ANNUAL REPORT 2 014
HIGHLIGHTS
CHAIRMAN’S LETTER
CEO’S REPORT
CORPORATE AND SOCIAL RESPONSIBILITY
DIRECTORS REPORT
OPERATING & FINANCIAL REVIEW
REMUNERATION REPORT
AUDITOR’S INDEPENDENCE DECLARATION
CORPORATE GOVERNANCE STATEMENT
ANNUAL FINANCIAL REPORT
INDEPENDENT AUDIT REPORT TO THE MEMBERS
SHAREHOLDER INFORMATION
INTELLECTUAL PROPERTY REPORT
CORPORATE DIRECTORY
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Starpharma Holdings Limited Annual Report
Highlights
CORPORATE
R&D tax incentive
Starpharma received a total
of $4.7 million under the R&D
Tax Incentive Program, relating
to eligible R&D activities from
the 2013 financial year.
Starpharma also received
approval for certain overseas
R&D expenditure for its DEP™
docetaxel program to be eligible
for the R&D tax incentive,
amounting to an estimated $2
million in cash over 3 years.
New Chairman
Rob Thomas AM succeeded
retiring Chairman, Peter Bartels
AO under the Board’s ongoing
succession planning and
renewal strategy. Mr Thomas
has a strong background in
financial services and is a
non-executive director of a
number of listed healthcare
companies.
VIVAGEL®
VivaGel® condom
certification in Australia
Consumers in Australia are
expected to be the first in
the world to buy the VivaGel®
condom under Ansell’s
LifeStyles® Dual Protect™ brand.
The condoms to be marketed
by Ansell will also carry the
VivaGel® brand and Starpharma
will receive royalties based
on sales.
VivaGel® condom
approved in Japan
Japan’s leading condom
company, Okamoto Industries,
is preparing for launch of the
VivaGel® condom in Japan
after regulatory certification
was achieved in that country.
Japan is the world’s second
largest condom market, and
Starpharma’s partner, Okamoto
holds approximately 60%
market share.
VivaGel® phase 3 clinical trial
for prevention of recurrent BV
Starpharma has commenced
phase 3 clinical trials of VivaGel®
for the prevention of recurrent
bacterial vaginosis (BV). The
protocol design received binding
approval from the US Food and
Drug Administration (FDA) under
a Special Protocol Assessment
(SPA), which reduces regulatory
risk for the clinical program.
Regulatory submissions in
preparation for VivaGel® BV
symptomatic relief product
With high patient demand for
VivaGel® for symptomatic relief
of BV, Starpharma is engaged
in commercial partnering
discussions for this application
in countries outside of the US.
In parallel, regulatory
documentation is being prepared
for a number of markets using
current clinical data with
submissions planned in CY2014.
DRUG DELIVERY
Dendrimer-enhanced docetaxel
commences human clinical trial
DEP™ docetaxel phase 1 clinical
trial commenced in January
involving 25-30 Australian
patients at centres in Melbourne
and Brisbane. Results so far
for DEP™ docetaxel show no
evidence of neutropenia, a
common dose-limiting side-effect
of Taxotere®.
Expanded agreement
with AstraZeneca
Global pharmaceutical company,
AstraZeneca, entered into a
second, expanded agreement
applying Starpharma’s
proprietary DEP™ technology
to a cancer drug from
AstraZeneca’s pipeline.
Dendrimer-enhanced version
of oxaliplatin demonstrates
tumour-inhibiting properties
A preclinical study of DEP™
oxaliplatin showed improved
tumour-inhibiting efficacy and
reduced overall toxicity when
compared to standard
oxaliplatin, a leading bowel
cancer drug.
Receipt of Australian Research
Council (ARC) Linkage grant
Starpharma received a $0.5
million ARC linkage grant in
partnership with Monash
University to further advance its
dendrimer technology in targeted
drug delivery.
Dendrimer technology
awarded Cancer Australia grant
A research program in
collaboration with Monash
Institute of Pharmaceutical
Sciences received funding to
utilise Starpharma’s dendrimers
in the treatment of lung cancer.
AGROCHEMICAL
Further partnerships for
Priostar® in agrochemicals
Additional agrochemical
partnerships were signed with
major industry players: US
based Gowan and European
based Isagro. Through these
partnerships, the companies are
utilising Starpharma’s Priostar®
dendrimers seeking to enhance
the performance of key crop
protection formulations. These
new partnerships build on
Starpharma’s broad portfolio
of agrochemical collaborations.
Starpharma has signed
agreements with many
companies in the agrochemical
sector, including with the
majority of the top 10 largest
companies by sales.
Dendrimer-enhanced
agrochemicals continue to
demonstrate strong results
In field studies this year,
Starpharma’s dendrimer-
enhanced glyphosate was found
to be more effective on hard-to-
control weeds than glyphosate
alone. The key benefits seen
were a more rapid effect, and
better overall effectiveness.
Starpharma Holdings Limited Annual Report
1
Starpharma Holdings Limited Annual Report 2014 01
Dear Shareholders,
On behalf of the board and management of Starpharma I’m
pleased to present the annual report for the financial year 2014.
Firstly I’d like to sincerely thank Peter Bartels for his exceptional
contribution to Starpharma over the past ten years and acknowledge
his role as Chairman in guiding the company from an early stage
development company to a business with multiple products nearing
commercial launch in the pharmaceutical, sexual health and
agrochemical sectors.
Starpharma is a leading science-based innovator in Australia and
the recent certifications of its VivaGel® condom in the Australian
and Japanese markets is a strong endorsement of both this
science and the company’s ability to commercialise its technology.
The VivaGel® condom is now readying for launch in both these
markets, in Australia with Ansell, and in Japan with Okamoto
Industries. Both these companies have leading positions in condom
sales in their respective territories. For Starpharma, this milestone
cannot be understated as it represents not only the first commercial
product launch from the VivaGel® portfolio, but a world-first product
in the battle against sexually transmitted infections. Starpharma will
receive royalty payments on the sales of condoms under these
agreements and with launch activities well underway, we will soon
see the product on retail shelves.
During the year Starpharma commenced an important clinical trial
of the innovative and improved version of the leading cancer drug
docetaxel, DEP™ docetaxel, in 25-30 patients with solid tumours.
This phase 1 clinical trial is being undertaken exclusively in Australia;
with Australian cancer patients gaining access to this potentially
enhanced cancer therapy. The Federal Government’s R&D tax
incentive scheme assists Starpharma with the development of these
innovative products, with more than $10 million in tax credits received
by Starpharma over the last two years. Preclinical studies for
Starpharma’s DEP™ dendrimer technology with known, effective
chemotherapies have demonstrated improved efficacy and
substantially reduced side effects compared with the original drugs
on their own and if these findings are confirmed in human trials, then
this is very good news for the patients who will potentially benefit.
Starpharma has also recently commenced two phase 3 clinical trials
of VivaGel® to prevent the recurrence of bacterial vaginosis (BV), an
infection that affects up to a third of the US female adult population.
Each trial will involve approximately 600 women across multiple
international clinical trial sites. Starpharma is very pleased to have
gained approval under a Special Protocol Assessment (SPA) from the
US Food and Drug Administration (FDA), which significantly reduces
the regulatory risk associated with the clinical development program.
Starpharma’s business strategy of advancing lead products internally,
in parallel with an active partnering program, allows the company to
progress the commercialisation of multiple products concurrently and
has resulted in Starpharma owning a deep and robust portfolio of
products at various stages of development. This portfolio includes
multiple clinical stage products, such as VivaGel® for the prevention of
recurrent BV and DEP™ docetaxel, along with regulatory submissions
of VivaGel® for symptomatic relief of BV in countries outside of the US,
and the previously discussed VivaGel® condom.
Starpharma’s partners include a number of leading international
companies in pharmaceuticals and agrochemicals.
This strategy has also allowed Starpharma to progress the portfolio
more quickly while maintaining a strong cash position of $24 million,
with a net cash burn of $10 million for the financial year.
I’d like to thank shareholders for your ongoing support. We enter the
new financial year with a strong conviction that solid progress and the
expected receipt of the first VivaGel® condom royalties will impact
positively throughout the year.
Finally, I would like to thank my fellow board members, including Chief
Executive Officer, Dr Jackie Fairley, the executive management team
and all employees. I look forward to my first full year as Chairman at
an exciting time for Starpharma and its shareholders.
Yours sincerely,
!
Rob Thomas AM
Starpharma Chairman
02
Starpharma Holdings Limited Annual Report
Chairman’s LetterMr Rob Thomas AM, Chairman >>
“ We look forward to
the launch in Australia
of the LifeStyles® Dual
Protect™ condom with
VivaGel®, expected in
the next few months.”
Chris Kalaitzis,
Ansell Vice President,
Asia Pacific Region –
Sexual Wellness Division
I am pleased to provide this report detailing Starpharma’s activities
during the 2014 financial year and our plans for the year ahead. It has
been an important year for Starpharma with progress across all three
programs: VivaGel®, drug delivery and agrochemicals.
VivaGel® portfolio
A number of major milestones were reached across the VivaGel®
portfolio during the year, with certification for VivaGel® condoms
achieved in Australia with Ansell, and in Japan with Okamoto, as
Starpharma’s partners. The subsequent launch of the VivaGel®
condom is expected in both markets in the coming months
representing the first VivaGel® product launch and, through royalties,
an ongoing revenue stream for Starpharma. Important clinical and
regulatory developments have also been achieved for the VivaGel®
bacterial vaginosis (BV) stand-alone product.
VivaGel® for bacterial vaginosis (BV)
Symptomatic relief
Starpharma is pursuing regulatory approval and is in active
discussions with commercial partners for the use of VivaGel® for
the symptomatic relief of BV in various markets outside the US.
This follows strong efficacy data from recent clinical studies,
regulatory input and high levels of patient acceptability for a
product based on claims of symptomatic relief.
High levels of patient demand and commercial interest underpin
this strategy, which will see regulatory documentation for this
product submitted in the second half of calendar year 2014.
Starpharma Holdings Limited Annual Report 2014
03
The LifeStyles® Dual Protect™ condom with VivaGel® received TGA
conformity assessment certification in July 2014 and will be launched
following inclusion in the Australian Register of Therapeutic Goods (ARTG)
Dr Jackie Fairley, Chief Executive OfficerCEO’s ReportChairman’s Letter
CEO’s Report
>>
“ Receiving
agreement on the SPA
is an important and very
positive development
as it effectively
eliminates the US
regulatory risk
associated with
clinical development,
by specifying upfront
the FDA’s agreed trial
design. This significantly
reduces overall
development risk for
VivaGel ®. SPA
agreement from the
FDA is protected by
US law and gives
Starpharma certainty
and confidence that
the studies will support
a regulatory submission
for the approval of
VivaGel ® for the
prevention of recurrent
BV in the US.”
Dr Jackie Fairley,
Cheif Executive Officer,
Starpharma
04
Starpharma Holdings Limited Annual Report
VivaGel® for bacterial vaginosis (BV) continuedPrevention of recurrenceStarpharma has recently commenced two pivotal phase 3 clinical trials of VivaGel® for the prevention of recurrent bacterial vaginosis (BV). In July 2014, Starpharma received a Special Protocol Assessment (SPA) designation for this trial program. The SPA agreement is a binding declaration received from the US Food and Drug Administration (FDA) that stipulates that the phase 3 clinical study design, endpoints, statistical analyses and other aspects of the planned studies are acceptable to support regulatory approval of the product. A SPA is rare and difficult to achieve with only a handful of companies in Australia achieving this milestone. The SPA significantly reduces development risk by effectively removing US FDA regulatory risk associated with the phase 3 studies. Approximately 600 women will be recruited to each trial where the primary efficacy endpoint is recurrence of BV over a 16 week treatment period. The double-blinded, randomised trial will compare VivaGel® with a placebo gel. Quintiles, a leading global clinical research organisation, has been appointed to assist Starpharma in the conduct of the clinical trials. Trial sites include locations in North America, Europe and Asia.There are currently no approved products for the prevention of recurrent BV, which affects approximately 1 in 3 women and recurs in approximately 50 per cent of women within 12 months. CEO’s Report
>>
“ Our partnership
with Starpharma is a
great example of two
highly innovative
companies working
together to bring to
market a ground-
breaking new sexual
health product.
New product
development is central
to Ansell’s business
strategy and this highly
innovative product is
exciting for both
companies.”
Chris Kalaitzis,
Ansell Vice President,
Asia Pacific Region –
Sexual Wellness Division
The VivaGel® condom
Starpharma received Conformity Assessment Certification for the
VivaGel® condom by the Australian Therapeutic Goods Administration
(TGA), a key regulatory milestone for the VivaGel®. Starpharma’s
marketing partner, Ansell, plans to launch the VivaGel® condom under
its brand, LifeStyles® Dual Protect™, in the coming months, following
inclusion on the Australian Register of Therapeutic Goods (ARTG).
The TGA certification is similar to CE certification of devices (CE
Mark) in Europe. The TGA certification will also support certain
regulatory processes in other markets.
VivaGel® is a novel antimicrobial agent which has been shown in
laboratory studies to inactivate up to 99.9 percent of HIV, HPV and
HSV-2. Its application to condoms has resulted in the first product of
its kind, which combines a physical barrier with an agent intended to
help further reduce the risk of exposure to the abovementioned
sexually transmitted viruses.
The VivaGel® condom is a world-first product with global relevance
and based on innovative Australian technology. Under the licence
agreement with Ansell, LifeStyles® Dual Protect™ condoms will carry
the VivaGel® brand, with Ansell having exclusive Australian marketing
rights for the product and being responsible for producing the
VivaGel® condoms.
Regulatory certification of VivaGel® condoms marks a major milestone
for Starpharma and our partner, Ansell, one of the world’s leading
condom companies and healthcare innovators. It is particularly
pleasing that two Australian, home-grown companies are pioneering,
developing and commercialising an Australian scientific innovation.
The licensing agreement with Ansell also provides marketing rights
to Ansell for the VivaGel® condom in countries outside of Japan.
In March, regulatory certification of VivaGel® condoms in Japan was
achieved by the leading Japanese condom company, Okamoto. This
collaboration is an important partnership for Starpharma, with Japan
being the second largest condom market in the world, and Okamoto
holding approximately 60 per cent share of that market.
Okamoto’s senior managing director, Mr Seiji Takeuchi, recently stated
publicly that condoms with functional coatings and gels represent the
next wave of innovation in the Japanese condom market, following a
decade-long focus on condom thinness.
>>
“ We are very pleased
to be in a partnership
with Starpharma for
this product…
condoms with functional
coatings and gels
represent the next wave
of innovations in the
Japanese condom
market…”
Mr Seiji Takeuchi,
Okamoto’s Senior Managing Director
Starpharma Holdings Limited Annual Report 2014
05
>> Results so far
for DEP™ docetaxel
show no evidence of
neutropenia (a low
white blood cell count),
which is one of the
most important dose-
limiting side effects
of standard formulations
of docetaxel.
DEP™ oxaliplatin and other DEP™ programsIn preclinical studies of DEP™ oxaliplatin, improved tumour-inhibiting efficacy and reduced overall toxicity was observed when compared to the blockbuster cancer drug, oxaliplatin. Oxaliplatin is sold by Sanofi under the brand name Eloxatin®. A colon cancer model was used in the study, which found DEP™ oxaliplatin also substantially reduced neutropenia.The results of both preclinical drug delivery studies indicate that Starpharma’s DEP™ technology has the great potential to deliver better efficacy compared to these common chemotherapy drugs alone, in addition to reduced neutropenia and other common side effects. Starpharma is also working on a number of other internal DEP™ programs focussed on improving leading therapeutics.Partnered pharmaceutical programsIn April, Starpharma announced the signing of a second, expanded agreement with AstraZeneca, which will see the application of the DEP™ drug delivery technology to a cancer drug from AstraZeneca’s pipeline. This additional work builds on the existing partnership agreement involving Starpharma’s delivery technology that began in September 2012. Under the agreement, AstraZeneca will provide funding for a cancer research program to be conducted jointly with Starpharma. Starpharma also continues to work on a number of confidential partnered DEP™ programs.Drug Delivery PortfolioDEP™ docetaxel programStarpharma’s drug delivery program reached a major milestone in January this year, with the commencement of a phase 1 human clinical trial for DEP™ docetaxel. The first group of patients have received one or more cycles of treatment at escalating doses, and no neutropenia has been observed thus far. The trial is being conducted through Nucleus Network at Melbourne’s AMREP/Alfred Hospital facility, Austin Health/Olivia Newton-John Cancer & Wellness Centre and Royal Brisbane & Women’s Hospital. The clinical trial involves 25-30 patients with solid tumours. The primary objective of the study is to establish the maximum tolerated dose and dose limiting toxicities of DEP™ docetaxel, which is a new formulation of the widely marketed chemotherapeutic, Taxotere®. In its existing formulation, Taxotere® is known to cause a number of toxic side effects in patients, including neutropenia (reduced white blood cell count) and in some cases, life-threatening anaphylaxis.In preclinical studies of Starpharma’s DEP™ docetaxel formulation neutropenia was not observed, whereas animals treated with Taxotere® exhibited severe neutropenia. In humans, neutropenia is a life threatening and dose-limiting side effect that occurs in more than 75 per cent of patients treated with docetaxel (Taxotere®). Early clinical trial results are promising as no neutropenia has been observed for DEP™ docetaxel to date.06 Starpharma Holdings Limited Annual ReportCEO’s Report >>
“As a leading
discovery-led company
this alliance represents
an exciting collaboration
with an Australian-based
company to combine
the oncology treatments
of tomorrow that
AstraZeneca is
developing using
innovative delivery
mechanisms.”
Mark Fladrich,
Managing Director,
AstraZeneca Australia
Starpharma Holdings Limited Annual Report 2014 07CEO’s Report
Agrochemicals and crop protection
A number of positive developments in the agrochemical portfolio
have seen Starpharma move closer to commercialisation using the
company’s dendrimer platform technology.
US-based agrochemical producer, Gowan Company LLC, signed
a partnership with Starpharma for the evaluation of Starpharma’s
Priostar® dendrimer technology in certain high value crop protection
formulations. Gowan has global agrochemical sales worth more
than US$300 million annually.
