e20vf
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
|
o
|
|
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)
OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|
OR
|
þ
|
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
For the fiscal year ended June 30, 2010
|
OR
|
o
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR
1
5(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
|
OR
|
o
|
|
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR
1
5(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
|
|
Date of event requiring this shell company report
|
|
|
|
|
|
For the transition period from
to
|
Commission file number 0-29962
Novogen Limited
ACN 063 259 754
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant’s name into English)
New South Wales, Australia
(Jurisdiction of incorporation or organization)
140 Wicks Road, North Ryde, New South Wales 2113, Australia
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
None
Securities registered or to be registered pursuant to Section 12(g) of the Act.
Ordinary Shares*
American Depositary Shares, each representing five Ordinary Shares
|
|
|
|
|
*
|
|
Not for trading, but only in connection with the registration of American Depositary Shares.
|
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
Not Applicable
The number of outstanding Ordinary Shares of the issuer as at June 30, 2010 was 102,125,894.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act.
Yes
o
No
þ
If this report is an annual or transition report, indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes
o
No
þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes
þ
No
o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
Yes
o
No
o
Indicate by check mark if the registrant is a large accelerated filer, an accelerated filer or
non-accelerated filer.
|
Large accelerated filer
o
|
Accelerated filer
o
|
Non-accelerated filer
þ
(Do not check if a smaller reporting company)
|
Smaller reporting company
o
|
Indicate by check mark which basis of accounting the registrant has used to prepare the financial
statements included in this filing
|
|
|
|
|
|
|
U.S. GAAP
o
|
|
International Financial Reporting Standards as issued
by the International Accounting Standards Board
þ
|
|
Other
o
|
If ‘Other” has been checked in response to the previous question, indicate by check mark which
financial statement item the registrant has elected to follow.
Item 17
o
Item 18
o
If this is an annual report, indicate by a check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes
o
No
þ
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
|
Forward Looking Statements
|
|
1
|
|
|
|
|
|
|
|
|
|
|
PART I
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ITEM 1.
|
|
Identity of Directors, Senior Management and Advisors
|
|
|
3
|
|
|
ITEM 2.
|
|
Offer Statistics and Expected Timetable
|
|
|
3
|
|
|
ITEM 3.
|
|
Key Information
|
|
|
3
|
|
|
ITEM 4.
|
|
Information on the Company
|
|
|
16
|
|
|
ITEM 4A
|
|
Unresolved Staff Comments
|
|
|
35
|
|
|
ITEM 5.
|
|
Operating and Financial Review and Prospects
|
|
|
35
|
|
|
ITEM 6.
|
|
Directors, Senior Management and Employees
|
|
|
44
|
|
|
ITEM 7.
|
|
Major Shareholders and Related Party Transactions
|
|
|
62
|
|
|
ITEM 8.
|
|
Financial Information
|
|
|
64
|
|
|
ITEM 9.
|
|
Offer and Listing Details
|
|
|
68
|
|
|
ITEM 10.
|
|
Additional Information
|
|
|
70
|
|
|
ITEM 11.
|
|
Quantitative and Qualitative Disclosures about Market Risk
|
|
|
75
|
|
|
ITEM 12.
|
|
Description of Securities other than Equity Securities
|
|
|
76
|
|
|
|
|
|
|
|
|
|
|
PART II
|
|
|
|
|
|
|
|
ITEM 13.
|
|
Defaults, Dividend Arrearages and Delinquencies
|
|
|
78
|
|
|
ITEM 14.
|
|
Material Modifications to the Rights of Security Holders and the Use of Proceeds
|
|
|
78
|
|
|
ITEM 15.
|
|
Controls and Procedures
|
|
|
78
|
|
|
ITEM 16.
|
|
Reserved
|
|
|
79
|
|
|
ITEM 16A.
|
|
Audit Committee Financial Expert
|
|
|
79
|
|
|
ITEM 16B
|
|
Code of Ethics
|
|
|
79
|
|
|
ITEM 16C
|
|
Principal Accountant Fees and Services
|
|
|
80
|
|
|
ITEM 16D
|
|
Exemptions from the Listing Standards for Audit Committees
|
|
|
81
|
|
|
ITEM 16E
|
|
Purchases of Equity Securities by the Issuer and Affiliated Purchases
|
|
|
81
|
|
|
ITEM 16G
|
|
Corporate Governance
|
|
|
81
|
|
|
|
|
|
|
|
|
|
|
PART III
|
|
|
|
|
|
|
|
ITEM 17.
|
|
Financial Statements — Not Applicable
|
|
|
83
|
|
|
ITEM 18.
|
|
Financial Statements
|
|
|
83
|
|
|
ITEM 19.
|
|
Exhibits
|
|
|
83
|
|
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 20-F includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than
statements of historical facts contained in this Annual Report, including statements regarding the
future financial position, business strategy and plans and objectives of management for future
operations, are forward-looking statements. The words “believe”, “may”, “will”, “estimate”,
“continue”, “anticipate”, “intend”, “should”, “plan”, “expect”, and similar expressions, as they
relate to Novogen Limited (“Novogen”, the “Company” or the “Group”), are intended to identify
forward-looking statements. The Company has based these forward-looking statements largely on
current expectations and projections about future events and financial trends that it believes may
affect its financial condition, results of operations, business strategy and financial needs. These
forward-looking statements are subject to a number of risks, uncertainties and assumptions,
including, without limitation, those described in “Risk Factors” and elsewhere in this Annual
Report on Form 20-F (the “Annual Report”), including, among other things:
|
|
•
|
|
the inability of the Company to obtain required additional financing or
financing available to it on acceptable terms,
|
|
|
|
|
•
|
|
the results of the various strategic alternatives being contemplated by the
Company, including the sale of its entire isoflavone-related intellectual property
portfolio to its majority-owned subsidiary Marshall Edwards, Inc. (“MEI”), which sale
remains subject to, among other things, definitive documentation and stockholder
approvals;
|
|
|
|
|
•
|
|
the ability of MEI to continue its development of triphendiol, NV-128 and
NV-143;
|
|
|
|
|
•
|
|
the ability of the Company’s majority owned subsidiary Glycotex, Inc.
(“Glycotex”) to continue its clinical development of GLYC-101;
|
|
|
|
|
•
|
|
the failure to locate, hire, assimilate and retain qualified personnel;
|
|
|
|
|
•
|
|
the failure of the Company to successfully commercialize its product candidates;
|
|
|
|
|
•
|
|
costs and delays in the development and/or receipt of U.S. Food and Drug
Administration (“FDA”) or other required governmental approvals, or the failure to
obtain such approvals, for the Company’s product canditates;
|
|
|
|
|
•
|
|
uncertainties in clinical trial results;
|
|
|
|
|
•
|
|
the inability to maintain or enter into, and the risks resulting from
dependence upon, collaboration or contractual arrangements necessary for the
development, manufacture, commercialization, marketing, sales and distribution of any
products;
|
|
|
|
|
•
|
|
competition and competitive factors;
|
|
|
|
|
•
|
|
the inability to enforce the Company’s patents or proprietary rights and obtain
|
1
|
|
|
|
necessary rights to third party patents and intellectual property to operate the
business;
|
|
|
•
|
|
the inability to operate the business without infringing upon the patents and
proprietary rights of others;
|
|
|
|
|
•
|
|
the failure of any product candidate to gain market acceptance;
|
|
|
|
|
•
|
|
general economic conditions;
|
|
|
|
|
•
|
|
technological changes;
|
|
|
|
|
•
|
|
government regulation generally and the receipt of regulatory approvals;
|
|
|
|
|
•
|
|
changes in industry practice; and
|
|
|
|
|
•
|
|
one-time events.
|
These risks are not exhaustive. Other sections of the Annual Report may include additional factors
which could adversely impact the Company’s business and financial performance. Moreover, the
Company operates in a very competitive and rapidly changing environment. New risk factors emerge
from time to time and it is not possible for the Company to predict all risk factors, nor can the
Company assess the impact of all factors on the business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those contained in any
forward-looking statements.
You should not rely upon forward looking statements as predictions of future events. The Company
cannot assure you that the events and circumstances reflected in the forward looking statements
will be achieved or occur. Although the Company believes that the expectations reflected in the
forward looking statements are reasonable, it cannot guarantee future results, levels of activity,
performance or achievements.
2
Item 1. Identity of Directors, Senior Management and Advisors
Item 1 details are not required to be disclosed as part of the Annual Report.
Item 2. Offer Statistics and Expected Timetable
Item 2 details are not required to be disclosed as part of the Annual Report.
Selected Financial Data
The selected financial data at June 30, 2010 and 2009 and for the years ended June 30, 2010, 2009
and 2008 have been derived from the Consolidated Financial Statements of the Company included in
this Annual Report and should be read in conjunction with, and are qualified in their entirety by,
reference to those statements and the notes thereto.
This financial report complies with International Financial Reporting Standards (IFRS) as adopted
by the International Accounting Standards Board (IASB).
The Consolidated Financial Statements have been audited in accordance with the PCAOB auditing
standards in the United States by the Company’s independent registered public accountants.
The Company’s fiscal year ends on June 30. As used throughout this Annual Report, the word “fiscal”
followed by a year refers to the 12-month period ending on June 30 of that year. For example, the
term “fiscal 2010” refers to the 12 months ended June 30, 2010. Except as otherwise indicated, all
dollar amounts referred to in this Annual Report are at the consolidated level and exclude
inter-company amounts.
3
Summary of Consolidated Statements of Comprehensive Income
(IFRS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
2007
|
|
2008
|
|
2009
|
|
2010
|
|
2010
|
|
|
|
(A$’000)
|
|
(A$’000)
|
|
(A$’000)
|
|
(A$’000)
|
|
(A$’000)
|
|
(US$’000)
|
|
Continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from sale of goods
|
|
|
13,500
|
|
|
|
10,709
|
|
|
|
9,400
|
|
|
|
8,333
|
|
|
|
7,983
|
|
|
|
6,770
|
|
|
Other revenue
|
|
|
3,945
|
|
|
|
6,586
|
|
|
|
3,883
|
|
|
|
2,814
|
|
|
|
1,925
|
|
|
|
1,632
|
|
|
|
|
|
|
Total revenue
|
|
|
17,445
|
|
|
|
17,295
|
|
|
|
13,283
|
|
|
|
11,147
|
|
|
|
9,908
|
|
|
|
8,402
|
|
|
|
|
|
|
Net loss before income tax
|
|
|
(17,912
|
)
|
|
|
(24,295
|
)
|
|
|
(24,773
|
)
|
|
|
(23,786
|
)
|
|
|
(15,236
|
)
|
|
|
(12,920
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to
members of Novogen
Limited
|
|
|
(16,220
|
)
|
|
|
(19,981
|
)
|
|
|
(20,264
|
)
|
|
|
(18,928
|
)
|
|
|
(12,345
|
)
|
|
|
(10,468
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings/(loss) per share
(cents per share)
|
|
|
(16.7
|
)
|
|
|
(20.5
|
)
|
|
|
(20.8
|
)
|
|
|
(18.6
|
)
|
|
|
(12.1
|
)
|
|
|
(10.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of Ordinary Shares used
to calculate earnings per
share
|
|
|
97,207,053
|
|
|
|
97,567,399
|
|
|
|
97,594,261
|
|
|
|
101,741,016
|
|
|
|
102,125,894
|
|
|
|
102,125,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of outstanding
Ordinary Shares at year
end
|
|
|
97,294,054
|
|
|
|
97,594,261
|
|
|
|
97,594,261
|
|
|
|
102,125,894
|
|
|
|
102,125,894
|
|
|
|
102,125,894
|
|
Summary of Consolidated Statements of Financial Position
(IFRS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
2007
|
|
2008
|
|
2009
|
|
2010
|
|
2010
|
|
|
|
(A$’000)
|
|
(A$’000)
|
|
(A$’000)
|
|
(A$’000)
|
|
(A$’000)
|
|
(US$’000)
|
|
Cash and Cash
Equivalents
|
|
|
33,513
|
|
|
|
39,511
|
|
|
|
35,386
|
|
|
|
33,338
|
|
|
|
15,131
|
|
|
|
12,831
|
|
|
Total Assets
|
|
|
51,098
|
|
|
|
51,357
|
|
|
|
43,401
|
|
|
|
37,842
|
|
|
|
19,290
|
|
|
|
16,358
|
|
|
Net Assets
|
|
|
44,578
|
|
|
|
44,626
|
|
|
|
35,637
|
|
|
|
28,773
|
|
|
|
13,176
|
|
|
|
11,173
|
|
|
Capital Stock
|
|
|
176,989
|
|
|
|
191,876
|
|
|
|
200,432
|
|
|
|
206,419
|
|
|
|
206,419
|
|
|
|
175,043
|
|
No dividends have been declared by the Company in the fiscal years included in this Annual
Report.
The Company publishes its Consolidated Financial Statements expressed in Australian dollars. In
this Annual Report, references to “U.S. dollars” or “US$” are to the currency of the United States
of America (“U.S.”) and references to “Australian dollars” or “A$” are to the currency of
Australia. For the convenience of the reader, this Annual Report contains translations of certain
Australian dollar amounts into U.S. dollars at specified rates. These translations should not be
construed as representations that the Australian dollar amounts actually represent such U.S. dollar
amounts or could be converted into U.S. dollars at the rate indicated. Unless otherwise stated, the
translations of Australian dollars into U.S. dollars have been made at the rate of US$0.8480 =
A$1.00, the noon market buying rate in New York City for cable transfers in Australian Dollars as
certified for customs purposes by the Federal Reserve Bank of New York (the noon buying rate) on
June 30, 2010.
4
The noon buying rate on November 30, 2010 was US$0.9607 = A$1.00
Exchange Rates for the six months to November 2010
A$ versus US$
|
|
|
|
|
|
|
|
|
|
|
Month
|
|
High
|
|
Low
|
|
June
|
|
$
|
0.8818
|
|
|
$
|
0.8192
|
|
|
July
|
|
$
|
0.9051
|
|
|
$
|
0.8380
|
|
|
August
|
|
$
|
0.9170
|
|
|
$
|
0.8807
|
|
|
September
|
|
$
|
0.9714
|
|
|
$
|
0.9093
|
|
|
October
|
|
$
|
0.9943
|
|
|
$
|
0.9666
|
|
|
November
|
|
$
|
1.0162
|
|
|
$
|
0.9594
|
|
Exchange Rates for the Last Five Years A$ versus US$
|
|
|
|
|
|
|
Fiscal Year
|
|
Average
|
|
Ended June 30
|
|
Rate
|
|
2006
|
|
$
|
0.7472
|
|
|
2007
|
|
$
|
0.7862
|
|
|
2008
|
|
$
|
0.8968
|
|
|
2009
|
|
$
|
0.7455
|
|
|
2010
|
|
$
|
0.8820
|
|
5
Risk Factors
The following risk factors, in addition to the other information and financial data contained in
this Annual Report, should be considered carefully in evaluating the Company and its business. The
risks described below and elsewhere in this Annual Report are not intended to be an exhaustive list
of the general or specific risks involved, but merely identify certain risks that are now foreseen
by the Company. It must be recognized that other risks, not now foreseen, might become significant
in the future and that the risks which are now foreseen might affect the Company to a greater
extent than is now foreseen or in a manner not now contemplated.
The Company is exploring various strategic alternatives involving assets comprising substantially
all of its business.
The Company continually explores opportunities to maximize value to its stakeholders, including,
among other things, through reorganizations, recapitalizations, private placements, strategic
alliances, joint ventures, acquisitions and dispositions potentially involving all types and
combinations of equity, debt and other alternatives. In this regard, the Company is currently
contemplating possible transactions which may involve the spin-off or sale of one or more
businesses, transfers of various assets, possible distributions of MEI securities held by the
Company, or other features. The assets involved in these transactions may include the Company’s
isoflavone-related intellectual property portfolio which the Company has reached an agreement in
principle to sell to its subsidiary MEI, its equity interests in its majority–owned subsidiary
Glycotex, its consumer health care business and substantially all of the Company’s other assets.
There are risks and uncertainties associated with any such potential transaction, including the
risk that, due to business considerations, regulatory constraints or other reasons, the Company may
be unable or unwilling to pursue or consummate any such transaction and that as a result of the
consummation, or failure to consummate, such transactions the trading price of the Company’s shares
may decline.
The Company will need additional funds in order to finance its future operations and its
pre-clinical and clinical development programs. The actual amount of funds that the Company will
need will be determined by a number of factors, some of which are beyond its control.
The Company’s funding requirements have been, and will continue to be, significant. The Company
anticipates that its existing cash resources will be adequate to fund the Company’s operating
requirements through the next 12 months based upon the Company’s current business plan.
The Company’s 71.3% owned U.S. subsidiary company MEI will need additional funds to progress the
development program for the drug candidates triphendiol, NV-128 and NV-143.
6
The factors which will determine the actual amount of funds that MEI will need to progress the
clinical trial programs for triphendiol, NV-143 and NV-128 may include the following:
|
|
•
|
|
the number of sites included in the trials;
|
|
|
|
|
•
|
|
the length of time required to enroll suitable patients;
|
|
|
|
|
•
|
|
the number of patients who participate in the trials and the rate that they are
recruited;
|
|
|
|
|
•
|
|
the number of treatment cycles patients complete while they are enrolled in the
trials; and
|
|
|
|
|
•
|
|
the efficacy and safety profile of the product.
|
If MEI is unable to obtain additional funds on favorable terms it may be required to cease or
reduce operations. Also, if MEI raises more funds by selling additional securities, the ownership
interests of the Company will be diluted, potentially significantly, which may result in the
Company no longer consolidating MEI for financial reporting purposes.
The Company’s 80.7% owned U.S. subsidiary company Glycotex will also need additional funds to
further the clinical development of its investigational wound healing compound GLYC-101.
There can be no assurance that additional financing will be available when needed on terms
acceptable to the Company, or at all. If additional funds are raised by issuing equity securities,
further dilution to existing shareholders will result and future investors may be granted rights
superior to those of existing shareholders. Insufficient funds may prevent the Company from
implementing its business strategy or may require the Company to limit its operations
significantly.
The uncertain financial markets may negatively impact the Company’s liquidity and clinical trials,
as well as the liquidity and clinical trials of the Company’s subsidiaries, by precluding the
Company and its subsidiaries from raising funds through equity and/or debt investments or third
party loans on favorable terms or at all.
The Company and its subsidiaries have traditionally raised capital through the sale of equity
securities to investors and intend to seek additional capital through an equity transaction in
fiscal 2011. Since September 2008, the financial services industry and credit market have
experienced a period of unprecedented turmoil and volatility. Accordingly, the Company may have
difficulty raising capital necessary to finance business operations through the sale of equity
securities on terms favorable to it or at all or through other types of financing. In order to
obtain the additional funding necessary to conduct the business, the Company and its subsidiaries
may need to rely on collaboration and /or licensing opportunities. The Company cannot assure you
that it or its subsidiaries we will be able to raise the funds necessary or find appropriate
collaboration or licensing opportunities to fund the future business plan.
7
The Company has incurred operating losses since its inception, and is likely to incur operating
losses for the foreseeable future.
The Company has incurred net losses of A$219,102,000 since its inception, including net losses of
A$15,246,000, A$23,787,000 and A$24,777,000 for the years ended June 30, 2010, 2009, and 2008,
respectively. The Company anticipates that it will incur operating losses and negative cash flow
for the foreseeable future.
Because a final analysis of the Phase III OVATURE trial of orally administered phenoxodiol
determined that the trial did not show a statistically significant improvement in its primary
(progression-free survival) or secondary (overall survival) endpoints, the Company is unlikely to
out-license phenoxodiol to third parties for this purpose.
On June 1, 2010, MEI announced that a final analysis of the Phase III OVATURE trial of orally
administered phenoxodiol in women with recurrent ovarian cancer determined that the trial did not
show a statistically significant improvement in its primary (progression-free survival) or
secondary (overall survival) endpoints. Since the trial did not meet its endpoints, it is unlikely
that MEI will be able to out-license Phenoxodiol to third parties.
If the U.S. Food and Drug Administration (“FDA”) does not allow the Company’s drug candidates
NV-143 and NV-128 to progress to clinical testing, the Company will not be able to continue
development of these drug candidates in the U.S.
In the U.S., submission and approval of an Investigational New Drug Application, or IND, is
required before clinical testing may begin. An IND requires submission of results of pre-clinical
tests, manufacturing information, and protocols for clinical studies. If the Company does not
obtain sufficient data required by FDA, it will not be able to submit INDs for its drug candidates
NV-143 and NV-128. If information included in the Company’s INDs for NV-143 and NV-128 is not to
the satisfaction of FDA, the Company may experience delays in the testing and IND approval process,
or may fail to obtain FDA’s agreement for conducting human clinical studies.
If the data from the Company’s clinical trial program do not demonstrate the safety and
efficacy of the phenolic drug candidates to the satisfaction of the FDA and other regulatory
authorities, the Company will not receive approval to market its drug candidates in the U.S. or
other jurisdictions.
Phenolic drug development is an entirely novel and unproven field of pharmaceutical drug
development and there is limited scientific understanding of phenolic technology on which the
Company’s drug program is based. There can be no assurance that any of the compounds under
development by the Company will prove to be sufficiently efficacious, safe and cost-effective to be
commercially viable. The commercialization process of the products currently in clinical
development includes the anti-cancer drug candidates triphendiol, NV-143 and NV-128 being developed
by the Company’s subsidiary MEI. The
8
commercialization process of the foregoing drug candidates may
be delayed if the FDA or another regulatory authority requires the expansion in the size and scope
of any clinical trial or if MEI fails to achieve satisfactory clinical outcomes. It may take many
years to complete the testing and failure can occur at any stage in the process. Negative or
inconclusive results or adverse medical events during a clinical trial could cause the Company to
delay or terminate development efforts.
Any failure in the clinical trial program could impair the commercial prospects of the Company’s
entire phenolic drug program.
Clinical trials have a high risk of failure. A number of companies have suffered significant
setbacks in advanced clinical trials even after achieving promising results in earlier trials. If
the Company experiences delays in the testing or approval process or if further clinical trials or
clinical trials involving a larger number of patients are required, the commercial prospects of the
drugs under development could be impaired.
If the Company does not receive marketing approval for its phenolic drug candidates, or regulatory
approval is withdrawn for the Company’s dietary supplements, the Company will not be able to
commercialize its products and product candidates.
Marketing approval is needed in order to commercialize the Company’s phenolic drug candidates. The
Company may never receive marketing approval for any of its phenolic drug candidates. If the
Company does receive marketing approval, such approval will be limited to those disease states and
conditions for which phenolic drug candidates have been proven to be safe and effective.
In order for the Company to market its products, the Company must obtain required marketing
approvals or clearances and otherwise comply with extensive regulations regarding safety,
manufacturing processes and quality. There can be no assurance that the Company will be able to
obtain or maintain regulatory approvals or clearances or that it will not be required to incur
significant costs in obtaining or maintaining its foreign regulatory approvals or clearances.
The FDA and other governmental approvals that may be granted to the Company will be subject to
continual review, and later discovery of previously unknown problems may result in withdrawal of
products from the market.
Moreover, if and when any FDA or other governmental approval is obtained, the marketing and
manufacture of the Company’s products will remain subject to extensive regulatory requirements
administered by the FDA and other regulatory bodies. Failure to comply with these regulatory
requirements may, among other things, result in fines, suspensions or withdrawal of marketing
approvals, operating restrictions and criminal prosecution.
9
The Company has no direct control over the cost of the pharmaceutical drug manufacturing costs
and the Company will be relying on third parties to manufacture commercial quantities of
pharmaceutical drug candidates as well as drug supplies for larger scale clinical trials.
The Company will rely on third parties to manufacture commercial quantities of its pharmaceutical
drug candidates as well as drug supplies for larger scale clinical trials. There can be no
assurance that third party manufacturers will devote the resources necessary to meet demand for the
Company’s products. Also, if the costs of manufacturing increases, or the costs of materials used
in manufacturing increases, these costs will be passed onto the Company making the cost of
conducting clinical trials more expensive. In addition, increases in manufacturing costs could
adversely affect the Company’s future profitability if it is unable to pass on the increased costs
to its customers.
The Company has no direct control over the cost of red clover isoflavone extract or the
formulation and packaging of its dietary supplement products.
The Company relies on third parties to (i) supply its active raw materials (isoflavones), (ii)
manufacture and package its dietary supplement products to satisfy performance and quality
standards and (iii) dedicate sufficient production capacity to meet demand and delivery times.
In addition, the facilities where the Company’s products are manufactured are subject to periodic
inspection by regulatory authorities for compliance with the Current Good Manufacturing Practice
(cGMP) regulations. There can be no assurance that these authorities will not, during the course of
an inspection of existing or future facilities, identify what they consider to be deficiencies in
cGMP or other requirements and request, or seek, remedial action. Failure to comply with such
regulations or delay in attaining compliance may adversely affect the Company’s manufacturing
activities and could result in, among other actions, warning letters, injunctions, civil penalties,
refusal to grant approvals or clearances of future or pending product submissions, fines, recalls
or seizure of products, total or partial suspensions of production and criminal prosecution. If any
of the foregoing events occur, the Company’s products may not be available to supply the market
demand and the Company’s sales revenues may be adversely affected.
The Company’s success is largely dependent on its ability to obtain patent protection and
preserve trade secrets, which cannot be guaranteed.
The Company’s success is dependent to a significant degree on whether it can obtain patents,
maintain trade secret protection and operate without infringing on the proprietary rights of third
parties. If it were determined that the Company was infringing upon any third party patent, the
Company could be required to pay damages, alter its products or processes, obtain licenses or to
cease certain operations. If the Company is required to obtain any licenses, there can be no
assurance that the Company will be
10
able to do so on commercially favorable terms, if at all. The
Company’s failure to obtain a license for any technology that it may require to commercialize its
products could have a material adverse effect on the Company’s business, financial condition and
results of operations.
Litigation relating to patent infringement could result in substantial costs to, and diversion of
effort by, the Company, and may also be necessary to enforce any patents issued or licensed to the
Company or to determine the scope and validity of third party proprietary rights. The Company is
currently involved in a number of litigation proceedings against companies which it believes were
infringing certain of the Company’s patents related to dietary supplements.
If competitors, claim technology also claimed by the Company, prepare and file patent applications
in the U.S., the Company may have to participate in interference proceedings in the U.S. Patent and
Trademark office to determine priority of invention, which could result in substantial cost to, and
diversion of effort by, the Company, even if the eventual outcome is favorable to the Company.
Any such litigation or interference proceedings, regardless of outcome, could be expensive and time
consuming. Litigation could subject the Company to significant liabilities to third parties,
requiring disputed rights to be licensed from third parties to the Company or requiring the Company
to cease using certain technologies and, consequently, could have a material adverse effect on the
Company’s business, financial condition and results of operations.
In addition to patent protection, the Company relies on trade secrets and proprietary technological
expertise. There can be no assurance that others will not independently develop or acquire
substantially equivalent technologies, or otherwise gain access to the Company’s trade secrets or
technological expertise or disclose such trade secrets. There can be no assurance that the Company
can ultimately protect its right to such un-patented trade secrets and technological expertise. The
Company relies, in part, on confidentiality agreements with its marketing partners, employees,
advisors, vendors and consultants to protect its trade secrets and proprietary technological
expertise. There can be no assurance that these agreements will not be breached, that the Company
will have adequate remedies for any breach or that the Company’s un-patented trade secrets and
proprietary technological expertise will not otherwise become known or independently discovered by
competitors.
The Company’s commercial opportunity will be reduced or eliminated if competitors develop and
market products that are more effective or less expensive than the Company’s products.
In developing its technology and products, the Company competes with many domestic and foreign
competitors in various rapidly evolving and technologically advanced fields, including
pharmaceutical, biotechnology and biopharmaceutical companies.
11
Many of the Company’s competitors and potential competitors have substantially greater financial,
technological, research and development, marketing and personnel resources than the Company. There
can be no assurance that the Company’s competitors will not succeed in developing alternate
technologies and products that are more effective, easier to use or more economical than those
which have been developed by the Company or that would render the Company’s technologies and
products obsolete and non-competitive in these fields. These competitors may also have greater
experience in developing products, conducting clinical trials, obtaining regulatory approvals or
clearances and manufacturing and marketing such products or technologies. These competitors may
obtain patent protection, approval or clearance earlier than the Company, which could adversely
affect the Company’s business, financial condition and results of operations. Furthermore, the
Company will also be competing with respect to manufacturing efficiency and marketing capabilities,
areas in which it currently has limited experience.
The Company’s commercial opportunities will be reduced or eliminated if competitors develop and
market products that are more effective, have fewer side effects or are less expensive.
The Company may not be able to establish the strategic licensing partnerships necessary to develop,
market and distribute its pharmaceutical product candidates.
A key part of the Company’s business plan is to out license its pharmaceutical product candidates
to strategic business partners. The Company has not yet established any strategic licensing
partnerships. The relative attractiveness to potential licensing partners and, consequently, the
ability to negotiate acceptable terms in any partnership agreement, will be affected by the results
of the clinical programs. Successful clinical outcomes may generate greater interest from potential
partners than if the Company’s product candidates are demonstrated to be less effective. There is
no assurance that the Company will be able to negotiate commercially acceptable licensing or other
agreements for the future exploitation of its product candidates. If the Company is unable to
successfully enter into licensing arrangements it may have to delay the commercialization program
for its product candidates which will adversely affect its ability to generate operating revenues.
The Company may not be able to establish or maintain the strategic partnerships necessary to
market and distribute its dietary supplement products.
The Company relies on its own marketing staff for the marketing and sale of its current and
proposed dietary supplement products in Australia, Canada and the U.K. The Company presently has
limited marketing and sales staff. Achieving market acceptance for the Company’s products will
require extensive and substantial efforts by experienced personnel as well as expenditure of
significant funds. There can be no assurance that the Company will be able to establish sufficient
marketing, distribution and sales capabilities necessary to achieve market penetration in these
geographical areas.
12
In other markets, the Company intends to appoint licensees and/or marketing partners who will be
responsible in large part for sales, marketing and distribution. While the Company will endeavor to
appoint licensees and/or marketing partners with proven abilities in these areas, the amount and
timing of resources, which may be devoted to the performance of their contractual responsibilities
by these partners, are not within the control of the Company. There can be no assurance that such
marketing partners will perform their obligations as expected, pay any additional option or license
fees to the Company or market any products under any agreement. There can be no assurance that the
Company will derive any revenue from such arrangements. Moreover, the other contracting parties may
have rights of termination under these agreements. Exercise of such termination rights by such
other parties may have an adverse effect on the Company’s business, financial condition and results
of operations. There can be no assurance that the interests of the Company will continue to
coincide with those of its partners or that such partners will not develop independently, or with
third parties, products or technologies which could compete with the Company’s products, or that
disagreements over rights, technologies or other proprietary interests will not occur. To the
extent that the Company chooses not to, or is unable to, enter into future agreements, the Company
will experience increased capital requirements to undertake the marketing or sale of its current or
future products. There can be no assurance that the Company will be able to market or sell its
technology or its current or future products independently in the absence of such agreements.
The Company faces the risk of product liability claims and may not be able to obtain adequate
insurance.
The Company’s business exposes it to the risk of product liability claims. This risk is inherent in
the manufacturing, testing and marketing of human pharmaceutical products. The Company has product
liability insurance coverage of up to approximately A$30 million. Although the Company believes
that this amount of insurance coverage is appropriate for its business at this time, the insurance
coverage is subject to deductibles and coverage limitations, and the market for such insurance is
becoming more restrictive. The Company may not be able to obtain or maintain adequate protection
against potential liabilities. If the Company is unable to sufficiently insure against potential
product liability claims, it will be exposed to significant liabilities, which may materially and
adversely affect the business development and commercialization efforts.
Enforceability of civil liabilities under the federal securities laws against the Company or
the Company’s officers and directors may be difficult.
The Company is a public company limited by shares and is registered and operates under the
Australian Corporations Act 2001. Two out of the Company’s five directors and all of the officers
named in this Annual Report reside outside the U.S. Substantially all of the assets of those
persons are located outside the U.S. As a result, it may not be possible to affect service on the
Company or such persons in the U.S. or to enforce, in foreign courts, judgments against such
persons obtained in U.S. courts and predicated
13
on the civil liability provisions of the federal
securities laws of the U.S. Furthermore, substantially all of the directly owned assets of the
Company are outside the U.S., and, as such, any judgment obtained in the U.S. against the Company
may not be collectible within the U.S. There is doubt as to the enforceability in the Commonwealth
of Australia, in original actions or in actions for enforcement of judgments of U.S. courts, of
civil liabilities predicated solely upon federal or state securities laws of the U.S., especially
in the case of enforcement of judgments of U.S. courts where the defendant has not been properly
served in Australia.
The trading price of the Company’s ordinary shares and American Depository Receipts (“ADRs”) could
decline in value if the trading price of the shares of common stock of its listed subsidiary
company, Marshall Edwards, declines.
Novogen currently owns 71.3% of its subsidiary Marshall Edwards, whose shares are currently traded
on the Nasdaq Global Market. If the trading price of MEI’s shares declines or its business does not
achieve its objectives or its product development program is delayed, it could have an adverse
affect on Novogen’s share price.
The trading price of the Company’s ordinary shares and ADRs is highly volatile. Your investment
could decline in value and the Company may incur significant costs from class action litigation and
its securities may be delisted from Nasdaq.
The trading price of the Company’s ordinary shares and ADRs is highly volatile in response to
various factors, many of which are beyond the Company’s control, including:
|
|
•
|
|
announcements of technological innovations by the Company and its competitors;
|
|
|
|
|
•
|
|
new products introduced or announced by the Company or its competitors;
|
|
|
|
|
•
|
|
changes in financial estimates by securities analysts;
|
|
|
|
|
•
|
|
actual or anticipated variations in operating results;
|
|
|
|
|
•
|
|
expiration or termination of licenses, research contracts or other collaboration
agreements;
|
|
|
|
|
•
|
|
conditions or trends in the regulatory climate in the biotechnology, pharmaceutical and
genomics industries;
|
|
|
|
|
•
|
|
changes in the market values of similar companies;
|
|
|
|
|
•
|
|
the liquidity of any market for the Company’s securities; and
|
|
|
|
|
•
|
|
additional sales by the Company of its shares.
|
In addition, equity markets in general and the market for biotechnology and life sciences companies
in particular, have experienced substantial price and volume fluctuations that have often been
unrelated or disproportionate to the operating performance of the companies traded in those
markets. Further changes in economic conditions in Australia, the United States, Europe, or
globally, could impact the Company’s ability to grow profitably. Adverse economic changes are
outside the Company’s control and may result in material adverse effects on the Company’s business
or results of operations.
14
These broad market and industry factors may materially affect the market
price of the Company’s ordinary shares and ADRs regardless of its development and operating
performance. In the past, following periods of volatility in the market price of a company’s
securities, securities class action litigation has often been instituted against that company. Such
litigation, if instituted against the Company, could cause it to incur substantial costs and divert
management’s attention and resources.
If the market price of the Company’s ADRs remains below $5.00 per share, under stock exchange
rules, the Company’s stockholders will not be able to use such ADRs as collateral for borrowing in
margin accounts. This inability to use ADRs as collateral may depress demand as certain
institutional investors are restricted from investing in securities priced below $5.00 and may lead
to sales of such ADRs creating downward pressure on and increased volatility in the market price of
the Company’s ordinary shares and ADRs.
On July 19, 2010, the Company received a notice of delisting from Nasdaq stating that the Company
was not in compliance with the minimum share price requirement of $1.00 for continued listing on
the Nasdaq Global Market. According to this notice, the Company will be afforded a grace period of
180 calendar days, or until January 18, 2011, to regain compliance with this continued listing
requirement, which may require the Company to take actions such as a reverse stock split, or be
delisted from Nasdaq. Any such delisting would significantly decrease the liquidity in the market
for the Company’s shares.
15
|
|
|
|
|
Item 4.
|
|
Information on the Company
|
History and development of the Company
Novogen Limited, a public company limited by shares, was incorporated in March 1994 under the
jurisdiction of the laws of New South Wales, Australia. Novogen is registered and operates under
the Australian Corporations Act. Novogen has its registered office at 140 Wicks Rd, North Ryde, New
South Wales 2113. Its telephone number and other contact details are: Phone 61-2-9878-0088; Fax
61-2-9878-0055; and website,
www.novogen.com
(the information contained in the website does not
form part of the Annual Report). The Company’s Ordinary Shares are listed on the Australian Stock
Exchange (“ASX”) under the symbol “NRT” and its ADRs, each representing five ordinary shares, trade
on the Nasdaq Global Market under the symbol “NVGN”. The Company’s agent in the U.S. for ADR’s is
the Bank of New York, 101 Barclay Street 22W New York, N.Y. 10286.
Capital expenditures
The Company made no major investments of a capital nature during fiscal 2010. Future facilities
will be developed where appropriate. Current capacity at the pilot plant at North Ryde NSW is
sufficient to meet demand for the short to medium term.
Business overview
Nature of the Business
The Company is a pharmaceutical company involved in the discovery, development, manufacture and
marketing of products based on the emerging field of isoflavonoid technology. The Company’s product
development program embraces both a novel range of pharmaceuticals based on a range of phenolic
compounds and a range of consumer health care products based on plant compounds known as
isoflavones. A key element of the Company’s strategy is to continue to advance its research and
development in more advanced pharmaceuticals in the area of human phenolic compound technology with
a focus on progressing the development of drug candidates in the field of oncology.
The Company continually explores opportunities to maximize value to its stakeholders. In this
regard, the Company is currently contemplating possible transactions which may involve the spin-off
or sale of one or more businesses, transfers of various assets, possible distributions of MEI
securities held by the Company, or other features.
16
Clinical development
Anti-Cancer
Phenoxodiol
Phenoxodiol was being developed by the Company’s subsidiary MEI as a chemosensitising agent in
combination with platinum drugs for late stage, chemoresistant ovarian cancer and as a monotherapy
for prostate and cervical cancers. Phenoxodiol is an investigational novel-acting drug that in
laboratory studies inhibits key pro-survival signalling pathways operating within cancer cells
causing selective cancer cell death and increased susceptibility to drugs like platinum and taxane,
to which most ovarian cancer patients become resistant in late stage disease.
