UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)
OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended June 30, 2008
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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 Registrants 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
*
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Not for trading, but only in connection with the registration of American Depositary Shares.
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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, 2008 was 97,594,261.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act.
Yes
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No
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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
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No
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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
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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(Do not check if a smaller reporting company)
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Smaller reporting company
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Indicate by check mark which basis of accounting the registrant has used to prepare the financial
statements included in this filing
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U.S. GAAP
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International Financial Reporting Standards as issued
By the International Accounting Standards Board
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Other
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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
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Item 18
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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
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No
þ
TABLE OF CONTENTS
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Forward Looking Statements
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1
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PART I
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ITEM 1.
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Identity of Directors, Senior Management and Advisors
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2
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ITEM 2.
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Offer Statistics and Expected Timetable
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2
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ITEM 3.
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Key Information.
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2
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ITEM 4.
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Information on the Company
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15
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ITEM 4A
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Unresolved Staff Comments
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32
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ITEM 5.
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Operating and Financial Review and Prospects
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32
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ITEM 6.
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Directors, Senior Management and Employees
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42
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ITEM 7.
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Major Shareholders and Related Party Transactions
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57
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ITEM 8.
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Financial Information
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58
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ITEM 9.
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Offer and Listing Details
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59
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ITEM 10.
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Additional Information
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61
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ITEM 11.
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Quantitative and Qualitative Disclosures about Market Risk
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66
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ITEM 12.
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Description of Securities other than Equity Securities
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66
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PART II
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ITEM 13.
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Defaults, Dividend Arrearages and Delinquencies
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67
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ITEM 14.
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Material Modifications to the Rights of Security Holders and the Use of Proceeds
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67
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ITEM 15.
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Controls and Procedures
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67
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ITEM 16.
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Reserved
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68
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ITEM 16A.
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Audit Committee Financial Expert
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68
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ITEM 16B
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Code of Ethics
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68
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ITEM 16C
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Principal Accountant Fees and Services
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69
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ITEM 16D
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Exemptions from the Listing Standards for Audit Committees
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70
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ITEM 16E
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Purchases of Equity Securities by the Issuer and Affiliated Purchases
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70
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PART III
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ITEM 17.
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Financial Statements Not Applicable
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71
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ITEM 18.
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Financial Statements
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71
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ITEM 19.
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Exhibits
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71
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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:
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our inability to obtain any additional required financing or financing available to
us on acceptable terms, particularly in the context of the current global financial
crisis;
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the failure of our majority owned subsidiary Marshall Edwards, Inc. (MEI or
Marshall Edwards) to complete the OVATURE clinical trial or achieve satisfactory
clinical outcomes.
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The ability of our majority owned subsidiary Glycotex, Inc. (Glycotex) to continue
its clinical development of GLYC-101;
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the failure to locate, hire, assimilate and retain qualified personnel;
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our failure to successfully commercialize our products;
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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 our products;
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uncertainties in clinical trial results;
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our inability to maintain or enter into, and the risks resulting from our dependence
upon, collaboration or contractual arrangements necessary for the development,
manufacture, commercialization, marketing, sales and distribution of any products;
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competition and competitive factors;
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our inability to enforce our patents or proprietary rights and obtain necessary
rights to third party patents and intellectual property to operate our business;
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our inability to operate our business without infringing upon the patents and
proprietary rights of others;
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the failure of any product candidate to gain market acceptance;
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general economic conditions;
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government regulation generally and the receipt of regulatory approvals;
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changes in industry practice; and
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one-time events.
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These risks are not exhaustive. Other sections of the Annual Report may include additional factors
which could adversely impact the Companys 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 us 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.
1
PART I
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.
Item 3. Key Information
Selected Financial Data
The selected financial data at June 2008 and 2007 and for the years ended June 30, 2008, 2007 and
2006 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).
References in this financial report to Australian Accounting Standards refer to the Australian
equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures
that the financial report, comprising the financial statements and notes thereto, complies with
IFRS as adopted by the IASB.
Selected financial data has been presented for the four most recent fiscal years which have been
prepared in compliance with AIFRS. The previous years financial data prepared in compliance with
Australian GAAP cannot be provided on a restated basis with out unreasonable effort or expense.
The Consolidated Financial Statements have been audited in accordance with generally accepted
auditing standards in the United States by the Companys independent registered public accountants.