A deal with European company, Isagro, was also announced in
the reporting period under which Isagro tests Starpharma’s Priostar®
dendrimer technology with a number of its fungicide formulations.
Isagro is an agrochemical company with global sales of
approximately €150 million and 620 employees.
More widely, Starpharma has signed agreements with many
companies in the agrochemical sector, including the majority
of the top 10 largest companies by sales.
Priostar® dendrimers provide a number of benefits to agrochemical
companies and end-user growers. These benefits can include:
>
>
Improved product efficacy;
More concentrated formulations to reduce supply chain costs
and for greater ease of handling;
> Reduction in solvent loading; and
>
Improved bioavailability through increased adhesion, to reduce
losses due to rain run-off, and the need for multiple applications.
Further field trials have also been completed demonstrating the
effectiveness of Starpharma’s dendrimer technology when applied
to glyphosate for the treatment of hard to control weeds. Results
from these trials show that Starpharma’s Priostar® glyphosate
formulations are more effective on a number of hard to control
weed species than marketed glyphosate alone.
Glyphosate is an off-patent product currently sold under a number of
brands, including Roundup®, and has global sales of approximately
US$5 billion annually, in a US$44 billion agrochemical market.
>>
“ Priostar® offers a
unique opportunity to
develop value-added,
IP-protected
agrochemical
formulations without
the expense and risk
associated with
registering new crop
protection actives.”
Dr Paul Barrett,
VP Business Development,
Starpharma
08 Starpharma Holdings Limited Annual ReportCEO’s Report
>>
“ At Gowan we are
proud of our history of
providing a complete
offering to farmers and
we are very pleased to
be able to include
Starpharma’s innovative
technology for potential
improvements to our
crop protection
formulations.”
Sandra Alcaraz,
Disruptive Technologies Manager,
Gowan Company LLC
Starpharma Holdings Limited Annual Report 2014
09
CEO’s Report
Overview of financial results
3 Year Financial Summary
Net cash outflows from operations remained comparable to the
prior year at $9.8 million for the year ended 30 June 2014, with
cash reserves at the end of the year of $24.0 million.
Starpharma received the total anticipated $4.7 million of R&D tax
incentive relating to FY13 expenditures. The R&D tax refund relates
to R&D expenditure, and allows Starpharma to confidently advance
development of its proprietary products including its development of
VivaGel® and DEP™ docetaxel. In addition, Starpharma received
a $2.3 million R&D tax incentive ruling for overseas R&D activities
related to the DEP™ docetaxel program.
Starpharma reported a net loss of $14.6 million, an increase from the
prior year loss of $5.2 million. The variance in the net loss compared
to prior year is a result of the clinical programs in progress and also a
result of the prior year loss reflecting $4.1 million of R&D tax
incentives relating to the previous 2012 financial year.
Revenue and grant income
Interest revenue
Total revenue and income
2014
$M
2013
$M
2012
$M
0.3
1.0
1.3
0.8
1.6
2.4
1.1
1.8
2.9
Expenditure
(15.9)
(7.6)
(16.6)
Net loss after tax
(14.6)
(5.2)
(13.7)
Net operating and investing
cash outflows
(10.1)
(10.0)
(9.9)
Net proceeds from issue of shares
0.2
0.9
33.7
Cash and cash equivalents
at the end of year
24.0
33.8
42.8
10 Starpharma Holdings Limited Annual ReportCEO’s ReportDr Brian Kelly Research Manager >> The R&D tax
incentive allows
Starpharma to
confidently advance
development of its
proprietary products
including the clinical
programs for VivaGel ®
and DEP™ docetaxel.
In the case of DEP™
docetaxel, it supports
the conduct of the
clinical trial in Australia
with the additional
benefit that Australian
patients will be the first
in the world to have
access to Starpharma’s
improved version of the
widely used cancer drug,
docetaxel.
Future outlook
The coming year is a pivotal one for Starpharma with revenues
expected from the launch of the VivaGel® condom in both Australia
and Japan and the likelihood of other markets being approved
throughout the year. Starpharma now has two products in clinical trial;
a novel and improved version of a widely used cancer drug that has
the potential to significantly reduce debilitating side effects of common
cancer treatments and improve efficacy; and a first in class treatment
for the prevention of recurrent bacterial vaginosis, in phase 3 clinical
trials. These “firsts” emphasise Starpharma’s position as a true
innovator in Australia and internationally.
We also expect to make progress across our product portfolio
including regulatory submissions and commercialisation of VivaGel®
for symptomatic relief of BV, our agrochemical program, and building
further on relationships with our various partners and collaborators.
Finally, I would like to personally thank retiring Chairman, Peter
Bartels, for his invaluable guidance and support over several years.
We have worked closely together in creating Starpharma’s diverse
and valuable pipeline of late-stage product opportunities and I look
forward to continuing the task of building upon these achievements
with incoming Chairman, Rob Thomas.
During the year, Starpharma also farewelled retiring Company
Secretary, Ben Rogers, who was succeeded by current CFO, Nigel
Baade. Experienced pharmaceutical executive, Dr Tony Eglezos,
joined our executive and business development teams as Vice
President of Business Development from CSL during the year.
In closing, I would like to sincerely thank Starpharma’s dedicated
and highly professional executive management team, my fellow
board members and all employees for their support during the year.
Jackie Fairley
Chief Executive Officer
Starpharma Holdings Limited Annual Report 2014 11CEO’s Report >>
“ Starpharma is
a global leader in
nanotechnology
drug delivery and
our relationship with
Starpharma is a
wonderful example of
how researchers can
work with companies to
advance very promising
pharmaceutical
products from the
lab to the clinic.”
Professor Chris Porter,
Monash Institute of
Pharmaceutical Sciences
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 PeopleThe 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 workplace policies and practices. Policies assist to ensure employees have engaging and satisfying roles and receive periodic assessments and feedback on performance. Policies provide for ongoing training and career development, and are intended to ensure a balanced work and home life. Starpharma’s Code of Conduct reflects the core values of the company and sets out standards of behaviour in matters including equal employment opportunity and best practice in recruitment. Starpharma also has a Health and Wellbeing policy to support employees in maintaining or adopting healthy lifestyles, recognising that employee physical and mental health has a positive impact on the individuals and culture of the organisation.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, expertise and opinion, as well as diversity are viewed as important cultural elements within the collegiate team environment. The Board has adopted a Diversity Policy to provide a framework for Starpharma to achieve a number of diversity objectives, with an initial focus on gender. Employee equity participation schemes are used to provide the opportunity for all staff to share in the business success of the company and to align the objectives of employees with those of shareholders.Occupational health and safety is considered every employee’s responsibility, and a safe working culture is promoted and encouraged. There is an active committee structure to eliminate, reduce or mitigate risks associated with Starpharma’s activities. Occupational Health & Safety Committee members represent all sections of the workplace including management and employees.Our PartnersStarpharma has established important business and scientific partnerships with leading global companies, international medical research organisations and key governmental and non-governmental departments and institutions. These 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.The CommunityThe 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, within the public health, pharmaceutical and medical markets. All of Starpharma’s pharmaceutical and medical products and clinical research activities comply with strict regulatory and ethical approval processes. These include the FDA in the United States, TGA in Australia and other regulatory bodies as applicable.The EnvironmentThe broad application of Starpharma’s dendrimer research extends into projects that may assist the environment. Research in the field of agrochemicals may improve existing products and reduce the negative impact of current practices on the environment. More effective chemical formulations for agrochemicals could reduce the frequency or level of application and potentially improve the environmental profile of such products. In conducting its research and operations Starpharma has documented procedures and processes in place to ensure that all waste products (albeit relatively minor in volume) are disposed of strictly in accordance with relevant environment regulations. 12 Starpharma Holdings Limited Annual ReportCorporate & Social ResponsibilityDr Jeremy Paull, VP Development & Regulatory Affairs Dr David Owen, VP Research
Directors’ Report
Your directors have pleasure in presenting this report on the consolidated entity (referred to hereafter as the group or the company) consisting
of Starpharma Holdings Limited and the entities it controlled at the end of, or during, the year ended 30 June 2014.
Directors
The following persons were directors of Starpharma Holdings Limited (“the company”) at the date of this report:
R B Thomas (Chairman)
R A Hazleton
P J Jenkins
Z Peach
J K Fairley (Chief Executive Officer)
P R Turvey
All were directors during the whole of the financial year, with the exception of:
R B Thomas who was appointed as a director on 4 December 2013 and as Chairman on 13 June 2014.
P T Bartels who was a director from the beginning of the financial year until his retirement on 13 June 2014.
Information on Directors
Rob B Thomas AM, BEc, MSAA, SF Fin
Independent non-executive director (appointed 4 December 2013)
Chairman (from 13 June 2014)
Member of remuneration & nomination committee (from 24
February 2014)
Member of audit & risk committee (from 24 February 2014)
Mr Thomas has a strong background in financial services and is a
non executive director on a number of listed Healthcare companies
in Australia and the United States. He has more than 35 years’
experience in the securities industry with Potter Partners (now
UBS), County Natwest and Citigroup. He is currently Chairman of
TAL Limited (formerly Tower Australia Limited), Gragher Capital
Securities and the NSW State Library. He is the immediate past
non-executive Chairman of Heartware International Inc and
remains a non-executive director of that company and is also a
director of ASX listed REVA Medical Inc., Virgin Australia Limited
and Biotron Limited. Rob holds a Bachelor of Economics from
Monash University and is a fellow of the Securities Institute of
Australia. He is also a Master Stockbroker and is a Fellow of the
Australian Institute of Company Directors.
Jacinth (Jackie) K Fairley BSc, BVSc (Hons), MBA
Executive director (appointed 1 July 2006)
Chief Executive Officer
Dr Jackie Fairley has more than 25 years of operational
experience in the pharmaceutical and biotechnology industries
working in business development and senior management roles
with companies including CSL and Faulding (now Hospira). She
was appointed Chief Executive Officer of the group in July 2006.
Jackie holds first class honours degrees in Science (pharmacology
and pathology) and Veterinary Science from Melbourne University
and was a practicing veterinary surgeon prior to joining CSL in
1989. Whilst at CSL she obtained an MBA from the Melbourne
Business School where, as Dux of her final year, she was the
recipient of the prestigious Clemenger Medal and a number of
other academic prizes. Jackie is also a Graduate of the Australian
Institute of Company Directors. Jackie currently sits on the board
of the Melbourne Business School, and is a past member of the
Federal Government’s Pharmaceutical Industry Working Group
and the Federal Ministerial Biotechnology Advisory Council. She is
also an advisor to the Carnegie Innovation Fund.
Other current directorships of listed entities:
Virgin Australia Limited, REVA Medical Inc., Biotron Limited,
Heartware International Inc. (NASDAQ listed, de-listed from ASX
on 17 Sep 2013)
Former directorships of listed entities in last 3 years: None
Other current directorships of listed entities: None
Former directorships of listed entities in last 3 years: None
1,664,197 ordinary shares in Starpharma Holdings Limited
1,510,000 employee performance rights
Peter J Jenkins MB, BS (Melb), FRACP
Independent Non-executive director (appointed 13 May 1997)
Deputy Chairman
Chairman of remuneration & nomination committee
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: None
1,537,462 ordinary shares in Starpharma Holdings Limited
270,000 ordinary shares in Starpharma Holdings Limited
Peter T Bartels, AO, FAISM, FRSA
Independent non-executive director (appointed 6 August 2003 until
13 June 2014)
Chairman (until 13 June 2014)
Member of remuneration & nomination committee (until 13 June
2014)
Member of audit & risk committee (until 13 June 2014)
Mr Bartels has considerable experience in the pharmaceutical
industry; while working for Abbott Laboratories he was responsible
for the introduction of a wide range of industrial, agricultural,
veterinary and human pharmaceuticals into the Australian market.
He was a director of Drug Houses of Australia and was managing
director of DHA Pharmaceuticals. He has been a major player in
corporate Australia, having held the positions of CEO and
Managing Director of both Coles Myer Ltd and Fosters Brewing
Company Ltd. He is a past Chairman of the Australian Sports
Commission, the Australian Institute of Sport, the Commonwealth
Heads of Government Committee for Sport and the Royal
Women's and Royal Children's Hospitals. Peter is presently Chair
of the Dean's external Advisory Council, for the Faculty of
Medicine, Dentistry and Health Sciences at The University of
Melbourne.
Other current directorships of listed entities: None
Former directorships of listed entities in last 3 years: None
332,930 ordinary shares in Starpharma Holdings Limited
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
13
13
Corporate & Social Responsibility
Directors’ Report
Information on Directors (continued)
Richard A Hazleton BSChE, MSChE, HonDrEng, HonDrCommSc
Independent Non-executive director (appointed 1 December 2006)
Member of audit & risk committee
Peter R Turvey BA/LLB, MAICD
Independent Non-executive director (appointed 19 March 2012)
Chairman of audit & risk committee
Mr Hazleton is a former chairman and CEO 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 that 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
157,616 ordinary shares in Starpharma Holdings Limited
Zita Peach BSc
Independent Non-executive director (appointed 1 October 2011)
Member of remuneration & nomination committee
Ms Peach has more than 20 years of commercial experience in the
pharmaceutical industry, particularly in marketing and business
development, working for major industry players such as CSL
Limited and Merck Sharp & Dohme, the Australian subsidiary of
Merck Inc. Ms Peach is currently the Managing Director and
Executive Vice President, for Fresenius Kabi Australia and New
Zealand, a leader in medical devices, intravenous fluids,
intravenous genetics and clinical nutrition. Previously, Ms Peach
was Vice President, Business Development R&D for CSL, a
position she held for ten years. Ms Peach is a Non-Executive
Director of the ASX-listed Vision Eye Institute Limited. Ms Peach is
a graduate member of the Australian Institute of Company
Directors.
Other current directorships of listed entities: Vision Eye Institute
Limited
Former directorships of listed entities in last 3 years: None
3,000 ordinary shares in Starpharma Holdings Limited
Mr Turvey has had more than 30 years of experience in the
biotech/pharmaceutical industry having been former Executive
Vice President Licensing, Group General Counsel and Company
Secretary of global biopharmaceutical company CSL Limited,
retiring in 2011. Mr. Turvey is currently a principal of Foursight
Associates Pty Ltd, a director of the industry organisation
AusBiotech Limited, and a director of Victorian Government owned
entity Agriculture Victoria Services Pty Ltd. Mr. Turvey played a
key role in the transformation of CSL from a government owned
enterprise, through ASX listing in 1994, to a global plasma and
biopharmaceutical company. He also had responsibility for the
protection and licensing of CSL's intellectual property and for risk
management within CSL, which included management of the
internal audit function, reporting to the Audit & Risk Management
Committee of the Board as well as being the Chairman of the
Corporate Risk Management Committee.
Other current directorships of listed entities: Admedus Limited
Former directorships of listed entities in last 3 years: None
47,000 ordinary shares in Starpharma Holdings Limited
Company Secretary
The Company Secretary is Mr Nigel Baade, holding the position
from 13 December 2013. Mr Baade also holds the position of Chief
Financial Officer, which he has held from January 2009. Mr Baade
is a CPA qualified accountant with extensive experience in the
pharmaceutical and biotechnology industries. Prior to joining
Starpharma as Financial Controller in 2006, he has held positions
at Hagemeyer, Cerylid Biosciences, Faulding (Hospira) and UMT
(Fonterra). He holds qualifications from University of Tasmania
and Monash University.
Mr Ben Rogers was Company Secretary until his retirement on 13
December 2013.
14
Starpharma Holdings Limited Annual Report 2014
Starpharma Holdings Limited Annual Report
14
Directors’ Report Operating & Financial Review
Principal activities
The principal activities of the group consist of research,
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 VivaGel® for the management and prevention of
bacterial vaginosis, and as a condom coating for prevention of
sexual transmitted infections. Starpharma is also applying
dendrimers to drug delivery, and in agrochemicals.
Result
The financial report for the financial years ended 30 June 2014,
and the results herein, have been prepared in accordance with
Australian Accounting Standards.
The consolidated loss after income tax attributable to ordinary
shareholders for the financial year ended 30 June 2014 was
$14,635,000 (2013: $5,229,000). The net operating and investing
cash outflows for the year were $10,064,000 (2013: $9,951,000),
with a cash balance at 30 June 2014 of $24,028,000 (June 2013:
$33,840,000).
Dividends and distributions
No dividends were paid or declared during the period and no
dividends are recommended in respect to the financial year ended
30 June 2014 (2013: Nil).
Review of operations
Key highlights until the date of this report include:
⋅ VivaGel® condom received Conformity Assessment Certification
from the Australian Therapeutic Goods Administration (TGA).
Ansell will launch the VivaGel® condom under their brand
Lifestyles® Dual ProtectTM following listing on the Australian
Register of Therapeutic Goods (ARTG);
⋅ The commencement of the phase 3 clinical studies of the
VivaGel® bacterial vaginosis (BV) product for the prevention of
recurrent BV following the US FDA granting Special Protocol
Assessment (SPA) agreement on the design and planned
analyses of the studies;
⋅ The granting of regulatory certification for marketing the
VivaGel® condom in Japan by market leader, Okamoto
Industries;
⋅ Commencement of a phase 1 human clinical trial for DEPTM
docetaxel conducted in Australia. The study will enrol up to 30
patients, with the primary objective to establish the maximum
tolerated dose (MTD) and dose limiting toxicities of DEPTM
docetaxel;
⋅ DEPTM oxaliplatin shows improved anti-cancer efficacy and less
toxicity in animal studies;
⋅ The signing of a second, expanded agreement with AstraZeneca
in the field of cancer medicine using DEPTM technology;
⋅ Successful submission to AusIndustry for certain overseas R&D
activities for DEPTM docetaxel to be eligible for R&D tax
incentives;
⋅ Additional grant funding with collaborator, Monash Institute of
Pharmaceutical Sciences, from the Australian Research Council
and Cancer Australia for dendrimer-based drug research; and
⋅ New agrochemical Priostar® partnerships.