OVATURE Phase III Clinical Trial
The OVATURE Phase III clinical trial was a major multi-centre international Phase III clinical
trial of orally-administered phenoxodiol in combination with carboplatin in women with advanced
ovarian cancer resistant or refractory to platinum-based drugs. This trial was designed to
determine the safety and effectiveness of phenoxodiol when used in combination with carboplatin.
Originally, the OVATURE Phase III clinical trial was approved by the FDA under a Special Protocol
Assessment (“SPA”) program indicating that the study design, clinical endpoints and statistical
analysis were acceptable to the FDA. The protocol provided for an interim analysis of the data,
which, if statistically significant, could be used to support a request for accelerated marketing
approval. Under the SPA, an analysis of the interim results was possible after the targeted patient
recruitment was completed and 95 patients had disease progression.
In April, 2009, MEI announced the decision to terminate enrolment into the OVATURE Phase III
clinical trial and its intention to undertake an un-blinded analysis of the available data from the
trial.
MEI decided to terminate new enrolment into the OVATURE Phase III trial and assess the available
patient data, in part, because the global financial downturn made it unlikely that MEI would be
able to raise the necessary capital through debt or equity issuances in the near future to fund the
trial to completion as originally planned. Additionally, changes in the standard of care over the
period that the OVATURE trial had been in operation had resulted in fewer women meeting the
inclusion criteria of the OVATURE protocol, which slowed patient recruitment rates.
On 1 June, 2010, MEI announced that a final analysis of the Phase III OVATURE trial of orally
administered phenoxodiol in women with recurrent ovarian cancer determined that the trial did not
show a statistically significant improvement in its primary (progression-free survival) or
secondary (overall survival) endpoints.
17
The termination of patient enrollment into the OVATURE study and unblinded analysis of the
available data from the trial was discussed with the FDA.
Prostate Phase II Clinical Trial
MEI conducted a Phase II prostate cancer clinical trial using phenoxodiol as first line treatment
in men with early stage disease (16 patients with androgen dependent disease but rising Prostate
Specific Antigen (“PSA”) compared to patients with late stage hormone refractory disease (12
patients with chemotherapy naïve androgen independent disease) at Yale Cancer Center and the West
Haven Veterans Administration Hospital Connecticut in the US. Both of these patient groups
represent areas of unmet medical need in this common cancer. The results of this study, which were
presented by Dr. Kevin Kelly of Yale University at the American Society of Clinical Oncology
meeting in June 2010, indicated that approximately one-third of the patients experienced disease
stabilization as measured by PSA levels. In this small study, it appeared that during treatment,
interferon-gamma (IFN-ã) increased from baseline levels in patients with PSA partial response or
stable disease, while monocyte chemotactic protein-1 (MCP-1) levels increased from baseline levels
in patients with PSA progressive disease.
Triphendiol
Triphendiol is a synthetic investigational anti-cancer compound based on an isoflavan ring
structure and is being developed by MEI. Similar to phenoxodiol, triphendiol is an inhibitor of
signal transduction in cells. Preliminary laboratory screening studies have identified triphendiol
as a candidate for product development showing a favorable laboratory toxicity profile against
normal cells and broad activity against cancer cells. In March 2008, MEI announced that laboratory
data to be presented at the annual meeting of the American Association for Cancer Research
suggested that triphendiol may aid in the treatment of pancreatic cancer. These data indicated that
in laboratory testing in vitro and in animals bearing human pancreatic and bile duct tumors, the
activity of triphendiol against these cancers was demonstrated. Triphendiol completed two Phase I
human trials in Australia which demonstrated an acceptable safety profile and acceptable
pharmacokinetic profile, i.e., the characteristics of a drug that determine its absorption,
distribution and elimination in the body, when administered orally.
Triphendiol was granted Orphan Drug status by the FDA for the treatment of pancreatic cancer and
for the treatment of cholangiocarcinoma, or bile duct cancer, as well as for the treatment of Stage
IIB through Stage IV malignant melanoma.
An Orphan Drug refers to a product that is intended for use in a disease or condition that affects
fewer than 200,000 individuals in the U.S. A grant of Orphan Drug status provides seven years of
market exclusivity for the orphan indication after approval by the FDA, as well as study design
assistance and eligibility for grant funding from the FDA during its development. Triphendiol is in
the early stages of clinical development and
18
significant clinical testing will be required to prove its safety and efficacy before marketing
applications may be filed with the FDA.
In January 2009, MEI announced that triphendiol had been granted an Investigational New Drug (IND)
status by the FDA to undertake clinical studies with orally administered triphendiol as a
chemotherapy sensitizing agent in combination with gemcitabine in patients with unresectable
locally advanced or metastatic pancreatic and bile duct cancers. Based on the results of the
OVATRUE study with orally administered phenoxodiol, MEI is currently developing plans to amend the
triphendiol IND to administer triphendiol intravenously.
NV-143
NV-143 is a derivative of triphendiol and is a highly potent, pan acting investigational
anti-cancer drug. It is active against every melanoma cell line tested to date and is able to
sensitize melanoma cell lines to the standard of care drug, dacarbazine, and members of the
platinum drug family in laboratory studies. Proof of concept studies in animal models of melanoma
have demonstrated that orally delivered NV-143 retards tumor proliferation. The NV-143 mechanism of
action in melanoma has not been fully elucidated. NV-143 is non-clastogenic in laboratory studies,
where it did not induce chromosome breaks.
NV-128
In August, 2009 the Company entered into a licence agreement with Marshall Edwards Pty Limited
(“MEPL”) granting an exclusive world-wide, non-transferable licence, under the Novogen patent
rights, to conduct clinical trials and commercialise and distribute all forms of administering
NV-128, except topical applications. The agreement covers uses of NV-128 in the field of
prevention, treatment or cure of cancer in humans. NV-128 is currently in pre-clinical development
stage.
In consideration of the licence granted MEPL paid Novogen a licence fee of US$1,500,000 on 7
August, 2009.
NV-128 is an investigational cancer compound which has been shown in pre-clinical laboratory
studies to promote cancer cell death by targeting the specific protein regulatory pathway (
i
.
e
.,
AKT-mTOR pathway) in ovarian cancer cells that have become resistant to many drugs used to kill
cancer cells. Structurally, NV-128 is an analog of phenoxodiol and triphendiol, but in contrast to
phenoxodiol, NV-128 uses different molecular mechanisms to promote the death of cancer cells.
In September 2009, MEI released data demonstrating that the efficacy of NV-128 in animal xenograft
models was achieved without apparent toxicity. NV-128 is a novel flavonoid small molecule
inhibitor, capable of inhibiting both mTORC1 and mTORC2 protein regulatory pathways which are
central to the aberrant proliferative capacity of both mature cancer cells and cancer stem cells.
The laboratory data demonstrated that
19
NV-128 has greater safety than some other mTOR inhibitors in mice bearing human ovarian cancer
xenografts. Additional data released reported that NV-128 was judged to be without cardiac toxicity
in laboratory studies.
GLYC-101
GLYC-101 is intended to stimulate and modulate the natural cascade of wound healing activities in
several cell populations. The product candidate is a topical gel formulation to be applied directly
on the wound surface. The strategic priorities for GLYC-101 include wound healing following laser
ablation, burn wounds, surgical wounds, venous ulcers and diabetic ulcers.
Glycotex activity has been focused on seeking new funds to enable it to complete and extend the
existing clinical development program. The climate for raising new funds has continued to be
difficult but constructive discussions have progressed with a number of large global companies
operating in wound care and related fields and some new private investors have been identified who
would be willing to participate in a raising as soon as market conditions improve. In the meantime,
costs are being contained to the absolute minimum.
Consumer health care
The Company launched its first dietary supplement product, Promensil, in September 1997 in
Australia.
Promensil and Trinovin are “dietary supplements” that deliver standardized levels of all four
isoflavones — daidzein, genistein, formononetin and biochanin. In addition, the Company has
introduced dietary supplement line extensions including Promensil Vitality and Promensil Double
Strength.
The Company has established 100% owned subsidiary companies in Canada, and the U.K. to market and
distribute its range of dietary supplements. The Company has also entered into agency agreements to
distribute its dietary supplements in Singapore, China, Malaysia, Indonesia, Taiwan, South Africa,
Ireland, Austria, Netherlands, Switzerland, Belgium, Portugal, Italy, Malta, Korea, Brazil and UAE.
In 2006, the Company licensed the U.S. rights to market Promensil and Trinovin brands to Natrol,
Inc.
The following table is an analysis of revenue from sales and other sources during the past three
fiscal years by categories of activity and by geographical market. Other revenue consists
principally of interest income and royalty receipts. See Note 2 to the Consolidated Financial
Statements.
20
Category of Activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
2009
|
|
2010
|
|
|
|
(A$’000)
|
|
(A$’000)
|
|
(A$’000)
|
|
|
|
|
|
Revenue from sale of goods
|
|
|
9,400
|
|
|
|
8,333
|
|
|
|
7,983
|
|
|
Other revenue
|
|
|
3,883
|
|
|
|
2,814
|
|
|
|
1,925
|
|
|
|
|
|
|
Total Revenue
|
|
|
13,283
|
|
|
|
11,147
|
|
|
|
9,908
|
|
|
|
|
|
Geographical Markets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
2009
|
|
2010
|
|
|
|
(A$’000)
|
|
(A$’000)
|
|
(A$’000)
|
|
|
|
|
|
Revenue from sale of goods
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia/NZ
|
|
|
4,755
|
|
|
|
4,065
|
|
|
|
3,955
|
|
|
Europe
|
|
|
2,217
|
|
|
|
2,200
|
|
|
|
2,240
|
|
|
North America
|
|
|
2,428
|
|
|
|
2,068
|
|
|
|
1,788
|
|
|
|
|
|
|
|
|
|
9,400
|
|
|
|
8,333
|
|
|
|
7,983
|
|
|
|
|
|
|
Other revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia/NZ
|
|
|
3,145
|
|
|
|
2,528
|
|
|
|
1,824
|
|
|
Europe
|
|
|
5
|
|
|
|
1
|
|
|
|
2
|
|
|
North America
|
|
|
733
|
|
|
|
285
|
|
|
|
99
|
|
|
|
|
|
|
|
|
|
3,883
|
|
|
|
2,814
|
|
|
|
1,925
|
|
|
|
|
|
|
Total Revenue
|
|
|
13,283
|
|
|
|
11,147
|
|
|
|
9,908
|
|
|
|
|
|
21
Source and Availability of Raw Materials
Phenolic Pharmaceutical Compounds
Small quantities of the synthetic phenolic compounds used in the Company’s pre-clinical studies and
clinical trials were manufactured at the Company’s pilot facility located at North Ryde, Australia,
and through contracted third party manufacturers. The Company has taken the strategic decision not
to manufacture compounds for larger clinical trials or commercial scale Active Pharmaceutical
Ingredients (API) for its drug candidates, including phenoxodiol and triphendiol, NV-143 and NV-128
as these can be more economically supplied by third parties with particular expertise in this area.
Isoflavones
Isoflavones for use in consumer health care products are supplied under contract entered into with
a third party supplier. The Company also uses contract formulators and packers in Australia to
tablet and pack the final product for supply to world markets.
Marketing Channels
The Company’s marketing strategy is to continue to be responsible for the direct marketing of its
consumer health care products in Australia, Canada and the U.K. The Company has entered into third
party distribution arrangements for other international territories.
Patent Protection
The most important area of the intellectual property (“IP”) of the Company is the Company’s
discovery that isoflavonoid-derived phenolic compounds have biological activity. This is the basis
of the Company’s drug discovery and development program. A number of these phenolic compounds have
been identified by the Company as offering significant commercial potential as new pharmaceuticals
and these are currently under development. The Company has multiple PCT (Patent Cooperation Treaty)
applications pending relating to these compounds and a wide range of therapeutic indications.
The Company pursues a broad patent application filing strategy, and filing PCT patent applications
can be used to pursue patent protection in member countries with significant markets for the
Company’s products. All current patent applications are filed in the name of, or assigned to either
Novogen Inc., Novogen’s wholly-owned U.S. subsidiary, or Novogen Research Pty Ltd, one of Novogen’s
wholly-owned Australian subsidiaries.
The areas with expanding patent cover include novel dimeric and novel aminated isoflavones,
isoflavone formulations and various uses, combined
22
isoflavone/chemotherapy and isoflavone/radiotherapy treatments and glucan preparation and uses.
During the year 24 patents were granted.
Trademark Protection
The Company also seeks IP protection through trademark registration of product names and corporate
logos. The Company has an active program of registering all product trademarks in significant
markets.
Licensing Arrangements
In 1997, the Company granted an exclusive royalty-bearing license, with the right to grant
sublicenses, to Protein Technologies International, then a subsidiary of Ralston Purina Company
(“PTI”), covering three of the Company’s patent applications (and U.S. patents arising from such
applications) for the development and commercialization of prescription and non-prescription drug
products and dietary health supplements in which the biologically active component is derived from
soy and consists of at least one isoflavone covered by one of the licensed patent applications (or
U.S. patents arising from such applications). Subsequent to the Company’s grant of the license,
U.S. patents were issued for all three patent applications. The geographical territory of the
license is worldwide, with the exception of Australia and New Zealand. In 1997, Dupont acquired PTI
and PTI subsequently changed its name to Solae LLC (“Solae”) in connection with a joint venture
that it entered into with Bunge Ltd. In 2004, the parties amended the license to revise the
schedule of minimum annual payments and to provide for payment to be made by Solae to the Company
in the event that Solae sells its isoflavone drug program. The license was transferred to Archer
Daniels Midland Company (“ADM”) in 2005.
Under the terms of the transfer, ADM assumed the rights and obligations formally held by Solae,
including the obligation to make minimum annual payments and royalty payments to the Company.
Notwithstanding the transfer of the license agreement, Solae remains obligated to make payment to
the Company in the event that Solae sells its isoflavone drug program. The license agreement will
terminate upon the expiration or invalidation of the last of the patent applications and/or patent
rights that it covers.
The Company received minimum annual payments from ADM of US$1,320,000 and US$1,430,000 in the
calendar years 2008 and 2009, respectively. ADM is also required to make the following future
minimum annual payments to the Company:
|
|
(i)
|
|
US$1,540,000 due by December 31, 2010;
|
|
|
|
|
(ii)
|
|
US $1,670,000 due by December 31, 2011; and
|
|
|
|
|
(iii)
|
|
US $2,000,000 by December 31, 2012 and annually thereafter for so long as
the agreement is in effect.
|
The annual royalties payable under the terms of the agreement are computed at various percentages
of ADM’s cumulative net sales of prescription and non-prescription drug
23
products and dietary health supplements covered by the licensed patents. ADM must pay the Company
a certain percentage of its cumulative net sales of the covered products as annual royalties until
the cumulative net sales reach a certain dollar amount. Thereafter, as the cumulative net sales
increase to certain specified dollar amount tiers, the percentage payable as royalties decreases
with each tier. In connection with agreement, the Company received royalty income from ADM of A$1.5
million and A$1.6 million in fiscal years 2010 and 2009, respectively.
Australian Government
The activities of the Company are subject to numerous Australian laws and regulations, including
those described below.
The Australian Corporations Law is the main body of law governing companies incorporated in
Australia, such as Novogen and its Australian subsidiaries. The Australian Securities and
Investments Commission is an Australian Government organization which administratively enforces
legislation covering matters such as directors’ duties and responsibilities, preparation of
accounts, auditor control, issue and transfer of shares, control of shareholders’ meetings, rights
of minority interests, amendments to capital structure, preparation and filing of public documents
such as annual reports, changes in directors and changes to capital.
The ASX imposes listing rules on all listed companies, such as Novogen. The rules cover issues such
as continuous and immediate disclosure to the market of relevant information, periodic financial
reporting and the prior approval of reports to shareholders.
The Company believes that it materially complies with the foregoing Australian laws and regulations
pertaining to public and private companies.
The Company’s products and manufacturing facilities also are regulated by various Australian
federal and state authorities. The Company’s manufacturing facilities hold the appropriate licenses
concerning the manufacture of health products.
Regulatory Requirements
Australian Regulatory Requirements
The
Therapeutic Goods Act 1989,
or 1989 Act, sets out the legal requirements for the import,
export, manufacture and supply of pharmaceutical products in Australia. The 1989 Act requires that
all pharmaceutical products to be imported into, supplied in, manufactured in or exported from
Australia be included in the Australian Register of Therapeutic Goods, or ARTG, unless specifically
exempted under the Act.
Medicines with a higher level of risk (prescription medicines, some non-prescription medicines) are
evaluated for quality, safety and efficacy and are registered on the ARTG. Medicines with a lower
risk (many over the counter medicines including vitamins)
24
are assessed only for quality and safety. Medicines included in the ARTG can be identified by the
AUST R number (for registered medicines) or an AUST L number (listed medicines) that appears on the
packaging of the medicine.
In order to ensure that a product can be included in the ARTG, a sponsoring company must make an
application to the Therapeutic Goods Administration, or TGA. The application usually consists of a
form accompanied by data (based on the European Union requirements) to support the quality, safety
and efficacy of the product for its intended use and payment of a fee. Application details are
available on the TGA website http://www.tga.gov.au.
The first phase of evaluation, known as the Application Entry Process, is usually a short period
during which an application is assessed at an administrative level to ensure that it complies with
the basic guidelines. The TGA may request further details from the applicant, and may agree with
sponsors that additional data (which while not actually required by the application, could enhance
the assessment outcome) may be submitted later at an agreed time. The TGA must decide within at
least 40 working days whether it will accept the application for evaluation.
Once an application is accepted for evaluation, aspects of the data provided are allocated to
evaluators within the different relevant sections, who prepare clinical evaluation reports.
Following evaluation, the chemistry, quality control bioavailability and pharmacokinetics aspects
of a product may be referred to a Pharmaceutical Sub-Committee (PSC), which is a sub-committee of
the TGA prescription medicine expert advisory committee, the Advisory Committee on Prescriptive
Medicines (ACPM) to review the relevant clinical evaluation reports.
The clinical evaluation reports (along with any resolutions of the ACPM sub-committee) are then
sent to the sponsoring company who then has the opportunity to comment on the views expressed
within the evaluation report, provide corrections and to submit supplementary data to address any
issues raised in the evaluation reports.
Once the evaluations are complete, the TGA prepares a summary document on the key issues on which
advice will be sought from either the ACPM (for new medicines) or from the Peer Review Committee
(PRC) for extensions to products which are already registered. This summary is sent to the
sponsoring company which is able to submit a response to the ACPM or PRC dealing with issues raised
in the summary and those not previously addressed in the evaluation report. The ACPM/PRC provide
independent advice on the quality, risk-benefit, effectiveness and access of the product and
conduct medical and scientific evaluations of the application. The ACPM meets every 2 months to
examine the applications referred by the TGA and its resolutions are provided to the sponsoring
company after 5 working days after the ACPM meeting.
The TGA takes into account the advice of the ACPM or PRC in reaching a decision to approve or
reject a product. Any approval for registration on the ARTG may have conditions associated with it.
25
From the time that the TGA accepts the initial application for evaluation, the TGA must complete
the evaluation and make a decision on the registration of the product within at least 255 working
days. If not completed within 255 working days, the TGA forfeits 25% of the evaluation fee
otherwise payable by the sponsor, but any time spent waiting for a response from the sponsor is not
included in the 255 working days. The TGA also has a system of priority evaluation for products
that meet certain criteria, including where the product is a new chemical entity that it is not
otherwise available on the market as an approved product, and is for the treatment of a serious,
life-threatening illness for which other therapies are either ineffective or not available.
U.S. Regulatory Requirements
The FDA, and comparable regulatory agencies in other countries, regulate and impose substantial
requirements upon the research, development, pre-clinical and clinical testing, labeling,
manufacture, quality control, storage, approval, advertising, promotion, marketing, distribution
and export of pharmaceutical products including biologics, as well as significant reporting and
record-keeping obligations. State governments may also impose obligations in these areas.
In the U.S., pharmaceutical products are regulated by the FDA under the Federal Food, Drug, and
Cosmetic Act or FDCA and other laws including in the case of biologics, the Public Health Service
Act. The Company believes, but cannot be certain, that its products will be regulated as drugs by
the FDA. The process required by the FDA before drugs may be marketed in the U.S. generally
involves the following:
|
|
•
|
|
pre-clinical laboratory evaluations, including formulation and stability testing, and
animal tests performed under the FDA’s Good Laboratory Practices regulations to assess
potential safety and effectiveness;
|
|
|
|
|
•
|
|
submission and approval of an Investigational New Drug Application, or IND, including
results of pre-clinical tests, manufacturing information, and protocols for clinical
studies, which must become effective before clinical trials may begin in the U.S.;
|
|
|
|
|
•
|
|
obtaining approval of Institutional Review Boards, or IRBs, to administer the products
to human subjects in clinical trials;
|
|
|
|
|
•
|
|
adequate and well-controlled human clinical trials to establish the safety and efficacy
of the product for the product’s intended use;
|
|
|
|
|
•
|
|
development of manufacturing processes which conform to FDA current Good Manufacturing
Practices, or cGMPs, as confirmed by FDA inspection;
|
|
|
|
|
•
|
|
submission of pre-clinical and clinical studies results, and chemistry, manufacturing
and controls, or CMC, information on the product to the FDA in a
|
26
|
|
|
|
New Drug Approval Application, or NDA; and
|
|
|
|
|
•
|
|
FDA review and approval of NDA, prior to any commercial sale or shipment of a product.
|
The testing and approval process requires substantial time, effort, and financial resources, and
the Company cannot be certain that any approval will be granted on a timely basis, if at all.
The results of the pre-clinical studies, together with initial specified manufacturing information,
the proposed clinical trial protocol, and information about the participating investigators are
submitted to the FDA as part of an IND, which must become effective before we may begin human
clinical trials in the U.S. Additionally, an independent Institutional Review Board (“IRB”) must
review and approve each study protocol and oversee conduct of the trial. An IND becomes effective
30 days after receipt by the FDA, unless the FDA, within the 30-day period, raises concerns or
questions about the conduct of the trials as outlined in the IND and imposes a clinical hold. If
the FDA imposes a clinical hold, the IND sponsor must resolve the FDA’s concerns before clinical
trials can begin. Pre-clinical tests and studies can take several years to complete, and there is
no guarantee that an IND the Company or its subsidiaries submit based on such tests and studies
will become effective within any specific time period, if at all.
Human clinical trials are typically conducted in three sequential phases that may overlap.
|
•
|
|
Phase I:
The drug is initially introduced into healthy human subjects or patients and tested for
safety and dosage tolerance. Absorption, metabolism, distribution, and excretion testing is
generally performed at this stage.
|
|
|
|
•
|
|
Phase II:
The drug is studied in controlled, exploratory therapeutic trials in a limited number
of subjects with the disease or medical condition for which the new drug is intended to be used in
order to identify possible adverse effects and safety risks, to determine the preliminary or
potential efficacy of the product for specific targeted diseases or medical conditions, and to
determine dosage tolerance and the optimal effective dose.
|
|
|
|
•
|
|
Phase III:
When Phase II studies demonstrate that a specific dosage range of the drug is likely
to be effective and the drug has an acceptable safety profile, controlled, large-scale therapeutic
Phase III trials are undertaken at multiple study sites to demonstrate clinical efficacy and to
further test for safety in an expanded patient population.
|
The Company cannot be certain that it will successfully complete Phase I, Phase II, or Phase III
testing of its products within any specific time period, if at all. Furthermore, the FDA, the IRB
or the Company may suspend or terminate clinical trials at any time on various grounds, including a
finding that the subjects or patients are being exposed to an unacceptable health risk.
27
Results of pre-clinical studies and clinical trials, as well as detailed information about the
manufacturing process, quality control methods, and product composition, among other things, are
submitted to the FDA as part of a NDA seeking approval to market and commercially distribute the
product on the basis of a determination that the product is safe and effective for its intended
use. Before approving a NDA, the FDA will inspect the facilities at which the product is
manufactured and will not approve the product unless cGMP compliance is satisfactory. If applicable
regulatory criteria are not satisfied, the FDA may deny the NDA or require additional testing or
information. As a condition of approval, the FDA also may require post-marketing testing or
surveillance to monitor the product’s safety or efficacy. Even after a NDA is approved, the FDA may
impose additional obligations or restrictions (such as labeling changes), or even suspend or
withdraw a product approval on the basis of data that arise after the product reaches the market,
or if compliance with regulatory standards is not maintained. The Company cannot be certain that
any NDA the Company or its subsidiaries submit will be approved by the FDA on a timely basis, if at
all. Also, any such approval may limit the indicated uses for which the product may be marketed.
Any refusal to approve, delay in approval, suspension or withdrawal of approval, or restrictions on
indicated uses could have a material adverse impact on our business prospects.
Each NDA must be accompanied by a user fee, pursuant to the requirements of the Prescription Drug
User Fee Act, or PDUFA, and its amendments. According to the FDA’s fee schedule, effective on
October 1, 2010 for the fiscal year 2011, the user fee for an application requiring clinical data,
such as an NDA, is $1,542,000. The FDA adjusts the PDUFA user fees on an annual basis. PDUFA also
imposes an annual product fee for prescription drugs and biologics ($86,520), and an annual
establishment fee ($497,200) on facilities used to manufacture prescription drugs and biologics. A
written request can be submitted for a waiver for the application fee for the first human drug
application that is filed by a small business, but there are no waivers for product or
establishment fees. The Company is not at the stage of development of its products where the
Company is subject to these fees, but they are significant expenditures that may be incurred in the
future and must be paid at the time of application submissions to FDA.
Satisfaction of FDA requirements typically takes several years. The actual time required varies
substantially, based upon the type, complexity, and novelty of the pharmaceutical product, among
other things. Government regulation imposes costly and time-consuming requirements and restrictions
throughout the product life cycle and may delay product marketing for a considerable period of
time, limit product marketing, or prevent marketing altogether. Success in pre-clinical or early
stage clinical trials does not ensure success in later stage clinical trials. Data obtained from
pre-clinical and clinical activities are not always conclusive and may be susceptible to varying
interpretations that could delay, limit, or prevent marketing approval. Even if a product receives
marketing approval, the approval is limited to specific clinical indications. Further, even after
marketing approval is obtained, the discovery of previously unknown problems with a product may
result in restrictions on the product or even complete withdrawal of the product from the market.
28
After product approval, there are continuing significant regulatory requirements imposed by the
FDA, including record-keeping requirements, obligations to report adverse side effects in patients
using the products, and restrictions on advertising and promotional activities. Quality control and
manufacturing procedures must continue to conform to cGMPs, and the FDA periodically inspects
facilities to assess cGMP compliance. Additionally, post-approval changes in ingredient
composition, manufacturing processes or facilities, product labeling, or other areas may require
submission of an NDA Supplement to the FDA for review and approval. New indications will require
additional clinical studies and submission of a NDA Supplement. Failure to comply with FDA
regulatory requirements may result in an enforcement action by the FDA, including Warning Letters,
product recalls, suspension or revocation of product approval, seizure of product to prevent
distribution, impositions of injunctions prohibiting product manufacture or distribution, and civil
and criminal penalties. Maintaining compliance is costly and time-consuming. The Company cannot be
certain that the Company, or its present or future suppliers or third-party manufacturers, will be
able to comply with all FDA regulatory requirements, and potential consequences of noncompliance
could have a material adverse impact on our business prospects.
The FDA’s policies may change, and additional governmental regulations may be enacted that could
delay, limit, or prevent regulatory approval of the Company products or affect the Company’s
ability to manufacture, market, or distribute our products after approval. Moreover, increased
attention to the containment of healthcare costs in the U.S. and in foreign markets could result in
new government regulations that could have a material adverse effect on the Company’s business. The
Company’s failure to obtain coverage, an adequate level of reimbursement, or acceptable prices for
our future products could diminish any revenues the Company may be able to generate. The Company’s
ability to commercialize future products will depend in part on the extent to which coverage and
reimbursement for the products will be available from government and health administration
authorities, private health insurers, and other third-party payers. European Union member states
and U.S. government and other third-party payers increasingly are attempting to contain healthcare
costs by consideration of new laws and regulations limiting both coverage and the level of
reimbursement for new drugs. The Company cannot predict the likelihood, nature or extent of adverse
governmental regulation that might arise from future legislative or administrative action, either
in the U.S. or abroad.
The Company’s activities also may be subject to state laws and regulations that affect the
Company’s ability to develop and sell its products. The Company is also subject to numerous
federal, state, and local laws relating to such matters as safe working conditions, clinical,
laboratory, and manufacturing practices, environmental protection, fire hazard control, and
disposal of hazardous or potentially hazardous substances. The Company may incur significant costs
to comply with such laws and regulations now or in the future, and the failure to comply may have a
material adverse impact on the Company’s business prospects.
29
The FDCA includes provisions designed to facilitate and expedite the development and review of
drugs and biological products intended for treatment of serious or life-threatening conditions that
demonstrate the potential to address unmet medical needs for such conditions. These provisions set
forth a procedure for designation of a drug as a “fast track product.” The fast track designation
applies to the combination of the product and specific indication for which it is being studied. A
product designated as fast track is ordinarily eligible for additional programs for expediting
development and review, but products that are not in fast track drug development programs may also
be able to take advantage of these programs. These programs include priority review of NDAs and
accelerated approval. Drug approval under the accelerated approval regulations may be based on
evidence of clinical effect on a surrogate endpoint that is reasonably likely to predict clinical
benefit. A post-marketing clinical study will be required to verify clinical benefit, and other
restrictions to assure safe use may be imposed.
Under the Drug Price Competition and Patent Term Restoration Act of 1984, a sponsor may obtain
marketing exclusivity for a period of time following FDA approval of certain drug applications,
regardless of patent status, if the drug is a new chemical entity or if new clinical studies were
required to support the marketing application for the drug. This marketing exclusivity prevents a
third party from obtaining FDA approval for an identical or nearly identical drug under an
Abbreviated New Drug Application or a “505(b)(2) New Drug Application.” The statute also allows a
patent owner to obtain an extension of applicable patent terms for a period equal to one-half the
period of time elapsed between the filing of an IND and the filing of the corresponding NDA plus
the period of time between the filing of the NDA and FDA approval, with a five year maximum patent
extension. We cannot be certain that Novogen will be able to take advantage of either the patent
term extension or marketing exclusivity provisions of these laws.
The Best Pharmaceuticals for Children Act, or BPCA, signed into law on January 4, 2002, was
reauthorized and amended by the FDA Amendments Act of 2007 or FDAAA. The reauthorization of BPCA
provides an additional six months of patent protection to NDA applicants that conduct acceptable
pediatric studies of new and currently-marketed drug products for which pediatric information would
be beneficial, as identified by FDA in a Pediatric Written Request. The Pediatric Research Equity
Act, or PREA, signed into law on December 3, 2003, also was reauthorized and amended by FDAAA. The
reauthorization of PREA requires that most applications for drugs and biologics include a pediatric
assessment (unless waived or deferred) to ensure the drugs’ and biologics’ safety and effectiveness
in children. Such pediatric assessment must contain data, gathered using appropriate formulations
for each age group for which the assessment is required, that are adequate to assess the safety and
effectiveness of the drug or the biological product for the claimed indications in all relevant
pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation
for which the drug or the biological product is safe and effective. The pediatric assessments can
only be deferred provided there is a timeline for the completion of such studies. The FDA may waive
(partially or fully) the pediatric assessment requirement for several reasons, including if the
applicant can demonstrate that reasonable attempts to produce a pediatric formulation necessary for
that age group have failed.
30
European Union Regulatory Requirements
Outside the U.S., our ability to market our products will also be contingent upon receiving
marketing authorizations from the appropriate regulatory authorities and compliance with applicable
post-approval regulatory requirements. Although the specific requirements and restrictions vary
from country to country, as a general matter, foreign regulatory systems include risks similar to
those associated with FDA regulation, described above. Under EU regulatory systems, marketing
authorizations may be submitted either under a centralized or a national procedure. Under the
centralized procedure, a single application to the European Medicines Agency (EMA) leads to an
approval granted by the European Commission which permits the marketing of the product throughout
the EU. The centralized procedure is mandatory for certain classes of medicinal products, but
optional for others. For example, all medicinal products developed by certain biotechnological
means, and those developed for cancer and other specified diseases and disorders, must be
authorized via the centralized procedure. We assume that the centralized procedure will apply to
our products that are developed by means of a biotechnology process. The national procedure is used
for products that are not required to be authorized by the centralized procedure. Under the
national procedure, an application for a marketing authorization is submitted to the competent
authority of one member state of the EU. The holders of a national marketing authorization may
submit further applications to the competent authorities of the remaining member states via either
the decentralized or mutual recognition procedure. The decentralized procedure enables applicants
to submit an identical application to the competent authorities of all member states where approval
is sought at the same time as the first application, while under the mutual recognition procedure,
products are authorized initially in one member state, and other member states where approval is
sought are then requested to recognize the original authorization based upon an assessment report
prepared by the original authorizing competent authority. Both the decentralized and mutual
recognition procedures should take no longer than 90 days, but if one member state makes an
objection, which under the legislation can only be based on a possible risk to human health, the
application will be automatically referred to the Committee for Medicinal Products for Human Use
(CHMP) of the EMA. If a referral for arbitration is made, the procedure is suspended. However,
member states that have already approved the application may, at the request of the applicant,
authorize the product in question without waiting for the result of the arbitration. Such
authorizations will be without prejudice to the outcome of the arbitration. For all other concerned
member states, the opinion of the CHMP, which is binding, could support or reject the objection or
alternatively could reach a compromise position acceptable to all EU countries concerned. The
arbitration procedure may take an additional year before a final decision is reached and may
require the delivery of additional data.
As with FDA approval, we may not be able to secure regulatory approvals in Europe in a timely
manner, if at all. Additionally, as in the U.S., post-approval regulatory requirements, such as
those regarding product manufacture, marketing, or distribution, would apply to any product that is
approved in Europe, and failure to comply with such
31
obligations could have a material adverse effect on our ability to successfully commercialize any
product.
The conduct of clinical trials in the European Union is governed by the European Clinical Trials
Directive (2001/20/EC), which was implemented in May 2004. This Directive governs how regulatory
bodies in member states control clinical trials. No clinical trial may be started without a
clinical trial authorization granted by the national competent authority and favorable ethics
approval.
Accordingly, there is a marked degree of change and uncertainty both in the regulation of clinical
trials and in respect of marketing authorizations which face us for our products in Europe.
Nasdaq compliance
Novogen
Novogen Limited received a letter from The Nasdaq Stock Market on 19 July, 2010 notifying it that
for the last 30 consecutive business days the bid price of the Company’s ADRs closed below the
minimum US$1.00 per share requirement for continued inclusion on the Nasdaq Global Market under
Nasdaq Rule 5450(a)(1). According to Nasdaq’s letter, the Company will be afforded a grace period
of 180 calendar days, or until 18 January, 2011, to regain compliance in accordance with Nasdaq
Rule 5810(c)(3)(A). In order to regain compliance, shares of the Company’s ADRs must maintain a
minimum bid closing price of at least US$1.00 per share for a minimum of ten consecutive business
days during the grace period. The Company intends to actively monitor the bid price of its common
stock between now and 18 January, 2011 and take those steps possible to maintain the listing. This
notification from The Nasdaq Stock Market has no bearing on the ASX listing.
Marshall Edwards, Inc.
In September 2009, Novogen’s subsidiary, MEI received a letter from The Nasdaq Stock Market
(“Nasdaq”) notifying it that for the previous 30 consecutive business days the bid price of MEI’s
common stock closed below the minimum $1.00 per share requirement for continued inclusion on the
Nasdaq Global Market under Nasdaq Rule 5450(a)(1). According to Nasdaq’s letter, MEI were afforded
a grace period of 180 calendar days, or until March 15, 2010, to regain compliance in accordance
with Nasdaq Rule 5810(c)(3)(A). In order to regain compliance, shares of MEI’s common stock must
maintain a minimum bid closing price of at least $1.00 per share for a minimum of ten consecutive
business days during the grace period. On March 16, 2010, MEI received notice from The Nasdaq Stock
Market that it had not regained compliance and that it would be suspended from The Nasdaq Global
Market on March 25, 2010, unless it requested a hearing. On March 23, 2010 MEI requested a hearing
before the Nasdaq Hearings Panel. On March 29, 2010, MEI stockholders approved an amendment to
MEI’s Restated Certificate of Incorporation to effect a reverse stock split of MEI’s
32
common stock at a 1-for-10 reverse split ratio. The reverse stock split of MEI outstanding common
stock was effected on March 31, 2010 on a 1-for-10 split adjusted basis. Following the reverse
stock split, the closing bid price of MEI’s common stock closed above the $1.00 minimum requirement
for ten consecutive trading days. MEI has now received notification from The Nasdaq Stock Market
that it had regained compliance with the $1.00 minimum closing bid price in accordance with the
Nasdaq Listing Rule 5450(a)(1). The Nasdaq Hearings Listing Qualifications Panel determined to
continue the listing of MEI’s securities on the Nasdaq Stock Market and, therefore, the hearing
before the Hearings Listing Qualifications Panel was canceled. For the purpose of this report we
have adjusted all share data presented retrospectively to incorporate the 1-for-10 reverse stock
split.
On May 18, 2010 MEI received a notice from Nasdaq indicating that it failed to comply with the
minimum stockholders’ equity requirement set forth in Nasdaq Listing Rule 5450(b)(1)(A) for
continued listing of its common stock on the Nasdaq Global Market because our stockholders’ equity
as of March 31, 2010 as set forth in MEI’s quarterly report on Form 10-Q for the period ended March
31, 2010 of US$9.16 million was below the US$10 million minimum stockholders’ equity requirement.
The notice also stated MEI would be provided 45 calendar days, or until July 2, 2010, to submit a
plan to regain compliance.