The Companys 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 2008 refers to the 12 months ended June 30, 2008. Except as otherwise indicated, all
dollar amounts referred to in this Annual Report are at the consolidated level and exclude
inter-company amounts.
2
Summary of Consolidated Income Statements
(AIFRS)
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2005
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2006
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2007
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2008
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2008
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Continuing operations
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(A$000)
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(A$000)
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(A$000)
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(A$000)
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(US$000)
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Revenue from sale of goods
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13,404
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13,500
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10,709
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9,400
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8,988
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Other revenue
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3,985
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3,945
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6,586
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3,883
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3,713
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Total revenue
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17,389
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17,445
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17,295
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13,283
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12,701
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Net loss before income tax
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(12,682
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(17,912
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(24,295
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(24,773
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(23,688
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Net loss attributable to
members of Novogen
Limited
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(11,532
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(16,220
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(19,981
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(20,264
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(19,376
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Basic and diluted
earnings/(loss) per share
(cents per share)
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(11.9
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(16.7
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(20.5
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(20.8
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(19.9
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Weighted average number
of Ordinary Shares used
to calculate earnings per
share
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96,839,570
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97,207,053
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97,567,399
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97,594,261
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97,594,261
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Number of outstanding
Ordinary Shares at year
end
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97,045,662
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97,294,054
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97,594,261
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97,594,261
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97,594,261
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Summary of Consolidated Balance Sheets
(AIFRS)
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2005
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2006
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2007
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2008
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2008
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(A$000)
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(A$000)
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(A$000)
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(A$000)
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(US$000)
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Cash and Cash
Equivalents
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47,260
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33,513
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39,511
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35,386
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33,836
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Total Assets
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67,485
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51,098
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51,357
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43,401
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41,500
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Net Assets
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60,492
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44,578
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44,626
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35,637
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34,076
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Capital Stock
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176,235
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176,989
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191,876
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200,432
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191,653
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No dividends have been declared by the Company in the fiscal years included in this Annual Report.
3
The Company publishes its Consolidated Financial Statements expressed in Australian dollars. In
this Annual Report, references to U.S. dollars or US$ 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$0.9562 = 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, 2008.
The noon buying rate on October 31, 2008 was US$0.6574 = A$1.00
Exchange Rates for the six months to October 2008
A$ versus US$
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Month
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High
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Low
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May
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$
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0.9644
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$
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0.9338
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June
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$
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0.9610
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$
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0.9342
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July
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$
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0.9797
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$
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0.9415
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August
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$
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0.9317
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$
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0.8553
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September
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$
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0.8441
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$
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0.7831
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October
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$
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0.7937
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$
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0.6073
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Fiscal Year
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Average
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Ended June 30
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Rate
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2004
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$
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0.7109
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2005
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$
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0.7529
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2006
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$
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0.7472
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2007
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$
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0.7862
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2008
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$
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0.8968
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4
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 will need additional funds in order to finance its future operations and its
clinical development programs. The actual amount of funds that we will need will be determined by a
number of factors, some of which are beyond our control.
The Companys funding requirements have been, and will continue to be, significant. The Company
anticipates that its existing cash resources will be adequate to fund the Companys operating
requirements through the next 12 months based upon the Companys current business plan.
The Companys 71.3% owned U.S. subsidiary company MEI will need additional funds to complete the
Ovature Phase III clinical trial for phenoxodiol known as OVATURE and to progress the development
program for the drug compounds triphendiol (formally NV-196) and NV-143.
The Companys 81.0% owned U.S. subsidiary company Glycotex will also need additional funds to
futher the clinical development of its wound healing compound GLYC-101.
The Companys operating cash requirements may vary materially from those now planned due to a
number of factors. These factors include the success of the Companys research and development
efforts, the ability of the Company to satisfy applicable regulatory requirements, the extent of
the Companys ability to produce its products in a cost-effective manner, the rate at which the
Company can introduce its products into new markets and the market acceptance and competitive
position of the Companys products.
The Company will need additional capital to fund its future operations. 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.
