Delivering results
Investing for future growth
2010 Annual Report
Sirtex is transforming and improving the
way liver cancer can be treated, helping
to bring hope and quality of life to
patients and their families worldwide.
2010 Financial Snapshot
The Success of SIR-Spheres Microspheres
The Reality of SIR-Spheres Microspheres
1
2
3
4 Achievement Summary
6 Chairman’s Report
8 CEO’s Report
11 Corporate Governance
13
Financials
Annual General Meeting
The Annual General Meeting will be held at 10:00am
on 26 October 2010 at the Stamford Grand Hotel
North Ryde, NSW Australia.
Sirtex’s global headquarter is in Sydney, Australia,
with three regional headquarters located in Asia
Pacific, Europe and the United States and principal
manufacturing facilities in Australia and the
United States.
Sirtex Medical Ltd ABN 35 078 166 122
®SIR-Spheres is a Registered Trademark of Sirtex SIR-Spheres Pty Ltd
®Thermospheres is a Registered Trademark of Sirtex Thermospheres Pty Ltd
2010 Financial Snapshot
> Dose sales of SIR-Spheres microspheres targeted radioactive liver cancer treatment
were up 14 per cent year-on-year.
> Sales revenue this year was down 1.9 per cent from $65.5 million to $64.3 million with
the strength of the Australian dollar against a weakening Euro and US dollar the main
reason for the flat number despite strong product sales.
> Sales in Europe grew by 31 per cent, sales in the US were up 8 per cent and sales
in the Asia Pacific region grew 5 per cent.
> Sales revenue in Europe was $21.5 million, revenue in the US was $40 million and the
Asia Pacific region $2.8 million.
> Cash from operating activities was $20.2 million compared to $20.1 million last year.
> Cash on hand increased to $41.4 million compared with $26.5 million last year.
5 Year Dose Sales Growth
1
7
1
,
4
8
5
6
,
3
Asia Pacific
Europe
US
1
8
5
,
2
8
0
1
,
2
9
2
3
,
1
2006
2007
2008
2009
2010
Asia Pacific 5%a
Europe 31%a
US 8%a
2010 Sales Revenue
$Million
2.8
21.4
40
Asia Pacific
Europe
US
> Profit before tax, excluding foreign exchange, was up 27 per cent to $20.5 million
compared to $16 million last year. The result included $5.6 million in damages, legal
costs, expenses and interest from The University of Western Australia and Dr Bruce Gray
following proceedings in the Federal Court of Australia.
> Profit before tax, including foreign exchange, was down 17.5 per cent to $19.1 million.
Net profit after tax was $16 million, down 12 per cent due to unfavourable foreign
currency conditions.
> Earnings per share (EPS) was 28.8 cents compared to 32.7 cents last year. Net tangible
assets per share rose 33 per cent to 89.9 cents per share.
> Payment of a fully franked final year dividend of 7 cents per share on 14 October 2010
to shareholders registered at 30 September 2010.
Sirtex 2010 Annual Report 1
The Success of SIR-Spheres
Microspheres
SIR-Spheres microspheres
are an innovative means
of treating advanced
liver cancer.
In cases where it is not possible to surgically remove or ablate
patients’ liver tumours, SIR-Spheres microspheres can be used
to deliver targeted, internal radiation therapy directly to the
tumours.
This therapy is called Selective Internal Radiation Therapy,
also known as SIRT. SIR-Spheres microspheres are microscopic
radioactive particles that contain yttrium-90 (Y-90) and emit
pure beta radiation.
Each biocompatible sphere measures approximately 32 microns,
the size of four red blood cells or one-third the diameter of a
strand of human hair. SIRT is a minimally invasive procedure
that takes approximately 60 minutes and is performed by a
specially trained interventional radiologist.
The procedure involves the delivery of millions of SIR-Spheres
microspheres directly to the site of the liver tumours. The
microspheres are suspended in water and infused through
a temporary micro-catheter placed in the femoral artery of
the patient’s upper thigh and guided through the hepatic
artery to the site of the liver tumours.
Delivering the microspheres via the hepatic artery takes
advantage of the structure of the liver and enables the radiation
to be targeted to the cancerous tissue.
This is because healthy liver tissue receives most of its blood
supply via the portal vein, while liver tumours are hypervascular
and receive the overwhelming majority of their blood supply
from the hepatic artery.
Accordingly, the SIR-Spheres microspheres lodge in the small
blood vessels of the tumour, where they selectively destroy the
tumour from inside over a period of time. The anti-cancer effect
is concentrated in the liver while sparing the surrounding
healthy tissue.
2
Sirtex 2010 Annual Report
®
microspheres
The targeted nature of SIRT enables doctors to deliver up to
40 times more radiation to the liver tumours than conventional
radiotherapy, making it more effective in killing the cancer
without seriously affecting the patient. Patients may receive
SIRT on an outpatient basis or may stay overnight in hospital
afterwards. SIRT is usually a single procedure, although repeat
treatments are possible.
SIR-Spheres microspheres have proven to have positive results
in the treatment of inoperable liver cancer for both HCC and
CRC liver metastases when used either in combination with
chemotherapy or alone (in patients for whom SIRT is suitable).
Patient responses have included a reduction in disease
progression and increased patient survival rates, with some
patients’ liver cancer being down-staged to a point that enables
resection or ablation.
Lifesaver: Professor Peter
Gibbs of Royal Melbourne
Hospital in Australia with
patient Gordon Howgate
who was successfully
treated with SIR-Spheres
microspheres.
The Reality of SIR-Spheres
Microspheres
In Melbourne Australia,
Gordon Howgate, 58, says
he is feeling well and is
‘optimistic that soon all the
tumours will be gone’.
He is one of the over 15,000 people worldwide with inoperable
liver cancer who has been treated successfully with SIR-Spheres
microspheres.
Mr Howgate’s doctor, Associate Professor Peter Gibbs, is a
medical oncologist with The Royal Melbourne Hospital who has
helped pioneer the therapy over the past few years wtih Sirtex.
Professor Gibbs was one of the first doctors to use SIR-Spheres
microspheres seven years ago and has successfully treated
over one hundred patients since the first procedure.
Many of those with inoperable liver cancer have a secondary
cancer from bowel, breast or other organs that has spread to
the liver. In the past decade there has been a significant
increase in liver cancer in Australia. Prior to SIR-Spheres
microspheres patients had few options available to them.
Last year Mr Howgate was diagnosed with bowel cancer that
had spread extensively to his liver.
‘I asked how long I had without treatment and was told three
to six months,’ Mr Howgate said.
Following his treatment with SIR-Spheres microspheres and
six months of chemotherapy, scans show his liver cancer has
shrunk significantly and continues to do so. Professor Gibbs said
that in his experience about five per cent of his patients treated
with SIR-Spheres microspheres saw their tumours disappear, and
in most others it was prolonging lives. Professor Gibbs is also the
lead investigator for our SIRFLOX study underway worldwide.
Sirtex 2010 Annual Report 3
Achievement Summary
We are investing to create the foundations for long-term success
40 countries
Sirtex has helped improve the
quality of life for people in
40 countries.
16 clinical studies
We have invested in 16 important
small and large clinical studies
actively recruiting globally.
Over 15,000 people
Medical professionals worldwide
have treated over 15,000 people
with SIR-Spheres microspheres.
2,000 patients
Our investment in clinical studies
involves over 2,000 patients and
hundreds of independent medical
professionals worldwide.
Key achievements
in 2010
> Major new studies launched in Europe and the Asia Pacific
> Positive clinical results presented at the American Society of Clinical Oncology (ASCO)
> Record dose sales
> Clinical collaborations with Bayer Pharmaceuticals and Oxford University
> New president of US operations
> Commenced work to establish our new Singapore facility
10 years of solid growth and development
2000
Sirtex Medical lists on
the Australian Stock
Exchange.
2001
Company relocates
from Perth to Sydney
2002
US Food & Drug
Administration
approves SIR-Spheres
microspheres
2003
SIR-Spheres
microspheres granted
regulatory approval
in Europe
2004
SIR-Spheres
microspheres granted
full reimbursement
in US
2005
Gilman Wong appointed
Chief Executive Officer
4
Sirtex 2010 Annual Report
Growing global footprint
There are now 408 hospitals and treatment centres around the world
using SIR-Spheres microspheres to give hope to liver cancer patients.
United States of America: 222
Europe, Africa, Middle East: 111
Asia Pacific: 75
Major clinical study
investments underway
Name
SIRFLOX
FOXFIRE
SIRveNIB
SORAMIC
Number of patients
450
490
360
375
Location
Global
UK
Asia-Pacific
Europe
Global clinical program
underpins our long-term
growth
Our aim is to build the evidence needed to expand the use of SIR-Spheres microspheres
to treat liver cancer at an early stage.
Our long-term growth is underpinned by our extensive clinical studies program around the
world in collaboration with dozens of leading international experts in radiology, oncology
and cancer therapies.
Some of these studies are small. Others are large and are conducted with other established
global leaders like Bayer Pharmaceuticals and The University of Oxford in the quest to more
effectively treat liver cancer.
Our combined efforts with our partners are building the evidence to confirm the efficacy and
use of SIR-Spheres microspheres as the standard therapy for liver cancer and expand the
indications for its use.
2006
Positive clinical data
reported at the
American Society for
Clinical Oncology
2007
Start of SIRFLOX
international clinical
study
2008
New US manufacturing
facility opens
Positive clinical data
presented to the
American Society for
Clinical Oncology
2009
First shareholder
dividend paid
Record earnings
and dose sales
2010
New clinical studies in collaboration with
Bayer Pharmaceuticals and Oxford University
Record dose sales in all geographic markets
Start of work on Singapore office facility
Sirtex 2010 Annual Report 5
Chairman’s Report
Despite challenging market
conditions, we have reported
an increase in sales of
14 per cent for the year and
continued progress with our
global growth strategy.
Financial performance
and dividend
In the 2010 financial year, sales revenues were down 1.9 per
cent to $64.3 million. Sirtex achieved a net profit before tax
of $19.1 million, down 17.5 per cent on the prior year.
This result was in the context of significant economic uncertainty
in our major markets of Europe and the US, extreme volatility in
the foreign exchange markets and the continued strength of the
Australian dollar against the Euro and US dollar in which we
earn most of our revenue.
Earnings per share (EPS) was 28.8 cents compared to 32.7
cents last year. It is worth noting that EPS has grown at an
average rate of 55 per cent over the past five years. Net tangible
assets per share rose 33 per cent to 89.9 cents per share.
Net cash provided by operating activities remained steady at
$20.2 million over the period.
Despite the relatively flat result, our ongoing confidence that
we will continue our record of strong growth has enabled the
Board to pay a final fully franked dividend of 7 cents per
share this year.
Strong position going forward
Not withstanding the uncertainties of the global economic
environment, Sirtex remains in robust shape to continue to
deliver on its global growth objectives. The evidence provided
by our large clinical trial program combined with positive clinical
outcomes for more and more patients point to a positive future
for our main product and service. Sirtex retains a leadership
position in a global market with few competitors.
Long-term growth strategy
Sirtex takes a long-term view to its growth prospects.
One way to measure our performance is the growth in sales
of our main product, which has grown from 1,329 doses in
2006 to 4,171 in 2010. In addition, our share price has seen
consistent growth from $2.32 at the end of financial year
2006 to $4.90 at the end of financial year 2010.
Our strategy remains focused on long-term sustainable growth
through the expansion of our SIR-Spheres microspheres,
investment in sales and marketing, clinical studies, expanded
manufacturing capabilities and new product innovations. These
investments will secure our ambitious long-term future growth
and our research and development investment will help reduce
the risk of being a single product company.
6
Sirtex 2010 Annual Report
Earnings Per Share
Cents
Earnings Per Share
Net Tangible Assets per Share
Net Tangible Assets
$’000
Net Tangible Assets
Total Equity
Share Price
$
Prices at 30 June each year
9
.
9
8
.
4
7
6
3
4
5
,
1
5
5
5
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0
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9
7
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6
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8
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0
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2006
2007
2008
2009
2010
2006
2007
2008
2009
2010
2006
2007
2008
2009
2010
Outlook
It appears the new financial year will be categorised by more
uncertainty in the global economic environment and our main
markets.
We believe Sirtex is well positioned to continue its history
of sustained and consistent growth and innovation supported
by continued research and development and ongoing
investments in market development initiatives.
Richard Hill
Chairman
Directors and executive
management team
There were no changes to the Board during the year. Our
US operations have been refocused with the appointment
of Mr Michael Mangano as President of Sirtex Medical, Inc.
Mr Mangano was a senior executive with global medical device
company Boston Scientific Corporation. His focus is to increase
sales of SIR-Spheres microspheres in the US market.
Board and management stability is a key strength of our
business and a key contributor to helping us deal with the
many complexities of operating in multiple and highly regulated
global healthcare markets.
Our executive management team and their support staff made
excellent progress on the execution of our long-term global
growth strategy.
On behalf of the Board, I would like to thank our CEO Gilman
Wong, his management team and all our employees around the
world for their valued contribution and dedication. Our ongoing
success reflects their passion, enthusiasm and hard work. We
are all justifiably proud of Sirtex’s good work and achievements
to help give hope and improve the quality of life for liver cancer
patients worldwide.
