ANNUAL
REPORT
2015
2015 HIGHLIGHTS
DOSE SALES: 10,252
Up 19.8%
REVENUE: $176.1m
Up 36.1%
NET PROFIT AFTER TAX: $40.3m
Up 69.0%
Boston, United States
Regional Head Office,
Manufacturing Facility
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
DOSE SALES GROWTH
ABOUT SIRTEX
Sirtex Medical Limited is an
Australian-based global healthcare
business working to improve
outcomes for people with cancer.
Our leading product is a targeted
radiation therapy known as
SIR-Spheres Y-90 resin microspheres.
It is available in more than 40
countries and over 900 hospitals
where we work together with medical
professionals to help improve
outcomes for people with liver
cancer.
Sirtex 2015 AR 1
We are challenging established
practices and developing innovative
new therapies that promise to
improve the health and lives
of many people.
Our business revolves around helping
medical professionals understand and
use our product to improve clinical
outcomes and the quality of life for
people with liver cancer.
Our ongoing success is based
on a commitment to serving our
customers, professionalism,
continuous improvement and
innovation.
Our vision is that liver cancer will
one day be a chronic disease that
patients can successfully live with.
We are also focused on bringing
a number of new treatments and
innovations to global markets that
will transform quality of life and
standards of medical care.
Our head office is in Australia and
we have substantial manufacturing
and operations in the United States,
Germany and Singapore.
11,000
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
Bonn, Germany
Regional Head Office
Frankfurt, Germany
Manufacturing Facility
Singapore
Regional Head Office,
Manufacturing Facility
10,252
DOSES SOLD
2015
11,000
10,000
9,000
8,000
7,000
6,000
5,000
Sydney, Australia
Corporate Head Office
4,000
3,000
2,000
1,000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
CONTENTS
3 2015 FINANCIAL SUMMARY
5 REGIONAL UPDATE
7 SIRFLOX RESULTS & OTHER CLINICAL PROGRAMS
11 MANUFACTURING & OPERATIONS
RESEARCH & DEVELOPMENT
12 MARKETING & COMMUNICATIONS
13 PEOPLE, COMMUNITIES & SOCIAL RESPONSIBILITY
15 CHAIRMAN’S REPORT
18 CHIEF EXECUTIVE OFFICER’S REPORT
22 BOARD OF DIRECTORS
23 KEY MANAGEMENT PERSONNEL
24 CORPORATE GOVERNANCE STATEMENT
26 FINANCIAL REPORT
Sirtex 2015 AR 2
40345.0
36310.5
32276.0
28241.5
24207.0
20172.5
16138.0
12103.5
8069.0
4034.5
0.0
18
16
14
12
10
8
6
4
2
0
2015 FINANCIAL SUMMARY
11
consecutive
years of
growth
51974.0
46776.6
41579.2
36381.8
31184.4
25987.0
20789.6
15592.2
10394.8
5197.4
0.0
36.1%
revenue
growth
PROFIT AFTER TAX
$’000
OPERATING CASH FLOW
$’000
EARNINGS PER SHARE
CENTS
71.399664
63.466368
55.533072
47.599776
39.666480
31.733184
23.799888
15.866592
5
4
3
7.933296
,
0
4
0.000000
2015
0
8
0
,
6
1
9
7
4
,
1
1
3
0
1
,
7
1
0
7
2
,
8
1
8
6
8
,
3
2
2010
2011
2012
2013
2014
1
3
2
,
0
2
6
8
2
,
5
1
7
8
9
,
9
1
7
2
3
,
4
2
1
7
1
,
2
3
4
7
9
,
1
5
8
.
8
2
6
.
0
2
7
.
0
3
8
.
2
3
5
.
2
4
4
.
1
7
2010
2011
2012
2013
2014
2015
2010
2011
2012
2013
2014
2015
DIVIDENDS PER SHARE
CENTS
SHARE PRICE
$ (AT 30 JUNE)
CASH ON HAND
$’000 (AT 30 JUNE)
73940.977463
66546.879717
59152.781971
51758.684224
44364.586478
36970.488732
29576.390985
22182.293239
14788.195493
7394.097746
0
2
0.000000
2015
$29.05
$16.88
$11.98
29.05
24.22
19.39
14.56
$6.09
$4.90 $4.90
1
2
4
,
1
4
5
1
9
,
2
4
9.73
4.90
7
4
4
,
9
4
4
9
0
,
2
5
5
9
4
,
2
5
1
4
9
,
3
7
2010
2011
2012
2013
2014
2015
2010
2011
2012
2013
2014
2015
2011
4,977
70,686
14,354
11,479
5,632
10,402
3,785
76,785
60,142
52,357
20.6
2012
6,141
82,627
22,118
17,103
5,723
12,243
1,092
96,656
73,548
57,314
30.7
2013
7,299
2014
8,561
2015
10,252
96,774
24,507
18,270
6,615
15,872
3,685
117,766
87,684
59,762
32.8
129,363
176,088
31,110
23,868
7,981
22,168
6,187
148,710
107,583
60,219
42.5
52,768
40,345
8,641
20,724
1,692
201,476
144,636
76,609
71.4
7
7
7
0
1
2
1
4
1
2009
2010
2011
2012
2013
2014
FIVE YEAR SUMMARY
Dose sales (units)
’000
Sales revenue
Profit before income tax
Net profit
R&D investment
Clinical investment
Capital investment
Total assets at 30 June
Total equity at 30 June
Net tangible assets at 30 June
Earnings per share (cents)
Sirtex 2015 AR 3
DOSE SALES GROWTH
UNITS
SALES REVENUE
$’000
10,252
176,088
8,561
7,299
6,141
4,977
4,171
65,559
64,333
70,686
129,363
96,774
82,627
9112.889404
7973.778228
6834.667053
5695.555877
4556.444702
3417.333526
2278.222351
1139.111175
0.000000
176087.986388
158479.187749
140870.389110
123261.590472
105652.791833
88043.993194
70435.194555
3,658
52826.395916
35217.597278
17608.798639
0.000000
19.8%
dose sales
growth
ASIA PACIFIC
EUROPE,
MIDDLE EAST
& AFRICA
THE AMERICAS
2009
2010
2011
2012
2013
2014
2009
2015
2010
2011
2012
2013
2014
2015
82,627
70,290
65,559
64,333
38,125
10,252
2015 Dose Sales
2008
2009
2010
2011
2012
THE AMERICAS
7,076
EUROPE,
MIDDLE EAST
& AFRICA
2,273
ASIA PACIFIC
903
SIRTEX MEDICAL (SRX) vs S&P/ASX 200 HEALTH CARE INDEX (XHJ)
$
40
35
30
25
20
15
Aug
Sep
Oct
Nov
Dec
Jul
2014
Feb
Mar
Apr
May
Jan
2015
Jun
2015
+45.6%
relative
outperformance
SRX +72.1%
XHJ +26.5%
Sirtex 2015 AR 4
REGIONAL UPDATE
Another year of achievement
for Sirtex business units globally.
THE AMERICAS
PERFORMANCE
REVENUE:
DOSE SALES:
Up 42.5%
to $136.7 million
Up 21.2%
to 7,076
YEAR IN REVIEW & GROWTH INITIATIVES
The Americas achieved another year of significant
growth, driven by the continued delivery of our
strategy designed to increase the use of our product
at individual sites while targeting the certification of
new sites expected to contribute to meaningful dose
sales over time. At the end of the financial year, the
number of hospitals certified in the use of SIR-Spheres
microspheres across the region had grown by 17.7 per
cent to 493 sites.
Our focus on educating multi-disciplinary hospital teams has
proved successful and we continue to refine our strategies while
expanding our sales, marketing and support infrastructure.
Critical to our approach is ensuring that Sirtex Regional Sales
Managers and Market Development Managers are supported
by our marketing, customer service, manufacturing, clinical and
office staff to drive dose sales.
In 2015, revenue growth exceeded dose sales growth
considerably, driven by a $US1,000 price increase in the US
market in June 2014. In Australian dollar terms, the currency
tailwind from a stronger US dollar also worked in our favour.
Though very early days, pleasing progress has been made in
several Latin American markets over the past 12 months.
Our expanded manufacturing facility in Wilmington,
Massachusetts became fully operational during 2015,
equipping us to meet current and forecast demand in the
Americas. Despite record winter snowfall, production and
sales continued with minimal disruption to our customers
and patients.
Reimbursement support for our customers and their patients
continues to be a priority and further progress has been
made with insurers as we seek their support for SIR-Spheres
microspheres as a treatment option for patients.
The Americas team took a lead role in Sirtex’s representation
to world-leading Oncologists and medical specialists at the
American Society of Clinical Oncology (ASCO) meeting in
Chicago in May, where data from our SIRFLOX study was
presented. Sirtex had a significant presence at the event
and facilitated numerous meetings with attendees, with
overwhelmingly positive feedback received from clinicians.
Additionally, we hosted a number of advisory boards designed
to garner feedback from leading US Key Opinion Leaders
(KOLs) to help build consensus on our findings. The SIRFLOX
results provided significant momentum and interest in the
market creating favourable conditions for continued business
expansion in the coming year.
The impressive business performance of Sirtex
this year was underpinned by a robust platform
of our SIR-Spheres microspheres business,
expansion in current markets, entry to new markets,
manufacturing capacity expansion and our global
clinical, research and development activities.
Sirtex at the American Society of Clinical Oncology (ASCO) meeting
in Chicago.
GLOBAL TREATMENT
CENTRES
0
1
5
8
2
6
4
1
7
5
9
7
9
1
9
2011
2012
2013
2014
2015
“Sirtex’s business outlook in all
markets remains positive and is
driven by the large unmet global
medical need for our liver
cancer therapy.”
Sirtex 2015 AR 5
919.000000
816.888889
714.777778
612.666667
510.555556
408.444444
306.333333
204.222222
102.111111
0.000000
EUROPE, MIDDLE EAST, AFRICA
ASIA PACIFIC
PERFORMANCE
PERFORMANCE
REVENUE:
DOSE SALES:
REVENUE:
DOSE SALES:
Up 17.3%
to $32.4 million
Up 18.6%
to 2,273
Up 20.5%
to $6.9 million
Up 11.6%
to 903
YEAR IN REVIEW & GROWTH INITIATIVES
YEAR IN REVIEW & GROWTH INITIATIVES
Growth this year was driven by the solid contribution
from several well established European markets and
the UK. Several Middle Eastern markets also delivered
sound results and we achieved reimbursement in
Israel, leading to increased sales in that market.
At the end of the financial year, the number of hospitals
certified in the use of SIR-Spheres microspheres
across the region had grown by 11.5 per cent to
291 sites.
The EMEA sales and marketing teams continued to focus
on professional education programs and a range of initiatives
to create awareness among patient support groups.
A dedicated UK support website called MySIRTStory for
patients treated with Selective Internal Radiation Therapy (SIRT)
was launched during the year. This initiative was in response to
the National Health Service (NHS) in Wales approving funding for
SIR-Spheres microspheres under the Commissioning through
Evaluation (CtE) process, making the treatment available for
funding for all eligible patients throughout the UK.
SIR-Spheres microspheres also received endorsement from
the European Society of Medical Oncology (ESMO) in its
Clinical Guidelines for treating metastatic colorectal cancer
(mCRC) during 2015. The new guidelines for the treatment
of mCRC recommended radioembolisation and SIR-Spheres
microspheres as a ‘clinically proven technology to prolong time
to liver tumour progression’ in patients who have failed
to respond to available chemotherapy options. This has
significantly improved awareness and interest among
European clinicians.
The European clinical program made excellent progress this
year. In France, the recruitment of 460 patients in the SARAH
study was completed in March 2015, while a second major
European study, SORAMIC, reached the 85 per cent patient
recruitment level at the end of the financial year.
Our sales team focused heavily on educating referring
Medical Oncologists, Liver Surgeons and Hepatologists and
representing Sirtex at European and national industry events.
This culminated in the EMEA team having a major presence at
ASCO following the release of the SIRFLOX results. A number
of European centres and KOLs were part of the study and
publicly stated their support for the results delivered in the
liver. The very positive reception at ASCO, and subsequent
presentations of additional SIRFLOX data, coupled with a
number of regional opportunities, will ensure EMEA continues
its positive growth trajectory.
A year of sound growth saw the number of hospitals
certified in the use of SIR-Spheres microspheres
across the region grow by 17.4 per cent to 135 sites.
APAC revenue growth outpaced dose sales growth,
reflecting increases in the selling price of SIR-Spheres
microspheres in several markets and new direct
market entries.
The APAC team continued to execute its market development
strategy centred on educating and informing Oncologists
and medical professionals about the benefits of SIR-Spheres
microspheres.
Recognising the region’s growth potential, Sirtex hosted a
series of educational presentations to Interventional Radiologists
and Medical Oncologists in Vietnam, The Philippines, India
and Malaysia. Additionally, we facilitated the 2nd Asia Pacific
Symposium on Liver Directed Y-90 Microspheres Therapy
together with the Academy of Medicine, Singapore. This two-
day event included a host of APAC KOLs presenting on the
benefits of SIRT in primary and metastatic liver cancer.
Our strategy is having a positive impact on sales, with Singapore
and Vietnam recording strong growth. Australia continues to be
an important market with high single digit growth recorded,
reflecting increasing awareness among the medical community.
A key event was Sirtex sponsorship of the 5th Asia-Pacific
Primary Liver Cancer Expert Meeting (APPLE) in Taipei, Taiwan.
This investment brought together a diverse group of participants
from around the world to discuss new initiatives and develop a
consensus in radiotherapy for the treatment of primary liver
cancer. As a result, SIRT treatment was included in the Primary
Liver Cancer Management Consensus Guidelines in Taiwan in
April 2015.
APAC-oriented clinical studies made good progress with
recruitment in the SIRveNIB 360 patient multi-centre randomised
controlled study in locally advanced hepatocellular carcinoma
(HCC) reaching 85 per cent at the end of the financial year.
To capitalise on the growing interest in our product, Sirtex
initiated a small clinical study on cholangiocarcinoma, a form of
cancer that originates in the bile ducts. The study will evaluate
SIR-Spheres microspheres in combination with a standard
chemotherapy regimen. This will be compared to the outcome
of prescribing chemotherapy alone in the first-line treatment of
nonresectable liver-only or liver-dominant disease in Hong Kong
and Singapore.
With such promising inroads being made with our market
development strategy across the region, APAC is well positioned
for continued growth in all markets.
Sirtex 2015 AR 6
SIRFLOX RESULTS & OTHER CLINICAL PROGRAMS
Our significant investment in clinical programs
is expanding the market and knowledge of our
unique and innovative therapy
INTERNATIONAL CANCER EXPERTS WELCOME
SIRFLOX STUDY RESULTS
SIRFLOX STUDY KEY FINDINGS
• 7.9 month improvement in control of tumours
in the liver in patients with metastatic colorectal
cancer treated with SIR-Spheres microspheres
plus chemotherapy compared to chemotherapy
alone.
• Patients treated with SIR-Spheres microspheres
plus chemotherapy had a 31 per cent lower
risk of the tumours in their liver progressing
compared to patients treated with chemotherapy
alone.
• The combination of SIR-Spheres microspheres
plus chemotherapy led to a significantly higher
tumour response rate in the liver.
in combination with modern chemotherapy for patients
with colorectal cancer that has spread to the liver.
More than 30,000 oncology professionals from around the
world attend this annual scientific conference to share results
from the latest ground-breaking research in the field of cancer.
Scientific results presented at the ASCO Annual Meeting often
have a major influence on future treatment decisions made by
cancer specialists worldwide.
Recognising the importance of the study’s results, SIRFLOX
was selected for an oral presentation at the ASCO Annual
Meeting, which ASCO only granted to 2.3 per cent of all
colorectal cancer abstracts submitted.
Furthermore, the SIRFLOX study was also selected as one
of the ‘Best of ASCO’ presentations which enables the key
findings to be further disseminated throughout the oncology
community over the following six to 12 months.
• Data supports the first-line use of SIR-Spheres
microspheres in patients with metastatic
colorectal cancer.
Associate Professor Peter Gibbs from the Royal Melbourne
Hospital presented the SIRFLOX findings to an audience of
approximately 3,500 oncology professionals.
The detailed results of Sirtex’s landmark SIRFLOX study
were presented to the world’s leading oncologists at the
American Society of Clinical Oncology (ASCO) Annual
Meeting in Chicago in May. The main objective of the
SIRFLOX study was to provide the oncology community
with the necessary Level 1 evidence demonstrating the
effectiveness and safety of SIR-Spheres microspheres
Associate Professor Gibbs is the co-Principal Investigator
on the SIRFLOX study and has used SIR-Spheres microspheres
in his practice for over a decade.
He told delegates that while the SIRFLOX study did not show
using SIR-Spheres microspheres plus chemotherapy was more
effective than chemotherapy alone in improving Progression-
Free Survival at any site in the body, it did show that SIR-
Spheres microspheres were highly effective at improving
Progression-Free Survival in the liver.
WHAT LEADING ONCOLOGISTS SAID:
Prof Ricky Sharma
University of Oxford, England
Dr Harpreet Wasan
Imperial College Trust, England
“There is an impressive change in local control
“The results of this study show that the effect of
in the liver… this is a robust result.”
Prof Eric Van Cutsem
University of Leuven, Belgium
“The outcome of SIRFLOX suggests oncologists
may now consider earlier use of Y-90 resin
microspheres in combination with systemic
chemotherapy in liver limited disease. The
results provide robust Level 1 evidence for
oncologists to incorporate in their daily
clinical practice.”
SIR-Spheres on slowing the growth of liver cancer
tumours, within the liver is quite pronounced.”
Assistant Prof Navesh K Sharma
University of Maryland Medical Centre, United States
“SIRFLOX has shown us, in an unbiased manner,
that not only can we deliver high doses of radiation
to the liver safely, but we can do so using
concurrent chemotherapy.”
Sirtex 2015 AR 7
+7.9
months
20.5
months
12.6
months
SIRFLOX STUDY KEY FINDINGS
A 7.9 month
improvement and
a 31 per cent reduction
in the risk of tumour
progression in
the liver.
Complete Response Rate (CRR)
1.9%
SIR-Spheres
microspheres
Objective Response Rate (ORR)
significantly increases
the percentage of
patients whose cancer
tumours shrink in
the liver.
+7.9
MEDIAN PROGRESSION-FREE
months
SURVIVAL IN THE LIVER
20.5
months
12.6 months
+7.9 months
20.5 months
12.6
months
Progression-Free Survival (PFS) is the number of patients who
continue to live with a disease that is not getting worse. Disease
progression is often symptomatic and uncomfortable, so delaying
progression is very meaningful for patients and is an important goal
for physicians and nurses.
Complete Response Rate (CRR)
3x
1.9%
RESPONSE RATE IN THE LIVER
Complete Response Rate (CRR)
Objective Response Rate (ORR)
1.9%
68.8%
6.0%
+XX%
6.0%
3x
Objective Response Rate (ORR)
78.7%
68.8%
+9.9%
6.0%
78.7%
+9.9%
68.8%
+9.9%
78.7%
Patients who only
received chemotherapy
Patients who only
received chemotherapy
Patients who received
chemotherapy with
SIR-Spheres microspheres
Patients who received
chemotherapy with
SIR-Spheres microspheres
Objective Response Rate (ORR) is a physical measurement of tumor
size, and is thought to be an indication of treatment effectiveness.
It can provide physicians with important information on how a patient
is reacting to a treatment.
Patients who only
received chemotherapy
Patients who received
chemotherapy with
SIR-Spheres microspheres
The SIRFLOX study data showed that SIR-Spheres
microspheres plus chemotherapy extended the amount of
time it took for the tumours to progress or ‘grow’ in the liver
by 7.9 months, which was a clinically impressive result.
first-line therapy in patients with metastatic colorectal cancer
(mCRC). A number of the KOLs present at the ASCO Annual
Meeting publicly stated their positive view of the impressive
SIRFLOX study results.
The results also showed that patients who received SIR-Spheres
microspheres plus chemotherapy had a 31 per cent lower risk of
the tumours in their liver progressing compared to patients who
received chemotherapy alone, and were three times more likely
to have their liver tumours disappear altogether.
Sirtex is very pleased with the outcome of the ASCO peer
review process, which we believe will facilitate an increase in
the utilisation of SIR-Spheres microspheres at an earlier stage
of patient treatment together with modern chemotherapy
regimens.
Associate Professor Gibbs said the findings were important
because the liver is usually the organ where colorectal cancer
spreads first. He told the audience that while half of all colorectal
cancer patients survive if the primary tumour is removed before
the disease has spread, hundreds of thousands die each year
because inoperable tumours subsequently appear in the liver,
which ultimately leads to liver failure if those tumours are not
adequately controlled.
The response from oncology professionals, including Key
Opinion Leaders (KOLs) at the conference indicated that
SIR-Spheres microspheres could be used more widely as a
NEXT STEPS
Sirtex is now focused on helping educate and inform as many
oncology professionals as possible so they are able to use the
valuable insights from the SIRFLOX study to improve the clinical
outcomes for their patients facing the challenge of metastatic
colorectal cancer.
It is clear the Level 1 clinical data generated by the SIRFLOX
study and the ongoing dissemination of these data will be
beneficial for the use of SIR-Spheres microspheres at an
earlier stage of patient treatment.
Sirtex 2015 AR 8
SIRFLOX RESULTS & OTHER CLINICAL PROGRAMS
PROGRESS OF OUR LEAD CLINICAL PROGRAMS
L
A
T
C
E
R
O
L
O
C
C
I
T
A
T
S
A
T
E
M
)
C
R
C
m
(
R
E
C
N
A
C
R
A
L
U
L
L
E
C
O
T
A
P
E
H
)
C
C
H
(
A
M
O
N
C
R
A
C
I
SIRFLOX
530 Patients
Completion of
patient recruitment
FOXFIRE/
FOXFIRE GLOBAL
573 Patients
Primary endpoint
reported
Completion of
patient recruitment
Est. Primary
endpoint available
SARAH
460 Patients
SORAMIC
375 Patients
ve
SIR NIB
360 Patients
Completion of
patient recruitment
Est. Primary
endpoint available
Est. Completion of
patient recruitment
Est. Completion of
patient recruitment
2013
2014
2015
2016
2017
2018
The SARAH study directly compares SIR-Spheres microspheres
against the current standard of care systemic therapy sorafenib
(Nexavar®, Bayer Healthcare Pharmaceuticals) in patients with
non-resectable advanced hepatocellular carcinoma (HCC), as
the main form of primary liver cancer.
SARAH is a landmark study that exceeded its initial recruitment
target with 460 patients enrolled in more than 25 institutions
across France within a rapid timeframe. We believe if the results
from the SARAH study are positive they could help elevate the
use of SIR-Spheres microspheres to a standard treatment for
patients with advanced primary hepatocellular carcinoma.
The primary endpoint of the SARAH study is Overall Survival
with secondary endpoints being safety and tolerability,
Progression-Free Survival, tumour response rates, quality-of-life
scores and overall healthcare costs between the two arms of
the study. It is the largest randomised study ever to compare
SIRT or any liver-directed therapy against the standard of care
systemic therapy in the treatment of primary hepatocellular
carcinoma. The SARAH study is expected to have its Overall
Survival data available in late calendar year 2016.
We remain focused on implementing our comprehensive
regulatory and reimbursement strategies and progressing
discussions with clinical guideline panels around the world on
the importance of the SIRLFOX study findings.
Alongside these initiatives, the SIRFLOX results will continue
to be presented over the next six to 12 months as part of the
Best of ASCO series, which will help further the awareness and
understanding of the SIRFLOX study among the international
oncology community and its importance for clinical practice.
SIGNIFICANT PROGRESS ACHIEVED IN OTHER
MAJOR STUDIES
During the reporting period we announced the achievement of
key milestones in a number of other important studies aimed
at generating further Level 1 evidence demonstrating the
effectiveness and safety of SIR-Spheres microspheres.
