2017
ANNUAL
REPORT
DOSES SOLD 2017
12,578
1 I SIRTEX
2017 HIGHLIGHTS
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
CONTENTS
ABOUT SIRTEX
03 2017 FINANCIAL SUMMARY
05 CHAIRMAN’S REPORT
09 CHIEF EXECUTIVE OFFICER’S REPORT
18 ENVIRONMENTAL, SOCIAL AND
GOVERNANCE
22 BOARD OF DIRECTORS
23 KEY MANAGEMENT PERSONNEL
24 FINANCIAL REPORT
Sirtex Medical Limited is an Australian-
based global healthcare business working to
improve outcomes for people with cancer.
Our lead product is a targeted radiation
therapy known as SIR-Spheres® Y-90 resin
microspheres. It is available in more than
40 countries, within over 1,090
certified hospitals to treat patients with
inoperable liver cancer.
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. While at the same time, we work
closely with government and private
payers to ensure our patients receive the
appropriate reimbursement for our product.
We are challenging established practices
and developing innovative new therapies
that promise to improve the health and lives
of many people suffering from cancer or
other diseases.
Our ongoing success is based on a
commitment to serving our customers,
professionalism, continuous improvement
and innovation.
ANNUAL REPORT 2017 I 2
DOSE SALES
12,578 +5.4%
REVENUE
$234.3m +0.8%
NET LOSS AFTER TAX
$26.3m -149.0%
THE AMERICAS
Boston, United States
Regional Head Office,
Manufacturing Facility
EUROPE, MIDDLE
EAST, AFRICA
Frankfurt, Germany
Manufacturing Facility
ASIA PACIFIC
Singapore
Regional Head Office,
Manufacturing Facility
Bonn, Germany
Regional Head Office
Sydney, Australia
Corporate Head Office
65211.0
58689.9
52168.8
45647.7
39126.6
32605.5
26084.4
19563.3
13042.2
6521.1
0.0
29.05
53582.0
45598.2
37614.4
29630.6
21646.8
13663.0
5679.2
-2304.6
-10288.4
-18272.2
-26256.0
30
27
24
21
18
15
12
9
6
3
0
3 I SIRTEX
2017 FINANCIAL SUMMARY
PROFIT AFTER TAX
$’000
OPERATING CASH FLOW
$’000
EARNINGS PER SHARE
CENTS
93.599345
78.143863
62.688380
47.232897
31.777414
0
7
2
,
8
1
8
6
8
,
3
2
16.321931
5
4
3
,
0
4
2
8
5
,
3
5
0.866448
7
5
2
,
6
2
-
-14.589034
-30.044517
-45.500000
7
8
9
,
9
1
7
2
3
,
4
2
1
7
1
,
2
3
4
7
9
,
1
5
1
1
2
,
5
6
2
7
9
,
5
5
8
.
2
3
5
.
2
4
4
.
1
7
7
.
3
9
5
.
5
4
-
2013
2014
2015
2016
2017
2012
2013
2014
2015
2016
2017
2013
2014
2015
2016
2017
DIVIDEND PER SHARE
CENTS
118348.963928
SHARE PRICE
$ (AT 30 JUNE)
CASH ON HAND
$’000 (AT 30 JUNE)
106514.067535
94679.171143
82844.274750
71009.378357
59174.481964
47339.585571
35504.689178
23669.792786
11834.896393
0.00
0
1
2
1
4
1
0
2
2012
2013
2014
2015
0
3
0.000000
2016
0
0
9
.
3
4
9
0
.
6
8
9
.
1
1
8
8
.
6
1
5
0
.
9
2
7
5
.
5
2
5
2
.
6
1
7
4
4
,
9
4
4
9
0
,
2
5
5
9
4
,
2
5
1
4
9
,
3
7
9
4
3
,
8
1
1
5
2
0
,
7
0
1
2017
2011
2012
2013
2014
2015
2016
2017
2012
2013
2014
2015
2016
2017
FIVE YEAR SUMMARY
Dose sales (units)
$’000
Sales revenue
Net profit / (loss) before tax
Net profit / (loss) after tax
R&D investment*
Clinical investment*
Capital investment
Total assets at 30 June
Total equity at 30 June
Net tangible assets at 30 June
Earnings (loss) per share (cents)
2013
7,299
96,774
24,507
18,270
6,615
15,872
3,685
117,766
87,684
59,762
32.8
2014
8,561
129,363
31,110
23,868
7,981
22,168
6,187
148,710
107,583
60,219
42.5
2015
10,252
176,088
52,768
40,345
8,641
20,724
1,692
201,476
144,636
76,609
71.4
2016
11,931
232,492
69,998
53,582
10,835
20,631
1,718
261,717
193,504
110,683
93.7
2017
12,578
234,282
(40,954)
(26,257)
11,865
24,852
1,239
194,122
149,467
140,941
(45.5)
* Includes both capitalised and expensed items; clinical investment additionally excludes SIRFLOX and SARAH amortisation expense.
ANNUAL REPORT 2017 I 4
DOSE SALES GROWTH
UNITS
12,578
SALES REVENUE
$’000
11,931
10,252
8,561
7,299
176,088
129,363
96,774
82,627
232,492
234,282
234281.981890
210853.783701
187425.585512
163997.387323
140569.189134
6,141
117140.990945
ASIA PACIFIC
EUROPE, MIDDLE EAST & AFRICA
THE AMERICAS
93712.792756
70284.594567
46856.396378
23428.198189
0.000000
11180.445076
9782.889442
8385.333807
6987.778173
5590.222538
4192.666904
2795.111269
1397.555635
0.000000
2012
2013
2014
2015
2016
2017
2012
2013
2014
2015
2016
2017
REGIONAL SPLIT OF SALES REVENUE AND DOSE SALES
THE AMERICAS
SALES REVENUE IN THE AMERICAS
REGION UP 0.9% ON THE PRIOR
PERIOD (UP 4.7% ON CONSTANT
CURRENCY BASIS)
EUROPE, MIDDLE EAST, AFRICA
SALES REVENUE IN THE EMEA REGION
DOWN 1.6% ON THE PRIOR PERIOD
(UP 6.4% ON CONSTANT
CURRENCY BASIS)
ASIA PACIFIC
SALES REVENUE IN THE APAC
REGION UP 8.6% ON THE PRIOR
PERIOD (UP 11.5% ON CONSTANT
CURRENCY BASIS)
70.0%
70.0%
21.3%
21.3%
8.7%
8.7%
THE AMERICAS
UP 4.6%
ON THE PRIOR
PERIOD
8,807
EMEA
UP 5.9%
ON THE PRIOR
PERIOD
2,677
12,578
2017 Dose Sales
12,578
2017 Dose Sales
ASIA PACIFIC
UP 11.3%
ON THE PRIOR
PERIOD
1,094
5 I SIRTEX
CHAIRMAN’S REPORT
On behalf of the Sirtex Board and
management, I hereby present the
2017 Sirtex Annual Report. The 2017
financial year was a challenging one for
the Company. We have seen a decline
in the historical growth rates achieved
for our core product, and none of our
major clinical studies met their primary
endpoints. Accordingly, we faced the
difficult decision of writing off the value
associated with those clinical studies,
and reducing our global headcount to
reflect the wind-down of our major
clinical studies, a discontinuation of the
majority of non-core R&D and a pull-
back in discretionary marketing spend.
Importantly, these changes were designed
to optimise our corporate structure for
growth and enhanced engagement with
key clinician users, while more effectively
targeting new users and ensuring as many
patients as possible receive our innovative
therapy through new or expanded
reimbursement. We ended the year with a
new Chief Executive Officer in place, and
the senior management team ready to
implement our growth strategies.
It is important for shareholders to recognise
that there is still a large global market
available for SIR-Spheres® Y-90 resin
microspheres. Following the results of all
our major clinical studies, with the exception
of one study yet to report findings, we now
have a very clear understanding of that
market opportunity. In the markets in which
we currently operate, the salvage-only
market opportunity represents 184,000
patients annually. In addition, the SARAH and
SIRveNIB results in hepatocellular carcinoma
(HCC), the most common form of primary
liver cancer showed that despite SIR-Spheres
microspheres not meeting the primary
endpoint of superiority in Overall Survival
(OS) versus the current standard of care, SIR-
Spheres microspheres conferred statistically
significant safety and toxicity benefits for
these patients. In addition, beneficial quality
of life benefits were also seen in the SARAH
study favouring SIR-Spheres microspheres.
HCC represents an annual opportunity of
approximately 61,000 patients in our current
markets. The interventional oncology space
is continuing towards being considered
as a fourth tenet of cancer care, alongside
long-standing surgical, radiotherapy and
chemotherapy-based approaches. Sirtex
remains a global leader in the rapidly
evolving interventional oncology field.
2017 FINANCIAL PERFORMANCE
Sirtex recorded a disappointing financial
performance this year, with a significant
decline in volume growth as measured by
dose sales. This unexpected abatement in
growth saw profits significantly impacted
during the year. For the first time since
2010, the Company recorded a reduction
in underlying net profit after tax versus the
prior year. The profit and loss statement
was additionally impacted by the non-cash
recognition of asset write-offs related to the
capitalised costs of our major clinical studies
and R&D development programs, along
with provisions relating to the organisational
restructure. This has resulted in a material
reported loss for the Company of $26.3
million in 2017.
The Company reported SIR-Spheres
microspheres dose sales of 12,578,
representing growth of 5.4 per cent over the
prior corresponding period. The primary
headwind of the dose sales performance
during the year was the Americas region,
which delivered dose sales growth of 4.6 per
RICHARD HILL
CHAIRMAN
cent over the prior corresponding period
(pcp). EMEA dose sales were up 5.9 per
cent and APAC dose sales were up 11.3 per
cent versus the pcp. Total product revenue
was $234.3 million, up 0.8 per cent on
the prior period.
Earnings before interest, tax, depreciation
and amortisation (EBITDA) was -$36.7
million, the loss before tax was $41.0 million
and as mentioned the net loss after tax
was $26.3 million. Excluding the impact of
asset impairments and provisions related
to restructuring costs, underlying EBITDA
was down 17.3 per cent to $61.5 million and
underlying net profit before tax was down
18.3 per cent to $57.2 million. Underlying
net profit after tax was down 20.9 per cent
to $42.4 million.
Cash from operations was $56.0 million,
down 14.2 per cent on the previous year with
net cash flow after dividend payments and
the share buy-back of $12.9 million recorded.
FINANCIAL POSITION
Sirtex ended the financial year in a strong
financial position with cash and cash
equivalents of $118.3 million. The Company
has no short term or long term debt.
During the year, the Board reviewed the
carrying value of the Company’s clinical
and R&D assets in accordance with AASB138
Intangible Assets following the results of
the clinical studies and the completion
of development activities relating to our
core SIR-Spheres microspheres product.
The Board assessed the carrying value of
the SIRFLOX/FOXFIRE/FOXFIRE Global
studies in metastatic colorectal cancer
(mCRC) and the SARAH/SIRveNIB studies in
hepatocellular carcinoma (HCC) following
18848.0
16963.2
15078.4
13193.6
11308.8
9424.0
7539.2
5654.4
3769.6
1884.8
0.0
ANNUAL REPORT 2017 I 6
SHAREHOLDER DIVIDENDS DECLARED
$’000
“The Board of Sirtex works
diligently to ensure the Sirtex
global management team has
the expertise, capability and
resources to execute on its
global strategies and growth
initiatives.”
7
7
5
,
5
3
3
7
,
6
4
1
9
,
7
3
2
4
,
1
1
2
9
2
,
7
1
8
4
8
,
8
1
2012
2013
2014
2015
2016
2017
data release and presentation at major
oncology conferences, noting in all instances
the primary endpoint was not met. Included
in this review was the SORAMIC study in
HCC, which has yet to report findings. For
SIR-Spheres microspheres, the capitalised
costs associated with two development
projects relating to delivery and dosing
were also tested for impairment. As a
result of that review, the Board decided to
impair the entire carrying value of those
assets, representing a one-off, non-cash
impairment charge of $90.5 million in FY17.
This significantly impacted reported net
profit after tax for the year.
As part of the organisational restructure
announced in June, pre-tax provisioning
costs of $4.1 million were recognised,
principally related to employee redundancy
payments associated with the reduction
in the global workforce. These occurred
predominately in the clinical, R&D and global
marketing functions of the business.
Despite the asset write-offs, the Sirtex
balance sheet remains strong, with net assets
of $149.5 million, consisting predominately of
cash and property, plant and equipment.
CLASS ACTION
In January, the Company received a letter
and draft statement of claim, foreshadowing
the commencement of a representative
proceeding against the Company in the
Federal Court of Australia. The statement of
claim alleged breaches by the Company of
its continuous disclosure obligations, and
alleged misleading and deceptive conduct.
The statement of claim was subsequently
filed at the Federal Court of Australia, Victoria
Registry in early February and proceedings
commenced. Sirtex will continue to
vigorously defend the proceeding. The
matter is set down for a trial commencing
late October 2018.
SHARE BUY-BACK
A $30 million on-market share buy-back was
announced in February. This was anticipated
to commence in March 2017 but was delayed
until early June owing to the applicant of
the class action seeking a Federal court
injunction against the commencement
of the buy-back. Thankfully for our
shareholders, this injunction was dismissed
in late May, and the Company commenced
the buy-back following the release of results
from our clinical studies at the American
Society of Clinical Oncology (ASCO)
Annual Meeting.
At the end of the FY17 period, we have
bought back $2.9 million worth of our stock,
representing approximately 231,000 shares.
A further $27.1 million remains to be bought
back which is expected to be complete by 8
September 2017. Accordingly, the expected
earnings accretion from the buy-back will be
skewed towards the FY18 period. The Board
will continue to monitor its level of cash on
hand and capital efficiency of the business.
DIVIDENDS
The Board of Directors is committed to the
payment of dividends to our shareholders.
The Directors have approved an unfranked
final dividend of 30.0 cents per share for
the 2017 financial year, identical to the prior
period. The record date for the dividend is
27 September 2017 and the payment date is
18 October 2017.
Inclusive of the 2017 financial year dividend
payment to be made on 18 October 2017,
Sirtex will have returned to shareholders a
total of $69.8 million in dividends since 2011.
DIRECTOR AND BOARD ACTIVITIES
The Board of Sirtex works diligently to
ensure the Sirtex global management team
has the expertise, capability and resources
to execute on its global strategies and
growth initiatives.
In April, Mr Neville Mitchell was appointed
as an independent Non-Executive Director
of the Company. He is a qualified Chartered
Accountant with over 25 years of experience
as a Chief Financial Officer at Cochlear
Limited (ASX:COH). Cochlear is the world’s
leading company for the development,
manufacture and sale of cochlear implants
with annual revenue in excess of $1 billion.
During that time, Mr Mitchell was responsible
for all financial aspects of the business,
including ASX compliance and governance,
banking, acquisitions and mergers, together
with forecasting and budgetary management
and responsibility for accounting data, legal
and company secretarial and facilities.
Mr Mitchell serves as a Member of the
Audit Committee and member of the
Remuneration Committee and the Risk,
Health and Safety Committee.
There have also been significant changes
to the composition of our Executive
Management Team during 2017. In January,
our CEO, Mr Gilman Wong, ceased his
employment with Sirtex following an
investigation into his share trading by
the Company’s legal advisers, Watson
Mangioni. All unvested performance
rights previously issued to Mr Wong were
subsequently forfeited.
7 I SIRTEX
“Sirtex’s Corporate Governance
policies and procedures are
available to shareholders and
other stakeholders in a single,
easy-to-read format within
the Investors section of
our website.”
Following the dismissal of Mr Wong in
January, Mr Nigel Lange was appointed as
Interim CEO of Sirtex Medical. Prior to this
appointment, Mr Lange was Chief Operating
Officer of Sirtex. Mr Lange joined Sirtex US in
2002 and then established 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.
During his time as Interim CEO of Sirtex, Mr
Lange made some difficult, but necessary
decisions for the business and the Board
thanks him for his efforts and diligence in
this role. Mr Lange resumed his role of Chief
Operating Officer, which was re-named as
Chief Commerical Officer in May.
In May, we announced the appointment
of Mr Andrew McLean as the CEO of Sirtex
Medical. This followed a comprehensive
global recruitment process that
considered both internal and external
candidates for the role.
Mr McLean has over 20 years of experience
with a track record of success in regional and
global leadership roles. His most recent roles
were CEO, Applied Sterilisation Technologies
and Laboratories with Synergy Health plc,
and he leaves STERIS Corporation (NYSE:STE)
as Senior Vice President, Corporate Strategy
to join Sirtex.
He has a Master of Business Administration
from the Macquarie Graduate School of
Management and a Bachelor of Economics
from Macquarie University. In June, Mr
McLean was appointed as an Executive
Director of the Company.
CORPORATE
GOVERNANCE & REMUNERATION
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 a corporate
governance framework and practices
to ensure they meet the interests
of shareholders.
The Group complies with the Australian
Securities Exchange Corporate Governance
Principles and Recommendations 3rd
Edition (the ‘ASX Principles‘). Our Corporate
Governance Statement incorporates the
disclosures required by the ASX Principles
under the headings of the eight core
principles. All of these practices, unless
otherwise stated, were in place for the full
reporting period.
Sirtex’s Codes and Policies are a key element
of our corporate responsibility and govern
the way our Directors and employees work.
Sirtex’s Corporate Governance policies and
procedures are available to shareholders
and other stakeholders in a single, easy-to-
read format within the Investors section of
our website. As the policies are updated,
where required they are lodged with the
ASX and updated on our website. Sirtex
strives for transparency in the way the
Company is governed.
We were particularly pleased to formally
launch The Sirtex Code during the year,
which clearly summarises our many
corporate level policies into an easy-to-read
format and communicates our commitment
to integrity, and the highest ethical standards
in what we do. The Sirtex Code outlines the
key information we expect all employees to
know, understand, implement and comply
with across a range of policy areas.
In March, we updated our Securities
Trading Policy to include a streamlined
clearance process for securities dealing
for all employees and directors. Other
policies updated or introduced during the
year included our Privacy Policy, Flexible
Working Arrangements Policy, External Audit
Inspection Policy and Procedure and our
Quality Manual.
Sirtex’s remuneration levels, structure and
processes are designed to reflect high ethical
standards, the laws of the countries in which
the executives are employed, and the fair
treatment of all staff.
All charters, policies, procedures and
rules that relate to Executive and Non-
Executive remuneration at Sirtex can be
found within the Investors section of our
website. We actively encourage investors
with any questions or comments regarding
the Company’s remuneration structure
and processes to contact us directly
via the website.
OUR PEOPLE
Sirtex works hard to attract and retain top
talent who can make a positive contribution
to our innovative and dynamic culture that is
focused on delivering outcomes for people
who suffer from the debilitating effects
of liver cancer.
With a global workforce of 292 talented
individuals across 20 countries, our
employees bring a wealth of knowledge,
passion, innovation and expertise to
the organisation each day. The Board
recognises the dedication and hard work
of all our staff members in making Sirtex
ANNUAL REPORT 2017 I 8
“The Sirtex Code outlines
the key information we
expect all employees to know,
understand, implement and
comply with across a range
of policy areas.”
The
Sirtex
Code
2017
Government and private payer
reimbursement remains an important
consideration when patients receive our
therapy, and we will continue to work with
these groups to ensure as many patients as
possible are covered for their SIR-Spheres
microspheres treatment.
Finally, we intend to file with the US FDA
for additional regulatory clearances for our
therapy in the US market during the 2018
financial year. Assuming we are granted such
clearance, it will greatly enhance our sales
and marketing efforts in this key market to
include diseases outisde of mCRC.
RICHARD HILL
CHAIRMAN
a global leader in the emerging field of
interventional oncology.
The health and safety of our staff is
paramount and we are committed to a
values-based health and safety culture that
harmonises with our overall organisational
culture. I am particularly pleased to report
that only a single lost time injury (LTI) was
recorded across our entire global workforce
during the year, which emphasises our focus
on workplace safety.
Sirtex continues to benefit as an organisation
with a diverse workforce. Our workforce
represents a number of different cultures and
ethnic backgrounds and our people speak
multiple languages. Where possible, we seek
to align our global workforce to reflect the
diversity of our customers across the 40+
countries in which our doses are sold.
At the end of the 2017 financial year,
women represented 45 per cent of the
total number of employees globally. Sirtex
continues to encourage diversity across the
business in order to build on identifiable
individual strengths within a professional
development framework.
This is a key focus of our Growing with
Sirtex program. Our aim is to increase this
percentage at the senior level and we are
investing in strategies to achieve increased
representation.
CORPORATE SOCIAL
RESPONSIBILITY
Sirtex recognises the importance of
corporate social responsibility, and remains
committed to conducting business
ethically while contributing to the social,
environmental and economic wellbeing in
those locations in which we operate. We
acknowledge the benefits the commitments
we make in these three key areas can have
on our clinician customers, the patients we
treat and our shareholders.
We are committed to being a responsible
member of the international business
community, and acknowledge that our
operational integrity and reputation are
crucial to our success.
The Company assists its employees to
become active supporters of worthwhile
causes and participate in community
programs outside the workplace. During the
year, Sirtex made charitable contributions
of $0.34 million, representing 0.6 per cent
of our FY17 underlying net profit before
tax. This is consistent with our global
healthcare peers.
OUTLOOK
We are resolute in our focus on the long term
growth opportunity in our under-penetrated
market for SIR-Spheres microspheres. With
the majority of the clinical results now
having delivered findings, it is important to
continue to drive dose sales via new and
existing clinicians.
We will continue to develop our plans for
geographic expansion in Japan and China,
and parts of South America.
9 I SIRTEX
CHIEF EXECUTIVE OFFICER’S REPORT
ANDREW McLEAN
CEO
It was a great honour and privilege
to commence the role of new CEO of
Sirtex Medical in June. The product we
take to clinicians fills a vital need and
makes unquestionable differences to the
lives of many liver cancer patients
and their families.