5
The recent global financial crisis may negatively impact the Companys liquidity and clinical
trials, as well as the liquidity and clinical trials of the Companys subsidiaries (including the
OVATURE trial), 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. Recently, the financial services industry and credit market have
experienced a period of unprecedented turmoil characterized by bankruptcy, failure and collapse or
sale of various financial institutions. Although the ultimate outcome of these events cannot be
predicted, they may preclude the Company and its subsidiaries from raising the capital necessary to
finance their business operations. In particular, MEI, may not be able to raise the capital
necessary to complete the OVATURE trial and Glycotex may not be able to raise the capital necessary
to begin its Phase IIb clinical trial for GLYC-101. The Company and its subsidiaries may need to
rely upon collaboration and/or licensing opportunities with third parties to obtain the funding
necessary to conduct their business operations.
The Company cannot assure you that it or its subsidiaries will be able to raise the funds necessary
to complete their clinical trials and research programs or find appropriate collaboration and/or
licensing opportunities.
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$181,996,000 since its inception, including net losses of
A$24,777,000, A$24,296,000, and A$17,912,000 for the years ended June 30, 2008, 2007, and 2006,
respectively. The Company anticipates that it will incur operating losses and negative cash flow
for the foreseeable future.
MEI may not be able to complete the OVATURE clinical trial if it believes that the trial does not
demonstrate efficacy, if the trial encounters serious safety issues or if MEI does not complete
patient recruitment in a timely manner which could have a serious negative impact on our share
price.
The OVATURE clinical trial may be terminated by MEI following the review of recommendations by the
Independent Data Monitoring Committee for many reasons including, but not limited to, if:
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patients experience an unacceptable rate or severity of adverse side effects;
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patient numbers are not available to enrol at the expected rate or trial sites are
unable to recruit their target patient numbers due to the strict inclusion criteria of
the OVATURE protocol which may reduce the patient pool available to participate in the
trial; or
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MEI is unable to negotiate with the FDA additional patient recruitment time in order to
achieve our targeted patient recruitment numbers.
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6
MEI may not complete the OVATURE clinical trial on schedule, or at all, or the clinical trial may
be conducted improperly, which will delay or preclude FDA marketing approval and increase costs.
The completion of the OVATURE clinical trial may be delayed or terminated for many reasons,
including, but not limited to, if:
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MEI is unable to identify and contract clinical trial sites and clinical
investigators at the rate we expect or those sites are delayed in commencing patient
recruitment due to regulatory hospital ethics committee approvals or those
investigators do not perform to our anticipated patient recruitment schedule or comply
with the clinical trial protocol;
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MEI does not have enough funds to complete the clinical trial;
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patients are not available to enroll at the rate we currently expect, or trial
sites are unable to recruit their target patient numbers due to the strict inclusion
criteria of the OVATURE protocol which may reduce the patient pool available to
participate in the trial;
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subjects experience an unacceptable number of incidents or severity of adverse side
effects;
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third party clinical investigators do not conduct the trial in compliance with Good
Clinical Practice and regulatory requirements, or other third parties do not perform
data collection and analysis in a timely or accurate manner;
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our contracted Clinical Research Organization responsible for managing the OVATURE
clinical trial fails to provide the contracted services in a timely manner as
stipulated in the contract.
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one or more Institutional Review Boards suspend or terminate the trial at an
investigational site, precludes enrollment of additional subjects or withdraws its
approval of the trial; or
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one or more clinical investigators withdraw from our trials or deviates from our
approved protocol.
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Costs will increase if we have material delays in the OVATURE clinical trial, or if we are required
to modify, suspend, terminate or repeat it.
7
If the data from the Companys 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
Companys 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 undergoing clinical
trials includes the anti-cancer drug candidates phenoxodiol and triphendiol being developed by the
Companys subsidiary MEI, NV-27, the Companys cardiovascular drug candidate and NV-52 the
Companys anti-inflammatory drug candidate in the U.S. and Australia. The 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. 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 Companys
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 Companys dietary supplements, the Company will not be able to
commercialize its products and product candidates.
Marketing approval is needed in order to commercialize the Companys 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.
8
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 Companys 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.
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 manufacturing facilities of the Companys products are subject to periodic
inspection by regulatory authorities for compliance with Current Good Manufacturing Practice
(cGMP). 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 Companys 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 Companys products may not be available to supply the market
demand and the Companys sales revenues may be adversely affected.
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 Companys products. Also, if the costs of manufacturing increases, or the costs
of materials used in manufacturing increases, these costs will be passed onto us making the cost of
conducting clinical trials more expensive. In addition increases in manufacturing costs could
adversely affect our future profitability if we are unable to pass on the increased costs to our
customers.