MEI responded to Nasdaq on July 2, 2010. The response included plans to satisfy the listing
requirements with respect to the maintaining a minimum US$10 million Shareholders’ equity value.
MEI stated its intention to pursue a capital raising transaction within the time provided by Nasdaq
rules if market conditions permit, to further fund development of our product candidates 1)
triphendiol or its primary active metabolite NV-143, a potentially more potent, second generation
analog of phenoxodiol; and 2) NV-128. In the alternative, MEI intends to apply to transfer the
listing of its common stock from the Nasdaq Global Market to the Nasdaq Capital Market.
On August 5, 2010, MEI received a letter from Nasdaq indicating that, based on its plan, Nasdaq has
determined to grant an extension, through November 15, 2010, to regain compliance with the Rule by
establishing stockholders’ equity of at least US$10 million.
On November 16, 2010 MEI was notified by the Listing Qualifications Staff of The Nasdaq Stock
Market that, due to the Company’s non-compliance with the minimum US$10 million stockholders’
equity requirement for continued listing on The Nasdaq Global Market, as set forth in Listing Rule
5450(b)(1), MEI’s common stock is subject to delisting unless it requests a hearing before a Nasdaq
Listing Qualifications Panel. MEI has requested a hearing before the Panel, which request will
stay any further action by Nasdaq until the Panel issues its decision following the hearing. In
connection with the hearing, the Panel may grant MEI an additional compliance period of up to 180
calendar days from the date of the Nasdaq staff’s determination, or 16 May, 2011, to evidence
compliance with the minimum stockholders’ equity requirement for continued listing on The Nasdaq
Global Market. MEI has been granted a hearing date of January 6, 2011. While MEI is working
diligently to remedy the listing deficiency, there can be no
33
assurance that the Panel will grant MEI’s request for continued listing on The Nasdaq Global Market
and, if the Panel does not, MEI’s common stock may be transferred to The Nasdaq Capital Market or
delisted from Nasdaq.
On 14 July, 2010, MEI received notice from Nasdaq stating that for the last 30 consecutive business
days, the Market Value of Publicly Held Shares closed below the minimum US$5 million required for
continued listing on the Nasdaq Global Market under Nasdaq Rule 5450(b)(1)(C). Market Value of
Publicly Held Shares is calculated by multiplying the publicly held shares, which is total shares
outstanding less any shares held by officers, directors, or beneficial owners of 10% or more, by
the consolidated closing bid price. Novogen Limited currently owns 71.3% of the outstanding common
stock of MEI. Therefore, the value of Novogen Limited’s shares is excluded from the Market Value of
Publicly Held Shares of MEI. According to Nasdaq’s letter, MEI would be afforded a grace period of
180 calendar days, or until 10 January, 2011, to regain compliance in accordance with Nasdaq Rule
5810(c)(3)(A). MEI intends to actively monitor the Market Value of Publicly Held Shares between now
and 10 January, 2011.
Organizational Structure
Corporate Structure
Novogen Limited is a company limited by shares and is incorporated and domiciled in Australia.
Novogen Limited and its controlled entities “Novogen” or the “Group” have prepared a consolidated
financial report incorporating the entities that Novogen Limited controlled during fiscal 2010,
which included the following controlled entities:
|
|
|
|
|
|
|
Name of Entity
|
|
Country of Incorporation
|
|
Ownership %
+
|
|
Novogen Laboratories Pty Ltd
|
|
Australia
|
|
100
|
|
Novogen Research Pty Ltd
|
|
Australia
|
|
100
|
|
Novogen Inc
|
|
U.S.
|
|
100
|
|
Glycotex, Inc.
|
|
U.S.
|
|
80.7
|
|
Novogen Limited (U.K.)
|
|
U.K.
|
|
100
|
|
Promensil Limited
|
|
U.K.
|
|
100
|
|
Novogen BV
|
|
Netherlands
|
|
100
|
|
Novogen Canada Limited
|
|
Canada
|
|
100
|
|
Marshall Edwards, Inc.
|
|
U.S.
|
|
71.3
|
|
Marshall Edwards Pty Limited*
|
|
Australia
|
|
71.3
|
|
|
|
|
|
*
|
|
Indirect ownership through Marshall Edwards, Inc.
|
|
|
|
+
|
|
Ownership % at June 30, 2010.
|
34
Property, Plant and Equipment
The Company’s leases premises in North Ryde, Sydney which occupies approximately 1,088 square
meters. These premises are used as Novogen’s corporate headquarters and also contain laboratory
facilities for the Company’s Chemistry and Quality operations used in the pilot plant manufacturing
of the small scale synthetic drug compounds. The Company owns the equipment used in the pilot
plant. The lease was renewed in September 2010 and expires in October 2015. The Company believes
these facilities will adequately meet the Company’s needs for the foreseeable future and may seek
to sublet excess space at these facilities resulting from the discontinuation of the Company’s
research and development activities in Australia and possible asset transfers being considered by
the Company.
The Company’s subsidiary MEI has leased office space, of approximately 345 square meters, located
at 11975 El Camino Real, San Diego, California. The location houses MEI’s executive and
administrative offices. The lease commenced in July 2010 and expires in April 2013. In addition,
MEI has two options to extend the lease for one year each at the market rate in effect at the time
of renewal. The Company believes these facilities will adequately meet MEI’s office needs for the
foreseeable future.
Item 4A. Unresolved Staff Comments
None
Item 5. Operating and Financial Review and Prospects
The following discussion and analysis should be read in conjunction with “Item 18. Financial
Statements” included below. Operating results are not necessarily indicative of results that may
occur in future periods. This discussion and analysis contains forward-looking statements that
involve risks, uncertainties and assumptions. The actual results may differ materially from those
anticipated in the forward-looking statements as a result of many factors including, but not
limited to, those set forth under “Forward-Looking Statements” and “Risk Factors” in Item 3. “Key
Information” included above in this Annual Report. All forward-looking statements included in this
document are based on the information available to the Company on the date of this document and the
Company assumes no obligation to update any forward-looking statements contained in this Annual
Report.
Application of Critical Accounting Policies
The significant accounting policies are summarized in Note 1 to the Consolidated Financial
Statements under Item 18 of this Annual Report.
Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the
Group and the revenue can be reliably measured. In determining the economic benefits, provisions
are made for certain trade discounts and returned goods.
35
Returns
Over the last three years, returns and estimates of return liability were not considered material
and are detailed below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
Charged to
|
|
|
|
|
|
|
|
|
|
|
Beginning of
|
|
|
Cost and
|
|
|
Actual
|
|
|
Balance at
|
|
|
|
|
year
|
|
|
Expense
|
|
|
Returns
|
|
|
End of Year
|
|
|
|
|
|
A$’000
|
|
|
|
A$’000
|
|
|
|
A$’000
|
|
|
|
A$’000
|
|
|
Allowance for Sales returns:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended June 30, 2008
|
|
|
125
|
|
|
|
145
|
|
|
|
223
|
|
|
|
47
|
|
|
Year ended June 30, 2009
|
|
|
47
|
|
|
|
277
|
|
|
|
288
|
|
|
|
36
|
|
|
Year ended June 30, 2010
|
|
|
36
|
|
|
|
75
|
|
|
|
110
|
|
|
|
1
|
|
Discounts
Discounts are generally calculated as deductions off the Company’s invoice price and as such do not
require significant judgment in determining accrual amounts. Over the last three years, the
discounts and estimate of claims were not considered material and are detailed below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
Charged to
|
|
|
|
|
|
|
|
|
|
|
Beginning of
|
|
|
Cost and
|
|
|
Actual
|
|
|
Balance at
|
|
|
|
|
year
|
|
|
Expense
|
|
|
Discounts
|
|
|
End of Year
|
|
|
|
|
|
A$’000
|
|
|
|
A$’000
|
|
|
|
A$’000
|
|
|
|
A$’000
|
|
|
Allowance for Sales
discounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended June 30, 2008
|
|
|
117
|
|
|
|
554
|
|
|
|
592
|
|
|
|
79
|
|
|
Year ended June 30, 2009
|
|
|
79
|
|
|
|
647
|
|
|
|
584
|
|
|
|
142
|
|
|
Year ended June 30, 2010
|
|
|
142
|
|
|
|
492
|
|
|
|
557
|
|
|
|
77
|
|
Inventory Adjustments
Inventories are measured at the lower of cost or net realizable value. The Company reviews the
components of inventory on a regular basis for excess, obsolete and impaired inventory based on
estimated future usage and sales. The likelihood of any material inventory write-downs is dependent
on rapid changes in customer demand or new product introductions by competitors.
For additional information on significant accounting policies refer to Item 18 “Financial
Statements” — Note 1 — “Summary of Significant Accounting Policies”.
36
Results of Operations
The following table provides a summary of revenues and expenses to supplement the more detailed
discussions below:
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2010
|
|
|
|
|
$’000
|
|
|
$’000
|
|
|
A$’000
|
|
|
US$’000
|
|
|
|
|
|
|
|
|
|
Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
9,908
|
|
|
|
11,147
|
|
|
|
13,283
|
|
|
|
8,402
|
|
|
Cost of sales
|
|
|
(2,216
|
)
|
|
|
(2,523
|
)
|
|
|
(4,090
|
)
|
|
|
(1,879
|
)
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
7,692
|
|
|
|
8,624
|
|
|
|
9,193
|
|
|
|
6,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
7
|
|
|
|
—
|
|
|
|
1,623
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research & development expenses
|
|
|
(8,093
|
)
|
|
|
(18,788
|
)
|
|
|
(18,811
|
)
|
|
|
(6,863
|
)
|
|
Selling & promotional expenses
|
|
|
(4,196
|
)
|
|
|
(6,572
|
)
|
|
|
(6,134
|
)
|
|
|
(3,558
|
)
|
|
Shipping and handling expenses
|
|
|
(236
|
)
|
|
|
(341
|
)
|
|
|
(300
|
)
|
|
|
(200
|
)
|
|
General and administrative expenses
|
|
|
(10,395
|
)
|
|
|
(6,671
|
)
|
|
|
(9,792
|
)
|
|
|
(8,815
|
)
|
|
Other expenses
|
|
|
—
|
|
|
|
(27
|
)
|
|
|
(528
|
)
|
|
|
—
|
|
|
Finance costs
|
|
|
(15
|
)
|
|
|
(11
|
)
|
|
|
(24
|
)
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
Loss before income tax
|
|
|
(15,236
|
)
|
|
|
(23,786
|
)
|
|
|
(24,773
|
)
|
|
|
(12,920
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
(10
|
)
|
|
|
(1
|
)
|
|
|
(4
|
)
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss after tax from continuing operations
|
|
|
(15,246
|
)
|
|
|
(23,787
|
)
|
|
|
(24,777
|
)
|
|
|
(12,928
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the period
|
|
|
(15,246
|
)
|
|
|
(23,787
|
)
|
|
|
(24,777
|
)
|
|
|
(12,928
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net exchange difference on translation of
financial statements of foreign controlled
entities
|
|
|
(1,079
|
)
|
|
|
6,163
|
|
|
|
(3,775
|
)
|
|
|
(915
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
(1,079
|
)
|
|
|
6,163
|
|
|
|
(3,775
|
)
|
|
|
(915
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
(16,325
|
)
|
|
|
(17,624
|
)
|
|
|
(28,552
|
)
|
|
|
(13,843
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest
|
|
|
(2,901
|
)
|
|
|
(4,859
|
)
|
|
|
(4,513
|
)
|
|
|
(2,460
|
)
|
|
Novogen Limited
|
|
|
(12,345
|
)
|
|
|
(18,928
|
)
|
|
|
(20,264
|
)
|
|
|
(10,468
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(15,246
|
)
|
|
|
(23,787
|
)
|
|
|
(24,777
|
)
|
|
|
(12,928
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest
|
|
|
(3,212
|
)
|
|
|
(3,121
|
)
|
|
|
(5,559
|
)
|
|
|
(2,724
|
)
|
|
Novogen Limited
|
|
|
(13,113
|
)
|
|
|
(14,503
|
)
|
|
|
(22,993
|
)
|
|
|
(11,119
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(16,325
|
)
|
|
|
(17,624
|
)
|
|
|
(28,552
|
)
|
|
|
(13,843
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings/(loss) per share (cents)
|
|
|
(12.1
|
)
|
|
|
(18.6
|
)
|
|
|
(20.8
|
)
|
|
|
(10.3
|
)
|
37
Operating Results — Fiscal 2010 compared to Fiscal 2009
Revenue
The Group earned gross revenues for the year ended 30 June, 2010 of $9.9 million versus $11.1
million in the previous corresponding period, a reduction of $1.2 million. The reduction in revenue
was due to decreased sales of the Group’s consumer health care products of A$0.3 million or 4%.
Other revenue for the year ended 30 June, 2010 was $1.9 million, a decrease of $0.9 million from
$2.8 million for the twelve months ended 30 June, 2009. The decrease in other revenue was mainly
due to the lower interest receipts on lower cash balances, combined with unfavourable exchange rate
impacts on royalty receipts.
Consumer product sales
Sales of consumer health care products for the year ended 30 June, 2010 were $8.0 million, a
decrease of $0.3 million from $8.3 million for the year ended 30 June, 2009. The decrease was
related to a number of factors including discontinuing sales of the Aliten weight loss product in
Australia and decreased consumer demand in the UK associated with the economic downturn. Sales were
negatively effected by exchange rate movements as a result of a strengthening of the AUD compared
to both the GBP and CAD. These decreases were partially offset by increased export sales from
Australia to overseas distributor partners.
Sales in Australia for the year ended June 30, 2010 was A$3.5 million, a decrease of A$0.2 million
or 5% from A$3.7 million for the previous year. Sales in North America decreased A$0.3 million to
A$1.8 million for the year ended June 30, 2010 compared to A$2.1 million for the previous year.
Regulatory issues in Canada, which were resolved during the year, combined with the impact of
negative exchange rate movements contributed to this decrease. Sales revenue in Europe remained
constant at A$2.2 million for the year. Strong sales growth in Italy has offset declining sales in
UK caused by the continuing economic downturn and negative exchange rate movements when converting
sales denominated in GBP to A$.
Costs and expenses
Total expenses before interest and tax decreased by A$9.8 million to A$25.1 million for the year
ended June 30, 2010 compared to A$34.9 million for the year ended June 2009. Cost of sales
decreased A$0.3 million corresponding with reduced sales. Cost of sales, which includes only costs
associated with the sale of goods, decreased A$0.3 million corresponding with reduced sales from
Australia and North America and improved gross margins on consumer product sales as a result of
favorable currency movements on purchasing active ingredients from an overseas third party
manufacturer. Cost of sales as a percentage of sales in fiscal year 2010 continued to decline due
to the impact of the favorable currency movements on the cost of active ingredient in relative A$.
38
Research and development expenses decreased by A$10.7 million reflecting cost savings following the
termination of the Phase III Ovature clinical trial. Selling and promotional expenses decreased by
$2.4 million as a result of reduced marketing expenses associated with discontinuing sales of
Aliten. General and Administrative Expenses increased by A$3.7 million primarily as a result of
staff terminations described below.
Net loss
The operating loss attributable to Novogen shareholders for the financial year, after allowing for
losses attributable to non-controlling interests of $2.9 million, reduced by $6.6 million or 35% to
$12.3 million from a loss of $18.9 million for the previous year.
The net loss from continuing operations after income tax for the consolidated Group for the year
ended 30 June, 2010 reduced by $8.6 million to $15.2 million from $23.8 million for the previous
year. The reduction in the Group’s net loss for the year ended 30 June, 2010 was primarily due to
costs savings related to the termination of the Phase III Ovature clinical trial, combined with
reduced marketing expenses associated with discontinuing sales of Aliten. Other savings in
administrative expenses were offset by the termination payments made to the Company’s CEO in
December 2009 and termination payments for a number of other senior management staff as part of the
Company restructure which took place in June, 2010, amounting in total to approximately A$3
million. This restructure is part of the continuing strategy to focus the Group’s resources towards
oncology drug research and development.
Operating Results — Fiscal 2009 compared to Fiscal 2008
Revenue
The Group earned gross revenues for the year ended June 30, 2009 of A$11.1 million versus A$13.3
million in the previous corresponding period, a reduction of A$2.2 million. The reduction in
revenue was due to decreased sales of the Group’s consumer health care products of A$1.1 million or
12%. Other revenue also reduced by A$1.1 million to A$2.8 million verses A$3.9 million for the
previous corresponding period. The decrease in other revenue was mainly due to the reduced interest
received on cash balances reflecting lower global interest rates.
Consumer product sales
Sales of consumer health care products decreased by A$1.1 million to A$8.3 million for the twelve
months ended June 30, 2009 from A$9.4 million for the twelve months ended June 30, 2008.
Sales in Australasia (including sales to export markets) for the year ended June 30, 2009 were
A$4.9 million, an increase of A$0.1 million or 2% from A$4.8 million for the
39
previous year. Canadian sales for the year ended June 30, 2009 reduced by A$0.2 million to A$2.1
million from A$2.3 million for the previous 12 month period. The reduction was due to difficult
market conditions and a significant downturn in the consumer market for menopause products. Sales
revenue in the UK decreased by A$0.3 million to A$1.4 million for the twelve month period to June
30, 2009 compared to A$1.7 million for the same period last year. The UK sales decline was caused
by the economic downturn with consumers turning away from premium brands and a reduction in the
supplement market for menopause.
Costs and expenses
Total expenses before interest and tax decreased by A$4.8 million to A$34.9 million for the year
ended June 30, 2009 compared to A$39.7 million for the year ended June 2008. Cost of sales, which
includes only costs associated with the sale of goods, decreased A$1.6 million corresponding with
reduced sales from Europe and Canada and improved gross margins on consumer product sales through
sourcing active ingredients from a lower cost third party manufacturer, following the decision to
close the Company’s production facility at Wyong NSW in 2007. Sales of product manufactured from
lower cost active commenced during fiscal year 2008 having a favourable impact on cost of sales for
part of that year. Cost of sales as a percentage of sales in fiscal year 2009 continued to decline
due to the annualized impact of a lower cost active ingredient. General and Administrative Expenses
were favourably impacted by A$3.1 million due primarily to favourable currency movements. These
savings were partially offset by an increase in selling and promotional expense of A$0.4 million.
This increase was due to expenses associated with a decision to discontinue the weight loss product
Aliten following disappointing consumer uptake post launch.
Net loss
The operating loss attributable to Novogen shareholders for the financial year, after allowing for
losses attributable to minority interests of A$4.9 million, reduced by A$1.4 million to A$18.9
million from a loss of A$20.3 million for the previous year.
The net loss from ordinary activities after income tax for the consolidated Group for the year
ended June 30, 2009 reduced by A$1.0 million to $23.8 million from A$24.8 million for the previous
year. The reduction in the Group’s net loss for the year ended June 30, 2009 was due to reduced
revenues and other incomes being offset by reduced expenditures.
Liquidity and capital resources
Cash resources
At 30 June, 2010 the Group had total funds of $15.1 million compared to $33.3 million at 30 June,
2009.
40
During fiscal 2010, the Company had net cash outflows from operating activities of A$16.6 million
compared to cash outflows of A$20.6 million in fiscal 2009. Cash was used to fund the Group’s
operations including the OVATURE clinical trial program for the investigational anti-cancer drug
phenoxodiol being undertaken by Novogen’s U.S. subsidiary Marshall Edwards, Inc. (“MEI”), and in
connection with the termination of employment of the Company’s CEO in December 2009 and additional
redundancy costs associated with the management restructure in June 2010, which will result in
future cash savings.
The Company invests its cash and cash equivalents in interest bearing facilities with various
maturity dates. At the end of fiscal 2010, term deposits amounting to A$3.0 million had a weighted
average interest rate of 5.40% and cash deposits at call of A$12.1 million had a weighted average
interest rate of 0.66%.
The Company has arranged a multi option facility with St George Bank Limited, an Australian
commercial bank, of A$1.0 million, A$0.5 million of which was unused at the end of fiscal 2010.
As of June 30, 2010, the Group did not hold derivative financial instruments in managing its
foreign currency, however, the Company may from time to time enter into hedging arrangements where
circumstances are deemed appropriate.
The Company believes that its cash balances will provide sufficient cash resources to fund
operations over the next twelve months. The Company will require additional funds in order complete
the planned clinical development programs. In order to obtain additional funding the Company may
need to rely on collaboration and /or licensing opportunities.
The Company cannot assure you that it will be able to raise the funds necessary to complete the
planned clinical trial programs, or find appropriate collaboration or licensing opportunities.
The Company has historically financed its operations primarily from equity capital.
On March 31, 2010, MEI effected a reverse stock split of its outstanding common stock on a 1-for-10
split adjusted basis in order to correct a bid price listing requirement for continued inclusion on
the Nasdaq Global Market under Nasdaq Rule 5450(a)(1). For the purpose of this report we have
adjusted all share data presented retrospectively to incorporate the 1-for-10 reverse stock split.
On July 28, 2008 MEI entered into a securities subscription agreement with Oppenheimer Funds, Inc.
and Novogen Limited pursuant to which MEI sold 170,000 and 290,829 shares of common stock to
Oppenheimer and Novogen respectively, at a purchase price of US$21.70 per share. The aggregate
proceeds to MEI from the sale of shares was US$10,000,000. The shares are registered under the U.S.
Securities Act of 1933, as amended, pursuant to an effective shelf registration statement. On
41
July 30,2008 MEI filed a Prospectus Supplement to the registration statement covering the sale of shares to
Oppenheimer and Novogen.
On July 29, 2008 the Company entered into a Share Subscription Agreement with El Coronado Holdings
LLC for the placement of 4,531,633 ordinary shares at a purchase price of A$1.2215 per share
raising gross proceeds of A$5,535,390. Following the placement El Coronado Holdings LLC holds 19.9%
of the Company’s issued and outstanding shares.
There are no commitments for capital expenditure outstanding at the end of the financial year.
See Note 15 to the Financial Statements “Financial Instruments” for disclosures about financial
risk management including interest rate risk, foreign currency risk and liquidity risk.
Research and Development
Research and development policy
Expenditure during the research phase of a project is recognised as an expense when incurred.
Development costs are capitalised only when technical feasibility studies identify that the project
will deliver future economic benefits and these benefits can be measured reliably.
Development costs have a finite life and are amortised on a systematic basis matched to the future
economic benefits over the useful life of the project.
The Company spent A$8.1 million, A$18.8 million and A$18.8 million on gross research and
development expenditure during fiscal 2010, 2009 and 2008 respectively.
Due to the nature and uncertainty of the research and development projects being undertaken by the
Company, it is not possible to reasonably estimate the cost and timing of project completion. The
costs of research and development projects are not estimated on a project by project basis. An
analysis of costs between projects may only be performed on an arbitrary and subjective basis.
The progress on research and development projects and expenses is monitored and controlled in a
number of ways:
|
•
|
|
All third party research and development, including the conduct of clinical trials, are
carried out under contract. The contract details include project milestones and expenditure
budgets. Senior research and development staff monitor the projects to ensure that milestones
are achieved in a timely manner.
|
|
|
|
•
|
|
In-house research and development is managed by senior research and development staff.
Budgets are prepared annually and agreed upon by the Novogen
|
42
|
|
|
Board. Actual expenses incurred are monitored monthly against the budget by expense line and in
total.
|
Trend Information
The Company expects to consume cash and incur operating losses for the foreseeable future. The
Company intends to continue its expenditure on the development of its oncology drug candidates.
The impact on cash resources and results from operations will vary with the extent and timing of
the future clinical trial program. It is not possible to make accurate predictions of future
operating results.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
Table of Contractual Obligations
The following table summarizes the Company’s future payment obligations and commitments as at June
30, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments due by period
|
|
|
|
|
|
In A$000’s
|
|
Total
|
|
|
Less than 1 year
|
|
|
1-3 years
|
|
|
3-5 years
|
|
|
After 5 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Leases
|
|
|
1,646
|
|
|
|
343
|
|
|
|
725
|
|
|
|
510
|
|
|
|
68
|
|
|
Other Expenditure Commitments *
|
|
|
1,545
|
|
|
|
1,450
|
|
|
|
95
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Contractual Cash Obligations
|
|
|
3,191
|
|
|
|
1,793
|
|
|
|
820
|
|
|
|
510
|
|
|
|
68
|
|
|
|
|
|
|
|
|
|
|
*
|
|
represents research and development contracts for services to be rendered.
|
43
Item 6. Directors, Senior Management and Employees.
DIRECTORS
The names and details of the Company’s Directors at the date of this report are as follows:
Mr WD Rueckert — elected Chairman 18 October, 2010.
Mr JT Austin — appointed 20 September, 2010
Mr P Scutt — appointed 29 October, 2010
Mr PR White — appointed 20 September, 2010
Mr R Youngman — appointed 20 September, 2010
Former directors serving during the fiscal year 2010:
Mr PA Johnston (Chairman) — resigned as Chairman and Director 18 October, 2010.
Mr C Naughton (Managing Director) — employment ceased 1 December, 2009.
Professor AJ Husband (Executive Director) — retired as a director 30 June, 2010.
Mr GM Leppinus — retired 29 October, 2010
Professor PJ Nestel AO — retired 29 October, 2010
Mr PB Simpson — retired 28 July, 2009.
Directors were in office for the entire period unless otherwise stated.
Names, qualifications, experience and special responsibilities
William D Rueckert
Non-executive Chairman
Mr Rueckert has been director of the Company since March, 2009 and was elected Chairman of Novogen
Limited effective 18 October 2010. Mr Rueckert has been a Director of Marshall Edwards, Inc.
between March, 2007 and March, 2009. Mr Rueckert is the Managing Member of Oyster Management Group
LLC an investment fund specialising in community banks. From 1991 to 2006 he was President and
Director of Rosow & Company, a private investment firm based in Connecticut with interests in the
petroleum and resort development industries. From 1981 until 1988 he was President of United States
Oil Company, a publicly traded oil exploration business. Among his many civic associations, Mr
Rueckert is Director and President of the Cleveland H. Dodge Foundation, a private philanthropic
organisation in New York City and Chairman of the Board of the Trustees of Teachers College,
Columbia University.
Other current and former directorships held in the last three years
Mr Rueckert is currently a Director of Chelsea Therapeutics, Inc. a Nasdaq listed drug development
company and Rapid Pathogen Screening, Inc. a privately help diagnostic device company.
During the last three years Mr Rueckert has served as a Director for the Emergency
44
Filtration Products, Inc. and the Nasdaq listed, Novogen subsidiary, Marshall Edwards, Inc.
Special responsibilities
Chairman of the Board
Member of the Remuneration Committee
Member of the Audit Committee
Josiah T Austin
Non-executive Director
Mr Austin is a United States resident and the largest shareholder in Novogen. He is managing
member of El Coronado Holdings, LLC, a privately owned investment holding company, which invests in
public and private companies. He and his family own and operate agricultural properties in the
states of Arizona, Montana, and northern Sonora, Mexico through El Coronado Ranch & Cattle Company,
LLC and other entities. Mr Austin previously served on the Board of Directors of Monterey Bay
Bancorp of Watsonville, California, and is a prior board member of New York Bancorp, Inc., and
North Fork Bancorporation.
Other current and former directorships held in the last three years
During the last three years Mr Austin has served as Director of Goodrich Petroleum, Inc., a
position he has held since 2002.
Peter Scutt
Non-executive Director
B Com
Mr Scutt is an Australian based corporate advisor who is currently a consultant to specialist
corporate advisory and investment house, Spark Capital. Mr Scutt has broad investment and corporate
finance experience through his past positions at Texel Capital and BT Venture Partners. His early
career was highlighted by senior positions at Bankers Trust Co both in Australia and New York.
Ross Youngman
Non-executive Director
B Com, MBA
Based in Australia, Mr Youngman is co-founder and Chief Executive Officer of Five Oceans and has
over 25 years’ international experience in the finance industry covering stockbroking, financial
planning and asset management. He spent 12 years with Bankers Trust and Deutsche Bank in both
Sydney and New York and was most recently Chief Executive Officer of Deutsche Asset Management in
Australia. Prior positions included Head of Deutsche Asset Management’s U.S. mutual fund business
and Head of BT Funds Management’s U.S. asset management business. Mr Youngman has an MBA from
Columbia Business School, New York and a Bachelor of Commerce from the University of Tasmania.
45
Peter R White
Non-executive Director
AB, MBA
Mr White is based in the United States and is a corporate finance professional with over 30 years’
experience in financing and advising companies in the US. He has broad industry experience
including technology, media and communications, business services and energy distribution. Among
current responsibilities, Mr White is building a leveraged finance business servicing private
equity firms in the U.S. for TD Bank. Mr White has previously worked in senior positions for
several large North American financial services leaders, including BankBoston, Fleet Securities, GE
Capital and CIT Group. Mr White was educated at Dartmouth College, A.B. Cum Laude 1977, The Wharton
School — University of Pennsylvania, MBA.
Executive Officers’ profiles
Mark G. Hinze — Chief Financial Officer
— appointed 18 June, 2010
BEc, CPA
Mr. Hinze joined the Novogen Group in 1999 and previously held the position of the Group’s
Financial Controller. Mr. Hinze holds a Bachelors Degree in Economics from Macquarie University and
is a CPA. Mr. Hinze has over 18 years experience in accounting and finance. Prior to joining
Novogen Mr. Hinze worked as the Finance and Administration Manager of Alpha Healthcare’s Pathology
division. Mr. Hinze was also the Finance Manager for Diagnostic Pathology prior to its sale to
Alpha Healthcare.
Craig Kearney — General Manager Consumer Business
BMS Waikato.
Mr. Kearney joined Novogen Limited in December 2001 as the General Manager of the Consumer
Business. He has a Bachelor of Management Studies from Waikato University in New Zealand and has
subsequently completed managerial development programmes at London School of Business and Duke
University in Durham, North Carolina. He has worked 19 years in the Over The Counter (OTC) consumer
pharmaceutical category, including 10 years for Wellcome New Zealand and Wellcome Australia, and 6
years for Parke Davis/Warner Lambert Australia. Prior to joining Novogen Limited, Mr. Kearney
worked for Pfizer Australia. He held senior sales, marketing and business management roles for all
three companies.
Ronald L Erratt
FINA
Mr. Erratt has been the Company Secretary of Novogen Limited since it floated on the ASX in 1994.
He is also the Company Secretary for all of the wholly owned subsidiaries of Novogen. Mr Erratt has
over 30 years experience in accounting and commercial roles.
46
Prior to joining Novogen, he was the Director of Superannuation Fund Administration at Towers
Perrin, an international firm of Actuaries and Management Consultants.
Compensation
Principles used to determine the nature and amount of remuneration
Remuneration philosophy
Remuneration is assessed for Directors and senior executives with the overall objective of ensuring
maximum stakeholder benefit from the retention of a high quality executive team. The
appropriateness and nature of remuneration is assessed by reference to employment market
conditions. The financial and non-financial objectives of the Company are also considered when
assessing the remuneration of Directors and other key management personnel, however, Directors and
other key management personnel’s annual remuneration has no variable performance bonus elements
that are directly linked to Company financial performance with the exception of the CEO of
Glycotex, Inc. (Refer to section “Employment Agreements” for details of performance bonus).
The Board has established a Remuneration Committee which is responsible for determining and
reviewing compensation arrangements for the key management personnel.
Director’s fees
The Constitution of the Company and the ASX Listing Rules specify that the aggregate remuneration
of Non-executive Directors shall be determined from time to time by General Meeting. The last
determination for Novogen Limited was at the Annual General Meeting held on 28 October, 2005 when
the shareholders approved an aggregate remuneration of $560,000. The total Non-executive Director
remuneration of Novogen Limited for the year ended 30 June, 2010 utilised $212,000 (2009: $260,000)
of this authorised amount.
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which
it is apportioned amongst Directors is reviewed periodically.
Non-executive Director remuneration
Fees to Non-executive Directors reflect the demands which are made on, and the responsibilities of
the Directors. Non-executive Directors’ fees are reviewed periodically by the Board. In conducting
these reviews the Board considers independent remuneration surveys to ensure Non-executive
Directors’ fees are appropriate and in line with the market.
Each Non-executive Director receives a fee for being a Director of the Company. An additional fee
is also paid for each Board committee on which a Director sits. The payment of additional fees for
serving on a committee recognises the additional time commitment required by Non-executive
Directors who serve on one or more committees.
47
Due to the impact of the global financial crisis and the need for the Company to conserve cash, the
Company’s Non-executive Directors voluntarily reduced Director’s fees by 20% with effect from 1
February, 2009, this reduction was maintained for the year ended 30 June, 2010.
Executive Directors and other key management personnel remuneration
The Remuneration Committee of the Board of Directors is responsible for determining and reviewing
compensation arrangements for the key management personnel. The Remuneration Committee assesses the
appropriateness of the nature and amount of remuneration of such Officers on a periodic basis by
reference to relevant employment market conditions with the overall objective of ensuring maximum
stakeholder benefit from the retention of a high quality executive team. Such officers are given
the opportunity to receive their base remuneration, which is structured as a total employment cost
package, in a variety of forms including cash and prescribed non-financial benefits. It is intended
that the manner of payment chosen will be optimal for the recipient without creating undue cost for
the Group.
Due to the impact of the global financial crisis and the need for the Company to conserve
cash, effective from 1 February, 2009, the Company’s Executive Directors and key management
personnel entered into an agreement to voluntarily reduce their working hours effecting a
corresponding reduction of 20% in paid remuneration. This voluntary reduction ceased on 1 February,
2010, coinciding with the new employment agreements being signed with the Company’s seven most
senior executives. The new agreements bring all the Company executives termination payments into
full compliance with the recent amendments to the Corporations Act 2001 (Cth) and with the ASX
Listing Rules.
48
Employment Agreements
Novogen Executive Directors and key management executives (standard contracts)
It is the Remuneration Committee policy that employment contracts are entered into with the Chief
Executive Officer, the Chief Financial Officer, the Research Director and each of the executives
who are considered key management personnel. New contracts were entered into in March 2010. Under
the terms of the agreement remuneration is reviewed annually and any increases may be made at the
discretion of the Remuneration Committee. Key management executives are given the opportunity to
receive their base remuneration, which is structured as a total employment cost package, in a
variety of forms including cash and prescribed non financial benefits.
The employment agreements continue until terminated by either party by giving six months notice in
accordance with the terms of their contract or in the case of the Company by making a payment in
lieu of six months notice to the employee. In the event of the Company terminating without cause,
under the terms of the contracts the amount payable on termination is a fixed dollar value for each
key management personnel which at 30 June, 2010 is of an amount equal to 4.66 months remuneration,
in addition to any amount payable in lieu of notice.
In September 2010, an employment agreement was signed with the Chief Financial Officer. The
employment agreement continues until terminated by either party by giving six months notice in
accordance with the terms of their contract or in the case of the Company by making a payment in
lieu of six months notice to the employee. In the event of the Company terminating without cause,
under the terms of the contract the amount payable on termination is equal to 6 months
remuneration, in addition to any amount payable in lieu of notice.
The Company may terminate the contracts at any time without cause if serious misconduct has
occurred.
49
Glycotex, Inc. — Chief Executive Officer
The CEO of Glycotex, Inc. is employed under an employment agreement that commenced in December,
2005 and was subsequently amended in January, 2008. This employment contract has no expiry date.
Effective 1 January, 2009 Dr Koenig is entitled to a base salary of US$315,000 per annum. The
Glycotex, Inc. Compensation Committee granted Dr Koenig in December, 2008, a 100% vested cash bonus
of US$50,000 after having achieved certain performance milestones including the achievement of an
IND for GLYC-101 (enabling clinical trials to be conducted in the US) and commencing a Phase II
clinical trial in burn wounds. In May, 2009, Dr Koenig was issued stock options under the terms of
Glycotex, Inc’s 2007 Stock Option Plan amounting to 5% of the outstanding common stock of Glycotex,
Inc.
In the event that Dr Koenig’s employment is terminated without cause or without good reason or
Glycotex, Inc. undergoes a change in control, he will be entitled to certain severance and change
in control benefits including:
|
(1)
|
|
in the event of his termination without cause or without good reason,
Dr Koenig will be entitled to receive continued payment of his base
salary and reimbursement of premiums he pays for continued health
coverage under COBRA during the twelve month period following such
termination;
|
|
|
|
(2)
|
|
in the event of his termination without cause or without good reason
during the one year following a change in control, to the extent not
vested, the stock option granted to Dr Koenig upon the initial public
offering will become fully vested;
|
|
|
|
(3)
|
|
in the event that Glycotex undergoes a change in control, fifty
percent of each of the four installments of Dr Koenig’s stock options
issuable to him in connection with the offering will become fully
vested. In addition, in the event that Dr Koenig’s employment is
terminated without cause or good reason within the one year period
following a change in control, to the extent not vested, the stock
options granted to Dr Koenig upon the initial public offering will
vest.
|
Upon the termination of Dr Koenig’s employment for cause or his resignation other than for good
reason, Dr Koenig will be entitled only to any amounts earned and payable but not yet paid, and for
reimbursement of business or relocation expenses properly incurred but not yet paid.
Effective from 1 January, 2010, Dr Koenig voluntarily agreed to reduction of 20% in paid
remuneration. This agreement will remain in effect until terminated by Dr Koenig.
Marshall
Edwards Inc. — Chief Executive Officer and Chief Financial Officer Contracts
Marshall Edwards, Inc. has entered into employment contracts with its Chief Executive Officer and
Chief Financial Officer. These contracts have no set term and detail the amount of remuneration and
other benefits applicable on their initial appointment. These contracts do not fix the amount of
remuneration increases from year to year.
The Chief Executive Officer of MEI commenced in April, 2010 and is employed under an employment
agreement. The base salary under this agreement is US$400,000 per annum. An additional cash bonus
up to a maximum of 40% of the base salary per fiscal
50
year may be payable upon attainment of milestone goals established by the Board. Share options
were also granted as part of the employment terms — details of these options is described further
under Item 18 (Note 13). In the event that employment is terminated by MEI without cause, payment
in lieu of notice equivalent to 12 months base salary is payable. Voluntary termination by the CEO
can take place at any time by giving three months notice to MEI. In the event that employment is
terminated for cause no severance pay or other benefits are payable by MEI.