Sirtex 2010 Annual Report 7
Chief Executive Officer’s Report
2010 was another successful year
of growth for Sirtex in our quest to
help doctors worldwide extend and
improve the quality of life for people
with liver cancer through the use
of our unique technology.
Solid foundations for growth
Our core performance and business growth metric of dose
sales remained strong with a rise of 14 per cent to 4,171
doses sold.
We are encouraged by the fact dose sales have grown at
an average of 26 per cent each year for the past five years.
Our focus this year has been to implement the changes
needed to ensure this continues, and we are confident solid
and consistent growth will continue to be achieved over the
long term.
Despite the continued economic uncertainty in global markets
Sirtex delivered another year of growth in sales of our lead
product.
Revenue for the full year was down 1.9 per cent from
$65.3 million to $64.3 million.
Extreme volatility in foreign exchange markets, and sustained
strength of the Australian dollar against a weakening Euro and
US dollar were the main reasons for the flat number despite solid
product sales. Net profit after tax (NPAT) was $16 million for
the same reasons.
As with last year, Europe was our fastest growing region,
with dose sales of 1,288 and revenue of $21.5 million up
31 per cent. In the US dose sales were 2,490, up 8 per cent
to $40 million. Asia Pacific achieved dose sales of 393 and
revenue of $2.8 million representing 5 per cent growth.
Our focus in the coming year will be to lift these numbers to
even higher levels. It is worth remembering these sales represent
less than one per cent of the addressable global market of
people diagnosed worldwide each year with liver cancer.
I believe we are making excellent progress in all geographic
markets and the senior personnel renewal this year to our US
operations combined with the investment in our new Singapore
manufacturing and marketing base will translate into higher sales
over the next few years.
Strong cash position
Importantly for shareholders, Sirtex remains debt free with cash
on hand of $41.4 million compared with $26.5 million last year.
Cash from operating activities remained steady at $20.2 million.
Our confidence and performance saw the Board declare to
pay a final year fully franked dividend of 7 cents per share on
14 October 2010 to shareholders registered at 5:00pm on
30 September 2010.
Clinical studies provide evidence
for expanded use
Our extensive clinical program is focused on providing clinicians
worldwide with the evidence that SIR-Spheres microspheres
can be used as an early stage treatment. Our investment in this
area is critical. The Company devoted $8.9 million dollars to
clinical studies during the period which is consistent with our
commitments over the past five years.
As we finished the 2010 financial year, we announced the start
of yet another major international Phase III clinical study. This will
directly compare the effectiveness of SIR-Spheres microspheres
to treat inoperable liver cancer against the current accepted
standard of care, chemotherapy drug Sorafenib which is
marketed by Bayer HealthCare Pharmaceuticals, Germany.
8
Sirtex 2010 Annual Report
5 Year Dose Sales Growth
5 Year Sales Revenue
$’000
Profit after Tax
$’000
1
7
1
,
4
8
5
6
,
3
Asia Pacific
Europe
US
1
8
5
,
2
8
0
1
2
,
9
2
3
,
1
9
5
5
5
6
,
3
3
3
,
4
6
Asia Pacific
Europe
US
5
2
1
8
3
,
4
3
3
3
3
,
9
5
5
2
2
,
9
2
2
8
1
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0
8
0
6
1
,
7
0
8
1
,
6
6
5
,
1
9
0
2
,
1
2006
2007
2008
2009
2010
2006
2007
2008
2009
2010
2006
2007
2008
2009
2010
This important study called SIRveNIB is carried out in
collaboration with the Asia Pacific Hepatocellular Carcinoma
Trials Group (AHCC) in Singapore, the National Cancer Centre
Singapore, the National Medical Research Council in Singapore,
the Singapore Clinical Research Institute and Singapore
General Hospital.
Entering the 2011 financial year, recruitment is underway
for a small but exciting new study to determine if SIR-Spheres
microspheres is suitable for potential use to treat kidney
cancer patients.
At the same time, our major FOXFIRE study in collaboration
with The University of Oxford, Cancer Research UK and the
Bobby Moore Fund for Cancer Research, is recruiting in several
European hospitals and is actively assessing candidates.
The study will establish if chemotherapy and SIR-Spheres
microspheres is more effective than just chemotherapy in
patients with colorectal cancer that has spread to the liver.
Another major study, SORAMIC, in collaboration with Bayer
Healthcare of Germany is also recruiting to schedule. The study
will assess the efficacy of Bayer’s Nevexar combined with
SIR-Spheres compared to just Nevexar to treat patients with
inoperable liver cancer.
Technology pipeline development
Our long-term growth is underpinned by ongoing technology
innovations and our investment in the important area of research
and development was up again this year to $3 million or
5 per cent of revenue.
We have a very promising pipeline of technology in development
and I am pleased to report we are on track to begin the first
pre-clinical studies for our highly promising radioprotector
technology. There is strong interest worldwide in this asset
and the building blocks for long-term advances are in place.
Technological innovation is the cornerstone of our long-term
growth strategy and we lead the world in terms of investment in
future applications of our radioactive microspheres technology.
Sustaining growth requires that we stay at the forefront of
innovation worldwide. To this end we have a range of active
multi-disciplinary collaborations and research programs with
other leaders in the field. Our goal is to rapidly improve and
expand the potential use of our current platform.
Our partnerships with several leading universities give us
strengths across a range of relevant disciplines and create
the synergies to expand our knowledge base.
Each year we increase our investment in this area to ensure
we stay at the forefront of technology innovations in our
field worldwide.
We are currently involved in several major collaborative research
projects with leading universities and research centres in Europe,
Asia, Australia and the US. These programs are focused on the
three main areas of development we have identified as the most
promising ways to evolve our increasingly valuable technology
platform. These are:
Radioprotector Technology – Together with the respected Peter
MacCallum Cancer Centre in Melbourne, this year we moved
closer to the first clinical tests of a highly unique compound that
is designed to protect healthy tissue from the harmful effects of
exposure to radiation in patients undergoing radiotherapy
treatment for cancer.
Microsphere technologies – Work is progressing in partnership
with several leading universities to develop and test a range
of promising microsphere technologies including microspheres
for targeted hyperthermia and some novel concepts that
could potentially be incorporated in the next generation of
SIR-Spheres product.
Sirtex 2010 Annual Report 9
Another positive characteristic is our very low staff turnover rate.
The coming year will see Sirtex expand its employee numbers
by 40 per cent to support our growth. We will strengthen our
sales, marketing and clinical support teams in Asia, Europe
and the US. Our workforce reflects our diversity of operations
around the world.
To this end, we have invested in programs to build the process
management systems and capabilities needed to underpin our
future growth. We are committed to maintaining the highest
levels of health and safety for all of our employees, especially
the nature of our product and business activities. Full occupation
health and safety training is provided for all employees and
excellent progress has been made in all of these areas.
2011 outlook
The dedication and commitment of all who work with Sirtex are
the key to our success. Their efforts are equally matched by the
commitment of the medical professionals worldwide who use
our product to treat patients.
Together we are transforming and improving the way liver cancer
can be treated, helping bring hope and quality of life to patients
and their families. The continued good results we achieve
together will underpin the creation of significant value for
shareholders over many decades.
Gilman Wong
Chief Executive Officer
August 2010
Nano particle developments – We are making good progress
in pre-clinical studies with our collaborating partners at the
Australian National University in Canberra and The University
of Sydney to develop novel new nano particle technologies for
the detection and targeted treatment of cancer. These new
technologies will be applicable to a range of types of cancer,
not just liver cancer.
All of this work is important and we continued to expand and
grow our capabilities throughout the year.
Manufacturing and operations
Our current manufacturing operations in the US and Australia
give us a long-term sustainable advantage to deliver large
volumes of our product at the highest possible quality and
standards in a timely manner.
The doors to our new Singapore office are planned to open
in the first quarter of 2011 and we expect the manufacturing
facility to be certified and operating by mid-2011. This is a major
investment that will help us meet the anticipated strong growth
in demand for our products.
Our operations strategy is focused on using the best
manufacturing practices and capabilities available. We are
committed to maintaining the highest levels of quality and all
of our systems comply with all applicable regulatory
requirements in every market in which we operate.
Quality assurance and
regulatory approvals
Sirtex is committed to the highest levels of quality and we have
a robust integrated global quality management system in place
to ensure the highest level of quality of our core products and
services. Our systems comply with the stringent applicable
regulatory requirements in place in all the markets in which
we operate worldwide. Sirtex has all the necessary regulatory
licences and approvals to enable the marketing and sale of
its product in the countries in which we operate. We have an
active and ongoing program to seek approvals in new
jurisdictions where there is interest and demand for
SIR-Spheres microspheres.
Organisational capabilities
We have a dedicated and engaged team who are fundamental
to our success. As we continue to rapidly grow our business,
a large part of our focus is directed at strengthening our internal
capabilities and developing an environment that attracts and
retains the best people in every market in which we operate.
10
Sirtex 2010 Annual Report
Corporate Governance Statement
The Board of Directors of Sirtex Medical Limited is responsible
for the corporate governance of the Group and guides and
monitors the business and affairs of Sirtex Medical Limited
on behalf of its shareholders.
Sirtex Medical Limited is committed to ensuring that its policies
and practices reflect good corporate governance. In developing
these policies and practices, the Board has taken into account
the ASX Corporate Governance Council’s ‘Corporate Governance
Principles and Recommendations’. The Council, however, states
that these recommendations are not prescriptive; they are
guidelines. If a company decides not to adopt a specific
recommendation it has the flexibility not to do so providing
it explains the reason for not adopting the recommendation.
The Company has structured its Corporate Governance
Statement with reference to the Corporate Governance Council’s
principles and recommendations, which are as follows:
Principle 1 Lay solid foundation for management and oversight
Principle 2 Structure the board to add value
Principle 3 Promote ethical and responsible decision making
Principle 4 Safeguard integrity in financial reporting
Principle 5 Make timely and balanced disclosure
Principle 6 Respect the rights of shareholders
Principle 7 Recognise and manage risk
Principle 8 Remunerate fairly and responsibly
Sirtex Medical Limited corporate governance practices were
in place throughout the year ended 30 June 2010 and, with the
exception of the recommendation regarding the establishment
of a Nomination Committee, were compliant in all material
respects with the Council’s recommendations. The reason for
not establishing this committee is explained below at the end
of the section headed Board Functions.
For further information on corporate governance policies
adopted by Sirtex Medical Limited, refer to the company
website: www.sirtex.com
Board functions
The Board’s prime responsibility is to oversee Sirtex’s business
activities for the benefit of all its shareholders. The Board’s
responsibilities are detailed on the Company’s website in the
‘Corporate Governance’ web pages.
The Board also recognises that the Company has other
corporate and community responsibilities.
The Board has delegated certain responsibilities for the
management of operations and administration of the Company
to the CEO and the executive management. The Chief Executive
Officer is accountable to the Board for all delegated authority
to executive management. The responsibilities of management
are detailed on the Company’s website in the ‘Corporate
Governance’ web pages.
The Board recognises that at all times it retains full responsibility
for guiding and monitoring the Company. In discharging this
stewardship the Board makes use of sub-committees. Specialist
committees are able to focus on a particular responsibility and
provide informed feedback to the Board. To this end the board
has established the following committees:
> Remuneration
> Audit
The roles and responsibilities of these committees are discussed
later in this statement. Further detail can be found on the
Company’s website in the ‘Corporate Governance’ web pages.
As previously mentioned, the Board does not have a Nomination
Committee (recommendation 2.4). The charter of the Nomination
Committee has been incorporated into the Board Charter. The
Sirtex Board believes that as it is not large (four directors), a
formal Nomination Committee would not provide any marked
efficiencies or enhancements. The charter of the nomination
committee has been included into the board charter and as such
the Board considers all matters that would be relevant regarding
Board appointments. For further information refer to the
Company’s website in the ‘Corporate Governance’ web pages.
Structure of the Board
The skill, experience and expertise relevant to the position of
Director, held by each Director in office at the date of this report,
are included in the Directors’ Report under the section headed
Directors.
All three Non-Executive Directors of Sirtex Medical Ltd are
considered to be independent with reference to the Company’s
independence criteria as contained on the Company’s website
in the ‘Corporate Governance’ web pages. These independent
Directors are:
Name
Richard Hill
John Eady
Grant Boyce
Position
Non-Executive Chairman
Non-Executive Deputy Chairman
Non-Executive Director
The Board has procedures to permit Directors, in the furtherance
of their duties, to seek independent professional advice at the
Company’s expense. For further information refer to the
Company’s website in the ‘Corporate Governance’ web pages.
The term in office of each Director at the date of this report is
as follows:
Name
Richard Hill
John Eady
Grant Boyce
Gilman Wong
Term
6 Years
5 Years
8 Years
5 Years
Sirtex 2010 Annual Report 11
CEO and CFO Certification
The Chief Executive Officer and Chief Financial Officer have
provided a written certification to the Board that:
> The Company’s financial reports are complete and present
a true and fair view, in all material respects, of the financial
condition and operational results of the Company and Group
and are in accordance with the relevant accounting
standards and;
> The above statement is founded on a sound system of risk
management and internal controls are operating efficiently
and effectively in all material respects
Performance
Policies and procedures in place with respect to monitoring the
performance of the Directors and Senior Executives are set out
in the Directors’ Report under the section headed ‘Remuneration
Report’. The performance evaluation process has been
completed for all Directors and Senior Executives within the
last twelve months, in line with Company policy.