VivaGel® Program
The pivotal phase 3 clinical trials, to confirm VivaGel®’s ability to
prevent recurrence of bacterial vaginosis (R-BV), commenced in
July 2014 following the US FDA granting Special Protocol
Assessment (SPA) agreement on the design and planned
analyses of the studies. The granting of the SPA agreement
follows the earlier agreement of the European Medicines Agency
(EMA) on the design of the studies. Extensive preparations were
undertaken during the year ahead of the SPA and EMA agreement
including the selection of the trial sites and the appointment of a
global Clinical Research Organisation. These trials will build on the
positive results of a phase 2 R-BV efficacy study, reported in 2013,
which demonstrated both reduced overall risk of R-BV in patients
using 1% VivaGel® and delayed time to first recurrence, compared
with placebo. Bacterial vaginosis (BV) is the most common cause
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
of vaginal infection worldwide and existing treatments for BV are
considered suboptimal and recurrence is a major issue. There are
currently no approved products to prevent R-BV. VivaGel®
therefore has the potential to be a first in class therapeutic for
prevention of R-BV.
Starpharma is also pursuing symptomatic BV relief claims for
VivaGel® in selected markets based on the efficacy and
demonstrated excellent symptomatic relief shown in earlier
VivaGel® phase 3 clinical trials. The company is in discussions
with potential commercial partners for distribution rights for this
application of VivaGel®.
The VivaGel® condom, with commercial rights licensed to Ansell
and Okamoto, has received conformity certification and regulatory
certification from regulatory agencies in Australia and Japan,
respectively. Preparations during the year for market launch,
including product positioning, packaging design and manufacturing
validation will allow the launch of VivaGel® condom in the coming
months. Extensive consumer research has indicated a strong
demand for a VivaGel® condom with 86% of participants rating it
as “very interesting” and >90% saying they would buy the product.
Drug Delivery Program
The first human clinical trial of a dendrimer-reformulated version of
docetaxel (DEPTM docetaxel) began in January 2014. The phase 1
study will involve approximately 25-30 cancer patients at centres in
Melbourne and Brisbane, with the primary objective to establish
the maximum tolerated dose (MTD) and dose limiting toxicities of
DEPTM docetaxel. Results so far indicate no evidence of
neutropenia (reduced circulating neutrophil numbers). DEPTM
docetaxel is an enhanced version of the anti-cancer drug
docetaxel (Taxotere®), which had reported annual sales of US$3.1
billion in 2010. Positive pre-clinical study results for DEPTM
docetaxel were also received during the year. These demonstrated
that DEPTM docetaxel did not cause neutropenia and other
important bone marrow-related toxicities which occur in more than
75% of patients treated with Taxotere®. Bone marrow toxicities are
the most important dose-limiting side effects of docetaxel. Earlier
pre-clinical studies of DEPTM docetaxel have also demonstrated
superior anti-cancer effectiveness compared to docetaxel across a
range of important cancer types including breast, prostate, lung
and ovarian cancer.
In the broader drug delivery program, Starpharma released
impressive pre-clinical results showing the superior performance of
its DEPTM oxaliplatin compared to oxaliplatin (Eloxatin®). Eloxatin is
a leading bowel cancer drug. DEPTM oxaliplatin has been shown in
animal models to have improved anti-tumour efficacy; reduced
toxicity for bone marrow; and reduced toxicity for the nervous
system (neurotoxicity). The neurotoxicity improvement of DEPTM
oxaliplatin is particularly important as this is the major dose-limiting
toxicity, and causes the most debilitating side-effects, of oxaliplatin
treatment. Around 85-95% of patients who undergo Eloxatin®
therapy suffer irreversible nerve damage to the hands and feet.
Progress was also made in the company’s confidential partnered
drug delivery programs, with a second, expanded agreement with
AstraZeneca in the field of cancer medicine signed during the
year. Starpharma also announced, following submission to
AusIndustry, it is eligible to receive an additional estimated $2
million cash in research and development (R&D) tax incentives
over three years for the DEPTM docetaxel program. This is in
addition to the R&D tax incentives for eligible Australian
expenditure.
Agrochemical Program
Industry interest and commercial agreements involving
Starpharma’s Priostar® dendrimers continued to expand and
mature. The latest announced collaborations are with Isagro which
is examining dendrimer applications within its fungicides; and
Gowan which is pursuing crop protection formulations in high value
markets. Starpharma is also developing its own dendrimer-
containing formulations involving selected generic actives, which
studies have shown to have enhanced characteristics including
enhanced solubility and stability of the active and improved
efficacy and rain-fastness of agrochemicals. A number of
programs including glyphosate (RoundUp®) are underway with
glyphosate field trials ongoing.
15
15
Directors’ Report Operating & Financial Review
Matters subsequent to the end of the financial year
Review of Financials
Starpharma commenced its phase 3 clinical trials of VivaGel® for
the prevention of recurrent bacterial vaginosis after the protocol
design received written approval in July 2014 under a Special
Protocol Assessment (SPA) from the US Food and Drug
Administration (FDA).
In July 2014, the VivaGel® condom received Conformity
Assessment Certification from the Australian TGA. Ansell to will
launch the VivaGel® condom in the coming months under their
brand Lifestyles® Dual ProtectTM, following listing on the Australian
Register of Therapeutic Goods (ARTG).
No other matters or circumstances have arisen since 30 June
2014 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.
Strategy, future developments and prospects
There is no change to Starpharma’s strategy from the previous
year. 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. The company’s key focus is to advance and broaden
its product development pipeline for VivaGel®, drug delivery and
agrochemicals. It is intended to achieve this by continuing to utilise
a combination of internally funded and partnered projects across
the portfolio. The company commercialises its development
pipeline with corporate partners via licensing agreements at
various stages in a product’s development lifecycle; depending on
the product, a partner’s relative strength of product and market
expertise, comparison of current and future potential returns, and
the risks involved in advancing the product to the next value
inflection point or milestone.
Starpharma remains well positioned to create value in the medium
term, due to its deep expertise, strong intellectual property
portfolio, diverse development portfolio, a culture and ability to
innovate and adapt its technology platform to product
opportunities, proven risk management practices, and a solid cash
position. The company will continue using its cash resources to
invest in selected research and development activities to achieve
its objectives.
Legal
At the date of the Directors’ Report there are no significant
legal issues.
30 June
2014
$000
30 June
2013
$’000
Income statement
Revenue from continuing operations
1,246
2,429
Other income
7
5
Research and development expenses
(10,991)
(3,505)
Administration expenses
(4,890)
(4,149)
Finance costs
(7)
(9)
Loss attributable to members
(14,635)
(5,229)
Income statement
The reported net loss after tax of $14,635,000 (2013: $5,229,000)
is after fully expensing all research and development expenditure
and patenting costs in the current year. A contra research and
development expense of $4,222,000 (2013: $8,704,000) has been
recorded for research and development activities eligible under the
Australian Government’s R&D tax incentive program. The variance
in the net loss compared to prior year is a result of current year
clinical programs in progress, lower interest and partner revenue
and also a result of the prior year loss reflecting a $4,071,000 R&D
tax incentive relating to the 2012 year.
Research and development expenses include the costs of the
VivaGel® clinical and regulatory programs for BV and condom, the
internal drug delivery program, including DEPTM docetaxel, and the
agrochemical programs. Administration expenses include the
amortisation of intangible assets, costs of patents, and the share-
based expensing of employee incentives schemes.
Total revenue and other income for the year was $1,253,000
(2013: $2,434,000), a reduction from the previous year due to
lower interest revenue earned on cash deposits and lower revenue
from commercial partners.
Balance sheet
At 30 June 2014 the group’s cash position was $24,028,000 (June
2013: $33,840,000). Trade and other receivables of $4,570,000
(June 2013: $5,492,000) includes $4,154,000 receivable from the
Australian Government under the R&D tax incentive program.
Statement of cash flows
The net operating and investing cash outflows for the year were
$10,064,000 (2013: $9,951,000) including costs associated with
the company’s VivaGel®, drug delivery and agrochemical
programs. During the financial year $4,701,000 (2013: $5,395,000)
was received from R&D tax incentives associated with eligible
expenditure and activities from the prior financial year.
Net cash inflows from financing activities of $203,000 (2013:
$828,000) included $235,000 on the issue of shares from the
exercise of share options (2013: $878,000).
Earnings per share
Basic loss per share
($0.05)
($0.02)
Diluted loss per share
($0.05)
($0.02)
2014
2013
16
Starpharma Holdings Limited Annual Report 2014
Starpharma Holdings Limited Annual Report
16
Directors’ Report Operating & Financial Review
Material Business Risks
Health and Safety
The group operates in the biotechnology and pharmaceutical
sectors and is in the development phase. Any investment in these
sectors is considered high-risk. The group is subject to normal
business risks, including but not limited to interest rate
movements, labour conditions, government policies, securities
market conditions, exchange rate fluctuations and a range of other
factors which are outside the control of the Board and
management. More specific material risks of the sector and the
group include, but are not limited to:
⋅ Scientific, technical & clinical – product development requires a
high level of scientific rigour, the outcomes of which cannot be
known beforehand. Activities are experimental in nature so the
risk of failure or delay is material. Key development activities,
including clinical trials and product manufacture, are undertaken
by specialist contract organisations; and there are risks in
managing the quality and timelines of these activities.
⋅ Regulatory – products and their testing may not be approved by,
or may be delayed, by regulatory bodies (eg. US Food and Drug
Administration) whose approvals are necessary before products
can be sold in market.
⋅ Financial - the group currently, and since inception, does not
receive sufficient income to cover operating expenses. Although
current cash reserves are sound, there is no certainty that
additional capital funding may not be required in the future, and
no assurance can be given that such funding will be available, if
required.
⋅ Intellectual property (IP) – commercial success requires the
ability to develop, obtain and maintain commercially valuable
patents, trade secrets and confidential information. Gaining and
maintaining the IP across multiple countries; and preventing the
infringement of the group’s exclusive rights involves
management of complex legal, scientific and factual issues. The
company must also operate without infringing upon the IP of
others.
⋅ Commercialisation – the company relies, and intends to rely,
upon corporate partners to market, and in some cases finalise
development and registration of its products, on its behalf. There
are risks in establishing and maintaining these relationships, and
with the manner in which partners execute on these collaborative
agreements.
⋅ Product acceptance & competiveness – a developed product
may not be considered by key opinion leaders (eg. doctors),
reimbursement authorities (eg. PBS-listing) or the end customer
to be an effective alternative to products already on market, or
other products may be preferred.
⋅ Product liability – a claim or product recall would significantly
impact the company. Insurance, at an acceptable cost, may not
be available or be adequate to cover liability claims if a marketed
product is found to be unsafe.
⋅ Key personnel – the company’s success and achievements
against timelines depend on key members of its highly qualified,
specialised and experienced management and scientific teams.
The ability to retain and attract such personnel is important.
⋅ Grant and R&D incentives – the company may undertake R&D
activities under competitive grants and be part-funded by other
incentive programs (eg. R&D tax credits). There is no certainty
that grants or incentive programs will continue to be available to
the company, and changes in government policy may reduce
their applicability.
In accordance with good business practice in the pharmaceutical
industry the company’s management actively and routinely
employs a variety of risk management strategies. These are
broadly described in the Corporate Governance Statement
(section 7.1. Risk assessment and management).
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 connections to the company’s business
operations. Employees are encouraged to actively participate in
the management of environmental and Occupational Health and
Safety (OH&S) issues. The company has adopted an OH&S Policy
and has an established OH&S committee structure as part of its
overall approach to workplace safety. The OH&S committee
provides a forum for management and employees to consult on
health and safety matters. The primary role of the committee 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. The committee includes representatives of
management, and employees from 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 committee meets on a regular basis over the year.
Environment and Regulation
The group is subject to environmental regulations and other
licences in respect of its research and development facilities.
There are adequate systems in place to ensure compliance with
relevant Federal, State and Local environmental regulations and
the Board is not aware of any breach of applicable environmental
regulations by the group. There were no significant changes in
laws or regulations during the 2014 financial year or since the end
of the year affecting the business activities of the group, and the
Board is not aware of any such changes in the near future.
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 2014, and
the numbers of meetings attended by each director were:
Directors
Board
Audit & risk
committee
Remuneration
& nomination
committee
P T Bartels
11 of 11
2 of 2
2 of 2
J K Fairley
11 of 11
R A Hazleton
11 of 11
P J Jenkins
11 of 11
Z Peach
11 of 11
R B Thomas
5 of 5
P R Turvey
11 of 11
N/A
2 of 2
N/A
N/A
0 of 0
2 of 2
N/A
N/A
2 of 2
2 of 2
1 of 1
N/A
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.
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
17
17
Directors’ Report Remuneration Report
The remuneration report sets out remuneration information for
non-executive directors, executive directors and other key
management personnel of the group
Directors & key management personnel disclosed
Non-executive and executive directors – see pages 13 and 14.
Other key management personnel:
N J Baade
C P Barrett
A Eglezos
D J Owen
J R Paull
B P Rogers
Chief Financial Officer & Company Secretary
(Company Secretary from 13 December 2013)
VP, Business Development
VP, Business Development
(from 12 August 2013)
VP, Research
VP, Development and Regulatory Affairs
Company Secretary (until 13 December 2013)
Remuneration Governance
The remuneration and nomination committee, consisting of at least
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. 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.
Non-executive director remuneration policy
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 of the fees of non-
executive directors based on comparative roles in the
external market. Non-executive directors do not receive bonuses
or forms of equity securities, or any performance-related
remuneration or retirement allowances.
Directors’ fees
Non-executive directors’ fees are reviewed annually by the
remuneration and nomination committee, taking into account
comparable remuneration data from the biotechnology sector.
Non-executive directors’ fees were increased with effect from 1
April 2014, with the previous increase occurring from 1 January
2010. Fees and payments are determined within an aggregate
non-executive directors’ fee pool limit, approved by shareholders.
The aggregate amount currently stands at $450,000 and 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 and reflecting the time and
responsibility related to the Board and committees. The aggregate
amount paid to non-executive directors for the year ended 30 June
2014 was $401,555 (2013: $385,000). Directors’ fees include any
statutory superannuation contributions required under Australian
superannuation guarantee legislation.
Annual Directors’ Fees
From
1 April
2014
Until
1 April
2014
Board Chair (no additional fees for serving on
Board committees)
125,000
120,000
Base fee for other non-executive directors
62,500
60,000
Chair of audit & risk committee
7,500
N/A
Chair of remuneration and nomination
committee
5,000
N/A
Member of audit & risk committee
3,000
N/A
Member of remuneration and nomination
committee
2,500
N/A
Executive remuneration policy and framework
Remuneration packages are set at levels that are intended to
attract and retain high calibre executives capable of managing the
group’s operations. Each year, the company benchmarks the value
of fixed remuneration, short term incentives and long term
incentives against a group of comparator companies to ensure
these objectives are met.
The executive pay and reward framework comprises:
⋅ base pay and benefits, including superannuation;
⋅ short term performance incentives; and
⋅ long term incentives through participation in the Starpharma
employee equity plans.
The combination of these comprises an executive's total
remuneration.
The remuneration and nomination committee, with the Board are
actively reviewing the company’s remuneration structure, including
short and long term incentive plans to ensure they meet good
corporate practice for a company of Starpharma’s size, nature and
the company lifecycle.
Relationship between executive reward and company
performance
The company’s remuneration policy aligns executive reward with
the interests of shareholders. The primary focus is on growth in
shareholder value through achievement of research, development,
regulatory and commercial milestones, and therefore performance
goals are not necessarily linked to financial performance measures
typical of companies operating in other market segments.
Remuneration is set based on key performance indicators (KPIs)
typical of a biotechnology company in Starpharma’s lifecycle,
which may include (but are not limited to) successful negotiations
of commercial contracts, achieving key research, development and
regulatory milestones, and ensuring the availability of adequate
capital to achieve stated objectives. Improvement in the rating of
the company against peer biotechnology companies may also be
taken into consideration in determining the performance of the
executive team, and can be assessed on a qualitative basis by
reviewing external sources such as biotechnology publications and
non-commissioned research reports. Other factors taken into
account in determining remuneration packages include a
demonstrated record of performance, internal and external
relativities, and the company’s ability to pay.
Base pay and benefits
Executives receive their base pay and benefits structured as a
Total Fixed Remuneration (TFR) package which may be delivered
as a combination of cash and prescribed non-financial benefits at
the executives’ discretion. Superannuation is included in TFR.
There are no guaranteed base pay increases in any executives’
contracts.
Short-term performance incentives
With the exception of the CEO, executive service agreements do
not include pre-determined bonus or equity allocations, however
short term cash incentives may be awarded at the end of the
performance review cycle upon achievement of individual and/or
company related KPIs. Following a performance evaluation against
these KPIs, the amount of possible bonus payable to each
executive is determined by the remuneration and nomination
committee and Board based on the CEO’s recommendation. The
remuneration and nomination committee and the Board consider
this an appropriate approach for a company of Starpharma’s size,
nature and lifecycle. The short term incentive structure is under
active review to ensure it meets good corporate practice.
Long-term incentives
Long-term incentives for executives and employees to deliver long-
term shareholder returns are provided by a combination of equity
plans that may include:
⋅ an Employee Performance Rights Plan;
⋅ an Employee Share Plan ($1,000 Plan); and
⋅ an Employee Share Option Plan.
⋅
18
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18
Directors’ Report Remuneration Report
Participation in these plans is at the Board’s discretion and no
individual has an ongoing contractual right to participate in a plan
or to receive any guaranteed benefits. For key appointments, an
initial allocation of long-term equity incentives may be offered as a
component of their initial employment agreement.
The structure of long-term incentives is under the active review of
the remuneration and nomination committee to ensure it meets
good corporate practice for a company of Starpharma’s size,
nature and company lifecycle.
Starpharma Employee Performance Rights Plan
The introduction of the Starpharma Employee Performance Rights
Plan (ASX code SPLAK) was approved by the Board in 2010 and
subsequently approved by shareholders at the 2011 annual
general meeting. 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). The key
aspects of the Plan are:
⋅ All executives and staff and certain contractors may be invited to
apply for Rights under the scheme.
⋅ One Right once vested is equivalent to one fully paid
ordinary share.
⋅ Rights and the resultant shares are granted for no consideration.
⋅ Appropriate vesting conditions can be applied to each allocation.
The standard vesting condition in the plan rules is continued
employment for two years unless otherwise determined by the
Board. Additional performance hurdles may need to be met to
enable vesting.
