as possible, the
estimated future cash outflows.
(iii) Superannuation and Pension Benefits
Group companies make the statutory superannuation guarantee
contribution in respect of each employee to their nominated
complying superannuation or pension fund. In certain
circumstances pursuant to an employee’s employment contract the
group companies may also be required to make additional
superannuation or pension contributions and/or agree to make
salary sacrifice superannuation or pension 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 or pension plans
are recognised as an expense as they become payable. Prepaid
contributions are recognised as an asset to the extent that a cash
refund or reduction in future payments is available.
(iv) Employee benefits on-costs
Employee benefit on-costs, including payroll tax, are recognised
and included in other payables 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
35
STARPHARMA HOLDINGS LIMITED
Employee Share Plan ($1,000 Plan), and an Employee
Performance Rights Plan. Information relating to these plans is set
out in note 25 and section D of the remuneration report under the
directors’ report.
The fair value of options and performance rights granted 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 or rights The fair value at
grant date is determined using a Black-Scholes model (or variant
of) that takes into account any exercise price, the term, the vesting
and performance criteria, the impact of dilution, the non-tradeable
nature of the option or share right, 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. The fair
value 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 or share rights that are expected to become exercisable.
At each balance sheet date, the entity revises its estimate of the
number of options or share rights 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.
Under the CEO Equity Incentive Plan and the Employee Share
Plan ($1,000 Plan) shares are issued to employees for no cash
consideration and vest immediately on grant. On this date, the
market value of the shares issued is recognised as an employee
benefits expense with a corresponding increase in 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.
(vii) Termination benefits
Termination benefits are payable when employment is terminated
before the normal retirement date, or when an employee accepts
voluntary redundancy in exchange for these benefits. The group
recognises termination benefits when it is demonstrably committed
to either terminating the employment of current employees
according to a detailed formal plan without possibility of withdrawal
or providing termination benefits as a result of an offer made to
encourage voluntary redundancy. Benefits falling due more than
12 months after the end of the reporting period are discounted to
present value.
(t) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares, performance rights 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.
(u) 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 reporting period but not
distributed at the end of the reporting period.
(v) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to owners 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 and excluding treasury shares.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares and the weighted
average number of additional ordinary shares that would have
been outstanding assuming the conversion of all dilutive potential
ordinary shares.
(w) 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 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 flows.
(x) Rounding of amounts
The company is of a kind referred to in Class order 98/100, issued
by the Australian Securities and Investments Commission, relating
to the ‘’rounding off’’ of amounts in the financial statements.
Amounts in the financial statements have been rounded off in
accordance with that Class Order to the nearest thousand dollars,
or in certain cases, the nearest dollar.
(y) New accounting standards and interpretations
Certain new accounting standards and interpretations have been
published that are not mandatory for 30 June 2010 reporting
periods. The group’s assessment of the impact of these new
standards and interpretations is set out below.
(i) AASB 2009-8 Amendents to Australian Accounting Stanards –
Group Cash-Settled Share-based Payment Transactions [AASB 2]
(effective from 1 January 2010)
The amendments made by the AASB to AASB 2 confirm that an
entity receiving goods or services in a group share-based payment
arrangement must recognise an expense for those goods or
services regardless of which entity in the group settles the
transaction or whether the transaction is settled in shares or cash.
They also clarify how the group share-based payment
arrangement should be measured, that is, whether it is measured
as an equity- or a cash-settled transaction. The group will apply
these amendments retrospectively for the financial reporting period
commencing on 1 July 2010. There will be no impact on the
group’s financial statements.
(ii) AASB Interpretation 19 Extinguishing financial liabilities with
equity instruments and AASB 2009-13 Amendments to Australian
Accounting Standards arising from Interpretation 19 (effective from
1 January 2010)
AASB Interpretation 19 clarifies the accounting when an entity
renegotiates the terms of its debt with the result that the liability is
extinguished by the debtor issuing its own equity instruments to
the creditor (debt for equity swap). It requires a gain or loss to be
recognised in profit or loss which is measured as the difference
between the carrying amount of the financial liability and the fair
value of the equity instruments issued. The group will apply the
interpretation from 1 July 2010. It is not expected to have any
impact on the group or parent entity’s financial statements.
36
ANNUAL REPORT 2010
2. Financial risk management
The group’s activities expose it to a variety of financial risks;
including market risk, credit risk and liquidity 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, chief financial officer and company secretary,
under the guidance of the Board, have responsibility for the risk
management program.
(a) Market risk
(i) Foreign Exchange 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, but maintains cash and deposits in both Australian and
US dollars. The directors are regularly monitoring the potential
impact of movements in foreign exchange exposure.
The exposure to foreign currency risk at the reporting date was as
follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Deferred Income
Group Sensitivity
2010
US
$’000
3,890
733
898
508
Consolidated
2009
US
$’000
2,876
923
810
675
The group is mainly exposed to US dollars. The following table details the group’s sensitivity to a 10% increase and decrease in the Australian
dollar against the US dollar. A sensitivity of 10% represents the possible change in foreign exchange rates based on historic trends. A positive
number indicates a favourable movement; that is an increase in profit or reduction in the loss.
Impact on profit / (loss) on a movement of the US Dollar:
Australian dollar strengthens (increases) against the US Dollar by 10%
Australian dollar weakens (decreases) against the US Dollar by 10%
2010
$’000
(343)
420
(ii) Cash Flow Interest Rate Risk
The group hold interest bearing assets and therefore the income and operating cash flows are exposed to market interest rates.
At the end of the reporting period, the group had the following at call and short term deposits maturing in of 30 to 180 days.
Consolidated
2009
$’000
(259)
317
Consolidated
2009
$’000
8,856
Deposits at call
Group Sensitivity
At 30 June 2010, if interest rates had changed by 50 basis points
either higher or lower from the year end rates with all other
variables held constant, group profit for the year would have been
(b) Credit risk
Credit risk is managed on a group basis. Credit risk arises from
cash and cash equivalents and deposits with banks and financial
institutions, as well as credit exposures from royalty and licensing
agreements and product sales. Credit risk for cash and deposits
with banks and financial institutions is managed by maximising
deposits held under Australian and US bank guarantees and
insurance schemes. Other than government funded research and
development programs, third party receivables largely consist of
2010
$’000
20,141
$103,000 higher or lower (2009 - change of 50 bps: $46,000
higher/lower) due to either higher or lower interest income from
cash or cash equivalents.
royalty and licensing receivables from leading, multinational
organisations.
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient
cash and marketable securities. The directors regularly monitor the
cash position of the group, giving consideration to the level of
expenditure and future capital commitments entered into.
37
STARPHARMA HOLDINGS LIMITED
(d) Fair value estimation
The fair value of financial assets and financial liabilities must be
estimated for recognition and measurement for disclosure
purposes. The fair value of financial instruments traded in active
markets (such as publicly traded derivatives, and trading and
available-for-sale securities) is based on quoted market prices at
the reporting date. The quoted market price used for financial
assets held by the group is the current bid price. The fair value of
financial instruments that are not traded in an active market (for
example, over-the-counter derivatives and investments in unlisted
subsidiaries) is determined using valuation techniques. The group
uses a variety of methods and makes assumptions that are based
on market conditions existing at each balance date. Quoted market
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 their previously estimated lives. The carrying
value of intangible assets at 30 June 2010 is $13,118,000 (2009:
$15,224,000).
ii) Impairment of Goodwill
The group tests annually whether goodwill has suffered any
impairment. In accordance with the accounting policy stated in
notes 1(i) and 1(o). 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 11 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
4. Segment information
There are two reportable segments within the group, with
companies operating from two locations in Australia and United
States of America (“USA”). Dendritic Nanotechnologies Inc.