Remuneration Committee
The Remuneration Committee operates under a charter
approved by the Board. The charter can be viewed on the
company website. It augments the work of the Board through
the development and monitoring of the Company’s remuneration
policies and processes and the through the provision of feedback
to the Board and recommendations for action.
The Committee reviews the remuneration of the Non-Executive
Directors, Executive Directors and key Executives by reference
to independent data, external professional advice and the
requirements to retain high-quality management. Refer to
the Directors’ Report for details of performance evaluation,
remuneration policy and the value of remuneration (both
monetary and non-monetary) paid to each Director and Key
Executive during the year.
There is no scheme to provide retirement benefits, other
than superannuation, for Non-Executive Directors.
The members of the Remuneration Committee are all
independent Non-Executive Directors. During the year the
members were John Eady (Chairman), Richard Hill and
Grant Boyce.
Details of the number of meetings held during the year and
the number of meetings attended by each member during the
year are contained in the Directors’ Report.
Audit Committee
The Audit committee operates under a charter approved by the
Board. It is the Board’s responsibility to ensure that an effective
internal control framework exists within the Group. This includes
ensuring that there are internal controls to deal with both
effectiveness and efficiency of significant business processes,
safeguarding of assets, the maintenance of proper accounting
records and the reliability of the financial information as well
as non-financial considerations. The Board has delegated the
responsibility for the establishment and maintenance of a
framework of internal control and the ethical standards for the
management of the consolidated entity to the Audit Committee.
The Audit Committee also provides the Board with additional
assurances regarding the reliability of the financial information
for inclusion in the financial report. All members of the
Audit Committee are independent Non-Executive Directors.
The members of the audit committee during the year were
Grant Boyce (Chairman), Richard Hill and John Eady. The
qualifications of the members of the Audit Committee are
contained in the Directors’ Report. In addition the Directors’
Report sets out the number of meetings attended by
each member.
The Audit Committee is also responsible for nomination of
the external auditors and for reviewing the adequacy of the
scope and quality of the annual statutory audit and half-year
statutory review. The Audit Committees charter can be found
on the Company’s website in the ‘Corporate Governance’
web pages.
Risk Management
The Board determines the Company’s risk profile and is
responsible for overseeing and approving risk management
strategy and policies, internal compliance and internal control.
The Board has delegated monitoring risk management
performance to the Audit Committee and its operation has been
delegated to Sirtex’s Executive Management. Employees are
required to be conversant with the Company’s risk management
policies, standard operational procedures associated with risk
management and their employment, and to actively participate
in risk management matters.
The Board and Executive Management continue to identify
and monitor the general areas of risk including:-
> Economic outlook
> Political policy regarding healthcare and reimbursement
> Competitor products / research and development programs
> Market demand and prices, including supplies
> Legal proceedings commenced against the company (if any)
> Environmental regulations
> Ethical issues including those relating to pharmaceutical
research and development
> Other government regulation including those specifically
relating to the biotechnology and heath industries
> Occupational health and safety and equal opportunity laws
> Information technology
To this end, comprehensive practices are in place that are
directed towards achieving the following objectives
> Effective and efficient use of the Company’s resources
> Compliance with applicable laws and regulations
> Preparation of reliable published financial information
The Board oversees an annual assessment of the effectiveness
of risk management and internal compliance and control. The
responsibility for undertaking and assessing risk management
and internal control effectiveness is delegated to management.
Annually, management is required and has provided to the
Board a report assessing the efficiency and effectiveness of
risk management and associated internal compliance and
control procedures.
12
Sirtex 2010 Annual Report
Financial Report
For The Year Ended 30 June 2010
Sirtex Medical Ltd
Consolidated Entity
ABN 35 078 166 122
Directors’ report
Auditor’s independence declaration
Directors’ declaration
Independent auditor’s report
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Additional information
14
21
22
23
26
27
28
29
30
54
13
Directors’ Report
Directors’ Report
The directors of Sirtex Medical Ltd present their report, together with the financial statements of the Group for the year ended 30 June 2010.
Directors
The directors of Sirtex Medical Ltd during the financial year and until the date of this report are Mr R Hill, Dr J Eady, Mr G Boyce, and
Mr G Wong. Details of the directors, including their skills, experience, and expertise, are set out below.
Richard Hill – Chairman
BA, LLB (Sydney), LLM (London)
Experience and Expertise
Mr Hill was appointed a director in September 2004 and Chairman in August 2006. He previously held senior
executive positions with HSBC Investment Bank in Hong Kong and New York and has extensive experience in
international M&A and capital raising. He is a founding partner of Hill Young & Associates corporate advisory
firm. He is also an attorney of the New York State Bar.
Other Current Directorships in Listed Companies
Calliden Group Limited – Chairman
Biota Holdings Limited
Pelorus Property Group Limited
Special Responsibilities
Member of the Audit Committee and the Remuneration Committee
Interest in Shares and Options
Nil
Dr John Eady –
Non-executive director,
Deputy Chairman
BSc (Hons), PhD, FTSE
Experience and Expertise
Dr Eady was appointed a director in March 2005. He spent most of his career with CRA Limited in a range
of senior executive positions. He has broad Board experience including that with the Australian Federal
Government’s Industry, Research and Development Board. Dr Eady is a Fellow of the Academy of
Technological Sciences and Engineering. He consults extensively on business improvement in Asia &
North America.
Former Directorships in Listed Companies in the past 3 years
Frigrite Limited
Special Responsibilities
Chairman of the Remuneration Committee and Member of the Audit Committee
Interest in Shares and Options
Nil
Grant Boyce –
Non-executive director
CA, BCom
Experience and Expertise
Mr Boyce was appointed a director in December 2002. He is a Chartered Accountant and the founder of
Montrose Partners, a West Australian firm of chartered accountants. He was a partner with Ernst & Young and
worked in their Perth and New York offices. He has also served previously as Company Secretary for Sirtex.
Other Current Directorships in Listed Companies
Nil
Special Responsibilities
Chairman of the Audit Committee and Member of the Remuneration Committee
Interest in Shares and Options
5,000 ordinary shares in Sirtex Medical Limited
Gilman Wong –
Executive Director and
Chief Executive Officer
Experience and Expertise
Mr Wong was appointed Chief Executive Officer in May 2005 and director in June 2005. Mr Wong previously
held CEO and senior executive positions in the commercial and industry sector including 10 years with
Email Limited. He has a strong planning and sales and marketing background.
Other Current Directorships in Listed Companies
Nil
Interest in Shares and Options
Nil
14
Sirtex 2010 Annual Report
Company Secretary
Darren Smith –
Company Secretary and
Chief Financial Officer
MBA, BBus, CPA
Experience and Expertise
Mr Smith was appointed company secretary in July 2008 and Chief Financial Officer in February 2009
(previously interim CFO). Mr Smith previously held CFO and senior executive finance and general
management positions in a number of international, Australian listed and private companies. He has
significant experience in a range of commercial environments including FMCG, services and
manufacturing industries.
Interest in Shares and Options
15,000 ordinary shares in Sirtex Medical Limited
Directors’ meetings
The number of directors’ meetings (including meetings of committees of directors) and number of meetings attended by each of the directors
of the company during the financial year are:
Board of Directors Remuneration Committee Audit Committee
Directors Held Attended Held Attended Held Attended
R Hill (Chairman) 13 13 8 8 5 5
Dr J Eady 13 13 8 8 5 5
G Boyce 13 13 8 8 5 5
G Wong 13 13 – – – –
Principal activities
Sirtex Medical Ltd and its controlled entities form a biotechnology and medical device company whose primary objective is to manufacture and
to distribute effective liver cancer treatments utilising small particle technology to approved markets in Asia-Pacific, Europe and the United
States of America.
Review of operations
Revenue from the sale of goods for the year ended 30 June 2010 was $64,333,000, representing a decline of 2% from last year’s
$65,559,000. This decline is entirely due to the unfavourable impact from the strengthening of the Australian dollar against the US dollar and
the Euro during the financial year. From 30 June 2009 to 30 June 2010, the Australian dollar appreciated by more than 20% against the
US dollar resulting in lower revenue from sales in the US and in Europe when converted into Australian dollars.
Volume growth could only partially offset the negative currency impact. Dose sales grew by 14% over last year, with all regional markets
contributing to the volume growth. The key market, the US, representing approximately 63% of total dose sales, achieved growth of 8.4%,
selling 2,490 doses. Europe had another outstanding year with 30.8% growth selling 1,288 doses. Asia Pacific achieved approximately 4.8%
growth with promising opportunities as the business continues to develop new markets within Asia Pacific.
Gross margin improved to 83.7% for the year ended 30 June 2010 compared to 80.7% for last financial year. This is partly due to the benefit
from the full year operation of our manufacturing facility in Wilmington, USA that was commissioned in February 2008. Profit after tax for the
year ended 30 June 2010 was $16,079,891 compared to last year $18,229,000.
Dividends
An ordinary dividend of 2 cents per share and a special dividend of 5 cents per share have been declared and paid during the year ended
30 June 2010 for the financial year ended 30 June 2009. An ordinary dividend of 7 cents per share has been declared for the financial year
ended 30 June 2010 with a record date 30 September 2010 and a payment date 14 October 2010.
Significant changes in state of affairs
During the financial year there were no significant changes in the state of affairs of the Consolidated Entity other than that referred to in the
financial statements or notes thereto.
Future developments, prospects and business strategies
Disclosure of information regarding likely developments in the operations of the Consolidated Entity in future financial years and the expected
results of those operations is likely to result in unreasonable prejudice to the Consolidated Entity. Accordingly, this information has not been
disclosed in this report.
Environmental regulations
The operations are not subject to significant environmental regulation under the law of the Commonwealth or State.
Sirtex 2010 Annual Report 15
Directors’ Report
Share options
Share options granted to key management personnel
There were no share options granted during or since the end of the financial year.
Share options on issue at year end or exercised during the year
During the year ended 30 June 2010, there were no ordinary shares of Sirtex Medical Ltd issued on the exercise of options. No share options
have been issued during the year, and no share options are outstanding at 30 June 2010.
Directors’ interests
The relevant interest of each director in the share capital of the Company, as notified by the directors to the ASX in accordance with section
205G(1) of the Corporations Act 2001, at the date of this Report is as follows:
2010 2010 2009 2009
Ordinary Shares Share Options Ordinary Shares Share Options
R Hill – – – –
Dr J Eady – – – –
G Boyce 5,000 – 5,000 –
G Wong – – – –
Indemnification of officers and auditors
During or since the financial year, the Company has paid premiums to insure each of the directors of the Group against liabilities incurred by
them arising out of their conduct while acting in the capacity of director, subject to certain terms and conditions. The insurance policy prohibits
disclosure of the value of the premium.
During or since the financial year, the Company has also agreed to continue to indemnify the directors of the Group against certain liabilities
incurred by them arising out of their conduct while acting in the capacity of director, subject to certain terms and conditions, and to the
applicable requirements of the Corporations Act 2001.
Events after balance date
The legal proceedings in relation to UWA were concluded in July 2010 with the receipt of a final payment for settlement of legal costs
of $2,575,186. A final dividend of 7 cents per ordinary shares has been declared for the year ended 30 June 2010.
No other matter or circumstance has arisen since the end of the financial year, that has significantly affected, or may significantly affect, the
operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.
Proceedings on behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the company
is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a
party to any such proceedings during the year except for those mentioned in Note 24.
Non-audit services
The Board of Directors, in accordance with advice from the audit committee, is satisfied that the provision of non-audit services during the year
is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that
their services disclosed below did not compromise the external auditor’s independence for the following reasons:
(cid:129) all non-audit services are reviewed and approved by the audit committee prior to commencement to ensure they do not adversely affect the
integrity and objectivity of the auditor; and
(cid:129) the nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110:
Code of ethics for Professional Accountants set out by the Accounting Profession Ethical Standards Board.
There were no non-audit services performed during the year.
A total of $91,000 has been paid as remuneration of the auditor of the parent entity and a total of $46,000 has been paid as remuneration
of the auditors of subsidiaries for audit and review of financial reports during the year.
16
Sirtex 2010 Annual Report
Auditor’s independence declaration
The auditor’s independence declaration for the year ended 30 June 2010 has been received and can be found on page 21 of the financial
report and forms part of the Directors’ Report.
Rounding off of amounts
The Company is an entity to which ASIC Class Order 98/100 applies and, accordingly, amounts in the financial statements and Directors’
Report have been rounded to the nearest thousand dollars, unless otherwise indicated.
Remuneration report
This report details the Company’s approach to remuneration and steps that it has taken to ensure that the structure and levels of remuneration
meet strict governance standards and are appropriate to facilitate its future growth.
Remuneration policy
The Board’s policy for determining the nature and amount of remuneration for board members and other key management staff of the
Consolidated Entity is as follows:
(cid:129) The remuneration policy, including setting the terms and conditions for non-executive directors, the executive director, other key
management and staff is developed by the Remuneration Committee after reviewing extensive market data and seeking professional advice
from independent external consultants. It is approved by the Board prior to implementation.