⋅ At the end of the vesting period a further disposal restriction
(Holding Lock) may be applied to restrict disposal of the resulting
shares. The standard Holding Lock in the plan rules is one year
after vesting unless otherwise determined by the Board.
⋅ Rights will lapse on cessation of employment before the vesting
date, except for good leaver and change of control provisions at
the Board’s discretion. The Holding Lock on the resulting shares
will be automatically removed on cessation of employment.
⋅ In the event of a change of control of the company the Board has
the discretion to determine whether Rights will vest and become
exercisable. In making its decision, the Board must consider:
(i) the portion of the Vesting Period elapsed; and
(ii) the extent to which the Performance Conditions (if any)
have been met.
⋅ In the event of cessation due to death, illness, permanent
disability, redundancy or any other circumstance approved by
the Board unvested Rights will lapse, unless the Board
determines otherwise having regard to:
(i) the portion of the Vesting Period elapsed; and
(ii) the extent to which the Performance Conditions (if any)
have been met.
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. 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.
Starpharma Employee Share Option Plan
Options may be 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 the
volume-weighted average price (VWAP) of the shares in the 15
days preceding the approval to grant the options.
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
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 a performance evaluation of all
executives and other staff took place in accordance with this
process to assess each employee’s performance against their pre-
agreed KPIs to determine the level of bonus payable.
Trading in company securities
The trading of shares issued to participants under any of the
company’s employee equity plans is governed by the company’s
securities trading policy. Executives are prohibited from entering
into any hedging arrangements over unvested securities. Further
information regarding the company’s securities trading policy is set
out in Section 3.2 of the Corporate Governance Statement.
Use of remuneration consultants
If remuneration consultants are to be engaged to provide
remuneration recommendations as defined in section 9B of the
Corporations Act 2001, they are to be engaged by, and report
directly to, the remuneration & nomination committee. No
remuneration consultants have been engaged to provide such
remuneration services during the financial year.
Voting and comments made at the company’s
2013 Annual General Meeting (AGM)
Of the votes cast on the company’s remuneration report for the
2013 financial year, 91% were in favour of the resolution. The
company did not receive any specific feedback at the AGM or
throughout the year on its remuneration practices.
Performance of Starpharma Holdings Limited
The executive team of Starpharma achieved important milestones
directly related to their key performance indicators, including:
⋅ VivaGel® condom received Conformity Assessment Certification
from the Australian TGA;
⋅ Preparation, regulatory feedback and initial ethics approval for
the phase 3 clinical studies of the VivaGel® bacterial vaginosis
(BV) product for the prevention of recurrent BV;
⋅ The granting of regulatory certification for marketing the
VivaGel® condom in Japan;
⋅ Commencement of a phase 1 human clinical trial for DEPTM
docetaxel conducted in Australia;
⋅ Broadened drug delivery portfolio with positive preclinical results
including DEPTM oxaliplatin;
⋅ Expansion of the drug delivery partnerships;
⋅ Approved R&D tax incentive overseas finding with respect to the
DEPTM docetaxel program;
⋅ New agrochemical Priostar® partnerships; and
⋅ Additional grant funding with collaborator, Monash Institute of
Pharmaceutical Sciences.
The broad corporate key performance indicators listed on page 18,
together with individual KPIs relevant to each executive, are
considered to be appropriate drivers of growth in shareholder
value and were used by the remuneration and nomination
committee and the Board in assessing the appropriate level of
short and long term incentives payable to each executive during
the year. In addition to the KPIs above, a significant proportion of
the CEO’s performance rights are linked to growth in total
shareholder return (TSR) as measured by either, achievement of
absolute share price targets, or as returns relative to the
S&P/ASX300 Accumulation Index.
The closing share price on the date prior to the date of this report
was $0.74, which represents a 5 year TSR (avg annual rate) of
11%1. The share price as at 30 June 2014 was $0.58 (2013:
$0.81, 2012: $1.37, 2011: $1.50, 2010: $0.54).
1 Source: CommSec Accessed 13/08/2014.
19
19
Directors’ Report Remuneration Report
Details of remuneration
The following tables show details of the remuneration received by the directors and the key management personnel of the group for the current
and previous financial year.
2014
Name
Short-term benefits
Post-
employment
Long-term
benefits
Cash salary &
fees
$
Cash bonus#
$
Non-monetary
benefits
$
Superannuation
$
Long service
leave
$
Share-based payments
Shares#
$
Performance
Rights#
$
Non-executive directors
R B Thomas1
P T Bartels2
P J Jenkins
35,888
105,581
56,636
R A Hazleton
Z Peach
P R Turvey
61,375
56,064
57,208
Executive director
–
–
–
–
–
–
–
–
–
–
–
–
3,320
9,766
5,239
–
5,186
5,292
–
–
–
–
–
–
J K Fairley
403,648
200,000
39,932
20,775
14,612
Other Key Management Personnel (group)
N J Baade
C P Barrett
A Eglezos3
D J Owen
J R Paull
B P Rogers4
192,564
212,096
170,090
206,817
197,211
48,918
30,000
25,000
8,000
30,000
40,000
–
15,347
401
17,754
363
13,213
2,737
1,804,096
Totals
1 Appointed 4 December 2013. Appointed Chairman 13 June 2014.
2 Retired 13 June 2014.
3 Appointed 12 August 2013.
4 Retired 13 December 2013.
333,000
89,747
25,000
17,775
16,061
17,775
25,000
34,900
186,089
23,811
24,036
334
27,954
(8,809)
(42,477)
39,461
Non-executive directors
P T Bartels
R Dobinson1
P J Jenkins
R A Hazleton
Z Peach
P R Turvey
Executive director
120,000
25,000
55,046
60,000
55,046
50,034
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,954
–
4,954
9,966
–
–
–
–
–
–
J K Fairley
368,213
150,000
40,608
21,286
27,824
Other Key Management Personnel (group)
B P Rogers
J R Paull
C P Barrett
N J Baade
D J Owen
M L McColl2
117,680
185,280
206,158
183,067
186,140
128,852
10,399
35,000
30,000
30,000
32,500
–
5,021
13,356
–
13,698
311
259
24,917
25,000
16,470
24,970
24,970
9,608
Totals
1 Resigned 28 November 2012.
2 Resigned 18 January 2013.
1,740,516
287,899
73,253
167,095
6,203
8,982
13,944
13,475
9,680
(516)
79,592
4,995
973,311 3,430,699
Total
$
39,208
115,347
61,875
61,375
61,250
62,500
–
–
–
–
–
–
624,576 1,303,543
82,823
82,823
35,353
82,823
82,823
(17,910)
370,544
363,130
248,591
366,731
350,437
26,168
Total
$
120,000
25,000
60,000
60,000
60,000
60,000
–
–
–
–
–
–
325,844
933,775
44,526
55,657
55,657
55,657
55,657
(10,331)
209,745
324,274
323,228
321,866
310,257
128,871
–
–
–
–
–
–
–
999
999
999
999
999
–
–
–
–
–
–
–
–
999
999
999
999
999
999
5,994
582,667 2,937,016
2013
Name
Short-term benefits
Post-
employment
Long-term
benefits
Cash salary &
fees
$
Cash bonus#
$
Non-monetary
benefits
$
Superannuation
$
Long service
leave
$
Share-based payments
Shares#
$
Performance
Rights#
$
# All performance related remuneration, including cash bonuses, shares, and performance rights granted are determined to be an ‘at risk’
component of total remuneration.
There were no retirement benefits paid in the current or prior year.
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20
Directors’ Report Remuneration Report
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Fixed remuneration
At risk - STI
At risk – LTI1
Name
2014
2013
2014
2013
2014
2013
J K Fairley
N J Baade
C P Barrett
A Eglezos2
M L McColl3
D J Owen
J R Paull
B P Rogers4
37%
69%
70%
82%
-%
69%
65%
100%
49%
73%
73%
-%
100%
71%
72%
73%
15%1
16%1
8%
7%
3%
-%
8%
11%
-%
9%
9%
-%
-%
10%
11%
6%
48%
23%
23%
15%
-%
23%
24%
*
35%
18%
18%
-%
*
18%
17%
22%
* Percentage not disclosed as the total amount of STI and/or LTI remuneration expense was negative for the relevant period.
1The 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.
2 Appointed 12 August 2013.
3 Resigned 18 January 2013.
4 Retired 13 December 2013.
Service Agreements
Remuneration and other terms of employment for the CEO and the
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 that the executive may receive 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 for those executives who are employed at the
date of this report.
J K Fairley Chief Executive Officer
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at 30
June 2014 of $460,000, to be reviewed annually by the
remuneration and nomination committee.
– A cash bonus up to $200,000 for the year to 30 June 2014
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.
N J Baade Chief Financial Officer & Company Secretary
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at 30
June 2014 of $237,114, 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
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
(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.
C P Barrett VP – Business Development
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at 30
June 2014 of $232,989, 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.
A Eglezos VP – Business Development
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at 30
June 2014 of $229,838, 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.
21
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Directors’ Report Remuneration Report
D J Owen VP – Research
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at 30
June 2014 of $231,134, 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.
Share-based payments
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
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 or prior year. The
terms and conditions of each grant of options affecting
remuneration of any director of the company and any key
management personnel of the group in this or future reporting
periods are as follows:
J R Paull VP – Development and Regulatory Affairs
– No fixed term of agreement.
– Base salary, inclusive of superannuation, per annum as at 30
June 2014 of $235,970, 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
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.
Shares issued to directors and key management personnel on
the exercise of options
Details of ordinary shares issued to the key management
personnel of the group on the exercise of options in the current
and prior year were:
Number of shares issued on
exercise of options during
the year
Intrinsic value
$1
Name
2014
2013
2014
2013
N J Baade
125,000
C P Barrett
125,000
–
–
36,775
36,775
–
–
D J Owen
125,000
100,000
27,400
120,190
Date
exercise-
able
Grant
date
Expiry
date
Exercise
price
Value per
option at
grant date
%
vested
J R Paull
–
125,000
–
52,400
B P Rogers
100,000
100,000
61,920
116,190
29 Jun
2009
29 Jun
2011
28 Jun
2014
$0.37
$0.23 100%
Options granted under the Plan carry no dividend or voting rights.
There are no options outstanding at the end of the year. The
weighted average remaining contractual life of share options
outstanding at the end of the previous year was 1.00 year.
Fair value of options granted
There were no options granted in the current or prior year. For
earlier years, the fair value at grant date was 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.
1 The intrinsic value of each option exercised has been determined
as opening share price on the date of allotment of shares less the
option exercise price.
The amount paid per ordinary share by the key management
personnel of the group on the exercise of options were as follows:
Share allotment date on
exercise of options
Amount paid per share
2 Sep 2013; 22 May 2014; 18 Jun 2014
$0.37
No amounts are unpaid on any shares issued on the exercise of
options.
Options granted to directors and key management personnel
No options have been granted to directors or key management
personnel in the current or prior year, or since the end of the year.
No options vested or expired (unexercised) in the current or prior
year, or since the end of the year.
No options lapsed during the year as a result of performance
milestones not being met.
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Directors’ Report Remuneration Report
Option holdings
The numbers of options over ordinary shares in the company held during the financial year by executive directors and other key management
personnel of the group, including their close family members and entities related to them, are set out below. No non-executive director held
options in the current or prior year.
2014
Name
Balance at the
start of the year
Granted during
the year as
compensation
Exercised during
the year
Other changes
during the year
Balance at the
end of the year
Vested and
exercisable at the
end of the year
Unvested
Directors of Starpharma Holdings Limited
J K Fairley
–
Other key management personnel of the group
N J Baade
C P Barrett
A Eglezos1
D J Owen
J R Paull
125,000
125,000
–
125,000
–
B P Rogers2
1 Appointed 12 August 2013.
2 Retired 13 December 2013.
100,000
–
–
–
–
–
–
–
–
125,000
125,000
–
125,000
–
100,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Performance rights
The number of rights over ordinary shares in the company provided as remuneration during the financial year to any of the executive directors
and the key management personnel of the group, including their close family members and entities related to them, are set out below.
No non-executive director held share rights in the current or prior year. J K Fairley was granted 950,000 performance rights over ordinary shares
following approval by shareholders at the 2013 annual general meeting.
2014
Name
Balance at the
start of the year
Granted during
the year as
compensation
Directors of Starpharma Holdings Limited
Vested 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 Fairley1
960,000
950,000
200,000
(200,000)
1,510,000
–
1,510,000
Other key management personnel of the group
N J Baade
C P Barrett
A Eglezos2
D J Owen
J R Paull
90,000
90,000
–
90,000
90,000
100,000
100,000
100,000
100,000
100,000
40,000
40,000
–
40,000
40,000
–
–
–
–
–
72,000
B P Rogers3
1 The value of rights that were forfeited during the year was $31,350.
2 Appointed 12 August 2013.
3 Retired 13 December 2013. The value of rights that were forfeited during the year was $62,000.
# Other changes during the year relate to the forfeiture of rights.
(40,000)
32,000
–
150,000
150,000
100,000
150,000
150,000
–
–
–
–
–
–
–
150,000
150,000
100,000
150,000
150,000
–
The value at vesting date of performance rights that vested during 2014 was $370,960 (2013: $864,940).
No other shares were issued on the vesting of performance rights in the current year provided as remuneration to any of the directors or the key
management personnel of the group.
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
23
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Directors’ Report Remuneration Report
Share-based payments (continued)
The terms and conditions of the grant of performance rights to the directors or the key management personnel of the group in the current year
were as follows:
Grant date
Vesting Date
Holding Lock
Expiry date
Number
of Rights
Performance
Measure
Value per right at
16 September 2013
16 September 2015
16 September 2016
500,000
Achievement of KPIs
22 November 2013
30 September 2014
30 September 2015
500,000
Achievement of KPIs
22 November 2013
22 November 2015
22 November 2016
50,000 Continued Employment
22 November 2013
22 November 2015
22 November 2016
50,000
Index TSR
22 November 2013
22 November 2015
22 November 2016
100,000
Index TSR +10%
22 November 2013
22 November 2016
22 November 2017
100,000 Continued Employment
22 November 2013
22 November 2016
22 November 2017
50,000
Index TSR
22 November 2013
22 November 2016
22 November 2017
100,000
Index TSR +10%
grant date % vested
$0.89
$0.85
$0.85
$0.55
$0.54
$0.85
$0.58
$0.55
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Information of the performance measures:
Achievement of KPIs:
Continued Employment:
Index TSR:
Index TSR + 10%:
The achievement of certain key business performance indicators linked to matters which the Board believes are
key drivers of shareholder value.
Employee remains employed by the company until the vesting date.
If the company achieves a total shareholder return (TSR), relative to the S&P/ASX 300 Accumulation Index
(Index) for the vesting period, which is equal to or greater than the Index.
If the company achieves a total shareholder return (TSR), relative to the S&P/ASX 300 Accumulation Index
(Index) for the vesting period, which is which is 10% or more greater than the Index.
Ordinary shares
The number of ordinary shares in the company provided as remuneration during the financial year to any of the directors or the key
management personnel of the group, including their close family members and entities related to them, are set out below.
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 were granted to Australian-based permanent employees under the plan during the current and prior year.
2014
Name
Balance at the
start of the year
Granted during
the year as
compensation
On exercise of
share options
during the year
On vesting of
performance rights
during the year
Other changes
during the year
Balance at the
end of the year
Directors of Starpharma Holdings Limited
Ordinary Shares
R B Thomas1
P T Bartels2
J K Fairley
P J Jenkins
R A Hazleton
Z Peach
P R Turvey
170,000
332,930
1,824,197
1,537,462
157,616
3,000
47,000
Other key management personnel of the group
Ordinary Shares
N J Baade
C P Barrett
A Eglezos3
D J Owen
J R Paull
202,394
159,268
–
110,916
220,831
–
–
–
–
–
–
–
1,204
1,204
1,204
1,204
1,204
–
–
–
–
–
–
–
125,000
125,000
–
125,000
–
–
–
100,000
–
200,000
(360,000)5
–
–
–
–
40,000
40,000
–
40,000
40,000
–
–
–
–
–
–
–
–
–
270,000
332,930
1,664,197
1,537,462
157,616
3,000
47,000
368,598
325,472
1,204
277,120
262,035
209,449
B P Rogers4
1 Appointed 4 December 2013 with a holding of 170,000 shares at the time of appointment.
2 Retired 13 June 2014.
3 Appointed 12 August 2013.
4 Retired 13 December 2013.
5 On market sale of shares to partially fund the tax liability associated with securities granted under the company’s equity incentive plans.
(83,259)
100,000
32,000
–
258,190
24
Starpharma Holdings Limited Annual Report 2014
Starpharma Holdings Limited Annual Report
24
Directors’ Report Remuneration Report
Details of remuneration
Details of remuneration: cash bonuses, shares, performance
rights and options
For each cash bonus and grant of equity included in the tables on
pages 20 to 25, 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 is set out below.
The options and performance rights vest over the specified periods
provided vesting criteria are met.
No options or rights will vest if the conditions are not satisfied,
hence the minimum value of the options and rights yet to vest is
nil. The maximum value of the options and rights yet to vest has
been determined as the amount of the grant date fair value of the
options and rights that is yet to be expensed.
Cash bonus
Shares
Grant date
value of shares
granted during
20142
Grant date
value of rights
granted during
20142,3
For-
feited
Paid
Year
granted
Vested
Forfeited
Performance rights
Name
%
%
$
$
J K Fairley
100%
–
–
715,350
N J Baade
C P Barrett
A Eglezos4
D J Owen
J R Paull
B P Rogers5
–1
–1
–1
–1
–1
–1
–
–
–
–
–
–
999
89,000
999
89,000
999
89,000
999
89,000
999
89,000
–
–
1 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.
2 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.