(“DNT”) operates from Michigan, USA and it has been determined
that on the basis of internal reporting and monitoring of the USA
operations, these operations represent a separate reportable
prices or dealer quotes for similar instruments are used for long-
term debt instruments held. Other techniques, such as estimated
discounted cash flows, are used to determine fair value for the
remaining financial instruments. The fair value of interest rate
swaps is calculated as the present value of the estimated future
cash flows. The fair value of forward exchange contracts is
determined using forward exchange market rates at the reporting
date. The carrying value less impairment provision of trade
receivables and payables are assumed to approximate their fair
values due to their short-term nature. 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.
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. 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 in February 2007 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 Inc (“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.
segment to the Chief Executive Officer, who is the chief operating
decision maker.
The revised reportable segments are consistent with the previous
reported geographic segments; hence there is no impact in
presentation of segments for the current or prior year arising from
the adoption of AASB 8 Operating Segments.
38
Reportable segments
2010
Revenue and other income
Expenses
Australia
$’000
5,363
(10,244)
USA
$’000
1,160
(2,639)
Loss before income tax
(4,881)
(1,479)
Segment net assets
28,172
6,701
2009
Revenue and other income
Expenses
Australia
$’000
8,338
(10,905)
USA
$’000
1,909
(3,681)
Loss before income tax
(2,567)
(1,772)
Segment net assets
16,804
8,696
ANNUAL REPORT 2010
Total
$’000
5,908
(12,289)
(6,381)
34,844
Total
$’000
9,815
(14,144)
(4,329)
25,499
Inter-segment
Eliminations
$’000
(615)
594
(21)
(29)
Inter-segment
Eliminations
$’000
(432)
442
10
(1)
Sales between segments are carried out at arm's length and are eliminated upon consolidation. The revenue from external parties reported to
the board is measured in a manner consistent with that in the income statement.
5. Revenue and other income
Revenue and other income
Royalty, customer & licence revenue
Interest revenue
Other revenue
Total revenue
Australian Government grants
USA Government grants
Total other income
Total revenue and other income
2010
$’000
1,404
699
–
2,103
167
3,638
3,805
5,908
Consolidated
2009
$’000
2,019
105
–
2,124
379
7,312
7,691
9,815
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 recognised above. The group did not benefit from any other form of government assistance.
39
STARPHARMA HOLDINGS LIMITED
6. Expenses
Loss from continuing operations before income tax expense includes
the following items:
Depreciation
Amortisation
Rental expense on operating leases
Defined contribution superannuation expense
7. Income tax expense
(a) Income tax expense/(credit)
Current Tax
Deferred Tax
Income tax expense is attributable to:
Profit from continuing operations
Profit from discontinued operations
Aggregate income tax credit
Deferred income tax credit (revenue) / expense included in income
tax credit comprises:
(Decrease) in deferred tax liabilities
(b) Numerical reconciliation to income tax credit prima facie tax
payable
Loss from continuing operations before
income tax
Tax at the Australian tax rate of 30% (2009: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating
taxable income
Share-based payments
Difference in overseas tax rates
Future income tax benefits not brought to account
Income tax credit
40
2010
$’000
227
1,470
341
383
2010
$’000
5
(8)
(3)
(3)
–
(3)
–
–
(6,380)
(1,914)
380
47
1,484
(3)
Consolidated
2009
$’000
375
1,652
461
517
Consolidated
2009
$’000
–
(202)
(202)
(202)
–
(202)
(128)
(128)
(4,329)
(1,299)
63
56
978
(202)
(c) Amounts recognised directly in equity
Reduction of deferred tax liabilities of $8,000 (2009: $74,000) arising
due to foreign exchange movements have been recognised within the
foreign currency translation reserve in equity.
(d) Tax losses
Unused tax losses for which no deferred tax asset has been
recognised (as recovery is currently not probable)
Potential tax benefit
(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
ANNUAL REPORT 2010
55,179
16,554
694
208
51,705
15,511
899
270
Potential future income tax benefits attributable to tax losses
carried forward have not been brought to account at 30 June 2010
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.
Realisation of the benefit of tax losses would be subject to the
group satisfying the conditions for deductibility imposed by tax
legislation and no subsequent changes in tax legislation adversely
affecting the group. The group is making an assessment as to the
satisfaction of deductibility conditions at 30 June 2010 which it
believes will be satisfied.
8. Current assets – Cash and cash equivalents
Cash at bank and on hand
Deposits at call
2010
$’000
2,710
20,141
22,851
Consolidated
2009
$’000
2,739
8,856
11,595
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 0.15% to 6.00% (2009: 0.15% to 4.00%). These deposits are of 30-180 day
maturities.
Cash not available
There is $165,000 of cash not available for use due to restrictions associated with a finance lease and credit card facility which is guaranteed by
term deposits (2009: $187,000).
Interest rate risk
With the exception of loans to controlled entities, current receivables are non-interest bearing.
41
STARPHARMA HOLDINGS LIMITED
30 June 2010
Floating
Interest
rate
Fixed interest maturing
Notes
$’000
1 year
or
less
$’000
1 to 2
years
$’000
2 to 3
years
$’000
3 to 4
years
$’000
4 to 5
years
$’000
More
than 5
years
$’000
Non-
interest
bearing
$’000
Contractual
cash
flows
Total
$’000
Financial Assets
Cash and
deposits
Receivables
8
9
Weighted average
interest rate
Financial Liabilities
Payables
and provisions
Borrowings
12
13
Deferred income
Weighted average
interest rate
30 June 2009
1,280
19,339
–
–
1,280
19,339
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,232
22,851
N/A
1,379
1,379
1,379
3,611
24,230
1,379
3.1%
5.4%
–%
–%
–%
–%
–%
–%
–
–
–
–
–
160
–
160
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,934
1,934
1,934
–
629
160
629
160
629
2,563
2,723
2,723
–%
7.8%
–%
–%
–%
–%
–%
–%
Floating
Interest
rate
Fixed interest maturing
Notes
$’000
1 year
or
less
$’000
1 to 2
years
$’000
2 to 3
years
$’000
3 to 4
years
$’000
4 to 5
years
$’000
More
than
5
years
$’000
Non-
interest
bearing
$’000
Contractual
cash
flows
Total
$’000
7,627
1,656
–
–
7,627
1,656
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,312
11,595
N/A
1,581
1,581
1,581
3,893
13,176
1,581
2.8%
1.9%
–%
–%
–%
–%
–%
–%
–
–
–
–
–
–
133
160
–
–
133
160
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,100
2,100
2,100
–
955
293
955
293
955
3,055
3,348
3,348
–%
8.0%
7.8%
–%
–%
–%
–%
–%
Financial Assets
Cash and
deposits
Receivables
8
9
Weighted average
interest rate
Financial Liabilities
Payables
and provisions
Borrowings
12
13
Deferred income
Weighted average
interest rate
42
9. Current assets – Trade and other receivables
Trade and grant receivables
Interest receivables
Prepayments
Other receivables
ANNUAL REPORT 2010
Consolidated
2009
$’000
1,344
35
100
102
1,581
2010
$’000
932
315
56
76
1,379
Trade and grant receivables
Trade receivables primarily comprise of customer royalty and
licence revenue and are subject to normal terms of settlement
within 30 to 90 days. Grant receivables comprise of expenditure
reimbursable under grants from the USA government, including
the National Institutes of Health (“NIH”) which are subject to
normal terms of settlement within 30 to 60 days.