The Chief Financial Officer of MEI commenced in June, 2010 and is employed under an employment
agreement. The base salary under this agreement is US$250,000 per annum. An additional cash bonus
up to a maximum of 20% of the base salary per fiscal year may be payable upon attainment of
milestone goals established by the Board. Share options were also granted as part of the
employment terms — details of these options is described further under Note 13. In the event that
employment is terminated by MEI without cause, payment in lieu of notice equivalent to 12 months
base salary is payable. Voluntary termination by the CFO can take place at any time by giving two
months notice to MEI. In the event that employment is terminated for cause no severance pay or
other benefits are payable by MEI.
51
Details of Remuneration
Details of the remuneration of the Directors of Novogen Limited, other key management personnel and
Group executives of the Novogen Group are set out in the following table.
Remuneration of key management personnel and other Group Executives
(includes movements in executive leave provisions for untaken annual and long service leave).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post
|
|
Long term
|
|
Termination
|
|
Share based
|
|
|
|
|
|
Short term benefits
|
|
employment
|
|
benefits
|
|
payments
|
|
payments
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary &
|
|
|
|
|
|
Monetary
|
|
Superan-
|
|
Long Service
|
|
|
|
|
|
|
|
2010
|
|
fees
|
|
Cash bonus
|
|
benefits
|
|
nuation
|
|
Leave
|
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
%
|
|
$
|
|
Key management personnel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-executive Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PA Johnston (i)
|
|
|
118,625
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
168,625
|
|
|
GM Leppinus
|
|
|
44,036
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,964
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
48,000
|
|
|
PJ Nestel AO (ii)
|
|
|
82,400
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
82,400
|
|
|
WD Rueckert (iii)
|
|
|
98,225
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
98,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C Naughton (iv)
|
|
|
273,006
|
|
|
|
—
|
|
|
|
12,920
|
|
|
|
50,000
|
|
|
|
14,504
|
|
|
|
1,544,390
|
|
|
|
(45,139
|
)
|
|
|
-2.4
|
%
|
|
|
1,849,681
|
|
|
AJ Husband
|
|
|
311,288
|
|
|
|
—
|
|
|
|
50,420
|
|
|
|
50,000
|
|
|
|
7,003
|
|
|
|
—
|
|
|
|
28,079
|
|
|
|
6.3
|
%
|
|
|
446,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DR Seaton (v)
|
|
|
388,345
|
|
|
|
—
|
|
|
|
44,150
|
|
|
|
50,000
|
|
|
|
13,235
|
|
|
|
447,635
|
|
|
|
(5,156
|
)
|
|
|
-0.5
|
%
|
|
|
938,209
|
|
|
WJ Lancaster **
|
|
|
152,466
|
|
|
|
—
|
|
|
|
22,278
|
|
|
|
—
|
|
|
|
—
|
|
|
|
209,341
|
|
|
|
(2,065
|
)
|
|
|
-0.5
|
%
|
|
|
382,020
|
|
|
BM Palmer
|
|
|
167,591
|
|
|
|
—
|
|
|
|
29,259
|
|
|
|
14,649
|
|
|
|
2,032
|
|
|
|
—
|
|
|
|
31,522
|
|
|
|
12.9
|
%
|
|
|
245,053
|
|
|
CD Kearney
|
|
|
190,277
|
|
|
|
—
|
|
|
|
16,563
|
|
|
|
16,680
|
|
|
|
3,819
|
|
|
|
—
|
|
|
|
32,446
|
|
|
|
12.5
|
%
|
|
|
259,785
|
|
|
RL Erratt
|
|
|
156,970
|
|
|
|
—
|
|
|
|
30,708
|
|
|
|
50,000
|
|
|
|
3,489
|
|
|
|
—
|
|
|
|
29,732
|
|
|
|
11.0
|
%
|
|
|
270,899
|
|
|
DP Gold (vi) **
|
|
|
100,067
|
|
|
|
—
|
|
|
|
3,844
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
69,902
|
|
|
|
40.2
|
%
|
|
|
173,813
|
|
|
TM Zech (vi) **
|
|
|
10,569
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,172
|
|
|
|
17.0
|
%
|
|
|
12,741
|
|
|
MG Hinze (vi)
|
|
|
5,375
|
|
|
|
—
|
|
|
|
755
|
|
|
|
415
|
|
|
|
75
|
|
|
|
—
|
|
|
|
601
|
|
|
|
8.3
|
%
|
|
|
7,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Group executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R Koenig **
|
|
|
323,195
|
|
|
|
—
|
|
|
|
27,873
|
|
|
|
8,918
|
|
|
|
—
|
|
|
|
—
|
|
|
|
429,618
|
|
|
|
54.4
|
%
|
|
|
789,604
|
|
|
|
|
|
|
|
|
|
2,422,435
|
|
|
|
—
|
|
|
|
238,770
|
|
|
|
294,625
|
|
|
|
44,157
|
|
|
|
2,201,366
|
|
|
|
571,712
|
|
|
|
9.9
|
%
|
|
|
5,773,065
|
|
|
|
|
|
|
|
|
|
|
(i)
|
|
Remuneration includes Marshall Edwards and Glycotex Director’s fees of $92,625*.
|
|
|
|
(ii)
|
|
Remuneration includes Marshall Edwards Director’s fees of $36,000.
|
|
|
|
(iii)
|
|
Remuneration includes Glycotex Director’s fees of $56,625*.
|
|
|
|
(iv)
|
|
Remuneration includes Marshall Edwards and Glycotex Director’s fees of $29,593*.
|
|
|
|
(v)
|
|
Remuneration includes Glycotex Director’s fees of $51,906*.
|
|
|
|
(vi)
|
|
Remuneration and benefits covered period of appointment which were part of the financial year.
|
|
|
|
*
|
|
Glycotex Director’s fees have been earned but not paid as at the date of this report. The amounts
owed from Glycotex are not expected to be received in cash but are expected to be settled in
equity.
|
|
|
|
**
|
|
US based employee.
|
The elements of remuneration have been determined on the basis of the cost to the Company and
the consolidated entity.
Share Based Compensation
Employee share option plan
The Board has suspended the Novogen Limited Employee Share Option Plan. When business conditions
improve the design and application of the plan, including future performance criteria, will be
reviewed.
52
Remuneration options: granted and vested during the year
During the financial year no options were granted under the Novogen Limited Employee Share Option
Plan.
The following table sets out options issued by MEI to Key Management Personnel, directly employed
by MEI, during the year:
Marshall Edwards Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terms and conditions for each grant
|
|
|
|
|
|
|
|
|
|
|
|
Value per
|
|
Exercise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
option at
|
|
price per
|
|
First
|
|
Last
|
|
|
|
Granted
|
|
|
|
grant date
|
|
share
|
|
exercise
|
|
exercise
|
|
|
|
number
|
|
Grant date
|
|
(US$)
|
|
(US$)
|
|
date
|
|
date
|
|
|
|
|
|
DP Gold
|
|
|
110,195
|
|
|
|
23/04/2010
|
|
|
|
4.38
|
|
|
|
5.05
|
|
|
|
19/04/2011
|
|
|
|
22/04/2015
|
|
|
|
|
|
110,195
|
|
|
|
7/06/2010
|
|
|
|
1.63
|
|
|
|
1.86
|
|
|
|
19/04/2011
|
|
|
|
6/06/2015
|
|
|
TM Zech
|
|
|
73,463
|
|
|
|
18/06/2010
|
|
|
|
1.33
|
|
|
|
1.52
|
|
|
|
18/06/2011
|
|
|
|
17/06/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
293,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Of the options issued by MEI, 25% will vest one year from the effective date of the employees
Employment Letter and, thereafter, the remaining 75% of options will vest in equal monthly
instalments over the following thirty-six (36) months. The options do not have any performance
conditions. There were no options forfeited and all options granted are available for future years.
Shares issued on exercise of remuneration options
No key management personnel or executives exercised options during the year ended 30 June, 2010.
The value of options for key management personnel, granted during the year ended 30 June, 2010 was
A$857,000. The value of options for key management personnel, which lapsed during the year ended 30
June, 2010, was nil.
There were no alterations to the terms and conditions of options granted as remuneration since
their grant date.
There is no Board policy in relation to staff members limiting their exposure to risk as options
vest subject to service criteria, not performance criteria.
53
Fair values of options:
The fair value of each option is estimated on the date of grant using a binomial option-pricing
model with the following assumptions used for grants made on:
Novogen
|
|
|
|
|
|
|
|
|
|
|
|
|
6 March,
|
|
31 October,
|
|
|
|
2009
|
|
2008
|
|
|
|
|
|
Exercise price
|
|
|
0.5256
|
|
|
|
1.06
|
|
|
Share price at grant date
|
|
|
0.51
|
|
|
|
0.95
|
|
|
Dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
|
Expected volatility
|
|
|
73
|
%
|
|
|
66
|
%
|
|
Historical volatility
|
|
|
73
|
%
|
|
|
66
|
%
|
|
Risk-free interest rate
|
|
|
3.61
|
%
|
|
|
4.76
|
%
|
|
Expected life of option
|
|
5 years
|
|
|
4.3 years
|
|
|
Option fair value
|
|
|
0.31
|
|
|
|
0.51
|
|
Marshall Edwards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18 June,
|
|
7 June,
|
|
23 April,
|
|
28 January,
|
|
30 July,
|
|
|
|
2010
|
|
2010
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
Exercise price
|
|
US$
|
1.52
|
|
|
US$
|
1.86
|
|
|
US$
|
5.05
|
|
|
US$
|
6.30
|
|
|
US$
|
21.70
|
|
|
Share price at grant date
|
|
US$
|
1.52
|
|
|
US$
|
1.86
|
|
|
US$
|
5.05
|
|
|
US$
|
6.30
|
|
|
US$
|
21.30
|
|
|
Dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
Expected volatility
|
|
|
136
|
%
|
|
|
135
|
%
|
|
|
132
|
%
|
|
|
111
|
%
|
|
|
81
|
%
|
|
Historical volatility
|
|
|
136
|
%
|
|
|
135
|
%
|
|
|
132
|
%
|
|
|
111
|
%
|
|
|
81
|
%
|
|
Risk-free interest rate
|
|
|
2.04
|
%
|
|
|
1.95
|
%
|
|
|
2.61
|
%
|
|
|
1.70
|
%
|
|
|
3.36
|
%
|
|
Expected life of warrant/option
|
|
5 years
|
|
5 years
|
|
5 years
|
|
5 years
|
|
5 years
|
|
|
|
Warrant/option fair value
|
|
US$
|
1.33
|
|
|
US$
|
1.63
|
|
|
US$
|
4.38
|
|
|
US$
|
5.00
|
|
|
US$
|
14.10
|
|
Glycotex
|
|
|
|
|
|
|
|
|
29 May,
|
|
|
|
2009
|
|
Exercise price
|
|
US$
|
15.13
|
|
|
Share price at grant date
|
|
US$
|
15.13
|
|
|
Dividend yield
|
|
|
0
|
%
|
|
Expected volatility
|
|
|
52
|
%
|
|
Historical volatility
|
|
|
52
|
%
|
|
Risk-free interest rate
|
|
|
2.34
|
%
|
|
Expected life of warrant
|
|
5 years
|
|
Warrant fair value
|
|
US$
|
7.13
|
|
The dividend yield reflects the assumption that the current dividend payout, which is zero,
will continue with no anticipated increases. The expected life of the options is based on
historical data and is not necessarily indicative of exercise patterns that may occur. The expected
volatility reflects the assumption that the historical volatility is indicative of future trends,
which may also not necessarily be the actual outcome.
54
Further detail on the remuneration of Directors and Executives are also provided in Note 19 to the
financial statements.
Arrangements and Relationships
There are no arrangements (other than standard employment remuneration arrangements) by which any
Director or Executive Officer was appointed to his position. There are no family relationships
between any of the Directors or Executive Officers.
No Director has received or has become entitled to receive, during or since the end of the fiscal
year ended 2010, a benefit because of a contract made by Novogen Limited, a controlled entity, or a
related body corporate with a Director, a firm of which a Director is a member or an entity in
which a Director has a substantial financial interest.
Pension Benefits
The Company has paid A$573,000 during fiscal 2010 for employee superannuation benefits and pension
benefits.
Board Practices
Novogen Board of Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year First
|
|
Current Term
|
|
Name
|
|
Postion Held
|
|
Appointed
|
|
Expires
|
|
|
|
|
|
|
|
|
|
|
|
Current Directors:
|
|
W.D. Rueckert
|
|
Chairman
|
|
|
2009
|
|
|
October-2013
|
|
J.T. Austin
|
|
Director
|
|
|
2010
|
|
|
October-2013
|
|
P.R. White
|
|
Director
|
|
|
2010
|
|
|
October-2013
|
|
R. Youngman
|
|
Director
|
|
|
2010
|
|
|
October-2013
|
|
P. Scutt
|
|
Director
|
|
|
2010
|
|
|
October-2011
|
|
|
|
|
|
|
|
|
|
|
|
Former Directors who served during the fiscal year
2010:
|
|
P. A. Johnston
|
|
Chairman
|
|
|
1997
|
|
|
Retired October , 2010
|
|
C. Naughton
|
|
Managing Director
|
|
|
1997
|
|
|
Employment ceased December 1, 2009
|
|
P. B. Simpson
|
|
Director
|
|
|
1994
|
|
|
Retired July , 2009
|
|
P. J. Nestel
|
|
Director
|
|
|
2001
|
|
|
Retired October , 2010
|
|
G. M. Leppinus
|
|
Director
|
|
|
2005
|
|
|
Retired October , 2010
|
|
A. J. Husband
|
|
Executive Director
|
|
|
2006
|
|
|
Retired as a Director June 30, 2010
|
Term of Directors
The Company’s Constitution requires that at each Annual General Meeting of the Company, one third
(or the number nearest to but not exceeding one third) of the
55
Directors, (excluding a Director who
is the Managing Director, and a director appointed to fill a casual vacancy) must retire from
office provided that no Director may retain office for more than 3 years without offering
himself/herself for re-election even though such submission results in more than one third of the
Directors retiring from office.
The Board of Directors has the power to appoint any person to be a director either to fill a casual
vacancy or as an additional Director (up to a maximum of 10). Any Director so appointed may hold
office only until the next Annual General Meeting when he or she shall be eligible for election by
the Company shareholders.
Board of Directors
The Board of Directors of Novogen Limited is elected by and accountable to shareholders. The Board
monitors and directs the business and is responsible for the corporate governance of the Company.
The Managing Director, who is accountable to the Board, is responsible for managing the development
of the Company consistent with the objective of enhancing long term shareholder value.
The Board is comprised of five Directors all of whom are non-Executive Directors. In addition, the
Board has established an Audit Committee and a Remuneration Committee.
Structure of the Board of Directors
The skills, expertise and experience relevant to the position of Director held by each Director in
office at the date of this Annual Report is included in Item 6 beginning on page 44. Directors are
considered to be independent when they are independent of management and free from any business or
other relationship that could materially interfere with, or could reasonably be perceived to
materially interfere with, the exercise of their unfettered and independent judgement.
In the context of Director independence, “materiality” is considered from both the Company and
individual Director perspective. In determining whether a non-Executive Director is independent, he
or she must not hold more than 5% of the Company’s outstanding shares.
Also, the following qualitative factors, among others, are considered:
|
|
•
|
|
whether the director has been employed as an Executive of the Company within the last
three years;
|
|
|
|
|
•
|
|
whether the director has been a principal of a material professional advisor or
consultant of the Company;
|
|
|
|
|
•
|
|
whether the director has a material contractual relationship with the Company;
|
|
|
|
|
•
|
|
whether the director has served on the Board of Directors for a period which could be
perceived to interfere with his or her ability to act in the best interests of the Company;
and
|
56
|
|
•
|
|
whether the director has any business interests which could be perceived to interfere
with his or her ability to act in the best interests of the Company.
|
In accordance with the definition of independence above, and the materiality thresholds set, the
following Directors of Novogen Limited are considered to be independent:
|
|
|
|
|
Name
|
|
Position
|
|
|
|
|
|
Philip A. Johnston
|
|
Non-Executive Chairman — retired 18 October, 2010
|
|
Professor Paul J. Nestel AO
|
|
Non-Executive Director — retired 29 October, 2010
|
|
Geoffrey M. Leppinus
|
|
Non-Executive Director — retired 29 October, 2010
|
|
William D. Rueckert
|
|
Non-Executive Director
|
|
Peter R. White
|
|
Non-Executive Director — appointed September, 2010
|
|
Ross Youngman
|
|
Non-Executive Director — appointed September, 2010
|
|
Peter Scutt
|
|
Non-Executive Director — appointed October, 2010
|
There are procedures in place, agreed upon by the Board of Directors, to enable Directors in the
furtherance of their duties, to seek independent professional advice at the Company’s expense.
For additional details regarding appointments to the Board of Directors please refer to the
Company’s web site.
Audit Committee
The Board of Directors has an Audit Committee, which operates under a charter approved by the
Board. It is the Board’s responsibility to ensure that an effective internal control framework
exists within the Group. This includes internal controls to deal with both the effectiveness and
efficiency of significant business processes, the safeguarding of assets, the maintenance of proper
accounting records and the reliability of financial information as well as non-financial
considerations such as bench marking of operational key performance indicators. The Board of
Directors has delegated the responsibility for the establishment and maintenance of a framework of
internal control and ethical standards for the management of the consolidated entity to the Audit
Committee. The Audit Committee is responsible for the hiring, termination and compensation of the
independent auditors and approving any non-audit work performed by the auditors.
The Audit Committee also provides the Board with additional assurance regarding the reliability of
financial information for inclusion in the financial reports. All members of the Audit Committee
are independent Non-Executive Directors. The members of the Audit Committee during the fiscal year
2010 were Mr. Geoffrey Leppinus (Chairman), Professor Paul J. Nestel, Mr. Philip A. Johnston and
Mr. William D. Rueckert (appointed April 1, 2010). The members of the Audit Committee at the date
of this report were Mr. William D. Rueckert (Chairman), Mr. Josiah T. Austin and Mr. Peter R.
White.
57
Performance
The performance of the Board of Directors and the key Executives is reviewed regularly against both
measurable and qualitative indicators. The performance criteria against which Directors and
Executives are assessed have regard to the financial and non-financial objectives of Novogen
Limited.
Remuneration Committee
The Remuneration Committee of the Board of Directors is responsible for determining and reviewing
compensation arrangements for the Directors, the Managing Director, Executive Director and senior
Executives.
The Remuneration Committee assesses the appropriateness of the nature and amount of emoluments of
such officers on a periodic basis by reference to relevant employment market conditions with the
overall objective of ensuring maximum shareholder benefit from the retention of a high quality
executive team.
The members of the Remuneration Committee during the fiscal year 2010 were Mr. Philip A. Johnston
(Chairman), Mr. Geoffrey Leppinus, Professor Paul J. Nestel, and Mr. William D. Rueckert (appointed
April 1, 2010). The members of the Remuneration Committee at the date of this report were Mr.
William D. Rueckert (Chairman), Mr. Josiah T. Austin, Mr. Peter Scutt, Mr. Peter R. White and Mr.
Ross Youngman.
Employees
The Group employed 37 people at June 30, 2010, 48 people at June 30, 2009 and 68 people at June 30,
2008 as follows
Category of Activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of People
|
|
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
Research and development
|
|
|
14
|
|
|
|
17
|
|
|
|
30
|
|
|
Production
|
|
|
3
|
|
|
|
9
|
|
|
|
14
|
|
|
Sales and marketing
|
|
|
8
|
|
|
|
11
|
|
|
|
12
|
|
|
Finance and administration
|
|
|
12
|
|
|
|
11
|
|
|
|
12
|
|
|
|
|
|
|
Total
|
|
|
37
|
|
|
|
48
|
|
|
|
68
|
|
|
|
|
|
58
Geographic Location
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of People
|
|
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
Australasia
|
|
|
31
|
|
|
|
43
|
|
|
|
63
|
|
|
North America
|
|
|
5
|
|
|
|
3
|
|
|
|
3
|
|
|
Europe
|
|
|
1
|
|
|
|
2
|
|
|
|
2
|
|
|
|
|
|
|
Total
|
|
|
37
|
|
|
|
48
|
|
|
|
68
|
|
|
|
|
|
Share Ownership
Directors’ holdings of shares and options in the Company
The table below shows the number of ordinary shares and options to purchase Ordinary Shares held
directly or indirectly by the Directors of the Company as of November 30, 2010. The ordinary shares
held by Directors do not entitle them to voting rights different from those of the Company’s
shareholders.
|
|
|
|
|
|
|
|
|
Ordinary
|
|
|
|
shares fully
|
|
|
|
paid
|
|
|
|
|
|
|
|
|
|
W.D. Rueckert
|
|
|
5,000
|
|
|
J.T. Austin
|
|
|
20,318,053
|
|
|
|
|
|
|
|
|
|
|
|
20,323,053
|
|
The tables below shows the number of ordinary shares and options to purchase ordinary shares
held directly or indirectly by the named Executives of the Company as of November 30, 2010. The
ordinary shares held by the named Executives do not entitle them to voting rights different from
those of the Company’s shareholders.
Shares held
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary
|
|
%
|
|
|
|
shares fully
|
|
Total shares
|
|
|
|
paid
|
|
on issue
|
|
|
|
|
|
R.L. Erratt
|
|
|
271,368
|
|
|
|
0.3
|
|
|
M.G.Hinze
|
|
|
14,728
|
|
|
|
—
|
|
|
C.D. Kearney
|
|
|
8,850
|
|
|
|
—
|
|
59
Options granted to and held by named Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eligible
|
|
|
|
|
|
|
|
Total
|
|
executives
|
|
Exercise
|
|
|
|
|
|
options
|
|
participating
|
|
price
(A$)
|
|
Grant date
|
|
Expiry date
|
|
|
|
|
43,424
|
|
|
|
3
|
|
|
|
3.64
|
|
|
|
21/04/2006
|
|
|
|
21/04/2011
|
|
|
|
70,716
|
|
|
|
3
|
|
|
|
2.41
|
|
|
|
30/03/2007
|
|
|
|
30/03/2012
|
|
|
|
177,720
|
|
|
|
3
|
|
|
|
1.06
|
|
|
|
1/03/2008
|
|
|
|
1/03/2013
|
|
|
|
295,236
|
|
|
|
3
|
|
|
|
0.53
|
|
|
|
6/03/2009
|
|
|
|
6/03/2014
|
|
Each option represents the right to purchase one ordinary share.
Exemptions from Certain Corporate Governance Rules of the Nasdaq Stock Market, LLC
Exemptions from the corporate governance standards of the Nasdaq Stock Market, LLC (“Nasdaq”) are
available to foreign private issuers such as Novogen when those standards are contrary to a law,
rule or regulation of any public authority exercising jurisdiction over such issuer or contrary to
generally accepted business practices in the issuer’s country of domicile. In connection with
Novogen’s National Market Listing Application, Nasdaq granted Novogen exemptions from certain
corporate governance standards that were contrary to the laws, rules, regulations or generally
accepted business practices of Australia. These exemptions and the practices followed by Novogen
are described below:
|
•
|
|
Novogen is exempt from Nasdaq’s quorum requirements applicable to meetings of ordinary
shareholders. In keeping with the law of Australia and generally accepted business practices
in Australia, Novogen’s Constitution requires a quorum of three shareholders for a
shareholders’ meeting.
|
|
•
|
|
Novogen is exempt from Nasdaq’s requirement that each Nasdaq issuer shall require
shareholder approval of a plan or arrangement in connection with the acquisition of the stock
or assets of another company if “any director, officer or substantial shareholder of the
issuer has a 5 percent or greater interest (or such persons collectively have a 10 percent or
greater interest), directly or indirectly, in the Company or assets to be acquired or in the
consideration to be paid in the transaction or series of related transactions and the present
or potential issuance of common stock, or securities convertible into or exercisable for
common stock, could result in an increase in outstanding common shares or voting power of 5
percent or more”.
|
Novogen is listed on the ASX and subject to Chapter 10 of the ASX listing rules which requires
shareholder approval for an acquisition from or disposal to a “related party” (including a
director) or “substantial shareholder” (who is entitled to at least 10% of the voting securities)
of “substantial assets”. The Australian Corporations Act to which
60
Novogen is also subject generally
requires shareholder approval for a transaction with a director or director-controlled entity
unless on arm’s length terms.
61
Item 7. Major Shareholders and Related Party Transactions
Major Shareholders
Josiah T. Austin and El Coronado Holdings, LLC (beneficially owned by Mr. Austin) — hold
20,318,053 Ordinary Shares representing 19.9% of the outstanding Ordinary Shares.
Oppenheimer holds 12,744,689 ordinary shares representing 12.5% of the outstanding ordinary shares.
The major shareholders do not have voting rights that differ from those other shareholders of the
Company.
At November 30, 2010 there were 9,545,492 of the Company’s ADRs outstanding, representing
47,727,460 Ordinary Shares (or 46.7% of the then outstanding Ordinary Shares). At November 30, 2010
there were 42 registered holders of the Company’s ADRs.
On July 29, 2008 the Company entered into a share subscription agreement with El Coronado holdings
LLC for the placement of 4,531,633 ordinary shares at a purchase price of A$1.2215 per share
raising gross proceeds of A$5,535,390. Following the placement El Coronado LLC holds 19.9% of the
Company’s issued and outstanding ordinary shares.
On August 1, 2007, El Coronado and certain other accredited investors entered into a securities
subscription agreement with Marshall Edwards pursuant to which El Coronado purchased 70,000 shares
of Marshall Edwards’ common stock at a purchase price of US$30.00 per share for an aggregate
purchase price of US$2,100,000. El Coronado also received a warrant to purchase an additional 4
shares of common stock for every block of 10 shares of common stock purchased. As a result, El
Coronado received a warrant to purchase 7,000 shares of common stock. All of the warrants have an
exercise price of US$36.00 per share. The exercise price and number of shares issuable upon
exercise of the warrants are subject to adjustment in the event of stock dividends, stock splits
and other similar events. The warrants may be exercised beginning February 6, 2008 and will expire
five years from the date of issuance, or August 6, 2012.
On August 1, 2007, Oppenheimer and certain other accredited investors entered into a securities
subscription agreement with Marshall Edwards pursuant to which Oppenheimer purchased 76,400 shares
of Marshall Edwards common stock at a purchase price of US$30.00 per share for an aggregate
purchase price of US$2,292,000. Oppenheimer also received a warrant to purchase an additional 4
shares of common stock for every block of 10 shares of common stock purchased. As a result,
Oppenheimer received warrants to purchase 30,560 shares of common stock. All of the warrants have
an exercise price of US$36.00 per share. The exercise price and
62
the number of shares issuable upon exercise of the warrants are subject to adjustment in the event
of stock dividends, stock splits and other similar events. The warrants may be exercised beginning
February 6, 2008, and will expire five years from the date of issuance, or August 6, 2012.
On July 28, 2008, Oppenheimer entered into a securities subscription agreement with Marshall
Edwards pursuant to which Oppenheimer purchased 170,000 shares of Marshall Edwards common stock at
a purchase price of US$21.70 per share for an aggregate purchase price of US$3,698,000. The shares
are registered under the Securities Act pursuant to an effective shelf registration statement. On
July 30, 2008, Marshall Edwards filed a prospectus supplement to the shelf registration statement
covering the sale of the shares to Oppenheimer.
There have been no other significant changes to the shareholdings of the known major shareholders
over the last three years.
On 8 September, 2010, Novogen announced that it had reached agreement in principle with its
subsidiary MEI to acquire Novogen’s entire isoflavone-related intellectual property portfolio in a
stock-based transaction. The agreement in principle was negotiated by an independent subcommittee
of the Board of Directors of both companies. The closing of the transaction is subject to, among
other things, due diligence, the execution of a definitive agreement, an independent fairness
opinion and shareholder approvals.
63
Item 8. Financial Information
Consolidated financial statements are included in “Item 18 — Financial Statements” on pages 90
through 145.
Export Sales
Export sales to third parties from Australia during fiscal 2010 were $1.7 million which represents
20.9% of total sales. The details of sales by geographic region are contained in “Item 4 —
“Information on the Company”.
Legal Proceedings
There are no pending legal proceedings which either individually or in the aggregate will have a
significant effect on the Company’s financial position or loss, nor have any such proceedings had
any impact in the recent past, except that the Company is continuing to prosecute its IP rights and
in June 2007 announced that the Vienna Commercial Court had upheld a provisional injunction against
an Austrian company, APOtrend. The Company has provided a guarantee to the value of €250,000 with
the court to confirm its commitment to the ongoing enforcement process.
Dividends
The Company has incurred losses since its inception and as a result has not declared any dividends.
Any dividends declared in the future will be paid in Australian dollars.
Significant Changes After Balance Sheet Date
Novogen Limited
Novogen Limited received a letter from The Nasdaq Stock Market on 19 July, 2010 notifying it that
for the last 30 consecutive business days the bid price of the Company’s ADRs closed below the
minimum US$1.00 per share requirement for continued inclusion on the Nasdaq Global Market under
Nasdaq Rule 5450(a)(1). According to Nasdaq’s letter, the Company will be afforded a grace period
of 180 calendar days, or until 18 January, 2011, to regain compliance in accordance with Nasdaq
Rule 5810(c)(3)(A). In order to regain compliance, shares of the Company’s ADRs must maintain a
minimum bid closing price of at least US$1.00 per share for a minimum of ten consecutive business
days during the grace period. The Company intends to actively monitor the bid price of its common
stock between now and 18 January, 2011 and take those steps possible to maintain a Nasdaq listing.
This notification from The Nasdaq Stock Market has no bearing on the ASX listing.
On 8 September, 2010, Novogen announced that it had reached agreement in principle with its
subsidiary MEI to acquire Novogen’s entire isoflavone-related intellectual property portfolio in a
stock-based transaction. The agreement in principle was negotiated by an independent subcommittee
of the Board of Directors of both companies. The closing of the transaction is subject to, among
other things, due
64
diligence, the execution of a definitive agreement, an independent fairness opinion and shareholder
approvals.
On 20 September, 2010, Novogen appointed three new directors; Mr Ross Youngman, Mr Peter White and
Mr Josiah T Austin. Of the three Directors, two are based in the United States and one in
Australia, with their backgrounds encompassing investment and corporate finance.
On 18 October, 2010, Novogen appointed Mr William D Rueckert, a current non-executive Director, as
Chairman of the Board of Directors. Mr Rueckert replaces Mr Philip Johnston, who resigned as both
Chairman and a director.
On 29 October, 2010, Novogen appointed Mr Peter Scutt, an Australian based corporate advisor, as a
director of the Company, following the retirement of Prof. Paul Nestel and Mr Geoff Leppinus.
On December 8, 2010, the Company received approval to transfer the listing of its ADRs from the
Nasdaq Global Market to the Nasdaq Capital Market. The Company’s securities will be transferred to
the Capital Market at the opening of business on December 20, 2010.
The Company’s research and development operations in Australia will cease on 31 December, 2010.
Staff termination costs associated with this restructure will amount to approximately A$465,000.
The Company may seek to sublet excess space following this decision as well as disposing of any
plant and equipment no longer required.
Marshall Edwards, Inc.
On May 18, 2010 Novogen’s subsidiary MEI received a notice from Nasdaq indicating that the it
failed to comply with the minimum stockholders’ equity requirement set forth in Nasdaq Listing Rule
5450(b)(1)(A) for continued listing of its common stock on the Nasdaq Global Market because our
stockholders’ equity as of March 31, 2010 as set forth in MEI’s quarterly report on Form 10-Q for
the period ended March 31, 2010 of US$9.16 million was below the US$10 million minimum
stockholders’ equity requirement. The notice also stated MEI would be provided 45 calendar days, or
until July 2, 2010, to submit a plan to regain compliance.
MEI responded to Nasdaq on July 2, 2010. The response included plans to satisfy the listing
requirements with respect to the maintaining a minimum US$10 million Shareholders’ equity value.
MEI stated its intention to pursue a capital raising transaction within the time provided by Nasdaq
rules if market conditions permit, to further fund development of our product candidates 1)
triphendiol or its primary active metabolite NV-143, a potentially more potent, second generation
analog of phenoxodiol; and 2) NV-128. In the alternative, MEI intends to apply to transfer the
listing of its common stock from the Nasdaq Global Market to the Nasdaq Capital Market.
65
On August 5, 2010, MEI received a letter from Nasdaq indicating that, based on its plan, Nasdaq has
determined to grant an extension, through November 15, 2010, to regain compliance with the Rule by
establishing stockholders’ equity of at least US$10 million.
On November 16, 2010, MEI was notified by the Listing Qualifications Staff of The Nasdaq Stock
Market that, due to the Company’s non-compliance with the minimum US$10 million stockholders’
equity requirement for continued listing on The Nasdaq Global Market, as set forth in Listing Rule
5450(b)(1), MEI’s common stock is subject to delisting unless it requests a hearing before a Nasdaq
Listing Qualifications Panel. MEI has requested a hearing before the Panel, which request will
stay any further action by Nasdaq until the Panel issues its decision following the hearing. In
connection with the hearing, the Panel may grant MEI an additional compliance period of up to 180
calendar days from the date of the Nasdaq staff’s determination, or 16 May, 2011, to evidence
compliance with the minimum stockholders’ equity requirement for continued listing on The Nasdaq
Global Market. MEI has been granted a hearing date of 6 January, 2010. While MEI is working
diligently to remedy the listing deficiency, there can be no assurance that the Panel will grant
MEI’s request for continued listing on The Nasdaq Global Market and, if the Panel does not, MEI’s
common stock may be transferred to The Nasdaq Capital Market or delisted from Nasdaq.
On 14 July, 2010, MEI received notice from Nasdaq stating that for the last 30 consecutive business
days, the Market Value of Publicly Held Shares closed below the minimum US$5 million required for
continued listing on the Nasdaq Global Market under Nasdaq Rule 5450(b)(1)(C). Market Value of
Publicly Held Shares is calculated by multiplying the publicly held shares, which is total shares
outstanding less any shares held by officers, directors, or beneficial owners of 10% or more, by
the consolidated closing bid price. Novogen Limited currently owns 71.3% of the outstanding common
stock of MEI. Therefore, the value of Novogen Limited’s shares is excluded from the Market Value of
Publicly Held Shares of MEI. According to Nasdaq’s letter, MEI would be afforded a grace period of
180 calendar days, or until 10 January, 2011, to regain compliance in accordance with Nasdaq Rule
5810(c)(3)(A). MEI intend to actively monitor the Market Value of Publicly Held Shares between now
and 10 January, 2011.
On 10 August, 2010 MEI announced the appointment of Christine A. White, M.D. to its board of
directors. Dr. White replaced Professor Paul J. Nestel, who served as a director since April 2001.
On September 8, 2010, the Company announced that it had reached an agreement in principle with MEI
to sell Novogen’s entire isoflavone-related intellectual property portfolio in a stock-based
transaction. The agreement in principle was negotiated by independent committees of the Board of
Directors of both companies. The closing of the transaction is subject to, among other things, due
diligence, the negotiation and execution of a definitive agreement, independent fairness opinions
and shareholder approvals. The foregoing description of the agreement in principle between the MEI
and Novogen does not constitute an offer of any securities for sale or a solicitation of offers to
purchase securities.
66
There have been no other significant events occurring after balance sheet date which have had a
material impact on the business.
67
Item 9. Offer and Listing Details
Trading Markets
Novogen’s principal listing exchange and the exchange upon which its Ordinary Shares are quoted is
the ASX. The trading symbol on ASX is “NRT”.
American Depositary Receipts
Novogen’s Ordinary Shares trade in the U.S. in the form of ADRs on the Nasdaq Global Market. Each
ADR represents five Ordinary Shares of Novogen. The trading symbol on the Nasdaq Global Market is
“NVGN”. Novogen has entered into a Deposit Agreement with the Bank of New York under which the Bank
of New York, acting as depositary, issues the ADRs.
The following table sets forth, for the calendar periods indicated, the high and low market
quotations for Novogen’s Ordinary Shares, as quoted on the ASX, and Novogen’s ADRs, as quoted on
the Nasdaq Global Market.
68
NOVOGEN LIMITED SHARE PRICE HISTORY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Ordinary Share (A$)
|
|
Per ADR (US$)
|
|
Period
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 2006
|
|
|
6.00
|
|
|
|
2.14
|
|
|
|
22.08
|
|
|
|
8.03
|
|
|
June 2007
|
|
|
3.80
|
|
|
|
1.81
|
|
|
|
13.25
|
|
|
|
8.14
|
|
|
June 2008
|
|
|
2.14
|
|
|
|
0.83
|
|
|
|
10.13
|
|
|
|
3.89
|
|
|
June 2009
|
|
|
1.70
|
|
|
|
0.37
|
|
|
|
7.45
|
|
|
|
1.23
|
|
|
June 2010
|
|
|
0.89
|
|
|
|
0.17
|
|
|
|
5.24
|
|
|
|
0.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 2008
|
|
|
1.15
|
|
|
|
0.66
|
|
|
|
5.07
|
|
|
|
1.86
|
|
|
March 2009
|
|
|
1.01
|
|
|
|
0.37
|
|
|
|
3.27
|
|
|
|
1.23
|
|
|
June 2009
|
|
|
1.26
|
|
|
|
0.44
|
|
|
|
7.00
|
|
|
|
1.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 2009
|
|
|
0.89
|
|
|
|
0.52
|
|
|
|
5.24
|
|
|
|
2.02
|
|
|
December 2009
|
|
|
0.72
|
|
|
|
0.47
|
|
|
|
3.21
|
|
|
|
2.07
|
|
|
March 2010
|
|
|
0.71
|
|
|
|
0.41
|
|
|
|
3.00
|
|
|
|
1.90
|
|
|
June 2010
|
|
|
0.45
|
|
|
|
0.17
|
|
|
|
2.30
|
|
|
|
0.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 2010
|
|
|
0.17
|
|
|
|
0.12
|
|
|
|
0.70
|
|
|
|
0.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Month Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 2010
|
|
|
0.38
|
|
|
|
0.17
|
|
|
|
1.67
|
|
|
|
0.57
|
|
|
July 2010
|
|
|
0.17
|
|
|
|
0.13
|
|
|
|
0.66
|
|
|
|
0.50
|
|
|
August 2010
|
|
|
0.17
|
|
|
|
0.12
|
|
|
|
0.70
|
|
|
|
0.43
|
|
|
September 2010
|
|
|
0.14
|
|
|
|
0.12
|
|
|
|
0.60
|
|
|
|
0.41
|
|
|
October 2010
|
|
|
0.14
|
|
|
|
0.12
|
|
|
|
0.58
|
|
|
|
0.50
|
|
|
November 2010
|
|
|
0.15
|
|
|
|
0.11
|
|
|
|
0.56
|
|
|
|
0.41
|
|
69
Item 10. Additional Information
Constitution
The Company’s Constitution is incorporated by reference to the Registration Statement on Form 20-F
filed with the SEC on December 24, 1998 (File No. 0-29962).