I am pleased to report another year of
growth in dose sales and revenue for Sirtex
Medical. Our SIR-Spheres® Y-90 resin
microspheres business continues to perform,
although growth slowed during the year,
reflecting increased competition in the
interventional oncology market, new drug
therapies and some inefficiencies in our US
sales force following the strong expansion
in FY16 and the first half of FY17. Dose sales
in the Americas, grew 4.6 per cent on the
prior corresponding period (pcp), dose sales
in EMEA grew 5.9 per cent and dose sales in
APAC grew 11.3 per cent. Unfortunately, this
slowdown in growth necessitated a change
in our levels of investment into the business
following the results of the clinical studies
in April-June. On an underlying basis, and
reflecting the growth in expenditure ahead
of these studies, our earnings before interest,
tax, depreciation and amortisation (EBITDA)
declined by 17.3 per cent to $61.5 million
and underlying net profit after tax fell 20.9
per cent to $42.4 million. In June, we took
decisive action to address our cost base
and levels of expenditure. The Board also
reviewed the carrying value of our capitalised
clinical and R&D assets. As a result, we took
several non-cash, one-off charges to our
profit and loss statement, including a $90.5
million non-cash, pre-tax asset impairment
and a $4.1 million restructuring charge
following a review of our global headcount.
This delivered a reported net loss after tax of
$26.3 million for the year.
• Revenues of $234.3 million, up 0.8 per cent
• Underlying EBITDA of $61.5 million, down
While the interventional oncology market
continues to show a solid long term growth
profile, Sirtex needs to respond to the global
and competitive environment we currently
operate in by becoming more productive,
efficient and most importantly innovative, to
meet the needs of our clinician customers
and our valued patients suffering from the
debilitating effects of liver cancer. The results
of our clinical studies have provided us with
a clearly defined market opportunity moving
forward. For example, in hepatocellular
carcinoma (HCC) the SARAH and SIRveNIB
study data allows us to contest an annual
market opportunity of 61,000 patients
in Sirtex’s current markets and the total
salvage opportunity is 184,000 patients per
annum. We have a long way to go before our
global market opportunity for SIR-Spheres
microspheres reaches saturation, however
we need to expand our global footprint,
grow our approved disease indications, and
expand our reimbursement.
DOSE SALES GROWTH CONTINUES
In FY17 we saw global dose sales increase
5.4 per cent over the prior year. Revenue
growth trailed dose sales growth reflecting
the translation effect of a stronger Australian
dollar versus the US dollar and Euro over the
period. We reported a net loss after tax of
$26.3 million, resulting from the significant
clinical and R&D asset impairment and
restructuring costs both recognised in the
second half. The highlights for the 2017
financial year are as follows:
• Dose sales of 12,578, up 5.4 per cent on
2016
17.3 per cent
• Underlying earnings per share of 73.5cents,
down 21.6 per cent
• Dividend per share of 30.0 cents, identical
to the previous year
• Operating cash flow of $56.0 million, down
14.2 per cent
• Announced a $30 million on-market share
buy-back
• Reported results from the SARAH clinical
study
• Reported results from the SIRFLOX/
FOXFIRE/FOXFIRE Global clinical study
• Reported results from the SIRveNIB clinical
study
• Reported results from the RESIRT pilot
study in kidney cancer
• Reimbursement granted in France
• Commercial supply of doses from our
state-of-the art manufacturing facility in
Frankfurt, Germany
OUR APPROACH
During the first half of the financial year,
our strategy was directed towards building
the awareness and educating clinicians
on our product ahead of the outcomes
from the majority of our clinical studies.
Additional to this investment was the
continued build of our sales and marketing
infrastructure globally to support the
results, when delivered. Unfortunately, the
lowered dose sales growth delivered in the
first half negatively impacted our financial
performance relative to the additional
expenditures made.
ANNUAL REPORT 2017 I 10
DOSE SALES GROWTH
SALES REVENUE GROWTH
NET LOSS AFTER TAX
+5.4%
+0.8%
$26.3m
UNDERLYING
EBITDA
UNDERLYING
NET PROFIT AFTER TAX
$61.5m
$42.4m
With the clinical studies reporting out in
the second half, we made the necessary
adjustments to our cost base to reflect
those outcomes.
I certainly look forward to updating investors
on our future plans and strategies in
the coming months.
DRIVING REIMBURSEMENT IS
A KEY ORGANISATIONAL OBJECTIVE
We continue to make progress on our
strategy to ensure as many patients as
possible are treated with our product. We
expanded our Global Pricing, Reimbursement
and Market Access team during the year,
reflecting our commitment to driving
reimbursement expansion across markets,
with a focus on EMEA and APAC. As our
expansion plans into parts of South America
continue, the Company will seek to work
with government and private payers. For
example, in Brazil, the Decentralized Unified
Healthcare System (Sistema Único de Saúde,
SUS) is one of the largest public health
systems in the world, and provides medical
services to 60–80 per cent of the Brazilian
population, representing coverage of 51
million people in 2014. The Brazilian private
healthcare insurance system is the world’s
second largest.
In January, we saw the Centers for Medicare
and Medicaid Services (CMS) in the United
States (US) increase the reimbursement
available for SIR-Spheres microspheres by
approximately 3 per cent to approximately 3
per cent above our selling price.
In May, we received reimbursement
coverage in France. The French Ministry
of Health, Ministère des Affaires
sociales et de la Santé, agreed to
provide reimbursement for SIR-Spheres
microspheres for patients with colorectal
liver metastases who have failed on or
are intolerant to prior chemotherapy.
Reimbursement in France is specific to our
product and recognises the innovative
and specific product characteristics of this
trademarked product.
Offsetting the success we achieved in France,
the National Health Service (NHS) England
confirmed that the funding for SIR-Spheres
microspheres within the Commissioning
through Evaluation (CtE) scheme would
cease at the end of March 2017, after three
years of funding. This was disappointing, but
Sirtex is continuing its efforts to overturn
this decision for the benefit of our patients.
This decision did not impact private health
insurance reimbursement, where SIR-
Spheres microspheres is covered for most
primary and secondary forms of liver cancer.
We plan to utilise the results of our major
clinical studies which reported during the
year to drive new reimbursement where
possible. In particular, we see opportunities
for the SARAH study data to drive new
reimbursement across EMEA, and eventually
the US once regulatory clearance is achieved.
Within Asia, the results of the SIRveNIB study
will be important in our discussions with
government payers, given the very high
incidence of HCC caused by hepatitis B and
C viruses in these markets.
OPERATIONS
We continued to invest in our core
capabilities throughout the year as they
related to sales and marketing, regulatory
and quality assurance, medical and
administration.
Sales and marketing, our largest expenditure
item, was up 12.5 per cent on the prior year to
$89.3 million, or 38.1 per cent of sales.
We continued to focus on expanding the
awareness of our product across the clinical
community and invested significantly ahead
of the results from our three major studies
reported from April-June, including at the
major medical conferences where the data
was presented.
As we continue to increase our
manufacturing capability, expand into new
markets, market our clinical studies and
pursue new treatment indications, our
regulatory and quality assurance function
needs to keep pace with the increased
demands posed by government regulators,
customers and patients. Regulatory and
quality assurance expenses were up 18.9 per
cent to $4.6 million.
MEDICAL AFFAIRS – SERVICING
THE CLINICIANS
Medical expenditure grew 20.5 per cent to
$7.7 million during the year to educate the
many clinicians globally who use, or seek to
use our SIR-Spheres microspheres product
and wish to enquire on our clinical studies
program. One very large initiative established
by our skilled medical team has been the
RESiN registry.
The RESiN liver tumour patient registry in the
US continues to perform above expectations,
since its commencement in FY16. As at 30
June 2017, there were 34 active sites and
approximately 600 patients enrolled onto
the registry. This registry aims to recruit over
500 patients per annum with both primary
and secondary (metastatic) liver cancer, so
the performance has been very pleasing.
11 I SIRTEX
Sirtex at the 6th European Multidisciplinary Symposium on Liver-Directed Cancer Therapy using 90Y Microspheres in Rome, Italy.
We recently expanded the RESiN registry to
include sites from Australia and New Zealand,
with new sites up and running and other
sites planned.
The RESiN registry will provide considerable
benefits to Sirtex, including:
Clinical data – Rapidly generates real-world
data outside of a narrowly defined clinical
trial population
Reimbursement – May support decisions
by private payers and Medicare in
rarer tumour types
Regulatory clearances – Generates
post-marketing data that may support
regulatory applications
Clinician awareness – Structured scientific
publication strategy
Sirtex was a key sponsor of the 6th
European Multidisciplinary Symposium
on Liver-Directed Cancer Therapy using
90Y Microspheres in Rome, Italy held
in November. This two day, bi-annual
symposium attracts hundreds of clinicians
and key opinion leaders in the field of
radioembolisation from across Europe,
Asia and the US to discuss the latest
advances in the field.
MANUFACTURING AND SUPPLY
CHAIN
Sirtex has manufacturing capabilities
in Singapore as well as Wilmington,
Massachusetts and now in Frankfurt,
Germany. These facilities are close to major
transport hubs, allowing for efficient dispatch
of our product across the Americas, EMEA
and Asia Pacific regions.
We were pleased to commence commercial
supply from our state-of-the-art Frankfurt
facility during June. This occurred later
than originally anticipated owing to some
delays in obtaining the requisite regulatory
clearances. The Frankfurt facility will supply
the EMEA region. I am pleased to report
that to date we have not encountered any
significant issues in the commencement
of commercial supply into this important
region for Sirtex.
Given the very short half-life of SIR-
Spheres microspheres (64.1 hours), we have
invested significant time and resources
over the years to optimise our logistical
and supply infrastructure, to now cover
over 1,090 treatment centres globally. We
have demonstrated the ability to scale our
business over time to meet the needs of our
growing SIR-Spheres microspheres franchise,
while preserving our gross margins.
We pride ourselves on the ability to meet
our customer requirements in a timely
manner. During the 2017 financial year,
approximately 97.5 per cent of commercial
doses sold reached the patient/hospital
no later than 30 minutes from the delivery
time stipulated.
INFORMATION TECHNOLOGY
This year our global information technology
(IT) team successfully rolled out Phase 2 of
our SAP Enterprise Resource Planning (ERP)
solution across all three manufacturing
sites. This has improved the accuracy
and timeliness of data across functions
and is assisting in monitoring production
operations, from ordering to logistics, in
real time. Access to real time data allows
for efficiencies in production scheduling,
assessing of capacity utilisation, product
defect analysis, as well as improved
inventory control.
In the past year our IT team has relocated our
email platform onto a subscription-based
service that reduces our reliance, risk and
cost of on-premise equipment. We have also
shifted further into a cloud-based platform,
which is running some internal business
workloads, but most importantly the Sirtex
corporate website, bringing performance
improvements and uptime capabilities
that could not be realised with on-premise
equipment. In FY18 we will continue to
use and migrate other lines of business
applications onto the cloud.
We continued to refine and improve the
content on our website, making it easier
for key stakeholders to obtain information
on Sirtex. This included further refinements
to the way we present information to our
investors, clinicians, patients and the media.
With particular reference to the Media
section of the website, we have significantly
increased the available information on our
Company and products to facilitate a greater
level of understanding for news articles and
feature stories on Sirtex.
RESEARCH AND DEVELOPMENT
During the reporting period our Research
& Development (R&D) expenses were $10.6
million, up 21.1 per cent on the prior period,
representing 4.5 per cent of sales.
In February, Sirtex reviewed its R&D activities
to align with its redefined strategic direction.
This resulted in the Company electing to
wind down and then cease the development
of the Carbon-Cage Nanoparticles (CCN),
Polymer-Coated Nanoparticles (PCN), and
ANNUAL REPORT 2017 I 12
radioprotector programs beyond existing
contractual obligations. Where possible,
those assets will be divested. For the Histone
Inhibition Program (HIP), Sirtex intends to
complete the Phase 1 safety and toxicity
study for its lead compound STC314, which
commenced in the second half of the
financial year and is expected to report
findings in the second half of next financial
year. Once these results are available, we will
conduct an evaluation of our commercial
options for this program.
Our remaining R&D capability will be directed
towards product enhancements and user
interface enhancements associated with SIR-
Spheres microspheres.
CLINICAL STUDIES
During 2017, we reported the clinical findings
from the combined SIRFLOX/FOXFIRE/
FOXFIRE Global clinical study in metastatic
colorectal cancer (mCRC) representing
1,103 patients and the SARAH and SIRveNIB
studies in HCC, which recruited 467 and 360
patients, respectively.
These studies were unique in a number of
ways. Firstly, the combined SIRFLOX study
was the largest ever interventional oncology
(IO) study comparing a liver-directed
therapy, namely SIR-Spheres microspheres,
in combination with standard of care
chemotherapy and biologic therapy in
first-line mCRC for patients with liver-only or
liver-dominant disease.
The SARAH study was the largest IO study
ever to compare the current (and only)
standard of care chemotherapy agent
sorafenib with a liver-directed therapy
in HCC. While SIRveNIB, which was of a
similar design to SARAH, was the largest
ever study to examine a liver-directed
therapy versus sorafenib in a predominately
Asian population.
A single remaining study, known as
SORAMIC, which is examining the
combination of SIR-Spheres microspheres
with sorafenib in 420 patients across Europe,
is due to report findings in the first half
of the 2018 calendar year. The fact all our
studies completed recruitment and have
mostly reported findings is an incredible
achievement. Sirtex would like to thank all
those hospitals, clinicians, and of course our
patients who participated in these ground-
breaking studies.
SIRFLOX/FOXFIRE/FOXFIRE
GLOBAL STUDIES IN METASTATIC
COLORECTAL CANCER
In May, the results of our major combination
study in mCRC, SIRFLOX/FOXFIRE/FOXFIRE
Global, was released in abstract form and
the results presented as an oral abstract at
the American Society of Clinical Oncology
(ASCO) annual meeting in June.
The primary endpoint of overall survival (OS)
showed no statistically significant difference
between SIR-Spheres microspheres plus
chemotherapy versus chemotherapy alone
(Hazard Ratio (HR) = 1.04; 95% Confidence
Interval (CI) 0.90-1.19, p=0.609) in first-line
mCRC patients.
Additionally, there was no statistically
significant difference in overall progression-
free survival (PFS) between SIR-Spheres plus
chemotherapy versus chemotherapy alone
(HR=0.90, 95% CI 0.79-1.02, p=0.108).There
was also no statistically significant difference
in OS in either the liver-only disease and
liver-dominant disease sub-groups.
We were disappointed that the combined
analyses did not meet the primary endpoint
of an OS benefit in these first-line patients
and that no statistically significant survival
benefit was observed in the pre-specified
sub-groups, including those patients with
metastatic disease confined to their liver.
SIR-Spheres microspheres will continue to
be used clinically for those patients who are
unable to tolerate, or progress on standard
chemotherapy regimens. Current US and
European treatment guidelines supporting
‘salvage use’ of SIR-Spheres microspheres are
expected to remain unchanged.
However, an exploratory analyses of the
combined SIRFLOX and FOXFIRE Global
studies (n=530 and n=209, respectively)
showed that for patients with a right-sided
primary tumour, median OS was significantly
improved with the addition of SIR-Spheres
microspheres to standard chemotherapy
versus chemotherapy alone (22.0 vs. 17.1
months, respectively; p=0.007; HR = 0.64
(95% CI: 0.46-0.89)), but not for patients with
a left-sided primary tumour (24.6 vs. 25.6
months; p=0.279; HR = 1.12 (95% CI: 0.92-1.36)).
This data was subsequently presented at the
19th European Society for Medical Oncology
(ESMO) World Congress on Gastrointestinal
Cancer (WCGIC) in Barcelona, Spain.
Professor Guy van Hazel, Clinical Professor
of Medicine at the University of Western
Australia and Co- Principal Investigator on
the SIRFLOX study, presented the study data.
There is now increased evidence that
supports primary tumour location (left
side or right side) as being an important
prognostic factor in both early and advanced
13 I SIRTEX
colorectal cancer. Tumours that arise in
the right side of the colon are clinically and
biologically distinct from tumours on the left
side of the colon. The incidence of right-
sided primary colon cancers averages 38% in
mCRC patients, based on clinical studies and
population-based analysis.
Colon cancer patients who present with
a right-sided primary tumour in their
colon are clinically more difficult to treat,
being less responsive to standard of care
chemotherapies and biologic agents.
Approximately 24 per cent of patients who
were enrolled in the SIRFLOX and FOXFIRE
Global studies, where this information was
prospectively collected, had a right-sided
primary colon cancer.
The statistically significant 4.9 month
OS benefit observed in patients who
received SIR-Spheres microspheres is
clinically meaningful and subject to further
confirmatory analyses, coupled with
additional supporting evidence of this
OS benefit from the FOXFIRE study. Such
additional supporting evidence may support
consideration of right-sided liver-only or
liver-dominant mCRC patients for SIR-
Spheres microspheres treatment.
SARAH AND SIRVENIB STUDIES
IN HEPATOCELLULAR CARCINOMA
In April, the results of the SARAH study were
presented at the European Association for
the Study of the Liver, International Liver
Congress™ by Professor Valérie Vilgrain
MD, PhD. Professor Vilgrain is the Principal
Investigator of the SARAH study, Head of
Department of Radiology, Beaujon Hospital,
AP-HP and Professor at the Université Paris
Diderot, Sorbonne Paris Cité, France. The
primary endpoint of the study, which was
to show that SIR-Spheres microspheres
was superior to sorafenib in advanced HCC
patients, was not met.
In patients who were randomised to receive
treatment, the so-called Intention-To-Treat
(ITT) group, the median OS in the SIR-
Spheres microspheres arm of 8.0 months
versus 9.9 months in the sorafenib arm was
not significantly different (HR = 1.15; 95% CI:
0.94-1.41; p=0.18). However, 27 per cent of
patients who were randomised to receive
SIR-Spheres microspheres did not ultimately
receive therapy, which impacted results.
The study investigators therefore examined
those patients who actually received SIR-
Spheres microspheres, the so-called per-
protocol (PP) group. For this comparison, the
median OS in the SIR-Spheres microspheres
arm was identical to sorafenib (9.9 months,
HR = 0.99; 95% CI: 0.79-1.24; p=0.92).
Significantly fewer patients treated with SIR-
Spheres microspheres had any treatment-
related side effects at all (76.5% versus 94.0%
for sorafenib; p<0.001), and these were also
less severe (grade ≥3; 40.7% versus 63.0%,
respectively; p<0.001). Patients treated with
SIR-Spheres microspheres who reported
treatment-related side effects experienced
a median of only five such events over the
course of the SARAH study, compared to a
median of 10 events in those who received
sorafenib (p<0.001).
Quality of Life (QoL) analysis showed patients
treated with SIR-Spheres microspheres
maintained their health status over the
duration of the SARAH study, whereas
patients receiving sorafenib reported a
significant and sustained decline in QoL
(group effect: p=0.005; time effect: p<0.001;
between group difference increase over
time: p=0.045).
We were very pleased with the SARAH
results, and we can now market these
important findings globally, excluding the
US and Taiwan where we are not approved
for HCC. As announced, we plan on filing
for FDA clearance in the first half of FY18
in support of these results. In Asia, our
marketing efforts have been complemented
by the findings of SIRveNIB, which
showed a similar outcome to SARAH in an
Asian population.
In May, the results of the SIRveNIB study
were released in abstract form and the results
presented as an oral abstract at the ASCO
annual meeting in June by Professor Pierce
Chow, Principal Investigator of the SIRveNIB
study, and Senior Consultant Surgeon at the
National Cancer Centre Singapore and the
Singapore General Hospital.
OVERALL SURVIVAL FOR mCRC PATIENTS
LEFT-SIDED PRIMARY TUMOURS
RIGHT-SIDED PRIMARY TUMOURS
TRANSVERSE COLON
SPLENIC FLEXURE
MIDGUT (RIGHT-SIDED)
RIGHT COLON
(ASCENDING)
LEFT COLON
(DESCENDING)
HINDGUT (LEFT-SIDED)
CAECUM
RECTUM
SIGMOID COLON
L
A
V
I
V
R
U
S
L
L
A
R
E
V
O
F
O
Y
T
I
L
I
B
A
B
O
R
P
1.0
0.8
0.6
0.4
0.2
0.0
TIME FROM RANDOMIZATION (MONTHS)
0
AT RISK (N) 264
276
12
199
223
24
130
150
36
47
54
48
20
22
60
12
7
72
2
2
84
0
1
96
0
0
98
81
12
78
51
24
43
15
36
14
6
48
5
2
60
3
1
72
1
0
84
1
96
0
n
MEDIAN SURVIVAL (95% CI)
CHEMO + SIRT
CHEMO
264
276
24.6 MONTHS (22.3–26.7)
26.6 MONTHS (24.8–29.9)
HAZARD RATIO
1.12
(0.92–1.36) p=0.279
CENSORED
CHEMO + SIRT
CHEMO
n
98
81
MEDIAN SURVIVAL (95% CI)
22.0 MONTHS (18.9–25.6)
17.1 MONTHS (13.9–19.9)
HAZARD RATIO
0.64
(0.46–0.89) p=0.007
CENSORED
ANNUAL REPORT 2017 I 14
Sirtex at the 2017 EASL International Liver
Congress™ where the SARAH clinical data
was presented.
The primary endpoint of the study was
not met. In patients who actually received
treatment (PP) median OS in the SIR-
Spheres microspheres arm of 11.3 months
versus 10.4 months for sorafenib was not
significantly different (p=0.273; HR = 0.86
(95% CI: 0.66-1.13)).
In patients who were randomised to receive
treatment (ITT) the median OS in the SIR-
Spheres microspheres arm was 8.5 months
versus 10.6 months in the sorafenib arm and
this was not significantly different (p=0.360;
HR=1.17 (95% CI: 0.88 to 1.42)). In other words,
for both the ITT and PP populations, there
was statistically no difference in the OS
conferred by SIR-Spheres microspheres in
comparison to sorafenib.
The global opportunity for HCC in our
current markets based on these findings
represents around 61,000 patients annually.
However, patients treated with SIR-Spheres
microspheres showed a significantly
better tumour response rate in the treated
population versus sorafenib (23.1% versus
1.9%, p<0.001), and a significantly fewer
total number of adverse events (27.7%
versus 50.6%, p<0.0001) and severe adverse
events versus sorafenib (20.8% versus
35.2%, p=0.0091).
ONGOING CLINICAL STUDIES
Sirtex continues to fund a number of
smaller clinical studies, which are typically
investigator-initiated trials.