In January, we announced the completion of patient recruitment
in the FOXFIRE and FOXFIRE Global studies. These studies,
like SIRFLOX, are examining the first-line use of SIR-Spheres
microspheres in combination with chemotherapy in metastatic
colorectal cancer (mCRC). The FOXFIRE and FOXFIRE Global
studies have been designed from the outset to be combined
with the SIRFLOX study to generate Level 1 evidence on Overall
Survival. Overall Survival is considered the most robust measure
of benefit for cancer therapies in general. The combination of
the three clinical studies, that cumulatively recruited over 1,100
patients, has sufficient statistical power to clearly determine
whether SIR-Spheres microspheres in combination with first-
line chemotherapy can increase Overall Survival in a clinically
significant manner in patients with metastatic colorectal cancer.
The SIRFLOX, FOXFIRE and FOXFIRE Global clinical studies are
expected to have their Overall Survival data available in calendar
year 2017.
In March we announced the completion of recruitment in
the SARAH randomised controlled clinical study conducted
throughout France.
Sirtex 2015 AR 9
MORE CLINICAL DATA TO BECOME AVAILABLE
OVER NEXT THREE YEARS
22168.0
INVESTMENT IN CLINICAL
PROGRAMS
$’000
STUDY NAME
START
TOTAL
PATIENTS
SIRFLOX
FOXFIRE
FOXFIRE GLOBAL
SARAH
SORAMIC
SIRveNIB
2006
2010
2012
2010
2011
530
573
460
375
360
19951.2
% RECRUITMENT
AT 30 JUNE
2014
17734.4
15517.6
13300.8
100%
11084.0
8867.2
94%
6650.4
92%
4433.6
2216.8
0.0
63%
69%
COMMON CLINICAL TRIAL DEFINITIONS AND MEASURES
Clinical trials use many different terms to define their
success. The following is provided as a helpful guide
to shareholders and anyone interested in our work to
help medical professionals improve outcomes for
their patients.
Overall Survival
Overall Survival (OS) is seen as the ‘Gold Standard’ clinical
endpoint for many health authorities because it is a measure
of survival.
OS is the percentage of patients alive at a defined period
of time after diagnosis or, in treatment studies, the percentage
of patients alive at a defined time after initiation of the
treatment. OS is often reported as a five-year survival rate.
i.e. the percentage of patients alive five years after diagnosis
or treatment.
First-line and second-line
The ‘line’ of treatment describes the order in which it is tried as
a therapy for cancer. A first-line treatment is the initial treatment
used to target tumours. Second-line treatment is given when
first-line therapy doesn’t work or stops working.
Randomised
A descriptive term for a clinical study in which patients are
randomly assigned to one of two or more treatment arms
of the study.
Endpoints and outcomes
Endpoints, set and defined in advance of the clinical trial,
describe and define the goal or goals of the study. Examples
of endpoints will vary depending on the type and phase of trial.
Common endpoints include overall survival, tumour response,
patient survival or quality of life.
Salvage therapy
A form of treatment given after an ailment does not respond
to standard treatment. The most common diseases requiring
salvage therapy are various cancer tumours and HIV. It can
also mean a second attempt or a third final attempt.
% RECRUITMENT
AT 30 JUNE
2015
TYPE OF
LIVER
CANCER
100%
mCRC
100% mCRC
100%
HCC
85%
85%
HCC
2
6
0
,
3
HCC
2
0
4
,
0
1
3
4
2
,
2
1
2
7
8
,
5
1
8
6
1
,
2
2
4
2
7
,
0
2
2010
2011
2012
2013
2014
2015
Progression-Free Survival (PFS)
Is defined as the time elapsed from the date of patient
randomisation until the date of tumour progression occurring
at any site in the body (or patient death if disease progression
has not yet occurred). PFS measures the duration of time that
tumours located at any site in the body are ‘not growing’.
Progression-Free Survival in the Liver
Is defined as the time elapsed from the date of patient
randomisation until the date of tumour progression occurring in
the liver (or patient death if disease progression in the liver has
not yet occurred). PFS in the Liver measures the duration of
time that tumours located in the liver are ‘not growing’.
Quality of Life (QoL)
Clinical trials may assess the effect of treatment on a patient’s
wellbeing and ability to function in daily life. These are
measured using quality of life tools such as questionnaires.
Complete Response (CR)
This is the disappearance of all clinical evidence of disease.
It means the disappearance of tumours as measurable
using medical imaging techniques or by measurements
of pathological specimens and samples.
Objective Response Rate (ORR)
The percentage of patients experiencing either complete
or partial ‘shrinkage’ of their tumours located at any site
in the body.
Partial Response (PR)
Means at least 30 per cent ‘shrinkage’ of all tumours
as measurable using medical imaging techniques or by
measurements of pathological specimens and samples.
Sirtex sincerely thanks the many patients,
their families, medical professionals,
research and clinical support staff involved
in helping advance our important clinical
programs dedicated to improving the
outcomes for people with liver cancer.
Sirtex 2015 AR 10
MANUFACTURING & OPERATIONS
RESEARCH & DEVELOPMENT
Our commitment to creating long-term value
and growth has seen significant investments
in manufacturing and operations, and R&D.
MANUFACTURING & OPERATIONS
The manufacture and supply of the highest possible
quality product is of paramount importance to Sirtex,
the medical teams who administer our product and the
patients who receive our therapy.
Our manufacturing and operations teams continued to ensure
the safe and timely delivery of our product to customers at more
than 900 treatment sites, across over 40 countries around the
world. During the year, an average of 98 per cent of all SIR-
Spheres microspheres deliveries were made globally within
30 minutes of the scheduled delivery time from our current
manufacturing facilities in the US and Singapore.
During the 2015 financial year, our expanded manufacturing
facility in the US became operational and is expected to meet
future demand across the Americas. In Europe, work continued
to progress on our state-of-the-art manufacturing plant in
Frankfurt, Germany. This facility is anticipated to commence
commercial supply into the EMEA region during the 2016
financial year.
The robustness of our manufacturing and logistical infrastructure
was highlighted during February and March, where despite the
heaviest winter snowfall in history across Boston (108.6 inches),
our Wilmington manufacturing facility continued to operate
irrespective of the significant logistical challenges the snow
presented. All intended deliveries of SIR-Spheres microspheres
were made which enabled the patients to receive their
scheduled treatments. The highly efficient global distribution
network that allows Sirtex to manufacture and deliver such an
important cancer therapy is one of our most valuable assets.
However, we consistently aim to improve the way we structure
our manufacturing and operations. To manage our supply chain
more effectively, a new integrated software system is helping
our manufacturing teams streamline administrative procedures
and improve efficiency. Significant upgrades to our information
technology systems and other process improvements to our
global supply chain, sales and customer management systems
will safeguard our ability to meet the demands of increasing
clinical adoption of SIR-Spheres microspheres.
Leveraging these capabilities plays a key role in our growth
strategy and ability to serve an ever-expanding customer base
under our 2020Vision.
RESEARCH & DEVELOPMENT
Developing innovative new products by fostering an
active Research and Development (R&D) function within
Sirtex remains crucial to the long-term sustainability
of our business.
During the reporting period we invested $8.6 million into R&D,
up 8.3 per cent over last year. Over the past five years we have
invested $34.5 million into developing and expanding our
R&D portfolio.
R&D expenditure is allocated across a select number of
programs which seek to improve our current SIR-Spheres
microspheres product under the Evolution program, and the
development of a range of different platform technologies,
such as carbon cage nanoparticles, polymer coated magnetic
nanoparticles and a novel radioprotector compound. All of
which have multiple oncology applications through a direct
therapeutic effect, increasing the power of existing treatments
or reducing side-effects.
Recognising the inherent risk in new technology development,
the majority of R&D investment comprises active collaborations
with leading international research institutions, with the capability
and infrastructure to accelerate technology development. Our
collaborators include the Australian National University, the Peter
MacCallum Cancer Centre, the University of Sydney, and the
National Cancer Centre of Singapore (NCCS).
INVESTMENT IN R&D
$’000
PIPELINE
SIR-SPHERES®
EVOLUTION
(in house & various
collaborators)
CARBON CAGE
TECHNOLOGY
(Australian National
University)
NANOPARTICLE
DEVELOPMENTS
(University of Sydney)
• New delivery
apparatus
• Imaging for
treatment planning
• Imageable Spheres
• Cellular targeting
to improve the
effectiveness of
chemotherapy
• Enhancement of
external beam
radiation therapy
• Safely deliver
radioactive
substances to
specific cancer
sites deep within
the body
• Therapeutic agent
for intra-peritoneal
micrometastases
from ovarian cancer
(also with NCCS)
RADIOPROTECTOR
PROJECT
(Peter MacCallum
Cancer Centre)
• Topical agent
to prevent oral
mucositis during
radiotherapy
for head & neck
cancer
• Oral/systemic
radioprotector
for military and/or
civilian use
2
6
0
,
3
2
3
6
,
5
3
2
7
,
5
5
1
6
,
6
1
8
9
,
7
1
4
6
,
8
2010
2011
2012
2013
2014
2015
Sirtex 2015 AR 11
8641.0
7776.9
6912.8
6048.7
5184.6
4320.5
3456.4
2592.3
1728.2
864.1
0.0
MARKETING & COMMUNICATIONS
Our marketing investment creates greater
awareness of our unique therapy among
healthcare professionals worldwide.
Our marketing efforts focus on providing healthcare
professionals with the data they need to make
informed and independent treatment decisions
65081.0
that result in the greatest medical benefit for
58572.9
their patients.
52064.8
45556.7
INVESTMENT IN SALES & MARKETING
$’000
39048.6
During the financial year, a commitment of up to
$10.0 million into marketing and communications was
announced to support the planning and communication
26032.4
of the results of our SIRFLOX study.
19524.3
32540.5
Communicating the potential benefits of the SIRFLOX data
and its relevance to the treatment of colorectal cancer
liver metastases is currently the largest marketing program
undertaken by Sirtex.
13016.2
6508.1
0.0
During the reporting period, our marketing and sales teams
thoroughly reviewed metastatic colorectal cancer diagnosis
and treatment in order to determine the best ways to inform
and educate the medical community, patients and their families
about the potential benefits of earlier treatment of advanced liver
metastases using SIR-Spheres microspheres, consistent with
the SIRFLOX findings.
Our launch plan is underpinned by extensive market research
among more than 300 medical oncologists, interventional
radiologists and liver surgeons. The insights gathered will help
ensure our communications with stakeholders are relevant
and consistent.
We have also initiated a number of international and regional
advisory boards comprised of oncologists, liver surgeons,
interventional radiologists, oncology nurses, patient advocacy
groups and payers who are all leaders in their respective
communities.
Their insights will help Sirtex ensure our product is appropriately
positioned within the evolving treatment approach for metastatic
colorectal cancer.
The development and placement of advertising and marketing
materials represents the largest brand advertising effort we have
undertaken to date.
Running in parallel is an extensive program to support the
independent development of scientific publications in leading
peer-reviewed journals and academic presentations of these
data at leading medical congresses around the world. Peer-
review publications are key to raising awareness and building
credibility among the medical community. The presentation of
the SIRFLOX results at ASCO, the largest oncology meeting
worldwide, represented a significant milestone, and was also
the first of many presentations to medical audiences.
2
6
0
,
3
8
3
3
,
2
2
6
9
8
,
7
2
7
8
1
,
4
3
6
9
1
,
9
4
1
8
0
,
5
6
2010
2011
2012
2013
2014
2015
Expanded use of SIR-Spheres microspheres will also depend
on the decisions of public and private healthcare payers around
the world.
More than ever, we must clearly demonstrate evidence of better
health outcomes at reasonable costs to an increasingly broad
range of stakeholders who together play an progressively more
important role in the selection and purchase of new medical
products.
Our marketing investment is also focused on communicating the
health economics case for our product through the presentation
of independent and objective data.
Another key element to our global marketing initiatives
during the reporting period has been investment in medical
communications programs, including symposia, seminars,
panel discussions and public relations outreach through print,
video and online media to reach both professional and patient
audiences.
Our interactions with medical professionals and patient groups
are adapted by our regional teams to each local market and
aimed at encouraging the exchange of scientific information to
optimise the use of our product and services to improve medical
outcomes.
Our marketing communications efforts are ongoing and will
adapt to the changing competitive global environment we
operate within.
Sirtex 2015 AR 12
PEOPLE, COMMUNITIES & SOCIAL RESPONSIBILITY
Valuing our people for their unique
contributions to current success and
future growth.
WORKFORCE STATISTICS
43%
15%
Women represented
in the Sirtex workforce
Growth in employee
numbers in 2015
WORKFORCE DISTRIBUTION AND FUNCTION
The strength of Sirtex’s financial performance
throughout the 2015 financial year is very pleasing
and reflects the skill and dedication of the people
behind the results. Our workforce grew 15 per cent
to 246 employees during the reporting period, with
every Sirtex team member focused on our mission
to improve outcomes and quality of life for people
with cancer.
35%
39%%
26%
• AMERICAS
• EMEA
• ASIA PACIFIC
We deploy a holistic People Strategy with a focus
on attracting and retaining exceptional talent to
support our growth and develop outstanding future
business leaders.
68
3
8
246
114
12
26
36
33
• SALES & MARKETING
• OPERATIONS
• ADMINISTRATION
• CLINICAL AFFAIRS
• REGULATORY AFFAIRS &
QUALITY ASSURANCE
• MEDICAL
• MARKETING & MEDICAL
COMMUNICATIONS
• RESEARCH & DEVELOPMENT
• TRAINING & DEVELOPMENT
Our comprehensive employee induction program continues
to evolve to meet the demands of the business and our
consistent approach fosters the alignment of all employees
from their first day at Sirtex. Face-to-face technical product
training as well as Sirtex business process training is provided
to all employees globally.
246.0
221.4
A CULTURE BUILT ON QUALITY
196.8
Articulating the Sirtex culture has enabled the business
to attract talented individuals who share the ethics, integrity
and values we hold as a company.
147.6
172.2
123.0
98.4
We are fortunate to have a dedicated and passionate group
of people around the world who regard Sirtex as a great
place to begin and grow their careers. In striving to provide
an environment in which our employees can progress
professionally, we also remain mindful of the need to maintain
personal balance and quality of life.
49.2
24.6
73.8
0.0
Sirtex 2015 AR 13
EMPLOYEE NUMBERS GLOBALLY
OVER 5 YEARS
6
0
1
4
4
1
8
7
1
3
1
2
6
4
2
2011
2012
2013
2014
2015
With a dedicated global team of Human Resources professionals
now in place, we are equipped to actively support our growing
workforce and their unique requirements in all markets.
CARING FOR OUR PEOPLE AND BUILDING A
GLOBAL WORKFORCE
Sirtex has a diverse and inclusive working environment that
empowers employees and supports the achievement of our
long-term business goals. The Sirtex Diversity Program will
continue to foster equality, flexible work practices and promote
further opportunities for women to participate at all levels of
the organisation.
An inclusive environment cultivates different knowledge,
experiences and working styles that foster innovation and
creative thinking, providing scope to build a diverse group of
decision-makers and integrate a range of perspectives into
our business. By embracing this powerful formula, Sirtex is in
a strong position to capitalise on opportunities in all markets,
particularly emerging markets that could provide solid business
growth in the coming decade.
Key to the long-term, sustainable growth and success of Sirtex
will be our ability to continually attract, shape and motivate a
highly skilled workforce. A broad program of engagement has
been created, combining traditional hiring processes with more
modern recruitment solutions that harness the power of social
media. This has seen an increase in employees hired via direct
referrals during the reporting period.
With these sound strategic engagement plans in place, we are
well positioned to manage the expansion of our workforce as
we move towards the fulfillment of the Sirtex 2020Vision.
GROWING WITH SIRTEX
Growing with Sirtex is an internal initiative aimed at supporting
the development of our global team by enhancing the skills they
will need as our business evolves.
The goal is to continue to build a team of highly skilled and
capable individuals who can enjoy career progression within
Sirtex while making a significant, efficient and considered
contribution to the business.
HEALTH, SAFETY AND ENVIRONMENT
Our commitment to building a safe and healthy workplace
and reducing our environmental footprint is approached
with the same level of focus given to all other areas of the
Sirtex business.
We recently appointed a dedicated global Health and Safety
Manager to oversee the implementation of a comprehensive
program to build on our good record in this area. World Safety
Day 2015 served as an ideal occasion to launch our inaugural
Health, Safety and Environment Policy via a video message
from our CEO to all employees.
With employees in 20 countries and extensive research,
distribution and manufacturing operations, we are exposed to a
number of potential risks. As part of our steadfast commitment
to preventing work-related accidents and illnesses, a new
company-wide awareness and training program has been
designed to minimise these risks and equip our teams with
the tools and insights needed to perform at the highest levels
with zero harm.
Sirtex recognises the importance of conducting its business
in a manner that acknowledges our long-term responsibility to
the environment. During the reporting period we maintained
compliance with all applicable environmental laws and
regulations in every market.
Our performance in safety, health and environment is reviewed
regularly and all employees are encouraged to contribute and
identify areas for improvement.
IN THE COMMUNITY
Sirtex is committed to playing an active role in the medical,
scientific, patient and research communities we collaborate
with worldwide.
Helping where we can to empower researchers, medical
practitioners, patient advocacy and support groups and the
local communities where our employees live and work is part of
our corporate and social responsibility. Sirtex provides support
to these stakeholders through product or monetary donations,
sponsorships, research and education grants and scholarships.
By facilitating and contributing to the work of others who
support and share our goals, we are moving closer to our vision
of transforming cancer into a condition people can live with.
OUR COMMUNITY SUPPORT IS FOCUSED
ON FOUR AREAS
1
2
3
4
PATIENTS
Improve access and awareness
of our therapy
Enhance the quality of life for liver cancer
patients and their families
RESEARCH
Enhance and expand the knowledge
of researchers in microsphere and
related technologies
Expand knowledge of our technology
platform to support the next generation
of biomedical researchers
MEDICAL
Improve the skills and knowledge
of medical professionals who use
our product
Foster the next generation of medical
specialists who will use our product
LOCAL
Support community efforts where our
staff work and live
Support initiatives that contribute to
our goal of making cancer a
chronic disease
Sirtex 2015 AR 14
CHAIRMAN’S REPORT
Demonstrating market leadership by
creating innovative solutions for our
medical customers.
Chairman
Richard Hill
It is a great pleasure to present the 2015 Sirtex
Annual Report to investors. It was a milestone
year with the results of our flagship clinical study
SIRFLOX reported, and an additional three clinical
studies having completed patient recruitment.
Our core SIR-Spheres Y-90 resin microspheres
business recorded another year of record growth
and profits and our share price continued to
appreciate over the previous year. Once again,
Sirtex outperformed both the S&P/ASX 200 and
S&P/ASX 200 Healthcare indices.
When reflecting on just how far Sirtex has come,
it is worth remembering that the company was
first included in the S&P/ASX 200 Index in December
2012 when our market capitalisation was $740
million. As at 30 June, our market capitalisation
sits at approximately $1.6 billion. Underlying the
strength of the shareholder value created has been
the minimal change to our issued capital.
As our market capitalisation and share price have risen, so
too has awareness of our business within the financial market
community, with 11 sell-side analysts from global investment
banks and domestic stockbroking firms now providing research
coverage on Sirtex.
Sirtex 2015 AR 15
As we have stated previously, our goal is to help change liver
cancer from a terminal disease to a chronic, manageable
condition. While ambitious, we recognise how significant
the potential reward of this paradigm is for thousands of
medical professionals, patients and our shareholders.
Under our 2020Vision strategy, we are ensuring the long-term
sustainability and growth of our organisation for investors.
The runway of opportunity for our technology remains sound,
and our business is on track to achieve these goals.
2015 FINANCIAL RESULTS
Global dose sales of 10,252 set a new company record
and represented an improvement of 19.8 per cent on the
previous year. Total product revenue for 2015 was $176.1
million, up 36.1 per cent. Profit before tax was up 69.6 per cent
to $52.8 million while net profit after tax was $40.3 million,
up 69.0 per cent on last year.
Cash from operations was $52.0 million, up 61.6 per cent
on the previous year and the company increased its cash
holdings from $52.5 million to $73.9 million at the end of the
reporting period.
The company’s activities and financial results are discussed
in detail in the Directors’ Report.
DIVIDENDS
Our financial outlook remains strong given our solid cash
position and zero debt. This has permitted the company to pay
dividends to shareholders over the last five years. The Directors
have approved a fully franked final dividend of 20 cents per
share for the 2015 financial year, up 42.9 per cent over the prior
period. The record date for the dividend is 30 September 2015
and the payment date is 21 October 2015. Inclusive of the 2015
financial year dividend payment to be made on 21 October
2015, Sirtex will have returned to shareholders a total of
$35.4 million in dividends since 2011.
MANUFACTURING AND INFRASTRUCTURE INVESTMENT
TO MEET FUTURE GROWTH
As our financial results demonstrate, Sirtex is a rapidly
growing medical device company, and a market leader in the
interventional oncology space. Our shareholders are aware of
our commitment to creating long-term value and our growth has
necessitated investments into infrastructure, capabilities and
support functions that will equip us for future expansion.
The expansion of our global capacity will ensure the
company is able to meet the future demand anticipated for
SIR-Spheres microspheres. Our upgraded Wilmington plant
in Massachusetts, USA, became fully operational during the
financial year, tripling its manufacturing capability.
SHAREHOLDER DIVIDENDS DECLARED
$’000
GROWTH IN MARKET CAPITALISATION
$MILLIONS (AS AT 30 JUNE)
10280.7
9138.4
7996.1
6853.8
5711.5
4569.2
3426.9
2284.6
1142.3
0.0
1477.8
1313.6
1149.4
985.2
821.0
656.8
492.6
328.4
4
0
9
,
3
4
0
9
,
3
7
7
5
,
5
2010
2011
2012
3
164.2
3
7
,
6
0.0
2013
3
2
4
,
1
1
4
1
9
,
7
2014
2015
3
7
2
9
3
3
8
6
6
7
4
9
2
4
6
,
1
2011
2012
2013
2014
2015
Our new manufacturing facility in Frankfurt, Germany is
anticipated to commence commercial supply during the
2016 financial year.
Another major capital investment has been our commitment
to enhancing our internal systems and resource planning
capabilities. I am pleased to report Sirtex’s investment into this
new globally integrated software application was implemented
on time and on budget on 1 July 2015 with expenditure
of approximatley $3 million. The system will bring greater
efficiencies to our collection, storage and use of business
information. It will also empower our manufacturing, clinical
and marketing teams, streamline our administrative procedures
and further improve our competitiveness.
Together these investments put our business in a solid position
following the release of the SIRFLOX clinical data, and the
completion of patient recruitment in several other large studies.
SIRFLOX REPORTS CLINICAL DATA
Our large financial commitment to ongoing clinical studies
continued to deliver meaningful milestones during 2015.
These studies are critical to expanding the use of SIR-Spheres
microspheres from a last resort or salvage treatment to an initial
or first-line treatment option in patients with inoperable liver
cancer.
The company’s flagship clinical study, SIRFLOX, reported
clinical data during the year, revealing a significant delay in
the progression of liver tumours in patients who received our
innovative therapy in combination with standard chemotherapy.
While the effect of the treatment was profound, resulting in a
7.9 month delay in progression of tumours in the liver, the study
did not meet the primary endpoint of overall Progression-Free
Survival, which measures the progression of disease at any
site in the body, or the emergence of new disease.
However, based on the peer review process at the ASCO
meeting where our data was presented by Associate Professor
Peter Gibbs, we remain confident that our product has the
necessary clinical and safety attributes for adoption by the
medical community in the future for inoperable, first-line
metastatic colorectal cancer patients. We eagerly await the
scientific publication of the SIRFLOX study and look forward
to keeping our investors abreast of progress.