3 The maximum value of options and performance rights is
Financial
years in
which rights
may vest
30/06/2017
30/06/2016
30/06/2015
30/06/2016
30/06/2015
30/06/2014
30/06/2016
30/06/2015
30/06/2014
30/06/2016
30/06/2015
30/06/2014
30/06/2016
30/06/2016
30/06/2015
30/06/2014
30/06/2016
30/06/2015
30/06/2014
%
–
–
–
–
–
50%
–
–
–
–
–
–
–
–
–
–
–
–
–
Maximum
value yet to
vest
$
134,119
85,922
124,259
144,385
35,176
–
53,647
7,642
–
53,647
7,642
–
53,647
53,647
7,642
–
53,647
7,642
–
–
–
%
–
–
–
–
–
50%
–
–
100%
–
–
100%
–
–
–
100%
–
–
100%
–
100%
2014
2014
2014
2013
2013
2013
2014
2013
2012
2014
2013
2012
2014
2014
2013
2012
2014
2013
2012
2013
2012
100%
–
–
–
vesting period. The amount which will be included in a given key
management personnel’s remuneration for a given year is
consistent with this amortised amount. No options or
performance rights will vest if the conditions are not satisfied,
hence the minimum value yet to vest is nil.
4 Appointed 12 August 2013.
5 Retired 13 December 2013.
determined at grant date and is amortised over the applicable
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
25
25
- End of remuneration report -
Directors’ Report
Shares under option
There are no unissued ordinary shares of Starpharma Holdings
Limited under option at the date of this report.
Shares issued on the exercise of options
The following ordinary shares of Starpharma Holdings Limited
were issued during the year and up to the date of this report on the
exercise of options. No amounts are unpaid on any of the shares.
Date options granted
Issue price of shares
(Option exercise
price)
Number of shares
issued
29 Jun 2009
$0.37
635,000
Shares under rights
Unissued ordinary shares of Starpharma Holdings Limited under
the Employee Performance Rights Plan at the date of this report
are as follows:
Grant
date Vesting date
Holding lock
cessation
date
Number of
rights
granted
Balance
of rights
at date of
report
13 Sep 2012 19 Sep 2014 19 Sep 2015
672,400 499,400
30 Nov 2012 30 Nov 2014 30 Nov 2015
200,000 200,000
30 Nov 2012 30 Nov 2015 30 Nov 2016
360,000 360,000
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.
Audit & non audit services
The company may decide to employ the auditor on assignments
additional to their statutory audit duties where the auditor’s
expertise and experience with the company and/or the 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. The board of directors
has considered the position and, in accordance with the advice
received from the audit and risk committee is satisfied that the
provision of the non-audit services is compatible with the general
standard of independence for auditors imposed by the
Corporations Act 2001. The directors are satisfied that the
provision of non-audit services by the auditor, as set out below, did
not compromise the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
⋅ all non-audit services have been reviewed by the audit and risk
committee to ensure they do not impact the impartiality and
objectivity of the auditor;
⋅ none of the services undermine the general principles relating to
auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants.
During the year the following fees were paid or payable for
services provided by the auditor (PricewaterhouseCoopers) of the
company, its related practices and non-related audit firms.
16 Sep 2013 16 Sep 2015 16 Sep 2016 1,261,600 1,151,600
Assurance Services
22 Nov 2013 30 Sep 2014 30 Sep 2015
500,000 500,000
22 Nov 2013 22 Nov 2015 22 Nov 2016
200,000 200,000
Audit or review of financial reports of the
entity or any entity in the group under the
Corporations Act 2001
2014
$
2013
$
92,106
87,600
22 Nov 2013 22 Nov 2016 22 Nov 2017
250,000 250,000
No other assurance services, taxation or advisory services have
been provided by the auditor in either the current or prior year.
Performance rights and the resultant shares are granted for no
consideration.
Auditors’ Independence Declaration
Shares issued on the vesting of rights
The following ordinary shares of Starpharma Holdings Limited
were issued during the year to the date of this report on the vesting
of performance rights granted under the Employee Performance
Rights Plan. The shares are issued for nil consideration.
Date rights granted
Issue price of shares
(Exercise price of
right)
Number of shares
issued
25 Nov 2011
13 Sep 2012
30 Nov 2012
$ -
$ -
$ -
410,000
10,000
200,000
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
A copy of the auditors’ independence declaration as required
under section 307C of the Corporations Act 2001 is set out on
page 27.
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 directors’ report. Amounts
in the directors’ report have been rounded off in accordance with
that Class Order to the nearest thousand dollars, or in certain
cases, the nearest dollar.
Auditor
PricewaterhouseCoopers continues in office in accordance with
section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of the
Directors.
Rob Thomas AM
Chairman
Melbourne, 13 August 2014
26
Starpharma Holdings Limited Annual Report 2014
Starpharma Holdings Limited Annual Report
26
Auditor’s Independence Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Starpharma Holdings Limited for the year ended 30 June 2014, I
declare that to the best of my knowledge and belief, there have been:
Auditor’s Independence Declaration
a)
b)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
As lead auditor for the audit of Starpharma Holdings Limited for the year ended 30 June 2014, I
declare that to the best of my knowledge and belief, there have been:
a)
no contraventions of any applicable code of professional conduct in relation to the audit.
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
This declaration is in respect of Starpharma Holdings Limited and the entities it controlled during the
period.
no contraventions of any applicable code of professional conduct in relation to the audit.
b)
This declaration is in respect of Starpharma Holdings Limited and the entities it controlled during the
period.
Anton Linschoten
Partner
PricewaterhouseCoopers
Anton Linschoten
Partner
PricewaterhouseCoopers
Melbourne
13 August 2014
Melbourne
13 August 2014
PricewaterhouseCoopers, ABN 52 780 433 757
Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
PricewaterhouseCoopers, ABN 52 780 433 757
Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
Liability limited by a scheme approved under Professional Standards Legislation.
27
27
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 (2nd Edition with 2010 Amendments) (“the
2nd Edition CGC Recommendations”).
The Corporate Governance Statement set out below describes the
company’s current corporate governance principles and practices
which the board considers to comply with the 2nd Edition CGC
Recommendations. All of these practices, unless otherwise stated,
were in place for the entire financial year 2014. The ASX has
released recent amendments to the 2nd Edition CGC
Recommendations, incorporated in a 3rd Edition (“3rd Edition CGC
Recommendations), which are effective from 1 July 2014. The
company’s compliance against the 3rd Edition CGC
Recommendations will be described in the 2015 Annual Report.
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.
Principle 1: Lay solid foundations for management and oversight
Relationship between Board and Management
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.
Responsibilities of the Board
The responsibilities of the Board include:
(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;
– 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 $250,000 ($100,000 until
Principle 2: Structure the Board to add value
2.1 Responsibilities of the Board
The Board operates in accordance with the broad principles of the
charter. In addition to the responsibilities of the Board as set out
above, the charter also details the Board’s composition
requirements as set out below.
2.2 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 maintains a mix of directors on the Board from
different genders, age groups and professional backgrounds
who have complementary skills and experience.
– The Board has established measurable Board gender diversity
objectives and assess annually the objectives and the progress
in achieving them.
29 August 2013);
– 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;
(g) 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; and
– reporting to shareholders.
Responsibilities of the CEO
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.
CEO and Senior Executive Performance
A performance assessment for senior executives was last
conducted in April 2014. The process for these assessments is
described in the Remuneration Report under the heading
“Performance review and development” on page 19 of this report.
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.
2.3 Board members
Details of the members of the Board, their experience,
qualifications, term of office and independent status are set out in
the directors’ report under the heading “Information on Directors”.
There are five non-executive directors, all 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.
28
Starpharma Holdings Limited Annual Report 2014
Starpharma Holdings Limited Annual Report
28
Corporate Governance Statement
2.4 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; and
– 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 2001.
Under these criteria the Board has determined that all non-
executive directors were independent at the date of this report.
2.5 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.
It is anticipated that non-executive directors would generally hold
office for up to ten years, and shall serve a maximum of fifteen
years from date of first election by shareholders. The Board, on its
initiative and on an exceptional basis, may exercise discretion to
extend this maximum term where it considers that such an
extension would benefit the company.
2.6 Chairman and Chief Executive Officer (CEO)
The current Chairman, Mr Rob Thomas, is an independent non-
executive director appointed in 2013. 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.
In accordance with current practice, the Board’s policy is for the
roles of Chairman and CEO to be undertaken by separate people.
2.7 Commitment
The Board held eleven meetings during the year. Meetings are
usually held at the company’s corporate offices. A summary of the
number of meetings of the Board and of each Board committee
held during the year ended 30 June 2014, 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.
2.8 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.
2.9 Independent professional advice
Directors and Board committees have the right, in connection with
their duties and responsibilities, to seek independent professional
advice at the company’s expense. Prior approval of the Chairman
is required, but this approval will not be unreasonably withheld.
2.10 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.
2.11 Board committees
The Board has established two 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.
2.11.1 Remuneration and nomination committee
The company has established a remuneration and nomination
committee composed of three independent non-executive
directors. At the date of this report the committee consisted of the
following:
Dr P J Jenkins (Chairman)
Mr R Thomas
Ms Z Peach
Details of these directors’ attendance at committee meetings are
set out in the directors’ report on page 17.
The charter of the remuneration and nomination committee is, to
the extent delegated by the Board, to:
– conduct periodic reviews of Board membership having regard to
present and future needs of the company and make
recommendations on Board composition and appointments;
– conduct periodic reviews of and conclude on the independence
of each director;
– propose candidates for Board vacancies;
– oversee Board succession including the succession of the
Chairman;
– oversee the periodic assessment of Board performance;
– advise the Board on remuneration and incentive policies and
practices generally; and
– 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, 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
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
29
29
Corporate Governance Statement
Principle 2: Structure the Board to add value (continued)
sought from independent search consultants. 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.
When an existing director is required to stand for re-election, the
remuneration and nomination committee also reviews the range of
skills, experience and expertise on the Board.
2.11.2 Audit and risk committee
The company also has an audit and risk committee. Further details
about the committee are included on page 31.
Principle 3: Promote ethical and responsible decision making
3.1 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
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.
3.2 Trading in company securities
The dealing in company securities by directors, executives and
employees (collectively “Employees”) is only permitted (subject
also to complying with applicable laws) during the following periods
(trading windows):
⋅ the period starting 24 hours after the release of Starpharma’s
annual results and ending on 31 December;
⋅ the period starting 24 hours after the release of the Starpharma’s
half-year results and ending on 30 June; and
⋅ such other period as determined by the Chairman or a
Committee of the Board.
Notwithstanding the existence of these trading windows, the
company may notify Employees not to buy, sell or otherwise deal
in securities of the company during all or part of any trading
window. The other periods of the year are considered black-out
periods (or closed periods) during which time Employees must not
deal in securities of the company unless there are exceptional
circumstances and prior written permission from the “approving
officer” (Board, Chairman, CEO or Company Secretary, as
appropriate) is given.
An Employee who wishes to enter into a margin loan in relation to
securities of the company must obtain written permission from the
“approving officer” prior to entering into the margin loan.
Except with prior written permission from the “approving officer”,
Employees may not enter into any transaction which would have
the effect of hedging or otherwise transferring to any other person
the risk of any fluctuation in the value of:
(a) securities in the company which are subject to a restriction on
disposal under an employee share or incentive plan; or
(b) options or performance rights (or any unvested securities in the
company underlying them).
The Securities Trading Policy was approved by the Board and
released to the ASX on 16 December 2010, and is effective from
that date. The Securities Trading Policy is discussed with each
new employee as part of their induction training, and is available in
the Corporate Governance section of the company’s website.
3.3 Diversity policy
The company is committed to workplace diversity, and the Board
values the level of diversity already present within the organisation,
believing that continuing to promote diversity is in the best
interests of the company, its employees and its shareholders.
In June 2011, the Board approved a Diversity Policy which
operates alongside the Code of Conduct and Anti-Discrimination,
Bullying and Harassment policies, providing a framework for
Starpharma to achieve a number of diversity objectives. The
Diversity Policy is available in the Corporate Governance section
of the company’s website.
Independent of external corporate governance initiatives the
company has embraced a culture of inclusion and equal
opportunity across diversity areas recognised as potentially
impacting upon equality in the workplace - gender, national origin,
culture, language, sexual orientation, disability and age.
Board and management believe that a culture of diversity has
helped the company to tap a deeper pool of talent and has
enhanced the collective skillset, contributing to the strong
performance of the business.
In accordance with the Diversity Policy the Board has established
measurable objectives for achieving gender diversity and has
conducted an assessment of the objectives and progress in
achieving them. An appropriate gender balance already exists
across the company and therefore the initial focus has been on the
career development of women rather than on increasing
representation of female employees.
Objectives set by the Board for the 2013-2014 financial year, and
progress against these objectives are set out below:
Objective 1: Measurement - Continue to measure and track
diversity of gender, age and country of origin, and continue to
promote a corporate culture that accepts and embraces diversity
within the company and more widely within the biotech sector.
Progress towards objective: The company’s HR policies and
processes were reviewed during the 2013-2014 financial year,
consistent with our regular review of all policies, to ensure they are
inclusive in nature and consistent with the aims of the Diversity
Policy. Previously established systems continue to be used to
track and report diversity statistics including gender, country of
origin and age.
At 30 June 2014, 52% of the company’s employees were female,
compared with 54% in July 2013. The table below shows the
proportion of female employees in the whole organisation, in
senior executive positions and on the Board, at 30 June 2014.
Whole
organisation
Senior
Executive
Board
Total
Female
% female
33
17
52%
8
3
6
2
38%
33%
Objective 2: Development - Identify higher potential female
employees for further career development opportunities and
continue to seek professional development opportunities and
initiatives. Continue to encourage and provide opportunities for
female networking and role models.
Progress towards objective: Professional development
opportunities and options that are aligned with the company’s
needs and the individual’s role are considered for all employees as
part of the company’s annual performance review process.
Investments in formal/external development programs are made
where possible and appropriate, as well as being provided via
internal development opportunities where they exist. As in previous
years, during the 2014 financial year the company supported
participation of all female staff in an industry initiative “Connecting
30
Starpharma Holdings Limited Annual Report 2014
Starpharma Holdings Limited Annual Report
30
Corporate Governance Statement
Women in Biotechnology” run by the BioMelbourne Network
industry group, which included presentations by industry role
models.
company also has a number of part time roles reflecting both
business needs and the company’s support for flexible working
arrangements.
Objective 3: Family friendliness –Maintain initiatives to smooth
transitions before, during and after parental leave, and to retain
employees after they have taken parental leave.
Objective 4: Pay parity – Reduce the risk of unconscious gender
bias and understand any gender differentials in remuneration
relative to benchmarks analysing remuneration by gender.
Progress towards objective: The company has a Parental Leave
Policy which includes maternity leave and partner leave, and
where possible, the provision of flexible working hours and part
time arrangements to facilitate transitions associated with parental
leave. Staff are encouraged to approach management to discuss
their particular needs before and after parental leave. The
Principle 4: Safeguard integrity in financial reporting
4.1 Audit and risk committee
The company has established an audit and risk committee
comprising three independent non-executive directors. At the date
of this report the committee consisted of the following:
Mr P R Turvey (Chairman)
Mr R B Thomas
Mr R A Hazleton
Details of these directors’ qualifications and attendance at
committee meetings are set out in the directors’ report on pages
13 to 17. The audit and risk committee members have appropriate
financial expertise. 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.
– 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;
Progress towards objective: During the annual staff remuneration
review, gender based analyses of pre-and post-remuneration
review differentials to benchmarks were completed. This confirmed
that there are no significant gender differences in remuneration
relative to role benchmarks.
– review and monitor related party transactions and assess
their propriety;
– assist the Board in the development and monitoring of statutory
compliance and ethics programs;
– provide assurance to the Board that it is receiving adequate, up
to date and reliable information;
– report to the Board on matters relevant to the committee’s role
and responsibilities.
In fulfilling its responsibilities, the audit and risk 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.
4.2 External auditors
The company’s policy is to appoint external auditors who clearly
demonstrate quality and independence. The performance of the
external auditor is reviewed annually. The current auditors are
PricewaterhouseCoopers who have been the external auditors of
the company since it commenced operations. It is
PricewaterhouseCoopers policy to rotate audit engagement
partners on listed companies at least every five years, and the
current audit engagement partner assumed responsibility for the
conduct of the audit in 2010. An analysis of fees paid to the
external auditors, including a break-down of fees for non-audit
services, if any, 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
Principle 5 and 6: Make timely and balanced disclosures and respect the rights of shareholders
5.1. Continuous disclosure
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.
information that should be disclosed to the market, or whether any
price sensitive information may have been inadvertently disclosed.
6.1 Electronic Communication
All ASX announcements are posted on the company’s website as
soon as practicable after release to the ASX.
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
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). The company’s website also has an option for
shareholders to register their email address for direct email
updates which the company may send for material company
matters which have previously been released to ASX and OTCQX.
Starpharma Holdings Limited Annual Report
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31
31
Corporate Governance Statement
Principle 7: Recognise and manage risk
7.1. 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’s
culture and in the way activities are carried out at all levels of 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 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 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, a
summary of 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
Principle 8: Remunerate fairly and responsibly
8.1 Remuneration and nomination committee
The company has established a remuneration and nomination
committee consisting of three independent non-executive
directors. Details regarding composition, meetings and charter are
set out in section 2.11.1 of this Corporate Governance Statement.
8.2 Non-executive and executive remuneration
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 includes a position description which is reviewed by
the committee as necessary in consultation with the CEO and
relevant executive. Further information on directors’ and
executives’ remuneration, including principles used to determine
remuneration, is set out in the Remuneration Report on pages 18
to 25.
committee, the CEO, CFO & Company Secretary, and the senior
management team.
The CEO, CFO & Company Secretary are responsible to the
Board through the audit and risk committee 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.
7.2. 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
Rules 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 2014:
– 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 in
relation to financial reporting risks.
Executive directors and senior management receive a mix
between fixed and incentive pay, comprising both cash and
eligibility to participate in equity incentive schemes. Non-executive
directors receive fees only and are not eligible for bonus payments
or participation in equity incentive schemes. Non-executive
directors do not receive termination/retirement benefits, whereas
executive directors and senior management are entitled to
termination payments in accordance with the terms of their
contracts (detailed on page 21 to 22).
8.3 Prohibition on hedging of unvested entitlements
Employees are prohibited from entering into transactions in
products which limit the economic risk of participating in unvested
entitlements under equity-based remuneration schemes. Details in
relation to this policy are contained in the Securities Dealing Policy
which is available in the Corporate Governance section of the
company’s website
32
Starpharma Holdings Limited Annual Report 2014
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32
Annual Financial Report for the year ended 30 June 2014
Contents
•
•
•
•
•
•
•
•
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Audit Report to the Members
34
35
36
37
38
39
65
66
These financial statements are the consolidated financial statements for the consolidated entity consisting of Starpharma Holdings Limited and
its subsidiaries. The financial statements are presented in 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 IDI 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 11 and in the
operating and financial review in the directors’ report on pages 15 to 17, which are not part of this financial report.