In October, we announced the launch
of a new randomised controlled clinical
study of SIR-Spheres microspheres in
patients with unresectable intrahepatic
cholangiocarcinoma, also known as iCCA.
SIR-SPHERES Y-90 RESIN MICROSPHERES IS SIGNIFICANTLY
BETTER TOLERATED THAN SORAFENIB
54% LESS TREATMENT-RELATED AEs
SIGNIFICANTLY FEWER PATIENTS
WITH TREATMENT-RELATED AEs
p<0.0011
94.0%
63.0%
76.5%
40.7%
)
%
(
E
A
≥
H
T
I
W
S
T
N
E
I
T
A
P
2,837
411
)
N
(
S
T
N
E
V
E
E
S
R
E
V
D
A
1,297
230
SIR-SPHERES Y-90 RESIN MICROSPHERES
PROVIDED SIGNIFICANTLY BETTER
QUALITY OF LIFE*
GROUP EFFECT, SIRT vs SORAFENIB
TIME EFFECT
BETWEEN-GROUP DIFFERENCE INCREASE OVER TIME
P=0.005
P<0.001
P=0.045
)
%
(
E
R
O
C
S
-
B
U
S
S
U
T
A
T
S
H
T
L
A
E
H
L
A
B
O
L
G
N
A
E
M
100
80
60
40
20
0
SIR-SPHERES Y-90 RESIN MICROSPHERES (N = 226*)
SORAFENIB (N = 216)
ANY GRADE
GRADE ≥3
ANY GRADE
GRADE ≥3
*INCLUDES 26 PATIENTS RECEIVING ONLY SORAFENIB INSTEAD OF SIRT
1FOR BOTH ANY GRADE AND GRADE ≥3
0
3
6
9
12
MONTHS SINCE RANDOMIZATION
SIRT
SORAFENIB
15 I SIRTEX
OVERALL SAFETY
SUBJECTS WHO EXPERIENCED AT LEAST:
ONE AE
60.0% (p <0.0001)
84.6%
ONE TREATMENT-RELATED AE
31.5% (p <0.0001)
74.7%
ONE ≥3 GRADE AE
27.7% (p <0.0001)
50.6%
ONE TREATMENT RELATED ≥3 GRADE AE
13.1% (p <0.0001)
37.7%
ONE SAE
20.8% (p=0.0091)
35.2%
ONE TREATMENT-RELATED SAE
4.6% (p=0.1715)
9.3%
SIRT (N=130)
SORAFENIB (N=162)
INCLUDES ADVERSE EVENTS (AES) AND SERIOUS ADVERSE EVENTS (SAES)
WITH ONSET DATE ON OR AFTER STUDY TREATMENT START DATE.
TREATMENT-RELATED AE OR SAE DEFINED AS THOSE WITH CERTAIN,
PROBABLE, POSSIBLE, OR MISSING RELATIONSHIP TO STUDY TREATMENT.
P VALUES WERE COMPUTED FOR COMPARISON BETWEEN TREATMENT ARMS
USING THE FISHER’S EXACT TEST.
SIRveNIB
TUMOUR RESPONSE RATE
INTENT-TO-TREAT
POPULATION
TREATED
POPULATION
p<0.001
p<0.001
23.1%
16.5%
SIRT
SORAFENIB
1.7%
1.9%
were no serious adverse events related to
SIR-Spheres microspheres. We are currently
assessing our clinical development options.
Our clinical expenses in FY17 were $11.8
million, up 10.3 per cent or 5.0 per cent
of sales. Our total investment, including
capitalised expenditure and excluding
amortisation expense was $24.9 million,
up 20.5 per cent.
REGIONAL GROWTH PERFORMANCE
IN 2017
During the year, Sirtex maintained a high
level of sales and marketing activity across
the three distinct regions. The number
of centres accredited to use our therapy
continued to expand across all three regions,
with the total number of treatment centres
globally expanding 9.0 per cent to 1,093.
A major focus has been on the results
of the major clinical studies, which were
progressively presented in the latter half of
the 2017 financial year.
The study, known as SIRCCA, is a prospective,
multi-centre, randomised, controlled clinical
study evaluating SIR-Spheres microspheres
preceding cisplatin-gemcitabine (CIS-
GEM) chemotherapy versus CIS-GEM
chemotherapy alone as a first-line treatment
of patients with unresectable iCCA.
Although a relatively rare disease, iCCA is
the second most common form of primary
liver cancer and starts in the bile duct, with
an annual incidence of approximately 5,000
patients in the US, which appears to be
increasing. Treatment options are limited and
survival is typically less than 12 months.
SIRCCA is expected to recruit 180 patients
and is being conducted in 30 centres across
Australia and Europe. The study is anticipated
to complete recruitment in late 2018.
Also in October, we announced the results
of our RESIRT study; an Australian-based,
single arm, dose escalation study in patients
with renal cell carcinoma (the most common
form of kidney cancer) that were not suitable
for curative therapy by surgical re-section,
ablation or other conventional techniques.
A total of 21 patients were treated with
SIR-Spheres microspheres in a serial
manner, across six dose-escalating cohorts.
In terms of initial efficacy of SIR-Spheres
microspheres, the best overall tumour
responses were: partial response 1/19 (5.3%),
stable disease 17/19 (89.5%) and progressive
disease 1/19 (5.3%).
In terms of safety data presented, the
intended doses were delivered without any
dose-limiting toxicity. Furthermore, there
THE AMERICAS
PERFORMANCE
DOSE SALES: Up 4.6% to 8,807
REVENUE: Up 0.9% to $186.9 million
YEAR IN REVIEW
The growth achieved in the Americas was
disappointing in light of the growth achieved
in prior periods. Our sales trajectory during
the period was impacted by the convergence
of multiple factors, including a decline in
referrals for SIR-Spheres microspheres
in salvage metastatic colorectal cancer,
increased competition for patients with liver-
directed therapies, and a lack of sustained
momentum in the use of SIR-Spheres
microspheres in higher treatment lines prior
to the delivery of the SIRFLOX/FOXFIRE/
FOXFIRE Global survival data. In May, we
announced a change to the Americas
leadership and have re-organised our sales
and marketing function in the Americas
to reset the foundations in that region for
enhanced future sales growth.
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 13.3 per cent to 639 treatment sites.
There were a number of important structural
changes in our key US market during the
year. In November, The Centers for Medicare
and Medicaid Services (CMS) increased the
reimbursement of SIR-Spheres microspheres
by 3 per cent for the 2017 calendar year. The
CMS final rule with comment period revises
ANNUAL REPORT 2017 I 16
REGIONAL UPDATE
THE AMERICAS
THE AMERICAS
EUROPE, MIDDLE
EAST, AFRICA
ASIA PACIFIC
DOSE SALES
8,807
up 4.6%
2,677
up 5.9%
1,094
up 11.3%
REVENUE
$186.9M
up 0.9%
$38.3M
down 1.6%
$9.1M
up 8.6%
the Medicare hospital outpatient prospective
payment system (OPPS) and the Medicare
ambulatory surgical center (ASC) payment
system for CY17.
The suspension of the 2.3 per cent
US Medical Device Excise Tax, which
represented a tax on our US product
revenues, continued throughout the
financial year. The tax is anticipated to re-
commence on 1 January 2018 although the
legislation to permanently repeal the tax is
currently before the US Senate.
In late November, revised National
Comprehensive Cancer Network (NCCN)
Clinical Practice Guidelines in Oncology for
colon and rectal cancer were published.
The revised guidelines have seen SIR-
Spheres microspheres re-classified from a
Category 3 level of evidence and consensus
to a Category 2A. The NCCN concluded
‘Consensus amongst panel members is
that arterially directed catheter therapy
and, in particular, yttrium-90 microsphere
selective internal radiation is an option in
highly selected patients with chemotherapy-
resistant/refractory disease and with
predominant hepatic metastases. Over time,
the revision to a Category 2A is expected to
positively impact discussions with clinicians.
As part of our strategy to build awareness of
our product among the medical community,
the Sirtex Americas team had a presence
at a number of important conferences
throughout the year including the Clinical
Interventional Oncology (CIO) meeting,
the Society for Interventional Radiology
(SIR) meeting, the World Congress on
Interventional Oncology (WCIO), the
American Society of Clinical Oncology –
Gastrointestinal (ASCO-GI) meeting and
the ASCO Annual Meeting. Such meetings
provide the opportunity to directly engage
with a large number of clinicians, and help to
build consensus among key opinion leaders.
EUROPE, MIDDLE EAST, AFRICA
PERFORMANCE
DOSE SALES: Up 5.9% to 2,677
REVENUE: Down 1.6% to $38.3 million
YEAR IN REVIEW
Across the EMEA region, we experienced
solid growth in several of our established
markets including Italy, Spain and Belgium
while Germany, our largest market, was
flat. Growth was impacted by changes to
reimbursement in the UK in the fourth
quarter, partially offset by strong initial dose
sales in France following the granting of
reimbursement. Revenue growth was lower
than dose sales growth principally due to
the negative impact of the Australian dollar
depreciation against the Euro, partially
offset by a greater percentage of dose sales
recorded in higher priced markets.
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 0.7 per cent to 308 treatment sites.
In February, the French Ministry of Health,
Ministère des Affaires sociales et de la
Santé, agreed to provide reimbursement for
SIR-Spheres microspheres for patients with
colorectal liver metastases who have failed
on or are intolerant to prior chemotherapy.
Reimbursement in France is specific to our
product and recognises the innovative
and specific product characteristics of this
trademarked product. The estimated annual
incidence of colorectal cancer in France
was approximately 41,000 cases in 2012. It
is also the country’s third most common
cause of cancer mortality, accounting for
approximately 17,000 deaths each year.
Since September 2013, limited funding for
SIR-Spheres microspheres has been available
via the Commissioning through Evaluation
(CtE) scheme across England. During the
year, the National Health Service England
confirmed that the funding for SIR-Spheres
microspheres within the CtE scheme would
cease at the end of March 2017. A decision
about whether to routinely fund SIRT by the
NHS could take up to 16 months from the
end of March 2017.
Sirtex continues to actively engage clinicians,
their professional societies and patient
groups in contesting this decision, directly
and via elected representatives, to NHSE.
Unfortunately for our patients at this
juncture, the funding deficiency remains.
The cessation of the CtE does not impact
private insurance coverage of SIR-Spheres
microspheres in the UK.
Throughout the year, our sales and
marketing team focused on a number of
key conferences including the European
Association for the Study of the Liver (EASL)
International Liver Congress™, where the
1093.000000
971.555556
850.111111
728.666667
607.222222
485.777778
364.333333
242.888889
121.444444
0.000000
17 I SIRTEX
GLOBAL TREATMENT CENTRES
8
2
6
4
1
7
5
9
7
9
1
9
3
0
0
,
1
3
9
0
,
1
2012
2013
2014
2015
2016
2017
SARAH data was presented. Additionally,
we attended the European Conference
on Interventional Oncology (ECIO),
the Global Embolization Symposium &
Technologies (GEST) meeting, and the 19th
World Congress on Gastrointestinal Cancer
(WCGIC). The EMEA team also worked
alongside our US colleagues at the major
global meetings, namely SIR, ASCO and
ASCO-GI meetings.
ASIA PACIFIC
PERFORMANCE
DOSE SALES: Up 11.3% to 1,094
REVENUE: Up 8.6% to $9.1 million
YEAR IN REVIEW
Regional dose sales growth during the
year was driven by a solid performance
across several key Asian markets including
Singapore, Taiwan and India. We re-entered
South Korea during the year, following
the appointment of a new distributor
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
grew 9.8 per cent to 146 treatment sites.
Our sales and marketing team also attended
a number of important scientific conferences
during the year, including the APPLE
meeting in Hong Kong, the Best of ASCO
meeting in Singapore, and the major global
meeting ASCO, where Professor Pierce Chow
presented the Asian clinical study SIRveNIB.
Sirtex booth in preparation for the American Society of Clinical Oncology (ASCO)
Annual Meeting in June.
LOOKING AHEAD
I am excited by the potential of our business
to deliver on its long term growth objectives.
The reshaping of our business following the
results of the clinical studies is specifically
designed to drive efficiencies, productivity
and effectiveness across the organisation as
we seek to expand our global footprint and
treat more liver cancer patients.
We now have a clear mission and vision
in which to execute our short, medium
and longer term strategies. Our business
remains in a strong financial position, which
affords us the opportunity to continue to
reward shareholders.
I look forward to keeping you abreast of our
progress throughout the 2018 financial year.
ANDREW McLEAN
CHIEF EXECUTIVE OFFICER
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
ANNUAL REPORT 2017 I 18
At Sirtex, we hold in high regard our
Environmental, Social and Governance
(ESG) responsibilities through open
and transparent disclosure to our key
stakeholders including customers,
clinicians, patients, shareholders and
the communities in which we operate.
Our approach to ESG issues reflects the
risks and opportunities inherent in the
manner by which we conduct our business
and our specific areas of focus.
PROMOTING WORKPLACE HEALTH,
SAFETY AND THE ENVIRONMENT
Sirtex is committed to providing a safe and
healthy working environment as set out in
the Health, Safety and Environment (HSE)
Policy for all persons in the workplace,
including employees, contractors
and visitors, and to minimising our
environmental footprint.
This is achieved by management and
employees working together to identify,
assess and suitably control hazards that may
cause injury and/or illness and may adversely
impact the environment. This commitment
is emphasised at all levels, including the
Sirtex Board which receives a monthly HSE
report summarising our performance, and a
biannual presentation detailing the progress
of our HSE plans across the business.
During the year, only a single lost time injury
(LTI) was recorded across our entire global
workforce, which is testament to the focus
the organisation devotes to workplace safety.
friendly design. Similarly, our Singapore
offices located at Science Park II, are housed
in a business complex highly rated in terms of
environmental performance.
We continue to comply with all relevant
legislation, standards and other requirements
to which our organisation subscribes. We
closely monitor regulatory changes in the
countries where we operate, and adapt to
change as quickly as possible.
As Sirtex produces a radioactive medical
product, the Company has been extremely
diligent in the design of its production
facilities, the equipment used and controls
put in place to mitigate risks and comply with
all relevant safety standards. Sirtex operations
are not subject to significant environmental
regulation under the law of any of the
jurisdictions in which it operates.
Sirtex offices strive to be energy efficient
and environmentally friendly. Our global
headquarters, situated in North Sydney, are
in a building awarded a 5 Star Green Star
rating, a 5 Star NABERS Energy Rating (Base
Building) and a 3.5 NABERS Water Rating.
Sirtex European headquarters, in Bonn, are
located in a building by ‘Rheinwerk3’, which
was awarded a platinum status by Deutsche
Gesellschaft für Nachhaltiges Bauen
(German Sustainable Building Council) for its
particularly sustainable and environmentally
We remain focused on reporting and
investigation of all safety incidents,
environmental aspects and any hazardous
conditions. An updated Incident and Hazard
Form is available in print and online, to
facilitate easier and faster reporting. This, in
turn, helps us formulate plans for corrective
actions to prevent recurrence and improve
our HSE systems.
World Safety Day was celebrated on 28 April
2017 across all Sirtex sites globally and was
marked by the launch of a HSE book Safety
First. This book summarises key information
from a range of HSE Standard Operating
Procedures applicable across Sirtex. It has
been designed to serve as a quick reference
guide to provide all persons in the workplace
with succinct information about how we
practice safety at Sirtex, and how everyone
can contribute.
Several other health and safety initiatives
were carried out during the year. We
completed all the HSE Standard Operating
Procedures required under our HSE System
Development Plan. We developed a variety
of checklists relating to specific topics
and safety areas, to serve as simplified risk
Social
Governance
Environmental
ESG
PROFILE
292.0
262.8
233.6
204.4
175.2
146.0
116.8
87.6
58.4
29.2
0.0
WORKFORCE STATISTICS
numbers since 2016
4.7% Growth in employee
45% Women represented
in the Sirtex workforce
EMPLOYEE NUMBERS GLOBALLY
OVER 5 YEARS
4
4
1
8
7
1
3
1
2
6
4
2
9
7
2
2
9
2
2012
2013
2014
2015
2016
2017
19 I SIRTEX
assessment tools. A concise on-the-job
risk assessment notebook entitled Take
5 Think Safe was issued, offering a simple
five-step methodology to help us all develop
a culture where risk assessment is a normal
practice, and people’s safety comes first.
The Sydney offices now have an Emergency
Procedures flipchart on each desk, and there
are plans to implement this project at all
other Sirtex sites. Our internal audit program
continues to be rolled out during 2017-2018,
with each factory and office site audited at
least annually to formally assess our HSE
performance, and identify and correct any
gaps at local and corporate levels.
Sirtex pays careful consideration to the
environmental impact of its activities. The
business has implemented the requirements
of the Globally Harmonised System for the
Classification and Labelling of Chemicals,
and disposes of waste chemicals in an
environmentally responsible manner. To
reduce the environmental impact of our
packaging materials, we introduced 100%
recyclable cardboard inserts to replace
packing peanuts, allowing for a higher rate
of recycling by our end customers. Each of
our sites has developed a recycling program,
with a waste minimisation plan and a variety
of protocols for specific types of waste.
WORKFORCE DISTRIBUTION AND FUNCTION
30%
EUROPE,
MIDDLE EAST
& AFRICA
SALES & MARKETING
148
%
THE AMERICAS
41%
ASIA PACIFIC
29%
292
OPERATIONS
39
ADMINISTRATION
CLINICAL AFFAIRS
MEDICAL, REGULATORY AFFAIRS,
TRAINING & DEVELOPMENT
PEOPLE & CULTURE
COMPLIANCE, SAFETY & QUALITY
RESEARCH & DEVELOPMENT
GLOBAL PRICING,REIMBURSEMENT
& MARKET ACCESS
GLOBAL MARKETING &
MEDICAL COMMUNICATIONS
27
20
21
8
12
5
4
8
OUR PEOPLE
We are proud of the culture we have built and
the values we hold as an organisation. Sirtex
employees are critical to achieving business
and organisational success.
250
200
We are strong believers in our people, and
the expertise they bring to the organisation.
We seek to develop a collegiate workplace,
which actively fosters productivity, efficiency,
idea generation and innovation across all
levels of the business. We have implemented
a number of important policies that
empower our employees to achieve their
career goals. The Sirtex Code has assimilated
these important codes and policies into
a single easy-to-read document. The
three broad categories of policies relate
to our operating environment, corporate
regulations to which we are subject,
and policies that relate more directly to
individual employees.
50
100
150
MEDICAL, REGULATORY AFFAIRS, TRAINING & DEVELOPMENT - 21
The Sirtex Code assists employees in
a number of ways, but particularly as a
source document, it provides a ‘quick
conduct test’ to easily allow our people
to assess what is the right thing to do in
challenging situations.
0
GLOBAL PRICING, REIMBURSEMENT AND MARKET ACCESS - 4
GLOBAL MARKETING AND MEDICAL COMMUNICATIONS - 8
At the end of the 2017 financial year, our total
workforce of 292 talented people was located
across more than 20 countries, representing
growth of 4.7 per cent over the prior period.
SALES AND MARKETING - 148
OPERATIONS - 39
ADMINISTRATION - 27
CLINICAL AFFAIRS - 20
PEOPLE & CULTURE - 8
COMPLIANCE, SAFETY & QUALITY - 12
R&D - 5
ANNUAL REPORT 2017 I 20
Community support: We play an active role in the medical, scientific, patient and research
communities that we collaborate with worldwide.
PATIENTS
RESEARCH
MEDICAL
LOCAL
Improve access and awareness
of our therapy.
Enhance the quality of life for
liver cancer patients and their
families.
Enhance and expand the
knowledge of researchers
in microsphere and related
technologies.
Improve the skills and
knowledge of medical
professionals who use our
product.
Expand knowledge of our
technology platform to
support the next generation of
biomedical researchers.
Foster the next generation of
medical specialists who will use
our product.
Support community efforts
where our staff work and live.
Support initiatives that
contribute to our goal of making
cancer a chronic disease.
Women represent 45 per cent of the Sirtex
workforce. Our workforce distribution shows
41 per cent of our dedicated employees are
located in the Americas, 30 per cent located
in EMEA and 29 per cent located in APAC.
Our workforce operates across nine key
functional areas of the business, with 54 per
cent of our employees engaged within a
sales and marketing function at Sirtex.
Our People Strategy seeks to engage,
identify and recruit talented individuals to the
business, while ensuring alignment with our
core values and beliefs from the employee
induction program.
Our employee engagement programs
continued throughout FY17. Growing with
Sirtex is a series of integrated activity streams,
which aim to methodically build a team of
highly skilled and capable individuals, who
will continue to develop with Sirtex. Our
Onboarding, Professional Development
Framework and Continuing Professional
Development Programs have commenced
their implementation phase.
THE IMPORTANCE OF DIVERSITY
The concept of diversity has four main
tenets: understanding, acceptance, respect
and appreciation. A workplace that values
and respects its diversity and is free from
discrimination or bias is more productive.
There is strong evidence globally that
diversity offers businesses and their
employees a range of benefits, both short
term and long term.
Sirtex is committed to developing a culture
of diversity. We recognise the benefits
of diversity in terms of enhancements to
productivity and efficiency that arise from
facilitating any individual, irrespective
of gender, ethnicity, sexual orientation,
disability, age, marital status and religious
background, to reach their full potential. We
believe a diverse workforce is one of the keys
to achieving long term business growth and
sustainability.
We have three key objectives relating to
diversity. Specifically, we provide updated
online training to all current and new staff
on our Economic, Environmental and
Social Sustainability Report and Diversity
Policy. Secondly, we aim to include at least
one female candidate in the short list of
applicants for every management role. Our
target is to increase female participation
across all levels of management from 36 per
cent to 40 per cent over three to five years.
In 2016 we launched the Leadership and
Management Development Program. Part
of this extensive and ongoing program is to
identify females who should participate in
the program with a target of 40 per cent of
the participating population being women.
This is in addition to the Growing with Sirtex
career development program introduced in
2015. Our Growing with Sirtex program, now
in its second year of implementation, and
part of the Sirtex Professional Development
Framework has been designed to strengthen
the dialogue between individuals and
managers and foster a continuous cycle
of alignment, planning, feedback and
review to support and enhance personal
growth in line with the Sirtex strategy and
regional objectives.