Material Contracts
There have been no material contracts entered into in the last two years by the Company or any of
its subsidiaries other than in the normal course of business.
See “Item 4. Information on the Company — Patent Protection — Licensing Arrangements” for a
description of the Company’s Patent License Agreement with Solae LLC (formally Protein Technologies
International Inc.)
Exchange Controls
Australia has largely abolished exchange controls on investment transactions. The Australian dollar
is freely convertible into U.S. dollars. In addition, (other than as specified under “taxation”
below and certain restrictions imposed under Australian law in relation to dealings with the assets
of and transactions with, designated countries, entities and persons specified by the Reserve Bank
of Australia from time to time, including, persons connected with terrorism) there are currently no
specific rules or limitations regarding the export from Australia of profits, dividends, capital,
or similar funds belonging to foreign investors, except that certain payments to non-residents must
be reported to the Australian Transaction Reports and Analysis Centre, which monitors such
transactions. However, as mentioned above, the Reserve Bank of Australia does retain discretion to
prevent foreign exchange dealings in certain circumstances under the Australian Banking (Foreign
Exchange) Regulations 1959.
Under Australian law, foreign persons are prohibited from acquiring more than a limited percentage
of the interests in an Australian company without approval from the Australian Treasurer or in
certain other limited circumstances. These limitations are set forth in the Australian Foreign
Acquisitions and Takeovers Act 1975 (the “Foreign Takeovers Act”).
Under the Foreign Takeovers Act, as currently in effect, any foreign person, together with
associates, is prohibited from acquiring, without prior approval from the Australian Treasurer, 15%
or more of the voting power (including potential voting power) or issued shares (including rights
to issued shares) (“Substantial interest”) of an entity such as Novogen, whose total share value or
gross assets (whichever is higher) exceed A$231 million. If the person is a U.S. investor, the
A$231 million threshold applies only for investments in prescribed sensitive sectors, otherwise a
threshold of A$1,004 million rather than A$231 million applies. All direct investment by foreign
governments and their related entities regardless of the value of the investment, including
proposals to establish new businesses, must be notified to the Australian Treasurer. Where an
acquisition is
70
made in breach of these requirements, the Australian Treasurer may make an order requiring the
acquirer to dispose of its Substantial Interest within a specified period of time. In addition, if
a foreign person acquires a Substantial Interest in Novogen in circumstances where the above
thresholds would be exceeded and as a result the total holdings of all foreign persons and their
associates exceeds 40% in aggregate without the approval of the Australian Treasurer, then the
Australian Treasurer may make an order requiring the acquirer to dispose of its Substantial
Interest within a specified period of time. The same rule applies if the total holdings of all
foreign persons and their associates already exceeds 40% and a foreign person (or its associate)
acquires any further interests, including in the course of trading in the secondary market of the
ADRs.
Under the current Australian foreign investment policy, it is unlikely that the Australian
Treasurer would make such an order in relation to an acquisition that contravenes the Foreign
Takeovers Act where the level of foreign ownership exceeds 40% in the ordinary course of trading,
unless the Australian Treasurer is satisfied that the acquisition is contrary to the national
interest. The Foreign Takeovers Act allows foreign persons to seek prior approval of acquisitions
of Novogen interests which could otherwise result in the Australian Treasurer making an order
requiring the foreign person to dispose of any Substantial Interest.
If a foreign person holds more than 15% of the interests of Novogen or if the level of aggregate
foreign ownership of Novogen exceeds 40% at any time, Novogen would be considered a foreign person
under the Foreign Takeovers Act. In such event, Novogen would be required to obtain the approval of
the Australian Treasurer for Novogen, together with its associates, to acquire: (i) more than 15%
of an Australian company or business with a share value or gross assets (whichever is higher)
totaling over A$231 million; or (ii) any direct or indirect ownership interest in Australian urban
land. However, as mentioned above, proposals by U.S. investors for investment in non-sensitive
sectors do not require notification to the Australian Treasurer or the Australian Treasurer’s
approval unless the amount to be invested or the value of the target Australian company or business
exceeds A$1,004 million.
The percentage of foreign ownership of Novogen would also be included in determining the foreign
ownership of any Australian company or business in which it may choose to invest. Novogen has no
current plans for any such acquisitions. The Company’s Constitution does not contain any additional
limitations on a non-resident’s right to hold or vote the Company’s securities.
Taxation
The following discussion is a summary of the Australian taxes generally applicable to U.S. Holders
of ADRs. For the purposes of this discussion, “U.S. Holder” means a beneficial owner of ADRs who:
(a) for U.S. federal income tax purposes is a U.S. resident, a U.S. citizen, a domestic
corporation, a domestic partnership, or a non-foreign estate or trust;
71
(b) are not residents of Australia for Australian income tax purposes; and
(c) has not owned, at any time directly, indirectly or constructively, 10% or more of the voting
stock of the Company.
Prospective investors are urged to consult their own tax advisers regarding the U.S. and Australian
tax consequences of owning and disposing of Ordinary Shares and ADRs, including in relation to
state and local tax laws. Further, prospective investors who are residents of jurisdictions other
than the U.S. should consult their tax advisers as to the tax consequences of investing in the ADRs
or shares under the laws of their jurisdictions of residence.
This taxation discussion is intended only as a descriptive summary and does not purport to be a
complete technical analysis or listing of all potential tax effects to U.S. Holders, and does not
address the Australian taxes applicable to special classes of U.S. Holders. Except as otherwise
noted, the statements of Australian tax laws set out below are based on the laws as of the date of
this Annual Report, including the bilateral taxation convention between Australia and the U.S. (the
“Treaty”) and are subject to any changes in law occurring after that date.
Distributions
Under Australian law, non-residents of Australia may be subject to withholding tax of up to 30% in
respect of dividends received on shares in Australian companies.
In accordance with the Treaty, dividends derived by a non-resident of Australia who is a resident
of the U.S. for the purposes of Treaty (which may not include all U.S. Holders) may be taxed on
those dividends in Australia, but such withholding tax is limited to 15% of the gross amount of
dividends unless the dividend is derived by a non-resident of Australia who has or is deemed to
have a permanent establishment in Australia. In this case, the non-resident may be taxed at the
rate applicable to them. Some U.S. resident companies may be entitled to a withholding rate of 5%
if they hold at least 10% of the voting power of the Australian company.
In some instances withholding tax may not apply. Under the Australian dividend imputation system,
dividends that are paid out of income on which Australian income tax has been levied may be wholly
or partly “franked”. No withholding tax is payable in respect of any franked portion of a dividend.
Under the conduit foreign income rules, the unfranked portion of a dividend paid to a non-resident
of Australia is not subject to withholding tax to the extent that the amount is declared to be
conduit foreign income ie an amount calculated by reference to certain foreign source income earned
by the Australian company on which no Australian tax is payable.
Dispositions
Upon disposal of shares or ADRs, a capital gain or a capital loss may be made. A capital gain is
calculated as the difference between the disposal proceeds and the cost base of the shares or ADRs,
where the disposal proceeds exceeds the cost base. Broadly, the
72
cost base is the total of the amount paid for the shares or ADRs plus acquisition and/or disposal
costs (such as brokerage or stamp duty).
Capital gains made by non-residents of Australia are only subject to Australian tax if they are in
respect of the disposal of assets which are taxable Australian property. Very broadly, a share or
ADR will be taxable Australian property if the share or ADR is in a company that principally owns
(directly or indirectly) Australian real property and the share is part of a shareholding that
represents at least 10% of all of the shares or ADRs in the company (when taking into account
shares or ADRs owned by the participant or associates). Any non-resident shareholder who held at
least 10% of shares or ADRs (when taking into account shares or ADRs owned by the participant or
associates) at any time during the 2 years prior to disposing of the shares or ADRs in the Company
should consult their own tax advisers regarding the capital gains tax consequences of a disposal of
shares or ADR’s in the Company.
Shares or ADRs will also be taxable Australian property and any capital gain made on the disposal
of such shares or ADRs will be subject to Australian tax if the share or ADRs have at any time been
held by a taxpayer in carrying on a business through a permanent establishment in Australia.
If the shares or ADRs were acquired before 11:45 am on September 21, 1999 the cost base may be
indexed for inflation up to September 30, 1999. For a Holder to whom the CGT discount applies (see
below), indexation will only apply if the Holder elects to use indexation instead of the discount.
Indexation will not be available if the shares or ADRs were acquired after 11:45 am on September
21, 1999 and will effectively only be relevant if the shares were acquired before July 1, 1999.
Holders who are individuals or who hold shares or ADRs directly through trusts and are subject to
Australian tax may be eligible to have their capital gain (after applying any capital losses
against it) discounted by 50% if they have held their shares or ADRs for at least 12 months. If the
shares or ADRs were acquired before 11:45 am on September 21, 1999, such Holders may choose whether
to calculate their capital gain using indexation frozen at September 21, 1999 or by applying the
CGT discount without indexation. If the shares or ADRs were acquired after 11:45 am on September
21, 1999, it will not be possible to elect to apply indexation and such Holders will be entitled to
the CGT discount if they have held the shares or ADRs for at least 12 months. Companies are not
entitled to the CGT discount.
A capital loss will be made if the disposal proceeds for the shares or ADRs are less than the
reduced cost base. Broadly, the reduced cost base will be calculated in a similar way to the cost
base, however, the reduced cost base is calculated without indexation. Capital losses can only be
offset against capital gains realised in the same year or in later years.
Non-residents of Australia who are subject to Australian tax on capital gains made on the disposal
of shares or ADRs are required to file an Australian income tax return for the year in which the
disposal occurs.
Non-residents of Australia who are securities dealers or in whose hands a profit on disposal of
ADRs or shares is regarded as ordinary income and not as a capital gain (such shares and ADRs are
referred to as “revenue assets”) will be subject to Australian
73
income tax on Australian source profits arising on the disposal of the ADRs or shares, without
indexation or discount, unless such profits are exempt from Australian tax under the Treaty. Under
the Business Profits Article of the Treaty, the profits of a person that is a resident of the U.S.
for the purposes of the Treaty (which may not include all U.S. Holders) will not be subject to tax
in Australia unless the profits are attributable to the carrying on of a business by that person
through a permanent establishment of that person in Australia. Prospective investors should consult
their own tax advisers as to whether the shares or ADRs are revenue assets as such a conclusion
depends on the particular facts and circumstances of the individual investor concerned.
Non-residents of Australia with no taxable capital gains or income from sources in Australia other
than dividends with respect to the shares or ADRs are not required to file an Australian income tax
return.
Estate and Gift Tax
Australia does not impose any estate, inheritance or gift taxes. Therefore, no Australian estate
tax, inheritance tax or gift tax will be imposed on the death of, or upon a lifetime gift by, a
U.S. Holder. However, the transfer by a U.S. Holder of ordinary shares or ADRs by way of gift or
upon death may have Australian income tax and stamp duty implications.
Documents on Display
The Company is subject to the reporting requirements of the Exchange Act that are applicable to a
foreign private issuer. Under the Exchange Act, the Company is required to file periodic reports
and other information with the SEC. These materials, including this Annual Report and the exhibits
hereto, may be inspected without charge and copied at established rates at the public reference
facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C., 20549. Please call the
SEC at 1-800-SEC-0330 to obtain information on the operation of the public reference room. Such
materials can also be obtained at the SEC’s website at www.sec.gov.
74
Item 11. Quantitative and Qualitative Disclosures about Market Risk.
Interest Rate Risk
The Company has cash reserves and places funds on deposit with financial institutions for periods
generally not exceeding three months.
The Company does not use derivative financial instruments. The Company places its deposits with
high credit quality financial institutions, and, by policy, limits the amount of credit exposure to
any single counter-party. The Company is averse to principal loss and ensures the safety and
preservation of its invested funds by limiting default risk, market risk and reinvestment risk.
The Company mitigates default risk by depositing funds with only the safest and highest credit
quality financial institutions and by constantly positioning its portfolio to respond appropriately
to a significant reduction in a credit rating of any financial institution.
The Company has no interest rate exposure due to rate changes for long-term debt obligations. The
Company primarily enters into debt obligations to support general corporate purposes, including
capital expenditures and working capital needs.
The Company does not consider the effects of interest rate movements to be a material risk to its
financial condition.
For additional disclosure regarding interest rate risk see Item 18 — Note 15.
Foreign Currency Risk
The Company operates internationally and is exposed to foreign exchange risk arising from various
currency exposures, primarily with respect to the U.S. dollar (USD), the British pound (GBP), the
Euro, the Swiss Franc (CHF) and the Canadian dollar (CAD). Foreign exchange risk arises from future
transactions and recognised assets and liabilities denominated in a currency that is not the
entity’s functional currency and net investments in foreign operations.
As of June 30, 2010, the Group did not hold derivative financial instruments in managing its
foreign currency, however, the Company may from time to time enter into hedging arrangements where
circumstances are deemed appropriate. Foreign subsidiaries with a functional currency of AUD have
exposure to the local currency of these subsidiaries and any other currency these subsidiaries
trade in. The functional currency of Marshall Edwards, Inc. and Glycotex, Inc. is USD and these
subsidiaries have exposure to AUD and any other currency these subsidiaries trade in.
The Company has mitigated and will continue to mitigate a portion of its currency exposure through
international sales, marketing and support operations in which all
75
costs are local currency based. Net foreign currency loss in fiscal year was A$512,000 compared to
net foreign currency gains of A$920,000 in fiscal year 2009.
For additional disclosure regarding market risk see Item 18 — Note 15.
Item 12. Description of Securities Other than Equity Securities
American Depository Shares
The depositary collects its fees for delivery and surrender of American Depository Shares (ADSs)
directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or
from intermediaries acting for them. The depositary collects fees for making distributions to
investors by deducting those fees from the amounts distributed or by selling a portion of
distributable property to pay the fees. The depositary may collect its annual fee for depositary
services by deductions from cash distributions or by directly billing investors or by charging the
book-entry system accounts of participants acting for them. The depositary may generally refuse to
provide fee-attracting services until its fees for those services are paid.
|
|
|
|
|
|
|
Persons depositing or withdrawing shares must pay:
|
|
For:
|
|
$5.00 (or less) per 100 ADSs (or
portion of 100 ADSs)
|
|
•
|
|
Issuance of ADSs,
including issuances resulting from
a distribution of shares or rights
or other property
|
|
|
|
|
|
|
|
|
|
•
|
|
Cancellation of ADSs for
the purpose of withdrawal,
including if the deposit agreement
terminates
|
|
|
|
|
|
|
|
$.02 (or less) per ADS
|
|
•
|
|
Any cash distribution to
ADS registered holders
|
|
|
|
|
|
|
|
A fee equivalent to the fee that
would be payable if securities
distributed to you had been shares
and the shares had been deposited for
issuance of ADSs
|
|
•
|
|
Distribution of securities
distributed to holders of
deposited securities which are
distributed by the depositary to
ADS registered holders
|
|
|
|
|
|
|
|
$.02 (or less) per ADSs per calendar
year
|
|
•
|
|
Depositary services
|
|
|
|
|
|
|
|
Registration or transfer fees
|
|
•
|
|
Transfer and registration
of shares on our share register to
or from the name of the depositary
or its agent when you deposit or
withdraw shares
|
76
|
|
|
|
|
|
|
Persons depositing or withdrawing shares must pay:
|
|
For:
|
|
Expenses of the depositary
|
|
•
|
|
Cable, telex and facsimile
transmissions (when expressly
provided in the deposit agreement)
|
|
|
|
|
|
|
|
|
|
•
|
|
Converting foreign currency
to U.S. dollars
|
|
|
|
|
|
|
|
Taxes and other governmental charges
the depositary or the custodian have
to pay on any ADS or share
underlying an ADS, for example,
stock transfer taxes, stamp duty or
withholding taxes
|
|
•
|
|
As necessary
|
|
|
|
|
|
|
|
Any charges incurred by the
depositary or its agents for
servicing the deposited securities
|
|
•
|
|
As necessary
|
As part of its service to the Company, The Bank of New York Mellon as depositor, has agreed to
waive fees for the standard costs associated with the administration and maintenance of the ADR
program. The estimated cost for this service is approximately $55,000 per annum. For the period
July 1, 2009 to June 30, 2010 the Company has paid The Bank of New York approximately US$15,000 for
other services including AGM/EGM services and mailing of Company Notices.
77
Item 13. Defaults, Dividend Arrearages and Delinquencies
This item is not applicable.
Item 14. Material Modifications to the Rights of Security Holders and the Use of Proceeds
This item is not applicable.
Item 15. Controls and Procedures
(a) Disclosure Controls and Procedures
At the end of the period covered by this Annual Report, the Company’s management, with the
participation of the Principal Executive Officer and Chief Financial Officer, evaluated the
effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act). Based on that evaluation, the Company’s Principal Executive
Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and
procedures are effective to ensure that the information required to be disclosed by the Company in
reports that it files or submits under the Exchange Act were recorded, processed, summarized and
reported within the time periods specified in the SEC’s rules and forms.
(b) Management’s Annual Report on Internal Controls Over Financial Reporting
The management of Novogen Limited is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a — 15(f) under the Exchange Act. Novogen
Limited’s internal control was designed to provide reasonable assurance to the Company’s management
and Board of Directors regarding the preparation and fair presentation of published financial
statements. All internal control systems, no matter how well designed, have inherent limitations.
Therefore, even those systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation.
Management maintains a comprehensive system of controls intended to ensure that transactions are
executed in accordance with management’s authorization, assets are safeguarded, and financial
records are reliable. Management also takes steps to ensure that information and communication
flows are effective and monitor performance, including performance of internal control procedures.
78
Management assessed the effectiveness of the Company’s internal control over financial reporting as
of June 30, 2010 based on the criteria set forth by the Committee of Sponsoring Organizations of
the Treadway Commission in Internal Control-Integrated Framework. Based on this assessment,
management concluded that the Company’s internal control over financial reporting is effective as
of June 30, 2010.
(c) Attestation Report
The attestation report of the Company’s independent registered public accounting firm regarding the
Company’s internal control over financial reporting appears in the independent public account
firm’s report on page 87.
(d) Changes in Internal Controls
During the fiscal year ended June 30, 2010, there has been no change in internal control over
reporting that has materially affected or is reasonably likely to materially affect the Company’s
internal control over financial reporting.
Item 16A. Audit Committee Financial Expert
The Board of Directors has determined that Mr. William D. Rueckert, qualifies as an “audit
committee financial expert” as that term is defined in Item 16A of Form 20-F. Mr. Rueckert meets
the independence requirements of the Nasdaq Global Market and SEC’s rules and regulations.
The Company has adopted a Code of Ethics that applies to all its employees, Executive Officers and
Directors, including its Chief Financial Officer and persons performing similar functions. A copy
of the Code of Ethics is posted in the “About Novogen — Corporate Governance” section of Novogen
Limited’s website, and may be viewed at
http://www.novogen.com
. If the Company makes any
substantive amendment, to the Code of Ethics or grants any waiver, including an implicit waiver,
from a provision of the Code of Ethics to Directors or Executive Officers, it will disclose the
nature of such amendment or waiver on the Company’s website.
79
Item 16C. Principal Accounting Fees and Services
BDO Audit (NSW-VIC) Pty Ltd (“BDO”) (formerly BDO Kendalls Audit and Assurance (NSW-VIC) Pty Ltd)
has audited the Company’s annual financial statements acting as the independent registered public
accounting firm for the fiscal years ended June 30, 2010 and 2009.
The charts below set forth the total fees for services performed by BDO in 2010 and 2009 and
summarizes these amounts by the category of service.
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
Audit fees
|
|
|
333
|
|
|
|
329
|
|
|
Audit related fees
|
|
|
—
|
|
|
|
3
|
|
|
Tax fees
|
|
|
26
|
|
|
|
51
|
|
|
Other Fees
|
|
|
—
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fees
|
|
|
359
|
|
|
|
389
|
|
|
|
|
|
|
|
|
|
|
|
Audit fees
The audit fees include the aggregate fees incurred in fiscal years 2010 and 2009 for professional
services rendered in connection with the audit of the Company’s annual financial statements and for
related services that are reasonably related to the performance of the audit (including audit in
respect of the Sarbanes-Oxley Section 404) or services that are normally provided by the auditor in
connection with regulatory filings of engagements for those financial years (including review of
the Company’s Annual Report on Form 20-F, consents and other services related to SEC matters).
Audit Related Services
Fees for audit related services billed in fiscal years 2009 include audit related services provided
in connection with the filing of a registration statement for Marshall Edwards
Tax Fees
Tax fees billed in each of the fiscal years 2010 and 2009 were for the preparation of tax returns
and related advice.
All Other Fees
Other fees incurred by the Company in fiscal year 2009 relate to the costs associated with
regulatory compliance and other general matters.
Pre-approval Policies and Procedures
80
The Audit Committee Charter sets forth the Company’s policy regarding the appointment of
independent auditors. The Audit Committee Charter also requires the Audit Committee to review and
approve in advance the appointment of the independent auditors for the performance of 100% of all
audit services and, after taking into account the opinion of management, 100% of lawfully permitted
non audit services. The Audit Committee may delegate authority to one or more members of the Audit
Committee where appropriate, but no such delegation is permitted if the authority is required by
law, regulation or listing standard to be exercised by the Audit Committee as a whole.
Item 16D. Exemptions from the Listing Standards for Audit Committees.
This item is not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
This item is not applicable.
Item 16G. Corporate Governance
Exemptions from Certain Corporate Governance Rules of the Nasdaq Stock Market, LLC
Exemptions from the corporate governance standards of the Nasdaq Stock Market, LLC (“Nasdaq”) are
available to foreign private issuers such as Novogen when those standards are contrary to a law,
rule or regulation of any public authority exercising jurisdiction over such issuer or contrary to
generally accepted business practices in the issuer’s country of domicile. In connection with
Novogen’s National Market Listing Application, Nasdaq granted Novogen exemptions from certain
corporate governance standards that were contrary to the laws, rules, regulations or generally
accepted business practices of Australia. These exemptions and the practices followed by Novogen
are described below:
|
•
|
|
Novogen is exempt from Nasdaq’s quorum requirements applicable to meetings of ordinary
shareholders. In keeping with the law of Australia and generally accepted business practices
in Australia, Novogen’s Constitution requires a quorum of three shareholders for a
shareholders’ meeting.
|
|
|
|
•
|
|
Novogen is exempt from Nasdaq’s requirement that each Nasdaq issuer shall require
shareholder approval of a plan or arrangement in connection with the acquisition of the stock
or assets of another company if “any director, officer or substantial shareholder of the
issuer has a 5 percent or greater interest (or such persons collectively have a 10 percent or
greater interest), directly or indirectly, in
the Company or assets to be acquired or in the consideration to be paid in the transaction
or series of related transactions and the present or potential issuance
|
81
|
|
|
of common stock, or
securities convertible into or exercisable for common stock, could result in an increase in
outstanding common shares or voting power of 5 percent or more”.
|
Novogen is listed on the ASX and subject to Chapter 10 of the ASX listing rules which requires
shareholder approval for an acquisition from or disposal to a “related party” (including a
director) or “substantial shareholder” (who is entitled to at least 10% of the voting securities)
of “substantial assets”. The Australian Corporations Act to which Novogen is also subject generally
requires shareholder approval for a transaction with a director or director-controlled entity
unless on arm’s length terms.
82
Item 17. Financial Statements
Not Applicable
Item 18. Financial Statements
The financial statements filed as part of this Annual Report are included on pages 90 through 145
hereof.
(a) Exhibits
|
|
|
|
|
Exhibit
|
|
|
|
No.
|
|
Exhibit Description
|
|
1.1
|
|
Constitution of Novogen Limited (formerly known as the
Memorandum of Association and Articles of Association). (1)
|
|
|
|
|
|
2.1
|
|
Deposit Agreement as further amended and restated, dated as of
September 29, 2005, among Novogen Limited, the Bank of New
York, as Depositary, and owners and holders from time to time
of ADRs issued thereunder. (2)
|
|
|
|
|
|
4.1
|
|
Employment Contract between the Company and Mr. C. Naughton
dated June 21, 2006. (4)
|
|
|
|
|
|
4.2
|
|
Lease between Hyperion Property Syndicates Limited (Lessor)
and Novogen Laboratories Pty Ltd for the Company’s corporate
headquarters at 140 Wicks Road, North Ryde, New South Wales.
(*)
|
|
|
|
|
|
4.3
|
|
Employment Contract between the Company and Professor Alan
Husband dated March 10, 2010. (*)
|
|
|
|
|
|
4.4
|
|
Employment Contract between the Company and Bryan Palmer dated
March 10, 2010. (*)
|
|
|
|
|
|
4.5
|
|
Employment Contract between the Company and Craig Kearney
dated March 10, 2010. (*)
|
|
|
|
|
|
4.6
|
|
Employment Contract between the Company and David Seaton dated
March 10, 2010. (*)
|
|
|
|
|
|
4.7
|
|
Employment Contract between the Company and Ronald Erratt
dated March 10, 2010. (*)
|
|
|
|
|
|
4.8
|
|
Employment Contract between the Company and Warren Lancaster dated March 10, 2010. (*)
|
83
|
|
|
|
|
Exhibit
|
|
|
|
No.
|
|
Exhibit Description
|
|
4.9
|
|
Employment Contract between the Company and Mark Hinze dated
September 23, 2010. (*)
|
|
|
|
|
|
4.10
|
|
Patent License Agreement, dated as of November 13, 1997, by
and among Novogen Limited, Novogen Research Pty Limited,
Novogen Inc. and Protein Technologies International Inc.** (6)
|
|
|
|
|
|
4.11
|
|
Amendment to the Patent License Agreement, dated as of June
21, 2004 by and among Novogen Limited, Novogen Research Pty
Limited, Novogen Inc. and Solae LLC (formerly known as Protein
Technologies International Inc.)** (7)
|
|
|
|
|
|
8.1
|
|
Company Subsidiaries. (*)
|
|
|
|
|
|
12.1
|
|
Certification of the Chairman and Acting Principal Executive
Officer pursuant to Rule 13a — 14(a) of the Securities
Exchange Act of 1934, as amended. (*)
|
|
|
|
|
|
12.2
|
|
Certification of Chief Financial Officer pursuant to Rule 13a
— 14(a) of the Securities Exchange Act of 1934, as amended.
(*)
|
|
|
|
|
|
13.1
|
|
Certification by the Chairman and Acting Principal Executive
Officer and Chief Financial Officer pursuant to 18 U.S.C.
Section 1350 as added by Section 906 of the Sarbanes — Oxley
Act of 2002. (*)
|
|
|
|
|
|
*
|
|
Filed herewith.
|
|
|
|
**
|
|
Portions of these documents have been omitted pursuant to a
request for confidential treatment. Such omitted portions have been filed
separately with the SEC.
|
|
|
|
(1)
|
|
Incorporated by reference to the Registration Statement on
Form 20-F filed with the Securities and Exchange Commission on December 24,
1998 (File No. 0-29962)
|
|
|
|
(2)
|
|
Incorporated by reference to the Registration Statement on
Form F-6 filed with the Securities and Exchange Commission on September 29,
2005 (File No. 333-128681)
|
|
|
|
(3)
|
|
Incorporated by reference to the Annual Report on Form 20-F
filed with the Securities and Exchange Commission on November 27, 2000 (File
No. 0-29962)
|
|
|
|
(4)
|
|
Incorporated by reference to the Annual Report on Form 20-F
filed with the Securities and Exchange Commission on November 29, 2006 (File
No. 0-29962)
|
84
|
|
|
|
|
(5)
|
|
Incorporated by reference to the Annual Report on Form 20-F
filed with the Securities and Exchange Commission on December 14, 2007 (File
No. 0-29962)
|
|
|
|
(6)
|
|
Incorporated by reference to the Annual Report on Form 20-F/A
filed with the Securities and Exchange Commission on March 20, 2009 (File No.
0-29962).
|
|
|
|
(7)
|
|
Incorporated by reference to the Annual Report on Form 20-F/A
filed with the Securities and Exchange Commission on May 5, 2009 (File No.
0-29962).
|
85
Report of Independent Registered Public Accounting Firm
Board of Directors
Novogen Limited
We have audited the accompanying
consolidated statements of financial position of Novogen Limited as
of June 30, 2010 and 2009 and the related consolidated statements of comprehensive income,
consolidated statements of changes in equity, and consolidated statements of cash flows for each of
the three years in the period ended June 30, 2010. These financial statements are the
responsibility of the Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Novogen Limited at June 30, 2010 and 2009, and the
results of its operations and its cash flows for each of the three years in the period ended June
30, 2010
,
in conformity with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), Novogen Limited’s internal control over financial reporting as of June 30,
2010, based on criteria established in
Internal Control — Integrated Framework
issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated
December 8, 2010 expressed an unqualified opinion thereon.
BDO Audit (NSW-VIC) Pty Ltd
Sydney, NSW Australia
December 8, 2010
86
Report of Independent Registered Public Accounting Firm
Board of Directors
Novogen Limited
We have audited Novogen Limited’s internal control over financial reporting as of June 30, 2010,
based on criteria established in
Internal Control — Integrated Framework
issued by the Committee
of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Novogen Limited’s
management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in
the accompanying Item 15(b), Management’s Report on Internal Control Over Financial Reporting. Our
responsibility is to express an opinion on the company’s internal control over financial reporting
based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal control based on the assessed
risk. Our audit also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
A company’s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company; (2) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in
accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board, and that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Novogen Limited maintained, in all material respects, effective internal control
over financial reporting as of June 30, 2010, based on the COSO criteria
.
87
We also have audited, in accordance with the
standards of the Public Company Accounting Oversight
Board (United States), the accompanying consolidated statements of financial position of Novogen
Limited as of June 30, 2010 and June 30, 2009, and the
related consolidated statements of
comprehensive income, consolidated statements of changes in equity and consolidated statements of
cash flows for each of the three years in the period ended June 30, 2010 and our report dated
December 8, 2010 expressed an unqualified opinion.
BDO Audit (NSW-VIC) Pty Ltd
Sydney, NSW, Australia
December 8, 2010
88
Directors’ Declaration
The Directors of the Company declare that:
|
1.
|
|
The financial statements, comprising the Statement of Comprehensive Income, Statement of
Financial Position, Statement of Cash Flows, Statement of Changes in Equity, accompanying
notes, are in accordance with the Corporations Act 2001 and:
|
|
|
(a)
|
|
comply with Accounting Standards and the Corporations Regulations 2001; and
|
|
|
|
|
(b)
|
|
give a true and fair view of the consolidated entity’s financial position as at 30
June, 2010 and of the performance for the year ended on that date.
|
|
2.
|
|
The Company has included in the notes to the financial statements an explicit and unreserved
statement of compliance with International Financial Reporting Standards.
|
|
|
|
3.
|
|
In the Directors’ opinion, there are reasonable grounds to believe that the Company will be
able to pay its debts as and when they become due and payable.
|
|
|
|
4.
|
|
The Directors have been given the declaration by Chief Financial Officer required by section
295A.
|
Novogen Limited and its subsidiaries identified in Note 17 are parties to the deed of cross
guarantee under which each company guarantees the debts of the others. At the date of this
declaration there are reasonable grounds to believe that the companies which are parties to this
deed of cross guarantee will as a consolidated entity be able to meet any obligations or
liabilities to which they are, or may become, subject to, by virtue of the deed.
This declaration is made in accordance with a resolution of the Board of Directors and is signed
for and on behalf of the Directors by:
|
|
|
|
|
|
|
|
|
|
|
William Rueckert
|
|
|
|
Non-executive Chairman
|
|
|
|
|
|
|
|
Sydney, December 9, 2010
|
|
|
|
|
89
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
2008
|
|
2010
|
|
|
|
Notes
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
US$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
2
|
|
|
|
9,908
|
|
|
|
11,147
|
|
|
|
13,283
|
|
|
|
8,402
|
|
|
Cost of sales
|
|
|
|
|
|
|
(2,216
|
)
|
|
|
(2,523
|
)
|
|
|
(4,090
|
)
|
|
|
(1,879
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
7,692
|
|
|
|
8,624
|
|
|
|
9,193
|
|
|
|
6,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
2
|
|
|
|
7
|
|
|
|
—
|
|
|
|
1,623
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research & development expenses
|
|
|
|
|
|
|
(8,093
|
)
|
|
|
(18,788
|
)
|
|
|
(18,811
|
)
|
|
|
(6,863
|
)
|
|
Selling & promotional expenses
|
|
|
|
|
|
|
(4,196
|
)
|
|
|
(6,572
|
)
|
|
|
(6,134
|
)
|
|
|
(3,558
|
)
|
|
Shipping and handling expenses
|
|
|
|
|
|
|
(236
|
)
|
|
|
(341
|
)
|
|
|
(300
|
)
|
|
|
(200
|
)
|
|
General and administrative expenses
|
|
|
|
|
|
|
(10,395
|
)
|
|
|
(6,671
|
)
|
|
|
(9,792
|
)
|
|
|
(8,815
|
)
|
|
Other expenses
|
|
|
|
|
|
|
—
|
|
|
|
(27
|
)
|
|
|
(528
|
)
|
|
|
—
|
|
|
Finance costs
|
|
|
|
|
|
|
(15
|
)
|
|
|
(11
|
)
|
|
|
(24
|
)
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax
|
|
|
2
|
|
|
|
(15,236
|
)
|
|
|
(23,786
|
)
|
|
|
(24,773
|
)
|
|
|
(12,920
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
3
|
|
|
|
(10
|
)
|
|
|
(1
|
)
|
|
|
(4
|
)
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss after tax from continuing operations
|
|
|
|
|
|
|
(15,246
|
)
|
|
|
(23,787
|
)
|
|
|
(24,777
|
)
|
|
|
(12,928
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the period
|
|
|
|
|
|
|
(15,246
|
)
|
|
|
(23,787
|
)
|
|
|
(24,777
|
)
|
|
|
(12,928
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net exchange difference on translation of
financial statements of foreign controlled
entities
|
|
|
|
|
|
|
(1,079
|
)
|
|
|
6,163
|
|
|
|
(3,775
|
)
|
|
|
(915
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
(1,079
|
)
|
|
|
6,163
|
|
|
|
(3,775
|
)
|
|
|
(915
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
(16,325
|
)
|
|
|
(17,624
|
)
|
|
|
(28,552
|
)
|
|
|
(13,843
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest
|
|
|
|
|
|
|
(2,901
|
)
|
|
|
(4,859
|
)
|
|
|
(4,513
|
)
|
|
|
(2,460
|
)
|
|
Novogen Limited
|
|
|
12
|
(c)
|
|
|
(12,345
|
)
|
|
|
(18,928
|
)
|
|
|
(20,264
|
)
|
|
|
(10,468
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,246
|
)
|
|
|
(23,787
|
)
|
|
|
(24,777
|
)
|
|
|
(12,928
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest
|
|
|
|
|
|
|
(3,212
|
)
|
|
|
(3,121
|
)
|
|
|
(5,559
|
)
|
|
|
(2,724
|
)
|
|
Novogen Limited
|
|
|
|
|
|
|
(13,113
|
)
|
|
|
(14,503
|
)
|
|
|
(22,993
|
)
|
|
|
(11,119
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16,325
|
)
|
|
|
(17,624
|
)
|
|
|
(28,552
|
)
|
|
|
(13,843
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings/(loss) per share (cents)
|
|
|
4
|
|
|
|
(12.1
|
)
|
|
|
(18.6
|
)
|
|
|
(20.8
|
)
|
|
|
(10.3
|
)
|
The above Statement of Comprehensive income should be read in conjunction with the accompanying notes.
90
STATEMENT OF FINANCIAL POSITION
as at 30 June, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
|
|
Notes
|
|
A$’000
|
|
A$’000
|
|
US$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
5
|
|
|
|
15,131
|
|
|
|
33,338
|
|
|
|
12,831
|
|
|
Trade and other receivables
|
|
|
6
|
|
|
|
1,984
|
|
|
|
2,252
|
|
|
|
1,682
|
|
|
Inventories
|
|
|
7
|
|
|
|
1,561
|
|
|
|
1,334
|
|
|
|
1,324
|
|
|
Other current assets
|
|
|
8
|
|
|
|
442
|
|
|
|
565
|
|
|
|
375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
|
|
|
19,118
|
|
|
|
37,489
|
|
|
|
16,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
9
|
|
|
|
172
|
|
|
|
353
|
|
|
|
146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current assets
|
|
|
|
|
|
|
172
|
|
|
|
353
|
|
|
|
146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
|
|
|
|
|
19,290
|
|
|
|
37,842
|
|
|
|
16,358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
10
|
|
|
|
5,365
|
|
|
|
8,059
|
|
|
|
4,550
|
|
|
Provisions
|
|
|
11
|
|
|
|
597
|
|
|
|
774
|
|
|
|
506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
|
|
|
5,962
|
|
|
|
8,833
|
|
|
|
5,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions
|
|
|
11
|
|
|
|
152
|
|
|
|
236
|
|
|
|
129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current liabilities
|
|
|
|
|
|
|
152
|
|
|
|
236
|
|
|
|
129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
|
|
|
|
6,114
|
|
|
|
9,069
|
|
|
|
5,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS
|
|
|
|
|
|
|
13,176
|
|
|
|
28,773
|
|
|
|
11,173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed equity
|
|
|
12
|
(a)
|
|
|
206,419
|
|
|
|
206,419
|
|
|
|
175,043
|
|
|
Reserves
|
|
|
12
|
(b)
|
|
|
(3,778
|
)
|
|
|
(3,010
|
)
|
|
|
(3,204
|
)
|
|
Accumulated losses
|
|
|
12
|
(c)
|
|
|
(191,452
|
)
|
|
|
(179,730
|
)
|
|
|
(162,351
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital and reserves attributable to owners of Novogen Limited
|
|
|
|
|
|
|
11,189
|
|
|
|
23,679
|
|
|
|
9,488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest
|
|
|
12
|
(d)
|
|
|
1,987
|
|
|
|
5,094
|
|
|
|
1,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EQUITY
|
|
|
|
|
|
|
13,176
|
|
|
|
28,773
|
|
|
|
11,173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The above Statement of Financial Position should be read in conjunction with the accompanying
notes.