Credit risk
The group considers that there is no significant concentration of
credit risk with respect to current receivables. Grant receivables
are with government bodies and royalty receivables are from large,
well respected companies. Loans to controlled entities are
assessed for recoverability and provisions are applied as
considered appropriate.
Impaired receivables
As at 30 June 2010, trade and grant receivables of $140,000
(2009: $234,000) were past due. These relate to grant funding and
customers for whom there is no recent history of default. No
receivables are considered impaired at 30 June 2010 (2009: nil)
other than from subsidiaries within the group.
Other receivables
Other receivables comprise sundry debtors and GST claimable
and are subject to normal terms of settlement within 30 days.
43
STARPHARMA HOLDINGS LIMITED
10.
Non-current assets – Property, plant and equipment
Consolidated
At 30 June 2008
Cost
Accumulated depreciation and amortisation
Net book amount
Year ended 30 June 2009
Opening net book amount
Exchange differences
Additions
Disposals
Depreciation and amortisation
Closing net book amount
At 30 June 2009
Cost
Accumulated depreciation and amortisation
Net book amount
Year ended 30 June 2010
Opening net book amount
Exchange differences
Additions
Disposals
Depreciation and amortisation
Closing net book amount
At 30 June 2010
Cost
Accumulated depreciation and amortisation
Net book amount
Plant and Equipment
$’000
Leasehold
improvements
$’000
Plant and Equipment
under finance lease
$’000
Total Plant and
Equipment
$’000
2,270
(1,882)
388
388
25
49
(10)
(227)
225
2,337
(2,112)
225
225
(4)
26
(24)
(85)
138
2,246
(2,108)
138
1,141
(1,124)
17
17
–
–
–
(9)
8
1,141
(1,133)
8
8
–
–
–
(3)
5
1,141
(1,136)
5
614
(261)
353
353
–
–
–
(139)
214
294
(80)
214
214
–
–
–
(138)
76
614
(538)
76
4,025
(3,267)
758
758
25
49
(10)
(375)
447
3,772
(3,325)
447
447
(4)
26
(24)
(226)
219
4,001
(3,782)
219
44
11. Non-current assets – Intangible assets
Consolidated
At 30 June 2008
Cost
Accumulated depreciation and amortisation
Net book amount
Year ended 30 June 2009
Opening net book amount
Exchange differences
Depreciation and amortisation
Closing net book amount
At 30 June 2009
Cost
Accumulated depreciation and amortisation
Net book amount
Year ended 30 June 2010
Opening net book amount
Exchange differences
Depreciation and amortisation
Closing net book amount
At 30 June 2010
Cost
Accumulated depreciation and amortisation
Net book amount
ANNUAL REPORT 2010
Patents & Licences
$’000
Goodwill
$’000
Total Intangibles
$’000
16,065
(2,972)
13,093
13,093
1,948
(1,652)
13,389
18,244
(4,855)
13,389
13,389
(548)
(1,470)
11,371
17,578
(6,207)
11,371
1,547
–
1,547
1,547
288
–
1,835
1,835
–
1,835
1,835
(88)
–
1,747
1,747
–
1,747
17,612
(2,972)
14,640
14,640
2,236
(1,652)
15,224
20,079
(4,855)
15,224
15,224
(636)
(1,470)
13,118
19,325
(6,207)
13,118
(a) Impairment tests for goodwill
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 has operations in both Australia and the United States –
these reportable segments are also determined to be the Cash
Generating Units (CGUs) of the Group. The directors have
determined that the goodwill (which arose 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 and United States operations.
The recoverable amounts of the group’s CGUs have been
determined based on estimation of their fair value less costs to
sell.
(b) Key assumptions used for fair value less costs to sell
estimation
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 group. Given the excess of the
market capitalisation of Starpharma Holdings Limited over the
carrying value of total assets (including goodwill) at 30 June 2010,
goodwill is not considered to be impaired at the end of the
reporting period.
(c) Impairment tests for finite life intangible assets
Identifiable intangible assets with finite lives are carried at cost less
accumulated amortisation and adjusted for any accumulated
impairment loss. The directors have assessed these assets for
indicators of impairment at 30 June 2010 and determined that
there is no indication that the asset is impaired.
45
STARPHARMA HOLDINGS LIMITED
12. Current liabilities – Trade and other payables
Trade payables
Other payables
2010
$’000
1,346
235
1,581
Consolidated
2009
$’000
1,764
–
1,764
13. Current and Non-current liabilities – Borrowings
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 $160,000 at 30 June 2010 (2009: $293,000).
2010
Floating
Interest rate
Fixed interest rate
Notes
1 year
or
less
$’000
Over 1–2
years
$’000
Over 2–3
years
$’000
Over 3–4
years
$’000
Over 4–5
years
$’000
Over 5
years
$’000
Total
$’000
Lease Liabilities
20
–
160
Weighted average interest rate
–%
7.8%
–
–%
–
–%
–
–
–
160
–%
–%
–%
2009
Floating
Interest rate
Fixed interest rate
Notes
1 year
or
less
$’000
Over 1–2
years
$’000
Over 2–3
years
$’000
Over 3–4
years
$’000
Over 4–5
years
$’000
Over 5
years
$’000
Total
$’000
Lease Liabilities
20
–
133
160
Weighted average interest rate
–%
8.0%
7.8%
–
–%
–
–
–
293
–%
–%
–%
46
14. Contributed equity
(a) Share Capital
Share Capital
ANNUAL REPORT 2010
Parent Entity
Parent Entity
2010
Shares
2009
Shares
2010
$’000
2009
$’000
Ordinary shares – fully paid
238,842,208
207,218,113
101,766
85,640
(b) Movements in ordinary share capital
Date
Details
Number of shares
Issue Price
01 Jul 2008
Opening balance
8 Apr 2009
Share placement (Tranche I)
22 May 2009 Share placement (Tranche II)
22 May 2009 Share purchase Plan
less transaction costs
179,715,153
11,853,844
8,000,000
7,649,116
$0.26
$0.26
$0.26
Balance at 30 June 2009
207,218,113
24 Nov 2009
Share placement
30,000,000
$0.52
less transaction costs
25 Jan 2010 Employee share plan ($1,000) issue
29 Jan 2010
Proceeds on exercise of employee options
11 Feb 2010
Proceeds on exercise of employee options
22 Feb 2010
Proceeds on exercise of employee options
25 Feb 2010
Proceeds on exercise of employee options
31 Mar 2010 CEO equity incentive plan share issue
24 Jun 2010
Proceeds on exercise of employee options
Balance at 30 June 2010
25,524
10,000
60,000
40,000
20,000
1,428,571
40,000
238,842,208
$0.70
$0.50
$0.50
$0.50
$0.50
$0.69
$0.50
$’000
78,667
3,082
2,080
1,989
(178)
85,640
15,600
(563)
18
5
30
20
10
986
20
101,766
(c) Ordinary shares
As at 30 June 2010 there were 238,842,208 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. There is no current on-
market share buy-back.
(d) Employee Share Plan ($1,000 Plan)
Information relating to the Employee Share Plan, including details
of shares issued under the plan, is set out in note 25.