Finally we continually seek to improve our
approach to flexible working to make it
more accessible and culturally acceptable
for all employees. A large percentage of our
employees are not based in any one of our
three main offices across the globe.
SIRTEX IN THE COMMUNITY
We play an active role in the medical,
scientific, patient and research communities
that we collaborate with worldwide.
Sirtex is an active supporter of efforts
to raise money, support and awareness
for scientific and medical research
innovation in the community. We support
emerging and established researchers
dedicated to developing advanced new
interventional therapies. Our focus in this
area is on translational research and the
practical application of new technologies,
innovation and insights.
Sirtex has been a major sponsor of the
New South Wales Premier’s Awards for
Outstanding Cancer Research over a
number of years, which recognises and
celebrates excellence and innovation in
cancer research.
THE SIRTEX CORPORATE
GIVING PROGRAM
Under the Sirtex Corporate Giving Program,
all charitable contributions made during the
year are recorded internally in an appropriate
register as well as being publically disclosed.
This requirement is part of the Sirtex Anti-
Bribery, Anti-Corruption Policy. The annual
disclosure of charitable contributions
21 I SIRTEX
Diversity at Sirtex
can be found within the Investors section
of our website.
The program is focused on the impact
cancer has across time. Sirtex adopts a
cancer journey approach to ensure its
charitable contributions are made to
programs within each of the following four
main categories: awareness, research, patient
treatment and survivorship, and end of life
for those individuals not fortunate enough to
experience a cure.
During the 2017 financial year, Sirtex made
charitable donations of $0.34 million,
equivalent to 0.6 per cent of underlying
pre-tax profit. This level of corporate
giving remains consistent with our global
healthcare peers (0.7%) and within the 0.75%
target we have set for ourselves.
Sirtex is committed to supporting volunteer
groups that help patients and their families
around the world. One of our longer term
high-profile partnerships is the collaboration
with the international group, YES Beat Liver
Tumors. YES seeks to change the face of
primary liver cancer or advanced cancer
that has spread to the liver by advocating
for increased funding for cancer research,
educating liver cancer survivors about
possible surveillance and treatment options,
and by being a point of contact and support
for those affected by liver cancer.
At our Americas national sales meeting
in Santa Barbara, California, we raised in
excess of US$20,000 for YES through a
4-kilometre fun run.
VALE JOHN PHILIP (1977-2017)
During the year, we were saddened by
the loss of one of our own, Sirtex Global
Information Technology Manager, John
Philip. John had been bravely fighting cancer
for an extended period of time and finally
succumbed to his disease in late May. John
was instrumental in driving technological
change at Sirtex, and orchestrated the
implementation of our current ERP
management information system. He was
an integral member of our Sirtex ‘DeLivers’
cycling team as part of The Ride to Conquer
Cancer tour, raising in excess of $85,000 for
the Chris O’Brien Lifehouse, where John
spent much of his final days with his loving
family. He will be greatly missed.
GOVERNANCE
The Board is committed to achieving and
demonstrating the highest standards
of corporate governance. Sirtex’s key
governance principles and practices are
outlined in our Corporate Governance
Statement for the 2017 financial year,
which is available on our website at:
http://www.sirtex.com/au/
investors/company-overview/
corporate-governance/
In addition, we have provided all of our Board
and Committee charters, along with our
Sirtex Code of Conduct (The Sirtex Code)
summarising our Corporate Policies. This
ensures stakeholders have complete visibility
as it relates to our corporate responsibility,
how we govern the way our Directors and
employees operate, and how Sirtex seeks to
build and maintain a strong reputation for
integrity in our business practices. These are
available at http://www.sirtex.com/au/
investors/company-overview/
1
CANCER AWARENESS,
SCREENING, PREVENTION
AND ADVOCACY
2
CANCER RESEARCH
3
CANCER TREATMENT
4
END OF LIFE
Bowel Cancer Australia
Cancer Council NSW
Unicorn Foundation
NSW Premier’s Awards
for Cancer Research
Chris O’Brien Lighthouse
LifeCircle
John Logan Foundation
BOARD OF DIRECTORS
ANNUAL REPORT 2017 I 22
Richard Hill
Chairman (Non-Executive)
BA, LLB (Sydney), LLM (London)
Neville Mitchell
Director (Non-Executive)
CA, BCom
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.
Responsibilities
Member of the Audit Committee, the
Risk, Health and Safety Committee and
the Remuneration Committee
Years with Sirtex
13 years
Experience and Expertise
Mr Mitchell was appointed a Director
in April 2017. He is a qualified Chartered
Accountant with over 25 years of
experience as a Chief Financial Officer
at Cochlear Limited (ASX:COH). During
that time, Mr Mitchell was responsible
for all financial aspects of the business,
including ASX compliance and
governance, banking, acquisitions and
mergers, together with forecasting/
budgetary management, legal and
company secretarial.
Responsibilities
Member of the Audit Committee,
Member of the Remuneration
Committee and the Risk, Health
and Safety Committee
Years with Sirtex
3 months
Dr John Eady
Deputy Chairman (Non-Executive)
BSc (Hons), PhD, FTSE
Experience and Expertise
Dr Eady was appointed a Director in
March 2005. He spent most of his
career in a range of senior executive
positions with CRA/Rio Tinto and Pacific
Dunlop, in Australia and overseas. He
has broad Board experience with start-
up and established companies, and
with government bodies. Dr Eady is a
Fellow of the Academy of Technological
Sciences and Engineering and
consultsextensively on business
leadership and improvement.
Responsibilities
Chairman of the Remuneration
Committee, Member of the Audit
Committee and the Risk, Health and
Safety Committee
Years with Sirtex
12 years
Grant Boyce
Director (Non-Executive)
CA, BCom
Dr Katherine Woodthorpe AO
Director (Non-Executive)
BSc (Hons), PhD, FAICD
Experience and Expertise
Mr Boyce was appointed a director
in December 2002. He is a Chartered
Accountant with his own practice and
was previously a partner with Ernst and
Young where he worked in their Perth
and New York offices. Mr Boyce worked
advising multiple clients including ASX
listed entities. He was board member
and Chairman of the West Australian
Institute of Sport for over 10 years.
Responsibilities
Chairman of the Audit Committee,
Member of the Remuneration
Committee and the Risk, Health and
Safety Committee
Experience and Expertise
Dr Woodthorpe was appointed a director
in September 2015. Dr Woodthorpe
was the Chief Executive of AVCAL, the
Australian Private Equity and Venture
Capital Association for seven years. She
has a deep knowledge of the private
equity and the superannuation industry
in the financial sector and a strong track
record in a broad range of technology
orientated industries.
Responsibilities
Chairperson of the Risk, Health and
Safety Committee, Member of the Audit
Committee and the
Remuneration Committee
Years with Sirtex
14 years
Years with Sirtex
2 years
Andrew McLean
Executive Director and
Chief Executive Officer
MBA, BEc
Experience and Expertise
Mr McLean was appointed Chief
Executive Officer of Sirtex on 5 June
2017 and Executive Director on 16 June
2017. Mr McLean has over 20 years
of experience with a track record of
success in regional and global leadership
roles. Mr McLean’s most recent
roles were CEO, Applied Sterilisation
Technologies and Laboratories with
Synergy Health plc, and with STERIS
Corporation (NYSE:STE).
Responsibilities
Daily management decisions
and implementation
of the Company’s
strategic plans
Years with Sirtex
1 month
23 I SIRTEX
23 I SIRTEX
KEY MANAGEMENT PERSONNEL
Darren Smith MBA, BBus, FCPA– 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 AGSM, is a fellow of CPA Australia and
an AICD member.
Responsibilities
Mr Smith has overall responsibility for the
finance function of the group including
IT and human resources.
Years with Sirtex
9 years
Nigel Lange – Chief Commercial Officer
Experience and Expertise
Mr Lange was appointed Chief Commercial
Officer in June 2017. Prior to his current role
he held roles as the Interim Chief Executive
Officer of Sirtex, Chief Operating Officer
of Sirtex and Chief Executive Offer of Sirtex
EMEA. Mr Lange joined Sirtex U.S. 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
15 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
11 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.
Responsibilities
Daily management decisions and
implementation of the Company’s
strategic plans.
Years with Sirtex
11 years
*Ceased employment on 13 January 2017
FINANCIAL REPORT
FOR THE YEAR ENDED 30 JUNE 2017
SIRTEX MEDICAL LIMITED
CONSOLIDATED ENTITY
ABN 35 078 166 122
ANNUAL REPORT 2017 I 24
CONTENTS
25 DIRECTORS’ REPORT
45 AUDITOR’S INDEPENDENCE DECLARATION
46 DIRECTORS’ DECLARATION
47 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
88 ADDITIONAL STOCK EXCHANGE INFORMATION
89 COMPANY INFORMATION
25 I SIRTEX
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
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 2017.
DIRECTORS
The Directors of Sirtex Medical Ltd during the financial year and until the date of this report are Mr R Hill (Chairman), Dr J Eady,
Mr G Boyce, Dr K Woodthorpe AO, Mr N Mitchell, Mr A McLean and Mr G Wong (ceased employment on 13 January 2017).
Information on the directors is presented in the Annual Report. This information includes the qualifications, experience and special
responsibilities of each director. It also gives details of the directors’ other directorships. Information on the Company Secretary
including his qualifications and experience is presented in the Annual Report.
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
Risk, Health and Safety
Committee
Held
Attended
Held
Attended
Held
Attended
Held
Attended
15
15
15
15
3
1
5
15
15
15
15
3
1
5
8
8
8
8
1
-
-
8
8
8
8
1
-
-
6
6
6
6
1
-
-
6
6
6
6
1
-
-
5
5
5
5
-
-
-
5
5
5
5
-
-
-
R Hill (Chairman)
Dr J Eady
G Boyce
Dr K Woodthorpe
N Mitchell
A McLean
G Wong
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® Y-90 resin 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 12,578 doses worldwide.
During 2017, we reported the clinical findings from the combined SIRFLOX/FOXFIRE/ FOXFIRE Global clinical study in metastatic
colorectal cancer (mCRC) representing 1,103 patients and the SARAH and SIRveNIB studies in hepatocellular carcinoma (HCC), which
recruited 467 and 360 patients, respectively.
In April 2017, the results of the SARAH study were presented at the European Association for the Study of the Liver, International
Liver Congress™. The primary endpoint of the study, which was to show that SIR-Spheres microspheres was superior to sorafenib in
advanced HCC patients, was not met, as there was no statistically significant difference in overall survival (OS) outcomes. In May 2017,
the results of the combination SIRFLOX/FOXFIRE/FOXFIRE Global study was released in abstract form and the results presented as an
oral abstract at the American Society of Clinical Oncology (ASCO) annual meeting in June 2017. The primary endpoint of OS was not
met, as there was no statistically significant difference between SIR-Spheres microspheres plus chemotherapy versus chemotherapy
alone. In May 2017, the results of the SIRveNIB study was released in abstract form and the results presented as an oral abstract at the
ASCO annual meeting in June 2017. The primary endpoint of the study was also not met.
Dose sales for the year increased by 5.4 per cent over the previous financial year. The Americas (North and Latin America) market
with 8,807 doses achieved growth of 4.6 per cent, the Europe, Middle East and Africa (EMEA) market with 2,677 doses achieved
growth of 5.9 per cent, and Asia Pacific (APAC) recorded 1,094 dose sales, representing growth of 11.3 per cent. The number of
treatment centres certified to use SIR-Spheres microspheres stands at 1,093 centres globally, representing growth of 9.0 per cent.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
ANNUAL REPORT 2017 I 26
Sales revenue reached $234,282,498 for the financial year ended 30 June 2017, an increase of 0.8 per cent over last financial year
($232,491,500). The lower sales revenue growth compared to volume growth is as a result of changes in geographic revenue mix with
stronger growth in the APAC region, and of negative foreign currency fluctuations, as the Australian Dollar appreciated against the
US Dollar and the Euro during the year when compared to the prior year.
In June 2017, the Board reviewed the carrying value of the Company’s clinical and R&D assets in accordance with AASB138 Intangible
Assets following the results of the aforementioned clinical studies and the completion of development activities relating to our
core SIR-Spheres microspheres product. As a result of that review, the Board impaired the entire carrying value of those assets,
representing a one-off, non-cash impairment charge to the profit and loss account of $90,540,640 for the financial year ended
30 June 2017. At the same time, management restructured the business and a one-off restructuring provision of $4,065,626 was
recognised in June 2017. This significantly impacted reported net profit after tax for the year.
Profit before tax has decreased 158.5 per cent to a loss before tax of $40,953,964 for the year ended 30 June 2017 (2016: profit of
$69,998,039), and profit after tax has decreased by 149.0 per cent to a loss of $26,257,188 (2016: profit of $53,582,392). Excluding the
impact of the asset impairments, write-down of receivables and the restructuring costs, underlying profit before tax decreased
18.3 per cent to $57,182,789.
Earnings per share for the year ended 30 June 2017 has decreased to a loss per share of $0.455 (2016: earnings per share of $0.937).
Net assets for the Group decreased by 22.8 per cent to $149,467,490 (2016: $193,503,996), as a result of the impairment of capitalised
intangible R&D and clinical assets of $90,540,640. There was an increase in cash and short-term deposits of $11,323,760 (2016:
$33,084,007).
SHARE BUY-BACK
A $30,000,000 on-market share buy-back was announced in February 2017, which commenced in early June 2017. For the year ended
30 June 2017, we have bought back $2,873,348 worth of the Company’s stock, representing 231,379 shares. A further $27,126,652
remains to be bought back which is expected to be completed by 8 September 2017.
DIVIDENDS
A partially franked ordinary dividend of 30 cents per share was declared for the financial year ended 30 June 2016 and paid during the
financial year
ended 30 June 2017 (2016: 20 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 primary and secondary forms of liver cancer.
The execution of this strategy has required the Group to expand its sales and marketing, regulatory, and medical function. In total,
51 per cent of the Group’s workforce is engaged in a sales and marketing role, to help build the awareness and use of SIR-Spheres
microspheres by the global medical community.
The Group completed the expansion of its manufacturing capabilities during the year, with a new state of the art facility in Frankfurt,
Germany commencing the supply of commercial doses into the EMEA region during the second half of the 2017 financial year.
The Group has been successful in gaining regulatory clearances for SIR-Spheres microspheres in key global markets. They include
the United States, Canada, 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. We continue to make progress as we develop our
entry strategies for both China and Japan. Both markets are attractive, long term opportunities for the Company. China represents
approximately 50 per cent of the annual incidence of HCC, while Japan is the second largest medical device market globally behind
the US, with generally high pricing and a well-established government reimbursement environment upon regulatory clearance. The
Group was also successful in expanding government and private sector reimbursement for SIR-Spheres microspheres during the
financial year, with reimbursement granted in France for refractory mCRC. Expanded reimbursement coverage helps ensure as many
patients as possible who suffer from liver cancer can receive SIR-Spheres microspheres.
During the financial year, the Group invested an additional $4,132,641, included in intangible asset work-in-progress, in its 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.
27 I SIRTEX
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
UNISSUED SHARES
Executive Performance rights on issue at year end
As at 30 June 2017, the unissued shares of Sirtex Medical Ltd under Executive Performance Rights Plan are as follows:
Grant date
26 November 2013
23 September 2014
1 September 2015
4 February 2016
21 December 2016
Date of Vesting
30 June 2016
30 June 2017
30 June 2018
30 June 2018
30 June 2019
Exercise Price $
nil
nil
nil
nil
nil
Number under Rights
20,000
204,920
96,244
54,900
180,076
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.
Employee Service rights on issue at year end
As at 30 June 2017, the unissued shares of Sirtex Medical Ltd under the Employee Service Rights Plan are as follows:
Grant date
20 September 2016
9 March 2017
Date of Vesting
30 June 2019
30 June 2019
Exercise Price $
nil
nil
Number under Rights
61,900
3,250
Rights holders do not have any rights to participate in any issue of shares or other interests in the Company or any other entity.
Directors’ rights on issue at year end
As at 30 June 2017, there were no unissued shares of Sirtex Medical Ltd under Non-Executive Directors Rights.
Share options on issue at year end or exercised during the year
During the year ended 30 June 2017, 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 2017.
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 2017 is as follows:
2017
Ordinary Shares
2017
Rights
2016
Ordinary Shares
2016
Rights
R Hill
Dr J Eady
G Boyce
Dr K Woodthorpe
N Mitchell
A McLean
G Wong
11,871
10,546
9,436
1,778
3,000
-
-
-
-
-
-
-
-
-
9,617
9,137
8,309
651
-
-
-
-
-
-
-
-
160,000
233,930
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.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
ANNUAL REPORT 2017 I 28
EVENTS AFTER REPORTING DATE
On 4 August 2017, it was determined that none of the Executive Performance Rights issued on 23 September 2014 vested. The Board
exercised its discretion to disallow any vesting of rights.
Since the end of the year, the Directors have declared an unfranked dividend of 30 cents per share to be paid on 18 October 2017
(2016: 30 cents per share). The record date for the dividend is 27 September 2017.
Sirtex Medical Limited (Sirtex) is the respondent to a representative proceeding (shareholder class action) brought in the Federal
Court of Australia. Details are in Note 15 Contingent Liabilities.
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.
ENVIRONMENTAL REGULATIONS
The Group is not subject to significant environmental regulation under the law of any of the jurisdictions the Group is operating in.
NON-AUDIT SERVICES
During the year, Grant Thornton, the Company’s auditors, performed 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 28 to the Financial Statements.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration for the year ended 30 June 2017 has been received and can be found on page 45 of the
financial report and forms part of the Directors’ report.
ROUNDING OFF OF AMOUNTS
Sirtex Medical Ltd is the type of Company referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191 and therefore the amounts contained in this report and in the financial report have been rounded to the nearest $1,000, or
in certain cases, to the nearest dollar.
29 I SIRTEX
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
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 2017, 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.
As detailed in the recent Remuneration Portal update, work has continued to refine and further develop our remuneration structure
and policies during the past year. Our objective is for the remuneration structure and policies to:
•
Enable us to recruit, motivate and retain the calibre of non-executive directors, executives and staff needed to guide and run our
complex Company, in a way that delivers on its potential to all stakeholders;
• Motivate and encourage focus through performance-based short-term incentives, and a longer-term perspective and a sense of
ownership through an equity-based long-term incentive.
And:
• We listen, with decisions data-driven and based on considered analysis; and
• Where Total Remuneration Packages are aligned to the complexity of the role and reflect the contribution being delivered and
results obtained.
As would be expected, and in line with our remuneration structure, the past year’s circumstances have had a marked impact on our
executive Total Remuneration Packages.
While circumstances meant that over the second half of FY17 the demands on many of our executives were increased substantially,
given the Company’s performance, the average STI awarded for our KMP executives for the year was less than 20% of target. None
of the 2015 LTI grants vested. In line with these circumstances, FY18 base salary movements were minimal, with changes to the at-
risk components limited to improving KPI alignment for the STI portion and to address stakeholder concerns with our LTI Plan and
structure. Non-executive directors received no increase in their fees.
I hope that you will continue to support our approach to remuneration by voting to adopt this Remuneration Report at the
upcoming Annual General Meeting.
Sincerely,
Dr John Eady
Chair of the Remuneration Committee
Remuneration Report (audited)
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 other KMP, for the year ended 30 June 2017. It 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 2017;
5. Details of remuneration; and
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
• Dr Katherine Woodthorpe, Independent Non-Executive Director – Chair of the Risk, Health and Safety Committee
• Mr Neville Mitchell, Independent Non-Executive Director (appointed 13 April 2017)
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
ANNUAL REPORT 2017 I 30
Executives
• Mr Andrew McLean, Managing Director & CEO (appointed 5 June 2017)
• Mr Gilman Wong, Managing Director & CEO (ceased employment on 13 January 2017)
• Mr Darren Smith, CFO and Company Secretary
• Mr Nigel Lange, Executive Vice President, Sales and Marketing, EMEA (1 July 2016 to 31 October 2016), Chief Operating Officer
(1 November 2016 to 13 January 2017), Interim CEO (13 January 2017 to 4 June 2017), and Chief Commercial Officer (5 June 2017
to current)
• Mr Kevin Richardson, Executive Vice President, Sales and Marketing, Americas (promoted 1 July 2016, departed 18 May 2017)
• Mr Anthony Dixon, Executive Vice President, Sales and Marketing, EMEA (promoted 13 January 2017)
• Mr Reuben Teo, Executive Vice President, Sales and Marketing, APAC (appointed 27 March 2017)
• Mr Robert Hardie, Global Head of Operations
• Dr David Cade, Chief Medical Officer
Unless otherwise stated, the KMP held their positions throughout the financial year ended 30 June 2017.
2. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION
2.1 Remuneration Governance Framework
The Remuneration Committee relies on and benefits from input provided by a wide range of sources:
•
•
•
•
• Other experts and professionals such as tax advisors and lawyers; and
•
Remuneration Committee members;
External remuneration consultants (ERCs);
Stakeholder groups and shareholders;
Remuneration Committee peers within Australia;
Individual KMP to understand roles and complexities.
Care is taken to ensure that interaction with and between these sources regarding Remuneration Committee business is
independent, not improperly influenced by personal interests and reflects the current Sirtex circumstances.
2.2 Executive KMP Remuneration Policy and Procedure
The Executive KMP Remuneration Policy and Procedure applies to executives defined as:
• Managing Director & CEO – accountable to the Board for the Group’s performance and long term planning;
•
Top Strata Direct Reports to the Managing Director/Chief Executive Officer – Chief Commercial Officer, Chief Financial Officer
and Chief Medical Officer who provide corporate expertise and operational overview; and
Regional Executive Vice Presidents and Global Head of Operations.
•
Each of these roles have the opportunity to materially influence the integrity, strategy and the operations of the Company and its
performance.
Comprehensive policies and procedures are in place that reflect the Company’s values and intentions regarding executive
remuneration. These include those covering Senior Executive Remuneration, Senior Executive STIs and LTIs, Clawback, Diversity
and Privacy. They are amended to clarify and improve alignment from time to time and are documented on the Company’s website.