91
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
Contributed
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
controlling
|
|
|
|
|
|
|
|
equity
|
|
losses
|
|
Reserves
|
|
Total
|
|
interest
|
|
Total equity
|
|
Total equity
|
|
Consolidated
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
US$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 July, 2007
|
|
|
191,876
|
|
|
|
(146,147
|
)
|
|
|
(5,155
|
)
|
|
|
40,574
|
|
|
|
4,052
|
|
|
|
44,626
|
|
|
|
37,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the period
|
|
|
—
|
|
|
|
(20,264
|
)
|
|
|
—
|
|
|
|
(20,264
|
)
|
|
|
(4,513
|
)
|
|
|
(24,777
|
)
|
|
|
(21,011
|
)
|
|
Exchange differences on translation of
foreign operations
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,729
|
)
|
|
|
(2,729
|
)
|
|
|
(1,046
|
)
|
|
|
(3,775
|
)
|
|
|
(3,201
|
)
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
—
|
|
|
|
(20,264
|
)
|
|
|
(2,729
|
)
|
|
|
(22,993
|
)
|
|
|
(5,559
|
)
|
|
|
(28,552
|
)
|
|
|
(24,212
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue of share capital by subsidiary
|
|
|
18,429
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18,429
|
|
|
|
—
|
|
|
|
18,429
|
|
|
|
15,628
|
|
|
less non-controlling interest
|
|
|
(5,334
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,334
|
)
|
|
|
5,334
|
|
|
|
—
|
|
|
|
—
|
|
|
Share-based payments
|
|
|
—
|
|
|
|
850
|
|
|
|
—
|
|
|
|
850
|
|
|
|
284
|
|
|
|
1,134
|
|
|
|
962
|
|
|
Share of opening equity transferred to
minority interest due to issuance of
shares by subsidiary
|
|
|
(4,539
|
)
|
|
|
3,310
|
|
|
|
393
|
|
|
|
(836
|
)
|
|
|
836
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Total transactions with owners in their
capacity as owners
|
|
|
8,556
|
|
|
|
4,160
|
|
|
|
393
|
|
|
|
13,109
|
|
|
|
6,454
|
|
|
|
19,563
|
|
|
|
16,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June, 2008
|
|
|
200,432
|
|
|
|
(162,251
|
)
|
|
|
(7,491
|
)
|
|
|
30,690
|
|
|
|
4,947
|
|
|
|
35,637
|
|
|
|
30,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 July, 2008
|
|
|
200,432
|
|
|
|
(162,251
|
)
|
|
|
(7,491
|
)
|
|
|
30,690
|
|
|
|
4,947
|
|
|
|
35,637
|
|
|
|
30,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the period
|
|
|
—
|
|
|
|
(18,928
|
)
|
|
|
—
|
|
|
|
(18,928
|
)
|
|
|
(4,859
|
)
|
|
|
(23,787
|
)
|
|
|
(20,171
|
)
|
|
Exchange differences on translation of
foreign operations
|
|
|
—
|
|
|
|
—
|
|
|
|
4,425
|
|
|
|
4,425
|
|
|
|
1,738
|
|
|
|
6,163
|
|
|
|
5,226
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
—
|
|
|
|
(18,928
|
)
|
|
|
4,425
|
|
|
|
(14,503
|
)
|
|
|
(3,121
|
)
|
|
|
(17,624
|
)
|
|
|
(14,945
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue of share capital (4,531,633 shares)
|
|
|
5,527
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,527
|
|
|
|
—
|
|
|
|
5,527
|
|
|
|
4,687
|
|
|
Issue of share capital by subsidiary
|
|
|
4,033
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,033
|
|
|
|
—
|
|
|
|
4,033
|
|
|
|
3,420
|
|
|
less non-controlling interest
|
|
|
(3,047
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,047
|
)
|
|
|
3,047
|
|
|
|
—
|
|
|
|
—
|
|
|
Share-based payments
|
|
|
—
|
|
|
|
1,060
|
|
|
|
—
|
|
|
|
1,060
|
|
|
|
140
|
|
|
|
1,200
|
|
|
|
1,018
|
|
|
Share of opening equity transferred to
non-controlling interest due to issuance
of shares by subsidiary
|
|
|
(526
|
)
|
|
|
389
|
|
|
|
56
|
|
|
|
(81
|
)
|
|
|
81
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Total transactions with owners in their
capacity as owners
|
|
|
5,987
|
|
|
|
1,449
|
|
|
|
56
|
|
|
|
7,492
|
|
|
|
3,268
|
|
|
|
10,760
|
|
|
|
9,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June, 2009
|
|
|
206,419
|
|
|
|
(179,730
|
)
|
|
|
(3,010
|
)
|
|
|
23,679
|
|
|
|
5,094
|
|
|
|
28,773
|
|
|
|
24,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 July, 2009
|
|
|
206,419
|
|
|
|
(179,730
|
)
|
|
|
(3,010
|
)
|
|
|
23,679
|
|
|
|
5,094
|
|
|
|
28,773
|
|
|
|
24,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the period
|
|
|
—
|
|
|
|
(12,345
|
)
|
|
|
—
|
|
|
|
(12,345
|
)
|
|
|
(2,901
|
)
|
|
|
(15,246
|
)
|
|
|
(12,928
|
)
|
|
Exchange differences on translation of
foreign operations
|
|
|
—
|
|
|
|
—
|
|
|
|
(768
|
)
|
|
|
(768
|
)
|
|
|
(311
|
)
|
|
|
(1,079
|
)
|
|
|
(916
|
)
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
—
|
|
|
|
(12,345
|
)
|
|
|
(768
|
)
|
|
|
(13,113
|
)
|
|
|
(3,212
|
)
|
|
|
(16,325
|
)
|
|
|
(13,844
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based payments
|
|
|
—
|
|
|
|
623
|
|
|
|
—
|
|
|
|
623
|
|
|
|
105
|
|
|
|
728
|
|
|
|
617
|
|
|
|
|
|
|
|
|
|
|
Total transactions with owners in their
capacity as owners
|
|
|
—
|
|
|
|
623
|
|
|
|
—
|
|
|
|
623
|
|
|
|
105
|
|
|
|
728
|
|
|
|
617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June, 2010
|
|
|
206,419
|
|
|
|
(191,452
|
)
|
|
|
(3,778
|
)
|
|
|
11,189
|
|
|
|
1,987
|
|
|
|
13,176
|
|
|
|
11,173
|
|
|
|
|
|
|
|
|
|
The above Statements of Changes in Equity should be read in conjunction with the accompanying
notes.
92
STATEMENT OF CASH FLOWS
for the year ended 30 June, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
2008
|
|
2010
|
|
|
|
Notes
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
US$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before tax
|
|
|
|
|
|
|
(15,236
|
)
|
|
|
(23,786
|
)
|
|
|
(24,773
|
)
|
|
|
(12,920
|
)
|
|
Income tax paid
|
|
|
|
|
|
|
(10
|
)
|
|
|
(1
|
)
|
|
|
(4
|
)
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortisation
|
|
|
|
|
|
|
198
|
|
|
|
282
|
|
|
|
353
|
|
|
|
168
|
|
|
Net (gain)/loss on disposal of property, plant and equipment
|
|
|
|
|
|
|
(7
|
)
|
|
|
29
|
|
|
|
(1,623
|
)
|
|
|
(6
|
)
|
|
Share-based payments
|
|
|
|
|
|
|
728
|
|
|
|
1,200
|
|
|
|
602
|
|
|
|
617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(increase)/decrease in trade receivables
|
|
|
|
|
|
|
252
|
|
|
|
527
|
|
|
|
300
|
|
|
|
214
|
|
|
(increase)/decrease in other receivables
|
|
|
|
|
|
|
16
|
|
|
|
190
|
|
|
|
1,007
|
|
|
|
14
|
|
|
(increase)/decrease in inventories
|
|
|
|
|
|
|
(227
|
)
|
|
|
595
|
|
|
|
1,970
|
|
|
|
(192
|
)
|
|
(increase)/decrease in prepayments
|
|
|
|
|
|
|
123
|
|
|
|
(23
|
)
|
|
|
88
|
|
|
|
104
|
|
|
increase/(decrease) in trade and other payables
|
|
|
|
|
|
|
(2,694
|
)
|
|
|
1,388
|
|
|
|
751
|
|
|
|
(2,285
|
)
|
|
increase/(decrease) in provisions
|
|
|
|
|
|
|
(261
|
)
|
|
|
(83
|
)
|
|
|
282
|
|
|
|
(221
|
)
|
|
exchange rate change on opening cash
|
|
|
|
|
|
|
512
|
|
|
|
(920
|
)
|
|
|
937
|
|
|
|
434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in operating activities
|
|
|
|
|
|
|
(16,606
|
)
|
|
|
(20,602
|
)
|
|
|
(20,110
|
)
|
|
|
(14,081
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of property, plant and equipment
|
|
|
|
|
|
|
(22
|
)
|
|
|
(94
|
)
|
|
|
(95
|
)
|
|
|
(19
|
)
|
|
Proceeds from sale of plant and equipment
|
|
|
|
|
|
|
12
|
|
|
|
5
|
|
|
|
3,831
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from/(used in) investing activities
|
|
|
|
|
|
|
(10
|
)
|
|
|
(89
|
)
|
|
|
3,736
|
|
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from the issue of ordinary shares
|
|
|
|
|
|
|
—
|
|
|
|
5,527
|
|
|
|
—
|
|
|
|
—
|
|
|
Proceeds from the issue of shares by subsidiary
|
|
|
|
|
|
|
—
|
|
|
|
4,033
|
|
|
|
18,961
|
|
|
|
—
|
|
|
Withdrawal of/(investment in) short-term deposits
|
|
|
|
|
|
|
—
|
|
|
|
2,000
|
|
|
|
(2,000
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from/(used in) financing activities
|
|
|
|
|
|
|
—
|
|
|
|
11,560
|
|
|
|
16,961
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents
|
|
|
|
|
|
|
(16,616
|
)
|
|
|
(9,131
|
)
|
|
|
587
|
|
|
|
(14,090
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
|
|
|
32,338
|
|
|
|
34,386
|
|
|
|
38,511
|
|
|
|
27,422
|
|
|
Effect of exchange rates on cash holdings in foreign currencies
|
|
|
|
|
|
|
(1,591
|
)
|
|
|
7,083
|
|
|
|
(4,712
|
)
|
|
|
(1,349
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
|
5
|
|
|
|
14,131
|
|
|
|
32,338
|
|
|
|
34,386
|
|
|
|
11,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The above Statements of Cash Flows should be read in conjunction with the accompanying notes.
93
NOTES TO THE FINANCIAL STATEMENTS
The financial report of Novogen Limited for the year ended 30 June, 2010 was authorised for issue
in accordance with a resolution of the Board of Directors on 9 December, 2010.
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies which have been adopted in the preparation of the financial
report are:
Basis of preparation
The financial report is a general-purpose financial report, which has been prepared in accordance
with the requirements of the Corporations Act 2001, Australian Accounting Standards and other
authoritative pronouncements of the AASB. The financial report has also been prepared on a
historical cost basis with all amounts presented in Australian dollars, rounded to the nearest
thousand dollars ($’000), unless otherwise stated.
Separate financial statements for Novogen Limited as a separate legal entity are no longer
presented as a consequence of a change to the Corporations Act 2001. However, limited information
for Novogen Limited as an individual entity is included in Note 17.
Statement of compliance
This financial report complies with International Financial Reporting Standards (IFRS) as adopted
by the International Accounting Standards Board (IASB).
Basis of consolidation
The consolidated financial statements comprise the financial statements of Novogen Limited and its
subsidiaries (the “Group”) as at 30 June each year.
The financial statements of the subsidiaries are prepared for the same reporting period as the
parent company, using consistent accounting policies.
In preparing the consolidated financial statements, all inter-company balances and transactions,
income and expenses and profit and losses resulting from intra-group transactions have been
eliminated in full.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group and
cease to be consolidated from the date on which control is transferred out of the Group.
Non-controlling interests represent the portion of profit or loss and net assets in Marshall
Edwards, Inc. and Glycotex, Inc. not held by the Group and are presented separately in the
Statement of Comprehensive Income and within equity in the consolidated Statement of Financial
Position.
94
Significant accounting judgements, estimates and assumptions
(i) Significant accounting judgements
In the process of applying the Group’s accounting policies, management has made the following
judgement, apart from those involving estimations.
Research and development expenses
The Directors do not consider the development programs to be sufficiently advanced to reliably
determine the economic benefits and technical feasibility to justify capitalisation of development
costs. These costs have been recognised as an expense when incurred.
Research and development expenses relate primarily to the cost of conducting human clinical and
pre-clinical trials. Clinical development costs are a significant component of research and
development expenses. Estimates have been used in determining the expense liability under certain
clinical trial contracts where services have been performed but not yet invoiced. The actual costs
of those services could differ in amount and timing from the estimates used in completing the
financial statements.
Generally the costs, and therefore estimates, associated with clinical trial contracts are based on
the number of patients, drug administration cycles, the type of treatment and the outcome being
measured. The length of time before actual amounts can be determined will vary depending on length
of the patient cycles and the timing of the invoices by the clinical trial partners.
Clinical trial expenses of A$901,000 have been accrued at June 30, 2010. These estimates are based
on the number of patients in each trial and the drug administration cycle.
At 30 June, 2009 approximately A$1,456,000 was accrued in relation to claims received for clinical
trial expenses in connection with the termination of enrolment into the OVATURE Phase III clinical
trial. Following negotiations A$974,000 was paid in final settlement of these claims.
(ii) Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and
assumptions of future events. The key estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of certain assets and liabilities within the
next annual reporting period are:
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair
value of equity instruments at the date at which they are granted. The fair value is determined
using a binomial model, using the assumptions detailed in Note 13.
Impairments
The Group assesses impairment at the end of each reporting period by evaluating conditions specific
to the Group that may lead to impairment of assets. Where an impairment trigger exists, the
recoverable amount of the asset is determined. Value-in-
95
use calculations performed in assessing recoverable amounts incorporate a number of key estimates.
Clinical Trial Expenses
Estimates have been used in determining the expense liability under certain clinical trial
contracts where services have been performed but not yet invoiced. The actual costs of those
services could differ in amount and timing from the estimates used in completing the financial
results.
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the
Group and the revenue can be reliably measured. In determining the economic benefits, provisions
are made for certain trade discounts and returned goods. The following specific recognition
criteria must also be met:
Sale of goods
Revenue from sale of goods is recognised when the significant risks and rewards of ownership of the
goods have passed to the buyer and can be measured reliably. Risks and rewards are considered
passed to the buyer when the goods have been dispatched to a customer pursuant to a sales order and
invoice. Net sales represent product shipped less actual and estimated future returns, and slotting
fees, rebates and other trade discounts accounted for as reductions of revenue.
Estimates and allowances are based upon known claims and an estimate of additional returns. In
order to calculate estimates, management regularly monitor historical patterns of returns from, and
discounts to, individual customers.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. The
effective interest method uses the effective interest rate which is the rate that exactly discounts
the estimated future cash receipts over the expected life of the financial asset.
Dividends
Dividend revenue is recognised when the right to receive the payment is established.
Government grants
Grant income is recognised when there is reasonable assurance that the grant will be received and
all attaching conditions will be complied with. Grant income is recognised in the profit or loss
over the periods necessary to match the grant on a systematic basis to the costs that it is
intended to compensate.
Royalties
Royalty revenue is recognised on an accruals basis in accordance with the substance of the relevant
agreements.
Litigation Settlement
Revenue is recognised when the risks and rewards have been transferred, which is considered to
occur on settlement.
96
Borrowing costs
Borrowing costs are recognised as an expense when incurred. Novogen Limited does not currently hold
any qualifying assets but if it did, the borrowing costs directly associated with this asset would
be capitalised (including any other costs directly attributable to the borrowing and temporary
investment income earned on the borrowing).
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the
arrangement and requires assessment of whether the fulfilment of the arrangement is dependent on
the use of a specific asset or assets and the arrangement conveys a right to use the asset.
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to
ownership of the leased item, are capitalised at the inception of the lease at the fair value of
the leased property or, if lower, at the present value of the minimum lease payments. Lease
payments are apportioned between the finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance charges are
recognised as an expense in profit or loss.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the
asset and the lease term if there is no reasonable certainty that the Group will obtain ownership
by the end of the lease term.
Operating lease payments are recognised as an expense in the profit or loss on a straight-line
basis over the lease term. Lease incentives are recognised in the profit or loss as an integral
part of the total lease expense.
The cost of improvements to or on leasehold property is capitalised, disclosed as leasehold
improvements, and amortised over the unexpired period of the lease or the estimated useful lives of
the improvements, whichever is the shorter.
Cash and cash equivalents
Cash and short term deposits in the Statement of Financial Position comprise cash at bank and in
hand and short-term deposits with an original maturity of three months or less that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in
value.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank overdrafts and secured cash.
Trade and other receivables
Trade receivables, which generally have 30-60 day terms, are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest method
97
less an allowance for any uncollectible amounts.
An allowance for doubtful debts is made when there is objective evidence that the Group will not be
able to collect the debts. Objective evidence of impairment includes: financial difficulties of
debtors; default payments; or debts more than 120 days overdue. Bad debts are written off when
identified.
Cash flows relating to short term receivables are not discounted if the effect of discounting is
immaterial.
Inventories
Inventories are measured at the lower of cost and net realisable value.
Costs incurred for finished goods and work-in-progress in bringing each product to its present
location and condition are accounted for as cost of direct material, direct labour and a proportion
of manufacturing overheads based on normal operating capacity but excluding borrowing costs and
assigned on a standard costing basis. Costs are assigned using a standard costing system on the
basis of weighted average costs.
Net realisable value is the estimated selling price in the ordinary course of business, less
estimated costs of completion and the estimated costs necessary to make the sale.
Foreign currency translation
Functional currency
Both the functional and presentation currency of Novogen Limited and its subsidiaries is Australian
dollars ($A) except for Marshall Edwards, Inc., Marshall Edwards Pty Limited and Glycotex, Inc.,
where the functional currency is U.S. dollars.
Translation of foreign currency transactions
Transactions in foreign currencies are initially recorded in the functional currency at the
exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated
in foreign currencies are translated at the rate of the exchange ruling as at the end of the
reporting period.
Non-monetary items that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate as at the date of the initial transaction.
Translation of financial reports of overseas operations
As at the end of the reporting period the assets and liabilities of overseas subsidiaries are
translated into the presentation currency of the Group at the rate of exchange ruling as at the end
of the reporting period and the income and expenses are translated at the weighted average exchange
rates for the period.
The exchange differences arising on the retranslation of overseas operations which have a
functional currency of $A are taken directly to the profit or loss. The exchange differences
arising on the retranslation of overseas operations which have a functional
98
currency that is not $A are taken directly to a separate component of equity (foreign currency
translation reserve).
Taxes
Income tax
Current tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used
to compute the amount are those that are enacted or substantially enacted by the end of the
reporting period.
Deferred income tax is provided on all temporary differences as at the end of the reporting period
between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes.
The carrying amount of deferred income tax assets is reviewed at the end of each reporting period
and reduced to the extent that it is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply
to the year when the asset is realised or the liability is settled, based on the tax rates (and tax
laws) that have been enacted or substantively enacted as at the end of the reporting period.
Unrecognised deferred income tax assets are reassessed at the end of each reporting period and
recognised to the extent that it has become probable that future taxable profit will allow the
deferred tax asset to be recovered.
Income taxes relating to items recognised directly in equity are recognised in equity and not in
the Statement of Comprehensive Income.
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST receipt except:
|
•
|
|
when the GST incurred on a purchase of goods or services is not recoverable from the
taxation authority, in which case the GST is recognised as part of the cost of acquisition of
the asset or as part of the expense item as applicable; and
|
|
|
|
•
|
|
receivables and payables, which are stated with the amounts of GST included.
|
The net amount of GST recoverable from, or payable to, the taxation authority is included as part
of receivables or payables in the Statement of Financial Position.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable
to, the taxation authority.
99
Property, plant and equipment
Cost and valuation
Each class of property, plant and equipment is carried at cost or fair value less, where
applicable, any accumulated depreciation and impairment losses.
Depreciation
Depreciation is calculated on a straight-line basis to write off the depreciable amount of each
item of property, plant and equipment over its expected useful life to the Group.
|
|
|
|
|
Major depreciation periods are:
|
|
|
|
Plant and equipment
|
|
2.5-10 years
|
|
Leasehold improvements
|
|
the lease term
|
Impairment of assets
At the end of each reporting period, the Group assesses whether there is any indication that an
asset may be impaired. Where an indicator of impairment exists, the Group makes a formal estimate
of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the
asset is considered impaired and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is
determined for an individual asset, unless the asset’s value in use cannot be estimated to be close
to its fair value less costs to sell and it does not generate cash inflows that are largely
independent of those from other assets or groups of assets, in which case, the recoverable amount
is determined for the cash-generating unit to which the asset belongs.
In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money
and the risks specific to the asset.
Derecognition and disposal
An item of property, plant and equipment is derecognised upon disposal or when no further future
economic benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the
net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the
year the asset is derecognised.
Research and development
Expenditure during the research phase of a project is recognised as an expense when incurred.
Development costs are capitalised only when technical feasibility studies identify that the project
will deliver future economic benefits and these benefits can be measured reliably.
100
Capitalised development costs have a finite life and are amortised on a systematic basis matched to
the future economic benefits over the useful life of the project.
Trade and other payables
Trade and other payables are carried at amortised cost and represent liabilities for goods and
services provided to the Group prior to the end of the financial year that are unpaid and arise
when the Group becomes obliged to make future payments in respect of the purchases of these goods
and services.
Interest bearing loans and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received
less directly attributable transaction costs.
Gains and losses are recognised in profit or loss when the liabilities are derecognised.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a
result of a past event, it is probable that an outflow of resources embodying economic benefits
will be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation.
Employee benefits
Wages, salaries, annual leave
Liabilities for wages and salaries, including non-monetary benefits, are recognised in other
payables in respect of employees’ services up to the end of the reporting period. Liabilities for
annual leave are recognised in current provisions in respect of employees’ services up to the end
of the reporting period. They are measured at the amounts expected to be paid when the liabilities
are settled.
Long service leave
The liability for long service leave is recognised in the provision for employee benefits and
measured as the present value of expected future payments to be made in respect of services
provided by employees up to the end of the reporting period using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee
departures, and periods of service. Expected future payments are discounted using market yields at
the end of the reporting period on national government bonds with terms to maturity and currencies
that match, as closely as possible, the estimated future cash outflows.
Defined contribution plan
Defined superannuation contributions are recognised as an expense in the period they are incurred.
101
Share-based payment transactions
The Group provides benefits to employees of the Group in the form of share-based payments, whereby
employees render services in exchange for shares or rights over shares (equity-settled
transactions) under the terms of the Employee Share Option Plan (ESOP).
The cost of these equity-settled transactions with employees is measured by reference to the fair
value of the equity instruments at the date at which they are granted. The fair value is determined
using a binomial model. Further details are given in Note 13.
In valuing equity-settled transactions, no account is taken of any performance conditions.
The cost of equity-settled transactions is recognised, together with a corresponding increase in
equity, over the vesting period of the instrument. The cumulative expense recognised for
equity-settled transactions at each end of the reporting period until vesting date reflects (i) the
extent to which the vesting period has expired and (ii) the Group’s best estimate of the number of
equity instruments that will ultimately vest. The Statement of Comprehensive Income charge or
credit for a period represents the movement in cumulative expense recognised as at the beginning
and end of that period.
Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date,
or when an employee accepts voluntary redundancy in exchange for these benefits. The Group
recognises termination benefits when they are demonstrably committed to either terminating the
employment of current employees according to a detailed formal plan without the possibility of
withdrawing or providing termination benefits as a result of an offer made to encourage voluntary
redundancy.
Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of
new shares or options are shown as a deduction, net of tax, from the proceeds.
Subsidiary equity issues
Where a subsidiary makes a new issue of capital subscribed by non-controlling interests, the parent
company may make a gain or loss due to dilution of non-controlling interests. These gains or losses
are recognised in equity attributable to the parent company.
Earnings per share (EPS)
Basic earnings per share amounts are calculated by dividing net loss for the year attributable to
owners of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net loss attributable to owners
of the parent by the weighted average number of ordinary shares outstanding
102
during the year plus the weighted average number of ordinary shares that would be issued on the
conversion of all the dilutive potential ordinary shares into ordinary shares.
Deferred offering costs
Where costs associated with a capital raising have been incurred at the end of the reporting period
and it is probable that the capital raising will be successfully completed after the end of the
reporting period, such costs are deferred and offset against the proceeds subsequently received
from the capital raising.
Financial instruments
Recognition
Financial instruments are initially measured at cost on trade date, which includes transaction
costs, when the related contractual rights or obligations exist. Subsequent to initial recognition
these instruments are measured as set out below.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market and are stated at amortised cost using the effective interest
rate method.
Financial liabilities
Non-derivative financial liabilities are recognised at amortised cost, comprising original debt
less principal payments and amortisation.
New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for
30 June, 2010 reporting periods. The Group’s assessment of the impact of these new standards and
interpretations is set out below.
(i) AASB 2009-5 Further
Amendments to Australian Accounting Standards arising from the Annual
Improvements Process —
(effective 1 January, 2010)
In May 2009, the AASB approved amendments to AASB 5
Non-current Assets Held for Sale and
Discontinued Operations,
AASB 101
Presentation of Financial Statements
, AASB 107
Statement of Cash
Flows
and AASB 117
Leases.
The amendment to AASB 5,
Non-current Assets Held for Sale,
clarifies that disclosures required for
non-current assets (or disposal groups) classified as held for sale or discontinued operations are
limited to those required by AASB 5 unless: a) Disclosures are specifically required for these
assets by other AASBs; or b) Assets and liabilities of a disposal group are not within the
measurement requirements of AASB 5 and disclosures are required by other AASBs. There will be no
impact as these requirements are only required to be applied prospectively to disclosures for
non-current assets (or disposal groups) classified as held for sale or discontinued operations.
103
The amendment to AASB 101,
Presentation of Financial Statements,
clarifies that terms of a
liability that could, at the option of the counterparty, result in the liability being settled by
the issue of equity instruments, do not affect its classification. This means that unless the terms
of such liabilities require a transfer of cash or other assets within 12 months, they do not
necessarily have to be classified as current liabilities. Initial adoption of this amendment will
have no impact as the Group does not have any current liabilities where the counterparty has the
option to have the liabilities settled by the issue of equity instruments.
The amendment to AASB 107,
Statement of Cash Flows,
clarifies that only expenditures that result in
a recognised asset in the statement of financial position are eligible for classification as cash
flows from investing activities. Initial adoption of this amendment will have no impact as the
Group only recognises cash flows from investing activities for expenditures that result in a
recognised asset in the statement of financial position.
The amendment to AASB 117,
Leases,
allows Land to be classified as a finance lease for very long
leases where the significant risks and rewards are effectively transferred, despite there being no
transfer of title. Initial adoption of this amendment will have no impact as the Group has no
leases for land.
(ii) AASB 2009-8
Amendments to Australian Accounting Standards — Group Cash-settled Share-based
Payment Transactions
(effective from 1 January, 2010)
AASB 2009-8 clarifies the scope and accounting for Group cash-settled share-based payment
transactions in the individual financial statements of an entity receiving the goods/services when
that entity has no obligation to settle the share-based payment transaction. There will be no
impact as there are no share-based payment transactions where the Group receives goods or services
with no corresponding obligation to settle the share-based payment transaction.
(iii) AASB 9
Financial Instruments
(effective from 1 January, 2013)
In September 2009 the AASB issued AASB 9,
Financial Instruments,
which amends the requirements for
classification and measurement of financial assets. Due to the recent release of these amendments
and that adoption is only mandatory for the 30 June 2014 year end, the Group has not yet made an
assessment of the impact of these amendments.
(iv) AASB Interpretation 19
Extinguishing Financial Liabilities with Equity Instruments
(effective
from 1 July, 2010)
In December 2009, the AASB issued AASB Interpretation 19,
Extinguishing Financial Liabilities, with
Equity Instruments
which requires equity instruments issued to a creditor to extinguish all or part
of a financial liability are ‘consideration paid’ to be recognised at the fair value of the equity
instruments issued, unless their fair value cannot be measured reliably, in which case they are
measured at the fair value of the debt
104
extinguished. Any difference between the carrying amount of the financial liability extinguished
and the ‘consideration paid’ is recognised in profit or loss. There will be no impact as the Group
has not undertaken any debt for equity swaps.
(v) AASB 2010-3 A
mendments to Australian Accounting Standards arising from the Annual Improvements
Process
(effective 1 July, 2010) and AASB 2010-4 Further Amendments to Australian Accounting
Standards arising from the Annual Improvements Process — (effective 1 January, 2011)
In June 2010, numerous necessary, but not urgent, changes to IFRSs were issued as a result of
IASB’s 2009 annual improvements project. The changes that are relevant to the Group are disclosed
below.
The amendment to AASB 3
Business Combinations
(effective1 July 2010) limits the choice of measuring
non-controlling interests (NCI) at either fair value or the NCI’s proportionate share of the
acquiree’s net identifiable assets to NCI’s that are present ownership instruments that entitle
their holders to a proportionate share of the entity’s net assets in the event of liquidation.
Other components of NCI must be measured at acquisition date fair value, or as required by other
Accounting Standards. There will be no impact on initial adoption as these requirements are only
required to be applied prospectively.
Amendments to AASB 7,
Financial Instruments: Disclosures
(effective1 January 2011) deletes various
disclosures relating to credit risk, renegotiated loans and receivables and the fair value of
collateral held. There will be no impact on initial adoption to amounts recognised in the financial
statements as the amendments result in fewer disclosures only.
Amendments to AASB 101,
Presentation of Financial Statements
(effective1 January 2011), requires a
detailed reconciliation of each item of other comprehensive income to be included in the statement
of changes in equity or in the notes to the financial statements. There will be no impact on
initial adoption of this amendment as a detailed reconciliation of each item of other comprehensive
income has always been included in the statement of changes in equity and the notes to the
accounts.
105
Note 2 (LOSS)/PROFIT BEFORE INCOME TAX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue and expenses from continuing
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of goods
|
|
|
7,983
|
|
|
|
8,333
|
|
|
|
9,400
|
|
|
|
|
|
|
|
|
|
7,983
|
|
|
|
8,333
|
|
|
|
9,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank interest
|
|
|
290
|
|
|
|
888
|
|
|
|
1,773
|
|
|
Royalties
|
|
|
1,633
|
|
|
|
1,923
|
|
|
|
1,749
|
|
|
Licence fees
|
|
|
—
|
|
|
|
—
|
|
|
|
224
|
|
|
Other
|
|
|
2
|
|
|
|
3
|
|
|
|
137
|
|
|
|
|
|
|
|
|
|
1,925
|
|
|
|
2,814
|
|
|
|
3,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
9,908
|
|
|
|
11,147
|
|
|
|
13,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains on disposal of plant and
equipment
|
|
|
7
|
|
|
|
—
|
|
|
|
1,623
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
—
|
|
|
|
1,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Other expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on disposal of plant and
equipment
|
|
|
—
|
|
|
|
29
|
|
|
|
—
|
|
|
Reassessment of expected grant income
|
|
|
—
|
|
|
|
—
|
|
|
|
915
|
|
|
Inventory impairment provision
|
|
|
—
|
|
|
|
1,087
|
|
|
|
(387
|
)
|
|
Impairment loss — financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
—
|
|
|
|
23
|
|
|
|
(29
|
)
|
|
Other debtors
|
|
|
—
|
|
|
|
—
|
|
|
|
62
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
1,139
|
|
|
|
561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) Depreciation included in the statement
of comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation :
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in cost of sales
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
Included in administrative
expenses
|
|
|
198
|
|
|
|
282
|
|
|
|
351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e) Lease payments and other expenses
included in the income statement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in administrative expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum lease payments —
operating leases
|
|
|
476
|
|
|
|
775
|
|
|
|
663
|
|
|
Net foreign exchange differences
|
|
|
512
|
|
|
|
(920
|
)
|
|
|
937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(f) Employee benefit expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wages and salaries
|
|
|
5,453
|
|
|
|
6,884
|
|
|
|
7,248
|
|
|
Workers’ compensation costs
|
|
|
47
|
|
|
|
51
|
|
|
|
61
|
|
|
Defined contribution plan expense
|
|
|
573
|
|
|
|
1,139
|
|
|
|
1,147
|
|
|
Termination costs
|
|
|
3,017
|
|
|
|
—
|
|
|
|
—
|
|
|
Share-based payments expense
|
|
|
728
|
|
|
|
1,060
|
|
|
|
576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,818
|
|
|
|
9,134
|
|
|
|
9,032
|
|
|
|
|
|
106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation between tax expense and the product of accounting
(loss)/profit before income tax multiplied by the Group’s
applicable tax rate is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounting (loss)/profit before tax from operations
|
|
|
(15,236
|
)
|
|
|
(23,786
|
)
|
|
|
(24,773
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the Group’s statutory income tax rate of 30% (2009 and 2008: 30%)
|
|
|
(4,571
|
)
|
|
|
(7,136
|
)
|
|
|
(7,432
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign tax rate differentials
|
|
|
(184
|
)
|
|
|
(727
|
)
|
|
|
619
|
|
|
Non deductible expenses
|
|
|
85
|
|
|
|
310
|
|
|
|
307
|
|
|
Deductible balancing adjustments
|
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
|
Research and development allowance
|
|
|
(604
|
)
|
|
|
(1,403
|
)
|
|
|
(1,165
|
)
|
|
|
|
|
|
Sub-total
|
|
|
(5,274
|
)
|
|
|
(8,956
|
)
|
|
|
(7,668
|
)
|
|
Tax losses and timing differences not recognised
|
|
|
5,284
|
|
|
|
8,957
|
|
|
|
7,672
|
|
|
|
|
|
|
Tax expense
|
|
|
10
|
|
|
|
1
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of income tax expense/(benefit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current tax
|
|
|
(5,274
|
)
|
|
|
(8,956
|
)
|
|
|
(7,668
|
)
|
|
Deferred tax
|
|
|
5,284
|
|
|
|
8,957
|
|
|
|
7,672
|
|
|
|
|
|
|
Income tax expense
|
|
|
10
|
|
|
|
1
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax at 30 June relates to the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
301
|
|
|
|
340
|
|
|
|
761
|
|
|
Provisions and accruals
|
|
|
166
|
|
|
|
1,875
|
|
|
|
1,025
|
|
|
Exchange losses
|
|
|
113
|
|
|
|
121
|
|
|
|
78
|
|
|
Share based payments by USA subsidiaries
|
|
|
171
|
|
|
|
203
|
|
|
|
—
|
|
|
Other
|
|
|
51
|
|
|
|
60
|
|
|
|
6
|
|
|
Losses carried forward
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— Australia
|
|
|
40,474
|
|
|
|
35,177
|
|
|
|
33,238
|
|
|
— US
|
|
|
16,921
|
|
|
|
16,990
|
|
|
|
11,876
|
|
|
— Other countries
|
|
|
1,899
|
|
|
|
2,368
|
|
|
|
3,653
|
|
|
|
|
|
|
Total deferred tax assets not recognised
|
|
|
60,096
|
|
|
|
57,134
|
|
|
|
50,637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
—
|
|
|
|
(76
|
)
|
|
|
(117
|
)
|
|
|
|
|
|
Total deferred tax liability not recognised
|
|
|
—
|
|
|
|
(76
|
)
|
|
|
(117
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset not recognised
|
|
|
60,096
|
|
|
|
57,058
|
|
|
|
50,520
|
|
|
|
|
|
107
Tax consolidation
Novogen Limited and its 100% owned Australian subsidiaries elected to form a tax consolidation
group for income tax purposes with effect from July 1, 2003. The Australian Tax Office has been
formally notified of this decision. Novogen Limited as the head entity discloses all of the
deferred tax assets of the tax consolidated group in relation to tax losses carried forward (after
elimination of inter-group transactions).
As the tax consolidation group continues to generate tax losses there has been no reason for the
Company to enter a tax funding agreement with members of the tax consolidation group.
Note 4 EARNINGS PER SHARE
The notional issue of potential ordinary shares resulting from the exercise of options detailed in
Note 13 does not result in diluted earnings per share therefore the information has not been
disclosed.
Potential ordinary shares (non-dilutive) and not included in determining earnings per share:
2,370,340 options (refer Note 13).
There have been no conversions to, calls of, or subscriptions for ordinary shares or issues of
potential ordinary shares since the end of the reporting period and before the completion of this
financial report.