9
The Companys success is largely dependent on its ability to obtain patent protection and
preserve trade secrets, which cannot be guaranteed.
The Companys 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 able to do so on commercially favorable terms, if at all. The
Companys failure to obtain a license for any technology that it may require to commercialize its
products could have a material adverse effect on the Companys 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 we believe were
infringing certain of the Companys patents related to dietary supplements.
If competitors of the Company that 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
Companys 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 Companys 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 Companys un-patented trade secrets and proprietary technological expertise will not
otherwise become known or independently discovered by competitors.
10
The Companys commercial opportunity will be reduced or eliminated if competitors develop and
market products that are more effective or less expensive than the Companys 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.
Many of the Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 depends on a number of key personnel to provide the strategic direction of its research
and development programs and other corporate activities. If the Company is unable to procure the
services of key personnel in the future, the Companys research and development programs could be
delayed.
The Company is highly dependent upon the principal members of its management and scientific staff.
In addition, the Company believes that its future success in developing marketable products and
achieving a competitive position will depend to a significant extent on whether it can attract and
retain additional qualified management and scientific personnel. Competition for such personnel is
intense, and there can be no assurance
that the Company will be able to continue to attract and retain such personnel. The loss of the
services of one or more of the management or scientific staff, or the inability to attract and
retain additional personnel and develop expertise as needed, could have a material adverse effect
on the Companys results of operations and financial condition. The Company maintains key person
life insurance for Mr. Christopher Naughton, the Companys Managing Director, and Professor Alan
Husband, the Companys Director of Research and Development, currently set at A$2,293,000 each. In
addition, the Company also maintains key person life insurance for all members of the executive
team and other key staff. The policies for these personnel range between A$1,000,000 and
A$1,600,000. The proceeds of such policies are payable to the Company.
11
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 Companys 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.
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 Companys 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 Companys 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.
12
The Company faces the risk of product liability claims and may not be able to obtain adequate
insurance.
The Companys 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$20 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 Companys
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. All of the Companys directors and 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 such persons in the U.S. or to
enforce, in foreign courts, judgments against such persons obtained in U.S. courts and predicated
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 Companys 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 traded on the
Nasdaq Global Market. If the trading price of MEIs shares declines or its business does not
achieve its objectives or its product development program is delayed, it could have an adverse
affect on Novogens share price.
13
The trading price of the Companys ordinary shares and ADRs is highly volatile. Your investment
could decline in value and the Company may incur significant costs from class action litigation.
The trading price of the Companys ordinary shares and ADRs is highly volatile in response to
various factors, many of which are beyond the Companys control, including:
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announcements of technological innovations by the Company and its competitors;
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new products introduced or announced by the Company or its competitors;
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changes in financial estimates by securities analysts;
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actual or anticipated variations in operating results;
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expiration or termination of licenses, research contracts or other collaboration
agreements;
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conditions or trends in the regulatory climate in the biotechnology, pharmaceutical and
genomics industries;
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changes in the market values of similar companies;
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the liquidity of any market for the Companys securities; and
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additional sales by the Company of its shares.
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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 Companys ability to grow profitably. Adverse economic changes are
outside the Companys control and may result in material adverse effects on the Companys business
or results of operations. These broad market and industry factors may materially affect the market
price of the Companys ordinary shares and ADRs regardless of its development and operating
performance. In the past, following periods of volatility in the market price of a companys
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
managements attention and resources.
14
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 Companys 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 Companys agent in the U.S. for ADRs 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 2008. 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. In October 2007, the Company announced that
it had sold its isoflavone extraction plant located at Wyong NSW.
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 Companys 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 Companys strategy is to continue to advance its research and
development in more advanced pharmaceuticals in the area of human phenolic compound technology. The
Company expects to continue to commit cash resources to the clinical development program that is
underway, particularly the OVATURE clinical trial, other oncology pre-clinical and clinical
programs and the cardiovascular and anti-inflammatory drug programs.
15
Pharmaceutical Drug Development
Anti-Cancer
Phenoxodiol
Phenoxodiol is being developed by the Companys 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
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 Clinical Trial
The OVATURE clinical trial is 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 to determine its safety and effectiveness
when used in combination with carboplatin. The OVATURE trial has been approved by the U.S. Food and
Drug Administration (FDA) under a Special Protocol Assessment (SPA) program indicating that the
study design, clinical endpoints and statistical analysis are acceptable to the FDA. The protocol
provides for an interim analysis of the data, which, if statistically significant can be used to
support a request for accelerated marketing approval. An analysis of the interim results will be
possible after the targeted patient recruitment is completed and 95 patients have disease
progression.