Processes are also in place to determine how KMP remuneration is to be benchmarked and adjusted to reflect performance and
changes in the circumstances of the Group.
Broadly, the remuneration policies state that:
•
Total remuneration (TRP) should comprise Fixed Remuneration and significant at-risk STI and LTI components so that executive
reward reflects performance and shareholder experience;
• When combined, the components are designed so as to provide a TRP able to attract and retain the calibre of executives
required for the Company to achieve its goals;
Proportions are tailored to regional practice and are based on extensive and objective market data;
Internal relativities and any special circumstances are considered so as to recognise Sirtex’s organisational design;
•
•
31 I SIRTEX
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
•
•
‘Strata’ are used to define role complexities and manage TRP within a range so as to allow for individual differences such as the
calibre of incumbents and the competency with which they fulfil roles.
Termination benefits will be in line with local regulations, and in Australia limited to the default amount allowed for under the
Corporations Act.
As such, the Company’s executive KMP remuneration policies and procedures ensure that executive remuneration is linked to
Company performance, with an emphasis on longer-term results and the experience of shareholders. Executive TRP will be higher
when longer term issues are being addressed effectively and the Group is doing well.
Policy Area
Relationship to Company Performance
Fixed Remuneration
At-risk components
(STI and LTI)
As fixed remuneration is based on market practice and data shows that levels increase as market
capitalisation increases, amounts reflect Company performance through the impact on share price
and resulting market capitalisation.
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 executive has on Group performance. They are
based on key performance indicators (KPIs), each having defined targets. While many influencing
factors are quantitative, some are more subjective, aimed at assessing personal effectiveness in the
context of prevailing circumstances.
The STI KPIs are designed generally to drive focus on internal factors, 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.
2.3 At-risk remuneration: Executive Short-term Incentives STI Plan - Process
•
The Short-term Incentive Plan (STI) is an important part of the remuneration offered to executives as it:
– Encourages focus on factors that are considered critical over the coming year to meet the Company’s purpose and
implement its strategies, and
– Shares Company success with the executives who contribute through their efforts.
• Management of the STI structure and process rests with the Board.
– It determines the applicable KPIs and targets annually to align with Company strategy, with input from the CEO. While many
of the measures are quantitative, some are more subjective, aimed at assessing personal effectiveness in the context of
prevailing circumstances, and
– It assesses performance against the KPI measures annually, based on objective data and information provided by the CEO
and determines the quantum of STI awarded.
The Board has discretion to vary the Plan Rules or terminate the STI Plan in relation to future periods.
The Clawback policy applies to STI awards.
•
•
2.4 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
For the financial year ended 30 June 2017 the MD/CEO had a target STI award
opportunity equal to 50% of Fixed Remuneration. The COO/CCO, CFO and CMO
proportion was 40% and the remaining executive KMP had a target award opportunity
equal to 35% of Fixed Remuneration.
Key Performance
Indicators (KPIs)
The CEO’s focusing 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
focusing KPIs specific to their roles (50% weighting).
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
ANNUAL REPORT 2017 I 32
Aspect
Plan Rules, Offers and Comments
Key Performance
Indicators (KPIs) (continued)
‘Normalised Group EBITDA’ is defined as Group earnings before interest, tax, depreciation and
amortisation, excluding exchange rate fluctuations, clinical studies, and Research & Development
expenditure. It is a major KPI for all executive KMP as teamwork across the Group and a ‘one
Company’ culture is considered critical for ongoing success.
The scale used to determine the STI earned in relation to the ‘Normalised Group EBITDA’ KPIs is:
STI Performance Reward Scale
Performance
Level
95%, <100%
100%
>100%, <105%
105%
>105%, <110%
≥110%
Percentage of
Target STI Payable
Nil
25%
Pro-rata
75%
Pro-rata
100%
Pro-rata
110%
Role-specific, focusing KPIs 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. Weightings are applied to reflect the relative importance of each KPI.
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 reduced pro-rata to reflect the
(b)
portion of the Measurement Period worked, and
Performance and STI awards will be determined following the end of the Measurement Period
in the normal way, although the Board may accelerate the determination and payment of STI
awards in special circumstances.
Cessation of Employment
During a Measurement
Period
2.5 At-risk remuneration: Executive Long-term Incentive (LTI) Plan - Process
•
The Long-term Incentive Plan (LTI) is a key part of the at-risk component of the remuneration offered to executives and aims to:
– Build a sense of ownership and encourage a longer term view;
– Share Company success with the executives who contributed through their efforts; and
– Link executive reward with shareholder experience.
In most instances LTIs offer the greater proportion of at-risk reward with the number of LTI grants awarded to each executive
customised to reflect regional practice.
Vesting depends on thresholds being exceeded and in accordance with pro-rata scales to stretch levels. As is the case with STIs,
the ability to receive target TRP depends on meeting defined and demanding targets.
The responsibility for the ongoing administration of the LTI plan rests with the Board. It determines annually:
– The LTI proportions of TRP;
– The measures to be used; and
– Applicable vesting scales.
The Board has absolute and unfettered discretion, at any time, to increase or decrease (including to nil) the level of vesting of
Rights, if the Board forms the view that it is appropriate to do so, having regard to prevailing circumstances.
The Clawback policy applies to LTI awards.
•
•
•
•
•
33 I SIRTEX
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
2.6 Executive Long-term Incentive (LTI) Plan – Detail
Aspect
Plan Rules, Offers and Comments
Measurement Period
Award Opportunities
Vesting Scales
The measurement period for the 2017 offers is the three financial years from 1 July 2016 to 30 June
2019.
The FY17 grant target award opportunity was tailored to regional practice. It varied from 110%
of Fixed Remuneration for the MD/CEO, 75% for the COO/CCO, CFO and CMO and a lesser
proportion, mostly around 55%, for the remaining executive KMP.
Specific performance conditions must be satisfied for Rights to vest. The performance conditions
specified as part of the most recent offers comprise two tranches, with 50% of Rights being subject
to an Indexed Total Shareholder Return (iTSR) vesting measure, and 50% being subject to an
EPS Growth vesting measure. With regard to the indexed TSR measure, offer documents make it
clear that the Board has absolute and unfettered discretion, at any time, to increase or decrease
(including to nil) the level of vesting of Rights, if the Board forms the view that it is appropriate to
do so, having regard to prevailing circumstances. It noted that the Board would use this discretion
if the Company’s TSR is negative, even if it outperforms the indexed ASX300.
Indexed 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,
compared to that of the Australian stock-market’s ASX300 index. iTSR has replaced absolute
TSR so that gains rewarded are due to Company performance rather than general stock-market
movement, but with an implied absolute TSR threshold hurdle.
The selection of two times the average ASX300 growth as the target is based on past performance
data that showed that an ASX300 company performing at the P75 level over recent years
outperformed the market average by a factor of about two.
Normalised EPS growth remained as the most appropriate second measure. The Rights that
were considered for vesting on 30th June 2017 where granted in July 2015, at which time the
normalisation elements were understood to comprise expenditure on clinical trials, R&D and
adjusted for exchange rate movements. This has subsequently been tightened and for the awards
to be granted for the financial year 2018, the Compound Average Growth Rate (CAGR) for earnings
per share will be adjusted only for significant and specified, non-recurring items, and expressed in
constant currency.
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.
Vesting Scales
Percentages of grants to vest for the FY17 LTI grants are to be determined in accordance with the
following scales:
TSR Growth Rate Vesting Scale
Indexed TSR
Performance
Number of Rights to
Vest
Threshold
Recognition
100% of ASX300 TSR and greater than 10%
0%
Above threshold but not reaching target
P75 Target
200% of ASX300 TSR
Further Reward
Surpassing target
1% for each 1% above
threshold
(pro-rata)
100% of Target grants
(66.7% of Plan grants)
0.5% for each 1% above
target up to 1.5 times
entitlement
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
ANNUAL REPORT 2017 I 34
Aspect
Plan Rules, Offers and Comments
Vesting Scales (continued)
EPS Vesting Scale
Earnings per Share
Performance
Number of Rights to
Vest
Threshold
Recognition
EPS compound growth of 10%
0%
Above threshold but not reaching target
P75 Target
EPS compound growth of 20%
Further Reward
Surpassing target
10% for each 1% above
threshold (pro-rata)
100% of Target Rights
(66.7% of Plan Rights)
5% for each 1% above
target up to 1.5 times
entitlement
Exercise of Vested
Incentive Rights
Dealing Restrictions on
Shares
Cessation of Employment
Change of Control of the
Company (Compulsory
Acquisition)
On vesting, a Performance Right confers an entitlement for the Participant to exercise the
Performance Right to the value of an ordinary share (Share) in the Holding Company. On exercise,
the Executive Performance Rights (EPR) Plan Trust (Trustee) subscribes for Shares or acquires
Shares on market on behalf of the Participant. Care is taken to manage the tax impact of the EPR
Plan on Participants. For overseas Participants, this may involve having a portion of Shares sold to
account for withholding tax and/or other amounts payable 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.
Shares acquired when vested grants are exercised will be subject to the dealing 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.
Further restrictions are stipulated in the Performance Rights Plan to take effect for the FY18 and
subsequent grants.
In the event of cessation of employment other than due to Special Circumstances, all unvested
Performance Rights are forfeited unless otherwise determined by the Board.
In the event of cessation of employment due to Special Circumstances, unless otherwise
determined by the Board, in respect of the grant made in the financial year of the cessation, the
number of unvested Performance Rights that will be retained by the Employee will be based on
a pro-rata calculation relative to the full financial year. 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.
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.
2.7 Non-Executive Director’s Remuneration Policies and Procedures
• NED remuneration policies and procedures are designed so as to be consistent with other Sirtex remuneration policies but to
reflect the governance requirements required of non-executive directors. These are documented on the Company’s website.
NED remuneration is to be benchmarked and adjusted to reflect changes in the circumstances of the Group.
Broadly, the remuneration policies state that:
– Total NED Remuneration is to be managed within the aggregate fee limit (AFL) or fee pool approved by shareholders of the
•
Company;
– NED TRP comprises Board fees (inclusive of any superannuation, and any applicable fringe benefits tax (FBT), Salary-
sacrificed equity grants and Committee fees. It is recognised that it is not appropriate to provide performance-based
incentives to NEDs;
35 I SIRTEX
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
– Amounts are to be reviewed annually and based on market data;
– The Board retains discretion and may alter the proportion of NED remuneration salary sacrificed in order to meet prevailing
circumstances;
– Termination benefits are not paid to NEDs.
2.8 Salary Sacrificed Equity Grants – Non-executive (NED) Director Rights Plan – Detail
Aspect
Purpose
Plan Process
Grant Value
Treatment
Plan Rules, Offers and Comments
The NED Rights Plan constitutes part of a market-competitive main-board package and aims to
align the interests of NEDs further and directly with shareholders.
The Plan helps address the preference of many shareholders for NEDs to have significant
shareholdings in the Group. The disposal restrictions incorporated in the Plan support this aim.
Rights offered to NEDs are not subject to performance conditions or any vesting condition.
FY17 Rights vested immediately but could not be exercised until three months after granting.
At that time the shares are transferred to each NED, but with a CHESS holding lock. Disposal
restrictions stipulate that, except by force of law, exercised shares may not be dealt with until the
earlier of ceasing to be a NED of the Group or the elapsing of fifteen years from the grant date.
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.
NED Rights will be satisfied via on-market purchase of Sirtex Shares, rather than by new issues of
Shares.
Grants of Rights were made to NEDs during financial year ended 30 June 2017 with the intended
value of the grants being as follows (pro-rated for part of the year where applicable):
•
•
•
Grants of NED Rights were calculated by applying the following formula:
$59,125 for the Board Chair,
$36,953 for the Deputy Chair, and
$29,563 for the other NEDs.
Number of NED Rights = Salary sacrifice amount ÷ Right Value
The Right value was the volume weighted average share price of shares traded in the 10 days up to
and including 30 June 2016.
NEDs will be entitled to receive all dividends.
Without the approval of the Board, Rights may not be transferred, mortgaged, charged or
otherwise dealt with or encumbered.
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. Unless determined otherwise by the Board, the director will also
receive all vested shares held on the date of termination.
Remuneration and other terms of employment for the executive KMP are also formalised in service agreements. The major
provisions of the agreements are set out below.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
ANNUAL REPORT 2017 I 36
Remuneration and other terms of employment for the executive KMP 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 A McLean
Mr G Wong**
Mr D Smith
Mr N Lange
Mr K Richardson**
Mr A Dixon
Mr R Teo
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
No fixed term
No fixed term
12 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
6 months
12 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*
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.
** Ceased employment during the year.
*** Not entitled to redundancy payout
4. PERFORMANCE OUTCOMES AND IMPACT ON SHAREHOLDER WEALTH FOR THE FINANCIAL YEAR ENDED 30 JUNE 2017
4.1 Group Performance
The following outlines the performance of the Group over the 2017 financial year and the previous four financial years:
Profit/
(loss)
after Tax
$m
18.3
23.9
40.3
53.6
(26.3)
Share
Price
$
11.98
16.88
29.05
25.57
16.25
Change
in Share
Price Dividends
Short-term change
in Shareholder Value
over 1 year (SP
increase + dividends)
Long-term change
in Shareholder Value
over 3 years (SP
increase + dividends)
$
5.89
4.90
12.17
(3.48)
(9.32)
$
0.10
0.12
0.14
0.20
0.30
$
5.99
5.02
12.31
(3.28)
(9.02)
%
98.36
41.90
72.93
(11.3)
(35.28)
$
7.32
12.27
23.32
14.05
0.01
%
149.39
250.41
382.92
117.30
0.06
Date
Revenue
30-Jun-13
30-Jun-14
30-Jun-15
30-Jun-16
30-Jun-17
$m
96.7
129.4
176.1
232.5
234.3
The following table gives an indication of Group performance against the LTI measures:
Date
12 month EPS
12 month EPS growth
3 year EPS
12 month TSR
3 year TSR
EPS
TSR
30-Jun-13
30-Jun-14
30-Jun-15
30-Jun-16
30-Jun-17
$
0.328
0.425
0.714
0.937
(0.455)
%
6.8
29.6
68.0
31.2
(148.6)
%
13.9
106.3
132.6
185.6
(207.1)
%
98.4
41.9
72.9
(11.3)
(35.3)
%
149.4
250.4
382.9
117.3
0.1
37 I SIRTEX
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
4.2 Links between Performance and Reward
4.2.1 Short-term incentive
The actual STI to be paid in relation to the 2017 financial year were accrued in the 30 June 2017 accounts. The links between
performance and reward is summarised below.
STI Links
Name
Position
Objectives
Mr G Wong
Mr A McLean
Managing Director
& CEO
Normalised Group
EBITDA (40%
weighting)
Dose sold
(40% weighting)
Leadership
effectiveness (20%
weighting)
Stratum 1.4 and 1.3
Direct Reports to
MD/CEO
Normalised Group
EBITDA (50%
weighting)
Mr D Smith
Mr N Lange
Mr A Dixon
Dr R Teo
Mr R Hardie
Dr D Cade
Mr K Richardson
KPIs and other
Influencing Factors
(50% weighting)
Measurement
Maximum STI
payable
Percentage of Max
STI to be paid
Mr G Wong = 50%
Mr G Wong = 0%
Mr A McLean =
not entitled to be
included due to
limited employment
period.
Mr A McLean =
not entitled to be
included due to
limited employment
period.
0% of pro-rata
amount.
Ranged from 0%
to 88% of pro-rata
amount.
Mr D Smith = 17.5%
Mr N Lange = 17.5%
Mr A Dixon = 12.5%
Dr R Teo = 0%
Mr R Hardie = 17.5%
Dr D Cade = 17.5%
Mr K Richardson =
12.5%
Mr D Smith = 17.5%
Mr N Lange = 17.5%
Mr A Dixon = 12.5%
Dr R Teo = 0%
Mr R Hardie = 17.5%
Dr D Cade = 17.5%
Mr K Richardson =
12.5%
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 as measured 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
contribution 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
FY17.
These 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 FY17.
The average STI awarded for all executive KMP equated to 19.8% of the target amount.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
ANNUAL REPORT 2017 I 38
4.2.2 Long-term incentive
The LTI, being dependent on i-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 2016 financial year and those that
were granted during the 2014 financial year:
Name
Mr G Wong*
Mr D Smith
Mr N Lange
Mr M Mangano**
Mr K Richardson*
Mr A Dixon
Mr B Chew**
Mr R Hardie
Dr D Cade
Total
Target LTI Value
(at grant) $
2014 Grant
Number
TSR
Achieved
% of Grant
Vested
532,450
129,640
129,640
129,640
25,465
25,465
129,640
129,640
129,640
1,361,220
115,000
28,000
28,000
28,000
5,500
5,500
28,000
28,000
28,000
294,000
30.2
30.2
30.2
30.2
30.2
30.2
30.2
30.2
30.2
100%
100%
100%
100%
100%
100%
100%
100%
100%
Number
Vested
115,000
28,000
28,000
28,000
5,500
5,500
28,000
28,000
28,000
294,000
* Ceased employment during the year
** Ceased employment during the prior year
5. DETAILS OF REMUNERATION
5.1 Executive Remuneration
The following table outlines the remuneration received or receivable by executives of the Group for the 2017 and 2016 financial years,
in accordance with the statutory requirements for disclosure and accounting standards:
Year
Salary
Other
Benefits
Short-term
Incentive (STI)***
Short-term
Employee
Benefits
Retirement
Benefits/
Super-
annuation
Termination
Benefits
Equity-settled
Long-term
Incentive (LTI)
Total
Target
Remuner-
ation
Change
in
Accrued
Leave
Name
$
$
Mr A McLean
2017
41,250
842,425^
% of
TRP
$
% of
TRP
$
883,675
100
$
1,509
Mr G Wong*
Mr D Smith
Mr N Lange
2016
2017
2016
2017
2016
2017
2016
Mr M Mangano** 2017
2016
Mr K Richardson* 2017
Mr A Dixon
Mr B Chew**
Mr R Teo
Mr R Hardie
Dr D Cade
Total
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
–
552,201
875,695
488,684
452,763
638,583
582,480
–
599,242
647,177
734,512
318,047
251,441
–
476,027
95,104
–
439,659
419,335
466,983
444,751
–
–
–
–
–
74,409
39,038
24,545
70,280
59,343
49,861
43,212
38,915
–
16,158
18,153
–
–
–
–
–
3,687,688
532,087
–
–
–
314,514
50,830
133,854
30,720
133,782
–
209,735
25,314
–
35,752
45,259
–
–
12,887
–
72,820
124,563
49,875
122,638
278,198
–
–
–
16
9
17
4
14
–
21
2
–
9
12
–
–
10
–
13
17
9
16
5
13
–
–
–
552,201
(343)
1,190,209
539,514
586,617
743,712
755,301
24,545
879,257
731,834
784,373
397,012
335,616
–
492,185
61
96
74
96
77
9
87
63
93
98
91
–
82
126,144
100
–
512,479
543,898
516,858
567,389
5,027,974
6,134,845
–
94
73
94
73
98
76
15,217
33,305
19,616
31,337
6,036
–
8,268
23,944
39,909
23,403
–
–
–
–
–
–
33,366
31,165
31,767
30,249
155,688
173,403
4,836,246
214,252
1,084,345
* Ceased employment during the year.
** Ceased employment during the prior year.
*** STI figures included in the table represent STIs received or receivable for the financial years presented.
^ Made up of relocation allowance and sign-on bonus.
$
–
–
–
–
–
–
–
–
289,301
–
385,734
–
–
–
–
–
–
–
–
–
–
–
% of
TRP
$
–
–
–
–
$
885,184
–
$
6,198
–
(728,471)
452
(161,053)
(381,820)
742,690
2,008
174,027
24,742
228,526
(34,854)
108,090
13,283
39,996
9,974
34,429
38
-
22
3
23
(12)
11
1
5
2
9
(34,854)
108,090
100
18
–
–
(3,292)
169,476
1,310
172,770
–
–
(1)
23
-
23
1,966,204
85,343
561,138
791,981
774,490
983,827
287,259
1,011,291
1,170,761
847,772
406,985
370,045
(34,854)
600,275
126,144
–
542,553
744,539
549,935
770,408
(10,190)
27,029
9,773
(19,340)
–
(79,842)
(33,989)
8,815
28,382
(18,223)
–
(27,802)
11,764
–
216
31,174
28,665
23,577
675,035
(750,154)
(15)
5,108,542
(341,001)
–
1,778,094
22
8,086,342
30,731
39 I SIRTEX
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
The following table outlines the LTIs granted to executive KMP during the financial year ended 30 June 2017 subject to TSR vesting
criteria. The LTIs will vest over three years.
Value per
option
at grant
date
Value of
options
at grant
date
Number
granted
Number
vested
Exercise
price
$
First
exercise
date
Last
exercise
date
-
-
9,928
13,063
15,064
1,838
-
7,436
9,741
57,070
-
-
5.05
5.05
5.05
5.05
-
5.05
5.05
-
-
50,134
65,968
76,073
9,282
-
37,552
49,192
288,201
-
-
-
-
-
-
-
-
-
-
-
-
1-Jul-19
1-Jul-19
1-Jul-19
1-Jul-19
-
1-Jul-19
1-Jul-19
-
-
30-Jun-23
30-Jun-23
30-Jun-23
30-Jun-23
-
30-Jun-23
30-Jun-23
-
-
-
-
-
-
-
-
-
-
Name
Grant date
Mr A McLean
Mr G Wong*
–
–
Mr D Smith
21-Dec-2016
Mr N Lange
21-Dec-2016
Mr K
Richardson*
21-Dec-2016
Mr A Dixon
21-Dec-2016
Mr R Teo
–
Mr R Hardie
21-Dec-2016
Dr D Cade
21-Dec-2016
Total
* Ceased employment during the year.
The following table outlines the LTIs granted to executive KMP during the financial year ended 30 June 2017 subject to EPS vesting
criteria. The LTIs will vest over three years.