The following reflects the income and share data used in the basic and diluted earnings per share
computations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to owners of the parent
|
|
|
(12,345
|
)
|
|
|
(18,928
|
)
|
|
|
(20,264
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
Thousands
|
|
Thousands
|
|
Thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares
used in calculating basic and diluted
earnings per share
|
|
|
102,126
|
|
|
|
101,741
|
|
|
|
97,594
|
|
|
|
|
|
108
Note 5 CASH AND CASH EQUIVALENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at bank and in hand
|
|
|
12,131
|
|
|
|
27,848
|
|
|
Short-term deposits
|
|
|
2,000
|
|
|
|
4,490
|
|
|
|
|
|
|
|
|
|
14,131
|
|
|
|
32,338
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured cash (Refer Note 15)
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
15,131
|
|
|
|
33,338
|
|
|
|
|
|
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Short-term deposits and secured cash are made for varying periods of between one day and three
months, depending on the immediate cash requirements of the Group, and earn interest at the
respective short-term deposit rates.
109
Note 6 TRADE AND OTHER RECEIVABLES
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
1,279
|
|
|
|
1,531
|
|
|
Allowance for doubtful debts
|
|
|
(36
|
)
|
|
|
(36
|
)
|
|
|
|
|
|
|
|
|
1,243
|
|
|
|
1,495
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits held
|
|
|
386
|
|
|
|
454
|
|
|
Other debtors
|
|
|
355
|
|
|
|
303
|
|
|
|
|
|
|
|
|
|
1,984
|
|
|
|
2,252
|
|
|
|
|
|
Provision for doubtful debts
Trade receivables are non-interest bearing and are generally on 30-60 day terms. An allowance for
doubtful debts is made when there is objective evidence that the Group will not be able to collect
the debts.
At 30 June, 2010 trade receivables of $36,000 (2009: $36,000) were considered doubtful. These
amounts have been included in selling and promotional expenses.
Movements in the allowance for doubtful debts were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 July
|
|
|
(36
|
)
|
|
|
(20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in allowance for the year
|
|
|
3
|
|
|
|
(23
|
)
|
|
Amounts (recovered)/written off during the year
|
|
|
(3
|
)
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June
|
|
|
(36
|
)
|
|
|
(36
|
)
|
|
|
|
|
Past due but not considered doubtful
At 30 June, 2010 trade receivables of $408,000 (2009: $280,000) were past due but were not
considered to be doubtful. These relate to a number of independent customers for whom there is no
recent history of default. The ageing analysis of these trade receivables is as follows:
110
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 - 30 days overdue
|
|
|
363
|
|
|
|
250
|
|
|
31 - 60 days overdue
|
|
|
33
|
|
|
|
15
|
|
|
61 - 90 days overdue
|
|
|
—
|
|
|
|
3
|
|
|
91 + days overdue
|
|
|
12
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
408
|
|
|
|
280
|
|
|
|
|
|
Receivable balances which are neither overdue nor impaired are expected to be received when
due.
Other receivables
Other debtors, generally arising from transactions outside usual operating activities of the Group,
are non-interest bearing and have repayment terms between 7 and 30 days.
At 30 June, 2010 other receivables of $111,000 (2009: $Nil) were past due but were not
considered to be doubtful.
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 - 30 days overdue
|
|
|
62
|
|
|
|
—
|
|
|
31 - 60 days overdue
|
|
|
35
|
|
|
|
—
|
|
|
61 - 90 days overdue
|
|
|
—
|
|
|
|
—
|
|
|
91 + days overdue
|
|
|
14
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111
|
|
|
|
—
|
|
|
|
|
|
Other receivable balances which are neither overdue nor impaired are expected to be received
when due.
Fair value and credit risk
Due to the short term nature of these receivables, their carrying value is assumed to approximate
their fair value.
The maximum exposure to credit risk is the fair value of receivables. Collateral is not
held against these receivables.
Foreign exchange and interest rate risk
Details regarding foreign exchange and interest rate risk exposure is disclosed in Note 15.
111
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Work in progress (at cost)
|
|
|
888
|
|
|
|
573
|
|
|
Finished goods (at cost)
|
|
|
673
|
|
|
|
761
|
|
|
|
|
|
|
|
|
|
1,561
|
|
|
|
1,334
|
|
|
|
|
|
Note 8 OTHER CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepayments
|
|
|
442
|
|
|
|
565
|
|
|
|
|
|
112
Note 9 PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant and equipment — at cost
|
|
|
2,601
|
|
|
|
2,697
|
|
|
Accumulated depreciation
|
|
|
(2,443
|
)
|
|
|
(2,395
|
)
|
|
|
|
|
|
|
|
|
158
|
|
|
|
302
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasehold improvements — at cost
|
|
|
111
|
|
|
|
107
|
|
|
Accumulated depreciation
|
|
|
(97
|
)
|
|
|
(56
|
)
|
|
|
|
|
|
|
|
|
14
|
|
|
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property, plant and equipment — at cost
|
|
|
2,712
|
|
|
|
2,804
|
|
|
Accumulated amortisation and depreciation
|
|
|
(2,540
|
)
|
|
|
(2,451
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property, plant and equipment
|
|
|
172
|
|
|
|
353
|
|
|
|
|
|
Reconciliations
Reconciliations of the carrying amount of plant, property and equipment at the beginning and at the
end of the current financial year:
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
Plant and equipment
|
|
|
|
|
|
|
|
|
|
Carrying amount at beginning of financial year
|
|
|
302
|
|
|
|
517
|
|
|
Additions
|
|
|
18
|
|
|
|
63
|
|
|
Disposals
|
|
|
(5
|
)
|
|
|
(21
|
)
|
|
Depreciation expense
|
|
|
(157
|
)
|
|
|
(257
|
)
|
|
|
|
|
|
Carrying amount at end of financial year
|
|
|
158
|
|
|
|
302
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasehold improvements
|
|
|
|
|
|
|
|
|
|
Carrying amount at beginning of financial year
|
|
|
51
|
|
|
|
58
|
|
|
Additions
|
|
|
4
|
|
|
|
32
|
|
|
Disposals
|
|
|
—
|
|
|
|
(14
|
)
|
|
Depreciation expense
|
|
|
(41
|
)
|
|
|
(25
|
)
|
|
|
|
|
|
Carrying amount at end of financial year
|
|
|
14
|
|
|
|
51
|
|
|
|
|
|
113
Note 10 TRADE AND OTHER PAYABLES
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables
|
|
|
2,529
|
|
|
|
2,837
|
|
|
Accrued trade payables
|
|
|
1,935
|
|
|
|
1,261
|
|
|
Accrued clinical trial payments
|
|
|
901
|
|
|
|
3,961
|
|
|
|
|
|
|
|
|
|
5,365
|
|
|
|
8,059
|
|
|
|
|
|
Terms and conditions relating to the above payables:
|
•
|
|
trade payables are non-interest bearing and normally settled on 30 day terms; and
|
|
|
|
•
|
|
clinical trial payables are non-interest bearing and normally settled on 30 day terms.
|
Risk exposure
Information about the Group’s exposure to foreign exchange risk and liquidity risk is provided in
Note 15.
Fair value
Due to the short term nature of these payables, their carrying value is assumed to approximate
their fair value.
114
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
Employee benefit provision
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
597
|
|
|
|
774
|
|
|
Non-current
|
|
|
103
|
|
|
|
190
|
|
|
|
|
|
|
|
|
|
700
|
|
|
|
964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
Make good provision
|
|
|
|
|
|
|
|
|
|
Opening balance at beginning of the year
|
|
|
46
|
|
|
|
46
|
|
|
Additional provision made in the period
|
|
|
3
|
|
|
|
—
|
|
|
|
|
|
|
Closing balance at the end of the year
|
|
|
49
|
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
—
|
|
|
|
—
|
|
|
Non-current
|
|
|
49
|
|
|
|
46
|
|
|
|
|
|
|
|
|
|
49
|
|
|
|
46
|
|
|
|
|
|
In accordance with its Sydney premises lease, the Group must restore the leased premises to
agreed condition at the end of the lease term. A provision of A$49,000 was made in respect of the
Group’s expected obligation.
Note 12 CONTRIBUTED EQUITY AND RESERVES
(a) Issued and paid up capital
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
Fully Paid Ordinary Shares
|
|
|
|
|
|
|
|
|
|
Novogen Limited
|
|
|
|
|
|
|
|
|
|
102,125,894 (2009: 102,125,894) ordinary shares
|
|
|
133,100
|
|
|
|
133,100
|
|
|
|
|
|
|
|
|
|
133,100
|
|
|
|
133,100
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Gain arising on issue of shares by subsidiaries to outside shareholders:
|
|
Marshall Edwards, Inc.
|
|
|
65,855
|
|
|
|
65,855
|
|
|
Glycotex, Inc.
|
|
|
7,464
|
|
|
|
7,464
|
|
|
|
|
|
|
|
|
|
73,319
|
|
|
|
73,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed Equity
|
|
|
206,419
|
|
|
|
206,419
|
|
|
|
|
|
Ordinary shares have the right to receive dividends as declared and, in the event of winding
up the Company, to participate in the proceeds from the sale of all surplus
115
assets in proportion to the number of and amounts paid up on shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the
Company.
On March 31, 2010, MEI effected a reverse stock split of its outstanding common stock on a 1-for-10
split adjusted basis in order to satisfy a bid price listing requirement for continued inclusion on
the Nasdaq Global Market under Nasdaq Rule 5450(a)(1). For the purpose of this report all share
data presented has been adjusted retrospectively to incorporate the 1-for-10 reverse stock split.
Movements in issued and paid up ordinary share capital of Novogen Limited are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue
|
|
|
|
|
|
Number of
|
|
price
|
|
|
|
|
|
shares
|
|
$
|
|
A$’000
|
|
|
|
|
|
On issue 1 July, 2008
|
|
|
97,594,261
|
|
|
|
|
|
|
|
127,573
|
|
|
New Share Issue
|
|
|
4,531,633
|
|
|
|
1.22
|
|
|
|
5,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shares issued during the period
|
|
|
4,531,633
|
|
|
|
|
|
|
|
5,527
|
|
|
On issue 30 June, 2009
|
|
|
102,125,894
|
|
|
|
|
|
|
|
133,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On issue 1 July, 2009
|
|
|
102,125,894
|
|
|
|
|
|
|
|
133,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On issue 30 June, 2010
|
|
|
102,125,894
|
|
|
|
|
|
|
|
133,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share options
The Company has an employee share option plan under which options to subscribe for the Company’s
shares have been granted to certain executive and other employees (refer Note 13).
(b) Reserves
The foreign currency translation reserve is used to record exchange differences arising from the
translation of the financial statements of foreign subsidiaries.
Movements in the currency translation reserve were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
Balance at the beginning of the year
|
|
|
(3,010
|
)
|
|
|
(7,491
|
)
|
|
Share of opening reserve transferred to minority
interest due to issuance of shares by subsidiary
|
|
|
—
|
|
|
|
56
|
|
|
Exchange differences on translation of foreign
operations
|
|
|
(768
|
)
|
|
|
4,425
|
|
|
|
|
|
|
Balance at the end of the year
|
|
|
(3,778
|
)
|
|
|
(3,010
|
)
|
|
|
|
|
116
(c) Accumulated losses
Movements in accumulated losses were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the beginning of the year
|
|
|
(179,730
|
)
|
|
|
(162,251
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment to opening retained earnings
attributed to minority interest holders
|
|
|
—
|
|
|
|
389
|
|
|
Equity attributable to share based payments
|
|
|
623
|
|
|
|
1,060
|
|
|
Current year (loss)/profit
|
|
|
(12,345
|
)
|
|
|
(18,928
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the end of the year
|
|
|
(191,452
|
)
|
|
|
(179,730
|
)
|
|
|
|
|
(d) Non-controlling interests
The non-controlling interests are detailed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares
|
|
|
31,141
|
|
|
|
31,141
|
|
|
Foreign currency translation reserve
|
|
|
(1,504
|
)
|
|
|
(1,193
|
)
|
|
Accumulated losses
|
|
|
(27,650
|
)
|
|
|
(24,854
|
)
|
|
|
|
|
|
|
|
|
1,987
|
|
|
|
5,094
|
|
|
|
|
|
117
Note 13 SHARE BASED PAYMENT PLANS
Employee Share Option Plan
The Company has suspended the Novogen Limited Employee Share Option Plan. When business conditions
improve the design and application of the plan, including performance criteria, will be reviewed.
Under this plan all Executive Directors and executives and other staff had the opportunity to
qualify for participation in the Employee Share Option Plan after achieving a qualifying service
period. The qualifying service period was determined from time to time by the Board under the terms
of the Employee Share Option Plan and employees were currently required to have completed one year
service before they were eligible for a grant of options. The number and timing of options issued
under the terms of the Employee Share Option Plan was entirely at the discretion of the Board. No
options have been issued under this plan for the year ended 30 June, 2010.
Each option issued under the Employee Share Option Plan entitles its holder to acquire one fully
paid ordinary share and is exercisable at a price equal to the weighted average price of such
shares at the close of trading on the Australian Stock Exchange Limited for the five days prior to
the date of issue. Options vest equally over a four year period from the date of grant and expire
five years after grant date. No performance conditions apply to the options granted, however, the
unvested option lapses if the employee ceases to be an employee during the vesting period. Options
are not transferable and can not be settled by the Company in cash. The Employee Share Option Plan
provides that in the event of a change of control of the Company or in the event that the Company
is taken over, outstanding options become exercisable regardless of vesting status.
The expense recognised in the Statement of Comprehensive Income in relation to employee share-based
payments is disclosed in Note 2(f).
Consultant options
The Company has also granted options by way of compensation to consultants who perform services for
Novogen and its controlled entities. Options issued to consultants generally vest in four equal
annual instalments over the vesting period. The expense recognised in the Statement of
Comprehensive Income in relation to consultant options is $Nil (2009:$134,901). No new options have
been granted during the year to consultants.
The contractual life of all options granted is five years. There are no cash settlement
alternatives.
118
The following table illustrates the number (No.) and weighted average exercise price (WAEP) of, and
movements in, share options issued to employees during the year;
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
No.
|
|
WAEP
|
|
No.
|
|
WAEP
|
|
|
|
|
|
Outstanding at the beginning of the year
|
|
|
4,071,412
|
|
|
$
|
1.26
|
|
|
|
2,327,976
|
|
|
$
|
2.28
|
|
|
Granted
|
|
|
—
|
|
|
|
N/A
|
|
|
|
2,441,712
|
|
|
$
|
0.60
|
|
|
Forfeited
|
|
|
(1,550,364
|
)
|
|
$
|
1.15
|
|
|
|
(586,996
|
)
|
|
$
|
1.53
|
|
|
Exercised
|
|
|
—
|
|
|
|
N/A
|
|
|
|
—
|
|
|
|
N/A
|
|
|
Expired
|
|
|
(150,708
|
)
|
|
$
|
4.90
|
|
|
|
(111,280
|
)
|
|
$
|
6.76
|
|
|
|
|
|
|
Outstanding at the end of the year
|
|
|
2,370,340
|
|
|
$
|
1.11
|
|
|
|
4,071,412
|
|
|
$
|
1.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at the end of the year
|
|
|
1,018,552
|
|
|
$
|
1.57
|
|
|
|
886,110
|
|
|
$
|
2.63
|
|
The following table details the exercise price, expiry date and number of options issued to
employees that were outstanding as at the end of the year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
|
|
Expiry
|
|
No. outstanding
|
|
No. outstanding
|
|
Price
|
|
Date
|
|
30 June, 2010
|
|
30 June, 2009
|
|
|
|
$
|
4.90
|
|
|
16/03/10
|
|
|
—
|
|
|
|
160,340
|
|
|
$
|
3.64
|
|
|
21/04/11
|
|
|
164,416
|
|
|
|
228,964
|
|
|
$
|
2.41
|
|
|
30/03/12
|
|
|
214,868
|
|
|
|
346,172
|
|
|
$
|
2.41
|
|
|
26/10/12
|
|
|
50,472
|
|
|
|
141,668
|
|
|
$
|
1.06
|
|
|
1/03/13
|
|
|
553,012
|
|
|
|
894,916
|
|
|
$
|
1.06
|
|
|
1/03/13
|
|
|
126,928
|
|
|
|
345,592
|
|
|
$
|
0.53
|
|
|
6/03/14
|
|
|
1,260,644
|
|
|
|
1,953,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,370,340
|
|
|
|
4,071,412
|
|
|
|
|
|
|
|
|
|
The following table illustrates the number (No.) and weighted average exercise price (WAEP)
of, and movements in, share options issued to consultants during the year;
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
No.
|
|
WAEP
|
|
No.
|
|
WAEP
|
|
|
|
|
|
Outstanding at the beginning of the year
|
|
|
142,004
|
|
|
$
|
1.81
|
|
|
|
103,020
|
|
|
$
|
2.69
|
|
|
Granted
|
|
|
—
|
|
|
|
N/A
|
|
|
|
45,644
|
|
|
$
|
0.53
|
|
|
Forfeited
|
|
|
(132,820
|
)
|
|
$
|
1.59
|
|
|
|
—
|
|
|
|
N/A
|
|
|
Expired
|
|
|
(9,184
|
)
|
|
$
|
4.90
|
|
|
|
(6,660
|
)
|
|
$
|
6.76
|
|
|
|
|
|
|
Outstanding at the end of the year
|
|
|
—
|
|
|
|
N/A
|
|
|
|
142,004
|
|
|
$
|
1.81
|
|
|
|
|
|
|
Exercisable at the end of the year
|
|
|
—
|
|
|
|
N/A
|
|
|
|
49,063
|
|
|
$
|
3.02
|
|
119
The following table details the exercise price, expiry date and number of options issued to
consultants that were outstanding as at the end of the year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
|
|
Expiry
|
|
No. outstanding
|
|
No. outstanding
|
|
Price
|
|
Date
|
|
30 June, 2010
|
|
30 June, 2009
|
|
|
|
$
|
4.90
|
|
|
|
16/03/10
|
|
|
|
—
|
|
|
|
9,184
|
|
|
$
|
3.64
|
|
|
|
16/04/11
|
|
|
|
—
|
|
|
|
20,624
|
|
|
$
|
2.41
|
|
|
|
30/03/12
|
|
|
|
—
|
|
|
|
31,092
|
|
|
$
|
1.06
|
|
|
|
1/03/13
|
|
|
|
—
|
|
|
|
35,460
|
|
|
$
|
0.53
|
|
|
|
6/03/14
|
|
|
|
—
|
|
|
|
45,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
142,004
|
|
|
|
|
|
|
|
|
|
|
|
There are no share options outstanding at 30 June, 2010. The weighted average remaining
contractual life for the share options outstanding as at 30 June, 2009 was between 1 and 5 years.
There were no options granted during the year. The weighted average fair value of options granted
during the year ended 30 June, 2009 was $0.34.
The fair value of the equity-settled share options granted to both employees and consultants is
estimated as at the date of grant using a binomial model taking into account the terms and
conditions upon which the options were granted.
The following table lists the inputs to the model used to calculate the fair value of the options.
|
|
|
|
|
|
|
|
|
|
|
|
|
6 March,
|
|
31 October,
|
|
|
|
2009
|
|
2008
|
|
|
|
|
|
Exercise price
|
|
|
0.5256
|
|
|
|
1.06
|
|
|
Share price at grant date
|
|
|
0.51
|
|
|
|
0.95
|
|
|
Dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
|
Expected volatility
|
|
|
73
|
%
|
|
|
66
|
%
|
|
Historical volatility
|
|
|
73
|
%
|
|
|
66
|
%
|
|
Risk-free interest rate
|
|
|
3.61
|
%
|
|
|
4.76
|
%
|
|
Expected life of option
|
|
5 years
|
|
|
4.3 years
|
|
|
Option fair value
|
|
|
0.31
|
|
|
|
0.51
|
|
The dividend yield reflects the assumption that the current dividend payout, which is zero,
will continue with no anticipated increases. The expected life of the options is based on
historical data and is not necessarily indicative of exercise patterns that may occur. The expected
volatility reflects the assumption that the historical volatility is indicative of future trends,
which may also not necessarily be the actual outcome.
120
Marshall Edwards, Inc.
Share based payment plans
On 9 December, 2008, MEI adopted the Marshall Edwards, Inc. 2008 Stock Omnibus Equity Compensation
Plan (the “Plan”) and cancelled the Marshall Edwards, Inc. Share Option Plan (the “Share Option
Plan”). No options were issued under the Share Option Plan. The Plan provides for the issuance of
a maximum of 7,000,000 shares of common stock in connection with the grant of options and/or other
stock-based or stock-denominated awards to non-employee directors, officers, employees and
advisors.
On 28 January, 2009, options exercisable for 5,000 shares of common stock were granted to a
consultant for services to the company under the Plan. The options have an exercise price of
US$6.30 and are fully exercisable at date of grant. The options have a term of 5 years and expire
on 28 January, 2014. At 30 June, 2010 no options had expired, been forfeited or exercised and all
5,000 were outstanding at that date.
On 18 June, 2010, Mr Zech, pursuant to the terms of his employment as Chief Financial Officer of
MEI, received options to purchase 73,463 shares of the MEI’s common stock under the Plan. These
options were granted on 18 June, 2010, with an exercise price of US$1.52 per share equal to the
closing price of the MEI’s common stock on 18 June, 2010. Of Mr. Zech’s options, 25% will vest on
18 June, 2011 and, thereafter, the remaining 75% will vest in equal monthly installments over the
following thirty-six (36) months. The options have a term of five years from the date of grant.
Other share based payments.
On 30 July, 2008 MEI granted a warrant to a consultant, to purchase up to 4,608 shares of common
stock at an exercise price of US$21.70 per share for services provided to the company. The shares
are fully vested from grant date and expire five years from grant date on 30 July, 2013.
On 23 April, 2010, Dr. Gold, pursuant to the terms of his employment as President and Chief
Executive Office of MEI, received options to purchase 220,390 shares of the MEI’s common stock in
two separate tranches. The first tranche of options to purchase 110,195 shares of MEI’s common
stock was granted to Dr. Gold upon his appointment, with an exercise price of US$5.05 per share
equal to the closing price of MEI’s common stock on 23 April, 2010. The second tranche of options
to purchase 110,195 shares of MEI’s common stock was granted to Dr. Gold on 7 June, 2010 following
the public release of the OVATURE study results, with an exercise price of US$1.86 per share equal
to the closing price of the MEI’s common stock on 7 June, 2010. Of Dr. Gold’s options, 25% will
vest one year from the effective date of the Employment Letter and, thereafter, the remaining 75%
of Dr. Gold’s options will vest in equal monthly installments over the following thirty-six (36)
months. Both tranches of options have a term of five years from the date of each grant. In the
event of a Change in Control of the
121
Company, as defined in the Employment Letter, Dr. Gold’s options will become fully vested. Dr.
Gold’s options are issued outside the Plan.
At 30 June, 2010 no shares had been issued as a result of exercising the warrants.
The following table illustrates the number (No.) and weighted average exercise price (WAEP) of, and
movements in, MEI share options issued during the year;
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
No.
|
|
|
WAEP
|
|
|
No.
|
|
|
WAEP
|
|
|
|
|
|
|
Outstanding at the beginning of the year
|
|
|
9,608
|
|
|
US$
|
13.69
|
|
|
|
—
|
|
|
|
N/A
|
|
|
Granted
|
|
|
293,853
|
|
|
US$
|
2.97
|
|
|
|
9,608
|
|
|
US$
|
13.69
|
|
|
Forfeited
|
|
|
—
|
|
|
|
N/A
|
|
|
|
—
|
|
|
|
N/A
|
|
|
Expired
|
|
|
—
|
|
|
|
N/A
|
|
|
|
—
|
|
|
|
N/A
|
|
|
|
|
|
|
Outstanding at the end of the year
|
|
|
303,461
|
|
|
US$
|
3.31
|
|
|
|
9,608
|
|
|
US$
|
13.69
|
|
|
|
|
|
|
Exercisable at the end of the year
|
|
|
9,608
|
|
|
US$
|
13.69
|
|
|
|
9,608
|
|
|
US$
|
13.69
|
|
The following table details the exercise price, expiry date and number of MEI options issued
that were outstanding as at the end of the year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
|
|
Expiry
|
|
No. outstanding
|
|
No. outstanding
|
|
Price
|
|
Date
|
|
30 June, 2010
|
|
30 June, 2009
|
|
|
|
US$
|
21.70
|
|
|
|
30/07/13
|
|
|
|
4,608
|
|
|
|
4,608
|
|
|
US$
|
6.30
|
|
|
|
28/01/14
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
US$
|
5.05
|
|
|
|
23/04/15
|
|
|
|
110,195
|
|
|
|
—
|
|
|
US$
|
1.86
|
|
|
|
7/06/15
|
|
|
|
110,195
|
|
|
|
—
|
|
|
US$
|
1.52
|
|
|
|
18/06/15
|
|
|
|
73,463
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
303,461
|
|
|
|
9,608
|
|
|
|
|
|
|
|
|
|
|
|
The fair value of the equity settled transactions with consultants are estimated as at the
date of grant using a binomial model taking into account the terms and conditions upon which the
options and warrant were granted.
122
The following table lists the inputs to the model used to calculate fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18 June,
|
|
7 June,
|
|
23 April,
|
|
28 January,
|
|
30 July,
|
|
|
|
2010
|
|
2010
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
Exercise price
|
|
US$
|
1.52
|
|
|
US$
|
1.86
|
|
|
US$
|
5.05
|
|
|
US$
|
6.30
|
|
|
US$
|
21.70
|
|
|
Share price at grant date
|
|
US$
|
1.52
|
|
|
US$
|
1.86
|
|
|
US$
|
5.05
|
|
|
US$
|
6.30
|
|
|
US$
|
21.30
|
|
|
Dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
Expected volatility
|
|
|
136
|
%
|
|
|
135
|
%
|
|
|
132
|
%
|
|
|
111
|
%
|
|
|
81
|
%
|
|
Historical volatility
|
|
|
136
|
%
|
|
|
135
|
%
|
|
|
132
|
%
|
|
|
111
|
%
|
|
|
81
|
%
|
|
Risk-free interest rate
|
|
|
2.04
|
%
|
|
|
1.95
|
%
|
|
|
2.61
|
%
|
|
|
1.70
|
%
|
|
|
3.36
|
%
|
|
Expected life of warrant/option
|
|
5 years
|
|
|
5 years
|
|
|
5 years
|
|
|
5 years
|
|
|
5 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant/option fair value
|
|
US$
|
1.33
|
|
|
US$
|
1.63
|
|
|
US$
|
4.38
|
|
|
US$
|
5.00
|
|
|
US$
|
14.10
|
|
Glycotex, Inc. Share based payment plans
The Glycotex, Inc, 2007 stock option plan provides for the issuance of a maximum of 357,000 shares
of common stock in connection with the grant of options and/or other stock-based or
stock-denominated awards to non-employee directors, officers, employees and advisors. On 29 May,
2009, options exercisable for 125,573 shares of common stock were granted under the Stock Option
Plan.
A total of 50,229 options vest and become exercisable on the grant date, 37,672 options vest on 29
May, 2010 and 37,672 options vest on 29 May, 2011. The options have an exercise price of US$15.13.
The options have a term of 5 years and expire on 29 May, 2014. At 30 June, 2010, 87,901 options
were exercisable, no options had expired, been forfeited or exercised and all 125,573 were
outstanding at that date.
The fair value of the equity settled transactions are estimated as at the date of grant using a
binomial model taking into account the terms and conditions upon which the options and warrant were
granted.
The following table lists the inputs to the model used to calculate fair value:
|
|
|
|
|
|
|
|
|
29 May,
|
|
|
|
2009
|
|
Exercise price
|
|
US$
|
15.13
|
|
|
Share price at grant date
|
|
US$
|
15.13
|
|
|
Dividend yield
|
|
|
0
|
%
|
|
Expected volatility
|
|
|
52
|
%
|
|
Historical volatility
|
|
|
52
|
%
|
|
Risk-free interest rate
|
|
|
2.34
|
%
|
|
Expected life of warrant
|
|
5 years
|
|
|
Warrant fair value
|
|
US$
|
7.13
|
|
123
Note 14 SEGMENT INFORMATION
The group has adopted AASB 8 Operating Segments from 1 July 2009 whereby segment information is
presented using a ‘management approach’, i.e. segment information is provided on the same basis as
information used for internal reporting purposes by the chief operating decision maker (executive
management committee that makes strategic decisions). Comparatives for 2009 have been restated on
this basis.
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and
used by the executive management team (the chief operating decision makers) in assessing
performance and in determining the allocation of resources. Previously the Group reported segment
information based on both geographic location (Australia/NZ, North America and Europe) and business
function, however, it has now aligned the segments reported to be consistent with the way in which
the executive management team review operations.
The operating segments indentified by management are based on the specific area of targeted
therapeutic treatment or the individual market in which products are sold.
The Group has identified four unique segments as follows:
1 —
Drug Development
— includes the discovery of new compounds and the early stage
screening for bioactivity of such compounds through both in vivo and in vitro testing.
2 —
Oncology Drug Program
— involves the development of selected oncology drug candidates
which have indicated potential bioactivity against cancer cells through clinical trial programs to
assess safety and efficacy.
3 —
Consumer Business
— a dietary supplement business based on red clover isoflavones
which are marketed and sold world wide
4 —
Wound Healing
— a separate and unique technology based on Beta-1 Glucan to aid in the
management of wounds. This technology is currently being progressed through a clinical trial
program to assess safety and efficacy in order to ultimately obtain marketing approval.
The accounting policies used by the Group in reporting segments internally are consistent with
those applied to the consolidated accounts and contained in Note 1.
Corporate costs have been allocated between segments and are therefore included in the net
profit/(loss) for each segment.
124
The Group has a number of customers to which it provides products. The major customers of the
Group are pharmaceutical distributors, the largest of these accounts for $1,347,000 (14%) of
external revenue (2009: $1,136,000) with the next highest accounting for 9% of external revenue
(2009: 9%). The Group also receives royalty income which is dominated by one single customer
representing $1,493,000 (15%) of external revenue (2009: $1,617,000).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DRUG
|
|
ONCOLOGY DRUG
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEVELOPMENT
|
|
PROGRAM
|
|
CONSUMER BUSINESS
|
|
WOUND HEALING
|
|
TOTAL
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
A$000’s
|
|
A$000’s
|
|
A$000’s
|
|
A$000’s
|
|
A$000’s
|
|
|
|
|
|
|
|
|
|
Net sales from external
customers
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,983
|
|
|
|
8,333
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,983
|
|
|
|
8,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenue
|
|
|
1,690
|
|
|
|
2,192
|
|
|
|
95
|
|
|
|
306
|
|
|
|
140
|
|
|
|
308
|
|
|
|
—
|
|
|
|
8
|
|
|
|
1,925
|
|
|
|
2,814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
1,690
|
|
|
|
2,192
|
|
|
|
95
|
|
|
|
306
|
|
|
|
8,123
|
|
|
|
8,641
|
|
|
|
—
|
|
|
|
8
|
|
|
|
9,908
|
|
|
|
11,147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)/profit
|
|
|
(7,427
|
)
|
|
|
(6,398
|
)
|
|
|
(7,245
|
)
|
|
|
(12,299
|
)
|
|
|
959
|
|
|
|
(2,040
|
)
|
|
|
(1,532
|
)
|
|
|
(3,050
|
)
|
|
|
(15,246
|
)
|
|
|
(23,787
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest revenue
|
|
|
195
|
|
|
|
573
|
|
|
|
95
|
|
|
|
306
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
8
|
|
|
|
290
|
|
|
|
888
|
|
|
|
|
|
|
Interest expense
|
|
|
(16
|
)
|
|
|
(11
|
)
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
|
—
|
|
|
|
(15
|
)
|
|
|
(11
|
)
|
|
|
|
|
|
Depreciation and amortisation
|
|
|
(188
|
)
|
|
|
(271
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(8
|
)
|
|
|
(8
|
)
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
(198
|
)
|
|
|
(282
|
)
|
|
|
|
|
|
Share based payments
|
|
|
(225
|
)
|
|
|
(603
|
)
|
|
|
(73
|
)
|
|
|
(106
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(430
|
)
|
|
|
(490
|
)
|
|
|
(728
|
)
|
|
|
(1,199
|
)
|
|
|
|
|
|
Income tax expense
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(9
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(10
|
)
|
|
|
(1
|
)
|
|
|
|
|
Total assets and total liabilities, as reviewed and used by the executive management team, are
not allocated between segments where the segments are contained within the same legal entity.
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
Segment assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Drug development and
consumer business (combined)
|
|
|
18,489
|
|
|
|
22,880
|
|
|
Oncology drug program
|
|
|
10,719
|
|
|
|
23,856
|
|
|
Wound healing
|
|
|
38
|
|
|
|
365
|
|
|
|
|
|
|
Total segment assets
|
|
|
29,246
|
|
|
|
47,101
|
|
|
Inter-segment eliminations
|
|
|
(9,956
|
)
|
|
|
(9,259
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets per the statement
of financial position
|
|
|
19,290
|
|
|
|
37,842
|
|
|
|
|
|
125
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
Segment liabilities
|
|
|
|
|
|
Drug
development and consumer business (combined)
|
|
|
3,831
|
|
|
|
3,838
|
|
|
Oncology drug program
|
|
|
2,059
|
|
|
|
5,106
|
|
|
Wound healing
|
|
|
2,610
|
|
|
|
1,814
|
|
|
|
|
|
|
Total segment liabilities
|
|
|
8,500
|
|
|
|
10,758
|
|
|
Intersegment eliminations
|
|
|
(2,386
|
)
|
|
|
(1,689
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilites per the
statement of financial position
|
|
|
6,114
|
|
|
|
9,069
|
|
|
|
|
|
Revenue from external customers by geographical locations is detailed below. Revenue is
attributed to geographical locations based on the location of the customers.
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
Segment revenue
|
|
|
|
|
|
Australia
|
|
|
3,529
|
|
|
|
3,699
|
|
|
North America
|
|
|
1,788
|
|
|
|
2,068
|
|
|
Europe
|
|
|
2,240
|
|
|
|
2,200
|
|
|
other
|
|
|
426
|
|
|
|
366
|
|
|
|
|
|
|
|
|
|
7,983
|
|
|
|
8,333
|
|
|
|
|
|
An analysis of the location of non-current assets, other than financial instruments, is as
follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
Australia
|
|
|
155
|
|
|
|
330
|
|
|
North America
|
|
|
17
|
|
|
|
22
|
|
|
Europe
|
|
|
—
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
172
|
|
|
|
353
|
|
|
|
|
|
126
Note 15 FINANCIAL INSTRUMENTS
Capital risk management
The Group manages its capital to ensure that the entities in the Group will be able to continue as
a going concern while maximising shareholder value.
The capital structure of the Group consists of cash and cash equivalents and equity attributable to
equity holders. The Group operates globally, primarily through subsidiary companies established in
the markets in which the Group trades, or through subsidiary companies established to facilitate
the development of specialty pharmaceutical products including oncology drug development through
Marshall Edwards, Inc. and wound healing through Glycotex, Inc.
The Group’s overall strategy remains unchanged from 2009, whereby future operating cash flows
generated by the Consumer Health business will supplement the funds raised in equity markets by the
Group’s listed subsidiary companies.
Financial risk management
The Group’s principal financial instruments comprise cash and short term deposits, receivables and
payables. The Group is not exposed to significant debt or borrowings.
The Group’s activities expose it to a variety of financial risks. The main risks arising from the
Group’s financial instruments are market risk (including currency risk and interest rate risk),
credit risk and liquidity risk. The Group uses different methods to measure and manage the
different types of risks to which it is exposed. These methods include monitoring the levels of
exposure to interest rates and foreign exchange, ageing analysis and monitoring of specific credit
allowances to manage credit risk, and, rolling cash flow forecasts to manage liquidity risk.
127
Market risk
Interest rate risk
The Group’s exposure to market interest rates relate primarily to the investments of cash balances.
The Group has cash reserves held primarily in US$ and A$ and places funds on deposit with
financial institutions for periods generally not exceeding three months.
At the end of the reporting period the Group had the following exposure to variable interest
rate risk:
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at bank and in hand
|
|
|
12,131
|
|
|
|
27,848
|
|
|
Short term deposits
|
|
|
2,000
|
|
|
|
4,490
|
|
|
|
|
|
|
|
|
|
14,131
|
|
|
|
32,338
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured cash
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net exposure
|
|
|
15,131
|
|
|
|
33,338
|
|
|
|
|
|
At 30 June, 2010, if interest rates had moved as illustrated in the table below, with all
other variables held constant, post tax profit would have been affected as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Post tax profit
|
|
|
|
Higher/(Lower)
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
Judgements of reasonably possible
movements:
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
+1% (100 basis points)
|
|
|
151
|
|
|
|
333
|
|
|
-1% (100 basis points)
|
|
|
(151
|
)
|
|
|
(333
|
)
|
128
The Group’s exposure to interest rate risk and the effective weighted average interest rate
for each class of financial assets and liabilities is set out below.
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floating Interest
|
|
Fixed
|
|
Fixed
|
|
Non-interest
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
Rate
|
|
1 year or less
|
|
Over 1 to 5 years
|
|
bearing
|
|
Total
|
|
average rate of
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
interest
|
|
|
|
Note
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
5
|
|
|
|
9,489
|
|
|
|
18,835
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,642
|
|
|
|
9,013
|
|
|
|
12,131
|
|
|
|
27,848
|
|
|
|
0.66
|
%
|
|
|
0.58
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
5
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,000
|
|
|
|
5,490
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,000
|
|
|
|
5,490
|
|
|
|
5.40
|
%
|
|
|
3.62
|
%
|
|
Trade and other receivables
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,984
|
|
|
|
2,252
|
|
|
|
1,984
|
|
|
|
2,252
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and receivables
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,000
|
|
|
|
5,490
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,984
|
|
|
|
2,252
|
|
|
|
4,984
|
|
|
|
7,742
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,489
|
|
|
|
18,835
|
|
|
|
3,000
|
|
|
|
5,490
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,626
|
|
|
|
11,265
|
|
|
|
17,115
|
|
|
|
35,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
10
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,365
|
|
|
|
8,059
|
|
|
|
5,365
|
|
|
|
8,059
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at
amortised cost
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,365
|
|
|
|
8,059
|
|
|
|
5,365
|
|
|
|
8,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net financial assets/(liabilities)
|
|
|
|
|
|
|
9,489
|
|
|
|
18,835
|
|
|
|
3,000
|
|
|
|
5,490
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(739
|
)
|
|
|
3,206
|
|
|
|
11,750
|
|
|
|
27,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency risk
The Group operates internationally and is exposed to foreign exchange risk arising from various
currency exposures, primarily with respect to the U.S. dollar (USD), the British pound (GBP), the
Euro, the Swiss Franc (CHF) and the Canadian dollar (CAD). Foreign exchange risk arises from future
transactions and recognised assets and liabilities denominated in a currency that is not the
entity’s functional currency and net investments in foreign operations.