The financial statements were authorised for issue by the directors on 13 August 2014. The directors have the power to amend and reissue the
financial report.
Through the use of the internet, Starpharma ensures that corporate reporting is timely and complete. All recent press releases, financial reports
and other information are available on its website: www.starpharma.com.
Starpharma Holdings Limited Annual Report 2014
Starpharma Holdings Limited Annual Report
33
33
Consolidated Income Statement for the year ended 30 June 2014
Revenue from continuing operations
Other income
Administration expense
Research and development expense
Finance costs
Loss before income tax
Income tax expense
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
6
6
7
24
24
30 June 2014
30 June 2013
$'000
1,246
7
(4,890)
(10,991)
(7)
(14,635)
-
(14,635)
$
($0.05)
($0.05)
$'000
2,429
5
(4,149)
(3,505)
(9)
(5,229)
-
(5,229)
$
($0.02)
($0.02)
The above consolidated income statement should be read in conjunction with the accompanying notes.
Starpharma Holdings Limited Annual Report 2014
34
Starpharma Holdings Limited Annual Report
34
Consolidated Statement of Comprehensive Income for the year ended 30 June 2014
Notes
Loss for the year
Other comprehensive income (loss)
Items that may be reclassified to profit or loss
Foreign exchange differences on translation of foreign operations
15
Other comprehensive income (loss)
Total comprehensive income (loss) for the year attributable to
members of Starpharma Holdings Limited
30 June 2014
30 June 2013
$'000
(14,635)
(110)
(110)
$'000
(5,229)
713
713
(14,745)
(4,516)
The above statement of consolidated comprehensive income should be read in conjunction with the accompanying notes.
Starpharma Holdings Limited Annual Report 2014
Starpharma Holdings Limited Annual Report
35
35
Consolidated Balance Sheet as at 30 June 2014
30 June 2014
30 June 2013
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)
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Accumulated losses
Total Equity
Notes
8
9
10
11
12
13
13
14
15
16
$'000
24,028
4,570
28,598
509
7,755
8,264
36,862
3,114
27
659
44
3,844
48
19
67
3,911
32,951
140,349
4,852
(112,250)
32,951
$'000
33,840
5,492
39,332
411
8,807
9,218
48,550
1,696
25
627
111
2,459
75
48
123
2,582
45,968
140,081
3,502
(97,615)
45,968
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Starpharma Holdings Limited Annual Report 2014
36
Starpharma Holdings Limited Annual Report
36
Consolidated Statement of Changes in Equity for the year ended 30 June 2014
Contributed
capital
Reserves
Accumulated
losses
Notes
$'000
139,171
$'000
1,866
-
$'000
(92,386)
(5,229)
Balance at 1 July 2012
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 plans
Employee performance rights plan
Total transactions with owners
Balance at 30 June 2013
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 plans
Employee performance rights plan
Total transactions with owners
Balance at 30 June 2014
15
14
14
15
15
14
14
15
Total
equity
$'000
48,651
(5,229)
878
32
923
1,833
45,968
-
713
(5,229)
(4,516)
-
-
-
-
-
-
-
878
32
-
910
713
713
-
-
923
923
140,081
3,502
(97,615)
-
-
-
235
33
-
268
-
(14,635)
(14,635)
(110)
(110)
-
-
1,460
1,460
-
(110)
(14,635)
(14,745)
-
-
-
-
235
33
1,460
1,728
140,349
4,852
(112,250)
32,951
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Starpharma Holdings Limited Annual Report 2014
Starpharma Holdings Limited Annual Report
37
37
Consolidated Statement of Cash Flows for the year ended 30 June 2014
Notes
$'000
$'000
30 June 2014
30 June 2013
Cash Flows from Operating Activities
Receipts from trade and other debtors (inclusive of GST)
Grant income and R&D tax incentives (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest paid
Net cash outflows from operating activities
23
Cash Flow from Investing Activities
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
387
4,707
(16,108)
1,208
(7)
(9,813)
(251)
(251)
235
-
(32)
203
(9,861)
33,840
49
24,028
423
5,453
(17,270)
1,609
(10)
(9,795)
(156)
(156)
878
-
(50)
828
(9,123)
42,812
151
33,840
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Starpharma Holdings Limited Annual Report 2014
38
Starpharma Holdings Limited Annual Report
38
Notes to the Consolidated Financial Statements 30 June 2014
Contents
1.
2.
3.
4.
5.
6.
7.
8.
9.
Significant Accounting Policies
Financial Risk Management
Critical Accounting Estimates and Judgements
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.
Related Party Transactions
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.
Parent Entity Financial Information
Starpharma Holdings Limited Annual Report 2014
Starpharma Holdings Limited Annual Report
40
44
46
46
46
47
47
48
50
51
52
53
53
54
55
55
56
56
56
57
58
58
58
59
59
64
39
39
Notes to the Consolidated Financial Statements 30 June 2014
1. Significant Accounting Policies
The principal accounting policies adopted in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented,
unless otherwise stated. The financial statements are for the
consolidated entity consisting of Starpharma Holdings Limited and
its subsidiaries (the group).
(a) Basis of preparation
These general purpose financial statements have been prepared
in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards
Board and the Corporations Act 2001. Starpharma Holdings
Limited is a for-profit entity for the purpose of preparing the
financial statements.
(i) Compliance with IFRS
estimates are significant to the financial statements are disclosed
in note 3.
(vi) Going Concern
For the year ended 30 June 2014, the consolidated entity has
incurred losses of $14,635,000 (2013: $5,229,000) and
experienced net cash outflows of $9,813,000 from operations
(2013: $9,795,000), as disclosed in the balance sheet and
statement of cash flows, respectively. The company is in the
development phase, and given the entity’s strategic plans, the
directors are satisfied regarding the availability of working capital
for the period up to at least August 2015. 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.
The consolidated financial statements of the group also comply
with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB).
(b) Principles of consolidation
(i) Subsidiaries
(ii) New and amended standards adopted by the group
The group has applied the following standards and amendments
for first time for the annual reporting period commencing 1 July
2013:
•
AASB 10 Consolidated Financial Statements, AASB 11 Joint
Arrangements, AASB 12 Disclosure of Interests in Other
Entities, AASB 128 Investments in Associates and Joint
Ventures, AASB 127 Separate Financial Statements and
AASB 2011-7 Amendments to Australian Accounting
Standards arising from the Consolidation and Joint
Arrangements Standards
AASB 2012-10 Amendments to Australian Accounting
Standards - Transition Guidance and other Amendments
which provides an exemption from the requirement to
disclose the impact of the change in accounting policy on the
current period
AASB 13 Fair Value Measurement and AASB 2011-8
Amendments to Australian Accounting Standards arising from
AASB 13
AASB 119 Employee Benefits (September 2011) and AASB
2011-10 Amendments to Australian Accounting Standards
arising from AASB 119 (September 2011)
AASB 2012-5 Amendments to Australian Accounting
Standards arising from Annual Improvements 2009-2011
Cycle, and
AASB 2012-2 Amendments to Australian Accounting
Standards – Disclosures – Offsetting Financial Assets and
Financial Liabilities
•
•
•
•
•
None of the new and amended standards that are mandatory for
the first time for the financial year beginning 1 July 2013 affected
any of the amounts recognised in the current period or any prior
period and are not likely to affect future periods.
(iii) Early adoption of standards
The group has not elected to apply any pronouncements before
their operative date in the annual reporting period beginning 1 July
2013.
(iv) Historical cost convention
These financial statements have been prepared under the
historical cost convention, as modified by the revaluation of
available-for-sale financial assets, financial assets and liabilities
(including derivative instruments) at fair value through profit or
loss, certain classes of property, plant and equipment and
investment property.
(v) 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
The consolidated financial statements incorporate the assets and
liabilities of all subsidiaries of Starpharma Holdings Limited
(“company” or “parent entity”) as at 30 June 2014 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 entities (including structured entities) over
which the group has control. The group controls an entity when the
group is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control
is transferred to the group. They are deconsolidated 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.
(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.
(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.
Foreign exchange gains and losses that relate to borrowings are
presented in the income statement, within finance costs. All other
foreign exchange gains and losses are presented in the income
statement on a net basis within other income or other expenses.
40
Starpharma Holdings Limited Annual Report 2014
Starpharma Holdings Limited Annual Report
40
Notes to the Consolidated Financial Statements 30 June 2014
(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.
•
•
On consolidation, exchange differences arising from the translation
of any net investment in foreign entities, and of borrowings and
other financial instruments designated as hedges of such
investments, 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
operation and translated at the closing rate.
(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
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 are not consolidated for tax purposes.
(i) Investment allowances and similar tax incentives
Companies within the group may be entitled to claim special tax
deductions for investments in qualifying assets or in relation to
qualifying expenditure (eg. investment allowances). The group
accounts for such allowances as tax credits, which means that the
allowance reduces income tax payable and current tax expense. A
deferred tax asset is recognised for unclaimed tax credits that are
carried forward as deferred tax assets.
(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, and 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 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. They 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
with financial institutions, and other short-term, highly liquid
investments 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.
Starpharma Holdings Limited Annual Report
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41
41
Notes to the Consolidated Financial Statements 30 June 2014
1. Significant Accounting Policies (continued)
(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 to 60 days. They are
presented as current assets unless collection is not expected for
more than 12 months after reporting date. 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 90 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 uncollectable 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
(i) 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.
(ii) 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 2 to 20 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 (being 1 year) or
the estimated useful life of the improvement to the group,
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.
(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 is up to 20
years.
(iii) Research and development
Research expenditure is recognised as an expense as incurred.
Costs incurred on development projects (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)
are recognised as intangible assets when it is probable that the
project will, after considering its commercial and technical
feasibility 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 expenditures that do not meet these criteria are
recognised as an expense as incurred. Development costs
previously recognised as an expense are not recognised as an
asset in a subsequent period. Capitalised development costs are
recorded as intangible assets and amortised from the point at
which the asset is ready for use on a straight-line basis over its
useful life. 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. Trade and other payables are
presented as current liabilities unless payment is not due within 12
months from the reporting date.
(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 reporting period.
42
Starpharma Holdings Limited Annual Report 2014
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42
Notes to the Consolidated Financial Statements 30 June 2014
(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, and 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) Short-term obligations
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 personal 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 government bonds with terms to maturity and
currency that match, as closely as possible, the estimated future
cash outflows. The obligations are presented as current liabilities
in the balance sheet if the entity does not have an unconditional
right to defer settlements for at least twelve months after the
reporting date, regardless of when the actual settlements are
expected to occur.
(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) Share-based payments
Share-based compensation benefits are offered to the directors
and employees via the Starpharma Holdings Limited Employee
Share Option Plan (“SPLAM”), an Employee Share Plan ($1,000
Plan), and an Employee Performance Rights Plan. Information
relating to these plans is set out in note 25 and in 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
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
unconditionally entitled to the options or rights. The fair value at
grant date is determined using a Black-Scholes or binomial model
(or variant of, as appropriate) 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 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.
(v) 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.
(vi) 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, performance rights 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.
43
43
Notes to the Consolidated Financial Statements 30 June 2014
1. Significant Accounting Policies (continued)
(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 the 30 June 2014 reporting
period. The group’s assessment of the impact of these new
standards and interpretations is set out below.
(i) AASB 9 Financial Instruments, AASB 2009-11 Amendments to
Australian Accounting Standards arising from AASB 9, AASB
2010-7 Amendments to Australian Accounting Standards arising
from AASB 9 (December 2010) and AASB 2012-6 Amendments to
Australian Accounting Standards – Mandatory Effective Date of
AASB 9 and Transition Disclosures (effective from 1 January
2017)
AASB 9 Financial Instruments addresses the classification,
measurement and derecognition of financial assets and financial
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, and Chief Financial Officer & Company
Secretary, under the guidance of the audit and risk committee and
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
Cash and cash equivalents
Trade and other receivables
Trade and other payables
liabilities. The standard is not applicable until 1 January 2017 but is
available for early adoption.
There will be no impact on the group’s accounting for financial
liabilities, as the new requirements only affect the accounting for
financial liabilities that are designated at fair value through profit or
loss and the group does not have any such liabilities. The
derecognition rules have been transferred from AASB 139
Financial Instruments: Recognition and Measurement and have
not been changed. The group has not yet decided when to adopt
AASB 9.
There are no other standards that are not yet effective and that are
expected to have a material impact on the entity in the current or
future reporting periods and on foreseeable future transactions.
(z) Parent entity financial information
The financial information for the parent entity, Starpharma
Holdings Limited, disclosed in note 26 has been prepared on the
same basis as the consolidated financial statements, except as set
out below.
(i) Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities
are accounted for at cost in the financial statements of Starpharma
Holdings Limited. Dividends received from associates are
recognised in the parent entity’s profit or loss when its right to
receive the dividend is established.
(ii) Share-based payments
The grant by the company of options and rights over its equity
instruments to the employees of subsidiary undertakings in the
group is treated as a capital contribution to that subsidiary
undertaking. The fair value of employee services received,
measured by reference to the grant date fair value, is recognised
over the vesting period as an increase to investment in subsidiary
undertakings, with a corresponding credit to equity.
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 using
an US exchange rate of $0.9420 was as follows:
30 June 2014
US
$’000
2,963
13
3
30 June 2013
US
$’000
2,976
99
299
44
Starpharma Holdings Limited Annual Report 2014
Starpharma Holdings Limited Annual Report
44
Notes to the Consolidated Financial Statements 30 June 2014
Group Sensitivity
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 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%
(285)
348
(266)
325
30 June 2014
$’000
30 June 2013
$’000
(ii) Cash Flow Interest Rate Risk
The group holds 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 term and at call deposits. Refer to note 8 for additional information.
Term Deposits and deposits at call
Group Sensitivity
30 June 2014
$’000
22,559
30 June 2013
$’000
32,337
At 30 June 2014, 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 $113,000 higher or lower (2013 - change of 50 bps: $162,000 higher/lower) due to either
higher or lower interest income from cash or cash equivalents.
(b) Credit risk
Credit risk is managed on a group basis. Credit risk arises from
cash and cash equivalents with banks and financial institutions, as
well as credit exposures from royalty and licensing agreements.
Credit risk for cash and deposits with banks and financial
institutions is managed by maximising deposits held under major
Australian and US banks. Other than government tax incentives,
third party receivables largely consist of research fees, 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.
(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
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.
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
45
45
Notes to the Consolidated Financial Statements 30 June 2014
3. Critical Accounting Estimates and Judgements
Estimates and judgements are continually evaluated and are
based on historical experience and other factors, including
expectations of future events that may have a 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 is up to 20 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 2014 is $7,755,000 (2013: $8,807,000).
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
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 not recognised deferred tax assets or
liabilities, including carried forward losses due to the realisation of
such benefits as uncertain. The utilisation of tax losses also
depends on the ability of the entity to satisfy certain tests at the
time the losses are recouped.
iv) R&D Tax Incentives
The group’s research and development activities are eligible under
an Australian Government tax incentive for eligible expenditure
from 1 July 2011. Management has assessed these activities and
expenditure to determine which are likely to be eligible under the
incentive scheme. For the period to 30 June 2014 the group has
recorded a contra research and development expense of
$4,222,000 (2013: $8,704,000). Of the 2013 total, $4,071,000
relates to 2012 expenditure not previously booked in 2012 due to
the uncertainty of its eligibility. Subsequent to the 2012 results,
Starpharma received an advance finding from AusIndustry that
covers a 3 year period from 1 July 2011.
(b) Critical accounting judgements in applying accounting
policies
i) 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 judgement. In making these
judgements, 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.
4. Segment Information
The group has determined that on the basis of internal reporting and monitoring to the Chief Executive Officer, who is the chief operating
decision maker, the group operates in one business segment, being the discovery, development and commercialisation of dendrimers for
pharmaceutical, life science and other applications.
5. Revenue and Other Income
Revenue and other income
Royalty, customer & licence revenue
Interest revenue
Other revenue
Total revenue
Government grants
Total other income
Total revenue and other income
30 June 2014
$’000
30 June 2013
$’000
273
973
-
1,246
7
7
1,253
840
1,569
20
2,429
5
5
2,434
Total revenue and other income for the year was $1,253,000, a reduction of $1,181,000 from the previous year, mainly due to lower interest
revenue earned on cash deposits and lower revenue from commercial partners.
46
Starpharma Holdings Limited Annual Report 2014
Starpharma Holdings Limited Annual Report
46
Notes to the Consolidated Financial Statements 30 June 2014
6. Expenses
Loss from continuing operations before income tax expense
includes the following items:
30 June 2014
$’000
30 June 2013
$’000
R&D tax incentive (contra expense)1
(4,222)
(8,704)
Depreciation
Amortisation
Rental expense on operating leases
Defined contribution superannuation expense
1 Refer to Note 3 a) iv) for further information.
7. Income Tax Expense
(a) Income tax expense/(credit)
Current Tax
Deferred Tax
Total income tax expense
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% (2013: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating
taxable income:
Eligible expenses claimed under R&D tax incentive
Amortisation of intangibles
Share-based payments
Unearned income
Sundry items
Difference in overseas tax rates
Previously unrecognised tax losses now recouped to reduce current
tax expense
Future income tax benefits not brought to account
Income tax credit
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
153
943
434
437
159
891
444
402
30 June 2014
$’000
30 June 2013
$’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
30 June 2014
$’000
30 June 2013
$’000
(14,635)
(4,390)
1,503
174
448
50
24
29
(5)
2,167
–
(5,229)
(1,569)
477
170
287
(74)
202
26
(179)
660
–
47
47
Notes to the Consolidated Financial Statements 30 June 2014
7. Income Tax Expense (continued)
30 June 2014
$’000
30 June 2013
$’000
(c) Tax losses
Unused tax losses for which no deferred tax asset has been
recognised (as recovery is currently not probable)
Potential tax benefit
(d) 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
(e) Deferred tax liabilities
Deferred tax liabilities comprises temporary differences attributable to:
Intangibles
Sundry items
Total deferred tax liabilities
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax liabilities
Deferred tax liabilities expected to be settled within 12 months
Deferred tax liabilities expected to be settled after 12 months
72,641
21,874
26,265
7,819
1,458
464
1,922
(1,922)
–
464
1,458
1,922
65,680
19,704
20,304
6,185
1,659
111
1,770
(1,770)
–
111
1,659
1,770
Deferred tax assets and deferred tax liabilities have been set off as
there is a legally recognised right to set off current tax assets and
liabilities, and the deferred tax assets and liabilities relate to
income taxes levied by the same taxation authority. Deferred tax
assets mainly comprises of temporary differences attributable to
tax losses.