(cid:129) All staff receive a base salary (where the level is based on factors such as role and experience), superannuation and are eligible for fringe
benefits. Senior staff can receive performance incentives.
The Remuneration Committee comprises the three non-executive directors but invites executives and remuneration and industry experts to
provide input or attend meetings as necessary.
The Committee recommends payments to the non-executive directors, CEO and other key management staff and reviews their remuneration
annually, based on market practice, duties and accountability. Independent external advice is sought. Board policy is to remunerate all staff at
market rates for comparable companies for time, commitment and responsibilities. The objective is to attract the highest calibre of key
management executives and reward them for performance that results in long-term growth in stakeholder value.
The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual
General Meeting.
The performance of the CEO and non-executive directors is measured at least annually against criteria that are determined by the Board.
These criteria detail expectations and reflect short and long-term goals and shareholder and other stakeholder interests. The performance of
other key management staff is measured against criteria agreed at least annually, directly with the CEO or through him for his direct reports.
These criteria reflect current strategic initiatives and goals.
The Board strives to recruit the most appropriately qualified staff for all positions within the Company, including directors. Accordingly, the
Company employs a diverse mix of staff, both in terms of gender and background.
Performance based remuneration
As part of the CEO’s and other key management staff’s remuneration package, there is a performance-based component reflecting agreed
key performance indicators (KPIs). The intention is to reward these executives for excellent performance and facilitate goal congruence with
that of the business and stakeholders. The KPIs are specifically tailored to the accountabilities of each key executive. They cover areas the
Board believes hold greater potential for group expansion and profit. The target set for each KPI is based on budgeted figures for the group and
respective industry standards. Performance in relation to the KPIs is monitored monthly by the Board and assessed in the context of external
environment and other factors, with bonuses being awarded depending on how well targets have been achieved in the particular situation.
The Board may, however, exercise its discretion in relation to approving incentives and can recommend changes to the committee’s
recommendations. The policy is designed to attract the highest calibre of key management executives and reward them for performance
that results in long-term growth in stakeholder value.
Sirtex 2010 Annual Report 17
Directors’ Report
Relationship between remuneration policy and company performance
The remuneration policy is designed to align director and other staff objectives with those of shareholders and other stakeholders.
The following table shows the gross revenue, profits and dividends for the last five years for the listed entity, as well as the share price at the
end of the respective financial years. Analysis of the actual figures shows a significant increase in profits over the five year period. The Board
is of the opinion that these results can be attributed, in part, to the Company’s remuneration policy and is pleased to see the overall upwards
trend in shareholder wealth over the past five years.
2006
$
22.6m
1.8m
2.32
0.00
Revenue
Profit after tax
Share price at year end
Dividends paid
2007
$
33.3m
1.6m
3.44
0.00
2008
$
38.1m
1.2m
3.00
0.00
2009
$
65.6m
18.2m
3.35
0.00
2010
$
64.3m
16.1m
4.90
0.07
Remuneration audit
In order to ensure that Sirtex Medical Ltd maintains a remuneration policy that is appropriate and effective in its ability to attract and retain
capable staff and is consistent with best practice standards, the Remuneration Committee and Board engaged an independent remuneration
consultant (Godfrey Remuneration Group Pty Limited) to review current policies, audit existing remuneration levels and recommend areas for
improvement. The review concluded that the Company’s remuneration practices were well-founded if not conservative. It recommended
adjustments to several senior executive salary levels, minor modifications to the short-term incentive scheme and the introduction of a long-
term incentive plan.
The Remuneration Committee and Board intend to implement the Godfrey recommendations over the coming year.
18
Sirtex 2010 Annual Report
Key management personnel remuneration details
The following table provides the remuneration details of key management personnel of the Group.
Short-term
Post-employment
Salary
& fees
$
Non-
Bonus monetary
$
$
Super-
annuation
$
Other
Benefits
$
–
–
–
–
–
–
–
–
–
–
–
–
15,212
26,061
16,069
–
Non-executive Directors
R Hill
Dr J Eady
G Boyce
Subtotal
2010
2009
2010
2009
2010
2009
2010
2009
119,600
119,600
62,495
15,624
62,400
62,400
244,495
197,624
Other key management personnel
–
–
–
–
–
–
–
–
401,539
104,000
402,255
104,000
213,393
214,109
271,016
34,178
72,797
–
362,124
81,342
173,287
135,330
–
–
302,704
45,406
134,944
364,308
161,759
176,822
–
233,596
245,539
276,485
212,349
212,975
367,755
474,060
–
–
39,000
83,727
27,217
50,683
44,131
–
–
–
–
–
–
–
–
–
2,187,582
429,262
166,225
2,539,912
554,308
202,883
G Wong
D Cade
2010
2009
2010
2009
J Reddington (1)
2010
M Mangano (2)
N Lange
A Axisa (3)
D Smith
2009
2010
2009
2010
2009
2010
2009
2010
2009
M Van den Berg 2010
D Turner
Subtotal
Total
2009
2010
2009
2010
2009
2010
2009
–
–
5,625
52,496
–
–
5,625
52,496
14,461
13,745
14,461
13,745
–
–
–
–
–
–
–
3,120
14,461
4,582
14,461
13,745
–
–
57,844
48,938
2,432,077
429,262
166,225
63,469
2,737,536
554,308
202,883
101,434
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Equity
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Other
Long Term
$
Total Performance
related
%
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
119,600
119,600
68,120
68,120
62,400
62,400
250,120
250,120
520,000
520,000
262,032
300,651
286,228
469,527
324,686
–
483,054
702,889
–
236,716
299,000
364,794
254,027
277,403
411,886
474,060
– 2,840,913
– 3,346,041
– 3,091,033
– 3,596,161
–
–
–
–
–
–
20
20
13
24
–
17
42
–
9
23
–
–
13
23
11
18
11
–
15
17
14
15
(1) J Reddington ceased to be an employee of the Group on 31 December 2009. The salary paid to him during the year ended 30 June 2010
included a termination payment of $75,000.
(2) M Mangano became an employee of the Group on 1 January 2010.
(3) A Axisa ceased to be an employee of the Group on 25 February 2009. The salary paid to her during the year ended 30 June 2009 included
a termination payment of $183,000.
Sirtex 2010 Annual Report 19
Directors’ Report
Employment details of members of key management personnel
The following table provides employment details of persons who were, during the financial year, members of key management personnel
of the Group.
Name of Key
Management Personnel
Position held at 30 June 2010
Contract duration
Contract termination
by company
Participation in
Executive Bonus Plan
G Wong
D Smith
D Cade
Chief Executive Officer
Chief Financial Officer
Chief Medical Officer
M Van den Berg
Head of Asia Pacific Region
M Mangano
N Lange
D Turner
President US
CEO Europe
Head of Global Marketing
No fixed term
No fixed term
No fixed term
No fixed term
No fixed term
No fixed term
No fixed term
6 months (1)
1 month
1 month
1 month
nil (2)
1 month
3 months
Yes
Yes
Yes
Yes
Yes
Yes
Yes
(1) 3 months, if terminated by employee.
(2) 12 months in case of change of ownership or change of control.
Performance conditions linked to remuneration
G Wong’s remuneration has the following performance based elements:
Annual Bonus available up to 25% of base salary made up of 10% on achieving total company budget profit, 5% on achieving North American
budgeted profit, 5% on achieving European budgeted profit, and 5% on achieving Rest of World budgeted profit.
Up to further 15% of base salary at the discretion of the Board.
No other directors’ remuneration includes performance based elements.
Other key management personnel remuneration includes a performance-based element based on KPIs’ of the Group and of the regions.
The Report of the Directors, incorporating the Remuneration Report, is signed in accordance with a resolution of the Board of Directors
Gilman Wong
Director
26 August 2010
20
Sirtex 2010 Annual Report
Auditors’ Independence Declaration
Sirtex 2010 Annual Report 21
Directors’ Declaration
The directors of the company declare that:
1. The financial statements and notes, as set out on pages 26 to 53, are in accordance with the Corporations Act 2001and:
a. comply with International Financial Reporting Standards; and
b. give a true and fair view of the consolidated entity’s financial position as at 30 June 2010 and of its performance for the year ended
on that date.
2. The Chief Executive Officer and Chief Finance Officer have each declared that
a) the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the
Corporations Act 2001;
b) the financial statements and notes for the financial year comply with International Financial Reporting Standards and;
c) the financial statements and notes for the financial year give a true and fair view.
3.
In the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
On behalf of the directors
Gilman Wong
Director
26 August 2010
22
Sirtex 2010 Annual Report
Independent Auditor’s Report
Sirtex 2010 Annual Report 23
Independent Auditor’s Report
24
Sirtex 2010 Annual Report
Independent Auditor’s Report
Sirtex 2010 Annual Report 25
Statement of Comprehensive Income
Directors’ Report
for the year ended 30 June 2010
Consolidated
2010 2009
Note $’000 $’000
Revenue from the sales of goods 2(a) 64,333 65,559
Cost of sales (10,826) (12,606)
Gross profit 53,507 52,953
Other revenue 2(b) 7,756 1,334
Other income 2(c) – 6,994
Marketing expenses (21,770) (19,342)
Research expenses (3,062) (2,889)
Regulatory expenses (244) (189)
Quality assurance expenses (384) (438)
Clinical trial expenses (8,867) (6,005)
Administration expenses (6,330) (8,211)
Other expenses (1,503) (1,055)
Profit before income tax 19,103 23,152
Income tax expense 4 (3,023) (4,923)
Profit for the year 16,080 18,229
Other comprehensive income 162 (2,337)
Total comprehensive income for the year attributable
to members of the parent entity 16,242 15,892
Cents Cents
Earnings Per Share – Basic (earnings per share) 19 28.8 32.7
– Diluted (earnings per share) 19 28.8 32.7
7.0 –
Dividends per share
The financial statements should be read in conjunction with the accompanying notes.
26
Sirtex 2010 Annual Report
Statement of Financial Position
Directors’ Report
as at 30 June 2010
Consolidated
2010 2009
Note $’000 $’000
Current Assets
Cash and cash equivalents 5(a) 41,421 26,521
Trade and other receivables 6 15,209 12,438
Inventories 7 957 1,399
Financial assets 8 379 230
Other current assets 9 470 582
Current tax assets 10(a) 172 460
Total – Current Assets 58,608 41,630
Non-current Assets
Property, plant and equipment 11 4,331 3,512
Intangible assets 12 1,388 1,617
Deferred tax assets 10(b) 2,333 3,164
Total – Non-current Assets 8,052 8,293
Total Assets 66,660 49,923
Liabilities
Current liabilities
Trade and other payables 13 8,869 5,791
Current tax liabilities 14(a) 3,517 2,110
Short-term provisions 15(a) 2,268 1,605
Interest-bearing loans 16 – 64
Total – Current Liabilities 14,654 9,570
Non-current Liabilities
Long-term provisions 15(b) 255 185
Deferred tax liabilities 14(b) 208 989
Total – Non-current Liabilities 463 1,174
Total Liabilities 15,117 10,744
Net Assets 51,543 39,179
Equity
Issued capital 17 23,521 23,521
Reserves 18 (719) (882)
Retained earnings 28,741 16,540
Total – Equity 51,543 39,179
The financial statements should be read in conjunction with the accompanying notes.
Sirtex 2010 Annual Report 27
Statement of changes in equity
Directors’ Report
for the year ended 30 June 2010
Ordinary Option FC Translation Retained
Shares Reserve Reserve Profits Total
$’000 $’000 $’000 $’000 $’000
Consolidated Entity
Balance at 1 July 2008 23,521 557 1,455 (2,246) 23,287
Foreign currency translation reserve – – (2,337) – (2,337)
Profit attributable to members of parent entity – – – 18,229 18,229
Total comprehensive income for the year attributable
to the members of parent entity – – (2,337) 18,229 15,892
Transfer from option reserve to retained profits – (557) – 557 –
Dividends paid or provided for – – – – –
Balance at 30 June 2009 23,521 – (882) 16,540 39,179
Foreign currency translation reserve – – 162 – 162
Profit attributable to members of parent entity – – – 16,080 16,080
Total comprehensive income for the year attributable
to the members of parent entity – – 162 16,080 16,242
Dividends paid or provided for – – – (3,878) (3,878)
Balance at 30 June 2010 23,521 – (720) 28,741 51,543
The financial statements should be read in conjunction with the accompanying notes.
28
Sirtex 2010 Annual Report
Statement of Cash Flows
Directors’ Report
for the year ended 30 June 2010
Consolidated
2010 2009
Note $’000 $’000
Cash Flows From Operating Activities
Receipts from customers 64,064 62,557
Payments to suppliers and employees (47,714) (42,664)
Receipts from government grants 171 248
Receipts from license fees 183 113
Recovery of legal fees 3,000 –
Interest received 1,468 450
Interest paid (1) (9)
Net income tax paid (940) (555)
Net cash provided by operating activities 5(b) 20,231 20,140
Cash Flows From Investing Activities
Purchase of plant and equipment (1,384) (604)
Net cash used in investing activities (1,384) (604)
Cash Flows From Financing Activities
Proceeds from short-term borrowings – 96
Repayment of short-term borrowings (65) (32)
Payment of dividends (3,882) –
Net cash (used in) / provided by financing activities (3,947) 64
Net increase in cash held 14,900 19,600
Cash and cash equivalents at the beginning of financial year 26,521 6,921
Cash and cash equivalents at the end of financial year 5(a) 41,421 26,521
The financial statements should be read in conjunction with the accompanying notes.