Value per
option
at grant
date
Value of
options
at grant
date
Number
granted
Number
vested
Exercise
price
$
First
exercise
date
Last
exercise
date
-
-
9,928
13,063
15,064
1,838
-
7,436
9,741
57,070
-
-
14.04
14.04
14.04
14.04
-
14.04
14.04
-
-
139,382
183,405
211,499
25,806
-
104,401
136,764
801,257
-
-
-
-
-
-
-
-
-
-
-
-
1-Jul-19
1-Jul-19
1-Jul-19
1-Jul-19
-
1-Jul-19
1-Jul-19
-
-
30-Jun-23
30-Jun-23
30-Jun-23
30-Jun-23
-
30-Jun-23
30-Jun-23
-
-
-
-
-
-
-
-
-
-
Name
Grant date
Mr A McLean
Mr G Wong*
–
–
Mr D Smith
21-Dec-2016
Mr N Lange
21-Dec-2016
Mr K
Richardson*
21-Dec-2016
Mr A Dixon
21-Dec-2016
Mr R Teo
–
Mr R Hardie
21-Dec-2016
Dr D Cade
21-Dec-2016
Total
* Ceased employment during the year.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
ANNUAL REPORT 2017 I 40
5.2 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 2016
Granted during year
Exercised
Forfeited
Rights Held at
30 June 2017
Value at
Grant
Value at
Grant
Value at
Grant
Value at
Grant
Number
$ Number
$ Number
$ Number
$ Number
Value at
Grant
$
Mr A McLean
Mr G Wong*
Mr D Smith
Mr N Lange
-
-
233,930 2,200,798
56,010
514,394
65,110
699,761
Mr K Richardson*
13,900
167,649
Mr M Mangano**
45,000
290,120
-
-
19,855
26,126
30,128
-
-
-
189,516
249,373
287,572
-
-
-
-
115,000
532,450
118,930 1,668,348
-
-
-
-
28,000
129,640
28,000
129,640
-
-
-
-
47,865
574,270
63,236
819,494
5,500
25,465
30,128
287,572
8,400
142,184
Mr A Dixon
Mr R Teo
Dr B Chew**
Mr R Hardie
Dr D Cade
Total
-
28,000
129,640
12,400
134,622
3,676
35,087
5,500
25,465
-
-
45,000
290,120
55,250
55,800
498,913
510,116
-
-
-
-
14,872
19,482
141,953
185,956
-
-
28,000
129,640
28,000
129,640
28,000
129,640
-
-
-
-
-
-
-
-
-
-
-
-
17,000
160,480
10,576
144,244
-
-
17,000
160,480
42,122
511,226
47,282
566,432
582,400 5,306,493
114,139 1,089,457
294,000 1,361,220
149,058 1,955,920
253,481 3,078,810
* Ceased employment during the year.
** Ceased employment during the prior year.
The following table outlines the changes in the number of Shares held by executives over the financial year:
Name
Mr A McLean
Mr G Wong*
Mr D Smith
Mr N Lange
Mr K Richardson*
Mr M Mangano**
Mr A Dixon
Mr R Teo
Dr B Chew**
Mr R Hardie
Dr D Cade
Total
Balance at
beginning of
year
-
160,000
30,000
-
-
-
-
-
49,974
-
-
239,974
Granted as
remuneration
Issued on
exercise of
Rights
Disposals ***
Balance at
end of year
-
-
-
-
-
-
-
-
-
-
-
-
-
114,968
27,968
27,968
5,468
27,968
5,468
-
27,968
27,968
27,968
-
274,968
57,968
27,968
5,468
27,968
5,468
-
42,942
27,968
-
293,712
470,718
-
-
-
-
-
-
-
-
35,000
-
27,968
62,968
* Ceased employment during the year.
** Ceased employment during the prior year.
*** Future LTI grants will include requirements for the retention of shares.
Conditions attached to Performance Rights issued during the year are included in note 21 in the Financial Report.
41 I SIRTEX
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
5.3 Non-Executive Director Remuneration
The following table outlines the remuneration received by non-executive directors of the Group during the 2017 and 2016 financial
years, in accordance with the statutory requirements for disclosure and accounting standards:
Board
Fees
$
Committee
Fees
$
Super-
annuation
$
Other
Benefits
$
Name
Mr R Hill
Dr J Eady
Mr G Boyce
Dr K Woodthorpe
Mr N Mitchell
Total
Year
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
236,500
220,000
113,051
103,036
118,250
110,000
118,250
74,321
24,261
–
610,312
507,357
–
–
20,000
20,000
20,000
20,000
20,000
10,869
-
–
60,000
50,869
–
–
34,759
34,464
–
–
–
–
2,305
–
37,064
34,464
Equity*
Total
$
57,635
69,382
36,028
43,384
28,817
34,691
28,817
25,591
–
–
$
294,135
289,382
203,838
200,884
167,067
164,691
167,067
110,781
26,566
–
–
–
–
–
–
–
–
–
–
–
–
–
151,297
858,673
173,048
765,738
5.4 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 2016
Granted during year
Forfeited
Exercised
Rights Held at
30 June 2017
Value at
Grant
Value at
Grant
Value at
Grant
Value at
Grant
Number
$ Number
$ Number
$ Number
$ Number
Mr R Hill
Dr J Eady
Mr G Boyce
Dr K Woodthorpe
Mr N Mitchell
Total
–
–
–
–
–
–
–
–
–
–
–
2,254
1,409
1,127
1,127
–
57,635
36,028
28,817
28,817
–
–
5,917
151,297
–
–
–
–
–
–
–
–
–
–
–
–
2,254
1,409
1,127
1,127
–
57,635
36,028
28,817
28,817
–
5,917
151,297
–
–
–
–
–
–
The following table outlines the changes in the number of Shares held by Non-Executive Directors over the financial year:
Value at
Grant
$
–
–
–
–
–
–
Name
Mr R Hill
Dr J Eady
Mr G Boyce
Dr K Woodthorpe
Mr N Mitchell
Total
Balance at
beginning of
year
Held on
commencement
as NED
Issued on
exercise of
Rights*
Disposals
Balance at end
of year
9,617
9,137
8,309
651
–
27,714
–
–
–
–
3,000
3,000
2,254
1,409
1,127
1,127
–
5,917
–
–
–
–
–
–
11,871
10,546
9,436
1,778
3,000
36,631
*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 fifteen years from the grant date.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
ANNUAL REPORT 2017 I 42
5.5 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
2016
Value
expensed in
2017
% of grant
% of grant
Mr G Wong*
Mr D Smith
Mr N Lange
Mr A Dixon
Mr K Richardson*
Mr M Mangano**
Dr B Chew**
Mr R Hardie
Dr D Cade
26-Nov-13
23-Sep-14
27-Oct-15
26-Nov-13
23-Sep-14
01-Sep-15
21-Dec-16
26-Nov-13
23-Sep-14
01-Sep-15
21-Dec-16
26-Nov-13
23-Sep-14
04-Feb-16
21-Dec-16
26-Nov-13
23-Sep-14
04-Feb-16
26-Nov-13
23-Sep-14
26-Nov-13
23-Sep-14
26-Nov-13
23-Sep-14
01-Sep-15
21-Dec-16
26-Nov-13
23-Sep-14
01-Sep-15
21-Dec-16
$
532,450
-
-
129,640
67,745
135,478
50,134
129,640
67,745
247,454
65,968
25,465
13,549
46,498
9,282
25,465
13,549
66,425
129,640
67,745
129,640
67,745
129,640
67,745
126,126
37,552
129,640
67,745
132,894
49,192
205,566
249,227
287,897
50,051
58,039
65,937
-
50,051
58,039
120,436
-
9,831
11,608
12,990
-
9,831
11,608
18,557
50,051
58,039
50,051
58,039
50,051
58,039
61,386
-
50,051
58,039
64,680
-
Total
2,761,791
1,778,094
* Ceased employment during the year.
** Ceased employment during the prior year.
39
-
-
39
86
49
-
39
86
49
-
39
86
28
30
39
86
17
39
86
39
86
39
86
49
-
39
86
49
-
-
(440,574)
(287,897)
-
(34,854)
21,717
15,146
-
(34,854)
39,667
19,929
-
(6,971)
14,178
2,767
-
(6,971)
20,254
-
(34,854)
-
(34,854)
-
(34,854)
20,218
11,345
(34,854)
21,303
14,861
(750,152)
-
-
-
-
(51)
16
30
-
(51)
16
30
-
(51)
30
30
-
(51)
30
-
(51)
-
(51)
-
(51)
16
30
(51)
16
30
43 I SIRTEX
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
The following table outlines amounts for equities for non-executive directors that have been granted.
Name
Mr R Hill
Dr J Eady
Mr G Boyce
Grant date
01-Jul-16
01-Jul-16
01-Jul-16
Dr K Woodthorpe
01-Jul-16
Mr N Mitchell
N/A
Total
6. ADDITIONAL INFORMATION
Total value
$
Value
expensed in
2016
Value
expensed in
2017
% of grant
% of grant
57,635
36,028
28,817
28,817
–
151,297
–
–
–
–
–
–
–
–
–
–
57,635
36,028
28,817
28,817
–
151,297
100
100
100
100
–
6.1 Loans to Key Management Personnel
At 30 June 2017, $2,531,294 (2016: $1,255,046) was payable to key management personnel.
At 30 June 2017, $1,486 (2016: $1,493) was receivable from key management personnel.
The payable relates to deferred remuneration which is fully offset with a corporate asset and recognised net in the financial
statements (2016: deferred remuneration which is fully offset with a corporate asset and recognised net in the financial statements).
The payable is long-term in nature and will be paid over a period of 10 years. The receivable relates to expense reimbursement.
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.
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.
6.3 External Remuneration Consultant Advice
During the year KMP remuneration recommendations and data were received from the Board-approved, external remuneration
consultant.
Godfrey Remuneration Group Pty Limited
The Board also received other independent remuneration-related advice during the year.
Godfrey Remuneration Group Pty Limited
Advice on proposed organisational design and
remuneration implications;
Advice for NED Equity Plan’s disposal
restriction cessation point and disposal by
executives of shares acquired under LTI plan;
Research market practice for senior executive
incentive plans;
Review Remuneration Committee Charter.
$82,000
$10,200
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 engagement 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.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
ANNUAL REPORT 2017 I 44
The Board is satisfied that the KMP remuneration recommendations received were free from undue influence from KMP to whom
the recommendations related. It 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.
End of audited remuneration report.
Richard Hill
Director
23 August 2017
45 I SIRTEX
AUDITOR’S INDEPENDENCE DECLARATION
Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230
T +61 2 8297 2400
F +61 2 9299 4445
E info.nsw@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Sirtex Medical Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor
for the audit of Sirtex Medical Limited for the year ended 30 June 2017, I declare that, to the best
of my knowledge and belief, there have been:
a
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b
no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
N J Bradley
Partner - Audit & Assurance
Sydney, 23 August 2017
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
ANNUAL REPORT 2017 I 46
1.
the financial statements and notes, as set out on pages 52 to 87 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
give a true and fair view of the financial position as at 30 June 2017 and of the performance for the year ended on that date
of the Company and Consolidated Group.
(b)
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;
the financial statements and notes for the financial year comply with Accounting Standards; and
the financial statements and notes for the financial year give a true and fair view.
(b)
(c)
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.
3.
This declaration is made in accordance with a resolution of the Board of Directors.
Richard Hill
Director
Sydney, 23 August 2017
47 I SIRTEX
INDEPENDENT AUDITOR’S REPORT
Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230
T +61 2 8297 2400
F +61 2 9299 4445
E info.nsw@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of Sirtex Medical Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Sirtex Medical Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2017,
the consolidated statement of profit or loss and other comprehensive income consolidated
statement of changes in equity and consolidated statement of cash flows for the year then ended,
and notes to the consolidated financial statements, including a summary of significant accounting
policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group, is in accordance with the
Corporations Act 2001, including:
a
giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
performance for the year ended on that date; and
b
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
INDEPENDENT AUDITOR’S REPORT
ANNUAL REPORT 2017 I 48
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key audit matter
Intangible Assets (Note 12)
During the year the Group impaired all capitalised
research and development costs relating to clinical
trials. The impairment was a result of the clinical trials
not achieving their primary endpoints.
AASB 136 ‘Impairment of Assets’ requires that an
entity shall assess at the end of each reporting period
whether there is any indication that an asset may be
impaired. If any indication exists, the entity shall
estimate the recoverable amount of the asset.
Irrespective of whether there is any indication of
impairment, an entity shall also test an intangible
asset not yet available for use for impairment
annually by comparing its carrying amount with its
recoverable amount.
This area is a key audit matter due to the inherent
subjectivity that is involved in management making
judgements as well as the evaluation for any
impairment indicators as part of their annual
impairment review.
Taxation (Note 4)
Taxation for the Group is considered to be a complex
area given the different geographical locations and
transfer pricing agreements between group entities.
The Group also account for the research &
development (R&D) tax incentive under the
requirements of AASB112 ‘Income Taxes’. Under
AASB112, any eligible R&D expenditure expensed in
the statement of profit or loss should be added back
and then claimed as a (non-refundable) tax offset.
Management make an estimate of this tax offset
amount at year end.
Taxation is a key audit matter due to its complex
nature and due to the inherent subjectivity that is
involved in the Group making judgements in relation
to key tax matters.
How our audit addressed the key audit matter
Our procedures included, amongst others:
reviewing management’s impairment position
paper and verifying the underlying information
used to support the position;
discussing the assumptions and details with the
Chief Medical Officer and agreeing key inputs to
published clinical trial results to substantiate the
conclusions;
consideration of each of the internal and external
factors outlined by AASB 136 ‘Impairment of
Assets’; and
ensuring appropriate disclosures within the
financial statements and the adequacy of
disclosures surrounding the impairment write-
down in line with management’s position paper.
Our procedures included, amongst others:
making enquiries with management to obtain and
document an understanding of their process to
calculate the taxation for the Group;
check the reasonableness and accuracy of the
tax calculations prepared by management’s
internal tax expert;
assessing and comparing the historical reliability
of prior period estimates and budgets to support
the reliability of the tax calculation including the
R&D tax incentive estimate;
evaluation of the qualifications and expertise of
management’s internal tax expert and external
expert in order to assess their professional
competence and capabilities as they relate to the
work undertaken;
engaging our taxation experts in Australia and
the US to review management’s tax calculations
for reasonableness and compliance with the
relevant tax legislations and accounting policies;
inspecting copies of relevant correspondence
with relevant tax authorities; and
reviewing relevant disclosures in the financial
statements.
49 I SIRTEX
INDEPENDENT AUDITOR’S REPORT
Performance rights (Note 21)
During the year performance rights (issued in
financial year 2014) were exercised and ordinary
shares of Sirtex Medical Limited were issued. A
corresponding transfer was made between reserves
and share capital. This transaction was accounted for
as a contribution to the employee share trust and
deferred tax was recognised directly in equity in
relation to the difference between the accounting
treatment and the tax treatment.
Executive performance rights were granted to
executive and senior management during the year.
Management determined the fair value of the rights
using a Monte Carlo Simulation Model and Binomial
option pricing model.
This area is a key audit matter due to the
complexities in the taxation treatment of performance
rights, as well as the complexities and the inherent
subjectivity involved in the Company making
judgements relating to the key inputs and
assumptions used to value the performance rights,
including historical volatility and the risk free rate of
return.
Our procedures included, amongst others:
determining the reasonableness of the input
assumptions used in the Monte Carlo Simulation
Model and Binomial Option pricing model with
the assistance of our internal valuation experts
we checked the methodology, key assumptions
and outputs including the underlying equity,
interest rate, volatility, dividend yield, expected
life, grant date and granting criteria and average
granting percentage;
checking the appropriateness of the treatment of
the vested rights and the transfer of the fair value
to share capital against the requirements of
AASB2 ‘Share based payments’;
evaluating the qualifications and expertise of
managements external valuations expert in order
to assess their professional competence and
capabilities as they relate to the work
undertaken;
obtaining the opinion provided by management’s
external tax expert in relation to the tax treatment
of the performance rights and assessing whether
management’s accounting treatment is
consistent with the external tax expert opinion;
engaging our own taxation experts in Australia to
review the treatment of the share contribution to
the employee trust and the associated taxation
treatment; and
evaluating the qualifications and expertise of
management’s external tax expert in order to
assess their professional competence and
capabilities as they relate to the work
undertaken; and
reviewing relevant disclosures in the financial
statements.
INDEPENDENT AUDITOR’S REPORT
ANNUAL REPORT 2017 I 50
Information Other than the Financial Report and Auditor’s Report Thereon
The Directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2017, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard
Responsibilities of the Directors’ for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the Directors determine is necessary to enable the
preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.
51 I SIRTEX
INDEPENDENT AUDITOR’S REPORT
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 29 to 44 of the directors’ report for
the year ended 30 June 2017.
In our opinion, the Remuneration Report of Sirtex Medical Limited, for the year ended 30 June
2017, complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
N J Bradley
Partner - Audit & Assurance
Sydney, 23 August 2017
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
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
Impairment of intangible assets
Other expenses
(Loss)/profit before income tax
Income tax benefit/(expense)
(Loss)/profit for the year
Items that may be reclassified subsequently to profit or loss
Foreign currency translation (net of tax) of foreign operations
Total comprehensive (loss)/income for the year attributable to
members of the parent entity
Earnings per share
Basic (loss)/ earnings per share
Diluted (loss)/earnings per share
Dividends per Share
Note
2 (a)
3
2 (b)
2 (c)
12
3
4
18
18
19
The financial statements should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2017 I 52
2017
$'000
234,282
(36,177)
198,105
2,645
169
(89,281)
(10,558)
(2,370)
(2,218)
(11,771)
(7,660)
(22,515)
(90,541)
(4,959)
(40,954)
14,697
(26,257)
Consolidated
2016
$'000
232,492
(35,287)
197,205
2,229
2,099
(79,338)
(8,717)
(1,626)
(2,232)
(10,672)
(6,356)
(20,915)
-
(1,679)
69,998
(16,416)
53,582
(713)
464
(26,970)
54,046
Cents
(45.5)
(45.5)
30.0
Cents
93.7
92.2
20.0
53 I SIRTEX
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
Assets
Current Assets
Cash and cash equivalents
Other short-term deposits
Trade and other receivables
Inventories
Other financial assets
Other current 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
12
4.1(a)
13
4.1(c)
14(a)
14(b)
4.1(b)
16
17
2017
$'000
50,349
68,000
36,976
1,993
1,575
3,583
162,476
12,045
9,436
10,165
31,646
194,122
26,433
8,412
7,972
42,817
919
919
1,838
44,655
149,467
34,792
3,257
111,418
149,467
Consolidated
2016
$'000
21,025
86,000
42,272
1,918
1,687
4,212
157,114
13,987
82,821
7,795
104,603
261,717
28,090
7,239
7,009
42,338
1,153
24,722
25,875
68,213
193,504
32,684
6,656
154,164
193,504
The financial statements should be read in conjunction with the accompanying notes.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
Share
Rights
Reserve
$'000
Foreign
Currency
Translation
Reserve
$'000
Ordinary
Shares
$'000
Consolidated Entity
Balance at 30 June 2015
Foreign currency translation reserve
Profit attributable to members of parent entity
Total comprehensive income for the year attributable
to the members of the parent entity
Ordinary shares issued
Forfeited rights
Deferred tax on performance rights
Exercise of Non-Executive Directors shares
Purchase of Non-Executive Directors' shares on market
Contribution to performance reserve
Dividends paid or provided for
Total transactions with owners
Balance at 30 June 2016
Foreign currency translation reserve
(Loss)/profit attributable to members of parent entity
Total comprehensive income for the year attributable
to the members of the parent entity
Ordinary shares issued
Forfeited rights
Deferred tax on performance rights
Exercise of Non-Executive Directors shares
Purchase of Non-Executive Directors' shares on market
Contribution to performance reserve
Share buy-back
Dividends paid or provided for
Total transactions with owners
Balance at 30 June 2017
27,021
4,075
-
-
-
1,839
-
3,777
341
(294)
-
-
5,663
32,684
-
-
-
3,384
-
1,599
152
(154)
-
(2,873)
-
2,108
34,792
-
-
-
(1,839)
(14)
-
(341)
-
2,771
-
577
4,652
-
-
-
(3,384)
(817)
-
(152)
-
1,667
-
-
(2,686)
1,966
The financial statements should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2017 I 54
Retained
Earnings
$'000
Total
$'000
112,000
144,636
1,540
464
-
53,582
-
464
53,582
464
53,582
54,046
-
-
-
-
-
-
-
-
-
14
-
-
-
-
(11,432)
(11,418)
-
-
3,777
-
(294)
2,771
(11,432)
(5,178)
2,004
154,164
193,504
(713)
-
-
(713)
(26,257)
(26,257)
(713)
(26,257)
(26,970)
-
-
-
-
-
-
-
-
-
1,291
-
817
-
-
-
-
-
(17,306)
(16,489)
111,418
-
-
1,599
-
(154)
1,667
(2,873)
(17,306)
(17,067)
149,467
55 I SIRTEX
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
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
Utilisation/(investment) in other short-term deposits
Proceeds from plant and equipment
Purchase of plant and equipment
Purchase of intangible assets
Net cash used by investing activities
Cash flows from financing activities
Share buy-back
Payment of dividends
Net cash used by financing activities
Net increase/(decrease) in cash held
Cash and cash equivalents at beginning of financial year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of financial year
5 (a)
The financial statements should be read in conjunction with the accompanying notes.
2017
$'000
239,375
(177,823)
2,611
(8,191)
55,972
18,000
-
(1,239)
(21,701)
(4,940)
(2,873)
(17,306)
(20,179)
30,853
21,025
(1,529)
50,349
Consolidated
2016
$'000
225,153
(153,992)
2,184
(8,134)
65,211
(34,000)
137
(1,718)
(19,196)
(54,777)
-
(11,432)
(11,432)
(998)
21,941
82
21,025
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
ANNUAL REPORT 2017 I 56
1. BASIS OF PREPARATION
This section sets out the Company’s accounting policies
that relate to the financial statements as a whole. Where an
accounting policy is specific to one note, the policy is described
in the note to which it relates.
1.1 Reporting Entity
Sirtex Medical Ltd (the Company) is a Public Company
incorporated and domiciled in Australia. The consolidated
financial statements of the Company as at and for the year
ended 30 June 2017 comprise the Company and its controlled
entities (together referred to as the Group). Sirtex Medical Ltd
is a for-profit entity.