The OVATURE clinical trial is recruiting ovarian cancer patients whose cancer initially responded
to chemotherapy but has since become resistant or refractory to traditional platinum treatment.
Patients are being recruited at clinical sites across the US, UK, Europe and Australia.
In May 2008, MEI announced that the FDA agreed that the accrual time for the OVATURE study may be
extended to facilitate complete patient enrollment in the US, UK, Europe and Australia. Increasing
the accrual period allowed decreasing the total number of patients in the study, without changing
the required statistical analyses. As a result, the OVATURE study will enroll 340 patients at 60 -
80 clinical sites throughout the US, UK, Europe and Australia. Initially, this study was announced
to enroll 470 patients.
In June 2008 and again in November 2008, a review by the Independent Data Monitoring Committee
(IDMC) recommended that the OVATURE clinical trial continue. The IDMC is responsible to ensure that
patients recruited to the study are not exposed to unnecessary safety risks, that the study
continues to meet its clinical objectives and that it is run according to the required standards of
Good Clinical Practice. Following these scheduled reviews of safety and efficacy data, the IDMC
recommended on both
occasions that the study remain open and continue as planned towards its target of 340 patients.
16
Prostate cancer
MEI has completed a Phase II study in advanced hormone refractory prostate cancer in Australia and
in October 2007, MEI announced that it was conducting a Phase II clinical trial using phenoxodiol
as first line treatment in men with early stage prostate cancer (35 patients with androgen
dependent prostate cancer but rising prostate specific antigen (PSA) compared to patients with
late stage hormone refractory disease (25 patients with chemotherapy naïve androgen independent
disease).The study is being conducted at Yale Cancer Center and the West Haven Veterans
Administration Hospital Connecticut in the U.S. Both of these patient groups represent areas of
unmet medical need in this common cancer.
Triphendiol
Triphendiol is a synthetic investigational anti-cancer compound based on an isoflavan structure and
is being developed by MEI. Similar to phenoxodiol, triphendiol is a multiple signal transduction
inhibitor. Preliminary screening studies have identified triphendiol as a candidate for product
development showing a favorable in vitro toxicity profile against normal cells and broad activity
against cancer cells. In March 2008, MEI announced that data presented at the annual meeting of the
American Association for Cancer Research (AACR) revealed that triphendiol may aid in the treatment
of pancreatic cancer. The data indicated activity of triphendiol against human pancreatic cancer
and bile duct tumors in vitro and in animals in laboratory testing. Triphendiol is being developed
initially in oral form for the treatment of pancreatic and bile duct cancers.
Triphendiol has completed two Phase I human trials in Australia which have demonstrated a good
safety profile and acceptable absorption, metabolism and excretion or pharmacokinetics when
administered by the oral route.
In January 2008, the Companys subsidiary MEI announced that triphendiol had been granted orphan
drug status by the FDA for the treatment of pancreatic cancer and cholangiocarcinoma, or bile duct
cancer. In February 2008, MEI announced that triphendiol had been granted Orphan Drug status by the
FDA 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 it is anticipated that significant clinical testing
will be required to prove safety and efficacy before marketing applications may be filed with the
FDA.
17
As a result of the global financial crisis and the need to conserve its cash resources MEI has
decided to limit the development of triphendiol to the stage of an IND application.
NV-128
NV-128 is a cancer compound which has been shown in pre-clinical studies to promote cancer cell
death in multi-drug resistant ovarian cancer cells by targeting the AKT-mTOR pathway.
Structurally, NV-128 is an analog of phenoxodiol and triphendiol. While phenoxodiol induces
programmed cell death, or apoptosis, which is mediated by an enzymatic protein or caspase NV-128
has been shown to induce DNA degradation that is not mediated by caspase and causes cancer cell
death via inhibition of the AKT-mTOR pathway.
These results were announced during the year following the completion of pre-clinical studies
conducted at Yale University School of Medicine in the U.S.