Sirtex 2010 Annual Report 29
Notes to the Financial Statements
Directors’ Report
for the year ended 30 June 2010
Note 1: Statement of Significant Accounting Policies
(c) Goods and services tax (GST)
The financial report is a general purpose financial report which has
been prepared in accordance with Australian Accounting Standards,
Australian Accounting Interpretations, other authoritative pronouncements
of the Australian Accounting Standards Board and the Corporations
Act 2001. The report includes the consolidated financial statements
and notes of Sirtex Medical Ltd and controlled entities.
Compliance with Australian Accounting Standards ensures that the
financial report of Sirtex Medical Ltd complies with International
Financial Reporting Standards (IFRS) in their entirety. Material accounting
policies adopted in the preparation of this financial report are presented
below and have been consistently applied unless otherwise stated.
The financial statements were authorised for issue by the directors
on 26 August 2010.
This financial report has been prepared on an accruals basis and is
based on historical costs, modified, where applicable, by the
measurement at fair value of selected non-current assets, financial
assets and financial liabilities.
(a) Principles of consolidation
A controlled entity is any entity Sirtex Medical Ltd has the power
to control the financial and operating policies of so as to obtain
benefits from its activities.
A list of controlled entities is contained in Note 26 to the financial
statements. All controlled entities have a June financial year-end.
As at reporting date, the assets and liabilities of all controlled
entities have been incorporated into the consolidated financial
statements as well as their results for the year then ended.
Where controlled entities have entered or left the consolidated
group during the year, their operating results have been
included/excluded from the date control was obtained or until
the date control ceased.
All inter-company balances and transactions between entities in
the consolidated group, including any unrealised profits or losses,
have been eliminated on consolidation. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistencies with those policies applied by the parent entity.
Minority equity interests in the equity and results of the entities that
are controlled are shown as a separate item in the consolidated
financial report.
(b) Revenue recognition
Revenues, expenses and assets are recognised net of the
amount of GST, except where the amount of GST incurred is
not recoverable from the Australian Taxation Office (ATO). In
these circumstances, the GST is recognised as part of the cost
of acquisition of the asset or as part of an item of the expense.
Receivables and payables are shown inclusive of GST. The net
amount of GST recoverable from, or payable to, the ATO is
included as a current asset or liability in the statement of
financial position.
Cash flows are presented in the statement of cash flows on a
gross basis, except for the GST component of investing and
financing activities, which are disclosed as operating cash flows.
(d) Government grants
Government grants are recognised at fair value where there is
reasonable assurance that the grant will be received and all
grant conditions will be met. Grants relating to expense items
are recognised as income over the periods necessary to match
the grant to the costs they are compensating.
Grants relating to assets are credited to deferred income at
amortised fair value and are credited to income over the
expected useful life of the asset on a straight-line basis.
(e) Provisions
Provisions are recognised when the group has a legal or
constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will result and that
outflow can be reliably measured.
(f)
Intangibles
Intellectual property
The fair value of intellectual property contributed by an outside
equity interest holder to Sirtex Medical Ltd, has been capitalised
and recorded at fair value at the time of the contribution. The
asset will be amortised on a straight-line basis over a period
of 20 years.
Research and development
Expenditure during the research phase of a project is recognised
as an expense when incurred. Development costs are
capitalised only when technical feasibility studies identify that
the project will deliver future economic benefits and these
benefits can be measured reliably.
Revenue is measured at the fair value of the consideration
received or receivable after taking into account any trade
discounts and volume rebates allowed. All revenue is stated
net of the amount of GST.
Revenue from the sale of goods is recognised upon the delivery of
goods to customers, since this is the date of significant transfers
of risks and reward of ownership of goods and cessation of an
involvement in those goods.
Interest revenue is recognised on a proportional basis taking into
account the interest rates applicable to the financial assets.
(g) Plant and equipment
All assets acquired, including plant and equipment and intangibles
other than goodwill, are initially recorded at their cost of
acquisition, being fair value of the consideration provided plus
incidental costs directly attributable to the acquisition and
depreciation or amortisation as outlined below.
The cost of plant and equipment constructed by the
Consolidated Entity includes the cost of material and direct
labour, an appropriate proportion of fixed and variable overheads
and capitalised interest.
30
Sirtex 2010 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2010
Carrying value
All items of plant and equipment are carried at the lower of cost
less accumulated depreciation, amortisation and impairment
losses and their recoverable amount. The carrying amount is
reviewed annually by directors to ensure it is not in excess of
the recoverable amount. The recoverable amount is assessed
on the basis of the expected discounted present value net cash
flows that will be received from the asset’s employment and
subsequent disposal.
(h) Depreciation and amortisation
Items of plant and equipment, including leasehold assets, are
depreciated or amortised on a straight line basis so as to write
off the net cost of each asset over its expected useful life. Assets
are depreciated or amortised from the date of acquisition or, in
respect of internally constructed assets, from the time an asset
is completed and held ready for use.
Depreciation and amortisation rates are reviewed annually for
appropriateness. When changes are made, adjustments are
reflected prospectively in current and future financial periods only.
The annual depreciation and amortisation rates used for each
class of asset are as follows:
Land and buildings
5% – 10%
Plant & Equipment
10% – 33.33%
Intellectual Property
Assets work in progress
5%
0%
(l) Employee benefits
Wages, salaries and annual leave
Liabilities for employee benefits for wages, salaries and annual
leave expected to settle within 12 months of the year end
represent present obligations resulting from employees’ services
provided up to reporting date, calculated at undiscounted
amounts based on remuneration wage and salary rates that the
Consolidated Entity expects to pay as at reporting date including
related on costs, such as workers’ compensation insurance and
payroll tax. Employee benefits expected to be settled beyond
12 months are carried at the present value of the estimated
future cash flows.
Long service leave
The provision for employee benefits to long service leave
represents the present value of estimated future cash outflows
to be made by the employer resulting from employees’ services
provided up to reporting date. The provision is calculated using
expected future increases in remuneration rates, including
related costs, and expected settlement dates based on turnover
history, and is discounted using the rates attaching to national
government securities at reporting date, which most closely
match the terms of maturity of the related liabilities.
Superannuation plans
The Consolidated Entity contributes to various employee
superannuation plans. Contributions are charged against
expense as they are made.
(i)
Impairment of non-financial assets
Share-based payments
At each reporting date, the group reviews the carrying values of
its tangible and intangible assets to determine whether there is
any indication that those assets have been impaired. If such an
indication exists, the recoverable amount of the asset, being the
higher of the asset’s fair value less costs to sell and value in use,
is compared to the asset’s carrying value. Any excess of the
asset’s carrying value over its recoverable amount is expensed
to the statement of comprehensive income.
Impairment testing is performed annually for intangible assets
with indefinite lives.
Where it is not possible to estimate the recoverable amount of
an individual asset, the group estimates the recoverable amount
of the cash-generating unit to which the asset belongs.
The group has in the past operated a share-based compensation
plan in form of an employee option plan. The amount to be
expensed over the vesting period has been determined by
reference to the fair value of the shares of the options granted.
(m) Receivables
Trade debtor terms vary from market to market depending on
the economic factors relevant to the individual market. The
Consolidated Entity has actual trading terms ranging up to
120 debtor days. The collectability of debts is assessed at
reporting date and allowance made for any doubtful accounts.
The allowance for doubtful debts is specific with reference to
the profile of debtors in the Consolidated Entity’s sales and
marketing regions.
(j) Leases
(n)
Income tax
Lease payments for operating leases, where substantially all the
risks and benefits remain with the lessor, are charged as expenses
in the periods in which they are incurred.
Lease incentives under operating leases are recognised as a
liability and amortised on a straight-line basis over the life of
the lease term.
(k)
Inventories
Inventories are measured at the lower of cost and net realisable
value. The cost of manufactured products includes direct
materials, direct labour and an appropriate portion of variable
and fixed overheads. Costs are assigned on the basis of
weighted average costs.
The charge for current income tax expense is based on the
profit for the year adjusted for any non-assessable or disallowed
items. It is calculated using the tax rates that have been enacted
or are substantially enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet liability
method in respect of temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in
the financial statements. No deferred income tax will be
recognised from the initial recognition of an asset or liability,
excluding a business combination, where there is no effect on
accounting or taxable profit or loss.
Sirtex 2010 Annual Report 31
Notes to the Financial Statements
Directors’ Report
for the year ended 30 June 2010
Note 1: Statement Of Significant Accounting Policies
(continued)
(n)
Income tax (continued)
Deferred tax is calculated at the tax rates that are expected to
apply to the period when the asset is realised or liability is settled.
Deferred tax is credited in the statement of comprehensive
income except where it relates to items that may be credited
directly to equity, in which case the deferred tax is adjusted
directly against equity.
Deferred income tax assets are recognised to the extent that
it is probable that future tax profits will be available against
which deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be
realised in the future is based on the assumption that no adverse
change will occur in income taxation legislation and the anticipation
that the consolidated entity will derive sufficient future assessable
income to enable the benefit to be realised and comply with the
conditions of deductibility imposed by the law.
Sirtex Medical Ltd and its wholly-owned Australian subsidiaries
have formed an income tax consolidated group under the tax
consolidation regime. Each entity in the group recognises its own
current and deferred tax liabilities, except for any deferred tax
liabilities resulting from unused tax losses and tax credits, which
are immediately assumed by the parent entity. The current tax
liability of each group entity is then subsequently assumed by the
parent entity. The group notified the Australian Tax Office that it
had formed an income tax consolidated group to apply from
1 July 2004. The tax consolidated group has entered a tax
sharing agreement whereby each company in the group
contributes to the income tax payable in proportion to their
contribution to the net profit before tax of the consolidated group.
(o) Accounts payable
Liabilities are recognised for amounts to be paid in the future
for goods and services received, whether or not billed to the
Company or Consolidated Entity.
(p) Borrowings
Bank loans are carried in the statement of financial position
sheet at amortised costs. Interest expense is recognised
on an accruals basis.
Diluted EPS is calculated by dividing the basic EPS earnings,
adjusted by the after tax effect of financing costs associated
with dilutive potential ordinary shares and the effect on revenues
and expenses of conversion to ordinary shares associated with
dilutive potential ordinary shares, by the weighted average
number of ordinary shares and dilutive potential ordinary shares
of the Company adjusted for any bonus issue.
(s) Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of assets that necessarily take a
substantial period of time to prepare for their intended use or
sale, are added to the cost of those assets, until such time as
the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in the statement of
comprehensive income in the period incurred.
(t)
Financial instruments
Financial instruments are initially measured at fair value on
trade date, which includes transaction costs, when the related
contractual rights or obligations exist. Subsequent to initial
recognition these instruments are measured as set out below.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market and are stated at amortised cost using the effective
interest rate method. Non-derivative financial liabilities are
recognised at amortised cost, comprising original debt less
principal payments and amortisation.
Foreign currency options entered into hedge highly probable
forecast transactions are accounted for as a derivative. Changes
in the fair value of derivatives are recorded in the Statement of
comprehensive income, together with any changes in the fair
value of hedged assets or liabilities that are attributable to the
hedged risk.
At each reporting date, the Group assesses whether there
is objective evidence that a financial instrument has been
impaired. Impairment losses are recognised in the statement
of comprehensive income.
Financial assets are derecognised when the contractual rights to
receipt of cash flows expire or the asset is transferred to another
party. Financial liabilities are derecognised where the related
obligations are either discharged, cancelled or expired.
(q) Comparative figures
(u) Cash and cash equivalents
Where required by Accounting Standards, comparative figures have
been adjusted to conform to changes in presentation for the current
financial year.
(r) Earnings per share
Basic earnings per share (EPS) is calculated by dividing the
net profit attributable to members of the parent entity for the
financial period, after excluding any costs of servicing equity
(other than ordinary shares) by the weighted average number of
ordinary shares of the Company, adjusted for any bonus issue.
Cash and cash equivalents include cash on hand, deposits held
at call with banks and other short-term instruments with original
maturity of three months or less. Restricted cash assets are
shown within other current financial assets.
(v) Key estimates – impairment
The group assesses impairment at each reporting date by
evaluating conditions specific to the group that may lead to
impairment of assets. Where impairment exists, the recoverable
amount of the asset is determined. Value-in-use calculations
performed in assessing recoverable amounts incorporate a
number of key estimates.
32
Sirtex 2010 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2010
Impairment of trade receivables is based on best estimates
of amounts that will not be collected from debtors for doses
sold. For the year ended 30 June 2010, a total of $169,000
(2009: $395,000) of trade receivables has been estimated
as being impaired.
(w) Foreign currency transactions and balances
All foreign currency transactions are brought to account using
the exchange rate in effect at the date of the transaction.
Foreign currency monetary items at reporting date are translated
at the exchange rate at that date.