Potential future income tax benefits attributable to tax losses
carried forward have not been brought to account at 30 June 2014
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 2014 which it
believes will be satisfied.
8. Current Assets – Cash and Cash Equivalents
Cash at bank and on hand
Term Deposits and deposits at call
30 June 2014
$’000
30 June 2013
$’000
1,469
22,559
24,028
1,503
32,337
33,840
Cash at bank and on hand
The cash is bearing floating interest rates based on current
bank rates.
Term deposits and deposits at call
The term deposits have maturities of 3 months or less. Funds in
deposits at call allow the group to withdraw funds on demand.
Cash not available
There is $415,023 (2013: $458,000) of cash not available for use
due to restrictions associated with a finance lease and credit card
facility which is guaranteed by term deposits.
Interest rate risk
With the exception of loans to controlled entities, current
receivables are non-interest bearing.
48
Starpharma Holdings Limited Annual Report 2014
Starpharma Holdings Limited Annual Report
48
Notes to the Consolidated Financial Statements 30 June 2014
30 June 2014
Floating
Interest
rate
Notes
$’000
Financial Assets
Fixed interest maturing
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
Total
$’000
cash
flows
Cash & deposits
Receivables
8
9
2,034
20,621
–
–
2,034
20,621
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,373
24,028
N/A
4,570
4,570
4,570
5,943
28,598
4,570
Weighted average
interest rate
Financial Liabilities
Payables
Borrowings
12
13
Weighted average
interest rate
2.7%
3.3%
–%
–%
–%
–%
–%
–%
–
–
–
–
27
27
–
30
30
–
18
18
–
–
–
–
–
–
–
–
–
3,114
3,114
3,114
–
75
75
3,114
3,189
3,189
–%
8.2%
8.2%
8.2%
–%
–%
–%
–%
30 June 2013
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
Total
$’000
cash
flows
Financial Assets
Cash & deposits
Receivables
8
9
Weighted average
interest rate
Financial Liabilities
Payables
Borrowings
12
13
Weighted average
interest rate
2,427
30,004
–
–
2,427
30,004
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,409
33,840
N/A
5,492
5,492
5,492
6,901
39,332
5,492
2.8%
4.0%
–%
–%
–%
–%
–%
–%
–
–
–
–
25
25
–
27
27
–
30
30
–
18
18
–
–
–
–
–
–
1,696
1,696
1,696
–
100
100
1,696
1,796
1,796
–%
8.2%
8.2%
8.2%
8.2%
–%
–%
–%
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
49
49
Notes to the Consolidated Financial Statements 30 June 2014
9. Current Assets – Trade and Other Receivables
Trade and grant receivables
Interest receivables
Prepayments
Other receivables
Trade and grant receivables
Trade and grant receivables primarily comprise of $4,154,000
(2013: $4,632,000) of expenditure reimbursable under the
Australian Government’s R&D tax incentive scheme. Other trade
receivables are associated with research and development
projects and are subject to normal terms of settlement within 30 to
90 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 trade receivables are from large,
well respected companies. Loans to controlled entities are
assessed for recoverability and provisions are applied as
considered appropriate.
30 June 2014
$’000
30 June 2013
$’000
4,211
120
154
85
4,570
4,869
354
178
91
5,492
Impaired receivables
As at 30 June 2014, there were no trade and grant receivables that
were past due (2013: nil). No receivables are considered impaired
at 30 June 2014 (2013: 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 to 90 days.
50
Starpharma Holdings Limited Annual Report 2014
Starpharma Holdings Limited Annual Report
50
Notes to the Consolidated Financial Statements 30 June 2014
10. Non-Current Assets – Property, Plant and Equipment
Plant and Equipment
$’000
Leasehold
improvements
$’000
Plant and Equipment
under finance lease
$’000
Total Plant and
Equipment
$’000
At 30 June 2012
Cost
Accumulated depreciation and amortisation
Net book amount
Year ended 30 June 2013
Opening net book amount
Additions
Disposals
Depreciation and amortisation
Closing net book amount
At 30 June 2013
Cost
Accumulated depreciation and amortisation
Net book amount
Year ended 30 June 2014
Opening net book amount
Additions
Disposals
Depreciation and amortisation
Closing net book amount
At 30 June 2014
Cost
Accumulated depreciation and amortisation
Net book amount
2,138
(1,903)
235
235
152
(1)
(88)
298
2,116
(1,818)
298
298
244
–
(115)
427
2,203
(1,776)
427
1,187
(1,165)
22
22
5
–
(22)
5
1,193
(1,188)
5
5
7
–
(8)
4
1,199
(1,195)
4
419
(262)
157
157
–
–
(49)
108
419
(311)
108
108
–
–
(30)
78
419
(341)
78
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
3,744
(3,330)
414
414
157
(1)
(159)
411
3,728
(3,317)
411
411
251
–
(153)
509
3,821
(3,312)
509
51
51
Notes to the Consolidated Financial Statements 30 June 2014
11. Non-Current Assets – Intangible Assets
Patents & Licences
$’000
Goodwill
$’000
Total Intangibles
$’000
At 30 June 2012
Cost
Accumulated depreciation and amortisation
Net book amount
Year ended 30 June 2013
Opening net book amount
Exchange differences
Depreciation and amortisation
Closing net book amount
At 30 June 2013
Cost
Accumulated depreciation and amortisation
Net book amount
Year ended 30 June 2014
Opening net book amount
Exchange differences
Depreciation and amortisation
Closing net book amount
At 30 June 2014
Cost
Accumulated depreciation and amortisation
Net book amount
15,417
(7,889)
7,528
7,528
564
(891)
7,201
16,507
(9,306)
7,201
7,201
(84)
(943)
6,174
16,321
(10,147)
6,174
1,461
–
1,461
1,461
145
–
1,606
1,606
–
1,606
1,606
(25)
–
1,581
1,581
–
1,581
16,878
(7,889)
8,989
8,989
709
(891)
8,807
18,113
(9,306)
8,807
8,807
(109)
(943)
7,755
17,902
(10,147)
7,755
(a) Impairment tests for goodwill
Goodwill is tested annually for impairment, and an impairment loss
is recognised for the amount by which the carrying amount
exceeds the recoverable amount. The recoverable amount is the
higher of fair value less costs to sell and value in use.
The group has companies in both Australia and the United States
– these 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 US business and intellectual property) should be allocated
across these CGUs as the business combination gives rise to
synergies within the group’s Australian and United States
companies and their intellectual property.
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 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 2014, 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 2014 and determined that
there is no indication that the asset is impaired.
(d) Remaining useful life
The patents being amortised have a remaining useful life of 1-12
years as at 30 June 2014.
52
Starpharma Holdings Limited Annual Report 2014
Starpharma Holdings Limited Annual Report
52
Notes to the Consolidated Financial Statements 30 June 2014
12. Current Liabilities – Trade and Other Payables
Trade payables and accruals
Other payables
30 June 2014
$’000
30 June 2013
$’000
2,586
528
3,114
1,208
488
1,696
Trade payables and accruals
The majority of trade payables are related to expenditure associated with the group’s research and development programs.
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.
2014
Floating
Interest rate
Lease Liabilities
Notes
20
Weighted average interest rate
–%
8.2%
8.2%
8.2%
–
27
30
18
–
–%
–
–
75
–%
–%
Fixed interest rate
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
2013
Floating
Interest rate
Fixed interest rate
Notes
20
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
–
25
27
30
18
–
–
100
Lease Liabilities
Weighted average interest rate
–%
8.2%
8.2%
8.2%
8.2%
–%
–%
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
53
53
Notes to the Consolidated Financial Statements 30 June 2014
14. Contributed Equity
(a) Share capital
Share Capital
2014
Shares
2013
Shares
2014
$’000
2013
$’000
Ordinary shares – fully paid
285,109,680
283,814,948
140,349
140,081
(b) Movements in ordinary share capital
Date
Details
1 Jul 2012
11 Jul 2012
Proceeds on exercise of options
11 Jul 2012
Proceeds on exercise of employee options
16 Jul 2012
Proceeds on exercise of options
13 Aug 2012 Proceeds on exercise of employee options
23 Aug 2012 Proceeds on exercise of options
13 Sep 2012 Employee performance rights plan share issue
13 Sep 2012 Proceeds on exercise of employee options
5 Oct 2012
Employee performance rights plan share issue
18 Jan 2013
Employee share plan ($1,000) issue
19 Jun 2013
Proceeds on exercise of employee options
Number of shares
Issue Price
280,802,451
$’000
139,171
260,660
150,000
477,290
150,000
946,859
717,800
10,000
125,000
25,888
149,000
$0.43
$0.29
$0.43
$0.29
$0.43
$ –
$0.37
$ –
$1.24
$0.37
Balance at 30 June 2013
283,814,948
Date
Details
1 Jul 2013
Number of shares
Issue Price
283,814,948
12 Jul 2013
Proceeds on exercise of employee options
2 Sep 2013
Proceeds on exercise of employee options
2 Oct 2013
Employee performance rights plan share issue
29 Nov 2013 Employee performance rights plan share issue
6 Dec 2013
Proceeds on exercise of employee options
30 Jan 2014
Employee share plan ($1,000) issue
19 Feb 2014 Employee performance rights plan share issue
22 May 2014 Proceeds on exercise of employee options
18 Jun 2014
Proceeds on exercise of employee options
50,000
100,000
200,000
410,000
40,000
39,732
10,000
250,000
195,000
$0.37
$0.37
$ –
$ –
$0.37
$0.83
$ –
$0.37
$0.37
113
43
207
43
412
–
4
–
32
56
140,081
$’000
140,081
18
37
–
–
15
33
–
93
72
Balance at 30 June 2014
285,109,680
140,349
(c) Ordinary shares
As at 30 June 2014 there were 285,109,680 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. Ordinary shares have no
par value and the company does not have a limited amount of
authorised capital. 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) 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.
(f) Options
Information relating to the Starpharma Holdings Limited Employee
Share Option Plan, including details of options issued, exercised
and expired during the financial year and options outstanding at
the end of the financial year are set out in note 25.
(g) 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. In order to
maintain or adjust the capital structure, the group may adjust the
amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets.
54
Starpharma Holdings Limited Annual Report 2014
Starpharma Holdings Limited Annual Report
54
Notes to the Consolidated Financial Statements 30 June 2014
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
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
(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 reserve, as
described in Note 1(d). The reserve is recognised in income
statement when the net investment is disposed of.
16. Accumulated Losses
Accumulated losses balance at 1 July
Net loss for the year
Accumulated losses balance at 30 June
30 June 2014
$’000
30 June 2013
$’000
5,648
(3,011)
2,215
4,852
30 June 2014
$’000
4,188
1,460
5,648
(2,901)
(110)
(3,011)
4,188
(2,901)
2,215
3,502
30 June 2013
$’000
3,265
923
4,188
(3,614)
713
(2,901)
(iii) Asset revaluation reserve
The uplift in fair value of the identifiable net assets of Dendritic
Nanotechnologies Inc. on the company’s acquisition of the
remaining share in October 2006 was recognised in reserves.
30 June 2014
$’000
(97,615)
(14,635)
(112,250)
30 June 2013
$’000
(92,386)
(5,229)
(97,615)
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
55
55
Notes to the Consolidated Financial Statements 30 June 2014
17. 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.
(c) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Other long term benefits
Share-based payments
(b) 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.
30 June 2014
$
30 June 2013
$
2,226,843
186,089
39,461
978,306
3,430,699
2,101,668
167,095
79,592
588,661
2,937,016
Detailed remuneration disclosures are provided in the remuneration report on pages 18 to 25.
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
Statutory audit services
Audit or review of financial reports of the entity or any entity in the
consolidated entity
PricewaterhouseCoopers
Total remuneration for statutory audit services
No other audit services were performed in the current or prior year.
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:
30 June 2014
$
30 June 2013
$
92,106
92,106
87,600
87,600
19. Contingencies
The company has no contingent assets or liabilities at 30 June 2014 (2013: nil).
56
Starpharma Holdings Limited Annual Report 2014
Starpharma Holdings Limited Annual Report
56
Notes to the Consolidated Financial Statements 30 June 2014
20. Commitments
(a) Capital Commitments
There is no capital expenditure contracted for, not recognised as liabilities at the reporting date (2013: nil).
(b) Lease Commitments
Operating leases
The group leases laboratory and offices under a lease until 31 August 2015.
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
30 June 2014
$’000
30 June 2013
$’000
380
70
–
450
366
450
–
816
Finance Leases
The group leases plant and equipment under a finance leases expiring within three (2013: four) years.
Commitments in relation to finance leases are payable as follows:
Notes
30 June 2014
$’000
30 June 2013
$’000
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
The weighted average interest rate implicit in the lease is 8.2% (2013: 8.2%).
32
51
–
83
(8)
75
27
48
75
32
84
–
116
(16)
100
25
75
100
(c) Expenditure Commitments
The group has entered into various agreements for research, development and clinical 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.
(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
the remuneration report for details of these commitments.
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
57
57
Notes to the Consolidated Financial Statements 30 June 2014
21. Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in note 1(b).
Name of entity
Starpharma Pty Limited
Angiostar Pty Limited1
Viralstar Pty Limited1
Dendritic Nanotechnologies Inc.
Country of
Incorporation
Class of Shares
Australia
Australia
Australia
USA
Ordinary
Ordinary
Ordinary
Ordinary
2014
%
100.00%
-%
-%
100.00%
Equity Holding
2013
%
100.00%
100.00%
100.00%
100.00%
1 Angiostar Pty Ltd and Viralstar Pty Ltd, were deregistered with ASIC on date 20 November 2013, these were non-operating subsidiaries.
22. Events Occurring After the Balance Sheet Date
The company commenced its phase 3 clinical trials of VivaGel® for the prevention of recurrent bacterial vaginosis after the protocol design
received written approval in July 2014 under a Special Protocol Assessment (SPA) from the US Food and Drug Administration (FDA).
In July 2014, the VivaGel® condom received Conformity Assessment Certification from the Australian TGA. Ansell will launch the VivaGel®
condom in the coming months under their brand Lifestyles® Dual ProtectTM, following listing on the Australian Register of Therapeutic Goods
(ARTG).
No other matters or circumstances have arisen since 30 June 2014 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.
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
Gain (loss) on sale of property, plant and equipment
Change in operating assets and liabilities,
net of effects of acquisitions and disposals of entities:
Decrease (increase) in receivables and other assets
Increase (decrease) increase in trade creditors
Increase in employee provisions
Increase (decrease) in deferred income
Net cash outflows from operating activities
30 June 2014
$’000
(14,635)
1,096
(49)
1,493
–
928
1,418
3
(67)
(9,813)
30 June 2013
$’000
(5,229)
1,050
(151)
955
(1)
(3,424)
(2,796)
86
(285)
(9,795)
58
Starpharma Holdings Limited Annual Report 2014
Starpharma Holdings Limited Annual Report
58
Notes to the Consolidated Financial Statements 30 June 2014
24. Earnings Per Share
Basic loss per share ($)
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)
30 June 2014
30 June 2013
(0.05)
(0.05)
(14,635)
(0.02)
(0.02)
(5,229)
Weighted average number of ordinary shares outstanding during the year used as
the denominator in calculating diluted and basic earnings per share
284,414,837
283,281,880
As at 30 June 2014 the company had on issue nil (30 June 2013: 635,000) share options and 3,161,000 (30 June 2013: 1,970,900)
performance rights that are not considered dilutive.
The options and rights have not been included in the determination of basic earnings per share. The options and rights granted are considered
to be potential ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive.
Given the entity is currently loss making, the potential shares are anti-dilutive and have therefore not been included in the diluted earnings per
share calculation.
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. No options were granted in the current
or prior year.
(b) 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. The remaining
balance of 1,684,809 options was exercised before the expiry
date.
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
59
59
Notes to the Consolidated Financial Statements 30 June 2014
25. Share-Based Payments (continued)
Set out below are summaries of options under the schemes:
2014
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
29 Jun 2009 a
28 Jun 2014
$0.37
635,000
635,000
Total
635,000
635,000
–
–
Weighted average exercise price
$0.37
$0.37
$ –
–
–
$ –
–
–
–
–
$ –
$ –
2013
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
21 Aug 2007b
22 Aug 2012
$0.43
1,684,809
1,684,809
1 Jan 2009 a
28 Aug 2012
$0.29
300,000
300,000
29 Jun 2009 a
28 Jun 2014
$0.37
794,000
159,000
Total
2,778,809
2,143,809
–
–
–
–
–
–
–
–
–
–
–
–
635,000
635,000
635,000
635,000
Weighted average exercise price
$0.40
$0.41
$ –
$ –
$0.37
$0.37
a Options granted under the Employee Option Plan.
b Options granted under a share placement.
No options were granted in the current or prior year.
The weighted average share price at the date of exercise of
options exercised during the year ended 30 June 2014 was $0.72
(2013: $1.44).
The weighted average remaining contractual life of share options
outstanding at the end of the period was nil years (2013: 1.00
year).
Where options are issued to employees of subsidiaries within the
group, the subsidiaries compensate Starpharma Holdings Limited
for the amount recognised as an expense in relation to these
options.
(c) Fair value of options granted
There were no options granted in the current or prior year. The fair
value at grant date of options granted in earlier years were
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.
Shares
(a) 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 group. 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 group.
(b) Fair value of shares granted
The weighted average assessed fair value at grant date of
employee shares granted during the year ended 30 June 2014
was $0.83 (2013: $1.235 per share). The fair value at grant date is
determined by the share price on the date of grant. Employee
shares were granted for no consideration.