OTHER MAJOR CLINICAL STUDIES COMPLETE PATIENT
RECRUITMENT
2015 was also a significant year for Sirtex’s clinical program
outside of SIRFLOX, with three additional clinical studies
completing recruitment, representing over 1,000 patients
worldwide. The SARAH study is forecast to deliver clinical results
during calendar year 2016 and the FOXFIRE and FOXFIRE
Global studies during calendar year 2017. Our two remaining
large studies, SORAMIC and SIRveNIB are anticipated to
complete recruitment during the 2016 financial year.
We continue to explore the potential for our innovative
SIR-Spheres microspheres product outside of the liver.
Our pilot study in renal cell carcinoma (RCC or kidney cancer)
has shown promising results.
The entire team at Sirtex strives to make a difference in the lives
of people suffering from cancer and we hope that the continued
application of our technology for liver and non-liver cancers can
offer hope to many patients across the globe.
RESEARCH & DEVELOPMENT
The ongoing enhancement of Sirtex’s Research & Development
(R&D) capability centres on three levers. Firstly, we ensure
projects of suitable merit have sufficient financial resources to
reach each successive stage of development. Secondly, our
financial capability is leveraged with government incentives.
In our case, this involves reducing our effective tax rate via
recognition of federal government R&D tax credits from eligible
expenditure. Thirdly, we partner with thought leaders in the field
and associated centres of excellence, both domestically and
globally, to drive the innovation process.
Continual innovation is crucial to the success of Sirtex over
the coming years, and forms one of the key pillars of our
2020Vision. 4.9 per cent of revenue was invested back into
R&D during the reporting period to support the development
of new product technologies and improvements to our
SIR-Spheres microspheres product offering.
We have had measurable success in this regard during 2015,
with improvements made in the ease of delivery of our product
into patients and the maturation of several core platform
technologies through the pre-clinical process.
Sirtex 2015 AR 16
CHAIRMAN’S REPORT
DIRECTOR AND BOARD ACTIVITIES
OUTLOOK
Minimally invasive interventional oncology products like
SIR-Spheres microspheres continue to generate higher levels
of clinician interest with each passing year. Now, with the
reporting of the SIRFLOX data which was the largest such study
ever undertaken, the Board believes such a solid foundation
of evidence and benefit will see this segment of the oncology
market continue to grow over the coming years.
Patients will continue to seek out treatments that offer greater
precision with better clinical outcomes and lower side-effects.
On the other hand, Governments globally are looking to
reduce healthcare expenditures by providing their citizens
with cost-effective medical solutions. We believe SIR-Spheres
microspheres are uniquely positioned in this regard.
The Board is pleased with the progress made on all fronts and
the performance of the Sirtex team. 2016 is shaping up to be
another year of growth and prosperity for Sirtex as we pursue
our goal of making a meaningful difference in the lives of people
with cancer.
RICHARD HILL
CHAIRMAN
Stability at Board level is one measure of strength of the
company. The Sirtex Board has worked cohesively and
constructively over a number of years, and this approach
continued in 2015 with Board membership remaining
unchanged.
The Board works diligently to ensure the Sirtex global
management team has the expertise, capability and resources
to execute on their global growth initiatives both now and into
the future.
Under the leadership of our Chief Executive Officer, Gilman
Wong, the company has continued to deliver exceptional
returns to shareholders over a number of years. Our staff
numbers continue to rise, commensurate with the growth in
our business, all within the stated objectives of the 2020Vision.
OUR DEDICATED EMPLOYEES WORLDWIDE
Our employees are highly motivated individuals who share
our common corporate vision for the business. Approximately
46 per cent of our workforce operates in a sales and
marketing capacity. At the end of the 2015 financial year,
women represented 43 per cent of the total number of
employees globally.
Our people are talented and united in their focus to deliver
on our 2020Vision to create market leadership by delivering
solutions to the problems faced by our medical customers.
They are also committed to deploying our resources wisely
and delivering financial performance to create long-term
shareholder value.
DIVERSITY
We benefit from a diverse workforce which reflects the multiple
and varied communities in which we seek to do business.
Our diverse workforce also provides the necessary insights
and innovation required to remain successful in a global
environment.
The Board acknowledges the tireless work and commitment
of Sirtex employees in realising this vision, which has enhanced
Sirtex’s reputation among its customers, the medical and
scientific community and its key stakeholders, both domestically
and across the globe in over 40 countries.
A RESPONSIBLE COMMUNITY MEMBER
Sirtex is committed to conducting business ethically and
contributing to the social, environmental and economic
wellbeing of the many communities in which we operate.
Our report this year details our commitment and support
for a range of stakeholders in the medical, patient research
and local communities worldwide.
Sirtex 2015 AR 17
CHIEF EXECUTIVE OFFICER’S REPORT
Another year of strong progress and
major milestones delivered.
Chief Executive Officer
Mr Gilman Wong
The SIRFLOX study provided for the first time the
necessary Level 1 clinical evidence required by
clinicians when making informed treatment decisions
for their liver cancer patients. SIRFLOX highlighted
the significant benefits of SIR-Spheres microspheres
in patients suffering from metastatic colorectal cancer
where the cancer had spread to the liver. Importantly,
through the peer review process at the American
Society for Clinical Oncology (ASCO) Annual Meeting
in Chicago in late May, our study results were deemed
to be both clinically meaningful and significant in the
liver. In short, we are delighted by the results, which
now provide us with an opportunity to generate sales
at an earlier stage of treatment for patients with
metastatic colorectal cancer than is currently the
case with our salvage business.
In addition to the exciting potential resulting from the
SIRFLOX study results, our current business delivered
another outstanding year of growth. We remain focused
in our determination to see as many patients as possible
with inoperable liver cancer benefit from our treatment. Our
addressable global market is large, and our 2015 dose sales
imply we have less than a two per cent share. Our runway
of opportunity is therefore significant.
We must work in a proactive manner with the medical
community, patients, insurance companies, government
regulators and hospital administrators to achieve our long-
term growth objectives.
Behind every treatment we sell is a patient living with liver
cancer. Despite recent advances in the field, the five-year
survival rate for patients with inoperable liver cancer remains
very low. Like all medical paradigms, changing the basic three
tenets of cancer care, namely surgery, external radiotherapy
and drug therapy (chemotherapy) to include a fourth option
of ‘loco-regional’ or organ-specific treatments such as
SIR-Spheres microspheres will require education and time.
At Sirtex, we are committed to ensuring the relatively new
specialty of interventional oncology gains wider acceptance
by the general medical community.
We have an ambitious aim of increasing the number of patients
who are effectively able to live with their cancer by controlling
the burden of their disease in the liver. It is these patients who
motivate and inspire us at Sirtex to ensure every patient who is
eligible for our treatment has the potential to receive it.
Much of what we aim to achieve in the longer term is embodied
in our core strategy, the 2020Vision.
Sirtex 2015 AR 18
The 2015 financial year was another milestone year
at Sirtex, with the reporting of the SIRFLOX study –
the largest ever randomised, multi-centre clinical
study involving SIR-Spheres microspheres in
patients with metastatic colorectal cancer.
SIRFLOX was also the largest interventional
oncology study ever conducted.
DOSE SALES GROWTH
19.8%
REVENUE GROWTH
36.1%
NET PROFIT AFTER TAX GROWTH
69.0%
CHIEF EXECUTIVE OFFICER’S REPORT
Sirtex has
structured the
business for
sustainable
long-term growth
based on three
core foundations
1 2 3
SIR-SPHERES
MICROSPHERES
RESEARCH &
DEVELOPMENT
MERGERS &
ACQUISITIONS
2020VISION STRATEGY
Our 2020Vision which aims to define where Sirtex could be in
the year 2020 is now well into its third year of implementation.
It continues to shape our near and long-term decision-making
across three core pillars.
The first pillar involves fully exploiting the SIR-Spheres
microspheres technology platform by significantly expanding
the current ‘salvage’ market opportunity by investing into sales
and marketing to build awareness and increase adoption,
while at the same time investing in clinical studies that will
expand its use in existing primary and secondary liver cancer
markets. We are also examining its use in other cancers outside
the liver, such as the kidneys. We are very pleased with our
progress under this pillar, with three of our six major clinical
studies completing recruitment during 2015 and in the case of
SIRFLOX, reporting results.
The second pillar is aimed at evolving the current SIR-Spheres
microspheres platform and related technologies, which
include developments in carbon cage nanoparticles, coated
nanoparticles, radioprotector and other technologies. We
continue to make good progress across all programs and are
moving closer to commencing human clinical studies.
The third pillar is focused on potential merger and acquisition
activities. While the opportunities for SIR-Spheres microspheres
are substantial, it is important for the company to leverage
its key capabilities and infrastructure in seeking appropriate
products or technologies that may facilitate additional growth.
The 2020Vision is a pragmatic approach to managing strategic
risk while increasing shareholder value and returns over the
long-term. We look forward to updating shareholders as further
key milestones are met.
SIRFLOX CLINICAL STUDY RESULTS
In 2015 Sirtex reported the results of its flagship clinical
study SIRFLOX, which examined the combination of SIR-
Spheres microspheres with standard chemotherapy versus
chemotherapy alone. While the study did not meet the
primary endpoint of overall Progression-Free Survival (PFS),
the study did meet the key secondary endpoint of PFS in the
liver. The addition of SIR-Spheres microspheres to standard
chemotherapy resulted in a 7.9 month improvement in PFS in
the liver from 12.6 months to 20.5 months with a 31 per cent
lower risk of the patient’s tumours progressing at any time
during the study, with strong statistical significance.
The SIRFLOX results presented at ASCO were considered
clinically meaningful in the liver and received strong
endorsement by a number of Key Opinion Leaders who
commented on the findings publicly. This is a remarkable
achievement, and we extend our thanks to the study
investigators, hospitals and patients who participated in
this important clinical study.
In recognition of the quality of both the study and its findings,
ASCO selected SIRFLOX as one of the ‘Best of ASCO’
presentations, which facilitates a greater dissemination of the
results by national oncology leaders to Medical Oncologists in
their home countries.
Study data continues to be generated beyond what was
presented at the ASCO meeting. In July, Professor Guy van
Hazel, Co-Principal Investigator on the SIRFLOX study from
the University of Western Australia presented further sub-set
analyses at the World Congress on Gastrointestinal Cancer
(WCGIC). This data once again highlighted the positive clinical
benefits of SIR-Spheres microspheres in patients with liver-only
and liver-dominant disease. Importantly, from a clinical practice
perspective, the significant effect of SIR-Spheres microspheres
was independent of whether a patient was intended to be
treated with the biologic drug bevacizumab or not and there
was no impact on the duration of systemic therapy given to
patients.
We anticipate the use of our unique product in earlier treatment
lines, including first-line, for metastatic colorectal cancer, will
gain momentum over time.
OTHER MAJOR CLINICAL STUDIES CONTINUE TO
PROGRESS STRONGLY
Our $60.0 million investment over five years into five major
clinical studies additional to SIRFLOX was designed to
significantly expand the use of SIR-Spheres microspheres
beyond the current salvage treatment market segment. This is a
key tenet of our 2020Vision. As mentioned, 2015 was a year of
significant progress in these clinical programs with three of them
completing recruitment and the final two studies now having
recruited 85 per cent of the total patients required by the end
of the 2015 financial year.
Sirtex 2015 AR 19
In January, we announced the completion of the FOXFIRE and
FOXFIRE Global studies, which recruited over 360 and over
200 patients, respectively. The primary endpoint of these studies
is Overall Survival (OS). When combined with the SIRFLOX OS
data it will provide the necessary statistical power in over 1,100
patients to see if there is a clinically meaningful difference in
survival between the chemotherapy arm and the chemotherapy
plus SIR-Spheres microspheres arm of the study. We anticipate
the results will be available during calendar year 2017.
In March, the SARAH study completed recruitment of 460
patients, across 25 specialist sites in France. This landmark
study is the largest randomised study to compare SIR-Spheres
microspheres, or any liver-directed therapy, against the standard
systemic therapy sorafenib (Nexavar® – Bayer Healthcare
Pharmaceuticals). We believe if the SARAH study results are
positive, it could elevate the use of SIR-Spheres microspheres
to a standard treatment for patients with advanced primary
liver cancer, also known as hepatocellular carcinoma (HCC).
Results from the SARAH study are anticipated in late calendar
year 2016.
The remaining two studies, SORAMIC (pan European) and
SIRveNIB (Asia Pacific) are anticipated to complete recruitment
during the 2016 financial year. The target recruitment for
SORAMIC is 375 patients and for SIRveNIB 360 patients.
As our large studies move closer to completion, we are directing
our resources and skills towards providing therapies for a range
of other potential indications.
Our RESIRT kidney cancer pilot study has continued to show
great promise with minimal side-effects in patients treated with
high doses of SIR-Spheres microspheres. To date, we have
treated 18 patients, with promising results delivered. Patient
recruitment is expected to be complete by early calendar
year 2016.
RESEARCH & DEVELOPMENT
Research & Development (R&D) is a crucial component of
our long-term 2020Vision. We continually seek to improve our
core product offering while simultaneously investing in new
technologies that leverage our in-house scientific expertise and
collaborations with world-leading universities and institutes.
During the reporting period our R&D investment was
$8.6 million or 4.9 per cent of total revenue.
Under our SIR-Spheres microspheres evolution program our
advanced patient treatment planning system and new delivery
apparatus continued to make good progress.
Our collaborations with The Australian National University,
Peter MacCallum Institute and National Cancer Centre of
Singapore all achieved developmental milestones during the
year. We believe our R&D activities are sufficiently diversified
to manage the inherent risks associated with new technology
development. Several of our programs are moving closer to
human clinical trials, which it is hoped will commence during
the 2016 financial year.
RECORD DOSE SALES AND PROFIT
We continue to make strong inroads with our ‘deep and
wide’ strategy. This approach seeks to increase the use of
SIR-Spheres microspheres on a per site basis (‘deep’) and
commensurately increase the number of accredited treatment
sites able to use our innovative treatment (‘wide’). In 2015 we
saw dose sales accelerate, up 19.8 per cent over the prior year.
Revenue growth of 36.1 per cent to $176.1 million outpaced
dose sales growth reflecting the material benefit of a price rise
in the key US market and the translation effect of a weaker
Australian dollar versus the US dollar over the period. With tight
cost control, our net profit after tax rose 69.0 per cent to
$40.3 million.
Key milestones achieved by the Sirtex team during the reporting
period include:
• Record dose sales of 10,252, up 19.8 per cent on 2014
• Record revenues of $176.1 million, up 36.1 per cent on 2014
• Earnings per share of 71.4 cents, up 67.8 per cent
• Dividend per share of 20.0 cents, up 42.9 per cent on the
previous year
• Operating cash flow of $52.0 million, up 61.6 per cent
on 2014
• Cash balance of $73.9 million and no debt
• Reporting of SIRFLOX clinical study results and presentations
at ASCO and WCGIC annual meetings
• Completion of patient recruitment in the SARAH clinical study
• Completion of patient recruitment in the FOXFIRE and
FOXFIRE Global clinical studies
• Strong investor interest in Sirtex’s ‘Lunch and Learn’ seminars
in Melbourne and Sydney with a Key Opinion Leader
presentation.
SALES & MARKETING
Sales and marketing expenditure was up 32.3 per cent on
the prior year to $65.1 million, or 37.0 per cent of sales.
Our major focus was on expanding our sales and marketing
infrastructure in readiness for presentation of the SIRFLOX study
results at ASCO.
In 2015 we allocated an additional $10.0 million in sales
and marketing expenditure. This was specifically targeted at
educating and building awareness within the medical oncology
and interventional radiology community both prior to and
immediately following the release of the SIRFLOX study results.
Our SIRFLOX sales and marketing initiative culminated with
our significant exposure at ASCO where over 30,000 people
attended the Annual Meeting and approximately 3,500 attended
the presentation of the SIRFLOX study results by Associate
Professor Peter Gibbs. We believe most in the audience were
relatively unfamiliar with our product.
Our sales and marketing teams globally are now armed with
the necessary knowledge and expertise to position SIR-Spheres
microspheres as a first-line treatment option for clinicians
considering a liver-directed therapy to complement their use
of systemic chemotherapy when treating liver-only or liver-
dominant metastatic colorectal cancer.
Sirtex now has a global team of 246 people across 20
countries, representing growth of 15 per cent over the prior
period. Reflecting our innovative, supportive and inclusive
culture at Sirtex is our high participation rate, with 30 per cent
of our global workforce having achieved five years’ service.
Our staff turnover rates remain low as a direct result of
Sirtex 2015 AR 20
We believe our multi-faceted approach ensures that we
will continue to build upon our strong leadership position
in the rapidly growing field of interventional oncology in the
years ahead.
We remain equally excited by our new technologies under
development, which made good progress during 2015.
Such technologies have the potential to become meaningful
contributors to sales growth in the coming years.
Our strong financial and market leading position also affords us
the opportunity to take advantage of any potential product or
company acquisition targets that may arise in the future. On all
fronts, we are particularly pleased with our progress under the
2020Vision.
The operational excellence of our global business is built on
a working culture of cooperation and mutual respect. This
ensures that every talented Sirtex team is able to meet our
ongoing commitment to the medical professionals and their
patients who depend on our product for their quality of life.
We remain very confident in our long-term growth prospects
and look forward to another successful year in 2016.
GILMAN E WONG
CHIEF EXECUTIVE OFFICER
CHIEF EXECUTIVE OFFICER’S REPORT
initiatives aimed at attracting, developing and promoting
high performers.
Sirtex is committed to providing a healthy and safe
workplace for all employees. To achieve this we appointed
a dedicated Global Health and Safety Manager to oversee
the implementation of a comprehensive program to build on
our solid track record in this area. We also used the occasion
of World Safety Day 2015 to launch our inaugural Health, Safety
and Environment Policy via a video message to all employees.
MANUFACTURING AND SUPPLY CHAIN
Sirtex has manufacturing capabilities in Singapore as well
as Wilmington, Massachusetts, USA and more recently in
Frankfurt, Germany. These facilities are close to major transport
hubs, allowing our product to be efficiently dispatched across
the Americas, EMEA and Asia Pacific. We operate a highly
efficient but complex logistical supply chain to ensure our
products are delivered on time to over 900 hospitals globally
and the thousands of patients they treat each year. The
complexity of our global manufacturing and supply chains is
one of our most valuable assets, particularly when managing
a product with a short half-life of only 64.1 hours. The
infrastructure we have in place allows for expanded production
volumes in the coming years while ensuring tight cost control
and margin stability.
Our expanded manufacturing facility in Wilmington was
completed during the year, with commercial doses now
being supplied throughout the Americas from this facility. We
anticipate our Frankfurt facility will be supplying commercial
doses across the EMEA region during the 2016 financial year.
Sirtex has mitigated the risk of unexpected shut downs at any
site, by ensuring each facility is certified to supply any one of
our three regions, should the need arise.
The major upgrade of our global information technology
systems in the 2015 financial year will allow us to more
effectively manage our supply chain, streamline administrative
procedures, enhance both sales and customer management
and increase the overall enterprise-wide efficiency. This will
enable Sirtex to manage future growth more readily.
OUTLOOK
The 2015 financial year was a watershed year for Sirtex with the
strong clinical results delivered from the SIRFLOX study. Such
large-scale clinical studies not only seek to educate the broader
medical community on the benefits of our treatment, but provide
us with a robust platform to pursue growth opportunities in
both existing and new markets for SIR-Spheres microspheres.
With such a large addressable market for SIR-Spheres
microspheres in patients with inoperable liver cancer, the
reporting of important clinical information from the SIRFLOX
study and additionally from our other major studies from
2016 onwards will provide us with the necessary evidence
to materially penetrate this market in the coming years.
With governments worldwide seeking to limit the growth in their
healthcare expenditures, it is important for us to demonstrate
to governments and private insurers that innovative treatments
like ours offer the patient an improved survival outlook at a price
that is deemed cost-effective.
Sirtex 2015 AR 21
BOARD OF DIRECTORS
Richard Hill – Chairman
(Non-Executive) BA, LLB
(Sydney), LLM (London)
Dr John Eady – Deputy
Chairman (Non-Executive)
BSc (Hons), PhD, FTSE
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 was a
founding partner of Hill Young
& Associates, a corporate
advisory firm. He is also an
attorney of the New York
State Bar.
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,
and consults extensively on
business improvement.
Responsibilities
Member of the Audit
Committee and
the Remuneration Committee
Responsibilities
Chairman of the Remuneration
Committee and Member of
the Audit Committee
Years with Sirtex
11 years
Years with Sirtex
10 years
Grant Boyce – Director
(Non-Executive) 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.
Responsibilities
Chairman of the Audit
Committee
and Member of the
Remuneration Committee
Years with Sirtex
13 years
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.
Responsibilities
Daily management decisions
and implementation of the
Company’s strategic plans.
Years with Sirtex
10 years
Sirtex 2015 AR 22
KEY MANAGEMENT PERSONNEL
Michael Mangano – President US
Dr David N Cade – Chief Medical Officer
Experience and Expertise
Mr Mangano joined Sirtex in January
2010, after 15 years of experience in
the medical device industry with Boston
Scientific where he had numerous
management positions both within
the US and internationally.
Responsibilities
Mr Mangano is based in our regional
office in the greater Boston area and
responsible for the development
and execution of the strategic direction
of Sales and Marketing in North,
Central and Latin America.
Years with Sirtex
5 years
Nigel Lange – CEO Europe
Experience and Expertise
Mr Lange joined Sirtex US in 2002,
then set up Sirtex operations in Europe.
Before joining Sirtex, Mr Lange held
senior roles at Nordion Inc (NYSE:NDZ)
and has over 20 years of experience in
the healthcare industry.
Responsibilities
Mr Lange is based in our regional office
in Bonn, Germany, where he is
responsible for the development and
execution of the strategic direction of
Sales and Marketing in Europe as well
as the Middle East and Africa, a region
which for Sirtex comprises a total of
20 countries with direct sales and
distributor sales models.
Years with Sirtex
13 years
Experience and Expertise
Dr Cade joined Sirtex in 2003 and has
served as the Chief Medical Officer since
2007. He previously held the positions of
U.S. Medical Director based in New York,
USA, from 2005 to 2007, and European
Medical Director based in Bonn,
Germany, from 2003 to 2005.
Dr Cade is a medical graduate of Monash
University and holds an MBA from the
Melbourne Business School and the
ESADE Business School in Barcelona,
Spain. He is a Graduate of the Australian
Institute of Company Directors. Prior
to joining Sirtex, Dr Cade worked at
management consultancy Booz &
Company.
Responsibilities
Dr Cade has responsibility for all medical
affairs of the group, and is based in the
Sydney head office.
Years with Sirtex
12 years
Robert Hardie – Global Head of
Operations
Experience and Expertise
Mr Hardie joined Sirtex in June 2006
and was appointed Global Head of
Operations in October 2006. Mr Hardie
previously held senior engineering and
management positions in various industry
sectors, and has a strong engineering,
manufacturing, production planning and
logistics background.
Responsibilities
Mr Hardie has overall responsibility
for global operations including
manufacturing, supply chain management
and logistics. Mr Hardie is based in the
Sydney head office.
Years with Sirtex
9 years
Darren Smith – Chief Financial Officer
and Company Secretary
Experience and Expertise
Mr Smith was appointed Company
Secretary in July 2008 and Chief
Financial Officer in February 2009.
Mr Smith previously held CFO and
senior executive finance and general
management positions in a number of
international, Australian listed and private
companies. Mr Smith holds an MBA
from the Australian Graduate School
of Management (AGSM), the University
of New South Wales, a Bachelor of
Business from the University of Western
Sydney, is a Fellow of CPA Australia
having been a member for over 20
years and is a member of the Australian
Institute of Company Directors.
Responsibilities
Mr Smith has overall responsibility
for the Finance, IT and Human Resources
function of the Group.