Exchange differences arising on the translation of monetary
items are recognised in the statement of comprehensive
income. Exchange differences arising on the translation of non-
monetary items are recognised directly in equity to the extent
that the gain or loss is directly recognised in equity, otherwise
the exchange difference is recognised in the statement of
comprehensive income.
The financial results and position of foreign operations whose
functional currency is different from the Group’s presentation
currency are translated as follows:
(cid:129) assets and liabilities are translated at year-end exchange rates
prevailing at that reporting date
(cid:129) income and expenses are translated at average exchange
rates for the period, and
(cid:129) retained earnings are translated at the exchange rate
prevailing at the date of the transaction
Exchange differences arising on translation of foreign operations
are transferred directly to the foreign currency translation
reserve in the statement of comprehensive income. These
differences are recognised in the statement of comprehensive
income in the period in which the operation is disposed.
(x) Adoption of new and revised accounting standards
During the current year the Group adopted all of the new and
revised Australian Accounting Standards and Interpretations
applicable to its operations which became mandatory.
The adoption of these standards has impacted the recognition,
measurement and disclosure of certain transactions. The following
is an explanation of the impact the adoption of these standards and
interpretations has had on the financial statements of Sirtex Medical
Limited.
AASB 8 – Operating Segments
In February 2007 the Australian Accounting Standards Board
issued AASB 8, which replaced AASB 114 Segment Reporting.
As a result, some of the required operating segment disclosures
have changed with the addition of a possible impact on the
impairment testing of goodwill allocated to the cash generating
units (CGUs) of the entity. Following is an overview of the key
changes and the impact on the Group’s financial statements.
Measurement impact
Identification and measurement of segments: AASB 8 requires
the ‘management approach’ to the identification measurement
and disclosure of operating segments. The ‘management approach’
requires that operating segments be identified on the basis of
internal reports that are regularly reviewed by the entity’s chief
operating decision maker, for the purpose of allocating
resources and assessing performance. This could also include
the identification of operating segments which sell primarily or
exclusively to other internal operating segments. Under AASB
114, segments were identified by business and geographical
areas, and only segments deriving revenue from external
sources were considered.
The adoption of the ‘management approach’ to segment
reporting has resulted in the identification of reportable
segments largely consistent with the prior year.
Under AASB 8, operating segments are determined based on
management reports using the ‘management approach’,
whereas under AASB 114 financial results of such segments
were recognised and measured in accordance with Australian
Accounting Standards. This has resulted in changes to the
presentation of segment results, with inter-segment sales and
expenses such as depreciation and impairment now being
reported for each segment rather than in aggregate for total
group operations, as this is how they are reviewed by the chief
operating decision maker.
Disclosure impact
AASB 8 requires a number of additional quantitative and
qualitative disclosures, not previously required under AASB 114,
where such information is utilised by the chief operating
decision maker. This information is now disclosed as part of the
financial statements.
AASB 101 – Presentation of Financial Statements
In September 2007 the Australian Accounting Standards Board
revised AASB 101 and as a result, there have been changes to
the presentation and disclosure of certain information within the
financial statements. Below is an overview of the key changes
and the impact on the Group’s financial statements.
Disclosure impact
Terminology changes: The revised version of AASB 101 contains
a number of terminology changes, including the amendment of
the names of the primary financial statements.
Reporting changes in equity: The revised AASB 101 requires all
changes in equity arising from transactions with owners, in their
capacity as owners, to be presented separately from non-owner
changes in equity. Owner changes in equity are to be presented
in the statement of changes in equity, with non-owner changes
in equity presented in the statement of comprehensive income.
The previous version of AASB 101 required that owner changes
in equity and other comprehensive income be presented in the
statement of changes in equity.
Sirtex 2010 Annual Report 33
Notes to the Financial Statements
Directors’ Report
for the year ended 30 June 2010
Note 1: Statement of Significant Accounting Policies
(continued)
(x) Adoption of new and revised accounting standards
(continued)
Statement of comprehensive income: The revised AASB 101
requires all income and expenses to be presented in either one
statement, the statement of comprehensive income, or two
statements, a separate income statement and a statement of
comprehensive income. The previous version of AASB 101
required only the presentation of a single income statement.
The Group’s financial statements now contain a statement of
comprehensive income.
New accounting standards for application in future periods
The AASB has issued new and amended accounting standards
and interpretations that have mandatory application dates for
future reporting periods. The Group has decided against early
adoption of these standards. A discussion of those future
requirements and their impact on the Group follows:
AASB 9: Financial instruments and AASB 2009–11:
Amendments to Australian Accounting Standards arising from
AASB 9 [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 121,
127, 128, 131, 132, 136, 139, 1023 & 1038 and
Interpretations 10 & 12] (applicable for annual reporting periods
commencing on or after 1 January 2013).
These standards are applicable retrospectively and amend
the classification and measurement of financial assets. The
Group has not yet determined the potential impact on the
financial statements.
AASB interpretation 19: Extinguishing Financial Liabilities with
Equity Instruments (applicable for annual reporting periods
commencing on or after 1 July 2010).
This interpretation deals with how a debtor would account for
the extinguishment of a liability through the issue of equity
instruments. The interpretation states that the issue of equity
should be treated as the consideration paid to extinguish the
liability, and the equity instruments issued should be recognised
at their fair value unless fair value cannot be measured reliably in
which case they shall be measured at the fair value of the liability
extinguished. The interpretation deals with situations where either
partial or full settlement of the liability has occurred. This
interpretation is not expected to impact the Group.
The Group does not anticipate the early adoption of any of the
above Australian Accounting Standards.
34
Sirtex 2010 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2010
Consolidated
2010 2009
$’000 $’000
2. Revenue and Other Income
(a) Revenue from the sale of goods 64,333 65,559
(b) Other revenue from ordinary activities
Grant income 171 358
Licensing income 183 113
Interest income from financial institutions 1,651 602
Interest income from legal settlement 813 –
Legal settlement Dr Gray/UWA 4,762 –
Other 176 261
7,756 1,334
(c) Other income
Realised foreign exchange gains – 4,758
Unrealised foreign exchange gains – 2,236
– 6,994
Consolidated
2010 2009
$’000 $’000
3. Profit for the Year
Profit from ordinary activities before income tax includes the following expense items:
Cost of sales 10,826 12,606
Legal fees UWA 409 1,121
Bad and doubtful debts – 230
Employee benefits expense 14,711 15,686
Depreciation and amortisation of
Plant and equipment 490 436
Intangible assets 289 434
Operating lease expenses
Minimum lease payments 308 296
Foreign exchange losses
Realised foreign exchange losses 535 –
Unrealised foreign exchange losses 953 –
Sirtex 2010 Annual Report 35
Notes to the Financial Statements
Directors’ Report
for the year ended 30 June 2010
Consolidated
2010 2009
$’000 $’000
4. Income Tax Expense
(a) The components of tax expense comprise:
Current tax 4,360 6,282
Deferred tax (117) 813
Recoupment of prior year losses – (2,355)
Over-provision in respect of prior years (1,220) (21)
3,023 4,923
(b) The prima facie tax on profit from ordinary activities before
income tax is reconciled to the income tax as follows:
Net profit before tax 19,103 23,152
Prima facie tax payable on profit from ordinary activities before income tax at 30% 5,731 6,945
Add/(less): Tax effect of
– Non-deductible amortisation 54 54
– Non-deductible expenses 408 241
– Non-assessable income* (1,469) –
– Over provision in respect of prior years (1,809) 183
Effect of higher tax rates on overseas income 146 139
Effect of Foreign Currency translation of tax balances 8 (277)
Timing differences and tax losses not brought to account as deferred tax assets – (2,409)
Eliminations for the tax consolidated group (48) 49
Other – –
Income tax attributable to entity 3,022 4,923
The applicable weighted average effect tax rates are as follows 16% 21%
* The majority of the non-assessable income relates to the reimbursement of legal
fees in relation to the UWA case
(c) Franking Account
Franking Account Balance 8,407 9,209
Legislation to allow groups, comprising a parent entity and its Australian resident wholly-owned entities, to elect to consolidate and
be treated as a single entity for income tax purposes was substantially enacted on 21 October 2002. This legislation, which includes
both mandatory and elective elements, is applicable to the Company. The directors elected for those entities within the consolidated
entity that are wholly-owned Australian resident entities to be taxed as single entity from 1 July 2004. The implementation of the tax
consolidation system was notified to the Australian Tax Office. The head entity within the tax-consolidated group for the purposes of
the tax consolidation system is Sirtex Medical Limited.
36
Sirtex 2010 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2010
2010 2009
$’000 $’000
Consolidated
5. Cash and Cash Equivalents
(a) Reconciliation of cash
Cash at the end of the financial year as shown in the statement of cash flows
is reconciled to items in the statement of financial position as follows:
Cash at bank and on hand 3,421 3,342
Short-term deposits with financial institutions 38,000 23,179
41,421 26,521
The effective interest rate on short-term deposits was 5.98% (2009: 3.87%).
These deposits have an average maturity of 42 days.
(b) Reconciliation of cash flow from operations with profit
after income tax Profit after income tax
Profit after income tax 16,080 18,229
Non-cash flows in profit:
Depreciation and amortisation 779 870
Decrease in current tax assets 288 2,489
Decrease/ (increase) in deferred assets 831 (556)
Net foreign exchange differences 183 (2,715)
Changes in net assets and liabilities
(Increase)/ decrease in assets
Trade receivables 21 (3,264)
Other receivables (2,793) 424
Inventories 442 (804)
Other current assets (37) (128)
Increase/ (decrease) in liabilities
Payables 3,754 (604)
Current tax liabilities 1,407 1,879
Short-term provisions 662 1,548
Other current liabilities (675) 1,694
Long-term provisions 69 89
Deferred tax liabilities (780) 989
Net cash flow from operating activities 20,231 20,140
Sirtex 2010 Annual Report 37
Notes to the Financial Statements
Directors’ Report
for the year ended 30 June 2010
2010 2009
$’000 $’000
Consolidated
6. Trade and Other Receivables
(a) Trade receivables
Trade receivables 11,697 11,944
Provision for impairment (169) (395)
11,528 11,549
(b) Other receivables
Receivables from key management personnel – 35
GST receivables 684 445
Other receivables 2,997 409
3,681 889
15,209 12,438
Receivables are assessed for recoverability based on the underlying terms of the contract. A provision for impairment is recognised when
there is objective evidence that an individual trade or term receivable is impaired. These amounts have been included in the other expenses
item (refer note 3).
Movement in the provision for impairment of receivables is as follows:
Opening Change for Amounts Closing
balance the year written off balance
$’000 $’000 $’000 $’000
30 June 2010
Trade receivables (395) 226 – (169)
30 June 2009
Trade receivables (165) (230) – (395)
An amount of $169,000 was considered impaired as at 30 June 2010 (2009: $395,000).
Trade receivables past due but not impaired
2010 2009
$’000 $’000
Less than 30 days overdue 1,938 1,616
30 – 60 days overdue 886 557
More than 60 days overdue 1,079 671
Consolidated
No other receivables are past due.
Credit risk
The Group has no significant concentration of credit risk with respect to any single counter party or group of counter parties other than those
receivables specifically provided for and shown above.
The class of assets described as Trade and other Receivables is considered to be the main source of credit risk related to the Group.
No collaterals have been received from any of the trade debtors in the form of a financial guarantee.