1.2 Basis of Preparation
(a) Statement of compliance
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 consolidated financial statements comply
with International Financial Reporting Standards (IFRS) and
Interpretations adopted by the International Accounting
Standards Board.
The consolidated financial statements were approved and
authorised for issue by the directors on 23 August 2017.
(b) Basis of measurement
The consolidated financial statements have been prepared
on an accruals basis and are based on historical costs
modified, where applicable, by the measurement at fair
value of selected non-current assets, financial assets and
financial liabilities.
(c) Functional and presentation currency
These consolidated financial statements are presented in
Australian dollars (AUD), which is the Company’s functional
currency.
The Company has applied the relief available to it
under ASIC Corporations (Rounding in Financial/
Directors’Reports) Instrument 2016/191 and in accordance
with that Instrument, all financial information presented in
AUD has been rounded to the nearest one thousand dollars
unless otherwise stated.
(d) Foreign currency
Foreign currency transactions
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.
Financial statements of foreign operations
The assets and liabilities of foreign operations are translated
at year-end exchange rates prevailing at that reporting date.
The income and expenses of foreign operations are
translated at average exchange rates for the period.
The retained earnings of foreign operations 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.
(e) Use of judgments and estimates
The preparation of financial statements in conformity with
IFRS requires management to make judgments, estimates
and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these
estimates.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are
recognised in the financial year in which the estimate is
revised and in any future years affected.
Information about critical judgments in applying accounting
policies that have the most significant effect on the amounts
recognised in the consolidated financial statements is
included in the following notes:
Note 4 - Income Tax
Note 12 - Intangibles
Note 14 - Provisions
Note 17 - Reserves
(f) Basis of consolidation
Controlled entities
The Consolidated Entity controls an entity if it is exposed to,
or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through
its power over the entity. The financial statements of
controlled entities are included in the consoldiated financial
statements from the date that control commences until the
date that control ceases.
57 I SIRTEX
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
1. BASIS OF PREPARATION (CONTINUED)
Transactions eliminated on consolidation
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.
(g) 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.
(h) New accounting standards and interpretations for
application in future periods
AASB 9 Financial Instruments (applicable for annual
reporting periods beginning on or after 1 January 2018):
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.
ii.
the objective of the entity’s business model for
managing the financial assets; and
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:
the change attributable to changes in credit risk are
i.
presented in other comprehensive income (OCI); and
the remaining change is presented in profit or loss.
ii.
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
AASB 16: Leases
Nature of the change in accounting policy
AASB 16 will cause the majority of the leases of an entity
to be brought onto the Balance Sheet. There are limited
exceptions relating to short-term leases and low value
assets which may remain off-balance sheet.
The calculation of the lease liability will take into account
appropriate discount rates, assumptions about lease term
and increases in lease payments. A corresponding right to
use an asset will be recognised which will be amortised over
the term of the lease.
Rent expense will no longer be shown, the profit and loss
impact of the leases will be through amortisation and
interest charges.
Effective date
Annual reporting periods beginning on or after 1 January
2019.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
ANNUAL REPORT 2017 I 58
Expected impact on the financial statements
For the financial year ended 30 June 2020, there will be a
significant increase in lease assets and financial liabilities
recognised on the balance sheet. The reported equity will
reduce as the carrying amount of lease assets will reduce
more quickly than the carrying amount of lease liabilities.
Group EBIT in the statement of profit or loss and other
comprehensive income will be higher as the implicit interest
in lease payments for former off balance sheet leases will
be presented as part of finance costs rather than being
included in operating expenses. Operating cash outflows
will be lower and financing cash flows will be higher in the
statement of cash flows as principal repayments on all lease
liabilities will now be included in financing activities rather
than operating activities. Interest can also be included
within financing activities
AASB 15: Revenue from Contracts with Customers
Nature of the change in accounting policy
AASB 15 introduces a five step process for revenue
recognition with the core principle of the new Standard
being for entities to recognise revenue to depict the
transfer of goods or services to customers in amounts that
reflect the consideration (that is, payment) to which the
entity expects to be entitled in exchange for those goods or
services.
Accounting policy changes will arise in timing of revenue
recognition, treatment of contracts costs and contracts
which contain a financing element.
AASB 15 will also result in enhanced disclosures about
revenue, provide guidance for transactions that were not
previously addressed comprehensively (for example, service
revenue and contract modifications) and improve guidance
for multiple-element arrangements.
Effective date
Annual reporting periods beginning on or after 1 January
2018.
Expected impact on the financial statements
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 2019.
59 I SIRTEX
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
2. REVENUE AND OTHER INCOME
(a) Revenue from the sale of goods
(b) Other revenue
Interest income from financial institutions
(c) Other income
Realised and unrealised foreign exchange gains
Other
Consolidated
2016
$'000
2017
$'000
234,282
232,492
2,645
2,645
-
169
169
2,229
2,229
1,900
199
2,099
Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and
volume rebates allowed.
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.
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
Other expenses
Impairment of intangible assets
Impairment of property, plant and equipment
Onerous lease provision
Provision for legal settlement
Consolidated
2016
$'000
35,287
2,367
66,941
2,164
4,403
2,593
-
-
-
1,389
2017
$'000
36,177
2,788
73,373
2,371
4,545
2,642
90,541
637
626
-
Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin.
Employee Benefits
Wages, salaries and annual leave
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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
ANNUAL REPORT 2017 I 60
3. PROFIT FOR THE YEAR (CONTINUED)
Long service leave
The provision for 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.
Post-employment benefit plans
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 recognised as an in the period that relevant employee services
are rendered.
Deferred compensation benefits
The Group provides deferred compensation benefits to certain employees. The net deferred compensation liability (asset) is
recognised taking into account the present value of the liability and the fair value of the corporate assets securing the liability. Any
gain or loss in recognised in profit or loss.
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.
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) Prima facie tax on profit from ordinary activities before income tax is reconciled
to 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
– Over-provision 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 effect tax rates are as follows
Consolidated
2016
$'000
2017
$'000
11,391
(26,185)
97
(14,697)
(40,954)
(12,286)
45
3,146
(3,439)
558
(2,221)
225
(770)
45
(14,697)
35.5%
14,671
1,923
(178)
16,416
69,998
20,999
54
3,411
(4,118)
(307)
(3,351)
476
(688)
(60)
16,416
23.5%
The Company and its wholly owned Australian subsidiaries are part of a tax-consolidated group. As a consequence, all members of
the tax-consolidated group are taxed as a single entity. The head entity within the tax-consolidated group is Sirtex Medical Limited.
Income tax expense includes current and deferred tax. Current and deferred tax are recognised in the Consolidated Statement
of Profit or Loss and Other Comprehensive Income except to the extent that they relate to items recognised directly in other
comprehensive income or equity.
61 I SIRTEX
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
4. INCOME TAX EXPENSE (CONTINUED)
Current tax is the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to tax payable in
respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date.
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 with consideration to any changes in
research and development activities or legislation during the year.
(c) Consolidated Entity - Numerical reconciliation between income tax expense and
cash taxes paid
Income tax expense on profit before income tax
Timing differences recognised in deferred tax
Effect of tax rate in foreign jurisdictions
Current tax instalments payable next year
Prior year tax instalments paid this year
Cash taxes paid per statement of cash flows
(d) Sirtex Medical Limited's Australian tax consolidated group - numerical
reconciliation between income tax expense and profit before income tax
Profit before income tax (excluding dividends from wholly owned foreign
subsidiaries)
Add: Dividends from wholly owned foreign subsidiaries
Profit before income tax
Tax at the Australian tax rate of 30%
Add/(less): Tax effect of
Non-deductible amortisation
Other non-deductible expenses
Research and development allowances
Exempt foreign sourced dividends from wholly owned subsidiaries
Adjustment for prior years
Income tax expense on profit before income tax
4.1 CURRENT AND DEFERRED TAX ASSETS AND LIABILITIES
(a) 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
2017
$'000
(14,697)
26,088
(2,221)
(2,706)
1,727
8,191
2017
$'000
(75,487)
24,546
(50,941)
(15,282)
45
9
(806)
(7,364)
(23,398)
98
(23,300)
2017
$'000
2,031
1,034
2,340
11
4,749
10,165
1,092
74
430
2016
$'000
16,416
(1,745)
(3,351)
(7,427)
4,241
8,134
2016
$'000
29,040
63,178
92,218
27,665
54
6
(931)
(18,954)
7,840
558
8,398
2016
$'000
1,166
1,053
2,468
268
2,840
7,795
1,092
464
301
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
ANNUAL REPORT 2017 I 62
4.1 CURRENT AND DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
(a) Deferred tax assets
The movement in tax losses 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 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 employee provisions is as follows:
Opening balance
(Debit)/credit to the statement of profit or loss and other comprehensive income
Credit/(debit) to equity
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
Closing balance
The movement in other is as follows:
Opening balance
Credit to the statement of profit or loss and other comprehensive income
Credit to equity
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
Credit to equity
Closing balance
2017
$'000
1,166
770
95
2,031
1,053
(19)
1,034
2,469
(129)
-
2,340
268
(257)
11
2,840
1,909
-
4,749
7,795
2,275
95
10,165
2016
$'000
415
688
63
1,166
279
774
1,053
2,001
471
(3)
2,469
-
268
268
2,390
397
53
2,840
5,085
2,598
112
7,795
63 I SIRTEX
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
4.1 CURRENT AND DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
2017
$'000
2016
$'000
(b) Deferred tax liabilities
Timing differences attributable to:
Capitalisation of development expenditure
Fixed assets
Other
The movement in the capitalisation of development expenditure is as follows:
Opening balance
(Credit)/debit to the statement of profit or loss and other comprehensive income
Closing balance
The movement in the fixed assets 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 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
(Credit)/debit to the statement of profit or loss and other comprehensive income
Debit to equity
Closing balance
-
134
785
919
22,846
(22,846)
-
945
(812)
1
134
931
(145)
-
786
22,846
945
931
24,722
19,222
3,624
22,846
724
220
1
945
88
833
10
931
24,722
(23,804)
1
919
20,034
4,677
11
24,722
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.
(c) Current tax assets and liabilities
The current tax liabilities for the Consolidated entity of $8,412,000 (2016: $7,239,000) represent the amount of income taxes payable
in respect of current and prior financial years.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
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 2.78% (2016: 2.93%). These deposits
have an average maturity of 31 days as at 30 June 2017 (2016: 43 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
Loss on disposal of plant & equipment
Impairment of internally generated intangibles
Impairment of property, plant and equipment
Onerous lease provision
Share rights reserve
Net foreign exchange differences
Changes in net assets and liabilties
(Increase)/decrease in assets
Trade receivables
Other receivables
Inventories
Other current assets
Deferred tax 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
ANNUAL REPORT 2017 I 64
Consolidated
2016
$'000
2017
$'000
36,349
14,000
50,349
15,025
6,000
21,025
(26,257)
53,582
6,916
205
90,541
637
626
1,667
1,604
4,924
373
(74)
740
(2,371)
(2,746)
1,173
962
1,088
(234)
(23,802)
55,972
6,567
-
-
-
-
2,771
(449)
(8,322)
-
39
(1,360)
(2,639)
3,650
2,483
321
-
130
8,438
65,211
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.
65 I SIRTEX
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
6. OTHER SHORT-TERM DEPOSITS
Other short-term deposits with financial institutions
2017
$'000
68,000
68,000
Consolidated
2016
$'000
86,000
86,000
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 2017 of these term deposits is 175 days (2016: 206 days). The effective interest rate on the deposits
is 2.78% (2016: 3.09%).
7. TRADE AND OTHER RECEIVABLES
(a) Trade receivables
Trade receivables
Provision for impairment
(b) Other receivables
GST receivables
Other receivables
Consolidated
2016
$'000
2017
$'000
37,474
(2,505)
34,969
816
1,191
2,007
36,976
40,152
(260)
39,892
1,256
1,124
2,380
42,272
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:
30 June 2017
Trade receivables
30 June 2016
Trade receivables
Trade receivables past due but not impaired
Less than 30 days overdue
30 - 60 days overdue
More than 60 days overdue
Opening
balance
$'000
Amounts
provided
for
$'000
Amounts
written
off
$'000
Closing
balance
$'000
(260)
(3,566)
1,321
(2,505)
(92)
(168)
-
(260)
2017
$'000
6,928
2,850
2,302
12,080
Consolidated
2016
$'000
7,644
4,544
3,218
15,406
Collection history from previous year’s supports management’s view that receivables less than 180 days overdue are not considered
impaired.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
ANNUAL REPORT 2017 I 66
7. TRADE AND OTHER RECEIVABLES (CONTINUED)
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.
The Group’s trading terms do not generally include the requirement for customers to provide collateral as security for financial
assets.
8. INVENTORIES
Raw materials - at cost
Consolidated
2016
$'000
1,918
1,918
2017
$'000
1,993
1,993
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.
9. OTHER FINANCIAL ASSETS
Other current financial assets:
Security deposits paid
10. OTHER CURRENT ASSETS
Prepayments
Consolidated
2016
$'000
1,687
1,687
Consolidated
2016
$'000
4,212
4,212
2017
$'000
1,575
1,575
2017
$'000
3,583
3,583
67 I SIRTEX
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
11. PROPERTY, PLANT AND EQUIPMENT
Buildings
At cost
Accumulated depreciation
Net carrying amount
Plant and equipment
At cost
Accumulated depreciation
Accumulated impairment loss
Net carrying amount
Asset work in progress
At cost
Accumulated depreciation
Net carrying amount
Total property, plant and equipment
At cost
Accumulated depreciation
Accumulated impairment loss
Net carrying amount
Movements in carrying amounts
Buildings
Carrying amount at beginning
Additions
Depreciation expense
Carrying amount at end
Plant and equipment
Carrying amount at beginning
Additions
Disposals
Depreciation expense
Impairment loss
Carrying amount at end
Asset work in progress
Carrying amount at beginning
Additions
Disposals/Transfers
Carrying amount at end
2017
$'000
1,304
(595)
709
21,788
(9,815)
(637)
11,336
-
-
-
23,092
(10,410)
(637)
12,045
781
-
(72)
709
10,951
3,494
(173)
(2,299)
(637)
11,336
2,255
-
(2,255)
-
Consolidated
2016
$'000
1,348
(567)
781
20,509
(9,558)
-
10,951
2,255
-
2,255
24,112
(10,125)
-
13,987
591
246
(56)
781
10,381
2,807
(129)
(2,108)
-
10,951
2,192
71
(8)
2,255
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
11. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Total property, plant and equipment
Carrying amount at beginning
Additions
Disposals
Depreciation expense
Impairment loss
Carrying amount at end
ANNUAL REPORT 2017 I 68
2017
$'000
13,987
1,239
(173)
(2,371)
(637)
12,045
Consolidated
2016
$'000
13,164
3,124
(137)
(2,164)
-
13,987
Owned assets
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.
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.
Depreciation
Items of plant and equipment, including leasehold assets, are depreciated on a straight line basis so as to write off the net cost of
each asset over its expected useful life. The estimated useful lives in the current and comparative years are as follows: leasehold
improvements between 10 to 20 years and plant and equipment between 3 to 10 years.
Plant and equipment 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.
69 I SIRTEX
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
12. INTANGIBLE ASSETS
Software
At cost
Accumulated amortisation
Net carrying amount
Internally generated intangibles
At cost
Accumulated amortisation
Accumulated impairment loss
Net carrying amount
Intellectual property
At cost
Accumulated amortisation
Net carrying amount
Asset work in progress
At cost
Accumulated amortisation
Net carrying amount
Total Intangible assets
At cost
Accumulated amortisation
Accumulated impairment loss
Net carrying amount
Movements in carrying amounts
Software
Carrying amount at beginning
Additions
Transfers in from work in progress
Amortisation expense
Carrying amount at end
Internally generated intangibles
Carrying amount at beginning
Additions
Amortisation expense
Impairment loss
Carrying amount at end
Intellectual property
Carrying amount at beginning
Additions
Disposals
Amortisation expense
Impairment loss
Carrying amount at end
Consolidated
2016
$'000
2017
$'000
12,372
(2,936)
9,436
96,977
(6,436)
(90,541)
-
3,607
(3,607)
-
-
-
-
112,956
(12,979)
(90,541)
9,436
2,399
13
8,240
(1,216)
9,436
76,153
17,566
(3,178)
(90,541)
-
151
-
-
(151)
-
-
4,122
(1,723)
2,399
79,411
(3,258)
-
76,153
3,607
(3,456)
151
4,118
-
4,118
91,258
(8,437)
-
82,821
312
3,303
-
(1,216)
2,399
64,075
15,085
(3,007)
-
76,153
331
-
-
(180)
-
151
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
12. INTANGIBLE ASSETS (CONTINUED)
Asset work in progress
Carrying amount at beginning
Additions
Transfers
Amortisation expense
Impairment loss
Carrying amount at end
Total intangible assets
Carrying amount at beginning
Additions
Amortisation expense
Impairment loss
Carrying amount at end
ANNUAL REPORT 2017 I 70
Consolidated
2016
$'000
2017
$'000
4,118
4,122
(8,240)
-
-
-
82,821
21,701
(4,545)
(90,541)
9,436
3,309
4,112
(3,303)
-
-
4,118
68,027
19,197
(4,403)
-
82,821
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.
Recognition of internally generated intangible assets
The Group undertakes clinical and R&D activities. These have been classified as internally generated intangible assets, in accordance
with AASB 138 Intangible Assets. Expenditure on the research phase of projects are recognised as an expense.
As at 30 June 2017, four of the five major Phase IV post-marketing clinical trials were completed. Amortisation expense of $3,178,141
was recognised during the year (2016: $3,007,411).
Following the initial recognition of the capitalised development expenditure, the cost model is applied requiring the assets to be
carried at cost less accumulated amortisation and accumulated impairment losses.
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.
Impairment
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.
71 I SIRTEX
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
12. INTANGIBLE ASSETS (CONTINUED)
The carrying value of the five major Phase IV post-marketing clinical trials and the two development projects have been tested for
impairment at the end of the financial year. The clinical trials did not achieve their primary end-points which was to demonstrate
superiority over the standard of care used in the market by showing an overall increase in survival. Given the outcome, management
determined that there is no future economic benefit to be derived from the capitalised clinical trials. The Group has conducted a
review of its strategy. As a result of this, all intangible assets ready for use and not ready for use including development projects with
a total carrying amount of $90,540,640 were considered for impairment and it was assessed that no future economic benefit could
be generated.
Amortisation
Amortisation of intangible asset is recognised from the date of completion and calculated over the estimated useful life of these
assets.
Consolidated
13. TRADE AND OTHER PAYABLES
Trade payables
Other payables
14. PROVISIONS AND ACCRUALS
(a) Short-term Provisions and Accruals
Provision for long service leave
Provision for clinical studies
Provision for legal settlement
Redundancy provision
Onerous lease provision
Miscellaneous provisions
(b) Long-term Provisions
Provision for long service leave
Miscellaneous provisions
The overall movement in the short-term provision for long service leave account is as
follows:
Opening balance
Additional provisions for the year
Amounts used during the year
Closing balance
The overall movement in the short-term provision for clinical studies account is as
follows:
Opening balance
Additional provisions for the year
Amounts used during the year
Closing balance
2017
$'000
13,550
12,883
26,433
390
3,514
-
2,704
626
738
7,972
513
406
919
463
216
(289)
390
1,940
7,442
(5,868)
3,514
2016
$'000
16,296
11,794
28,090
463
1,940
1,389
-
-
3,217
7,009
671
482
1,153
385
106
(28)
463
3,180
8,228
(9,468)
1,940
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
14. PROVISIONS AND ACCRUALS (CONTINUED)
The overall movement in the short-term provision for legal settlement account is as
follows:
Opening balance
Additional provisions for the year
Amounts used during the year
Closing balance
The overall movement in the short-term provision for redundancy provision account
is as follows:
Opening balance
Additional provisions for the year
Amounts used during the year
Closing balance
The overall movement in the onerous lease provision account is as follows:
Opening balance
Additional provisions for the year
Amounts used during the year
Closing balance
The overall movement in the short-term miscellaneous 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 for long service leave 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 miscellaneous provision account is as
follows:
Opening balance
Additional provisions for the year
Amounts used during the year
Closing balance
ANNUAL REPORT 2017 I 72
Consolidated
2017
$'000
2016
$'000
1,389
-
(1,389)
-
-
2,704
-
2,704
-
626
-
626
3,217
22,748
(25,227)
738
671
3
(161)
513
482
58
(134)
406
-
1,389
-
1,389
-
-
-
-
-
-
-
-
3,101
23,506
(23,390)
3,217
521
163
(13)
671
583
-
(101)
482
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.
73 I SIRTEX
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
14. PROVISIONS AND ACCRUALS (CONTINUED
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.
Restructuring provision
Restructuring provisions are recognised only if a detailed plan for the restructuring has been developed and implemented, or
management has at least announced the plan’s main features to those affected by it. Provisions are not recognised for future
operating losses.
Onerous lease provision
An onerous lease provision is recognised when the unavoidable costs of meeting the obligations under the contract exceed the
economic benefits expected to be received under it. A provision is recognised to reflect the least net cost of exiting from the
contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it.
15. CONTINGENT LIABILITIES
As previously disclosed, Sirtex Medical Limited (Sirtex) is the respondent to a representative proceeding (shareholder class action)
brought in the Federal Court of Australia. The statement of claim filed in the proceeding alleges breaches by Sirtex of its continuous
disclosure obligations in the period prior to 9 December 2016 and misleading and deceptive conduct arising out of statements made
by Sirtex on 24 August 2016 and 25 October 2016.
The class of applicants is said to include all persons who acquired ordinary shares in Sirtex on or after 24 August 2016 and who were at
the commencement of trading on 9 December 2016 holders of any of those shares. The applicants are seeking declarations, damages
and costs. Sirtex wholly rejects the claims and is vigorously defending the proceeding. Since the case commenced on 13 February
2017, there have been several interlocutory disputes and Sirtex filed a defence on 21 July 2017. At the most recent case management
hearing on 15 August 2017, the Court made timetable orders for the provision of discovery and the filing of lay and expert evidence
and set the matter down for trial commencing in late October 2018.