Years with Sirtex
7 years
Dr Burwood Chew – CEO Asia Pacific
Experience and Expertise
Dr Chew joined Sirtex in January 2011 as
Head of the Asia Pacific region. Dr Chew
has extensive experience in oncology and
for many years has held senior regional
positions with Bayer Healthcare, Sanofi-
Aventis, and with Wellcome (now GSK).
Dr Chew is a medical graduate from the
University of New South Wales.
Responsibilities
Dr Chew is based in our regional office
in Singapore with responsibility for the
development and execution of the
strategic direction of Sales and Marketing
in Australia, New Zealand and Asia
Pacific. This large region comprises
heterogeneous markets with direct sales,
distributors and licensing partners.
Years with Sirtex
4 years
Sirtex 2015 AR 23
CORPORATE GOVERNANCE
The Board is committed to achieving and
demonstrating the highest standards of corporate
governance. As such, Sirtex Medical Limited and
its Controlled Entities (the ‘Group’) have adopted
the third edition of the Corporate Governance
Principles and Recommendations which was
released by the ASX Corporate Governance
Council on 27 March 2014 and became effective
for financial years beginning on or after
1 July 2014.
The Group’s Corporate Governance Statement for the financial
year ending 30 June 2015 is dated as at 30 June 2015 and
was approved by the Board on 13 August 2015. The Corporate
Governance Statement is available on Sirtex Medical Limited’s
website at www.sirtex.com/au/investors/investor-resources/
corporate-governance-and-policies/
Sirtex 2015 AR 24
Sirtex 2015 AR 25
FINANCIAL REPORT
FOR THE YEAR ENDED 30 JUNE 2015
SIRTEX MEDICAL LIMITED
CONSOLIDATED ENTITY
ABN 35 078 166 122
CONTENTS
27 DIRECTORS’ REPORT
47 AUDITOR’S INDEPENDENCE DECLARATION
48 DIRECTORS’ DECLARATION
49 INDEPENDENT AUDITOR’S REPORT
52 CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
53 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
54 STATEMENT OF CHANGES IN EQUITY
55 CONSOLIDATED STATEMENT OF CASH FLOWS
56 NOTES TO THE FINANCIAL STATEMENTS
84 ADDITIONAL STOCK EXCHANGE INFORMATION
85 COMPANY INFORMATION
Sirtex 2014 AR 26
The Directors of Sirtex Medical Ltd present their report, together with the financial statements of the consolidated entity, being
Sirtex Medical Ltd and its controlled entities (‘the Group’) for the year ended 30 June 2015.
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
(Non-Executive)
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 was a founding partner of Hill Young
& Associates, a corporate advisory firm. He is also an attorney of the New York State Bar.
Dr John Eady – Deputy
Chairman (Non-Executive)
BSc (Hons), PhD, FTSE
Directorships held in other listed entities during the last three years
Calliden Group Limited – Chairman (appointed April 2000)
Biota Holdings Limited (appointed November 2008, delisted November 2012)
BlackWall Property Funds – Chairman (appointed July 2008)
Special Responsibilities
Member of the Audit Committee and the Remuneration Committee
Interest in Shares and Options
1,974 ordinary shares in Sirtex Medical Limited
2,959 share rights
Experience and Expertise
Dr Eady was appointed 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, and consults extensively on business
improvement.
Directorships held in other listed entities during the last three years
Nil
Special Responsibilities
Chairman of the Remuneration Committee and Member of the Audit Committee
Interest in Shares and Options
6,234 ordinary shares in Sirtex Medical Limited
1,850 share rights
Grant Boyce – Director
(Non-Executive)
CA, BCom
Experience and Expertise
Mr Boyce was appointed 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.
Directorships held in other listed entities during the last three years
Nil
Special Responsibilities
Chairman of the Audit Committee and Member of the Remuneration Committee
Interest in Shares and Options
5,987 ordinary shares in Sirtex Medical Limited
1,480 share rights
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 various industries. He has a strong planning,
and sales and marketing background.
Directorships held in other listed entities during the last three years
Nil
Interest in Shares and Options
100,000 ordinary shares in Sirtex Medical Limited
328,000 Executive Performance Rights
Sirtex 2015 AR 27
DIRECTORS’ REPORTFOR THE YEAR ENDED 30 JUNE 2015 COMPANY SECRETARY
Darren Smith – Company
Secretary and Chief
Financial Officer
MBA, BBus, FCPA
Experience and Expertise
Mr Smith was appointed company secretary in July 2008 and Chief Financial Officer in February 2009.
Mr Smith previously held CFO and senior executive finance and general management positions in a
number of international, Australian listed and private companies. Mr Smith holds an MBA from the
Australian Graduate School of Management (AGSM), The University of New South Wales, a Bachelor
of Business from the University of Western Sydney, and is a Fellow of CPA Australia and a member
of AICD.
Interest in Shares and Options
33,000 ordinary shares in Sirtex Medical Limited
95,000 Executive Performance Rights
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
Held
Attended
Held
Attended
Held
Attended
R Hill (Chairman)
Dr J Eady
G Boyce
G Wong
14
14
14
14
14
14
14
14
6
6
6
–
6
6
6
–
5
5
5
–
5
5
5
–
PRINCIPAL ACTIVITIES
Sirtex Medical Ltd and its controlled entities (‘Group’) form a medical device group whose primary objective is to manufacture and to
distribute effective liver cancer treatments utilising small particle technology to approved markets in Asia-Pacific, Europe, Middle East and
Africa, and North and South America.
REVIEW OF OPERATIONS AND FINANCIAL RESULTS
The Group’s main product SIR-Spheres microspheres is a targeted radioactive treatment for liver cancer. The treatment is called Selective
Internal Radiation Therapy (SIRT) and consists of a minimally invasive surgical procedure performed by an interventional radiologist. The
SIR-Spheres microspheres lodge in the small blood vessels of the tumour where they destroy it from the inside over a short period while
sparing the surrounding healthy tissue. During the year, the Group sold 10,252 doses worldwide representing less than 2 per cent of the
addressable market.
Dose sales for the year increased by 19.8 per cent over the previous financial year. The Americas (US, Latin America) market with
7,076 doses achieved growth of 21.2 per cent, the Europe, Middle East and Africa (EMEA) market with 2,273 doses achieved growth
of 18.6 per cent, and Asia Pacific (APAC) recorded 903 dose sales representing growth of 11.6 per cent. Doses have been sold to over
900 hospitals worldwide. The largest individual customer, a hospital in the US, represented 2.3 per cent of total dose sales during the year
(2014: 1.3 per cent).
Sales revenue reached $176,087,520 for the financial year ended 30 June 2015, an increase of 36.1 per cent over last financial year
($129,363,426). The higher sales revenue growth compared to volume growth was driven by a $US1,000 price increase in the US market
in June 2014 and positive foreign currency fluctuations, as the Australian Dollar depreciated against the US Dollar during the year.
Profit before tax has increased 69.6 per cent to $52,768,232 for the year ended 30 June 2015 (2014: $31,109,946), and profit after tax
has increased by 69.0 per cent to $40,344,738 (2014: $23,867,803).
Earnings per share for the year ended 30 June 2015 have increased to $0.714 (2014: $0.425). During the year, a fully franked dividend
of $0.14 (2014: $0.12) per share has been paid in respect of the previous financial year.
Net assets for the Group increased by 34.4 per cent to $144,635,697 (2014: $107,582,178), mainly due to the investment of $21,462,126
(2014: $18,848,091) in intangible assets and an increase in cash and short-term deposits of $21,446,091 (2014: $401,124).
A significant part of the Group’s clinical activities is focused on major post-marketing clinical studies. Consistent with last year, expenses
for these studies have been capitalised as they continue to satisfy the recognition criteria for AASB 138 Intangible Assets. Additions to
capitalised costs incurred for these trials as well as for two smaller development projects during the financial year ended 30 June 2015
represent a total of $17,800,798 compared to $18,848,091 for the previous financial year. One of the major clinical trials was completed
during the year resulting in amortisation of $250,618 being recognised in the Consolidated Statement of Profit and Loss.
Sirtex 2015 AR 28
DIVIDENDS
An ordinary dividend of 14 cents per share was declared for the financial year ended 30 June 2014 and paid during the financial year
ended 30 June 2015 (2014: 12 cents).
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
During the financial year there were no significant changes in the state of affairs of the Group other than that referred to in the financial
statements or notes thereto.
LIKELY DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
The Group’s strategy focuses on promoting and developing SIR-Spheres microspheres to become a worldwide standard of care for
patients with liver cancer, representing a market estimated at over 480,000 patients per year.
To achieve this objective, Sirtex continues to invest in major randomised controlled studies. With a Clinical Operations team comprising
in excess of 25 employees in the US, Europe, and Asia Pacific, together with contract research organisations and other service providers,
the Group possesses the project management and patient recruitment capabilities that are required to successfully manage and complete
these large studies.
During the financial year ended 30 June 2015, the Group released the results of one of its five clinical studies. To prepare for future demand
for SIR-Spheres microspheres following the release of the results, the Group has expanded its manufacturing capabilities. The additional
manufacturing capabilities at our plant in Wilmington, USA became operational during the financial year and the new manufacturing facility
in Frankfurt, Germany is anticipated to commence manufacturing commercial doses during the financial year ended 30 June 2016.
The Group has been successful in gaining regulatory approval for SIR-Spheres microspheres in key global markets. They include US,
Argentina, Brazil, the European Union, Israel and various Middle East and African markets, Australia, New Zealand, Singapore, Hong Kong,
Taiwan and various other Asian markets. Sirtex is working towards gaining regulatory approvals in other major markets such as Japan and
China for its SIR-Spheres microspheres product to continue its geographic growth.
The Group has invested $3,087,421 in a new integrated software application in order to bring greater efficiencies to our collection, storage
and use of business information to empower our manufacturing, clinical and marketing teams, streamline our administrative procedures and
further improve our competitiveness. In addition, significant investments have been made in human resources, with a further increase in staff
numbers from 213 at the end of last financial year to 246 at the end of this financial year.
ENVIRONMENTAL REGULATIONS
The Group is not subject to significant environmental regulation under the law of any of the jurisdictions the Group is operating in.
UNISSUED SHARES
Executive Performance rights on issue at year end
As at 30 June 2015, the unissued shares of Sirtex Medical Limited under Executive Performance Rights are as follows:
Grant date
22 February 2011
23 August 2011
28 August 2012
26 November 2013
23 September 2014
Date of Vesting
3 July 2013
7 July 2014
30 June 2015
30 June 2016
30 June 2017
Exercise Price $
nil
nil
nil
nil
nil
Number under Rights
33,000
33,000
678,500
443,000
281,320
Rights holders do not have any rights to participate in any issue of shares or other interests in the Company or any other entity.
For further details on rights issued as remuneration, refer to the Remuneration Report.
Directors’ rights on issue at year end
As at 30 June 2015, the unissued shares of Sirtex Medical Limited under Non-Executive Directors Rights are as follows:
Grant date
22 July 2014
Date of Vesting
22 July 2015
Exercise Price $
nil
Number under Rights
6,289
Share options on issue at year end or exercised during the year
During the year ended 30 June 2015, 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 2015.
Sirtex 2015 AR 29
DIRECTORS’ REPORTFOR THE YEAR ENDED 30 JUNE 2015 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, as at 30 June 2015 is as follows:
R Hill
Dr J Eady
G Boyce
G Wong
2015
Ordinary Shares
1,974
6,234
5,987
100,000
2015
Rights
2,959
1,850
1,480
328,000
2014
Ordinary Shares
–
5,000
5,000
60,000
2014
Rights
1,974
1,234
987
347,000
INDEMNIFICATION OF OFFICERS AND AUDITORS
During the financial year, the company paid a premium in respect of a contract insuring the directors of the company, the company
secretary and all executive officers of the company and of any related body corporate against a liability incurred as such a director,
secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure
of the nature of the liability and the amount of the premium.
The company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed
to indemnify an officer or auditor of the company or of any related body corporate against a liability incurred as such an officer or auditor.
EVENTS AFTER REPORTING DATE
On 10 July 2015, a total of 678,500 Executive Performance Rights issued on 28 August 2012 vested, having exceeded the performance
target. As at the date of this report, a total of 583,314 of these performance rights have been exercised and issued as ordinary shares of
Sirtex Medical Limited.
On 22 July 2015, a total of 6,289 Non-Executive Directors Rights issued on 22 July 2014 vested and 6,289 ordinary shares of Sirtex
Medical Limited were purchased on market by the Trust.
Since the end of the year, the Directors have declared a fully franked dividend of 20c per share to be paid on 21 October 2015 (2014:
14 cents per share). The record date for the dividend is 30 September 2015.
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 to the Court under section 237 of the Corporations Act 2001 for leave 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.
NON-AUDIT SERVICES
During the year, Grant Thornton, the Company’s auditors, performed certain other services in addition to their statutory audit duties.
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:
• 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
• 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.
Details of the amounts paid to the auditors of the Company, Grant Thornton, and its related practices for audit and non-audit services
provided during the year are set out in Note 30 to the Financial Statements.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration for the year ended 30 June 2015 has been received and can be found on page 47 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 report and Directors’
Report have been rounded to the nearest thousand dollars, unless otherwise indicated.
Sirtex 2015 AR 30
Remuneration Report (audited)
LETTER FROM THE CHAIRMAN OF THE REMUNERATION COMMITTEE
Dear Shareholder,
I am pleased to present the remuneration report for the financial year ended 30 June 2015, outlining the nature and amount of remuneration
for Sirtex’s non-executive directors and other Key Management Personnel (KMP), as defined under section 300A of the Corporations Act,
2001 and its associated regulations.
Sirtex’s remuneration levels and structure are critical to the Group’s ability to recruit and retain the calibre of people necessary if it is to grow
and reach its full potential. It must be market-competitive, and at the same time fair to staff and responsible from a shareholder perspective.
The Group’s remuneration for the financial year ended 30 June 2015 sought to achieve these goals.
Remuneration continues to comprise a fixed salary and a significant at-risk component. In this way, reward reflects performance and is
higher when shareholder rewards are higher and lower when they are not.
It is currently the Group’s policy to set fixed salary at the median (middle of market) for the role in the relevant country (P50) and for the
at-risk component to be structured so that remuneration equal to half-way between the median and top levels (P75) can be achieved if
demanding targets are met.
It is also Sirtex’s policy to emphasise the long-term incentive (LTI) element of the at-risk component. While some cash short-term incentive
(STI) bonus, reflecting individual and Group performance, is considered necessary to be fair to executives, the Board believes that this
LTI emphasis encourages the longer term commitment favoured by Sirtex and shareholder groups. As a result, we have continued this
emphasis and at this stage prefer this approach rather than introducing a two-part STI reward and its additional complexity.
At the same time the Board is considering improvements to the Executive Performance Rights Plan. For the financial year ended
30 June 2016, we intend to replace the current absolute Total Shareholder Return (TSR) measure with a market-adjusted TSR. This
change is in response to concerns expressed as to the possibility of vesting being driven by broad market movement rather than company
performance, although this has not occurred since the LTI plan was introduced. We are also considering whether changes are warranted
in order to encourage executive KMP to retain significant portions of vested LTI shares.
For the financial year ended 30 June 2015, KMP and other senior executive remuneration continued to be based on thorough data
collection and market analysis for equivalent roles in similar companies in the countries in which Sirtex operates. The data were collected
and analysed by the Group’s independent, expert remuneration consultant (Godfrey Remuneration Group), augmented where appropriate
through other sources and considered by the Remuneration Committee, given prevailing circumstances.
Where possible, the comparator companies included organisations in the healthcare/biotechnology/medical device industries, but it is evident
that the most relevant comparison characteristic is size. Extensive research has shown a strong correlation between the remuneration levels
of senior executives and market capitalisation, globally across all industries. The higher the capitalisation, the higher the remuneration levels,
reflecting the significantly greater complexity, responsibility and impact the executive’s role has in the larger organisations.
For this reason, the determination of the appropriate market capitalisation to be used as a basis for the comparison of remuneration levels
is a critical step, particularly given the significant share price growth and volatility experienced by Sirtex in recent times.
For the financial year ended 30 June 2015 analysis, the Remuneration Committee opted to take a conservative approach and used an
underlying share value that reflects factors such as typical Price Earnings (PE) ratios, rather than the latest share price. Even so, because
of the Group’s strong growth, remuneration for senior executives has needed to grow significantly more than would have been the case
for a company with a relatively stable market capitalisation.
This has also been the case for the Group’s non-executive directors (NEDs). Sirtex believes that the same P75 positioning is necessary
if it is to have the NEDs it needs to guide such a strategically exciting company. Accordingly, NED remuneration is based on fixed fees set
at P50 for NEDs in similar companies and equities purchased through a salary sacrifice mechanism so that total remuneration approaches
the P75 level.
Market comparisons have shown that NED remuneration also increases with company size. This has meant increases in total NED
remuneration for financial year ended 30 June 2015. It should be noted, however, that when determining the 2015 NED remuneration
components, it was decided to limit the indicated increases in fixed fees and use more of the market capitalisation-driven increases to
salary sacrifice into equities. The objective was to accelerate NED shareholding growth.
These equities vest after only one year but have dealing restrictions while the NED remains on the Board, or for six years after vesting.
This is a simple tax-effective mechanism to encourage NEDs to retain and build their shareholding in the Group.
Sirtex strives to have remuneration structures and levels that are data-driven and based on objective, simple and transparent policies.
A fundamental requirement is that we continue to match market practice. We are committed to improving healthcare outcomes for patients
worldwide, and to do that in a way that is responsible to all stakeholders.
As Chair of the Remuneration Committee, I would like to thank shareholders for their support and to invite feedback regarding the changes
made during the financial year ended 30 June 2015. I hope you will continue to support us by voting to adopt this remuneration report at
the upcoming Annual General Meeting.
Regards,
Dr John Eady
Chair of the Remuneration Committee
Sirtex 2015 AR 31
DIRECTORS’ REPORTFOR THE YEAR ENDED 30 JUNE 2015 CONTENT:
The Remuneration Report, which forms part of the Directors’ Report, provides information about the remuneration of the directors
of Sirtex Medical Limited (Sirtex) and its other KMP for the year ended 30 June 2015. The remuneration report is set out under the
following headings:
1. Persons covered by this report
2. Principles used to determine the nature and amount of remuneration
3. Service agreements
4. Performance outcomes and impact on shareholder wealth for the financial year ended 30 June 2015
5. Details of remuneration
6. Additional information
1. PERSONS COVERED BY THIS REPORT
This report covers remuneration arrangements and outcomes for the following KMP:
Non-executive Directors
• Mr Richard Hill, Independent Non-executive Chairman
• Dr John Eady, Independent Non-executive Director and Deputy Chairman – Chair of Remuneration Committee
• Mr Grant Boyce, Independent Non-executive Director – Chair of the Audit Committee
Executives
• Mr Gilman Wong, Managing Director & CEO
• Mr Darren Smith, CFO and Company Secretary
• Mr Michael Mangano, President Americas
• Mr Nigel Lange, Chief Executive EMEA
• Dr Burwood Chew, Chief Executive Asia Pacific
• Mr Robert Hardie, Global Head of Operations
• Dr David Cade, Chief Medical Officer
All KMP held their positions throughout the financial year ended 30 June 2015.
2. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION
2.1 Remuneration Governance Framework
In order to base its decisions on broadly-based information and views, the Group seeks input from a wide range of sources:
• Remuneration Committee members;
• External remuneration consultants (ERCs);
• Group management;
• Stakeholder groups and shareholders;
• Other experts and professionals such as tax advisors and lawyers; and
•
Individual KMP to understand roles and complexities.
Interactions between various parties on remuneration matters are overseen by the Remuneration Committee to ensure that there is
appropriate independence and controls in place. The Remuneration Committee uses the input provided to inform its views on KMP
remuneration issues, appropriate to the Group’s specific circumstances.
Sirtex 2015 AR 32
2.2 Executive KMP Remuneration Policy and Procedure
The Executive KMP Remuneration Policy and Procedure applies to executives defined as:
• Managing Director – accountable to the Board for the Group’s performance and long term planning; and
• Top Strata Direct Reports to the Managing Director – roles that are business unit, functional, or expertise heads regarded as KMP.
This policy outlines the Group’s intentions regarding executive remuneration, as well as how remuneration is intended to be structured,
benchmarked and adjusted in response to changes in the circumstances of the Group, and in line with good governance.
Broadly the policy states that for executive KMP:
• Remuneration should be composed of:
– Fixed Remuneration (inclusive of superannuation, allowances, benefits and any applicable fringe benefits tax (FBT),
– STI which provides a reward for performance against annual objectives and personal effectiveness,
– LTI which provides a securities-based reward for performance against indicators of shareholder benefit or value creation,
over a three year period.
In total, the sum of the three elements will constitute total targeted remuneration (TTR).
Internal relativities should be considered to recognise Sirtex’s particular organisation design, using ‘strata’ to map the relationships
between roles.
•
•
• External market factors should be considered and used to benchmark practices.
• TTR should be structured with reference to local market practice.
• Remuneration will be managed within a range so as to allow for the recognition of individual differences such as the calibre of
incumbents and the competency with which they fulfil roles.
• Termination benefits will be in line with local regulation, and in Australia limited to the default amount allowed for under the
Corporations Act.
Executive KMP remuneration is linked closely to Group performance.
Policy Area
Relationship to Company Performance
Fixed Remuneration
Fixed remuneration is based on market practice where levels vary with market capitalisation which
reflects Group performance through its share price.
At-risk components
(STI and LTI)
The at-risk components are linked to business levers that drive strategic initiatives or indicators that
reflect shareholder experience.
STI payments depend on the influence an individual senior executive has on Group performance, as
compared to target, and are measured via key performance indicators (KPIs) reflecting the business
levers necessary to implement Group strategy. While many influencing factors are quantitative, some
are more subjective, aimed at assessing personal effectiveness, in the context of the prevailing
circumstances.
STI KPIs generally focus on internal perspectives, such as dose sales, that can be considered as leading
indicators for the external measures used for LTI awards.
LTI awards are based on direct measures of Group performance, as reflected in share price growth and
the growth in earnings per share.
In this way, remuneration policies seek to link overall executive remuneration with longer-term strategies
and the experience of shareholders, it being higher when longer term issues are being addressed
effectively and the Group is doing well.
Sirtex 2015 AR 33
DIRECTORS’ REPORTFOR THE YEAR ENDED 30 JUNE 2015 2.3 Short-term Incentives
The Short-term Incentive Plan (STI) is a key part of the remuneration offered to executives and aims to:
– Create a strong link between performance and reward, and
– Share Group success with the executives who contribute to it through their efforts.
• Non-executive directors are excluded from participation.
• Where possible, there are threshold, target and stretch levels of objectives, with awards being scaled on a pro-rata basis dependent
on actual performance. This is intended to provide an opportunity to obtain a reward under a range of circumstances, including
outperformance above the target level of performance.
• The responsibility for the ongoing administration of the STI plan rests with the Board. It is authorised to amend the Rules and establish
and amend guidelines for the administration of the STI Plan, as deemed appropriate, and to make determinations under the STI Plan
as may be deemed necessary or advisable.
• The Clawback policy applies to STI awards.
Variable Remuneration – Executive Short-term Incentive (STI) Plan – Detail
Aspect
Plan Rules, Offers and Comments
Measurement Period
From 1 July to the following 30 June.
Award Opportunities
Key Performance
Indicators (KPIs)
Determined each year, and for financial year ended 30 June 2015 the MD/CEO had a target STI award
opportunity equal to 50% of Fixed Remuneration. The other executives who are KMPs had a target
award opportunity equal to 35% of Fixed Remuneration.
STIs are awarded based on KPI performance as compared to target, and other influencing factors.