38
Sirtex 2010 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2010
Consolidated
2010 2009
$’000 $’000
7. Inventories
Raw materials – at cost 957 1,399
957 1,399
Consolidated
2010 2009
$’000 $’000
8. Other Financial Assets
Other current financial assets
Security deposits paid 379 230
379 230
Consolidated
2010 2009
$’000 $’000
9. Other Current Assets
Prepayments 470 582
470 582
Consolidated
2010 2009
$’000 $’000
10. Tax Assets
(a) Current tax assets
Current tax assets 172 460
(b) Deferred tax assets
Timing differences attributable to:
Parent entity 509 369
Entities in the tax consolidated group 404 299
Overseas entities 1,420 2,496
2,333 3,164
The overall movement in the deferred tax account is as follows:
Opening balance 3,164 2,608
(Charge)/credit to the statement of comprehensive income (653) 193
(Charge)/credit to equity (178) 363
2,333 3,164
Sirtex 2010 Annual Report 39
Notes to the Financial Statements
Directors’ Report
for the year ended 30 June 2010
Consolidated
2010 2009
$’000 $’000
11. Property, Plant and Equipment
Land and buildings
At cost 1,175 1,234
Accumulated depreciation (142) (87)
Net carrying amount 1,033 1,147
Plant and equipment
At cost 3,913 3,819
Accumulated depreciation (1,507) (1,458)
Net carrying amount 2,406 2,361
Assets work in progress
At cost 892 4
Accumulated depreciation – –
Net carrying amount 892 4
Total Property, Plant and Equipment
At cost 5,980 5,057
Accumulated depreciation (1,649) (1,546)
Net carrying amount 4,331 3,512
Movements in carrying amounts
Land and buildings
Carrying amount at beginning 1,147 1,023
Additions – 194
Depreciation expense (114) (70)
Carrying amount at end 1,033 1,147
Plant and equipment
Carrying amount at beginning 2,361 2,202
Additions 436 753
Disposals (10) (68)
Depreciation expense (381) (526)
Carrying amount at end 2,406 2,361
Assets work in progress
Carrying amount at beginning 4 29
Additions 892 –
Disposals (4) (25)
Carrying amount at end 892 4
Total Property, Plant and Equipment
Carrying amount at beginning 3,512 3,254
Additions 1,328 918
Disposals (14) (68)
Depreciation expense (495) (592)
Carrying amount at end 4,331 3,512
40
Sirtex 2010 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2010
Consolidated
2010 2009
$’000 $’000
12. Intangible Assets
Software
At cost 479 458
Accumulated amortisation (323) (254)
Net carrying amount 156 204
Intellectual property
At cost 3,606 3,607
Accumulated amortisation (2,374) (2,194)
Net carrying amount 1,232 1,413
Total intangible assets
At cost 4,085 4,065
Accumulated amortisation (2,697) (2,448)
Net carrying amount 1,388 1,617
Movements in carrying amounts
Software
Carrying amount at beginning 204 169
Additions 70 162
Amortisation expense (118) (127)
Carrying amount at end 156 204
Intellectual property
Carrying amount at beginning 1,412 1,593
Amortisation expense (180) (180)
Carrying amount at end 1,232 1,413
Total intangible assets
Carrying amount at beginning 1,616 1,762
Additions 70 162
Amortisation expense (298) (307)
Carrying amount at end 1,388 1,617
Sirtex 2010 Annual Report 41
Notes to the Financial Statements
Directors’ Report
for the year ended 30 June 2010
Consolidated
2010 2009
$’000 $’000
13. Trade and Other Payables
Trade payables 6,986 3,233
Other accruals and payables 1,883 2,558
8,869 5,791
Consolidated
2010 2009
$’000 $’000
14. Current Tax Liabilities
(a) Current tax liabilities
Current tax liability 3,517 2,110
3,517 2,110
(b) Deferred tax liabilities
Timing differences attributable to:
Parent entity 24 53
Entities in the tax consolidated group 1 735
Other 183 201
208 989
The overall movement in the deferred tax account is as follows:
Opening balance 989 –
Charge/(credit) to the statement of comprehensive income (781) 989
208 989
Consolidated
2010 2009
$’000 $’000
15. Provisions and Accruals
(a) Short-term provisions
Employee benefits* 2,268 1,605
2,268 1,605
(b) Long-term provisions
Employee benefits* 255 185
255 185
* Employee benefits include provisions for annual leave, bonus and for long service leave
42
Sirtex 2010 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2010
Consolidated
2010 2009
$’000 $’000
15. Provisions and Accruals (continued)
The overall movement in the short-term provision account is as follows:
Opening balance 1,605 46
Additional provisions for the year 1,090 1,961
Amounts used during the year (427) (402)
Closing balance 2,268 1,605
The overall movement in the long-term provision account is as follows:
Opening balance 185 96
Additional provisions for the year 76 112
Amounts used during the year (6) (23)
Closing balance 255 185
Consolidated
2010 2009
$’000 $’000
16. Interest-Bearing Loans
Current
Insurance premium funding – 64
– 64
Consolidated
2010 2009
$’000 $’000
17. Issued Capital
Issued capital 24,779 24,779
Share issue cost (1,258) (1,258)
23,521 23,521
Number of shares issued 55,768,136 55,768,136
2010 2009
No (000) $’000 No.(000) $’000
Fully paid ordinary shares
Balance at beginning of the year 55,768 23,521 55,768 23,521
Balance at end of the year 55,768 23,521 55,768 23,521
Fully paid ordinary shares carry one vote per share and carry the right to dividends. On winding up, ordinary shares participate in dividends and
the proceeds, in proportion to the number of shares held. The Company does not have a limited number of authorised capital and issued shares
do not have a par value.
Sirtex 2010 Annual Report 43
Notes to the Financial Statements
Directors’ Report
for the year ended 30 June 2010
17. Issued Capital (continued)
Share options
At reporting date, there were no share options outstanding, and no share option plan was in place.
Capital management
Management controls the capital of the Group in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns
and ensure that the group can fund its operations and continue as a going concern. Management effectively manages the Group’s capital by
assessing the Group’s financial risk and adjusting its capital structure in response to changes in these risks and in the market. The responses
include the management of debt levels, distributions to shareholders, and share issues.
The Company has no debt as at 30 June 2010.
Consolidated
2010 2009
$’000 $’000
18. Reserves
Foreign Currency Translation Reserve (719) (882)
(719) (882)
The translation of foreign controlled subsidiaries into the functional currency of the Group gives rise to a foreign currency translation reserve.
Consolidated
2010 2009
$’000 $’000
19. Earnings Per Share
(a) Basic earnings per share
Profit from continuing operations attributable to equity holders 16,080,000 18,229,000
Weighted average number of shares used in the calculation of basic earnings per share 55,768,136 55,768,136
(b) Diluted earnings per share
Profit from continuing operations attributable to equity holders 16,080,000 18,229,000
Weighted average number of shares used in the calculation of diluted earnings per share 55,768,136 55,818,136
Consolidated
2010 2009
$’000 $’000
20. Dividends
Distributions paid
Declared fully franked ordinary dividend of 0 (2009: 2) cents per share franked
at the tax rate of 30% (2009: 30%) – 1,116
Declared fully franked special dividend of 0 (2009: 5) cents per share franked at
the tax rate of 30% (2009: 30%) – 2,791
Balance of franking credit amount at year end adjusted for franking credits arising
from payment of provision for income tax 8,407 9,209
44
Sirtex 2010 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2010
21. Operating Segments
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors in
assessing performance and determining the allocation of resources.
The Group is managed primarily on the basis of regional markets which have different structures and performance assessment criteria.
Operating segments are therefore determined on the same basis. The three regional markets currently serviced by the group are Asia Pacific,
North America and Europe.
As the Group manufactures and distributes only one product, identical for each of the three regional markets, no further segmentation across
products or services is made.
Basis of accounting for purposes of reporting by operating segments
Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors with respect to operating segments are determined in accordance
with accounting policies that are consistent to those adopted in the annual financial statements of the Group.
Inter-segment transactions
An internally determined transfer price is set for all inter-entity sales. This price is re-set annually and is based on what would be realised
in the event the sale was made to an external party at arm’s length. All such transactions are eliminated on consolidation for the Group’s
financial statements.
Inter-segment loans payable and receivable are initially recognised at the consideration received net of transaction costs. If inter-segment loans
are not on commercial terms, these are not adjusted to fair value based on market interest rates. This policy represents a departure from that
applied to the statutory financial statements.
Segment assets
Where an asset is used across multiple segments, the asset is allocated to the segment that received the majority of economic value
from the asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location.
Segment liabilities
Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the operations of the segment.
Borrowings and tax liabilities are generally considered to relate to the Group as a whole and are not allocated. Segment liabilities include
trade and other payables and certain direct borrowings.
Unallocated items
Unallocated revenue comprises income from legal settlement UWA and other income.
Segment performance
External Sales Inter-segment Other Total
2010 2009 2010 2009 2010 2009 2010 2009
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Asia Pacific 2,848 2,738 48,826 69,006 2,993 321 54,667 72,065
North America 40,012 43,957 5,526 4,362 – – 45,538 48,319
Europe 21,473 18,863 – 102 – – 21,473 18,965
Total of all segments 121,678 139,350
Eliminations (54,352) (73,469)
Unallocated 4,762 8,007
Consolidated 72,088 73,887
Sirtex 2010 Annual Report 45
Notes to the Financial Statements
Directors’ Report
for the year ended 30 June 2010
21. Operating Segments (continued)
Segment net profit after tax
Total
2010 2009
$’000 $’000
Asia Pacific 16,837 11,621
North America 1,345 1,295
Europe 759 10,398
Total of all segments 18,941 23,314
Eliminations 162 (162)
Profit before income tax expense 19,103 23,152
Income tax expense (3,023) (4,923)
Profit after income tax expense 16,080 18,229
Segment assets and liabilities
Assets Liabilities
2010 2009 2010 2009
$’000 $’000 $’000 $’000
Asia Pacific 126,525 83,499 74,167 41,973
North America 16,548 17,652 18,617 20,722
Europe 6,311 7,036 4,974 6,058
Total of all segments 149,384 108,187 97,758 68,753
Eliminations (82,724) (58,264) (82,641) (58,009)
Consolidated 66,660 49,923 15,117 10,744
Other segment information
Asia Pacific North America Europe
2010 2009 2010 2009 2010 2009
$’000 $’000 $’000 $’000 $’000 $’000
Acquisition of segment assets
– Land and buildings – – – – – –
– Plant and equipment 1,095 – 192 786 41 132
Depreciation and amortisation of segment assets
– Plant and equipment 134 70 308 410 53 57
– Intangibles 298 307 – – – –
Major customers
The Group has a number of customers to whom it provides products. No single external customer represents more than 10% of total revenue.
46
Sirtex 2010 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2010
22. Key Management Personnel
Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid or payable to each member of the
Group’s key management personnel for the year ended 30 June 2010.
The totals of remuneration paid to key management personnel of the consolidated entity during the year are as follows:
Consolidated
2010 2009
$’000 $’000
Short-term employee benefits 2,952,564 3,311,727
Post-employment benefits 63,469 101,434
Other long-term benefits – –
Termination benefits 75,000 183,000
Share-based payment – –
3,091,033 3,596,161
Key management personnel shareholdings
The number of fully paid ordinary shares in Sirtex Medical Ltd held by each key management personnel of the Group during the financial
year is as follows:
Issued on
Balance at Granted as exercise of Other Balance
beginning remuneration options changes at end
30 June 2010
G Boyce 5,000 – – – 5,000
D Smith 15,000 – – – 15,000
30 June 2009
G Boyce 5,000 – – – 5,000
D Smith – – – 15,000 15,000
Key management personnel options and rights holdings
There were no options or rights holdings during the financial year with any of the key management personnel.
Sirtex 2010 Annual Report 47
Notes to the Financial Statements
Directors’ Report
for the year ended 30 June 2010
Consolidated
2010 2009
$’000 $’000
23. Parent Entity
Assets
Current assets 49,527 28,922
Non-current assets 2,117 2,260
Total assets 51,644 31,182
Liabilities
Current liabilities 38,912 21,958
Non-current liabilities 81 90
Total liabilities 38,993 22,048
Equity
Issued capital 23,521 23,521
Retained earnings (10,870) (14,387)
12,651 9,134
Reserves
Foreign currency revaluation reserve 0 0
Total reserves 0 0
Financial performance
Profit for the year 5,942 4,153
Other comprehensive income 0 0
Total comprehensive income 5,942 4,153
Financial guarantees
No guarantees have been provided to its wholly-owned subsidiaries by the parent entity.
Contingent liabilities
The parent entity has a contingent liability with respect to legal proceedings with Dr Gray. Refer to note 24 for further details.
Contractual commitments
The parent entity has an operating lease commitment for the office lease in Sydney. Refer to note 25 for further details.
48
Sirtex 2010 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2010
24. Contingent Assets and Contingent Liabilities
Contingent assets
As previously reported, Sirtex Medical Limited (Sirtex) is a party to proceedings in the Federal Court of Australia issued by the University of
Western Australia (UWA Proceedings). Dr Bruce Gray (a former director and a substantial shareholder of Sirtex) is also a party to the UWA
Proceedings. Sirtex was successful in the UWA Proceedings against UWA and Dr Gray.
Sirtex incurred in excess of $5.5 million in legal costs and expenses in relation to the UWA proceedings and related matters. In respect of
those costs, Sirtex has recovered $3,250,000 from UWA and $2,575,185.83 from Dr Gray. These amounts have been paid by UWA and
Dr Gray and the UWA Proceedings have been concluded. These amounts, less an amount of $250,000 credited to legal expenses, have
been included as other revenue (refer note 2 (b)).
Sirtex has the benefit of a further costs order in respect of its costs incurred in pursuing its recovery against Dr Gray. The total amount of
those costs is in excess of $400,000. Subject to an appeal (see below) Sirtex expects to recover a substantial proportion of those costs on
taxation or by agreement. Sirtex expects that any recovery in this regard will not be made until the first half of 2011. As a result of the
uncertainty regarding recovery of these costs, no revenue has been recorded in relation to these costs as of 30 June 2010.
Contingent liabilities
Dr Gray has filed an appeal against the assessment of damages in Sirtex’s favour. Sirtex is defending the appeal. The appeal is likely to be
heard in November 2010 and judgment is likely to be delivered in the first half of 2011.
In the event that Dr Gray is successful in his appeal, Sirtex would be ordered to repay the amount recovered from Dr Gray of $2,575,186
(or part of that amount) together with interest and costs. Until the appeal is heard and determined, it is not possible to provide any further
useful or precise estimate of the amount (if any) Sirtex might be ordered to repay to Dr Gray in the event that Dr Gray was successful in his
appeal. As a result of the uncertainty, no amounts have been provided in relation to the appeal.
25. Commitments
Operating leases
The consolidated entity leases offices in Sydney, in Germany and in the United States, with no option to purchase the leased assets at the
expiry of the leased assets.