(e) CEO Equity Incentive Plan
Information relating to the CEO Equity Incentive Plan, including
details of shares issued under the plan, is set out in note 25.
(f) Employee performance rights plan
Information relating to the Employee Performance Rights Plan,
including details of rights issued under the plan, is set out in note
25.
(g) 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 25.
(h) Capital risk management
The group’s and the parent entity’s objectives when managing
capital are to safeguard their ability to continue as a going
concern, so that they can continue to provide returns for
shareholders and benefits for other stakeholders.
47
STARPHARMA HOLDINGS LIMITED
15.
Reserves
(a) Reserves
Share-based payments reserve
Foreign currency translation reserve
Asset revaluation reserve
(b) Movement in reserves
Share-based payments reserve
Balance at 1 July
Share option expense
Performance right expense
Balance at 30 June
Foreign currency translation reserve
Balance at 1 July
Currency translation differences
arising during the year
Balance at 30 June
2010
$’000
2,412
(1,751)
2,215
2,876
2010
$’000
2,148
182
82
2,412
(1,084)
(667)
(1,751)
Consolidated
2009
$’000
2,148
(1,084)
2,215
3,279
Consolidated
2009
$’000
1,939
209
–
2,148
(3,145)
2,061
(1,084)
(c) Nature and purpose of reserves
(i) Share-based payments reserve
The share-based payments reserve is used to recognise the
fair value of options and performance rights granted.
(ii) Foreign currency translation reserve
Exchange differences arising on translation of the foreign
subsidiary are taken to the foreign currency translation
16.
Accumulated Losses
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
The uplift in fair value of the identifiable net assets of DNT on
the company’s acquisition of the remaining share in October
2006 was recognised in reserves.
2010
$’000
(63,420)
(6,378)
(69,798)
Consolidated
2009
$’000
(59,293)
(4,127)
(63,420)
Accumulated losses balance at 1 July
Net loss for the year
Accumulated losses balance at 30 June
48
17.
Key management personnel disclosures
(a) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Other long term benefits
Termination benefits
Share-based payments
ANNUAL REPORT 2010
Consolidated
2009
$’000
1,273
350
8
117
104
1,852
2010
$’000
1,550
267
31
–
1,185
3,033
Detailed remuneration disclosures are provided in sections A-D of the remuneration report on pages 12 to 19.
(b) Equity instrument disclosures relating to key management personnel
(i) Options provided as remuneration and shares issued on exercise of such options
Details of options provided as remuneration and shares issued on the exercise of such options, together with terms and conditions of the
options, can be found in section D of the remuneration report on pages 16 to 19.
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 or prior year.
2010
Name
Balance at the
start of the year
Granted during
the year as
compensation
Directors of Starpharma Holdings Limited
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
Unvested
J K Fairley
650,000
Other key management personnel of the group
B P Rogers
400,000
J R Paull
C P Barrett
N J Baade
D J Owen
475,000
575,000
425,000
425,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
650,000
650,000
–
400,000
200,000
200,000
475,000
200,000
275,000
575,000
300,000
275,000
425,000
200,000
225,000
425,000
200,000
225,000
49
STARPHARMA HOLDINGS LIMITED
2009
Name
Balance at the
start of the year
Granted during
the year as
compensation
Directors of Starpharma Holdings Limited
J K Fairley
1,150,000
–
Other key management personnel of the group
B P Rogers
420,000
200,000
J R Paull
280,000
275,000
C P Barrett
300,000
275,000
N J Baade
200,000
225,000
D J Owen
R I Berry1
200,000
225,000
250,000
–
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
Unvested
–
–
–
–
–
–
–
(500,000)
650,000
450,000
200,000
(220,000)
400,000
200,000
200,000
(80,000)
475,000
200,000
275,000
–
–
–
–
575,000
300,000
275,000
425,000
200,000
225,000
425,000
200,000
225,000
250,000
250,000
-
# Other Changes during the year relate to the expiry of options.
1 At 30 June 2009 R I Berry was not an executive of the group.
Performance rights holdings
The numbers of rights 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. There
were no share rights in the prior year, and with the exception of J K
Fairley, no director held share rights in the current year.
On 31 March 2010, J K Fairley was granted 750,000 rights to
ordinary shares as part of a CEO equity incentive plan. The
granting of these performance rights was approved by
shareholders on 25 March 2010.
2010
Name
Balance at the
start of the year
Granted during
the year as
compensation
Directors of Starpharma Holdings Limited
J K Fairley
–
750,000
Other key management personnel of the group
B P Rogers
J R Paull
C P Barrett
N J Baade
D J Owen
–
–
–
–
–
–
–
–
–
–
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
Unvested
–
–
–
–
–
–
–
–
–
–
–
–
750,000
–
750,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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
received during the current or prior reporting period on the
exercise of options.
On 31 March 2010, the J K Fairley was granted 1,428,571 fully
paid ordinary shares as part of the CEO equity incentive plan. The
granting of these shares was approved by shareholders on 25
March 2010.
Key management personnel of the group, excluding directors,
were eligible to participate in the Employee Share Plan ($1,000
Plan). Shares to the value of $1,000 where granted to Australian-
based permanent employees under the plan during the year.
No director has entered into a material contract with the group in
either the current or previous financial year and there were no
material contracts involving directors’ interests subsisting at year
end.
50
2010
Name
Balance at the
start of the year
Granted during
the year as
compensation
Other changes
during the year
Balance at the
end of the year
ANNUAL REPORT 2010
Directors of Starpharma Holdings Limited
Ordinary Shares
P T Bartels
J K Fairley
J W Raff
R Dobinson
P J Jenkins
R A Hazleton
129,804
53,750
7,280,777
-
1,416,000
142,616
Other key management personnel of the group
Ordinary Shares
65,622
–
–
–
–
B P Rogers
J R Paull
C P Barrett
N J Baade
D J Owen
2009
Name
–
1,428,571
–
–
–
–
1,418
1,418
1,418
1,418
1,418
–
–
–
129,804
1,482,321
7,280,777
-
10,000
1,426,000
-
–
–
–
–
–
142,616
67,040
1,418
1,418
1,418
1,418
Balance at the
start of the year
Granted during the year as
compensation
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
R Dobinson
P J Jenkins
R A Hazleton
129,804
53,750
6,496,874
–
1,416,000
42,616
Other key management personnel of the group
Ordinary Shares
B P Rogers
J R Paull
C P Barrett
N J Baade
D J Owen
R I Berry1
65,622
–
–
–
–
70,296
1 At 30 June 2009 R I Berry was not an executive of the group.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
129,804
53,750
783,903
7,280,777
-
-
1,416,000
100,000
142,616
–
–
–
–
–
–
65,622
–
–
–
–
70,296
51
STARPHARMA HOLDINGS LIMITED
18.
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 group 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:
(a) Statutory 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 statutory audit services
(b) Other audit services
Other audit services:
Grant reviews & program audits
PricewaterhouseCoopers
Total remuneration for other audit services
Total remuneration of auditors
19.
Contingencies
The Company has no contingent assets or liabilities at 30 June 2010 (2009: nil).
2010
$
124,500
–
124,500
27,300
27,300
151,800
Consolidated
2009
$
129,000
27,137
156,137
22,500
22,500
178,637
52
20.