For the CEO, these measures were ‘Normalised Group EBITDA’ (40% weighting), ‘doses sold’ (40%
weighting) and ‘leadership effectiveness’ (20% weighting). Those for the other executive KMP were
based on two measurement groups, ‘Normalised Group EBITDA’ (50% weighting) and KPIs and other
influencing factors (50% weighting). All measures reflect the nature of specific roles, while creating
shared objectives where appropriate.
The shared KPI for the financial year ended 30 June 2015 was ‘Normalised Group EBITDA’ being
Group earnings before interest, tax, depreciation and amortisation, excluding exchange rate fluctuations,
clinical studies, and Research & Development expenditure.
Role-specific influencing indicators included such factors as dose sales, expense control, delivery
performance, cost-of-goods sold, audit compliance and to cover project-style work, progress against
milestones.
These measures were judged by the Board as key levers for Group success. The Board limits the
number used so as to encourage focus on those business levers deemed most important.
In the case of qualitative factors, such as leadership development, actual performance is judged by
the Board based on a range of inputs, one of which is information from the MD/CEO in relation to his
Direct Reports.
Weightings are applied to the KPIs selected for each participant to reflect the relative importance of
each KPI.
The award scale used in relation to the ‘Normalised Group EBITDA’ and dose sales KPIs is:
Performance
Level
95%, <105%
105%
>105%, <110%
≥110%
Percentage of
Target STI Payable
Nil
25%
Pro-rata
100%
Pro-rata
110%
Sirtex practice is to adopt budgets where the achievement of key parameters is considered a
challenging but achievable objective.
Sirtex 2015 AR 34
Aspect
Plan Rules, Offers and Comments
Cessation of Employment
During a Measurement
Period
In the event of cessation of employment due to dismissal for cause, all entitlements in relation to the
Measurement Period are forfeited.
In the event of cessation of employment due to resignation, all entitlements in relation to the
Measurement Period are forfeited, unless otherwise determined by the Board.
In the event of cessation of employment for other reasons:
(a) The STI award opportunity for the Measurement Period will be pro-rata, reduced to reflect the
portion of the Measurement Period worked, and
(b) Performance and STI awards will be determined following the end of the Measurement Period in the
normal way. The Board, however, may determine to accelerate the determination and payment of
STI awards.
The Board has discretion to allow the Plan to continue for the Measurement Period or to terminate it at
the point of Change of Control, and may make pro-rata awards based on performance up to that time.
The Board determines the applicable targets annually and has discretion to vary the Plan Rules or
terminate the STI Plan in relation to future periods, but may not reduce earned awards (being amounts
already approved by the Board and payable for a completed measurement period) without the consent
of the Participant.
Change of Control
Board Discretion
2.4 Long-term Incentives
The Long-term Incentive Plan (LTI) is the third component of the remuneration offered to executives. It aims to:
– Create a strong link between performance and reward over the long-term, and
– Share long-term company success with the executives who contribute to it.
• Non-executive directors are excluded from participation.
• The Clawback Policy applies to the LTI Plan.
Variable Remuneration – Executive Long-term Incentive (LTI) Plan – Detail
Aspect
Plan Rules, Offers and Comments (2015 Offers)
Measurement Period
The measurement period for the 2015 offers is the three financial years from 1 July 2014 to
30 June 2017.
Award Opportunities
Performance Rights were offered under the Executive Performance Rights (EPR) Plan during the
financial year in accordance with the Group’s policies and Plan rules.
The target LTI value used to calculate grants was equal to 75% of Fixed Remuneration for the MD/CEO,
and 35% of Fixed Remuneration for other executive KMP.
The number of LTI Performance Rights granted is calculated by applying the following formula:
Number of Performance Rights = Fixed Remuneration x Target LTI% ÷
Right Value ÷ Target Vesting %
The Right Value was the volume weighted average share price for the 10 days up to and including
30 June 2014, less assumed dividends over the Measurement Period.
In order to take into account special circumstances, the Board has discretion to modify the Target
Vesting %. For 2015, this factor used was increased from 0.33, as in the vesting scale, to 0.5.
Sirtex 2015 AR 35
DIRECTORS’ REPORTFOR THE YEAR ENDED 30 JUNE 2015
Aspect
Plan Rules, Offers and Comments (2015 Offers)
Vesting Scales
Performance conditions must be satisfied for Rights to vest.
The performance conditions specified as part of 2015 offers include two tranches, with 50% of Rights
being subject to a Total Shareholder Return (TSR) vesting condition, and 50% being subject to an EPS
Growth Rate vesting condition.
The vesting percentages are to be determined by the following scales:
Performance
Level
10% & <17.5%
17.5%
>17.5% & <25%
25%
0%
16.67%
Pro-rata
33.3%
Pro-rata
100%
TSR Vesting Scale
Absolute TSR
Compound Annual Growth Rate
Over Measurement Period
Vesting
Percentage
<10%
10%
>10% & <15%
15%
>15% & <20%
20%
0%
16.67%
Pro-rata
33.3%
Pro-rata
100%
Comments
Absolute TSR is the cumulative gain for shareholders over a three year period, from growth in the
share price and dividends, assuming that dividends are reinvested into the Group’s shares. TSR was
chosen as one of the two measures for the 2015 offers because it has the highest correlation with
Group performance from the perspective of shareholders. It is acknowledged that some stakeholder
groups prefer a ‘relative TSR’ measure in order to take into account the possibility of windfall gains from
a universally rising market. Although this concern has not materialised, the Board has considered the
views of these stakeholders and will, for 2016 offers, replace the absolute TSR measure with a relative
TSR measure.
Sirtex’s TSR is calculated by the Group with the calculations reviewed by the Group’s auditor. In
selecting 10%, 15% and 20% as the threshold, target and stretch levels for TSR, the Board referenced
the accepted long-term average return received by shareholders from investing in stocks on major stock
exchanges around the world. It was also recognised that investors in Sirtex would be seeking returns in
excess of the long-term average.
EPS growth was selected as the most appropriate second measure. This measure is intended to give
a different perspective on Group performance. Earnings-per-share growth is a method of tracking
the ability of the Group to grow profit on a per-share basis. Increasing earnings per share indicates
increasing returns on the funds provided by shareholders.
The vesting scale relative to performance is reviewed each year and altered if the circumstances of the
Group or the market are sufficiently different, such that the difficulty of the scale is no longer appropriate.
Board discretion to vary vesting will generally only be applied when the vesting that would otherwise
apply is considered by the Board to be inappropriate.
Sirtex 2015 AR 36
Aspect
Plan Rules, Offers and Comments (2015 Offers)
Exercise of Vested
Incentive Rights
On vesting, a Performance Right confers an entitlement on the Participant to exercise the Performance
Right to the value of an ordinary share in the Holding Company (Share). On exercise, the Participant is
paid $1,000 in cash by the Group and the trustee of the EPR Plan Trust (Trustee) receives the balance
of the value of the vested Performance Rights (from the Company) to subscribe for Shares or acquire
Shares on market on behalf of the Participant. The partial cash payment is intended to manage the tax
impact of the EPR Plan on Australian Participants. Overseas Participants may have a portion of their
Shares sold to account for withholding tax and other amounts payable by the Company in respect of
the vested Performance Rights.
The Trustee holds Shares that it has subscribed for, or acquired on behalf of, a Participant, until the
Participant directs the Trustee to transfer the Shares to the Participant or sell the Shares and remit the
proceeds to the Participant.
No amount is payable by Participants to exercise their vested Executive Performance Rights.
Dealing Restrictions
on Shares
Shares acquired when vested Incentive Rights are exercised will be subject to the restrictions set out
in the Group’s share trading policy, the insider trading provisions of the Corporations Act or any other
additional dealing restrictions included in the offer of the Incentive Rights. No additional restrictions were
specified as part of offers for the financial year ended 30 June 2015.
Cessation of Employment
In the event of cessation of employment due to dismissal for cause, all unvested Performance Rights are
forfeited.
In the event of cessation of employment due to resignation, all unvested Performance Rights are
forfeited unless otherwise determined by the Board.
In the event of cessation of employment for other reasons all unvested Rights granted in the 12 months
preceding the termination of employment lapse. All other unvested Rights granted in prior years will not
lapse, and will continue and, if they become vested at some later time, will be able to be exercised in
accordance with their terms.
Change of Control of the
Company (Compulsory
Acquisition)
In the event of a compulsory acquisition of Shares following a takeover bid or a scheme of arrangement,
vested Performance Rights may be exercised and unvested Performance Rights may be exercised by
the Participant in the same proportion as the Share price (assessed via 10 day VWAP) has increased
since the beginning of the Measurement Period.
Board Discretion
The Board has absolute discretion in the exercise of its powers and in making determinations under the
EPRP rules or taking action under its rules.
The Board recognises that with the benefit of hindsight, the level of vesting as outlined in an offer may
not be appropriate and therefore it reserves the right to adjust the level of vesting. In exercising this
discretion the Board will have regard to the circumstances that prevailed over the Measurement Period
and the experience of shareholders relative to their expectation at the beginning of the Measurement
Period.
2.5 Non-executive Director’s Remuneration
The NED Remuneration is governed by formal Board policies and procedures.
• Remuneration may be composed of:
– Board fees,
– Committee fees,
– Superannuation, and
– Securities.
• Remuneration will be managed within the aggregate fee limit (AFL) or fee pool approved by shareholders of the Company.
• Remuneration should be reviewed annually.
• Termination benefits will not be paid to NEDs.
•
In line with other KMP policy, NED TRP targets the P75 market positioning for comparable companies, with fixed remuneration being
set by reference to the P50 of market practice.
• The P75 positioning is reached by salary-sacrificing the gap into equity grants. It is recognised that it is not appropriate to provide
performance-based incentives to NEDs.
Accordingly, NED remuneration is variable moving with shareholder value, as reflected in share growth.
Sirtex 2015 AR 37
DIRECTORS’ REPORTFOR THE YEAR ENDED 30 JUNE 2015 Variable Remuneration – Non-executive (NED) Director Rights Plan – Detail
Aspect
Purpose
Plan Process
Plan Rules, Offers and Comments
The NED Rights Plan has been recommended to the Board of Sirtex as suitable to the Group’s
circumstances, constituting part of a market-competitive main-board package that aims to align the
interests of NEDs directly with shareholders.
The plan helps address the preference of many shareholders for NEDs to increase their shareholdings
in the Group without breaching the insider trading provisions of the Corporations Act. The disposal
restrictions applicable to shares acquired under the plan ensure that NEDs maintain their shareholdings,
avoiding the need for a NED shareholding policy, but in such a manner as to avoid any adverse impact
on their independence.
Rights offered to NEDs are not subject to performance conditions or any vesting conditions other than a
one year period of service. The Restricted Shares that are acquired by the trustee of the NEDs Plan trust
(NEDs Trustee) in respect of the vested Rights are, however, subject to a dealing restriction such that
they may not be dealt with until the earlier of ceasing to be a NED of the Group or the elapsing of seven
years from the grant date. This ensures that the NEDs Trustee holds the shares on behalf of the NEDS
for as long as possible to create the strongest alignment with shareholders.
Extreme care has been taken to distinguish the NED Rights Plan from the Executive Rights Plan in order
to ensure no conflicts of interest can arise. Only the average weighted share price used to calculate the
number of Rights awarded to a NED is in common.
It is intended that vested NED Rights will be satisfied via on-market purchase of Sirtex Shares, rather
than by new issues of Shares.
Measurement Period
The Measurement Period is one year from grant.
Grant Value
Grants of Rights were made to NEDs during financial year ended 30 June 2015 with the intended value
of the grants being as follows:
• $50,000 for the Board Chair,
• $31,250 for the Deputy Chair, and
• $25,000 for the other NED.
Generally, grants of NED Rights are calculated by broadly applying the following formula:
Number of NED Rights = (P75-P50 of market data) ÷ Right Value
The Right Value was the volume weighted average share price of Shares over the
10 days up to and including 30 June 2014.
The Board retains discretion to modify the amounts that the NEDs Rights are based upon. For
the financial year ended 30 June 2015, it was determined that increases in the fixed remuneration
component would be limited, not increasing sufficiently to match P50 of similar ASX-listed companies,
and more would be sacrificed into equities.
Shareholder approval of grants of NED Rights was not obtained because such approval is not required
under the ASX Listing Rules and they form part of the shareholder approved aggregate fees limit.
Vesting Rights
Participants must complete a full year of service for Rights to vest.
NED Rights that do not vest will lapse.
Dividends
NED Rights
NEDs will be entitled to all dividends received by the NEDs Trustee in respect of Shares held for the
benefit of those NEDs.
Without the approval of the Board, Rights may not be sold, transferred, mortgaged, charged or
otherwise dealt with or encumbered.
Cessation of Being a NED
If a NED is no longer on the Board, the unvested NEDs Rights will be forfeited unless otherwise
determined in the discretion of the other NEDs
Sirtex 2015 AR 38
3. SERVICE AGREEMENTS
On appointment to the Board, all non-executive directors enter into a service agreement with the Group in the form of a letter of
appointment. Upon termination of a director’s appointment, the director will be paid his or her director’s fees on a pro-rata basis, to
the extent that they are unpaid, up to the date of termination. The director will also receive all vested shares held in trust on the date
of termination.
Remuneration and other terms of employment for the MD/CEO and other key management personnel are also formalised in service
agreements. The major provisions of the agreements are set out below. Generally, most contracts with executives may be terminated
early by either party with six months’ notice, subject to termination payments as detailed below.
Name
Mr G Wong
Mr D Smith
Mr M Mangano
Mr N Lange
Dr B Chew
Mr R Hardie
Dr D Cade
Duration of Contract
From Company
From KMP
Termination Payments
Period of Notice
No fixed term
No fixed term
No fixed term
No fixed term
No fixed term
No fixed term
No fixed term
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
Up to 12 months*
Up to 12 months*
Up to 12 months*
Up to 12 months*
6 months
Up to 12 months*
Up to 12 months*
*Under the Corporations Act the Termination Benefit Limit is 12 months average salary (last 3 years) unless shareholder approval
is obtained.
4. PERFORMANCE OUTCOMES AND IMPACT ON SHAREHOLDER WEALTH FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
The following outlines the performance of the Group over the 2015 financial year and the previous four financial years:
Date
Revenue Profit after
Tax
Share
Price
Dividends
Change
in Share
Price
Short-term change in
Shareholder Value over
1 year (SP increase +
dividends)
Long-term change in
Shareholder Value over
3 years (SP increase +
dividends)
30-Jun-11
30-Jun-12
30-Jun-13
30-Jun-14
30-Jun-15
$m
70.7
82.6
96.7
129.4
176.1
$m
11.5
17.1
18.3
23.9
40.3
$
4.90
6.09
11.98
16.88
29.05
$
0.00
1.19
5.89
4.90
12.17
$
0.07
0.07
0.10
0.12
0.14
$
0.07
1.26
5.99
5.02
12.31
%
1.43
25.71
98.36
41.90
72.93
$
%
2.95
7.32
12.27
23.32
88.06
149.39
250.41
382.92
The table shows very strong Group performance over the last 12 months, 3 and 5 years in terms of TSR. The Board believes that this
level of performance reflects the quality and commitment of its staff and the leadership given, all being enabled by fair and appropriate
remunerations structures and packages.
Other indications of Group performance include:
• Dose sales have been growing strongly in each of the last five years, with an approximately 20 per cent growth during 2014-2015.
• Revenue has grown in each of the last five years, with an approximately 36 per cent growth during 2014-2015.
The LTI is the main component of executive remuneration that is intended to be strongly related to external indicators of Group
performance. The following table gives an indication of Group performance against those measures that are part of the LTI:
Date
EPS
TSR
12 month EPS
12 month EPS growth
3 year EPS
12 month TSR
3 year TSR
$
0.206
0.307
0.328
0.425
0.714
%
(28.5)
49.0
6.8
29.6
68.0
%
(6.1)
13.9
106.3
132.6
%
1.4
25.7
98.4
41.9
72.9
%
88.1
149.4
250.4
382.9
30-Jun-11
30-Jun-12
30-Jun-13
30-Jun-14
30-Jun-15
Sirtex 2015 AR 39
DIRECTORS’ REPORTFOR THE YEAR ENDED 30 JUNE 2015 4.1 Links between Performance and Reward
The remuneration of executives is composed of three parts as outlined earlier, being:
• Fixed Remuneration, which is not intended to vary with performance,
• STI which is intended to vary with indicators of Group and individual performance, and
• LTI which is also intended to deliver a variable reward based on shareholder experience.
Estimates of the STI to be paid in relation to the 2015 financial year were accrued in the 30 June 2015 accounts. Adjustments will be made
subsequent to the completion of the audit process and finalisation of the assessment process, as summarised below. Based on the strong
financial performance of the Group during financial year ended 30 June 2015, 100 per cent of the award opportunity available (i.e. of the
maximum opportunity) was accrued.
STI Links
Name
Position
Objectives
Mr G Wong
Managing Director
& CEO
Mr D Smith
Mr M Mangano
Stratum 2 Direct
Report to MD/CEO
Mr N Lange
Dr B Chew
Mr R Hardie
Dr D Cade
Normalised
Group EBITDA
(40% weighting)
Dose sold
(40% weighting)
Leadership
effectiveness
(20% weighting)
Normalised
Group EBITDA
(50% weighting)
KPIs and other
Influencing Factors
(50% weighting)
Percentage of Max
STI to be paid
100%
100%
Measurement
Earnings were
measured via
Normalised Group
EBITDA, dose sales by
comparison to budget/
plans, and individual
effectiveness by NED
assessment on defined
achievements and
capabilities.
Achievement of the
earnings objective was
measured as for the
MD/CEO.
KPI and other
influencing factors
were assessed
against qualitative
and quantitative
objectives set at the
beginning of the year
in relation to each
role, with some Board
discretion to take
into account relevant
circumstances. In this
way awards aligned
with each individual’s
contributions to the
Group during the year,
as assessed by the
Board.
Contribution to
success
The MD/CEO role has
primary responsibility
for Group earnings
(EBITDA) and was
asked to focus on
increasing dose
sales and long-
term leadership
development as key
factors for success at
the CEO level in 2015.
Other executives
shared the EBITDA
objective with the MD/
CEO to encourage
teamwork and the
one-company culture.
KPIs and other
influencing factors for
the Regional Heads
included regional
sales growth, expense
control, debtor
management and
contribution margin.
Factors for the other
KMPs included
where relevant, audit
compliance, DIFOT,
cost of goods sold,
marketing objectives,
proctor development,
clinical trial recruitment
and the achievement
of project milestones.
Each factor was
identified and selected
as being a key lever for
each role, in order to
drive group success
for 2015.
Sirtex 2015 AR 40
The LTI, being dependent on TSR and EPS growth, is strongly related to external indicators of Group performance.
The following table outlines the extent that the LTIs vested in relation to the completion of the 2014 financial year and those that were
granted during the 2012 financial year:
Name
Mr G Wong
Mr D Smith
Mr M Mangano
Mr N Lange
Dr B Chew
Mr R Hardie
Dr D Cade
Total
Target LTI Value
(at grant)
2012 Grant
Number
TSR
Achieved
% of Grant
Vested
206,062
73,913
73,913
73,913
73,913
73,913
53,755
92,000
33,000
33,000
33,000
33,000
33,000
24,000
629,382
281,000
52.6%
52.6%
52.6%
52.6%
52.6%
52.6%
52.6%
52.6%
100%
100%
100%
100%
100%
100%
100%
100%
Number
Vested
92,000
33,000
33,000
33,000
33,000
33,000
24,000
281,000
5. DETAILS OF REMUNERATION
5.1 Executive Remuneration
The following table outlines the remuneration received by executives of the Group during the 2015 and 2014 financial years, in accordance
with the statutory requirements for disclosure and accounting standards:
Name
Year
Salary
Other
Benefits
Short-term
Incentive (STI)
Short-term
Employee
Benefits
Termination
Benefits
Equity-settled
Long-term
Incentive (LTI)
Retirement
Benefits/
Super-
annuation
$
18,783
24,535
18,783
17,775
12,922
10,196
–
–
–
–
18,783
17,775
18,783
17,775
88,054
88,056
68
74
78
80
83
85
83
88
82
83
76
80
78
82
77
81
Total
Target
Remuner-
ation
Change
in
Accrued
Leave
$
$
$ % of
TRP
519,662
30 1,704,522
43,637
317,371
24 1,340,371
62,324
138,514
99,606
138,514
99,606
138,514
99,606
138,514
99,606
138,514
99,606
126,183
80,213
20
17
16
14
17
12
18
17
21
17
19
15
700,189
(3,550)
585,669
25,054
865,443
39,554
718,430
(9,997)
802,335
(1,066)
843,362
779,895
4,226
5,040
569,216
(18,683)
664,389
(18,285)
579,356
5,140
658,495
(6,339)
541,026
11,599
1,338,415
22 6,175,268
58,990
895,614
17 5,177,430
79,663
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$ % of
TRP
$ % of
TRP
365,860
21 1,166,077
$
Mr G Wong
2015
800,217
2014
719,465
Mr D Smith
2015
413,467
2014
367,225
$
–
–
–
–
279,000
129,425
101,063
Mr M Mangano 2015
511,213
54,504
148,290
2014
435,286
20,992
152,350
Mr N Lange
2015
532,750
36,454
94,617
2014
552,980
45,619
145,157
Dr B Chew
2015
450,321
38,826
152,234
2014
361,520
13,191
94,899
Mr R Hardie
2015
390,717
2014
362,225
Dr D Cade
2015
390,717
2014
347,225
–
–
–
–
116,375
99,750
122,812
95,813
21
18
17
17
21
12
17
20
17
18
17
19
18
998,465
542,892
468,288
714,007
608,628
663,821
743,756
641,381
469,610
507,092
461,975
513,529
443,038
Total
2015 3,489,402 129,784 1,129,613
18 4,748,799
2014 3,145,926
79,802
968,032
19 4,193,760
Sirtex 2015 AR 41
DIRECTORS’ REPORTFOR THE YEAR ENDED 30 JUNE 2015 The following table outlines the LTIs granted to executive KMP during the financial year ended 30 June 2015. The LTIs will vest over
three years.
Name
Grant date
Mr G Wong
23-Sep-14
Mr D Smith
23-Sep-14
Mr M Mangano
23-Sep-14
Mr N Lange
23-Sep-14
Dr B Chew
23-Sep-14
Mr R Hardie
23-Sep-14
Dr D Cade
23-Sep-14
Number
granted
Value per
option at
grant date
Value of
options at
grant date
Number
vested
Exercise
price
$
First
exercise
date
Last
exercise
date
73,000
17,000
17,000
17,000
17,000
17,000
17,000
9.44
9.44
9.44
9.44
9.44
9.44
9.44
689,120
160,480
160,480
160,480
160,480
160,480
160,480
–
–
–
–
–
–
–
–
1-Jul-17
30-Jun-21
1-Jul-17
30-Jun-21
1-Jul-17
30-Jun-21
1-Jul-17
30-Jun-21
1-Jul-17
30-Jun-21
1-Jul-17
30-Jun-21
1-Jul-17
30-Jun-21
–
–
–
–
–
–
–
–
Total
175,000
1,652,000
Changes in Securities Held – Executives
The following table outlines the changes in the number of Performance Rights held by executives over the financial year:
Name
Rights held at
1 July 2014
Granted during year
Forfeited
Vested & Exercised
Rights Held at
30 June 2015
Number
Number
Value at
Grant
$
Value at
Grant
$
Number
Value
Number
Value
Number
Value at
Grant
$
$
Mr G Wong
Mr D Smith
347,000 1,088,512
73,000
689,120
111,000
328,553
17,000
160,480
Mr M Mangano
111,000
328,553
17,000
160,480
Mr N Lange
Dr B Chew
Mr R Hardie
Dr D Cade
Total
111,000
328,553
17,000
160,480
144,000
397,176
17,000
160,480
111,000
328,553
17,000
160,480
88,000
273,395
17,000
160,480
1,023,000 3,073,295
175,000 1,652,000
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
92,000 206,062
328,000 1,571,570
33,000
73,913
95,000
415,120
33,000
73,913
95,000
415,120
33,000
73,913
95,000
415,120
–
–
161,000
557,656
33,000
73,913
95,000
415,120
24,000
53,755
81,000
380,120
– 248,000 555,469
950,000 4,169,826
The following table outlines the changes in the number of Shares held by executives over the financial year:
Name
Mr G Wong
Mr D Smith
Mr M Mangano
Mr N Lange
Dr B Chew
Mr R Hardie
Dr D Cade
Total
Balance at
beginning of year
Granted as
remuneration
Issued on exercise
of Rights
60,000
5,000
–
–
–
–
–
65,000
–
–
–
–
–
–
–
–
91,947
32,947
32,946
32,946
–
32,947
23,946
247,679
Disposals
(51,947)
(4,947)
(32,946)
(32,946)
–
(32,947)
(23,946)
(179,679)
Balance at
end of year
100,000
33,000
–
–
–
–
–
133,000
Conditions attached to Performance Rights issued during the year are included in note 23 in the Financial Report.