The Sydney office has a lease term of 36 months, with a remaining period of five months. The German office has a lease term of 60 months,
with a remaining period of 43 months, and the US office has a lease term of one year with a remaining period of six months.
The consolidated entity also leases various items of plant and equipment in Germany with lease terms from 36 to 48 months, and remaining
periods of 15 to 33 months.
Consolidated
2010 2009
$’000 $’000
Non-cancellable operating leases
Not longer than 1 year 197 337
Longer than 1 year and not longer than 5 years 222 480
419 817
The consolidated entity has entered into various research and development agreements with universities and other external research
institutions for ongoing research and clinical trials.
Under these agreements, the consolidated entity is committed to providing funds over future periods, payable within one year, of $1,837,000
(2009: $432,000)
Sirtex 2010 Annual Report 49
Notes to the Financial Statements
Directors’ Report
for the year ended 30 June 2010
26. Controlled Entities
Ownership interest
Name of entity Country of incorporation 2010 2009
% %
Parent entity
Sirtex Medical Limited Australia
Controlled entities
Sirtex Medical Products Pty Ltd Australia 100 100
Sirtex Global Pty Ltd Australia 100 100
Sirtex Technology Pty Ltd Australia 100 100
Sirtex SIR-Spheres Pty Ltd Australia 100 100
Sirtex Thermospheres Pty Ltd Australia 100 100
Sirtex Medical Holdings Inc USA 100 100
Sirtex Medical Inc USA 100 100
Sirtex Wilmington LLC USA 100 100
Sirtex Medical Europe GmbH Germany 100 100
Sirtex Singapore Holding Pte Ltd Singapore 100 –
Sirtex Medical Singapore Pte Ltd Singapore 100 –
Sirtex Global Singapore Pte Ltd Singapore 100 –
Sirtex Manufacturing Singapore Pte Ltd Singapore 100 –
Sirtex Singapore Holding Pte Ltd was incorporated on 23 April 2010 and holds 100% interest in Sirtex Medical Singapore Pte Ltd, Sirtex Global
Singapore Pte Ltd and Sirtex Manufacturing Singapore Pte Ltd. Sirtex Medical Ltd and all its Australian-controlled entities are included in the
tax-consolidated group and is head entity for tax consolidation.
27. Related Party Transactions
(a) Equity interests in related parties
Details of the percentage of ordinary shares held in controlled entities are disclosed in Note 26.
(b) Transactions with key management personnel and related entities.
At 30 June 2010, $Nil (2009: $Nil) was payable to directors, key management personnel and director related entities.
At 30 June 2010, $Nil (2009: $22,474) was receivable from key management personnel and director related entities.
(c) Transactions with the wholly-owned group
The ultimate parent entity in the wholly-owned group is Sirtex Medical Limited. During the financial year, Sirtex Medical Limited received
licence fees from entities in the wholly-owned group of $6,367,303 (2009: $6,807,347).
(d) Outstanding balances arising from transactions with the wholly-owned group
The following balances are outstanding at the reporting date in relation to transactions with the wholly-owned group:
Current receivables from subsidiaries: $5,841,958 (2009: $3,671,236)
Loans receivable from subsidiaries: $1,334,620 (2009: $nil)
28. Events After Balance Sheet Date
As detailed in Note 24 to the Financial Statements, the UWA proceedings have been concluded in July 2010. A final dividend of 7 cents per
ordinary share has been declared for the year ended 30 June 2010.
No other matter or circumstance has arisen since the end of the financial year, that has significantly affected, or may significantly affect, the
operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.
50
Sirtex 2010 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2010
29. Remuneration of Auditors
During the year, the following were paid or were payable for services provided by the auditor of the parent entity, its related party practices and
non-related audit firms:
Consolidated
2010 2009
$’000 $’000
Remuneration of the auditor of the parent entity for audit and review of financial reports 91 96
Other non-audit services – –
Remuneration of other auditors of subsidiaries for audit and review of financial reports 46 25
The auditor of Sirtex Medical Ltd and its Australian subsidiaries is Grant Thornton Audit Pty Ltd. The auditor of the German subsidiary is
Grant Thornton GmbH. The auditor of the US entities is Grant Thornton LLP.
30. Financial Risk Management
The Audit Committee has been delegated responsibility by the Board of Directors for, amongst other issues, monitoring and managing financial
risk exposures of the Group. The Audit Committee monitors the Group’s financial risk management policies and exposures and approves
financial transactions within the scope of its authority. It also reviews the effectiveness of internal controls relating to counter party credit risk,
currency risk, and interest rate risk.
The Group’s activities expose it to a variety of financial risks, including but not limited to, market risk (currency risk and interest rate risk), credit
risk and liquidity risk. The overall risk management strategy seeks to measure and to mitigate these risks, in using different methods measure
the different types of risk, and in using derivate instruments to minimise certain risk exposures.
The Group’s financial instruments consist mainly of deposits with banks, short-term investments, account receivable and payable, and loans to and
from subsidiaries.
The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these
financial instruments, are as follows:
Consolidated
2010 2009
$’000 $’000
Financial Assets
Cash and cash equivalents 41,421 26,521
Trade and other receivables 15,209 12,438
Other financial assets* 379 230
57,009 39,185
Financial Liabilities
Trade and other payables 8,869 5,791
Borrowings – 64
8,869 5,855
* Other financial assets comprise security deposits.
The carrying amounts of financial assets and financial liabilities recorded in the financial statements represent their respective net fair values,
determined in accordance with the accounting policies disclosed in note 1 to the financial statements.
Sirtex 2010 Annual Report 51
Notes to the Financial Statements
Directors’ Report
for the year ended 30 June 2010
Financial risk exposures and management
The main risks the Group is exposed to through its financial instruments are interest rate risk, foreign exchange risk, liquidity risk and credit risk
as follows:
(a)
Interest rate risk
The Group’s exposure to interest rate risk relates to its cash and short-term deposits. The interest rate as at 30 June 2010 on cash was
4.25% (2009: 2.5%) and on short-term deposits 5.98% (2009: 3.87%). All other financial assets and liabilities are non-interest bearing.
Sensitivity analysis
A change in interest rate on cash and short-term deposits would result in a change in profit as follows:
Consolidated
2010 2009
$’000 $’000
Change in profit:
Increase in interest rate by 2% 746 371
Decrease in interest rate by 2% (746) (371)
(b) Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group
has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral or other securities where
appropriate, as a means of mitigating the risk of financial loss from defaults. The Group measures credit risk on a fair value basis.
The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar
characteristics. The carrying amounts of financial assets recorded in the financial statements, net of any provision for impairment,
represent the Group's maximum exposure to credit risk without taking into account any collateral or other security obtained.
(c) Liquidity risk
Liquidity risk management requires maintaining sufficient cash and cash equivalents, by continuously monitoring forecast and actual cash flows
and matching the maturity profiles of financial assets and liabilities. Surplus funds are invested in term deposits with short term maturities.
As of 30 June 2010, the Group had only non-interest bearing financial liabilities with less than one year maturity (refer note 13).
(d) Foreign exchange risk
The Group is exposed to foreign exchange risk resulting in fluctuations in the fair value and in future cash flows of its financial instruments
due to a movement in foreign exchange rates of currencies other than the Group's measurement currency.
It is the Group's policy that hedging, as a percentage of net foreign exchange rate exposure, be maintained within the limits of the foreign
exchange risk management policy.
The Group has open currency options at balance date relating to highly probable forecast transactions. These options give the Group the
right to purchase foreign currencies at a specified exchange rate if the actual exchange rate at expiry date of the options is higher than the
specified rate.
Sensitivity analysis
A change in foreign exchange rates would result in a change in profit as follows:
Consolidated
2010 2009
$’000 $’000
Change in profit:
Increase of AUD to USD by 15% (6,002) (6,576)
Decrease of AUD to USD by 15% 6,002 6,576
Increase of AUD to EUR by 15% (3,221) (2,829)
Decrease of AUD to EUR by 15% 3,221 2,829
52
Sirtex 2010 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2010
30. Financial Risk Management (continued)
The following table shows the foreign currency risk on the financial assets and liabilities of the Group’s operations, denominated in currencies
other than the functional currency of the operations. The foreign currency risk in the books of the parent entity is considered immaterial and is
therefore not shown.
Net financial assets / (liabilities)
USD EUR SGD AUD
’000 ’000 ’000 ’000
2010
Group entity (functional currency)
North American entities (USD) 5,437 – – 6,379
European entity (EUR) – 2,556 – 3,662
Singapore entities (SGD) – – 311 261
Balance sheet exposure 5,437 2,556 311 10,302
2009
Group entity (functional currency)
North American entities (USD) 4,869 – – 6,001
European entity (EUR) – 2,460 – 4,227
Singapore entities (SGD) – – – –
Balance sheet exposure 4,869 2,460 – 10,228
Foreign currency call/put options
The Group has European style call/ put options open at balance date relating to highly probable forecast transactions and recognised financial
assets and financial liabilities. These options consist of two components:
1. The right to buy specified amounts of AUD against foreign currencies in the future at specified exchange rates.
2. The obligation to buy specified amounts of AUD against foreign currencies in the future at specified exchange rates if the AUD falls below a
specified rate.
The following table summarises the notional amounts and terms of these options.
Notional Amounts Average Exchange Rate
2010 2009 2010 2009
USD ’000 USD ’000
Call Options (Sell USD/Buy AUD)
Settlement
– less than 6 months 3,000 3,000 0.89 0.82
Put Options (Sell USD/Buy AUD)
Settlement
– less than 6 months* 3,000 3,000 0.89 0.82
* The obligation to purchase AUD at the specified rate of $0.89 occurs, if on expiry date of the option the spot exchange rate is $0.865 or less.
Sirtex 2010 Annual Report 53
Additional Information
Directors’ Report
for the year ended 30 June 2010
Additional stock exchange information as at 18 August 2010
Number of shareholders
55,768,136 fully paid ordinary shares are held by 2,748 individual shareholders.
All issued ordinary shares carry one vote per share, however, partly paid shares do not carry the rights to dividends.
Distribution of shareholders
Ordinary Shares Holders
1 – 1,000 726,163 1,236
1,001 – 5,000 2,908,175 1,130
5,001 – 10,000 1,644,238 211
10,001 – 100,000 3,927,044 149
100,001 and over 46,562,516 22
55,768,136 2,748
Substantial shareholders
Ordinary shareholders Fully Paid
Number Percentage
COGENT NOMINEES PTY LIMITED 17,244,588 30.922
DR BRUCE GRAY 16,423,424 29.449
J P MORGAN NOMINEES AUSTRALIA 3,729,769 6.688
37,397,781 67.059
Twenty largest shareholders
Ordinary shareholders Fully Paid
Number Percentage
COGENT NOMINEES PTY LIMITED 17,244,588 30.922
ACN 132 442 114 PTY LIMITED 16,423,424 29.449
J P MORGAN NOMINEES AUSTRALIA 3,729,769 6.688
CITICORP NOMINEES PTY LIMITED 2,475,367 4.439
EQUITY TRUSTEES LIMITED 1,326,999 2.379
ANZ NOMINEES LIMITED 957,987 1.718
PINE RIDGE HOLDINGS PTY LTD 620,000 1.112
NATIONAL NOMINEES LIMITED 566,304 1.015
MR ERIK ADRIAANSE 500,000 0.897
HSBC CUSTODY NOMINEES 390,246 0.700
SANDHURST TRUSTEES LTD 359,185 0.644
APOLLO SOLUTIONS LIMITED 284,491 0.510
CITY AND WESTMINSTER LIMITED 250,000 0.448
SCJ PTY LTD 250,000 0.448
PACIFIC SECURITIES INC 250,000 0.448
UBS WEALTH MANAGEMENT 249,595 0.448
BANNABY INVESTMENTS PTY LTD 210,000 0.377
TILL NO 54 PTY LIMITED 190,000 0.341
RBC DEXIA INVESTOR SERVICES 148,869 0.267
ATTUNGA NOMINEES PTY LTD 135,385 0.243
46,562,209 83.492
54
Sirtex 2010 Annual Report
Company Information
Notes to the Financial Statements
Directors’ Report
for the year ended 30 June 2010
Registered office
Unit F6, Parkview, 16 Mars Road,
Lane Cove, NSW, 2066
Tel: +61 2 9936 1400
Principal places of business
Australian office
Unit F6, Parkview, 16 Mars Road,
Lane Cove, NSW, 2066
Tel: +61 2 9936 1400
United States office
2-4, 16 Upton Drive,
Wilmington, MA, 01887
Tel: +1 978 694 9099
European office
Walter-Flex-Strasse 2,
Bonn, Germany, 53113
Tel: +49 228 1840 730
Singapore office
Level 1, 50 Science Park Road
Singapore Science Park II
Singapore 117406
Tel: +65 6308 8370
Company Secretary
Mr Darren Smith
Stock exchange listing
Australian Stock Exchange Limited
ASX code SRX
Share registrar
Registries Ltd
Level 7
207 Kent Street
Sydney, NSW, 2000, Australia
Tel: +61 2 9290 9600
Auditors
Grant Thornton Audit Pty Ltd
Level 17, 383 Kent Street,
Sydney, NSW, 2000 Australia
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Sirtex 2010 Annual Report