Commitments
(a) Capital Commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:
Property, plant and equipment
Within one year
Later than one year but not later than five years
Later than five years
(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
Operating leases
ANNUAL REPORT 2010
Consolidated
2009
$’000
–
–
–
–
Consolidated
2009
$’000
402
228
–
630
337
315
(22)
630
2010
$’000
–
–
–
–
2010
$’000
452
59
–
511
351
164
(4)
511
The group leases laboratory and offices under a lease until 31 August 2011 and leases various plant and equipment under cancellable
operating leases.
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
Representing cancellable operating leases
2010
$’000
293
58
–
351
Consolidated
2009
$’000
269
68
–
337
53
STARPHARMA HOLDINGS LIMITED
Finance Leases
The group leases plant and equipment with a carrying amount of $160,000 (2009: $293,000) under a finance leases expiring
within one year.
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
Representing finance lease liabilities:
Current
Non-Current
13
13
2010
$’000
164
–
–
164
(4)
160
160
–
160
Consolidated
2009
$’000
151
164
–
315
(22)
293
133
160
293
The weighted average interest rate implicit in the lease is 7.8% (2009: 7.9%).
(c) Expenditure Commitments
The group has entered into various agreements for research and
development services. These agreements have typical termination
provisions to limit the commitment to the time and materials
expended at termination, or up to an approved work order amount.
Other committed expenditure is reimbursable under existing grant
funding sources.
21.
Subsidiaries
(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 for details
of these commitments.
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in note 1(b).
Name of entity
Starpharma Pty Limited
Angiostar Pty Limited
Viralstar Pty Limited
Dendritic Nanotechnologies Inc.
Country of
Incorporation
Class of Shares
Australia
Australia
Australia
USA
Ordinary
Ordinary
Ordinary
Ordinary
Equity Holding
2009
%
100.00%
100.00%
100.00%
100.00%
2010
%
100.00%
100.00%
100.00%
100.00%
22. Events occurring after the balance sheet date
On 15 July 2010 the Company announced it had received
clearance from the US Food and Drug Administration (FDA) to
commence a phase 2 study to investigate VivaGel® for the
treatment of bacterial vaginosis (BV). VivaGel® is under
investigation for both the short term treatment and longer term
suppression of recurrence of BV in women. This initial phase of the
clinical program will investigate the treatment of BV with a once
daily for seven days treatment of VivaGel® and its findings will
guide further investigation of suppression of recurrence. The study
will be conducted under an investigational new drug application
(IND) at sites in US and will enrol 132 women.
There are no other significant events occurring since 30 June 2010
that have significantly affected or may significantly affect the
operations of the group, the results of those operations, or the
state of the group.
54
23. Reconciliation of profit after income tax to net cash inflow from operating activities
Operating loss after tax:
Depreciation and amortisation
Foreign exchange (gains) / losses
Non-cash employee benefits: share-based payments
Change in operating assets and liabilities,
net of effects of acquisitions and disposals of entities:
Decrease in receivables and other assets
Increase (decrease) increase in trade creditors
Decrease in deferred tax liabilities
Increase (decrease) in employee provisions
Decrease in deferred income
Gain on sale of property, plant and equipment
Net cash outflows from operating activities
24. 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 ($’000)
Weighted average number of ordinary shares outstanding during the year used as
the denominator in calculating diluted and basic earnings per share
ANNUAL REPORT 2010
Consolidated
2009
$’000
(4,127)
2,028
(1,378)
209
39
142
(128)
(118)
(693)
(3)
2010
$’000
(6,378)
1,697
75
1,268
202
(183)
–
15
(326)
–
(3,630)
(4,029)
2010
$
(0.03)
(0.03)
(6,378)
Consolidated
2009
$
(0.02)
(0.02)
(4,127)
225,551,542
184,082,782
25. Share-based payments
Options
(a) Employee Option Plan
The establishment of the Starpharma Holdings Limited Employee
Share Option Plan (ASX code SPLAM) was approved by
shareholders at the Annual General Meeting held on 17 November
2004 and re-approved on 14 November 2007. 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. The vesting period is 1 to 2
years from date of grant, with the exercise period 2 to 3 years from
the end of the vesting period. Options granted under the plan carry
no dividend or voting rights. Each option is personal to the
participant and is not transferable, transmissible, assignable or
chargeable, except with the written consent of the remuneration
and nomination committee.
Set out below are summaries of options under the schemes:
(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.
(c) Options Attached to a Share Placement
The company issued 7,567,119 unlisted options attached to a
share placement in August 2007. The options have an exercise
price of $0.4346 per option with an expiry date of 21 August 2012.
Options granted carry no dividend or voting rights.
55
STARPHARMA HOLDINGS LIMITED
2010
Grant Date
Expiry Date
Consolidated and parent entity
Exercise
Price
Balance
at start of
the year
Exercised
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
31 Dec 2004 a
31 Dec 2009
$0.94
86,000
4 Jul 2005 a
4 Jul 2010
$0.94
300,000
18 Jul 2005 a
18 Jul 2010
$0.94
100,000
–
–
–
–
–
–
6 Oct 2006 a
6 Oct 2010
$0.50
1,038,000
130,000
10,000
2 Jan 2007 b
2 Jan 2009
$0.52
20,000
4 Apr 2007 a
4 Apr 2011
$0.50
590,000
21 Aug 2007c
22 Aug 2012
$0.43
7,567,119
12 Oct 2007 b
31 Jul 2009
$0.43
10,000
12 Oct 2007 b
31 Aug 2009
$0.43
10,000
–
–
–
–
–
–
–
–
–
–
31 Oct 2007 a
7 Aug 2011
$0.50
550,000
40,000
140,000
14 Nov 2007 a
4 Apr 2011
$0.50
150,000
14 Nov 2007 a
8 Aug 2011
$0.50
200,000
1 Jan 2009 a
28 Aug 2012
$0.29
1,578,000
1 Jan 2009 b
28 Aug 2012
$0.29
20,000
29 Jun 2009 a
28 Jun 2014
$0.37
1,464,000
–
–
–
–
–
–
–
220,000
–
320,000
86,000
–
–
–
–
–
–
–
–
300,000
300,000
100,000
100,000
898,000
898,000
20,000
20,000
590,000
590,000
7,567,119
7,567,119
10,000
10,000
–
–
–
–
–
–
–
–
–
–
370,000
370,000
150,000
150,000
200,000
200,000
1,358,000
20,000
1,144,000
–
–
–
Total
13,683,119
170,000
690,000
106,000
12,717,119
10,195,119
Weighted average exercise price
$0.44
$0.50
$0.37
$0.76
$0.44
$0.47
a Options granted under the Employee Option Plan.
b Options granted under individual option deeds.
c Options granted under a share placement.
No options were granted in the current year.