As of 30 June, 2010, the Group did not hold derivative financial instruments in managing its
foreign currency, however, the Group may from time to time enter into hedging arrangements where
circumstances are deemed appropriate. Foreign subsidiaries with a functional currency of AUD have
exposure to the local currency of these subsidiaries and any other currency these subsidiaries
trade in. The functional currency of Marshall Edwards, Inc. and Glycotex, Inc. is USD and these
subsidiaries have exposure to AUD and any other currency these subsidiaries trade in.
129
The Group’s exposure to foreign currency risk at 30 June, 2010 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
USD denominated
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
909
|
|
|
|
467
|
|
|
Trade and other receivables
|
|
|
210
|
|
|
|
243
|
|
|
|
|
|
|
|
|
|
1,119
|
|
|
|
710
|
|
|
|
|
|
|
Financial liablities
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
127
|
|
|
|
155
|
|
|
|
|
|
|
Net exposure
|
|
|
992
|
|
|
|
555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GBP denominated
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
127
|
|
|
|
126
|
|
|
Trade and other receivables
|
|
|
243
|
|
|
|
340
|
|
|
|
|
|
|
|
|
|
370
|
|
|
|
466
|
|
|
|
|
|
|
Financial liablities
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
206
|
|
|
|
337
|
|
|
|
|
|
|
Net exposure
|
|
|
164
|
|
|
|
129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAD denominated
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
102
|
|
|
|
150
|
|
|
Trade and other receivables
|
|
|
163
|
|
|
|
121
|
|
|
|
|
|
|
|
|
|
265
|
|
|
|
271
|
|
|
|
|
|
|
Financial liablities
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
208
|
|
|
|
145
|
|
|
|
|
|
|
Net exposure
|
|
|
57
|
|
|
|
126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EURO denominated
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
—
|
|
|
|
12
|
|
|
Trade and other receivables
|
|
|
406
|
|
|
|
491
|
|
|
|
|
|
|
|
|
|
406
|
|
|
|
503
|
|
|
|
|
|
|
Financial liablities
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
108
|
|
|
|
339
|
|
|
|
|
|
|
Net exposure
|
|
|
298
|
|
|
|
164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHF denominated
|
|
|
|
|
|
|
|
|
|
Financial liablities
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
615
|
|
|
|
218
|
|
|
|
|
|
|
Net exposure
|
|
|
(615
|
)
|
|
|
(218
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AUD denominated
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
752
|
|
|
|
738
|
|
|
Trade and other receivables
|
|
|
32
|
|
|
|
293
|
|
|
|
|
|
|
|
|
|
784
|
|
|
|
1,031
|
|
|
|
|
|
|
Financial liablities
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
551
|
|
|
|
4,085
|
|
|
|
|
|
|
Net exposure
|
|
|
233
|
|
|
|
(3,054
|
)
|
|
|
|
|
130
The following sensitivity is based on the foreign currency risk exposures in existence at the
date of the Statement of Financial Position:
|
|
|
|
|
|
|
|
|
|
|
|
|
Post tax profit
|
|
|
|
Higher/(Lower)
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
Judgements of reasonably possible movements:
|
|
|
|
|
|
USD denominated
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
AUD/USD +10%
|
|
|
(90
|
)
|
|
|
(50
|
)
|
|
AUD/USD -10%
|
|
|
110
|
|
|
|
62
|
|
|
|
|
GBP denominated
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
AUD/GBP +10%
|
|
|
(15
|
)
|
|
|
(12
|
)
|
|
AUD/GBP -10%
|
|
|
18
|
|
|
|
14
|
|
|
|
|
CAD denominated
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
AUD/CAD +10%
|
|
|
(5
|
)
|
|
|
(11
|
)
|
|
AUD/CAD -10%
|
|
|
6
|
|
|
|
14
|
|
|
|
|
EURO denominated
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
AUD/EURO +10%
|
|
|
(27
|
)
|
|
|
(15
|
)
|
|
AUD/EURO -10%
|
|
|
33
|
|
|
|
18
|
|
|
|
|
CHF denominated
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
AUD/EURO +10%
|
|
|
56
|
|
|
|
20
|
|
|
AUD/EURO -10%
|
|
|
(68
|
)
|
|
|
(24
|
)
|
|
|
|
AUD denominated
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
AUD/USD +10%
|
|
|
(21
|
)
|
|
|
278
|
|
|
AUD/USD -10%
|
|
|
26
|
|
|
|
(339
|
)
|
Credit risk
The Group trades only with recognised, creditworthy third parties.
It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit
application procedures. In addition, receivable balances are monitored on an ongoing basis with the
result that the Group’s exposure to bad debts is not significant.
As of 30 June, 2010, the Group did not hold derivative financial instruments. The Group places its
cash deposits with high credit quality financial institutions and by policy, limits the amount of
credit exposure to any single counter-party. The Group is averse to principal loss and ensures the
safety and preservation of its invested funds by limiting default risk, market risk, and
reinvestment risk.
131
The Group mitigates default risk by depositing funds with high credit quality financial
institutions and by constantly positioning its portfolio to respond appropriately to a significant
reduction in a credit rating of any financial institution.
The Group’s maximum exposures to credit risk at the end of the reporting period in relation to each
class of recognised financial assets is the carrying amount of those assets as indicated in the
Statement of Financial Position. Trade and other receivables by region are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
Australia
|
|
|
1,525
|
|
|
|
1,724
|
|
|
North America
|
|
|
217
|
|
|
|
182
|
|
|
Europe
|
|
|
242
|
|
|
|
346
|
|
|
|
|
|
|
|
|
|
1,984
|
|
|
|
2,252
|
|
|
|
|
|
Concentration of credit risk
There are no significant concentrations of credit risk within the Group. The Group minimises
concentration of credit risk in relation to trade receivables by undertaking transactions with a
large number of customers. The credit risk on liquid funds is limited as the counterparties are
banks with high credit ratings.
Credit risk is managed in the following way:
(i) customer payment terms are 30 days except for some customers who have 60 day terms;
(ii) credit limits are applied to customers to limit the credit risk exposure; and
(iii) by limiting the amount of credit exposure to any single counter-party for cash deposits.
Liquidity risk
The Group manages liquidity risks by maintaining adequate cash reserves and by continuously
monitoring cash forecasts and actual cash flows.
Maturity analysis of financial liabilities based on management’s expectation
Trade payables and other financial liabilities
mainly arise from the financing of assets used in
our ongoing operations such as plant and equipment and investments in working capital. These assets
are considered in the Group’s overall liquidity risk.
132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
< 6 months
|
|
6-12 months
|
|
1-5 Years
|
|
> 5 years
|
|
Total
|
|
Year ended 30 June, 2010
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
5,365
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,365
|
|
|
|
|
|
|
Total
|
|
|
5,365
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
< 6 months
|
|
6-12 months
|
|
1-5 Years
|
|
> 5 years
|
|
Total
|
|
Year ended 30 June, 2009
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
8,059
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,059
|
|
|
|
|
|
|
Total
|
|
|
8,059
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,059
|
|
|
|
|
|
Financing facilities available
At the end of the reporting period, the following financing facilities had been negotiated and were
available:
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi option facility
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Used at balance date
|
|
|
526
|
|
|
|
526
|
|
|
Unused at balance date
|
|
|
474
|
|
|
|
474
|
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
|
|
Novogen Limited has entered into a Deed of Set-off where it has agreed to hold a deposited sum
with the bank of at least $1 million at all times as additional security for the multi-option
facility.
133
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Lease commitments *
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
in relation to operating leases contracted for at the reporting date
but not recognised as liabilities payable:
|
|
|
|
|
|
|
|
|
|
Not later than 1 year
|
|
|
343
|
|
|
|
490
|
|
|
Later than 1 year but not later than 2 years
|
|
|
375
|
|
|
|
84
|
|
|
Later than 2 years but not later than 3 years
|
|
|
350
|
|
|
|
—
|
|
|
Later than 3 years but not later than 4 years
|
|
|
245
|
|
|
|
—
|
|
|
Later than 4 years but not later than 5 years
|
|
|
265
|
|
|
|
—
|
|
|
Greater than 5 years
|
|
|
68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,646
|
|
|
|
574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Other expenditure commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development contracts for service to be rendered:
|
|
|
|
|
|
|
|
|
|
Not later than 1 year
|
|
|
1,450
|
|
|
|
1,797
|
|
|
Later than 1 year but not later than 2 years
|
|
|
95
|
|
|
|
518
|
|
|
Later than 2 years but not later than 3 years
|
|
|
—
|
|
|
|
324
|
|
|
|
|
|
|
|
|
|
1,545
|
|
|
|
2,639
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Operating leases represent payments for property and equipment rental. Leases for property
include an annual review for Consumer Price Index increases.
|
There are no commitments for capital expenditure outstanding at the end of the financial year.
134
Note 17 RELATED PARTY DISCLOSURES
Interests in controlled entities
The consolidated financial statements include the financial statements of Novogen Limited and the
subsidiaries listed in the following table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Country of
|
|
% Equity interest *
|
|
Investment (A$’000)
|
|
Name of Entity
|
|
Incorporation
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
Novogen Laboratories Pty Ltd ^
|
|
Australia
|
|
|
100
|
|
|
|
100
|
|
|
|
2,154
|
|
|
|
2,154
|
|
|
Novogen Research Pty Ltd ^
|
|
Australia
|
|
|
100
|
|
|
|
100
|
|
|
|
7,000
|
|
|
|
7,000
|
|
|
Novogen Inc
|
|
US
|
|
|
100
|
|
|
|
100
|
|
|
|
—
|
|
|
|
—
|
|
|
Glycotex, Inc.
|
|
US
|
|
|
80.7
|
|
|
|
80.7
|
|
|
|
857
|
|
|
|
857
|
|
|
Novogen Limited (UK)
|
|
UK
|
|
|
100
|
|
|
|
100
|
|
|
|
—
|
|
|
|
—
|
|
|
Promensil Limited
|
|
UK
|
|
|
—
|
|
|
|
100
|
|
|
|
—
|
|
|
|
—
|
|
|
Novogen BV
|
|
Netherlands
|
|
|
—
|
|
|
|
100
|
|
|
|
—
|
|
|
|
—
|
|
|
Novogen Canada Limited
|
|
Canada
|
|
|
100
|
|
|
|
100
|
|
|
|
—
|
|
|
|
—
|
|
|
Marshall Edwards, Inc.
|
|
US
|
|
|
71.3
|
|
|
|
71.3
|
|
|
|
6,712
|
|
|
|
6,712
|
|
|
Marshall Edwards Pty Limited #
|
|
Australia
|
|
|
71.3
|
|
|
|
71.3
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,723
|
|
|
|
16,723
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Novogen Limited, a company incorporated in Australia, is the ultimate parent entity.
|
|
|
|
|
^
|
|
Entities subject to class order relief
Pursuant to Class Order 98/1418
(as amended) issued by the Australian Securities and Investment
Commission, relief has been granted to these companies from the Corporations Act 2001 requirements
for preparation, audit and lodgement of their financial reports.
|
|
|
|
|
|
As a condition of the Class Order, Novogen Limited and the controlled entities subject to the Class
Order (the “Closed Group”), entered into a Deed of Cross Guarantee on 28 May, 1999. The effect of
the deed is that Novogen Limited has guaranteed to pay any deficiency in the event of winding up of
the controlled entities. The controlled entities have also given a similar guarantee in the event
that Novogen Limited is wound up.
|
|
|
|
#
|
|
Entities that meet the requirements of small proprietary limited corporations.
|
|
|
|
*
|
|
The proportion of ownership interest is equal to the proportion of voting power held.
|
135
The consolidated income statement and balance sheet of the entities that are members of the “Closed
Group” are as follows:
Consolidated Statement of Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
|
CLOSED GROUP
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before income tax
|
|
|
(4,876
|
)
|
|
|
(6,395
|
)
|
|
Income tax expense
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
Loss after tax from continuing operations
|
|
|
(4,876
|
)
|
|
|
(6,395
|
)
|
|
Accumulated losses at the beginning of the period
|
|
|
(117,015
|
)
|
|
|
(111,224
|
)
|
|
Net income recognised directly in equity
|
|
|
223
|
|
|
|
604
|
|
|
|
|
|
|
Accumulated losses at the end of the financial year
|
|
|
(121,668
|
)
|
|
|
(117,015
|
)
|
|
|
|
|
Consolidated Statement of Financial Position
|
|
|
|
|
|
|
|
|
|
|
|
|
CLOSED GROUP
|
|
|
|
2010
|
|
2009
|
|
|
|
A$’000
|
|
A$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
4,264
|
|
|
|
9,164
|
|
|
Trade and other receivables
|
|
|
2,440
|
|
|
|
2,161
|
|
|
Inventories
|
|
|
1,068
|
|
|
|
827
|
|
|
Other current assets
|
|
|
348
|
|
|
|
489
|
|
|
|
|
|
|
Total current assets
|
|
|
8,120
|
|
|
|
12,641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
155
|
|
|
|
329
|
|
|
Other financial assets
|
|
|
6,712
|
|
|
|
6,712
|
|
|
|
|
|
|
Total non-current assets
|
|
|
6,867
|
|
|
|
7,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
|
14,987
|
|
|
|
19,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
2,854
|
|
|
|
2,653
|
|
|
Provisions
|
|
|
549
|
|
|
|
708
|
|
|
|
|
|
|
Total current liabilities
|
|
|
3,403
|
|
|
|
3,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
Provisions
|
|
|
152
|
|
|
|
236
|
|
|
|
|
|
|
Total non-current liabilities
|
|
|
152
|
|
|
|
236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
3,555
|
|
|
|
3,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS
|
|
|
11,432
|
|
|
|
16,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
|
Contributed equity
|
|
|
133,100
|
|
|
|
133,100
|
|
|
Accumulated losses
|
|
|
(121,668
|
)
|
|
|
(117,015
|
)
|
|
|
|
|
|
TOTAL EQUITY
|
|
|
11,432
|
|
|
|
16,085
|
|
|
|
|
|
136
Note 18 REMUNERATION OF AUDITORS
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$
|
|
A$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts received or due and receivable by BDO for:
|
|
|
|
|
|
|
|
|
|
(a) an audit or review of the financial report of the
entity and any other entity in the consolidated
group;
|
|
|
333,285
|
|
|
|
328,726
|
|
|
(b) other services in relation to the entity and any
other entity in the consolidated entity.
|
|
|
|
|
|
|
|
|
|
— Tax compliance services
|
|
|
25,960
|
|
|
|
50,650
|
|
|
— MEI S3/S8 audit and review services
|
|
|
—
|
|
|
|
3,381
|
|
|
— Other
|
|
|
—
|
|
|
|
6,240
|
|
|
|
|
|
|
|
|
|
359,245
|
|
|
|
388,997
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts received or due and receivable by other
entities in the BDO network for other services in
relation to the entity and any other entity in the
consolidated entity.
|
|
|
|
|
|
|
|
|
|
— Tax compliance services
|
|
|
3,681
|
|
|
|
4,359
|
|
|
— Administrative matters
|
|
|
2,545
|
|
|
|
30,456
|
|
|
|
|
|
|
|
|
|
6,226
|
|
|
|
34,815
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts received or due and receivable by non BDO
audit firms for:
|
|
|
|
|
|
|
|
|
|
— an audit or review of the financial report of the
entity and any other entity in the consolidated
group, for local statutory purposes
|
|
|
21,044
|
|
|
|
22,229
|
|
|
— other non-audit services — local statutory auditors
|
|
|
38,123
|
|
|
|
46,705
|
|
|
|
|
|
|
|
|
|
59,167
|
|
|
|
68,934
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
424,638
|
|
|
|
492,746
|
|
|
|
|
|
137
Note 19 DIRECTOR AND EXECUTIVE DISCLOSURES
a) Compensation of key management personnel
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2010
|
|
2009
|
|
|
|
A$
|
|
A$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short term employee benefits
|
|
|
2,310,137
|
|
|
|
2,705,031
|
|
|
Post employment benefits
|
|
|
285,707
|
|
|
|
532,290
|
|
|
Long term employee benefits
|
|
|
44,157
|
|
|
|
(52,228
|
)
|
|
Termination payments
|
|
|
2,201,366
|
|
|
|
—
|
|
|
Share-based payment
|
|
|
142,094
|
|
|
|
347,921
|
|
|
|
|
|
|
Total Compensation
|
|
|
4,983,461
|
|
|
|
3,533,014
|
|
|
|
|
|
Further information regarding key management personnel and their compensation can be found in
Item 6 Directors, Senior Management and Employees commencing on page 44.
138
b) Option holding of key management personnel
Novogen Limited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and
|
|
Not
|
|
|
|
beginning of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
exercisable
|
|
exercisable
|
|
|
|
period
|
|
Granted as
|
|
Options
|
|
Net change
|
|
end of period
|
|
30 June,
|
|
30 June,
|
|
|
|
1 July, 2009
|
|
remuneration
|
|
exercised
|
|
other
|
|
30 June, 2010
|
|
2010
|
|
2010
|
|
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
|
|
|
|
Executive Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C Naughton
|
|
|
309,860
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(309,860
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
AJ Husband
|
|
|
230,428
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(22,592
|
)
|
|
|
207,836
|
|
|
|
131,754
|
|
|
|
76,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DR Seaton
|
|
|
441,100
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(441,100
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
WJ Lancaster (US)
|
|
|
209,288
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(209,288
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
BM Palmer
|
|
|
238,784
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(12,392
|
)
|
|
|
226,392
|
|
|
|
99,921
|
|
|
|
126,471
|
|
|
CD Kearney
|
|
|
245,172
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(12,088
|
)
|
|
|
233,084
|
|
|
|
103,359
|
|
|
|
129,725
|
|
|
RL Erratt
|
|
|
225,900
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(12,264
|
)
|
|
|
213,636
|
|
|
|
94,958
|
|
|
|
118,678
|
|
|
MG Hinze @
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
140,376
|
|
|
|
140,376
|
|
|
|
60,813
|
|
|
|
79,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,900,532
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(879,208
|
)
|
|
|
1,021,324
|
|
|
|
490,805
|
|
|
|
530,519
|
|
|
|
|
|
|
|
|
|
|
@
|
|
Mr Hinze was appointed as CFO on 20 June, 2010. Options held prior to his appointment as CFO
are shown in net changes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and
|
|
Not
|
|
|
|
beginning of
|
|
|
|
|
|
|
|
|
|
Net
|
|
Balance at
|
|
exercisable
|
|
exercisable
|
|
|
|
period
|
|
Granted as
|
|
Options
|
|
change
|
|
end of period
|
|
30 June,
|
|
30 June,
|
|
|
|
1 July, 2008
|
|
remuneration
|
|
exercised
|
|
other
|
|
30 June, 2009
|
|
2009
|
|
2009
|
|
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
|
|
|
|
Executive Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C Naughton
|
|
|
91,196
|
|
|
|
218,664
|
|
|
|
—
|
|
|
|
—
|
|
|
|
309,860
|
|
|
|
100,264
|
|
|
|
209,596
|
|
|
AJ Husband
|
|
|
118,392
|
|
|
|
126,928
|
|
|
|
—
|
|
|
|
(14,892
|
)
|
|
|
230,428
|
|
|
|
102,387
|
|
|
|
128,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DR Seaton
|
|
|
243,884
|
|
|
|
212,108
|
|
|
|
—
|
|
|
|
(14,892
|
)
|
|
|
441,100
|
|
|
|
102,028
|
|
|
|
339,072
|
|
|
WJ Lancaster (US)
|
|
|
107,736
|
|
|
|
109,400
|
|
|
|
—
|
|
|
|
(7,848
|
)
|
|
|
209,288
|
|
|
|
44,859
|
|
|
|
164,429
|
|
|
BM Palmer
|
|
|
132,868
|
|
|
|
114,160
|
|
|
|
—
|
|
|
|
(8,244
|
)
|
|
|
238,784
|
|
|
|
55,715
|
|
|
|
183,069
|
|
|
CD Kearney
|
|
|
136,360
|
|
|
|
117,004
|
|
|
|
—
|
|
|
|
(8,192
|
)
|
|
|
245,172
|
|
|
|
57,176
|
|
|
|
187,996
|
|
|
RL Erratt
|
|
|
127,176
|
|
|
|
106,880
|
|
|
|
—
|
|
|
|
(8,156
|
)
|
|
|
225,900
|
|
|
|
53,813
|
|
|
|
172,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
957,612
|
|
|
|
1,005,144
|
|
|
|
—
|
|
|
|
(62,224
|
)
|
|
|
1,900,532
|
|
|
|
516,242
|
|
|
|
1,384,290
|
|
|
|
|
|
139
Marshall Edwards, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
Vested and
|
|
Not
|
|
|
|
beginning of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
end of period
|
|
exercisable
|
|
exercisable
|
|
|
|
period
|
|
Granted as
|
|
Options
|
|
Net
|
|
30 June,
|
|
30 June,
|
|
30 June,
|
|
|
|
1 July, 2009
|
|
remuneration
|
|
exercised
|
|
change other
|
|
2010
|
|
2010
|
|
2010
|
|
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
|
|
|
|
Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DP Gold
|
|
|
—
|
|
|
|
220,390
|
|
|
|
—
|
|
|
|
—
|
|
|
|
220,390
|
|
|
|
—
|
|
|
|
220,390
|
|
|
TM Zech
|
|
|
—
|
|
|
|
73,463
|
|
|
|
—
|
|
|
|
—
|
|
|
|
73,463
|
|
|
|
—
|
|
|
|
73,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
—
|
|
|
|
293,853
|
|
|
|
—
|
|
|
|
—
|
|
|
|
293,853
|
|
|
|
—
|
|
|
|
293,853
|
|
|
|
|
|
c) Shareholdings of key management personnel and their related parties
Novogen Limited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
|
|
Granted as
|
|
On exercise
|
|
Net change
|
|
Balance
|
|
|
|
1 July, 2009
|
|
remuneration
|
|
of options
|
|
other
|
|
30 June, 2010
|
|
|
|
Number Ord
|
|
Number Ord
|
|
Number Ord
|
|
Number Ord
|
|
Number Ord
|
|
|
|
|
|
Executive Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PA Johnston
|
|
|
73,594
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
73,594
|
|
|
C Naughton #
|
|
|
633,511
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
633,511
|
|
|
AJ Husband
|
|
|
102,920
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
102,920
|
|
|
GM Leppinus
|
|
|
11,883
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11,883
|
|
|
PJ Nestel AO
|
|
|
32,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
32,000
|
|
|
WD Rueckert *
|
|
|
5,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,000
|
|
|
PB Simpson #
|
|
|
5,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DR Seaton #
|
|
|
37,378
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
37,378
|
|
|
BM Palmer
|
|
|
205,636
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
205,636
|
|
|
CD Kearney
|
|
|
8,850
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,850
|
|
|
RL Erratt
|
|
|
271,368
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
271,368
|
|
|
MG Hinze @
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,728
|
|
|
|
14,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,387,640
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,728
|
|
|
|
1,402,368
|
|
|
|
|
|
|
|
|
|
|
#
|
|
Closing balance represents the shareholding at the time the key management personnel’s
employment ceased with the company.
|
|
|
|
*
|
|
Shares held as sponsored ADR’s.
|
|
|
|
@
|
|
Mr Hinze was appointed as CFO on 20 June, 2010. Shares held prior to his appointment as CFO are
shown in net changes.
|
140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
|
|
Granted as
|
|
On exercise
|
|
Net change
|
|
Balance
|
|
|
|
1 July, 2008
|
|
remuneration
|
|
of options
|
|
other
|
|
30 June, 2009
|
|
|
|
Number Ord
|
|
Number Ord
|
|
Number Ord
|
|
Number Ord
|
|
Number Ord
|
|
|
|
|
|
Executive Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PA Johnston
|
|
|
73,594
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
73,594
|
|
|
C Naughton
|
|
|
633,511
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
633,511
|
|
|
AJ Husband
|
|
|
102,920
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
102,920
|
|
|
GM Leppinus
|
|
|
3,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,883
|
|
|
|
11,883
|
|
|
PJ Nestel AO
|
|
|
32,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
32,000
|
|
|
WD Rueckert *
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
PB Simpson
|
|
|
5,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DR Seaton
|
|
|
37,378
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
37,378
|
|
|
BM Palmer
|
|
|
205,636
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
205,636
|
|
|
CD Kearney
|
|
|
8,850
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,850
|
|
|
RL Erratt
|
|
|
231,368
|
|
|
|
—
|
|
|
|
—
|
|
|
|
40,000
|
|
|
|
271,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,333,757
|
|
|
|
—
|
|
|
|
—
|
|
|
|
53,883
|
|
|
|
1,387,640
|
|
|
|
|
|
All equity transactions with Executive Directors and executives, other than those arising from
the exercise of remuneration options, have been entered into under terms and conditions no more
favourable than those the entity would have adopted if dealing at arm’s length.
141
Note 20 CONTINGENT ASSETS AND CONTINGENT LIABILITIES
Guarantees
|
(a)
|
|
The Company is continuing to prosecute its IP rights and in June 2007 announced that the
Vienna Commercial Court had upheld a provisional injunction against an Austrian company,
APOtrend. The Company has provided a guarantee to the value of €250,000 with the court to
confirm its commitment to the ongoing enforcement process.
|
|
|
|
(b)
|
|
As a condition of establishing bank facilities Novogen Limited and its controlled entities
Novogen Laboratories Pty Ltd and Novogen Research Pty Ltd have entered into a Guarantee and
Indemnity with St George Bank in January 1997. The effect of the guarantee is to guarantee
amounts owed to the bank by any of the above Novogen companies.
|
The Company has incurred losses since its inception and, as a result, has not declared any
dividends. Any dividends in future periods will be declared in Australian dollars.
Note 22 EVENTS AFTER THE BALANCE SHEET DATE
Novogen Limited
Novogen Limited received a letter from The Nasdaq Stock Market on 19 July, 2010 notifying it that
for the last 30 consecutive business days the bid price of the Company’s ADRs closed below the
minimum US$1.00 per share requirement for continued inclusion on the Nasdaq Global Market under
Nasdaq Rule 5450(a)(1). According to Nasdaq’s letter, the Company will be afforded a grace period
of 180 calendar days, or until 18 January, 2011, to regain compliance in accordance with Nasdaq
Rule 5810(c)(3)(A). In order to regain compliance, shares of the Company’s ADRs must maintain a
minimum bid closing price of at least US$1.00 per share for a minimum of ten consecutive business
days during the grace period. The Company intends to actively monitor the bid price of its common
stock between now and 18 January, 2011 and take those steps possible to maintain a Nasdaq listing.
This notification from The Nasdaq Stock Market has no bearing on the ASX listing.
On 8 September, 2010, Novogen announced that it had reached agreement in principle with its
subsidiary MEI to acquire Novogen’s entire isoflavone-related intellectual property portfolio in a
stock-based transaction. The agreement in principle was negotiated by an independent subcommittee
of the Board of Directors of both companies. The closing of the transaction is subject to, among
other things, due diligence, the execution of a definitive agreement, an independent fairness
opinion and shareholder approvals.
142
On 20 September, 2010, Novogen appointed three new directors; Mr Ross Youngman, Mr Peter White and
Mr Josiah T Austin. Of the three Directors, two are based in the United States and one in
Australia, with their backgrounds encompassing investment and corporate finance.
On 18 October, 2010, Novogen appointed Mr William D Rueckert, a current non-executive Director, as
Chairman. Mr Rueckert replaces Mr Philip Johnston, who resigned as both Chairman and a director.
On 29 October, 2010, Novogen appointed Mr Peter Scutt, an Australian based corporate advisor, as a
director of the Company, following the retirement of Prof. Paul Nestel and Mr Geoff Leppinus.
On December 8, 2010, the Company received approval to transfer the listing of its ADRs from
the Nasdaq Global Market to the Nasdaq Capital Market. The Company’s securities will be transferred
to the Capital Market at the opening of business on December 20, 2010.
The Company’s research and development operations in Australia will cease on 31 December, 2010.
Staff redundancy costs associated with this restructure will amount to approximately A$465,000. The
Company may seek to sublet excess space following this decision as well as disposing of any plant
and equipment no longer required.
Marshall Edwards, Inc.
On May 18, 2010 Novogen’s subsidiary MEI received a notice from Nasdaq indicating that the it
failed to comply with the minimum stockholders’ equity requirement set forth in Nasdaq Listing Rule
5450(b)(1)(A) for continued listing of its common stock on the Nasdaq Global Market because our
stockholders’ equity as of March 31, 2010 as set forth in MEI’s quarterly report on Form 10-Q for
the period ended March 31, 2010 of US$9.16 million was below the US$10 million minimum
stockholders’ equity requirement. The notice also stated MEI would be provided 45 calendar days, or
until July 2, 2010, to submit a plan to regain compliance.
MEI responded to Nasdaq on July 2, 2010. The response included plans to satisfy the listing
requirements with respect to the maintaining a minimum US$10 million Shareholders’ equity value.
MEI stated its intention to pursue a capital raising transaction within the time provided by Nasdaq
rules if market conditions permit, to further fund development of our product candidates 1)
triphendiol or its primary active metabolite NV-143, a potentially more potent, second generation
analog of phenoxodiol; and 2) NV-128. In the alternative, MEI intends to apply to transfer the
listing of its common stock from the Nasdaq Global Market to the Nasdaq Capital Market.
On August 5, 2010, MEI received a letter from Nasdaq indicating that, based on its plan, Nasdaq has
determined to grant an extension, through November 15, 2010, to regain compliance with the Rule by
establishing stockholders’ equity of at least US$10 million.
143
On November 16, 2010 MEI was notified by the Listing Qualifications Staff of The Nasdaq Stock
Market that, due to the Company’s non-compliance with the minimum US$10 million stockholders’
equity requirement for continued listing on The Nasdaq Global Market, as set forth in Listing Rule
5450(b)(1), MEI’s common stock is subject to delisting unless it requests a hearing before a Nasdaq
Listing Qualifications Panel. MEI has requested a hearing before the Panel, which request will
stay any further action by Nasdaq until the Panel issues its decision following the hearing. In
connection with the hearing, the Panel may grant MEI an additional compliance period of up to 180
calendar days from the date of the Nasdaq staff’s determination, or 16 May, 2011, to evidence
compliance with the minimum stockholders’ equity requirement for continued listing on The Nasdaq
Global Market. MEI has been granted a hearing date of 6 January, 2011. While MEI is working
diligently to remedy the listing deficiency, there can be no assurance that the Panel will grant
MEI’s request for continued listing on The Nasdaq Global Market and, if the Panel does not, MEI’s
common stock may be transferred to The Nasdaq Capital Market or delisted from Nasdaq.
On 14 July, 2010, MEI received notice from Nasdaq stating that for the last 30 consecutive business
days, the Market Value of Publicly Held Shares closed below the minimum US$5 million required for
continued listing on the Nasdaq Global Market under Nasdaq Rule 5450(b)(1)(C). Market Value of
Publicly Held Shares is calculated by multiplying the publicly held shares, which is total shares
outstanding less any shares held by officers, directors, or beneficial owners of 10% or more, by
the consolidated closing bid price. Novogen Limited currently owns 71.3% of the outstanding common
stock of MEI. Therefore, the value of Novogen Limited’s shares is excluded from the Market Value of
Publicly Held Shares of MEI. According to Nasdaq’s letter, MEI would be afforded a grace period of
180 calendar days, or until 10 January, 2011, to regain compliance in accordance with Nasdaq Rule
5810(c)(3)(A). MEI intend to actively monitor the Market Value of Publicly Held Shares between now
and 10 January, 2011.
On 10 August, 2010 MEI announced the appointment of Christine A. White, M.D. to its board of
directors. Dr. White replaces Professor Paul J. Nestel, who has served as a director since April
2001.
On September 8, 2010, the Company announced that it had reached an agreement in principle with MEI
to sell Novogen’s entire isoflavone-related intellectual property portfolio in a stock-based
transaction. The agreement in principle was negotiated by an independent committee of the Board of
Directors of both companies. The closing of the transaction is subject to, among other things, due
diligence, the execution of a definitive agreement, an independent fairness opinion and shareholder
approvals.
The foregoing description of the agreement in principle between the MEI and Novogen does not
constitute an offer of any securities for sale or a solicitation of offers to purchase securities.
144
There have been no other significant events occurring after the end of the reporting period which
have had a material impact on the business.
145
SIGNATURES
The registrant hereby certifies that it meets all the requirements for filing on Form 20-F and that
it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.
|
|
|
|
|
|
NOVOGEN LIMITED
|
|
|
|
|
|
|
Mark Hinze
Chief Financial Officer
|
|
|
|
|
|
Date: December 9, 2010
|
|
|
|
146
Exhibit Index
a. Exhibits
|
|
|
|
|
Exhibit
|
|
|
|
No.
|
|
Exhibit Description
|
|
1.1
|
|
Constitution of Novogen Limited (formerly known as the
Memorandum of Association and Articles of Association). (1)
|
|
|
|
|
|
2.1
|
|
Deposit Agreement as further amended and restated, dated as of
September 29, 2005, among Novogen Limited, the Bank of New
York, as Depositary, and owners and holders from time to time
of ADRs issued thereunder. (2)
|
|
|
|
|
|
4.1
|
|
Employment Contract between the Company and Mr. C. Naughton
dated June 21, 2006. (4)
|
|
|
|
|
|
4.2
|
|
Lease between Hyperion Property Syndicates Limited (Lessor)
and Novogen Laboratories Pty Ltd for the Company’s corporate
headquarters at 140 Wicks Road, North Ryde, New South Wales.
(*)
|
|
|
|
|
|
4.3
|
|
Employment Contract between the Company and Professor Alan
Husband dated March 10, 2010. (*)
|
|
|
|
|
|
4.4
|
|
Employment Contract between the Company and Bryan Palmer dated
March 10, 2010. (*)
|
|
|
|
|
|
4.5
|
|
Employment Contract between the Company and Craig Kearney
dated March 10, 2010. (*)
|
|
|
|
|
|
4.6
|
|
Employment Contract between the Company and David Seaton dated
March 10, 2010. (*)
|
|
|
|
|
|
4.7
|
|
Employment Contract between the Company and Ronald Erratt
dated March 10, 2010. (*)
|
|
|
|
|
|
4.8
|
|
Employment Contract between the Company and Warren Lancaster
dated March 10, 2010. (*)
|
|
|
|
|
|
4.9
|
|
Employment Contract between the Company and Mark Hinze dated
September 23, 2010. (*)
|
|
|
|
|
|
4.10
|
|
Patent License Agreement, dated as of November 13, 1997, by
and among Novogen Limited, Novogen Research Pty Limited,
Novogen Inc. and Protein Technologies International Inc.** (6)
|
|
|
|
|
|
4.11
|
|
Amendment to the Patent License Agreement, dated as of June
21, 2004 by and among Novogen Limited, Novogen Research Pty
Limited, Novogen Inc. and Solae LLC (formerly known as Protein
Technologies International Inc.)** (7)
|
147
|
|
|
|
|
Exhibit
|
|
|
|
No.
|
|
Exhibit Description
|
|
|
|
|
|
8.1
|
|
Company Subsidiaries. (*)
|
|
|
|
|
|
12.1
|
|
Certification of the Chairman and Acting Principal Executive
Officer pursuant to Rule 13a — 14(a) of the Securities
Exchange Act of 1934, as amended. (*)
|
|
|
|
|
|
12.2
|
|
Certification of Chief Financial Officer pursuant to Rule 13a
— 14(a) of the Securities Exchange Act of 1934, as amended.
(*)
|
|
|
|
|
|
13.1
|
|
Certification by the Chairman and Acting Principal Executive
Officer and Chief Financial Officer pursuant to 18 U.S.C.
Section 1350 as added by Section 906 of the Sarbanes — Oxley
Act of 2002. (*)
|
|
|
|
|
|
*
|
|
Filed herewith.
|
|
|
|
**
|
|
Portions of these documents have been omitted
pursuant to a request for confidential treatment. Such omitted portions
have been filed separately with the SEC.
|
|
|
|
(1)
|
|
Incorporated by reference to the Registration
Statement on Form 20-F filed with the Securities and Exchange
Commission on December 24, 1998 (File No. 0-29962)
|
|
|
|
(2)
|
|
Incorporated by reference to the Registration
Statement on Form F-6 filed with the Securities and Exchange Commission
on September 29, 2005 (File No. 333-128681)
|
|
|
|
(3)
|
|
Incorporated by reference to the Annual Report
on Form 20-F filed with the Securities and Exchange Commission on
November 27, 2000 (File No. 0-29962)
|
|
|
|
(4)
|
|
Incorporated by reference to the Annual Report
on Form 20-F filed with the Securities and Exchange Commission on
November 29, 2006 (File No. 0-29962)
|
|
|
|
(5)
|
|
Incorporated by reference to the Annual Report
on Form 20-F filed with the Securities and Exchange Commission on
December 14, 2007 (File No. 0-29962)
|
|
|
|
(6)
|
|
Incorporated by reference to the Annual Report
on Form 20-F/A filed with the Securities and Exchange Commission on
March 20, 2009 (File No. 0-29962).
|
|
|
|
(7)
|
|
Incorporated by reference to the Annual Report on Form 20-F/A filed with the Securities and
Exchange Commission on May 5, 2009 (File No. 0-29962).
|
148