Sirtex 2015 AR 42
5.2 Non-Executive Director Remuneration
The following table outlines the remuneration received by non-executive directors of the Group during the 2015 and 2014 financial years,
in accordance with the statutory requirements for disclosure and accounting standards:
Name
Mr R Hill
Dr J Eady
Mr G Boyce
Total
Year
2015
2014
2015
2014
2015
2014
2015
2014
Board
Fees
$
Committee
Fees
$
Super-
annuation
$
Other
Benefits
$
210,000
200,000
96,595
90,570
105,000
100,000
411,595
390,570
–
–
10,000
10,000
10,000
10,000
20,000
20,000
–
–
34,655
34,430
–
–
34,655
34,430
Equity*
Total
$
$
58,494
268,494
20,897
220,897
36,570
177,820
13,063
148,063
29,256
144,256
10,449
120,449
–
–
–
–
–
–
– 124,320
590,570
–
44,409
489,409
*pro-rated from date of grant until 30 June 2015.
Changes in Securities Held – Non-executive Directors
The following table outlines the changes in the number of NED Rights held by non-executive directors over the financial year:
Name
Rights held at
1 July 2014
Granted during year
Forfeited
Vested & Exercised
Rights Held at
30 June 2015
Number
Number
Value at
Grant
$
1,974
24,000
1,234
15,000
987
12,000
2,959
1,850
1,480
Value at
Grant
$
50,000
31,250
25,000
4,195
51,000
6,289
106,250
Mr R Hill
Dr J Eady
Mr G Boyce
Total
Number Value
Number
Value
Number
$
–
–
–
–
–
–
–
–
$
1,974
24,000
1,234
15,000
987
12,000
2,959
1,850
1,480
4,195
51,000
6,289
106,250
Value at
Grant
$
50,000
31,250
25,000
The following table outlines the changes in the number of Shares held by non-executive directors over the financial year:
Name
Mr R Hill
Dr J Eady
Mr G Boyce
Total
Balance at
beginning of year
Granted as
remunerations
Issued on exercise
of Rights*
Disposals
Balance at end
of year
–
5,000
5,000
10,000
–
–
–
–
1,974
1,234
987
4,195
–
–
–
–
1,974
6,234
5,987
14,195
*Dealing restrictions apply with shares held in trust until the earlier of ceasing to be a non-executive director of the Group or the lapsing
of seven years from the grant date.
Sirtex 2015 AR 43
DIRECTORS’ REPORTFOR THE YEAR ENDED 30 JUNE 2015
5.3 Future KMP Payments
The following table outlines amounts of LTI for executives that have been granted but which have not yet vested or been paid:
Name
Grant date
Total value
Value expensed
in 2014
% of grant
Value expensed
in 2015
% of grant
Mr G Wong
Mr D Smith
Mr M Mangano
Mr N Lange
Dr B Chew
Mr R Hardie
Dr D Cade
23-Aug-11
28-Aug-12
26-Nov-13
23-Sep-14
23-Aug-11
28-Aug-12
26-Nov-13
23-Sep-14
23-Aug-11
28-Aug-12
26-Nov-13
23-Sep-14
23-Aug-11
28-Aug-12
26-Nov-13
23-Sep-14
23-Aug-11
28-Aug-12
26-Nov-13
23-Sep-14
23-Aug-11
28-Aug-12
26-Nov-13
23-Sep-14
23-Aug-11
28-Aug-12
26-Nov-13
23-Sep-14
$
206,062
350,000
532,450
689,120
73,913
125,000
129,640
160,480
73,913
125,000
129,640
160,480
73,913
125,000
129,640
160,480
73,913
125,000
129,640
160,480
73,913
125,000
129,640
160,480
53,755
90,000
129,640
160,480
72,181
123,311
121,879
–
25,891
44,040
29,675
–
25,891
44,040
29,675
–
25,891
44,040
29,675
–
25,891
44,040
29,675
–
25,891
44,040
29,675
–
18,830
31,708
29,675
–
35
35
23
–
35
35
23
–
35
35
23
–
35
35
23
–
35
35
23
–
35
35
23
–
35
35
23
–
–
123,311
205,004
191,347
–
44,040
49,914
44,560
–
44,040
49,914
44,560
–
44,040
49,914
44,560
–
44,040
49,914
44,560
–
44,040
49,914
44,560
–
31,708
49,914
44,560
–
35
39
28
–
35
39
28
–
35
39
28
–
35
39
28
–
35
39
28
–
35
39
28
–
35
39
28
Total
4,656,674
895,612
1,338,414
Sirtex 2015 AR 44
The following table outlines amounts for equities for non-executive directors that have been granted but which have not yet vested.
Name
Grant date
Mr R Hill
24-Sep-13
22-Jul-14
Dr J Eady
24-Sep-13
22-Jul-14
Mr G Boyce
24-Sep-13
22-Jul-14
Total
Total value
$
Value expensed
in 2014
% of grant
Value expensed
in 2015
% of grant
27,241
55,333
17,029
34,595
13,621
27,676
175,495
20,897
–
13,063
–
10,449
–
44,410
77
–
77
–
77
–
6,344
52,150
3,966
32,605
3,172
26,084
124,319
23
94
23
94
19
75
6. ADDITIONAL INFORMATION
6.1 Loans to Key Management Personnel
At 30 June 2015, $9,222 (2014: $nil) was payable to key management personnel.
At 30 June 2015, $12,702 (2014: $nil) was receivable from key management personnel.
The loans relate to withholdings tax on the performance rights granted to Key Management Personnel and expense reimbursements.
The Group does not have an allowance account for receivables relating to outstanding loans and has not recognised any expense for
impaired receivables during the reporting period.
The loans are short-term in nature and are usually settled in full within 30 days. These loans are unsecured, arm’s length and interest free.
There were no individuals with loans above $100,000 during the financial year.
6.2 Transactions with Key Management Personnel
There have been no other transactions with Key Management Personnel or their related entities other than those disclosed in this report.
Sirtex 2015 AR 45
DIRECTORS’ REPORTFOR THE YEAR ENDED 30 JUNE 2015 6.3 External Remuneration Consultant Advice
During the year KMP remuneration recommendations and data were received from external remuneration consultant(s). The consultants
and the amount payable for the information and work that led to their recommendations are listed below:
Godfrey Remuneration Group Pty Limited
Hay Group Limited
The consultant(s) also provided other advice during the year and the kinds of advice and remuneration payable for such advice is
summarised below:
Godfrey Remuneration Group Pty Limited
Assistance drafting new and up-dating
existing remuneration policies and documents
related to the independent development of
the Remuneration Governance Framework,
Remuneration Report drafting and Notice of
Meeting drafting.
$16,000
$60,375
$74,000
So as to ensure that KMP remuneration recommendations were free from undue influence from the KMP to whom they relate, the
Company has policies and procedures governing engagements with external remuneration consultants. The key aspects include:
(a) KMP remuneration recommendations may only be received from consultants who have been approved by the Board. This is a legal
requirement. Before such approval is given and before each engagement the Board ensures that the consultant is independent of KMP.
(b) As required by law, KMP remuneration recommendations are only received by non-executive directors, mainly the Chair of the
Remuneration Committee.
(c) The policy seeks to ensure that the Board controls any contact by management of Board-approved remuneration consultants and
any interactions between management and external remuneration consultants when undertaking work leading to KMP remuneration
recommendations.
The Board is satisfied that the KMP remuneration recommendations received were free from undue influence from KMP to whom
the recommendations related. The reasons the Board is so satisfied include that it is confident that the policy for engaging external
remuneration consultants is being adhered to and is operating as intended, the Board has been closely involved in all dealings with
the external remuneration consultants and each KMP remuneration recommendation received during the year was accompanied by a
legal declaration from the consultants to the effect that their advice was provided free from undue influence from the KMP to whom the
recommendations related.
Gilman Wong
Director
13 August 2015
Sirtex 2015 AR 46
AUDITOR’S INDEPENDENCE DECLARATION
Sirtex 2015 AR 47
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
1. the financial statements and notes, as set out on pages 52 to 83, are in accordance with the Corporations Act 2001 and
(a) comply with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001, which, as stated in accounting policy Note 1 to the financial statements, constitutes explicit and unreserved
compliance with International Financial Reporting Standards (IFRS), and
(b) give a true and fair view of the financial position as at 30 June 2015 and of the performance for the year ended on that date
of the company and consolidated group
2. the Chief Executive Officer and Chief Financial Officer have each declared, as required by section 295A of the Corporations
Act 2001, that:
(a) the financial records of the company for the financial year have been properly maintained in accordance with s 286 of the
Corporations Act 2001
(b) the financial statements and notes for the financial year comply with Accounting 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 Group 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.
Gilman Wong
Director
Sydney, 13 August 2015
Sirtex 2015 AR 48
INDEPENDENT AUDITOR’S REPORT
Sirtex 2015 AR 49
INDEPENDENT AUDITOR’S REPORT
Sirtex 2015 AR 50
INDEPENDENT AUDITOR’S REPORT
Sirtex 2015 AR 51
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
Revenue from the sale of goods
Cost of sales
Gross profit
Other revenue
Other income
Marketing expenses
Research expenses
Regulatory expenses
Quality assurance expenses
Clinical trial expenses
Medical expenses
Administration expenses
Other expenses
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation (net of tax) of foreign operations
Total comprehensive income for the year attributable to
members of the parent entity
Earnings per share
Basic earnings per share
Diluted earnings per share
Dividends per share
Note
2(a)
2(b)
2(c)
4
20
20
21
The financial statements should be read in conjunction with the accompanying notes.
Consolidated
2015
$’000
176,088
(27,700)
2014
$’000
129,363
(20,356)
148,388
109,007
1,889
2,124
(65,081)
(5,797)
(1,388)
(1,810)
(5,649)
(4,660)
(15,248)
–
52,768
(12,423)
40,345
1,876
53
(49,196)
(5,773)
(967)
(1,529)
(5,528)
(2,756)
(13,564)
(513)
31,110
(7,242)
23,868
1,193
162
41,538
24,030
Cents
Cents
71.4
69.7
14.0
42.5
41.3
12.0
Sirtex 2015 AR 52
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2015
Assets
Current Assets
Cash and cash equivalents
Other short-term deposits
Trade and other receivables
Inventories
Other financial assets
Other current assets
Current tax assets
Total – Current Assets
Non-Current Assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Total – Non-Current Assets
Total Assets
Liabilities
Current Liabilities
Trade and other payables
Current tax liabilities
Short-term provisions
Total – Current Liabilities
Non-Current Liabilities
Long-term provisions
Deferred tax liabilities
Total – Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Retained earnings
Total – Equity
Note
5
6
7
8
9
10
11(a)
12
13
11(b)
14
15(a)
16(a)
16(b)
15(b)
18
19
Consolidated
2015
$’000
2014
$’000
21,941
52,000
35,000
1,836
1,213
3,210
–
115,200
13,164
68,027
5,085
86,276
22,495
30,000
25,714
1,678
1,276
2,024
554
83,741
13,592
47,364
4,013
64,969
201,476
148,710
24,290
4,746
6,666
35,702
1,104
20,034
21,138
56,840
14,657
–
10,058
24,715
874
15,538
16,412
41,127
144,636
107,583
27,021
5,615
112,000
144,636
24,893
3,121
79,569
107,583
The financial statements should be read in conjunction with the accompanying notes.
Sirtex 2015 AR 53
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2015
Share
Rights
Reserve
$’000
Foreign
Currency
Translation
Reserve
$’000
Retained
Earnings
$’000
Ordinary
Shares
$’000
Consolidated Entity
Balance at 30 June 2013
23,521
1,998
Foreign currency translation reserve
Profit attributable to members of parent entity
Total comprehensive income for the year
attributable to the members of parent entity
Ordinary shares issued
Deferred tax on performance rights
Contribution to performance rights reserve
Dividends paid or provided for
Total transaction with owners
Balance at 30 June 2014
Foreign currency translation reserve
Profit attributable to members of parent entity
Total comprehensive income for the year attributable
to the members of parent entity
Ordinary shares issued
Deferred tax on performance rights
Purchase of Non-Executive Directors’ shares on market
Contribution to performance rights reserve
Dividends paid or provided for
Total transaction with owners
Balance at 30 June 2015
–
–
–
708
664
–
–
1,372
24,893
–
–
–
949
1,271
(92)
–
–
2,128
27,021
–
–
–
(708)
–
1,484
–
776
2,774
–
–
–
(949)
–
–
2,250
–
1,301
4,075
The financial statements should be read in conjunction with the accompanying notes.
Total
$’000
88,138
162
23,868
185
162
–
62,434
–
23,868
162
23,868
24,030
–
–
–
–
–
–
–
–
(6,733)
(6,733)
–
664
1,484
(6,733)
(4,585)
347
79,569
107,583
1,193
–
–
40,345
1,193
40,345
1,193
40,345
41,538
–
–
–
–
–
–
–
–
–
–
(7,914)
(7,914)
–
1,271
(92)
2,250
(7,914)
(4,485)
1,540
112,000
144,636
Sirtex 2015 AR 54
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2015
Note
5(b)
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Net income tax paid
Net cash provided by operating activities
Cash flows from investing activities
Investment in other short-term deposits
Proceeds from plant & equipment
Purchase of plant and equipment
Intangible assets
Net cash used in investing activities
Cash flows from financing activities
Payment of dividends
Net cash used in financing activities
Net (decrease)/increase in cash held
Cash and cash equivalents at the beginning of financial year
Cash and cash equivalents at the end of financial year
5(a)
The financial statements should be read in conjunction with the accompanying notes.
Consolidated
2015
$’000
2014
$’000
168,926
(116,339)
1,815
(2,428)
51,974
(22,000)
201
(1,692)
(21,123)
(44,614)
125,048
(90,450)
1,777
(4,204)
32,171
2,000
–
(6,189)
(18,848)
(23,037)
(7,914)
(7,914)
(6,733)
(6,733)
(554)
2,401
22,495
21,941
20,094
22,495
Sirtex 2015 AR 55
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
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
(AASB) and the Corporations Act 2001. The report includes the
consolidated financial statements and notes of Sirtex Medical
Limited and controlled entities. Sirtex Medical Limited is a for-profit
entity for the purpose of preparing the financial statements.
Compliance with Australian Accounting Standards ensures that the
financial report of the Group 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.
Sirtex Medical Limited is the Group’s Ultimate Parent Company.
Sirtex Medical Limited is a Public Company incorporated and
domiciled in Australia.
The consolidated financial statements were approved and
authorised for issue by the directors on 13 August 2015.
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) Basis of consolidation
The Group financial statements consolidate those of the Parent
Company and all of its subsidiaries as of 30 June 2015. The
Parent controls a subsidiary if it is exposed, or has rights, to
variable returns from its involvement with the subsidiary and
has the ability to affect those returns through its power over the
subsidiary. All subsidiaries have a reporting date of 30 June.
All transactions and balances between Group companies are
eliminated on consolidation, including unrealised gains and
losses on transactions between Group companies. Where
unrealised losses on intra-group asset sales are reversed
on consolidation, the underlying asset is also tested for
impairment from a group perspective. Amounts reported in the
financial statements of subsidiaries have been adjusted where
necessary to ensure consistency with the accounting policies
adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries
acquired or disposed of during the year are recognised from
the effective date of acquisition, or up to the effective date of
disposal, as applicable.
(b) Revenue recognition
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 when the
Group has transferred the significant risks and rewards of
ownership to the buyer. Due to different legislative and market
environments in the regions where the Group is operating, the
date of transfer of risks and rewards is different by region. In
the US, this date is on the delivery of goods to the customer,
and in all other regions this date is the treatment day of the
patient which usually occurs one to two days after the
delivery day.
Interest revenue is recognised on an accrual basis using the
effective interest method.
(c) Operating expenses
Operating expenses are recognised in profit or loss upon
utilisation of the service or at the date of their origin.
(d) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the
amount of GST, except where the amount of GST incurred is
not recoverable from the relevant revenue authorities. 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 relevant
revenue authorities is included as a current asset or liability in
the Consolidated Statement of Financial Position.
Cash flows are presented in the Consolidated 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.
(e)
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.
(f) Plant and equipment
All assets acquired are initially recorded at their cost of
acquisition, being fair value of the consideration provided
plus incidental costs directly attributable to the acquisition.
Depreciation and amortisation is recognised in accordance
with (h) below.
The cost of plant and equipment constructed by the Group
includes the cost of material and direct labour, an appropriate
proportion of fixed and variable overheads and capitalised
interest. Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, only when it is
probable that future economic benefits associated with the
item will flow to the Group and the cost of the item can be
measured reliably.
All items of plant and equipment are carried at the lower of cost
less accumulated depreciation, amortisation and impairment
losses and their recoverable amount.
(g)
Intangibles
Intellectual property
The fair value of intellectual property contributed by an equity
interest holder to Sirtex Medical Ltd, has been capitalised
and recorded at fair value at the time of the contribution.
Amortisation is recognised in accordance with (h) below.
Internally generated intangible assets
Expenditure on the research phase of projects are recognised
as an expense as incurred.
Development costs and certain clinical trial costs have been
capitalised to the extent they satisfy the recognition criteria for
internally generated intangible assets.
Sirtex 2015 AR 56
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Following the initial recognition of the capitalised development
expenditure, the cost model is applied requiring the assets
to be carried at cost less accumulated impairment losses.
Amortisation is recognised in accordance with (h) below.
The Group uses its judgment in continually assessing whether
development expenditure meet the recognition criteria of an
intangible asset.
The carrying value of an intangible asset arising from
development costs is tested for impairment annually when the
asset is not yet available for use or more frequently when an
indicator of impairment arises during the reporting period.
(h) Depreciation and amortisation
Items of plant and equipment, including leasehold assets, and
intangible 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.
Plant and equipment and intangible assets other than
capitalised development costs are depreciated from the date
of acquisition. Capitalised development costs are amortised
from the date they are 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 depreciation and amortisation rates used for each class
of asset are:
Plant and Equipment
Buildings and Leasehold improvements 5% – 10%
Plant & Equipment
Assets work in progress
10% – 33.33%
0%
Intangible Assets
Intellectual Property
Internally Generated Intangible Assets
5% – 12.5%
12.5%
(j) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits
held at call with banks and other short-term, highly liquid
instruments with original maturity of three months or less.
Restricted cash assets are shown within other current financial
assets.
(k) 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 to hedge highly probable
forecast transactions are accounted for as a derivative.
Changes in the fair value of derivatives are recorded in
the Consolidated Statement of Profit or Loss and Other
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 Consolidated
Statement of Profit or Loss and Other 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 discharged, cancelled or expired.
(l) Employee benefits
(i)
Impairment of plant and equipment and intangible assets
Wages, salaries and annual leave
For impairment assessment purposes, assets are grouped at
the lowest levels for which there are largely independent cash
inflows (cash-generating units). As a result, some assets are
tested individually for impairment and some are tested at
cash-generating unit level.
Individual assets or cash-generating units are tested for
impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the
asset’s or cash-generating unit’s carrying amount exceeds
its recoverable amount, which is the higher of fair value less
costs to sell and value-in-use. To determine the value-in-use,
management estimates expected future cash flows from each
cash-generating unit and determines a suitable interest rate in
order to calculate the present value of those cash flows. The
data used for impairment testing procedures are directly linked
to the Group’s latest approved budget, adjusted as necessary
to exclude the effects of future reorganisations and asset
enhancements. Discount factors are determined individually
for each cash-generating unit and reflect management’s
assessment of respective risk profiles, such as market and
asset-specific risks factors.
Liabilities for employee benefits for wages, salaries and
annual leave expected to settle wholly within 12 months of
the year end represent present obligations resulting from
employees’ services provided up to reporting date, calculated
as undiscounted amounts based on remuneration wage and
salary rates that the Group 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 high quality corporate bonds at reporting date, which most
closely match the terms of maturity of the related liabilities.
Sirtex 2015 AR 57
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
Post-employment benefit plans
(o) Segment reporting
The Group contributes to various employee superannuation
plans. The Group has no legal or constructive obligations
to pay contributions in addition to its fixed contributions.
Contributions are recongised as an in the period that relevant
employee services are rendered.
Share-based payments
The Group provides benefits to certain employees in the form
of share-based payment transactions, whereby employees
render services in exchange for rights over shares (equity-
settled transactions). For this purpose, the Group has an
Executive Performance Rights Plan in place.
The cost of these equity-settled transactions is measured by
reference to the fair value at the date at which they are granted.
The fair value of the rights is determined using a Monte Carlo
simulation and the binomial option valuation models.
The cost of the equity-settled transactions is recognised,
together with a corresponding increase in equity, over the
period in which the vesting conditions are fulfilled, ending on
the date on which the relevant employees become fully entitled
to the award.
All share-based remuneration is ultimately recognised as an
expense in profit or loss with a corresponding credit to the
share rights reserve. The expense is allocated over the vesting
period, based on the best available estimate of the number of
share rights expected to vest.
Upon exercise of performance rights, the proceeds received
net of any directly attributable transaction costs are allocated
to share capital.
The Group has identified its operating segments based on
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, The Americas,
and Europe, Middle East and Africa (EMEA).
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.
(p) Equity, reserves and dividend payments
Share capital represents the fair value of shares that have been
issued. Any transaction costs associated with the issuing of
shares are deducted from share capital, net of any related
income tax benefits. Equity also includes the Foreign currency
translation reserve which comprises foreign currency translation
differences arising on the translation of financial statements of
the Group’s foreign entities into AUD.
Retained earnings include all current and prior period retained
profits.
Dividend distributions payable to equity shareholders are
included in other liabilities when the dividends have been
approved prior to the reporting date.
All transactions with owners of the parent entity are recorded
separately within equity.
Further information can be found in Note 23 to the financial
statements.
(q) Income tax
(m) Leases
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.
(n) Provisions, contingent liabilities and contingent assets
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 of economic resources will be required and
amounts can be estimated reliably. Timing or amount of the
outflow may still be uncertain.
Provisions are measured at the estimated expenditure required
to settle the present obligation, based on the most reliable
evidence available at reporting date. Provisions are discounted
to their present value, where the time value of money is
material.
No liability is recognised if an outflow of economic resources as
a result of a present obligation is not probable. Such situations
are disclosed as contingent liabilities, unless the outflow of
resources is remote in which case no liability is recognised.
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 reporting
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.
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 profit or loss
and other 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 2015 AR 58
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
R&D tax credits arising from the recognition of eligible R&D
expenditure under the Federal Government’s R&D Tax
Incentive Scheme are offset against any income tax payable.