56
2009
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
ANNUAL REPORT 2010
Consolidated and parent entity
6 Feb 2004a
31 Dec 2008
$0.73
200,000
8 Feb 2004 a
8 Feb 2009
$0.94
368,000
31 Dec 2004 a
31 Dec 2009
$0.94
101,000
4 Jul 2005 a
4 Jul 2010
$0.94
300,000
18 Jul 2005 a
18 Jul 2010
$0.94
100,000
6 Oct 2006 a
6 Oct 2010
$0.50
1,088,000
17 Nov 2006 a
30 Jun 2009
$0.45
500,000
2 Jan 2007 b
2 Jan 2009
$0.52
65,000
4 Apr 2007 a
4 Apr 2011
$0.50
590,000
21 Aug 2007c
22 Aug 2012
$0.43
7,567,119
12 Oct 2007 b
31 May 2009
$0.43
10,000
12 Oct 2007 b
30 Jun 2009
$0.43
10,000
12 Oct 2007 b
31 Jul 2009
$0.43
10,000
12 Oct 2007 b
31 Aug 2009
$0.43
10,000
31 Oct 2007 a
7 Aug 2011
$0.50
690,000
14 Nov 2007 a
4 Apr 2011
$0.50
150,000
14 Nov 2007 a
8 Aug 2011
$0.50
200,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
15,000
–
–
50,000
–
–
–
–
–
–
–
–
140,000
–
–
1 Jan 2009 a
28 Aug 2012
1 Jan 2009 b
28 Aug 2012
29 Jun 2009 a
28 Jun 2014
Total
$0.29
$0.29
$0.37
–
–
–
1,628,000
50,000
20,000
1,464,000
–
–
–
200,000
10,000
358,000
–
–
–
–
–
–
–
–
86,000
86,000
300,000
300,000
100,000
100,000
1,038,000
1,038,000
500,000
–
–
45,000
20,000
20,000
–
–
10,000
10,000
–
–
–
–
–
–
–
–
590,000
590,000
7,567,119
7,567,119
–
–
–
–
10,000
10,000
10,000
10,000
550,000
290,000
150,000
150,000
200,000
1,578,000
20,000
1,464,000
–
–
–
–
11,959,119
3,112,000
265,000
1,123,000
13,683,119
10,161,119
Weighted average exercise price
$0.49
$0.33
$0.50
$0.65
$0.44
$0.47
a Options granted under the Employee Option Plan.
b Options granted under individual option deeds.
c Options granted under a share placement.
No options were exercised during the prior year.
The weighted average remaining contractual life of share options outstanding at the end of the period was 1.98 years (2009: 3.00 years).
(d) Fair value of options granted
The weighted average assessed fair value at grant date of options
granted during the year ended 30 June 2009 was $0.17 per option.
There were no options granted in the current year. 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, and have
varying exercise and expiry dates.
57
STARPHARMA HOLDINGS LIMITED
Information used in assessing the fair value of options granted during the year ended 30 June 2009 is as follows:
Option grant date
Number of options granted
Expiry date
Exercise price
Expected price volatility of the company's shares
Risk-free interest rate
Expected dividend yield
Share price at grant date
Assessed fair value
Shares
1 Jan 2009
1,648,000
28 Aug 2012
$0.29
88.2%
5.7%
-
$0.20
$0.11
29 Jun 2009
1,464,000
28 Jun 2014
$0.37
92.4%
5.7%
-
$0.33
$0.23
(a) CEO Equity Incentive Plan
On 25 March 2010 the CEO Equity Incentive Plan was approved
by shareholders for the issue of 1,428,571 fully paid ordinary
shares and 750,000 performance rights (being rights to receive
fully paid ordinary shares subject to continued employment with
the Company and the satisfaction of certain performance hurdles
over a specified period). The CEO, Dr Jacinth Fairley was granted
the shares and rights on 31 March 2010. The shares and
performance rights were issued for no consideration. Dr Fairley
was engaged as the Company’s Chief Executive Officer in July
2006 and charged with a brief to commercialise Starpharma’s
technology portfolio, it was agreed as part of her remuneration
package Dr Fairley would be rewarded for her performance with an
entitlement to equity of between $1 million and $2 million within
three years provided certain goals were met. These long term and
short term goals are typical of a biotechnology company in
Starpharma’s lifecycle. The Board has the view that the Company
has achieved superior performance under the stewardship of Dr
Fairley and has achieved a number of significant milestones during
this period. Accordingly, the Board is of the view that Dr Fairley’s
performance has been outstanding during the period. The plan
contains two tranches to recognise her achievements and to
provide the appropriate incentives for future performance. Further
information is provided in section D of the remuneration report.
(b) Employee Share Plan ($1,000 Plan)
All executives and staff, excluding directors, are eligible to
participate in the Starpharma Employee Share Plan ($1,000 Plan).
The objective of the $1,000 Plan is to assist in the recruitment,
reward, retention and motivation of employees of the company.
The $1,000 Plan was established during the current year as a part
replacement for the Starpharma Employee Share Option Plan after
recent adjustments to relevant legislation. An annual allocation of
up to $1,000 of shares may be granted and taxed on a
concessional basis. Shares are granted under the $1,000 Plan for
no consideration and are escrowed for 3 years while participants
are employed by the Company.
(c) Fair value of shares granted
The weighted average assessed fair value at grant date of
employee shares granted during the year ended 30 June 2010
was $0.69 per share. There were no employee shares granted in
the prior year. The fair value at grant date is determined by the
share price on the date of grant. Employee shares were granted
for no consideration.
Information used in assessing the fair value of shares granted during the year ended 30 June 2010 is as follows:
Share grant date
Number of shares granted
Share price at grant date
Assessed fair value
Employee Performance Rights
24 Jan 2010
31 March 2010
25,524
$0.70
$0.70
1,428,571
$0.69
$0.69
(a) CEO Equity Incentive Plan
Details are provided in section D of the remuneration report.
Performance rights are granted under the Plan for no
consideration.
(b) Employee Performance Rights Plan
In 2010 the Board approved the introduction of the Starpharma
Employee Performance Rights Plan. All executives and staff are
eligible to participate in the Plan. Except for the performance rights
outlined under the CEO Equity Incentive Plan, no allocations have
been made in the current year; however an allocation to other
employees has been made subsequent to the end of the financial
year. The objective of the Plan is to assist in the recruitment,
reward, retention and motivation of employees of the company.
The Plan allows for the issue of performance rights (being rights to
receive fully paid ordinary shares subject to continued employment
with the Company and the satisfaction of certain performance
hurdles over a specified period). A further holding lock period may
also be applied to restrict disposal after the vesting date.
(c) Fair value of performance rights granted
The weighted average assessed fair value at grant date of
performance rights granted during the year ended 30 June 2010
was $0.33 per right. There were no performance rights granted in
the prior year. The estimated fair value at grant date is determined
using a modified Black-Scholes option pricing model that takes into
account the exercise price, the performance measure, the term of
the right, 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, adjusted
for any expected changes to future volatility due to publicly
available information. Performance rights are granted for no
consideration.
58
Information used in assessing the fair value of performance rights granted during the year ended 30 June 2010 is as follows:
ANNUAL REPORT 2010
Right grant date
Number of rights granted
Vesting date
Disposal Restriction until
Performance Measure
Expected price volatility of the company's shares
Risk-free interest rate
Expected dividend yield
Share price at grant date
Assessed fair value
31 March 2010
31 March 2010
31 March 2010
262,500
262,500
225,000
31 December 2010
31 December 2010
31 December 2010
1 March 2013
1 March 2013
1 March 2013
Share Price ≥ $0.65
Share Price ≥ $1.00
41%
5.3%
-
$0.69
$0.37
41%
5.3%
-
$0.69
$0.09
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
Employee shares issued
Employee performance rights issued
2010
$’000
182
–
1,004
82
1,268
KPIs
41%
5.3%
-
$0.69
$0.55
Consolidated
2009
$’000
207
2
–
–
209
26. 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 21.
(b) Key management personnel
Disclosures relating to key management personnel are set out in
note 17.