60
Starpharma Holdings Limited Annual Report 2014
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60
Notes to the Consolidated Financial Statements 30 June 2014
Information used in assessing the fair value of shares granted during the year ended 30 June 2014 is as follows:
Share grant date
Number of shares granted
Share price at grant date
Assessed fair value
Information used in assessing the fair value of shares granted during the year ended 30 June 2013 is as follows:
Share grant date
Number of shares granted
Share price at grant date
Assessed fair value
Performance Rights
30 January 2014
39,732
$0.83
$0.83
18 January 2013
25,888
$1.235
$1.235
(a) Employee Performance Rights Plan
In 2010 the Board approved the introduction of the Employee
Performance Rights Plan, which was subsequently approved by
shareholders at the 2011 annual general meeting. All executives
and staff, including the CEO, are eligible to participate in the Plan.
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.
Performance rights are granted under the Plan for no
consideration. The objective of the Plan is to assist in the
recruitment, reward, retention and motivation of employees of the
company.
(b) 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 2014
was $0.83 per right (2013: $1.08). There were 2,211,600
performance rights granted in the current year (2013: 1,682,400).
The estimated fair value at grant date is determined using either
an option pricing or a binomial 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.
Set out below are summaries of performance rights:
2014
Grant Date
Vesting
Date
Holding
Lock
Date
Balance
at start of
the year
Granted
during
the year
Converted
during
the year
Forfeited
during
the year
Balance
at end of
the year
25 Nov 2011
25 Nov 2013
25 Nov 2014
13 Sep 2012
19 Sep 2014
19 Sep 2015
30 Nov 2012
30 Sep 2013
30 Sep 2014
30 Nov 2012
30 Nov 2014
30 Nov 2015
30 Nov 2012
30 Nov 2015
30 Nov 2016
16 Sep 2013
16 Sep 2015
16 Sep 2016
22 Nov 2013
30 Sep 2014
30 Sep 2015
22 Nov 2013
22 Nov 2015
22 Nov 2016
22 Nov 2013
22 Nov 2016
22 Nov 2017
Number
410,000
600,900
400,000
200,000
360,000
–
–
–
–
Number
–
–
–
–
–
1,261,600
500,000
200,000
250,000
Number
410,000
10,000
200,000
–
–
–
–
–
–
Number
Number
–
91,500
200,000
–
–
–
499,400
–
200,000
360,000
110,000
1,151,600
–
–
–
500,000
200,000
250,000
Total
1,970,900
2,211,600
620,000
401,500
3,161,000
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
61
61
Notes to the Consolidated Financial Statements 30 June 2014
25. Share-Based Payments (continued)
2013
Grant Date
Vesting
Date
Holding
Lock
Date
Balance
at start of
the year
Granted
during
the year
Converted
during
the year
Forfeited
during
the year
Balance
at end of
the year
2 Sep 2010
31 Aug 2012
31 Aug 2013
10 Nov 2011
25 Nov 2011
30 Sep 2012
30 Sep 2013
25 Nov 2013
25 Nov 2014
13 Sep 2012
19 Sep 2014
19 Sep 2015
30 Nov 2012
30 Sep 2013
30 Sep 2014
30 Nov 2012
30 Nov 2014
30 Nov 2015
30 Nov 2012
30 Nov 2015
30 Nov 2016
15 Jan 2013
15 Jan 2015
15 Jan 2016
Number
717,800
375,000
457,500
–
–
–
–
–
Number
–
–
–
672,400
400,000
200,000
360,000
50,000
Number
717,800
125,000
–
–
–
–
–
–
Number
Number
–
250,000
47,500
71,500
–
–
–
50,000
–
–
410,000
600,900
400,000
200,000
360,000
–
Total
1,550,300
1,682,400
842,800
419,000
1,970,900
Information used in assessing the fair value of performance rights granted during the year ended 30 June 2014 is as follows:
Right grant date
16 September 2013
22 November 2013
22 November 2013
22 November 2013
Number of rights granted
1,261,600
500,000
50,000
50,000
Vesting date
16 September 2015
30 September 2014
22 November 2015
22 November 2015
Disposal Restriction until
16 September 2016
30 September 2015
22 November 2016
22 November 2016
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
KPIs
50%
2.7%
-
$0.89
$0.89
KPIs Continued Employment
Index TSR
50%
2.5%
-
$0.89
$0.85
50%
2.7%
-
$0.89
$0.85
50%
2.7%
-
$0.89
$0.55
Right grant date
22 November 2013
22 November 2013
22 November 2013
22 November 2013
Number of rights granted
100,000
100,000
50,000
100,000
Vesting date
22 November 2015
22 November 2016
22 November 2016
22 November 2016
Disposal Restriction until
22 November 2016
22 November 2017
22 November 2017
22 November 2017
Performance Measure
Index TSR+10% Continued Employment
Index TSR
Index TSR+10%
Expected price volatility of the
company's shares
Risk-free interest rate
Expected dividend yield
Share price at grant date
Assessed fair value
50%
2.7%
-
$0.89
$0.54
50%
3.0%
-
$0.89
$0.85
50%
3.0%
-
$0.89
$0.58
50%
3.0%
-
$0.89
$0.55
62
Starpharma Holdings Limited Annual Report 2014
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62
Notes to the Consolidated Financial Statements 30 June 2014
Information used in assessing the fair value of performance rights granted during the year ended 30 June 2013 is as follows:
Right grant date
13 September 2012
30 November 2012
30 November 2012
30 November 2012
Number of rights granted
672,400
100,000
100,000
200,000
Vesting date
19 September 2014
30 September 2013
30 September 2013
30 September 2013
Disposal Restriction until
19 September 2015
30 September 2014
30 September 2014
30 September 2014
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
KPIs
Share Price ≥ $1.86
Share Price ≥ $2.09
55%
2.8%
-
$1.55
$1.55
50%
3.0%
-
$1.16
$0.19
50%
3.0%
-
$1.16
$0.12
KPIs
50%
3.0%
-
$1.16
$1.10
Right grant date
30 November 2012
30 November 2012
30 November 2012
30 November 2012
Number of rights granted
50,000
50,000
100,000
80,000
Vesting date
30 November 2014
30 November 2014
30 November 2014
30 November 2015
Disposal Restriction until
30 November 2015
30 November 2015
30 November 2015
30 November 2016
Performance Measure
Continued Employment
Index TSR
Index TSR+10% Continued Employment
Expected price volatility of the
company's shares
Risk-free interest rate
Expected dividend yield
Share price at grant date
Assessed fair value
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
55%
2.8%
-
$1.16
$1.10
55%
2.8%
-
$1.16
$0.72
55%
2.8%
-
$1.16
$0.70
60%
2.7%
-
$1.16
$1.10
30 November 2012
30 November 2012
15 January 2013
80,000
200,000
50,000
30 November 2015
30 November 2015
15 January 2015
30 November 2016
30 November 2016
15 January 2016
Index TSR
Index TSR+10%
60%
2.7%
-
$1.16
$0.77
60%
2.7%
-
$1.16
$0.76
KPIs
50%
3.3%
-
$1.17
$1.12
Share price volatility and the risk-free interest rate are obtained through an independent valuation.
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period were as follows:
Employee shares issued
Employee performance rights issued
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
30 June 2014
$’000
30 June 2013
$’000
33
1,460
1,493
32
923
955
63
63
Notes to the Consolidated Financial Statements 30 June 2014
26. 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 2014 (2013: nil).
30 June 2014
30 June 2013
Parent
$'000
22,657
39,342
800
800
140,349
5,139
(106,946)
(12,283)
(12,283)
$'000
32,684
49,821
725
725
140,081
3,678
(94,663)
(10,088)
(10,088)
64
Starpharma Holdings Limited Annual Report 2014
Starpharma Holdings Limited Annual Report
64
Directors’ Declaration for the year ended 30 June 2014
In the directors’ opinion:
(a) the financial statements and notes set out on pages 33 to 64 are in accordance with the Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
and
(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014 and of its performance for the financial year
ended on that date; and
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the
Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Rob Thomas AM
Chairman
Melbourne, 13 August 2014
Starpharma Holdings Limited Annual Report
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65
65
Independent Audit Report to the Members of Starpharma Holdings Limited
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
We have audited the accompanying financial report of Starpharma Holdings Limited (the company),
Report on the financial report
which comprises the consolidated balance sheet as at 30 June 2014, the consolidated income
We have audited the accompanying financial report of Starpharma Holdings Limited (the company),
statement, consolidated statement of comprehensive income, consolidated statement of changes in
which comprises the consolidated balance sheet as at 30 June 2014, the consolidated income
equity and consolidated statement of cash flows for the year ended on that date, a summary of
statement, consolidated statement of comprehensive income, consolidated statement of changes in
significant accounting policies, other explanatory notes and the directors’ declaration for Starpharma
equity and consolidated statement of cash flows for the year ended on that date, a summary of
Holdings Limited (the consolidated entity). The consolidated entity comprises the company and the
significant accounting policies, other explanatory notes and the directors’ declaration for Starpharma
entities it controlled at year’s end or from time to time during the financial year.
Holdings Limited (the consolidated entity). The consolidated entity comprises the company and the
entities it controlled at year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a
Directors’ responsibility for the financial report
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
The directors of the company are responsible for the preparation of the financial report that gives a
and for such internal control as the directors determine is necessary to enable the preparation of the
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the
and for such internal control as the directors determine is necessary to enable the preparation of the
directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the
Statements, that the financial statements comply with International Financial Reporting Standards.
directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial statements comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
Auditor’s responsibility
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
obtain reasonable assurance whether the financial report is free from material misstatement.
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
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
in the financial report. The procedures selected depend on the auditor’s judgement, including the
In making those risk assessments, the auditor considers internal control relevant to the consolidated
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
entity’s preparation and fair presentation of the financial report in order to design audit procedures
In making those risk assessments, the auditor considers internal control relevant to the consolidated
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
entity’s preparation and fair presentation of the financial report in order to design audit procedures
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
accounting policies used and the reasonableness of accounting estimates made by the directors, as well
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
as evaluating the overall presentation of the financial report.
accounting policies used and the reasonableness of accounting estimates made by the directors, as well
as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Independence
Act 2001.
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
PricewaterhouseCoopers, ABN 52 780 433 757
Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
PricewaterhouseCoopers, ABN 52 780 433 757
Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
Liability limited by a scheme approved under Professional Standards Legislation.
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
66
Liability limited by a scheme approved under Professional Standards Legislation.
Starpharma Holdings Limited Annual Report
Starpharma Holdings Limited Annual Report 2014
66
Independent Audit Report to the Members of Starpharma Holdings Limited
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
2014 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.
(b)
the financial report and notes also comply with International Financial Reporting Standards as
disclosed in Note 1.
Report on the Remuneration Report
We have audited the remuneration report included in pages 18 to 25 of the directors’ report for the
year ended 30 June 2014. 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
2014 complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
Anton Linschoten
Partner
Melbourne
13 August 2014
Starpharma Holdings Limited Annual Report
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67
67
Shareholder Information
The shareholder information set out below was applicable as at 31 July 2014.
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
There were 392 holders of less than a marketable parcel of ordinary shares.
B. Equity Security Holders
The names of the twenty largest holders of quoted equity securities are listed below:
Name
1.
HSBC Custody Nominees (Australia) Limited
2.
National Nominees Limited
3.
JP Morgan Nominees Australia Limited
4.
Citicorp Nominees Pty Limited
5.
T & N Argyrides Investments P/L
6.
BNP Paribas Noms Pty Ltd
7.
Mr Peter Malcolm Colman
8.
Kenneth Nominees Pty Ltd
9.
HSBC Custody Nominees (Australia) Limited
10. Applecross Secretarial Services Pty Ltd
11. Citicorp Nominees Pty Limited
12. UBS Wealth Management Australia Nominees Pty Ltd
13. Mr Kingsley Bryan Bartholomew
14. JPS Distribution Pty Ltd
15. Commonwealth Scientific And Industrial Research Organisation
16. Warbont Nominees Pty Ltd
17. Ms Jacinth Fairley
18. HSBC Custody Nominees (Australia) Limited - A/C 2
19. Applecross Secretarial Services Pty Ltd
20. Mrs Wendy Jean Ayres
Class of equity security
Shares
Performance rights
737
1,691
906
1,397
214
4,945
–
–
–
21
6
27
Number held
73,316,647
31,939,425
24,319,864
12,731,952
5,410,449
4,164,654
3,855,968
3,422,053
3,106,060
2,885,588
2,587,187
2,498,620
2,000,000
1,863,255
1,448,798
1,202,834
1,156,697
1,124,196
1,118,588
1,117,947
Ordinary shares
Percentage
of issued shares
25.72
11.20
8.53
4.47
1.90
1.46
1.35
1.20
1.09
1.01
0.91
0.88
0.70
0.65
0.51
0.42
0.41
0.39
0.39
0.39
181,270,782
63.58
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68
Shareholder Information
Name
Employee Performance Rights
C. Substantial Holders
Unquoted equity securities over ordinary shares
Number on issue
3,161,000
Number of holders
27
Substantial shareholders as shown in substantial shareholder notices received by the company as at 31 July 2014:
Name
Acorn Capital Limited
Allan Gray Australia Pty Ltd
M&G Investment Funds
The Dow Chemical Company
D. Voting Rights
Ordinary shares
Number held
26,357,951
41,319,032
37,069,789
14,406,827
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.
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Intellectual Property Report
The Starpharma patent portfolio currently has around 30 active patent families with over 110 granted patents and more than 60 patent
applications pending.
Key patents within the Starpharma portfolio as at 31 July 2014:
Title
VivaGel® Patent Portfolio
Antiviral Dendrimers
Priority Date &
Publication Number
15 June 1994
WO95/34595
Anionic Or Cationic Dendrimer
Antimicrobial Or Antiparasitic
Compositions
14 September 1998
WO00/15240
Agents For The Prevention &
Treatment Of Sexually Transmitted
Diseases-I
30 March 2001
WO02/079299
Microbicidal Dendrimer
Composition Delivery System
18 October 2005
WO2007/045009
Contraceptive Composition
Method Of Treatment Or
Prophylaxis Of Bacterial Vaginosis
22 March 2006
WO2007/106944
16 May 2011
WO2012/000891
Drug Delivery Patent Portfolio
Disulfide-containing dendritic
polymers
Macromolecules Compounds
Having Controlled Stoichiometry
Modified Macromolecules
Targeted Polylysine Dendrimer
Therapeutic Agent
Macromolecules
Priostar Patent Portfolio
Dendritic Polymers With Enhanced
Amplification And Interior
Functionality
Sep 30, 1996
25 October 2005
WO2007/048190
10 August 2006
WO2007/082331
11 August 2006
WO2008/017125
6 June 2011
WO2012/167309
20 April 2005
WO2006/065266
Patents Granted
Applications Pending
Australia, Brazil, Canada, China,
Europe, Hong Kong, Japan,
Mexico, New Zealand,
Singapore, South Korea,
USA
Australia, Canada, Europe,
Japan, Mexico, New
Zealand, Singapore, South
Korea, USA
Australia, Canada, China,
Europe, Hong Kong, Japan,
Mexico, New Zealand,
Singapore, South Korea,
USA
Brazil
Australia, Japan, New Zealand,
Russian Federation,
Taiwan, USA
Argentina, Canada, China, Europe,
Hong Kong, India, Malaysia,
South Korea
Australia, China, Japan, USA
Canada, Europe
Australia, Brazil, Canada, China,
Europe, India, Israel, Japan,
South Korea, Mexico, Russia,
USA
USA
Australia, USA
Canada, Europe
USA
Australia, Canada, China, Europe,
China, USA
Argentina, Canada, China, India,
Israel, Japan, Mexico, New
Zealand, Singapore, South
Korea, Taiwan, USA
India, Japan, USA
Europe, India
Australia, Brazil, Canada, China,
Europe, India, Japan, South
Korea, USA
Brazil, Europe, Hong Kong
Dendritic Polymers With Enhanced
Amplification And Interior
Functionality
21 December 2005
WO2006/115547
PEHAM Dendrimers for use in
Agriculture
26 October 2009
WO2011/053605
Australia, Canada, China, India,
Argentina, Brazil, Europe, Hong
Israel, Mexico, New
Zealand, Singapore, South
Korea, Taiwan, USA
Kong, Japan
Australia, Brazil, China, Europe,
India, Japan, USA
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Solicitors
Norton Rose Fulbright
RACV Tower, 485 Bourke Street
Melbourne VIC 3000 Australia
Stock exchange listing
ASX Limited
Level 45, North Tower, Rialto, 525 Collins Street,
Melbourne VIC 3000 Australia
ASX Code: SPL
Starpharma’s American Depositary Receipts (ADRs) trade under
the code SPHRY (CUSIP number 855563102). Each Starpharma
ADR is equivalent to ten ordinary shares of Starpharma as traded
on the ASX. The Bank of New York Mellon is the depositary bank.
Starpharma’s ADRs are listed on OTCQX International
(www.otcmarkets.com), a premium market tier in the U.S. for
international exchange-listed companies, operated by OTC
Markets Group.
Website address
www.starpharma.com
Corporate Directory
Company name
Starpharma Holdings Limited
ABN 20 078 532 180
Directors
R B Thomas AM – Chairman
J K Fairley – Chief Executive Officer
P J Jenkins – Deputy Chairman
R A Hazleton
Z Peach
P R Turvey
Company Secretary
Nigel Baade
Registered office
Baker IDI Building
75 Commercial Road,
Melbourne, Victoria 3004 Australia
Telephone +61 3 8532 2700
Fax +61 3 9510 5955
Postal address
GPO Box 6535
Melbourne VIC 3004 Australia
Share register
Computershare Investor Services Pty Limited
452 Johnston Street, Abbotsford VIC 3067
GPO Box 2975
Melbourne, VIC 3001
1300 850 505 (within Australia)
+613 9415 4000 (outside Australia)
www.computershare.com
Auditor
PricewaterhouseCoopers
Freshwater Place
Southbank VIC 3006 Australia
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STARPHARMA HOLDINGS LIMITED
ABN 20 078 532 180
Baker IDI Building
75 Commercial Road, Melbourne
VIC 3004 Australia
Telphone +61 3 8532 2700
Facsimile +61 3 9510 5955
www.starpharma.com