Having regard to the status of the proceeding, the current pleadings and the other information available, the directors believe that
any liability potentially arising out of the class action cannot be reliably assessed or estimated at this point in time. Therefore, no
contingent asset or liability has been recorded in the financial statements.
16. ISSUED CAPITAL
Issued capital
Share issue costs
Share buy-back
Purchase of Non-Executive Directors' shares on market
Deferred tax on performance rights
Number of shares issued
2017
$'000
32,154
(1,258)
(2,873)
(540)
7,309
34,792
57,465,062
Consolidated
2016
$'000
28,616
(1,258)
-
(386)
5,712
32,684
57,273,893
NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 2017 I 74
FOR THE YEAR ENDED 30 JUNE 2017
16. ISSUED CAPITAL (CONTINUED)
Fully paid ordinary shares
Balance at beginning of the year
Purchase of Non-Executive Directors' share on market
Issued on exercise of performance rights
Share buy-back
Balance at end of the year
2017
2016
No (000)
$'000
No (000)
$'000
57,274
32,684
56,530
-
422
(231)
57,465
(154)
5,135
(2,873)
34,792
-
744
-
27,021
(294)
5,957
-
57,274
32,684
Share capital
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.
A total of 422,548 fully paid ordinary shares have been issued as a result of the exercise of performance rights at an average price of
$31.66. The value of $5,135,337 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 share capital and issued shares do not have a par value.
The purchase of Non-Executive Directors’ (NEDs) share 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 lapsing of fifteen 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 Directors’ Rights Plan in place. Refer to note 21
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 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 2017.
17. RESERVES
Share Rights Reserve
Foreign Currency Translation Reserve
Consolidated
2016
$'000
4,652
2,004
6,656
2017
$'000
1,966
1,291
3,257
The Executive Performance Rights Plan,the Non-Executive Directors’ Rights Plan and the Sirtex Equity Plan gives 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.
75 I SIRTEX
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Consolidated
2016
$
2017
$
18. EARNINGS PER SHARE
(a) Basic earnings per share
(Loss)/profit from continuing operations attributable to equity holders
Weighted average number of shares used in the calculation of basic earnings per share
(26,257,188)
57,668,660
53,581,892
57,197,572
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
Rights and Non-Executive Directors' Rights Plans (refer to note 21 for further details)
(b) Diluted earnings per share
-
942,027
(Loss)/profit from continuing operations attributable to equity holders
Weighted average number of shares used in the calculation of diluted earnings per share
(26,257,188)
57,668,660
53,581,892
58,139,599
Consolidated
2016
$'000
2017
$'000
19. DIVIDENDS
Distributions paid
Declared 77.8% franked (2016: 100% franked) ordinary dividend of 30 cents (2016: 20
cents) cents per share franked at the tax rate of 30% (2016: 30%)
17,306
11,432
Balance of franking credit amount at year end adjusted for franking credits arising from
payment of provision for income tax
1,570
6,206
Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been approved prior
to the reporting date.
Dividend franking account
Dividends paid during the financial year were partially franked at the tax rate of 30% (2016: 30%). There are no further tax
consequences as a result of paying dividends other than a reduction in the franking account.
At 30 June 2017 there were $1,570,000 of franking credits (2016: $6,206,000) available to shareholders of Sirtex Medical Limited for
subsequent financial years.
The ability to utilise the franking account credits is dependent upon the ability to declare dividends. Dividends in excess of the
dividend franking account balance will be unfranked.
20. 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 determine 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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
ANNUAL REPORT 2017 I 76
20. OPERATING SEGMENTS (CONTINUED)
Intersegment 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 a 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.
Segment performance
Segment revenue
Asia Pacific
Americas
EMEA
Total of all segments
Interest
Eliminations
Consolidated
External Sales
Inter-segment(s)
Total
2017
$'000
9,076
186,883
38,323
2016
$'000
8,361
185,204
38,927
2017
$'000
8,832
14,149
163,974
2016
$'000
163,751
13,819
-
2017
$'000
17,908
201,032
202,297
421,237
2,645
2016
$'000
172,112
199,023
38,927
410,062
2,229
(186,955)
(177,570)
236,927
234,721
The total revenue presented 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
2017
$'000
234,282
2,645
186,955
(186,955)
236,927
2016
$'000
232,492
2,229
177,570
(177,570)
234,721
77 I SIRTEX
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
20. OPERATING SEGMENTS (CONTINUED)
Segment net (loss)/profit after tax
Asia Pacific
Americas
EMEA
Total of all segments
Eliminations
Profit before income tax expense
Income tax benefit/(expense)
(Loss)/Profit after income tax expense
Segment assets and liabilities
Asia Pacific
Americas
EMEA
Total of all segments
Eliminations
Consolidated
Other segment information
2017
$'000
(50,268)
7,750
26,111
(16,407)
(24,547)
(40,954)
14,697
(26,257)
Assets
Liabilities
2017
$'000
207,797
50,804
58,772
317,373
(123,251)
194,122
2016
$'000
2017
$'000
273,960
66,860
55,959
52,865
382,784
(121,067)
261,717
27,718
37,961
132,539
(87,884)
44,655
2016
$'000
95,397
13,547
33,634
142,578
(72,580)
69,998
(16,416)
53,582
2016
$'000
86,408
36,100
29,998
152,506
(84,293)
68,213
Acquisition of segment assets
– Plant and equipment
– Intangibles
Depreciation and amortisation of
segment assets
– Plant and equipment
– Intangibles
Impairment expense of segment assets
– Plant and equipment
– Intangibles
Asia Pacific
Americas
EMEA
2017
$'000
379
21,701
779
4,545
637
90,541
2016
$'000
1,045
19,197
763
4,403
-
-
2017
$'000
444
-
2016
$'000
1,406
-
2017
$'000
2016
$'000
416
-
673
-
856
812
736
589
-
-
-
-
-
-
3
-
-
-
-
-
Major customers
The Group has a number of customers to whom it provides products. No single external customer represents more than 10% of the
total revenue.
ANNUAL REPORT 2017 I 78
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
21. SHARE BASED PAYMENTS
Executive Performance Rights
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.
On 21 December 2016, a total of 221,575 executive 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 after 30 June 2019. The performance rights hold no voting or dividend rights, and are not
transferable.
Performance rights granted to key management personnel are as follows:
Grant Date
26 November 2013
23 September 2014
1 September 2015
27 October 2015
4 February 2016
21 December 2016
Number
448,500
284,720
96,244
45,930
61,900
221,575
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 2016 to 30 June 2019 (the Measurement period), namely Indexed Shareholder Return (i-TSR) and Earnings per
Share (EPS). The percentage of rights vested will be determined as follows:
TSR (% pa compounded)
Vesting (%)
100% of ASX300 TSR and greater than 10%
0%
Above market average but not reaching target
1% for each 1% above market average (pro-rata)
200% of ASX300 TSR
Surpassing target
100% of Target grants (66.7% of Plan grants)
0.5% for each 1% above target up to 1.5 times entitlement
EPS (% pa compounded)
EPS compound growth of 10%
Vesting (%)
0%
Above threshold but not reaching target
10% for each 1% above market average (pro-rata)
EPS compound growth of 20%
100% of Target Rights (66.7% of Plan Rights)
Surpassing target
5% for each 1% above target up to 1.5 times entitlement
79 I SIRTEX
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
21. SHARE BASED PAYMENTS (CONTINUED)
A summary of the movements of all performance rights issued is as follows:
Grant
Date
Vesting
Date
Exercise
Price
26-Nov-13
30-Jun-16
23-Sep-14
30-Jun-17
1-Sep-15
30-Jun-18
27-Oct-15
30-Jun-18
4-Feb-16
30-Jun-18
21-Dec-16
30-Jun-19
-
-
-
-
-
-
Balance
at start
of year
443,350
281,320
96,244
45,930
61,900
Granted
during
the year
Exercised
during
the year
Forfeited
during
the year
Balance
at end of
year
Vested and
exercisable
-
-
-
-
-
423,350
-
20,000
20,000
-
-
-
-
-
76,400
204,920
-
96,244
45,930
-
7,000
54,900
41,499
180,076
-
-
-
-
-
221,575
Lapsed
-
204,920
-
-
-
-
The weighted fair value of the performance rights issued during the financial year ended 30 June 2017 has been calculated at $6.04
(2016: $17.83).
The price was calculated by using a Monte Carlo simulation model and the binomial option pricing model applying the following
inputs:
Exercise price
Performance rights life
Underlying share price
Expected share price volatility
Expected index volatility
Expected dividend
Distribution yield
Correlation
Risk-free interest rate
Nil
3 years
$14.76
30%
10%
$0.14 per share
1.05%
12.50%
2.04%
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 $1,666,747 (2016: $2,771,860) of performance rights
plan expense, and relates in full to equity-settled share-based payment transactions.
Non-Executive Directors’ Rights
On 1 July 2016, a total of 5,917 rights were granted to Non-Executive Directors under the Non-Executive Directors’ Rights Plan to take
up rights which may convert into ordinary shares, for nil consideration. The rights will vest three months after grant provided that
the Non-Executive Directors 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 are transferred to each NED, but with a CHESS
holding lock. Disposal restrictions stipulate that, except by force of law, exercised shares may not be dealt with until the earlier of
ceasing to be a NED of the Group or the elapsing of fifteen years from the grant date.
Rights granted to Non-Executive Directors are as follows:
Grant Date
23-Nov-15
01-Jul-16
Number
4,230
5,917
ANNUAL REPORT 2017 I 80
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
21. SHARE BASED PAYMENTS (CONTINUED)
A summary of the movements of all rights issued is as follows:
Grant Date
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
unexercisable
1 July 2016
1-Oct-16
-
-
5,917
5,917
-
-
-
-
Sirtex Equity Plan
The purpose of the Sirtex Equity Plan is to encourage employees to hold Sirtex shares, and to align their interests to shareholders’
interests.
The first grant of performance rights under the Plan was made on 20 September 2016. with a subsequent grant on 9 March 2017.
During the financial year ended 30 June 2017, a total of 78,590 performance rights were granted to Eligible Employees under the
Sirtex Equity plan, to take up performance rights which may convert into ordinary shares, for nil consideration. The performance
rights are exercisable after 30 June 2019. The performance rights hold no voting or dividend rights, and are not transferable.
Rights granted to Eligible Employees are as follows:
Grant Date
20 September 2016
9 March 2017
Number
75,340
3,250
The Board has determined that there will be a performance condition based on Indexed Shareholder Return (i-TSR) calculated over a
three year period from 1 July 2016 to 30 June 2019 (the Measurement period). The percentage of rights vested will be determined as
follows:
TSR (% pa compounded)
Less than 100% of ASX300 TSR
Vesting (%)
0%
At least 100% of ASX300 TSR and positive SRX TSR
100% of Plan grants
A summary of the movements of all rights issued is as follows:
Grant Date
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 &
exercis-
able
Vested &
unexercis-
able
20-Sep-16
30-Jun-19
9-Mar-17
30-Jun-19
-
-
-
-
75,340
3,250
-
-
13,440
-
61,900
3,250
-
-
-
-
The weighted fair value of the performance rights issued during the financial year ended 30 June 2017 has been calculated at $17.59.
22. KEY MANAGEMENT PERSONNEL
Refer to the Remuneration Report contained 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 2017 and 30 June 2016.
The totals of remuneration paid to KMP of the company and the Group during the year are as follows:
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payment
2017
$
5,035,196
155,687
675,035
(750,154)
5,115,764
2016
$
6,134,843
173,403
-
1,778,095
8,086,341
81 I SIRTEX
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
23. PARENT ENTITY
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Reserves
Retained earnings
Total Equity
Reserves
Share rights reserve
Share capital reserve
Total reserves
Financial performance
Profit for the year
Total comprehensive income
2017
$'000
134,997
33,537
168,534
50,066
939
51,005
34,792
(5,907)
88,644
117,529
(584)
(5,323)
(5,907)
2016
$'000
127,962
30,428
158,390
27,976
1,243
29,219
32,684
(2,032)
98,519
129,171
874
(2,906)
(2,032)
7,430
7,430
43,626
43,626
Financial guarantees
No guarantees have been provided to its wholly-owned subsidiaries by the parent entity.
Contingent liabilities
Refer to note 15.
Contractual commitments
The parent entity has an operating lease commitment for the office lease in Sydney. Refer to note 24 for further details.
Changes in accounting policies
There have been no changes to accounting standards impacting the parent entity in the current financial year.
ANNUAL REPORT 2017 I 82
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
24. 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 - North Sydney
Sydney - St Leonards
Singapore
Bonn (GER)
Frankfurt (GER)
Boston (US)
London (UK)
Lease term
84 months
60 months
36 months
98 months
120 months
123 months
48 months
Remaining lease period
37 months
43 months
14 months
55 months
74 months
55 months
26 months
The consolidated entity also leases various items of plant and equipment in Germany and the United States with lease terms up to
60 months, and remaining periods of up to 46 months.
Non-cancellable operating leases:
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
Consolidated
2016
$'000
3,299
10,623
1,865
15,787
2017
$'000
3,557
8,497
727
12,781
Research Commitments
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 $512,000 (2016: $1,469,000). The amount of all outstanding contractual commitments as at 30 June 2017 is $512,000 (2016:
$1,981,000).
Clinical Trial Commitments
The consolidated entity has entered into various clinical study agreements with Clinical Research Organisations and specialist Service
Providers for the management of clinical studies, and with a range of major hospitals for the recruitment of patients into the clinical
trials.
Under these agreements, the consolidated entity is committed to providing funds over future periods, payable within one year,
of $4,716,000 (2016:$9,358,000). The amount of all outstanding contractual commitments as at 30 June 2017 is $6,126,000 (2016:
$17,574,000).
83 I SIRTEX
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
25. CONTROLLED ENTITIES
Name of entity
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 Executive Share Trust
NEDS Rights Plan Trust
Sirtex Medical Holdings Inc
Sirtex Medical Inc
Sirtex Wilmington LLC
Sirtex Germany Holding GmbH
Sirtex Medical Europe GmbH
Sirtex Technology Germany GmbH
Sirtex Germany Manufacturing GmbH
Sirtex Medical United Kingdom Ltd
Sirtex Medical France S.A.R.L.
Sirtex Medical MEA FZE
Sirtex Medikal Limited Şirketi
Sirtex Singapore Holding Pte Ltd
Sirtex Medical Singapore Pte Ltd
Sirtex Global Singapore Pte Ltd
Sirtex Singapore Manufacturing Pte Ltd
Sirtex Technology Japan KK
Country of incorporation
Ownership interest
2017
%
2016
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
USA
USA
Germany
Germany
Germany
Germany
United Kingdom
France
United Arab Emirates
Turkey
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
100
100
100
-
100
100
100
100
100
Sirtex Medikal Limited Şirketi was incorporated on 15 June 2017.
Sirtex Technology Germany GmbH was deregistered during the year ended 30 June 2017.
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.
26. RELATED PARTY TRANSACTIONS
(a) Equity interests in related parties
Details of the percentage of ordinary shares held in controlled entities are disclosed in Note 25.
(b) Loans and transactions with key management personnel and related entities
At 30 June 2017, $2,531,294 (2016: $1,255,046) was payable to directors, key management personnel and director related entities.
At 30 June 2017, $1,486 (2016: $1,493) was receivable from directors, key management personnel and director related entities.
The payable relates to deferred remuneration which is fully offset with a corporate asset and recognised net in the financial
statements (2015: deferred remuneration which is fully offset with a corporate asset and recognised net in the financial statements).
The receivable relates to expense reimbursement.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
ANNUAL REPORT 2017 I 84
26. RELATED PARTY TRANSACTIONS (CONTINUED)
(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 Ltd paid
management fees of $163,242 (2016: $23,213) 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 to subsidiaries: $46,601,600 (2016: $23,932,288)
Loans receivable from subsidiaries: $15,045,768 (2016: $15,317,888)
27. EVENTS AFTER REPORTING DATE
On 4 August 2017, it was determined that none of the Executive Performance Rights issued on 23 September 2014 vested. The Board
exercised its discretion to disallow any vesting of rights.
Since the end of the year, the Directors have declared an unfranked dividend of 30 cents per share to be paid on 18 October 2017
(2016: 30 cents per share). The record date for the dividend is 27 September 2017.
Sirtex Medical Limited (Sirtex) is the respondent to a representative proceeding (shareholder class action) brought in the Federal
Court of Australia. Details are in Note 15 Contingent Liabilities.
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 resuts of those operations or the state of affairs of the Group in future financial years.
28. REMUNERATION OF AUDITORS
During the year the following were paid or 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 the auditors of subsidiaries for audit and review of financial reports
Consolidated
2016
$'000
164
78
159
2017
$'000
255
-
201
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. The auditor for the UK entity is Grant Thornton UK LLP.
29. 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.
85 I SIRTEX
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
29. FINANCIAL RISK MANAGEMENT (CONTINUED)
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
2016
$'000
21,025
86,000
42,272
1,687
150,984
28,090
28,090
2017
$'000
50,349
68,000
36,976
1,575
156,900
26,432
26,432
* 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.
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 2017 on cash was
0.70% (2016: 0.45%) and on short-term deposits 2.78% (2016: 3.08%). 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%
Consolidated
2017
$'000
2016
$'000
2,130
(2,130)
2,130
(2,130)
1,926
(1,926)
1,926
(1,926)
(b) Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. The
Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral or other securities
where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group measures credit risk on a fair value
basis.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
ANNUAL REPORT 2017 I 86
29. FINANCIAL RISK MANAGEMENT (CONTINUED)
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 2017, 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 hedging instruments open at reporting date.
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
2017
$'000
2016
$'000
(14,237)
14,237
(211)
211
(14,237)
14,237
(211)
211
(16,840)
16,840
(2,022)
2,022
(16,840)
16,840
(2,022)
2,022
87 I SIRTEX
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
29. FINANCIAL RISK MANAGEMENT (CONTINUED)
The following table shows the foreign currency risk on the financial assets and liabilities of the Group’s operations, denominated
in currencies other than the functional currency of the operations. The foreign currency risk in the books of the parent entity is
considered immaterial and is therefore not shown.
2017
USD
000
EUR
000
GBP
000
SGD
000
JPY
000
AED
000
TRY
000
AUD
000
Group entity (Functional currency)
US Entities (USD)
European Entities (EUR)
UK Entities (GBP)
Singapore Entities (SGD)
Japanese Entities (JPY)
Middle Eastern Entities (AED)
Turkish Entities (TRY)
17,993
9,791
(1,417)
1,365
8,283
Balance Sheet Exposure
17,993
9,791
(1,417)
1,365
8,283
23,394
14,550
(2,397)
1,288
94
-
1
36,930
-
-
3
3
2016
USD
000
EUR
000
GBP
000
SGD
000
JPY
000
AED
000
TRY
000
AUD
000
Group entity (Functional currency)
US Entities (USD)
European Entities (EUR)
UK Entities (GBP)
Singapore Entities (SGD)
Japanese Entities (JPY)
Middle Eastern Entities (AED)
Turkish Entities (TRY)
19,096
7,463
(66)
(467)
4,292
Balance Sheet Exposure
19,096
7,463
(66)
(467)
4,292
Foreign Currency Call/Put Options
The Group has no currency option open at reporting date.
25,718
11,143
(118)
(465)
56
-
-
36,334
-
-
-
-
ADDITIONAL STOCK EXCHANGE INFORMATION
AS AT 31 JULY 2017
ANNUAL REPORT 2017 I 88
Number of shareholders
56,817,734 fully paid ordinary shares are held by 16,656 individual shareholders. All issued ordinary shares carry one vote per share.
Distribution of shareholders
1
1,001
5,001
- 1,000
- 5,000
- 10,000
10,001
- 100,000
100,001 and over
Ordinary shares
Holders
5,006,164
7,911,953
2,395,652
4,343,535
37,160,430
56,817,734
12,447
3,666
328
183
32
16,656
Non-marketable parcels - 491 shareholders held less than a marketable parcel of ordinary shares representing 8,634 ordinary shares.
Substantial shareholders
Ordinary shareholders
Yarra Capital Management
Allan Gray Investment Management
Twenty largest shareholders
Ordinary shareholders
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
National Nominees Limited
BNP Paribas Nominees Pty Ltd (Agency Lending DRP A/C)
UBS Nominees Pty Limited
Bannaby Investments Pty Limited (Bannaby Super Fund A/C)
SCJ Pty Ltd (Jermyn Family Account)
BNP Paribas Noms Pty Ltd (DRP)
Mr Stephen Craig Jermyn (Jermyn Family S/Fund A/C)
House of Maister Financial Services Ltd
Mr Tod McGrouther
Carpe Diem Asset Management Pty Ltd (Lowe Family A/C)
City and Westminster Limited
BNP Paribas Nominees Pty Ltd (IB AU Noms Retailclient DRP)
Arrakis Nominees Pty Ltd (Arrakis Family Capital A/C)
AMP Life Limited
Nulis Nominees (Australia) Limited (Navigator Mast Plan Sett A/C)
Mr Mike Fegelson
Forbar Custodians Limited
Fully Paid
Number
Percentage
3,644,947
2,957,670
6.4
5.2
Fully Paid
Number
Percentage
14,714,353
6,662,250
5,754,205
3,844,845
1,724,726
1,125,801
610,000
600,000
446,586
400,000
284,491
271,207
236,000
228,793
200,368
167,835
167,046
136,763
135,630
133,038
25.90
11.71
10.16
6.78
3.03
1.98
1.07
1.06
0.78
0.70
0.50
0.48
0.42
0.40
0.35
0.30
0.29
0.24
0.24
0.23
37,843,937
66.62
89 I SIRTEX
COMPANY INFORMATION
FOR THE YEAR ENDED 30 JUNE 2017
COMPANY SECRETARY
Mr Darren Smith
STOCK EXCHANGE LISTING
Australian Stock Exchange Limited
ASX code SRX
SHARE REGISTRAR
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
Australia
Tel: 1300-554-474 (in Australia)
Tel: +61-1300-554-474 (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 24 October 2017 at the
Royal Automobile Club of Australia,
89 Macquarie Street, Sydney NSW 2000
WWW.SIRTEX.COM
SIR-Spheres® is a registered trademark
of Sirtex SIR-Spheres Pty Ltd.
Continue reading text version or see original annual report in PDF
format above