(r) 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 Consolidated Statement of Profit or
Loss. 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 Consolidated
Statement of Profit or Loss and Other 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:
• assets and liabilities are translated at year-end exchange
rates prevailing at that reporting date
•
income and expenses are translated at average exchange
rates for the period, and
• 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 Consolidated Statement of Profit or
Loss and Other Comprehensive Income. These differences
are recognised in the statement of profit or loss and other
comprehensive income in the period in which the operation
is disposed.
(s) Comparative figures
When required by accounting standards, comparative figures
have been adjusted to conform to changes in the presentation
for the current financial year.
(t) 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.
Sirtex 2015 AR 59
Impairment assessment of internally generated intangible
assets is performed in accordance with AASB 136 Impairment
of Assets. For the year ended 30 June 2015, no impairment
has been recognised for the clinical trials and development
projects which meet the recognition criteria for internally
generated intangible assets.
Research and development tax incentive
The Group estimates the research and development tax
incentive by reference to the percentage of research and
development expenditure that contributed to the prior year
research and development tax incentive.
Share-based payment transactions
The Group measures the cost of equity-settled transactions
with employees by reference to their fair value of the equity
instruments at the date at which they are granted. The fair
value is determined with a Monte Carlo simulation and binomial
option valuation models using the assumptions detailed in
Note 23.
Long service leave provision
The liability for long service leave is recognised and measured
at the present value of the estimated future cash flows to
be made in respect of all employees at the reporting date.
In determining the present value of the liability, estimates
of attrition rates and pay increases through promotion and
inflation have been taken into account.
Lease make good provision
A provision is made for the present value of anticipated costs
for future restoration of leased premises. The provision includes
future cost estimates associated with closure of the premises.
The calculation of this provision requires assumptions such as
application of closure dates and cost estimates. The provision
recognised for each site is periodically reviewed and updated
based on the facts and circumstances available at the time.
Changes to the estimated future costs for sites are recognised
in the statement of financial position by adjusting the expenses
or asset, if applicable, and provision.
(u) Rounding of amounts
The Parent Entity has applied the relief available to it under
ASIC Class Order 98/100 and accordingly, amounts in the
financial statements and directors’ report have been rounded
off to the nearest $1,000, or in cases, the nearest dollar.
(v) Adoption of new and revised accounting standards
A number of new and revised standards and an interpretation
became effective for the first time to annual periods beginning
on or after 1 July 2014. Information on these new standards is
presented below.
AASB 2012-3 Amendments to Australian Accounting
Standards – Offsetting Financial Assets and Financial
Liabilities
AASB 2012-3 adds application guidance to AASB 132 to
address inconsistencies identified in applying some of the
offsetting criteria of AASB 132, including clarifying the meaning
of ‘currently has a legally enforceable right of set-off’ and that
some gross settlement systems may be considered equivalent
to net settlement.
AASB 2012-3 is applicable to annual reporting periods
beginning on or after 1 January 2014.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
The adoption of these amendments has not had a material
impact on the Group as the amendments merely clarify the
existing requirements in AASB 132.
against early adoption of these standards. A discussion
of those future requirements and their impact on the
Group follows:
AASB 2013-3 Amendments to AASB 136 – Recoverable
Amount Disclosures for Non-Financial Assets
AASB 9 Financial Instruments (applicable for annual
reporting periods beginning on or after 1 January 2018:
These narrow-scope amendments address disclosure of
information about the recoverable amount of impaired assets
if that amount is based on fair value less costs of disposal.
When developing IFRS 13 Fair Value Measurement, the IASB
decided to amend IAS 36 Impairment of Assets to require
disclosures about the recoverable amount of impaired assets.
The IASB noticed however that some of the amendments
made in introducing those requirements resulted in the
requirement being more broadly applicable than the IASB had
intended. These amendments to IAS 36 therefore clarify the
IASB’s original intention that the scope of those disclosures
is limited to the recoverable amount of impaired assets that is
based on fair value less costs of disposal.
AASB 2013-3 makes the equivalent amendments to AASB
136 Impairment of Assets and is applicable to annual reporting
periods beginning on or after 1 January 2014.
The adoption of these amendments has not had a material
impact on the Group as they are largely of the nature of
clarification of existing requirements.
AASB 2014-1 Amendments to Australian Accounting
Standards (Part A: Annual Improvements 2010-2012 and
2011-2013 Cycles)
Part A of AASB 2014-1 makes amendments to various
Australian Accounting Standards arising from the issuance
by the IASB of International Financial Reporting Standards
Annual Improvements to IFRSs 2010-2012 Cycle and Annual
Improvements to IFRSs 2011-2013 Cycle.
Among other improvements, the amendments arising from
Annual Improvements to IFRSs 2010-2012 Cycle:
• clarify that the definition of a ‘related party’ includes
a management entity that provides key management
personnel services to the reporting entity (either directly or
through a group entity)
• amend AASB 8 Operating Segments to explicitly require the
disclosure of judgements made by management in applying
the aggregation criteria
Among other improvements, the amendments arising from
Annual Improvements to IFRSs 2011-2013 Cycle clarify that
an entity should assess whether an acquired property is an
investment property under AASB 140 Investment Property
and perform a separate assessment under AASB 3 Business
Combinations to determine whether the acquisition of the
investment property constitutes a business combination.
Part A of AASB 2014-1 is applicable to annual reporting
periods beginning on or after 1 July 2014.
The adoption of these amendments has not had a material
impact on the Group as they are largely of the nature of
clarification of existing requirements.
(w) 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
The standard introduces new requirements for the classification
and measurement of financial assets and liabilities. These
requirements improve and simplify the approach for
classification and measurement of financial assets compared
with the requirements of AASB 139. The main changes are:
(a) Financial assets that are debt instruments will be classified
based on
i.
the objective of the entity’s business model for
managing the financial assets; and
ii. the characteristics of the contractual cash flows.
(b) Allows an irrevocable election on initial recognition
to present gains and losses on investments in equity
instruments that are not held for trading in other
comprehensive income (instead of in profit or loss).
Dividends in respect of these investments that are a return
on investment can be recognised in profit or loss and there
is no impairment or recycling on disposal of the instrument.
(c) Financial assets can be designated and measured at fair
value through profit or loss at initial recognition if doing
so eliminates or significantly reduces a measurement or
recognition inconsistency that would arise from measuring
assets or liabilities, or recognising the gains and losses on
them, on different bases.
(d) Where the fair value option is used for financial liabilities
the change in fair value is to be accounted for as follows:
i.
the change attributable to changes in credit risk are
presented in other comprehensive income (OCI); and
ii. the remaining change is presented in profit or loss.
If this approach creates or enlarges an accounting
mismatch in the profit or loss, the effect of the changes
in credit risk are also presented in profit or loss.
Otherwise, the following requirements have been carried
forward unchanged from AASB 139 into AASB 9:
i. classification and measurement of financial
liabilities; and
ii. de-recognition requirements for financial assets
and liabilities.
AASB 9 requirements regarding hedge accounting represent
a substantial overhaul of hedge accounting that will enable
entities to better reflect their risk management activities in the
financial statements.
Furthermore, AASB 9 introduces a new impairment model
based on expected credit losses. This model makes use of
more forward-looking information and applies to all financial
instruments that are subject to impairment accounting.
The entity is yet to undertake a detailed assessment of the
impact of AASB 9. However, based on the entity’s preliminary
assessment, the Standard is not expected to have a material
impact on the transactions and balances recognised in the
financial statements when it is first adopted for the year ending
30 June 2019.
Sirtex 2015 AR 60
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
AASB 2015-2 Amendments to Australian Accounting
Standards – Disclosure Initiative: Amendments to
AASB 101
The amendments:
• clarify the materiality requirements in AASB 101, including
an emphasis on the potentially detrimental effect of
obscuring useful information with immaterial information
• clarify that AASB 101’s specified line items in the
statement(s) of profit or loss and other comprehensive
income and the statement of financial position can be
disaggregated
• add requirements for how an entity should present
subtotals in the statement(s) of profit and loss and other
comprehensive income and the statement of financial
position
• clarify that entities have flexibility as to the order in
which they present the notes, but also emphasise that
understandability and comparability should be considered
by an entity when deciding that order
• remove potentially unhelpful guidance in IAS 1 for identifying
a significant accounting policy.
When these amendments are first adopted for the year ending
30 June 2017, there will be no material impact on the financial
statements.
AASB 2015-3 Amendments to Australian Accounting
Standards arising from the Withdrawal of AASB 1031
Materiality
The Standard completes the AASB’s project to remove
Australian guidance on materiality from Australian Accounting
Standards.
When this Standard is first adopted for the year ending 30 June
2016, there will be no impact on the financial statements.
The Group does not anticipate the early adoption of any of the
above Australian Accounting Standards.
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
AASB 15 Revenue from Contracts with Customers
AASB 15:
• replaces AASB 118 Revenue, AASB 111 Construction
Contracts and some revenue-related Interpretations:
• establishes a new revenue recognition model
• changes the basis for deciding whether revenue is to be
recognised over time or at a point in time
• provides new and more detailed guidance on specific topics
(e.g., multiple element arrangements, variable pricing, rights
of return, warranties and licensing)
• expands and improves disclosures about revenue
The entity is yet to undertake a detailed assessment of the
impact of AASB 15. However, based on the entity’s preliminary
assessment, the Standard is not expected to have a material
impact on the transactions and balances recognised in the
financial statements when it is first adopted for the year ending
30 June 2018.
AASB 2014-1 Amendments to Australian Accounting
Standards (Part E: Financial Instruments)
Part E of AASB 2014-1 makes amendments to Australian
Accounting Standards to reflect the AASB’s decision to
defer the mandatory application date of AASB 9 Financial
Instruments to annual reporting periods beginning on or after
1 January 2018. Part E also makes amendments to numerous
Australian Accounting Standards as a consequence of the
introduction of Chapter 6 Hedge Accounting into AASB 9
and to amend reduced disclosure requirements for AASB 7
Financial Instruments: Disclosures and AASB 101 Presentation
of Financial Statements.
When these amendments are first adopted for the year ending
30 June 2016, there will be no material impact on the Group.
AASB 2014-4 Amendments to Australian Accounting
Standards – Clarification of Acceptable Methods of
Depreciation and Amortisation
The amendments to AASB 116 prohibit the use of a revenue-
based depreciation method for property, plant and equipment.
Additionally, the amendments provide guidance in the
application of the diminishing balance method for property,
plant and equipment.
The amendments to AASB 138 present a rebuttable
presumption that a revenue-based amortisation method for
intangible assets is inappropriate. This rebuttable presumption
can be overcome (i.e., a revenue-based amortisation method
might be appropriate) only in two (2) limited circumstances:
• The intangible asset is expressed as a measure of revenue,
for example when the predominant limiting factor inherent
in an intangible asset is the achievement of a revenue
threshold (for instance, the right to operate a toll road
could be based on a fixed total amount of revenue to be
generated from cumulative tolls charged); or
• When it can be demonstrated that revenue and the
consumption of the economic benefits of the intangible
asset are highly correlated.
Sirtex 2015 AR 61
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
2. REVENUE AND OTHER INCOME
(a) Revenue from the sale of goods
(b) Other revenue
Income from financial institutions
(c) Other income
Realised foreign exchange gains
Unrealised foreign exchange gains
Other
3. PROFIT FOR THE YEAR
Profit before income tax includes the following:
Cost of sales
Employee benefits expense
Superannuation contributions
Other employee benefits expenses
Depreciation and amortisation of
Plant and equipment
Intangible assets
Operating lease expenses
Minimum lease payments
Consolidated
2015
$’000
2014
$’000
176,088
129,363
1,889
1,889
953
928
243
2,124
1,876
1,876
–
–
53
53
Consolidated
2015
$’000
2014
$’000
27,700
20,356
1,268
51,839
1,919
460
1,057
39,761
1,405
187
2,406
1,775
Sirtex 2015 AR 62
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
4. INCOME TAX EXPENSE
(a) The components of tax expense comprise:
Current tax
Deferred tax
Under/(over) provision in respect of prior years (permanent and timing)
(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
Prima facie tax payable on profit from ordinary activities before income tax at 30%
Add/(less): Tax effect of
– Non-deductible amortisation
– Non-deductible expenses
– Non-assessable income
– Overprovision in respect of prior years (permanent)
Effect of higher tax rates on overseas income
Effect of Foreign Currency translation of tax balances
Recognition of tax losses not previously brought to account
Eliminations for the tax consolidated group
Income tax attributable to entity
The applicable weighted average effective tax rates are as follows
(c) Franking Account
Franking account balance
Consolidated
2015
$’000
2014
$’000
8,587
3,424
412
12,423
52,768
15,830
54
360
(2,748)
(317)
(580)
(94)
(199)
117
12,423
23.5%
2,515
5,491
(764)
7,242
31,110
9,333
54
92
(1,798)
(188)
(137)
39
(191)
38
7,242
23.3%
7,456
9,014
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.
Sirtex 2015 AR 63
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
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
Short-term deposits with financial institutions
Short-term deposits are term deposits with maturity date of less than 90 days.
The effective interest rate on short-term deposits was 3.7% (2014: 4.06%).
These deposits have an average maturity of 50 days as at 30 June 2015 (2014: 51 days).
(b) Reconciliation of cash flow from operations with profit after income tax
Profit after income tax
Non-cash flows in profit:
Depreciation and amortisation
Decrease/(increase) in current tax assets
(Increase) in deferred assets
Share rights reserve
Net foreign exchange differences
Changes in net assets and liabilities
(Increase)/decrease in assets
Trade receivables
Other receivables
Inventories
Other current assets
Increase/(decrease) in liabilities
Payables
Current tax liabilities
Short-term provisions
Other current liabilities
Long-term provisions
Deferred tax liabilities
Net cash flow from operating activities
Consolidated
2015
$’000
2014
$’000
11,941
10,000
21,941
8,495
14,000
22,495
40,345
23,868
2,379
554
(1,072)
2,250
22
(8,207)
–
(158)
(1,123)
9,633
6,017
(3,392)
–
230
4,496
51,974
1,591
(553)
(1,083)
1,484
816
(4,369)
(700)
12
(397)
1,090
(1,895)
3,203
2,495
43
6,566
32,171
Sirtex 2015 AR 64
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
6. OTHER SHORT-TERM DEPOSITS
Other short-term deposits with financial institutions
Consolidated
2015
$’000
2014
$’000
52,000
52,000
30,000
30,000
Other short-term deposits are term deposits with maturity date of more than 90 days and less than 360 days.
The average maturity as at 30 June 2015 of these term deposits is 225 days (2014: 207 days). The effective interest rate on the deposits
is 3.42% (2014: 3.91%).
7. TRADE AND OTHER RECEIVABLES
(a) Trade receivables
Trade receivables
Provision for impairment
(b) Other receivables
GST receivables
Other receivables
Consolidated
2015
$’000
2014
$’000
33,306
(92)
33,214
717
1,069
1,786
23,795
(318)
23,477
1,238
999
2,237
35,000
25,714
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.
Movement in the provision for impairment of receivables is as follows:
Opening
balance
$’000
Change for
the year
$’000
Amounts
written off
$’000
Closing
balance
$’000
30 June 2015
Trade receivables
30 June 2014
Trade receivables
(318)
(454)
226
136
–
–
An amount of $92,000 was considered impaired as at 30 June 2015 (2014: $318,000).
Trade receivables past due but not impaired
Less than 30 days overdue
30-60 days overdue
More than 60 days overdue
Total
Consolidated
2015
$’000
26,238
2,990
3,986
33,214
(92)
(318)
2014
$’000
5,165
2,133
1,787
9,085
Collection history from previous year’s supports management’s view that receivables less than 180 days overdue are not considered
impaired.
Sirtex 2015 AR 65
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
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 collateral has been received from any of the trade debtors in form of a financial guarantee.
8. INVENTORIES
Raw materials – at cost
9. OTHER FINANCIAL ASSETS
Other current financial assets
Security deposits paid
10. OTHER CURRENT ASSETS
Prepayments
Consolidated
2015
$’000
2014
$’000
1,836
1,836
1,678
1,678
Consolidated
2015
$’000
2014
$’000
1,213
1,213
1,276
1,276
Consolidated
2015
$’000
2014
$’000
3,210
3,210
2,024
2,024
Sirtex 2015 AR 66
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
11. TAX ASSETS
(a) Current tax assets
Current tax assets
(b) Deferred tax assets
Tax losses revenue
Timing differences attributable to:
Fixed assets
Employee provisions
Unrealised foreign exchange losses
Other*
*Other includes the following major components:
Executive performance rights
AMT credit (US)
Non-amortised patent costs
The movement in tax losses is as follows:
Opening balance
Credit/(debit) to the statement of profit or loss and other comprehensive income
(Debit) to equity
Closing Balance
The movement in fixed assets is as follows:
Opening balance
Credit to the statement of profit or loss and other comprehensive income
Credit to equity
Closing Balance
The movement in employee provisions is as follows:
Opening balance
Credit to the statement of profit or loss and other comprehensive income
Closing Balance
The movement in unrealised FX is as follows:
Opening balance
(Debit)/credit to the statement of profit or loss and other comprehensive income
(Debit) to equity
Closing Balance
The movement in other is as follows:
Opening balance
Credit to the statement of profit or loss and other comprehensive income
Closing Balance
The overall movement in the deferred tax account is as follows:
Opening balance
Credit to the statement of profit or loss and other comprehensive income
Closing Balance
Sirtex 2015 AR 67
Consolidated
2015
$’000
2014
$’000
–
–
415
279
2,001
–
2,390
5,085
1,141
–
201
282
133
–
415
181
98
–
279
849
1,152
2,001
916
(916)
–
–
1,785
605
2,390
4,013
1,072
5,085
554
554
282
181
849
916
1,785
4,013
754
160
160
628
(344)
(2)
282
114
63
4
181
595
254
849
12
911
(7)
916
1,581
204
1,785
2,930
1,083
4,013
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
12. PROPERTY, PLANT AND EQUIPMENT
Buildings and leasehold improvements
At cost
Accumulated depreciation
Net carrying amount
Plant and equipment
At cost
Accumulated depreciation
Net carrying amount
Asset work in progress
At cost
Net carrying amount
Total Property, Plant and Equipment
At cost
Accumulated depreciation
Net carrying amount
Movements in carrying amounts
Buildings and leasehold improvements
Carrying amount at beginning
Depreciation expense
Carrying amount at end
Plant and equipment
Carrying amount at beginning
Additions
Transfers
Disposals
Depreciation expense
Carrying amount at end
Asset work in progress
Carrying amount at beginning
Additions
Transfers
Carrying amount at end
Total Property, Plant and Equipment
Carrying amount at beginning
Additions
Disposals
Depreciation expense
Carrying amount at end
Consolidated
2015
$’000
2014
$’000
1,063
(472)
591
16,716
(6,335)
10,381
2,192
2,192
19,971
(6,807)
13,164
656
(65)
591
6,097
777
5,562
(201)
(1,854)
10,381
6,839
915
(5,562)
2,192
13,592
1,692
(201)
(1,919)
13,164
1,063
(407)
656
11,512
(5,415)
6,097
6,839
6,839
19,414
(5,822)
13,592
709
(53)
656
6,417
1,106
–
(74)
(1,352)
6,097
2,003
4,836
–
6,839
9,129
5,942
(74)
(1,405)
13,592
Sirtex 2015 AR 68
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
Consolidated
2015
$’000
2014
$’000
818
(506)
312
64,326
(251)
64,075
3,607
(3,276)
331
3,309
3,309
72,060
(4,033)
68,027
3
–
338
(29)
312
46,525
17,801
(251)
64,075
511
(180)
331
325
3,322
(338)
3,309
539
(536)
3
46,525
–
46,525
3,607
(3,096)
511
325
325
50,996
(3,632)
47,364
7
2
–
(6)
3
27,677
18,848
–
46,525
692
(181)
511
–
325
–
325
13. INTANGIBLE ASSETS
Software
At cost
Accumulated amortisation
Net carrying amount
Internally generated intangibles
At cost
Accumulated amortisation
Net carrying amount
Intellectual property
At cost
Accumulated amortisation
Net carrying amount
Asset work in progress
At Cost
Net Carrying amount
Total intangible assets
At cost
Accumulated amortisation
Net carrying amount
Movements in carrying amounts
Software
Carrying amount at beginning
Additions
Transfers
Amortisation expense
Carrying amount at end
Internally generated intangibles
Carrying amount at beginning
Additions
Amortisation expense
Carrying amount at end
Intellectual property
Carrying amount at beginning
Amortisation expense
Carrying amount at end
Asset work in progress
Carrying amount at beginning
Additions
Transfers
Carrying amount at end
Sirtex 2015 AR 69
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
13. INTANGIBLE ASSETS (CONTINUED)
Total intangible assets
Carrying amount at beginning
Additions
Amortisation expense
Carrying amount at end
Consolidated
2015
$’000
2014
$’000
47,364
21,123
(460)
68,027
28,376
19,175
(187)
47,364
Recognition of internally generated intangible assets
The consolidated group undertakes clinical and R&D activities. These have been classified as internally generated intangible assets, in
accordance with AASB 138 Intangible Assets.
On 1 June 2015, one of the major Phase IV post-marketing clinical trials was completed. Amortisation expense on the trial was recognised
for one month. At year end, the remaining useful life on this trial is 95 months.
At year end, the Group had four major Phase IV post-marketing clinical trials and two development projects aiming at improving the use
of SIR-Spheres that were still in the development phase. The activities satisfy all tests as set out in AASB 138, in particular the technical
feasibility of technical completion and the availability of sufficient financial resources for the completion.
Amortisation on the remaining four major Phase IV post-marketing clinical trials and two development projects will be recognised from the
date of completion of these activities and calculated over the estimated useful life of the assets which has been assessed at 8 years.
The carrying value of the intangible assets arising from development costs has been tested for impairment as the asset is not yet available
for use. The cash generating unit was determined at Group level. No impairment has been recognised based on value-in-use calculations
covering a detailed one-year forecast, followed by an extrapolation of expected cash flows for the next 4 years assuming no growth rates
and a discount rate of 12%.
14. TRADE AND OTHER PAYABLES
Trade payables
Other payables
15. TAX LIABILITIES
(a) Current tax liabilities
Current tax liability
(b) Deferred tax liabilities
Timing differences attributable to:
Capitalisation of development expenditure
Fixed assets
Other
Opening balance
Debit to the statement of profit or loss and other comprehensive income
Closing balance
Consolidated
2015
$’000
2014
$’000
13,638
10,652
24,290
7,649
7,008
14,657
Consolidated
2015
$’000
2014
$’000
4,746
4,746
19,222
724
88
20,034
13,957
5,265
19,222
–
–
13,957
624
957
15,538
8,303
5,654
13,957
Sirtex 2015 AR 70
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
15. TAX LIABILITIES (CONTINUED)
The movement in the fixed assets is as follows:
Opening balance
Debit/(credit) to the statement of profit or loss and other comprehensive income
Closing balance
The movement in other is as follows:
Opening balance
(Credit)/debit to the statement of profit or loss and other comprehensive income
Debit to equity
Closing balance
The overall movement in the deferred tax account is as follows:
Opening balance
Debit to the statement of profit or loss and other comprehensive income
Debit to equity
Closing balance
16. PROVISIONS AND ACCRUALS
(a) Short-term Provisions and Accruals
Provision for long service leave
Provision for clinical studies
Miscellaneous provisions
(b) Long-term Provisions
Accruals for long service leave
The overall movement in the short-term provision account is as follows:
Opening balance
Additional provisions for the year
Amounts used during the year
Closing balance
The overall movement in the long-term provision account is as follows:
Opening balance
Additional provisions for the year
Amounts used during the year
Closing balance
Consolidated
2015
$’000
2014
$’000
624
100
724
958
(870)
–
88
15,538
4,495
1
20,034
630
(6)
624
39
910
9
958
8,972
6,558
8
15,538
Consolidated
2015
$’000
2014
$’000
385
3,180
3,101
6,666
1,104
1,104
196
625
(436)
385
874
233
(3)
1,104
196
6,669
3,193
10,058
874
874
91
117
(12)
196
831
43
–
874
17. CONTINGENT LIABILITIES
Litigation is in process against the one of the companies in the Group relating to a dispute with a distributor whose agreement has been
terminated. The information usually required by AASB 137 Provisions, Contingent Liabilities and Contingent Assets is not disclosed on the
grounds that it can be expected to prejudice seriously the outcome of the litigation.