(c) Transactions with related parties
There are related party transactions within the group between the
parent and subsidiaries. Transactions include funds advanced
to/from entities and the associated interest charge; and
management and services fees. All transactions were made on an
arm’s length basis.
59
STARPHARMA HOLDINGS LIMITED
27. Parent entity financial information
(a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Balance Sheet
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Contributed equity
Reserves
Accumulated losses
Loss for the year
Total comprehensive income
(b) Contingencies of the parent entity
The parent entity has no contingent assets or liabilities at 30 June 2010 (2009: nil).
2010
$'000
19,553
42,410
1,624
1,624
101,766
1,903
(62,883)
(4,663)
(4,663)
Parent
2009
$'000
8,556
30,889
1,566
1,566
85,640
1,903
(58,220)
(882)
(882)
60
Di
rectors’ De
eclaration
ANNUAL REPORT
2010
In t
(a)
he directors’ op
the financial st
(i) complying
pinion:
tatements and n
with Accounting
notes set out on
g Standards, th
pages 26 to 60
e Corporations
0 are in accorda
Regulations 20
ance with the Co
001 and other m
orporations Act
andatory profes
:
2001, including
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ssional reporting
and
(ii) giving a tru
date; and
ue and fair view
w of the group’s f
financial positio
on as at 30 June
e 2010 and of its
s performance f
for the financial
year ended on
that
(b)
there are reaso
Note 1(a) conf
Accounting Sta
onable grounds
firms that the fin
andards.
s to believe that
nancial statemen
the company w
nts also comply
will be able to pa
with Internation
ay its debts as a
nal Financial Re
and when they b
eporting Standa
become due and
rds as issued b
d payable; and
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nal
The
Cor
e directors have
rporations Act 2
e been given the
2001.
e declarations b
by the chief exec
cutive officer an
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l officer required
d by section 295
5A of the
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s declaration is
made in accord
dance with a res
solution of the d
directors.
Pet
Dire
Me
O
ter T Bartels, AO
ector
lbourne, 25 Aug
gust 2010
61
STARPHARMA HOLDINGS LIMITED
Independent audit report to the members
Independent auditor’s report to the members of
Starpharma Holdings Limited
Independent auditor’s report to the members of
Starpharma Holdings Limited
Report on the financial report
PricewaterhouseCoopers
ABN 52 780 433 757
PricewaterhouseCoopers
Freshwater Place
ABN 52 780 433 757
2 Southbank Boulevard
SOUTHBANK VIC 3006
Freshwater Place
GPO Box 1331
2 Southbank Boulevard
MELBOURNE VIC 3001
SOUTHBANK VIC 3006
DX 77
GPO Box 1331
Telephone 61 3 8603 1000
MELBOURNE VIC 3001
Facsimile 61 3 8603 1999
DX 77
www.pwc.com/au
Telephone 61 3 8603 1000
Facsimile 61 3 8603 1999
www.pwc.com/au
We have audited the accompanying financial report of Starpharma Holdings Limited (the
Report on the financial report
company), which comprises the balance sheet as at 30 June 2010, and the income statement, the
statement of comprehensive income, statement of changes in equity and statement of cash flows
We have audited the accompanying financial report of Starpharma Holdings Limited (the
for the year ended on that date, a summary of significant accounting policies, other explanatory
company), which comprises the balance sheet as at 30 June 2010, and the income statement, the
notes and the directors’ declaration for the Starpharma Holdings Group (the consolidated entity).
statement of comprehensive income, statement of changes in equity and statement of cash flows
The consolidated entity comprises the company and the entities it controlled at the year's end or
for the year ended on that date, a summary of significant accounting policies, other explanatory
from time to time during the financial year.
notes and the directors’ declaration for the Starpharma Holdings Group (the consolidated entity).
The consolidated entity comprises the company and the entities it controlled at the year's end or
Directors’ responsibility for the financial report
from time to time during the financial year.
Directors’ responsibility for the financial 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
The directors of the company are responsible for the preparation and fair presentation of the
and maintaining internal controls relevant to the preparation and fair presentation of the financial
financial report in accordance with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing
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
and maintaining internal controls relevant to the preparation and fair presentation of the financial
circumstances. In Note 1 (a), the directors also state, in accordance with Accounting Standard
report that is free from material misstatement, whether due to fraud or error; selecting and applying
AASB 101 Presentation of Financial Statements, that the financial statements comply with
appropriate accounting policies; and making accounting estimates that are reasonable in the
International Financial Reporting Standards.
circumstances. In Note 1 (a), the directors also state, in accordance with Accounting Standard
AASB 101 Presentation of Financial Statements, that the financial statements comply with
Auditor’s responsibility
International Financial Reporting Standards.
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
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
the audit to obtain reasonable assurance whether the financial report is free from material
our audit in accordance with Australian Auditing Standards. These Auditing Standards require that
misstatement.
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
An audit involves performing procedures to obtain audit evidence about the amounts and
misstatement.
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the financial report, whether due
An audit involves performing procedures to obtain audit evidence about the amounts and
to fraud or error. In making those risk assessments, the auditor considers internal control relevant
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
to the entity’s preparation and fair presentation of the financial report in order to design audit
including the assessment of the risks of material misstatement of the financial report, whether due
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
to fraud or error. In making those risk assessments, the auditor considers internal control relevant
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
to the entity’s preparation and fair presentation of the financial report in order to design audit
appropriateness of accounting policies used and the reasonableness of accounting estimates
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
made by the directors, as well as evaluating the overall presentation of the financial report.
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
Our procedures include reading the other information in the Annual Report to determine whether it
made by the directors, as well as evaluating the overall presentation of the financial report.
contains any material inconsistencies with the financial report.
Our procedures include reading the other information in the Annual Report to determine whether it
contains any material inconsistencies with the financial report.
Liability limited by a scheme approved under Professional Standards Legislation
62
Liability limited by a scheme approved under Professional Standards Legislation
Independent audit report to the members
Independent auditor’s report to the members of
Starpharma Holdings Limited (continued)
ANNUAL REPORT 2010
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.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
Auditor’s opinion
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 consolidated entity’s financial position as at
30 June 2010 and of its 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 financial report and notes also comply with International Financial Reporting Standards
as disclosed in Note 1 (a).
Report on the Remuneration Report
We have audited the remuneration report included in sections A to D of the directors’ report for the
year ended 30 June 2010. The directors of the company are responsible for the preparation and
presentation of the remuneration report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the remuneration report, based on our audit
conducted in accordance with Australian Auditing Standards.
Auditor’s opinion
In our opinion, the remuneration report of Starpharma Holdings Limited for the year ended 30 June
2010, complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
Anton Linschoten
Partner
Melbourne
25 August 2010
63
STARPHARMA HOLDINGS LIMITED
Shareholder Information
The shareholder information set out below was applicable as at 31 July 2010
Supplementary information as required by ASX listing requirements.
A. Distribution of equity shareholders
Analysis of numbers of equity security holders by size of holding
1 –1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,000 and over
Total
Shares
Options
Performance rights
Class of equity security
187
790
494
955
195
2,621
–
–
–
27
13
40
–
–
–
–
1
1
There were 96 holders of less than a marketable parcel of ordinary shares.
B. Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
Name
Number held
of issued shares
Ordinary shares
Percentage
1. National Nominees Limited
2. J P Morgan Nominees Australia Limited
3. Citicorp Nominees Pty Limited
4. HSBC Custody Nominees (Australia) Limited
5. ANZ Nominees Limited
6. Mr Peter Malcolm Colman
7. T & N Argyrides Investments P/L
8. Weresyd Proprietary Limited
9. Kenneth Nominees Pty Ltd
10. JPS Distribution Pty Ltd
11. Gilridge Pty Ltd
12. Applecross Secretarial Services Pty Ltd
13. VCAMM Limited
14. Commonwealth Scientific And Industrial Research Organisation
15. Harbour Nominees Pty Ltd
16. Citicorp Nominees Pty Ltd
17. JPS Distribution Pty Ltd
18. Merrill Lynch (Australia) Nominees Pty Limited
19. Jacinth Fairley
20. Mr Kingsley Bryan Bartholomew
55,611,994
17,413,370
15,434,430
11,058,903
5,635,663
5,357,286
5,000,000
4,358,756
3,900,000
3,567,831
3,073,516
3,042,462
2,597,302
2,448,798
2,231,244
2,180,808
1,969,142
1,716,535
1,428,571
1,400,000
23.28
7.29
6.46
4.63
2.36
2.24
2.09
1.82
1.63
1.49
1.29
1.27
1.09
1.03
0.93
0.91
0.82
0.72
0.60
0.59
149,426,611
62.56
64
Name
Options issued under the Starpharma Holdings Limited
Employee Share Option Plan (ASX code SPLAM)
Options issued under individual option deeds
Employee Performance Rights
Total
ANNUAL REPORT 2010
Unquoted equity securities over ordinary shares
Number on issue
Number of holders
4,710,000
7,607,119
750,000
13,067,119
35
5
1
41
C. Substantial holders
Substantial shareholders as shown in substantial shareholder notices received by the Company as at 31 July 2010:
Name
Acorn Capital Limited
Orbis Investment Management (Australia) Pty Ltd
The Dow Chemical Company
Platinum-Montaur Life Sciences LLC
Ordinary shares
Number held
29,920,807
27,357,494
14,406,827
9,046,365
D. Voting rights
The voting rights attached to each class of equity securities are set out below:
(a) Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and on a poll each share shall have one
vote.
(b) Options
No voting rights.
(c) Performance Rights
No voting rights.
E. Securities subject to voluntary escrow
The following equity securities are subject to voluntary escrow until the date indicated:
Type of equity securities
Number of equity
securities
Number of holders
Release date
Employee Share Plan ($1,000
Plan)
Ordinary Shares
CEO Equity Incentive Plan
Performance Rights
25,524
750,000
18
1
25 January 2013
1 March 2013
65
STARPHARMA HOLDINGS LIMITED
Intellectual Property Report
The Starpharma patent portfolio currently has around 35 active patent families with over 70 granted patents and more than 100 patent
applications pending. Four new provisional patent applications were filed during the year.
Key patents within the Starpharma portfolio as at 3 August 2010
Title
Priority Date &
International
Publication Number
VivaGel® Patent Portfolio
Antiviral Dendrimers
15 June 1994
WO95/34595
Antimicrobial & Antiparasitic Agents
17 September 1998
Agents for the Prevention &
Treatment of Sexually
Transmitted Diseases - I
Delivery System
Contraceptive Composition
Platform Patent Portfolio
WO00/15240
30 March 2001
WO02/079299
18 October 2005
WO07/045009
22 March 2006
WO07/106944
Patents Granted
Applications Pending
Australia, Brazil, Canada, China,
Europe, Hong Kong, Mexico,
New Zealand, Singapore,
South Korea, USA
Australia, Canada, Europe,
Mexico, New Zealand,
Singapore, South Korea,
USA
Australia, China, Europe, Hong
Kong, Japan, Mexico, New
Zealand, Singapore, South
Korea, USA
Japan
China, Japan
Brazil, Canada
Argentina, Australia, Canada, China,
Europe, Hong Kong, India,
Japan, Malaysia, Mexico, New
Zealand, Russian Federation,
South Korea, Taiwan, USA
Australia, Canada, China, Europe,
Japan, USA
Macromolecules Compounds having
25 October 2005
Australia, Canada, Europe, USA
Controlled Stoichiometry
Modified Macromolecules
WO07/048190
10 August 2006
WO07/082331
Australia, Canada, China, Europe,
India, Japan, USA
Core-Shell Tectodendrimers
16 February 1999
Canada, Europe, USA,
Mexico
WO00/049066
20 April 2005
Japan, Singapore , South Korea,
Argentina, Brazil, Canada, China,
Dendritic Polymers with Enhanced
Amplification and Interior
Functionality (Priostar)
WO06/065266
Dendritic Polymers with Enhanced
Amplification and Interior
Functionality (PEHAMS 2)
21 December 2005
WO06/115547
Australia
Imaging Project Patent Portfolio
Imaging Macromolecule
siRNA Project Patent Portfolio
Delivery of Biologically Active
Materials Using Core-Shell
Tecto (Dendritic Polymers)
Drug Delivery Project Patent Portfolio
Modified Macromolecules 2
11 August 2006
WO08/017122
3 March 2006
WO08/054466
11 August 2006
WO2008017125
66
Europe, Hong Kong, India, Israel,
Japan, Mexico, New Zealand,
Taiwan, USA
Argentina, Brazil, Canada, China,
Europe, Hong Kong, India, Israel,
Korea, Mexico, New Zealand,
Singapore, Taiwan, USA
China, Europe, USA
Europe, USA
China, Europe, India, USA
Corporate Directory
Company name
Starpharma Holdings Limited
ABN 20 078 532 180
Directors
P T Bartels AO – Chairman
J K Fairley – Chief Executive Officer
J W Raff – Deputy Chairman
R Dobinson
R A Hazleton
P J Jenkins
Company Secretary
Ben Rogers
ANNUAL REPORT 2010
Solicitors
Norton Rose
RACV Tower, 485 Bourke Street
Melbourne VIC 3000 Australia
Greenberg Traurig LLP
MetLife Building, 200 Park Avenue,
New York, NY 10166 USA
Stock exchange listing
ASX Limited
Level 45, South Tower, Rialto, 525 Collins Street,
Melbourne, Vic 3000, Australia
ASX Code: SPL
Other Management
Chief Financial Officer
Nigel Baade
Paul Barrett
VP, Business Development
Malcolm McColl VP, Business Development
David Owen
Jeremy Paull
Roman Salij
VP, Research
VP, Development and Regulatory Affairs
VP, Business Development, DNT (USA)
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 ASX. The Bank of New York Mellon is the depositary bank.
Starpharma’s ADRs are listed on OTCQX International
(www.otcqx.com), a premium market tier in the U.S. for
international exchange-listed companies, operated by Pink OTC
Markets, Inc.
Website address
www.starpharma.com
Annual General Meeting
Thursday 11 November 2010 at 4.00pm
Norton Rose Australia
RACV Tower, 485 Bourke Street,
Melbourne Victoria 3000
Registered office
Baker Building
75 Commercial Road,
Melbourne, Victoria 3004 Australia
Telephone +61 3 8532 2700
Fax +61 3 9510 5955
Postal address
GPO Box 6535
St Kilda Road Central, VIC 8008 Australia
Share register
Computershare Investor Services
452 Johnston Street, Abbotsford VIC 3067
GPO Box 2975
Melbourne, VIC 3001
1300 850 505 (within Australia)
+613 6415 4000 (outside Australia)
www.computershare.com
Auditor
PricewaterhouseCoopers
Freshwater Place
Southbank VIC 3006 Australia
67
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