Sirtex 2015 AR 71
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
18. ISSUED CAPITAL
Issued capital
Share issue cost
Purchase of Non-Executive Directors’ shares on market
Deferred tax on performance rights
Number of shares issued
Consolidated
2015
$’000
2014
$’000
26,436
(1,258)
(92)
1,935
27,021
25,487
(1,258)
–
664
24,893
56,530,231
56,108,439
2015
2014
No. (000)
$’000
No. (000)
$’000
Fully paid ordinary shares
Balance at beginning of the year
Purchase of Non-Executive Directors’ shares on market
Issued on exercise of performance rights
Balance at end of the year
56,108
24,893
–
422
56,530
(92)
2,220
27,021
55,768
–
340
56,108
23,521
–
1,372
24,893
A total of 421,792 fully paid ordinary shares have been issued as a result of the exercise of performance rights at an average price of
$19.36. The value of $2,219,787 booked to share capital represents the accounting expense previously recognised in relation to the
performance rights and deferred tax on the performance rights exercised. 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 authorised capital and issued shares do not have a par value.
The purchase of Non-Executive Directors’ shares on market represent the Restricted Shares that are acquired by the trustee of the NEDs
Plan trust in respect of the vested Rights, and are subject to a dealing restriction such that they may not be dealt with until the earlier of
ceasing to be a NED of the Group or the elapsing of seven years from the grant date. The Restricted Shares were acquired via on-market
purchase of Sirtex Shares, rather than by new issues of Shares.
Share options
At reporting date, there were no share options outstanding, and no share option plan was in place.
Share rights
At reporting date, there is an Executive Performance Rights Plan and a Non-Executive Director’s Rights Plan in place. Refer to note 23 for
further details.
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 2015.
19. RESERVES
Share Rights Reserve
Foreign Currency Translation Reserve
Consolidated
2015
$’000
4,075
1,540
5,615
2014
$’000
2,774
347
3,121
The Executive Performance Rights Plan and the Non-Executive Director’s Right Plan give rise to a share rights reserve. The translation of
foreign controlled subsidiaries into the functional currency of the group gives rise to a foreign currency translation reserve.
Sirtex 2015 AR 72
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
Consolidated
2015
$
2014
$
20. EARNINGS PER SHARE
(a) Basic earnings per share
Profit from continuing operations attributable to equity holders
Weighted average number of shares used in the calculation of basic earnings per share
Add to number of shares used in the calculation of diluted earnings per share:
Effect of potential conversion to ordinary shares under the Executive Performance
and the Non-Executive Director’s Rights Plans (refer to note 23 for further details)
40,345,232
23,868,000
56,511,106
56,097,812
1,352,605
1,665,434
(b) Diluted earnings per share
Profit from continuing operations attributable to equity holders
40,345,232
23,868,000
Weighted average number of shares used in the calculation of diluted earnings per share
57,863,711
57,763,246
21. DIVIDENDS
Distributions paid
Declared fully franked ordinary dividend of 14 cents (2014: 12 cents)
per share franked at the tax rate of 30% (2014: 30%)
Balance of franking credit amount at year end adjusted for
franking credits arising from payment of provision for income tax
Consolidated
2015
$’000
2014
$’000
7,914
6,733
7,456
9,014
Sirtex 2015 AR 73
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
22. 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, Americas and Europe, Middle East and Africa (EMEA).
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 interest income from financial institutions and legal settlement UWA.
Segment performance
Segment revenues
Asia Pacific
Americas
EMEA
Total of all segments
Interest
Eliminations
Consolidated
External sales
Inter-segment
Total
2015
$’000
6,913
136,738
32,436
2014
$’000
5,738
95,962
27,664
2015
$’000
2014
$’000
151,944
109,510
11,110
11,963
9,227
298
2015
$’000
158,857
147,848
44,399
351,104
1,889
(175,016)
177,977
2014
$’000
115,248
105,189
27,962
248,399
1,876
(119,036)
131,239
Sirtex 2015 AR 74
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
22. OPERATING SEGMENTS (CONTINUED)
The total revenue represented for the Group’s operating segments reconcile to the key financial figures as presented in its financial
statements as follows:
Revenue from the sale of goods
Other segment revenue
From other segments
Elimination of intersegment revenues
Group revenues
Segment net profit after tax
Asia Pacific
Americas
EMEA
Total of all segments
Eliminations
Profit before income tax expense
Income tax expense
Profit after income tax expense
Segment assets and liabilities
Asia Pacific
Americas
EMEA
Total of all segments
Eliminations
Consolidated
Other segment information
2015
$’000
176,088
1,889
175,016
(175,016)
177,977
2015
$’000
42,472
3,364
6,932
52,768
–
52,768
(12,423)
40,345
2014
$’000
129,363
1,876
119,036
(119,036)
131,239
2014
$’000
31,223
411
(524)
31,110
–
31,110
(7,242)
23,868
Assets
Liabilities
2015
$’000
2014
$’000
2015
$’000
244,707
188,769
100,128
44,687
26,734
31,622
17,746
30,083
17,421
2014
$’000
72,525
20,062
14,141
316,128
238,137
147,632
106,728
(114,652)
(89,427)
(90,792)
201,476
148,710
56,840
(65,601)
41,127
Asia Pacific
Americas
EMEA
2015
$’000
2014
$’000
2015
$’000
2014
$’000
2015
$’000
Acquisition of segment assets
– Plant and equipment
– Intangible assets
553
21,123
1,457
19,173
Depreciation and amortisation of segment assets
– Plant and equipment
– Intangibles
Major customers
1,003
460
816
185
166
–
519
–
643
–
406
–
973
–
397
–
2014
$’000
4,086
2
182
2
The Group has a number of customers to whom it provides products. No single external customer represents more than 10% of total
revenue.
Sirtex 2015 AR 75
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
23. SHARE-BASED PAYMENTS
Executive Performance Rights
On 23 September 2014, a total of 284,720 performance rights were granted to executives and senior managers under the Executive
Performance Rights Plan, to take up performance rights which may convert into ordinary shares, for nil consideration. The performance
rights are exercisable following 30 June 2017. The performance rights hold no voting or dividend rights, and are not transferable.
Performance rights granted to executives and senior management are as follows:
Grant Date
22 February 2011
23 August 2011
28 August 2012
26 November 2013
23 September 2014
Number
374,188
456,000
687,000
448,850
284,720
During the year, a total of 73,000 rights were granted to the Chief Executive Officer, and a total of 211,720 rights to other executives and
senior managers of the Group. The performance rights vest after 30 June 2017, and the extent to which vesting occurs, depends on the
achievement of performance conditions.
The Board has determined that there will be two performance conditions with equal weight of 50% each, calculated over a three year
period from 1 July 2014 to 30 June 2017 (the Measurement Period), namely Total Shareholder Return (TSR) and Earnings per Share (EPS).
The percentage of rights vested will be determined as follows:
TSR (% pa compounded)
less than 10%
10%
10% – 15%
15%
15% – 20%
20% and more
EPS (% pa compounded)
less than 10%
10%
10% – 17.5%
17.5%
17.5% – 25%
25% and more
Vesting (%)
0%
16.67%
Pro-rata
33.33%
Pro-rata
100%
Vesting (%)
0%
16.67%
Pro-rata
33.33%
Pro-rata
100%
A summary of the movements of all performance rights issued is as follows:
Grant Date
22-Feb-11
23-Aug-11
28-Aug-12
26- Nov-13
23-Sep-14
Vesting
Date
Exercise
Price
Balance
at start of
year
Granted
during the
year
Exercised
during the
year
Forfeited
during the
year
Balance
at end of
year
Vested
and
exercisable
Vested
and un-
exercisable
30-Jun-13
30-Jun-14
30-Jun-15
30-Jun-16
30-Jun-17
nil
nil
nil
nil
nil
374,188
456,000
687,000
448,500
–
–
–
341,188
423,000
–
–
284,720
–
–
–
–
–
8,500
5,500
3,400
33,000
33,000
678,500
443,000
281,320
33,000
33,000
–
–
–
–
–
–
–
–
The weighted fair value of the performance rights issued during the financial year ended 30 June 2015 has been calculated at
$9.44 (2014: $4.63).
The price was calculated by using a Monte Carlo simulation model and binomial option pricing model applying the following inputs:
Exercise price
Performance rights life
Underlying share price
Expected share price volatility
Expected dividend
Risk-free interest rate
$nil
3 years
$22.20
33%
$0.14 per share
2.78%
Historical volatility has been the basis for determining expected share price volatility as it is assumed that this is the best indicator of future
volatility, which may not eventuate.
Included in the statement of profit or loss and other comprehensive income is $2,249,474 (2014: $1,484,000) of performance rights plan
expense, and relates in full to equity-settled share-based payment transactions.
Sirtex 2015 AR 76
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015 23. SHARE-BASED PAYMENTS (CONTINUED)
Non-Executive Director’s Rights
On 22 July 2014, a total of 6,289 rights were granted to Non-Executive Directors under the Non-Executive Director’s Rights Plan, to take
up rights which may convert into ordinary shares, for nil consideration. The rights will vest one year after grant provided that the Non-
Executive Director continues to be a Director at that time. There are no performance criteria attached to the vesting of the rights. Upon
vesting of the rights and conversion into ordinary shares, the shares will be subject to a dealing restriction until the earlier of either the
seventh anniversary of the grant or the date of cessation in being a Director.
Rights granted to Non-Executive Directors are as follows:
Grant Date
24 September 2013
22 July 2014
Number
4,195
6,289
A summary of the movements of all rights issued is as follows:
Grant Date
24-Sep-13
22-Jul-14
Vesting
Date
Exercise
Price
Balance
at start
of year
Granted
during
the year
Exercised
during
the year
Forfeited
during
the year
Balance
at end
of year
Vested
and
exercisable
Vested
and un-
exercisable
24-Sep-14
22-Jul-15
nil
nil
4,195
–
4,195
–
6,289
–
–
–
–
6,289
–
–
–
–
24. KEY MANAGEMENT PERSONNEL
Refer to the Remuneration Report in the Report of the Directors for details of the remuneration paid or payable to each member of the
Group’s key management personnel for the year ended 30 June 2015 and 30 June 2014.
The totals of remuneration paid to key management personnel of the Group during the year are as follows:
Short-term employee benefits
Post-employment benefits
Share-based payment
2015
$
5,180,394
122,709
1,462,735
6,765,838
2014
$
4,604,329
122,486
940,023
5,666,838
Sirtex 2015 AR 77
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
25. PARENT ENTITY
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Reserves
Retained earnings
Reserves
Share rights reserve
Total reserves
Financial performance
Profit for the year
Total comprehensive income
Financial guarantees
2015
$’000
2014
$’000
93,831
17,377
111,208
16,564
584
17,148
37,482
(9,746)
66,324
94,060
1,613
1,613
7,086
7,086
81,312
13,978
95,290
1,923
1,016
2,939
28,426
(3,228)
67,152
92,350
618
618
30,215
30,215
No guarantees have been provided to its wholly-owned subsidiaries by the parent entity.
Contingent liabilities
The parent entity does not have any contingent liability as at 30 June 2015.
Contractual commitments
The parent entity has an operating lease commitment for the office lease in Sydney. Refer to note 26 for further details.
Sirtex 2015 AR 78
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
26. COMMITMENTS
Operating Leases
The consolidated entity leases offices in Sydney, Singapore, Germany and in the United States, with no option to purchase the leased
assets at the expiry of the leased assets.
Duration and remaining periods for the office leases are as follows:
Location
Sydney
Singapore
Bonn (GER)
Frankfurt (GER)
Boston (US)
Lease term
84 months
60 months
98 months
120 months
62 months
Remaining lease period
60 months
2 months
79 months
98 months
18 months
The consolidated entity also leases various items of plant and equipment in Germany with lease terms of up to 48 months, and remaining
periods of 2 to 46 months.
Non-cancellable operating leases
No longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
Research commitments
Consolidated
2015
$’000
2,299
7,897
2,538
12,734
2014
$’000
2,454
7,653
4,348
14,455
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 $920,000
(2014: $820,000).
Clinical Trial commitments
The consolidated entity has entered into various clinical study agreements with Clinical Research Organisations (CRO) and specialist
service providers for the management of clinical studies, and with a range of major hospitals for the recruitment of patients into
these trials.
Under these agreements, the consolidated entity is committed to providing funds over future periods, payable within one year,
of $7,107,000 (2014: $10,602,000). The amount of all outstanding contractual commitments as at 30 June 2015 is $20,810,000
(2014: $21,384,000).
Capital commitments
The consolidated entity has entered into various agreements for property, plant and equipment and intangible assets. Under these
agreements, the consolidated entity is committed to providing funds over future periods within one year of $419,000 (2014: $207,000).
The amount of all outstanding contractual commitments as at 30 June 2015 is $839,000 (2014: $821,000).
Lease commitments
The consolidated entity entered into an operating lease agreement subsequent to year end to extend the lease on the premises in
Singapore. The lease agreement is for three years. Under this agreement, the consolidated entity is committed to providing funds over
future periods, payable within one year, of $419,000. The total amount of the contractual commitment as at 30 June 2015 is $1,300,000.
Sirtex 2015 AR 79
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
27. CONTROLLED ENTITIES
Name of entity
Country of incorporation
Ownership interest
2015
%
2014
%
Parent entity
Sirtex Medical Limited
Controlled entities
Sirtex Medical Products Pty Ltd
Sirtex Global Pty Ltd
Sirtex Technology Pty Ltd
Sirtex SIR-Spheres Pty Ltd
Sirtex Thermospheres Pty Ltd
Sirtex Medical Holdings Inc
Sirtex Medical Inc
Sirtex Wilmington LLC
Sirtex Germany Holding GmbH
Sirtex Medical Europe GmbH
Sirtex Germany Manufacturing GmbH
Sirtex Technology Germany GmbH
Sirtex Medical United Kingdom Ltd
Sirtex Medical MEA FZE
Sirtex Singapore Holding Pte Ltd
Sirtex Medical Singapore Pte Ltd
Sirtex Global Singapore Pte Ltd
Sirtex Singapore Manufacturing Pte Ltd
Sirtex Technology Japan KK
Australia
Australia
Australia
Australia
Australia
Australia
USA
USA
USA
Germany
Germany
Germany
Germany
United Kingdom
United Arab Emirates
Singapore
Singapore
Singapore
Singapore
Japan
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
–
100
100
100
100
100
Sirtex Medical United Kingdom was incorporated on 27 February 2015. Sirtex Medical MEA FZE was incorporated on 15 June 2015.
Sirtex Medical Ltd and all its Australian-controlled entities are included in the tax-consolidated group. Sirtex Medical Ltd is the head entity
in the tax consolidation group. These entities are taxed as a single entity.
28. RELATED PARTY TRANSACTIONS
(a) Equity interests in related parties
Details of the percentage of ordinary shares held in controlled entities are disclosed in Note 27.
(b) Loans and transactions with key management personnel and related entities
At 30 June 2015, $9,222 (2014: $nil) was payable to directors, key management personnel and director related entities.
At 30 June 2015, $12,702 (2014: $nil) was receivable from directors, 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 paid
management fees of $144,228 (2014: $139,327) to entities in the wholly-owned group.
(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 payables from subsidiaries: $12,169,332 (2014: Current receivables from subsidiaries: $10,887,513)
Loans receivable from subsidiaries: $14,885,016 (2014: $12,909,941)
Sirtex 2015 AR 80
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
29. EVENTS AFTER REPORTING DATE
On 10 July 2015, a total of 687,000 Executive Performance Rights issued on 28 August 2012 fully vested, having achieved the performance
target. As at the date of this report, a total of 583,314 of these performance rights have been exercised and issued as ordinary shares of
Sirtex Medical Limited.
On 22 July 2015, a total of 6,289 Non-Executive Directors Rights issued on 22 July 2014 vested and 6,289 ordinary shares of Sirtex
Medical Limited were purchased on market by the Trust.
Since the end of the year, the Directors have declared a fully franked dividend of 20c per share to be paid on 21 October 2015 (2014:
14 cents per share). The record date for the dividend is 30 September 2015.
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.
30. 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:
Remuneration of the auditor of the parent entity for audit and review of financial reports
Agreed upon procedures performed for the parent entity
Remuneration of other auditors of subsidiaries for audit and review of financial reports
Consolidated
2015
$’000
140
34
143
2014
$’000
155
–
126
The auditor of Sirtex Medical Ltd and its Australian subsidiaries is Grant Thornton Audit Pty Ltd. The auditor of the German subsidiary
is Warth & Klein Grant Thornton AG. The auditor of the US entities is Grant Thornton LLP. The auditor of the Singapore entities is Grant
Thornton Advisory Pte Ltd.
31. 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:
Financial Assets
Cash and cash equivalents
Other short-term deposits
Trade and other receivables
Other financial assets*
Financial Liabilities
Trade and other payables
Consolidated
2015
$’000
2014
$’000
21,941
52,000
35,000
1,213
110,154
22,495
30,000
25,714
1,276
79,485
24,290
24,290
14,657
14,657
*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 2015 AR 81
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
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 2015 on cash was
0.9% (2014: 2.05%) and on short-term deposits 3.46% (2014: 3.95%). All other financial assets and liabilities are non-interest bearing.
Sensitivity analysis
The sensitivity analysis is based on an expected overall volatility of interest rates using market data and forecasts. A change in interest rate
of 2% on cash and short-term deposits would result in changes in profit and equity as follows:
Change in profit:
Increase in interest rate by 2%
Decrease in interest rate by 2%
Change in equity:
Increase in interest rate by 2%
Decrease in interest rate by 2%
(b) Credit risk
Consolidated
2015
$’000
2014
$’000
1,331
(1,331)
1,331
(1,331)
945
(945)
945
(945)
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 at 30 June 2015, the Group had only non-interest bearing financial liabilities with less than 1 year maturity (refer note 14).
(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 does not have any currency options open at reporting date.
Sirtex 2015 AR 82
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
31. FINANCIAL RISK MANAGEMENT (CONTINUED)
Sensitivity analysis
The sensitivity analysis is based on an expected overall volatility of the relevant currencies, using management’s assessment of reasonable
fluctuations taking into account movements over the last 6 months and forecasts for the next 12 months. A change in foreign exchange
rates of 15% would result in changes in profit and equity as follows:
Change in profit:
Increase of AUD to USD by 15%
Decrease of AUD to USD by 15%
Increase of AUD to EUR by 15%
Decrease of AUD to EUR by 15%
Change in equity:
Increase of AUD to USD by 15%
Decrease of AUD to USD by 15%
Increase of AUD to EUR by 15%
Decrease of AUD to EUR by 15%
Consolidated
2015
$’000
2014
$’000
(20,511)
20,511
(4,865)
4,865
(20,511)
20,511
(4,865)
4,865
(14,394)
14,394
(4,150)
4,150
(14,394)
14,394
(4,150)
4,150
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) in ’000
USD
EUR
SGD
JPY
AUD
2015
Group entity (Functional currency)
North American entities (USD)
European entity (EUR)
Singapore entities (SGD)
Japanese entities (JPY)
Balance sheet exposure
2014
Group entity (functional currency)
North American entities (USD)
European entity (EUR)
Singapore entities (SGD)
Japanese entities (JPY)
Balance sheet exposure
Foreign Currency Call/Put Options
The Group has no currency option open at reporting date.
17,816
–
–
–
–
4,493
–
–
17,816
4,493
14,823
–
–
–
–
3,978
–
–
14,823
3,978
–
–
1,062
–
1,062
–
–
1,001
–
1,001
–
–
–
3,253
3,253
–
–
–
9,009
9,009
23,198
6,543
1,027
35
30,804
15,736
5,760
936
94
22,526
Sirtex 2015 AR 83
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015
ADDITIONAL STOCK EXCHANGE INFORMATION
AS AT 3 AUGUST 2015
Number of shareholders
57,113,545 fully paid ordinary shares are held by 10,876 individual shareholders. All issued ordinary shares carry one vote per share.
DISTRIBUTION OF SHAREHOLDERS
1
– 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
SUBSTANTIAL SHAREHOLDERS
Ordinary shareholders
Hunter Hall Investment Management Limited
TWENTY LARGEST SHAREHOLDERS
Ordinary shareholders
J P Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
Citicorp Nominees Pty Limited
BNP Paribas Noms Pty Ltd (DRP)
UBS Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited (A/C 2)
SCJ Pty Ltd (Jermyn Family Account)
Bannaby Investments Pty Limited
UBS Wealth Management Australia Nominees Pty Ltd
RBC Investor Services Australia Nominees P/L
SBN Nominees Pty Limited (10004 Account)
House Of Maister Financial Services Ltd
Share Direct Nominees Pty Ltd (10026 A/C)
City And Westminster Limited
Pacific Securities Inc
Australian Foundation Investment Company Limited
Bannaby Investments Pty Ltd (Bannaby Super Fund A/C)
Citicorp Nominees Pty Limited (Colonial First State Inv A/C)
Mr Stephen Craig Jermyn (Jermyn Family S/Fund A/C)
Ordinary Shares
3,173,837
5,403,464
1,888,063
5,227,636
41,420,545
57,113,545
Holders
7,973
2,425
253
194
31
10,876
Fully paid
Number
4,751,376
4,751,376
Percentage
8.319
8.319
Number
13,995,976
6,623,382
6,279,418
6,268,277
1,233,745
970,907
912,345
400,000
400,000
321,812
312,500
291,000
284,491
279,000
250,000
250,000
220,000
210,000
204,904
200,000
Fully paid
Percentage
24.506
11.597
10.995
10.975
2.160
1.700
1.597
0.700
0.700
0.563
0.547
0.510
0.498
0.498
0.438
0.438
0.385
0.368
0.359
0.350
39,907,757
69.874
Sirtex 2015 AR 84
COMPANY INFORMATION
FOR THE YEAR ENDED 30 JUNE 2015
COMPANY SECRETARY
Mr Darren Smith
STOCK EXCHANGE LISTING
Australian Stock Exchange Limited
ASX code SRX
SHARE REGISTRAR
Boardroom Pty Ltd
Level 12, 225 George Street
Sydney NSW 2000
Australia
Tel: 1300-737-760 (in Australia)
Tel: +61-2-9290-9600 (international)
AUDITORS
Grant Thornton Audit Pty Ltd
Level 17, 383 Kent Street
Sydney NSW 2000
Australia
REGISTERED OFFICE
Level 33, 101 Miller Street
North Sydney NSW 2060
Tel: +61-2-9964-8400
PRINCIPAL PLACES OF
BUSINESS ARE:
AUSTRALIAN OFFICE
Level 33, 101 Miller Street
North Sydney NSW 2060
Tel: +61-2-9964-8400
UNITED STATES OFFICE
300 Unicorn Park Drive
Woburn, MA 01801 USA
Tel: +1-781-721-3200
EUROPEAN OFFICE
Joseph-Schumpeter-Allee 33
53227 Bonn, Germany
Tel: +49-228-1840-730
SINGAPORE OFFICE
Level 1, 50 Science Park Road
Singapore Science Park II
Singapore 117406
Tel: +65-6308-8370
ANNUAL GENERAL MEETING
The Annual General Meeting will be held at 10am
on 27 October 2015 at The Royal Automobile Club,
89 Macquarie Street, Sydney NSW 2000
WWW.SIRTEX.COM
SIR-Spheres® is a registered trademark
of Sirtex SIR-Spheres Pty Ltd.
Sirtex 2015 AR 85
www.sirtex.com
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