Anti-Inflammatory
NV-52
In December 2007, the Company announced the results of a Phase Ib clinical trial of the
investigational new drug NV-52 for the treatment of inflammatory bowel disease (IBD). The results
indicated that drug treatment may be possible with a daily dose. The study was conducted at
Griffith and Bond Universities in Australia. In this study, NV-52 was administered once daily over
seven days to nine healthy volunteers. During that time, the levels of NV-52 were measured in the
blood and a wide range of safety assessments undertaken. Subsequent to this a Phase II study of
NV-52 of IBD patients has commenced at Brisbane Mater Hospital to evaluate the impact of the drug
on disease markers in patients in remission.
NV-52 is a synthetic phenolic derivative which, when given orally, protects mice from developing
inflammation of the intestine or colitis, where it has been effective at not only reducing the
severity of acute inflammation in the bowel, but also at inhibiting its initiation. Formal
toxicology testing has demonstrated that NV-52 is a non-toxic compound, causing no adverse effects
in animals, as well as having no genotoxic or mutagenic effects in laboratory assays.
FAIMs
The Company announced in July 2007 that a new investigational anti-inflammatory drug produced
promising results in animal studies which were conducted at the Rheumatology Unit in the Royal
Adelaide Hospital.
The effect of the new drug was examined in a well established model of arthritis in rats which
mimics the joint inflammation found in human arthritis.
18
The drug is one of a family of novel anti-inflammatory therapeutics known as flavonoid
anti-inflammatory molecules (FAIMs).These compounds possess robust anti-inflammatory activity
in
vitro
and, as now demonstrated, also
in vivo
. These compounds are designed to avoid cardiovascular,
gastrointestinal and renal side effects associated with some of the current commonly used
anti-inflammatory drugs.
Cardiovascular
NV-27
In February 2008, the Company undertook a Phase I human clinical trial of the novel cardiovascular
drug, NV-27. This drug has been developed from the Novogen flavonoid technology platform and has
been designed to be administered orally to reduce restenosis or reblocking of arteries after
surgery to clear blockages, commonly involving insertion of arterial stents. NV-27 has been
demonstrated to inhibit those processes
in vitro
via a variety of mechanisms. Importantly, orally
administered NV-27 has been extremely effective in protecting against restenosis following
endothelial injury in animal studies. The Phase I clinical study was conducted in association with
Bond University, Queensland, Australia. In this human study no toxic side effects were observed and
favourable pharmacokinetics were demonstrated. NV-27 therefore appears to be a promising candidate
for an orally delivered agent to reduce restenosis following coronary artery stenting. Additional
toxicity testing is being undertaken to enable the drug to progress into further human clinical
trials.
Wound Healing
GLYC-101
In January 2008, the Company announced that its subsidiary Glycotex obtained an active
Investigation New Drug Application (IND) from the FDA for the start of a Phase IIa clinical trial
of its lead product candidate GLYC-101, administered topically for the treatment of burn wounds.
The Phase IIa pilot study was completed in April 2008, and a Phase IIb human clinical trial has
commenced in the U.S. This trial is a randomised, double-blind, placebo controlled clinical trial
designed to investigate the safety and clinical outcomes of topically applied GLYC-101 compared to
placebo in subjects undergoing carbon dioxide laser skin resurfacing.
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.
19
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
entered into distribution agreements for a range of products which provide recognized health
benefits including Vinalac a probiotic, Promensil Menopause Tests, and Aliten for weight control.
The Company has also introduced dietry supplement line extensions including Promensil Vitality and
Promensil Double Strength.
The Company has established 100% owned subsidiary companies in the U.S., 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, Indonesia, South Africa, Ireland,
Austria, the Netherlands, Switzerland, Belgium and Italy. 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, grants received and royalty receipts. See Note 2 to the
Consolidated Financial Statements.
20
Category of Activity
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2006
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2007
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2008
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(A$000)
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(A$000)
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(A$000)
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Revenue from sale of goods
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13,500
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10,709
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9,400
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Other revenue
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3,945
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6,586
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3,883
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Total Revenue
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17,445
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17,295
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13,283
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Geographical Markets
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|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
2007
|
|
2008
|
|
|
|
|
|
|
(A$000)
|
|
(A$000)
|
|
(A$000)
|
|
|
|
|
|
|
|
Revenue from sale of goods
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia/NZ
|
|
|
5,166
|
|
|
|
4,453
|
|
|
|
4,755
|
|
|
|
|
|
Europe
|
|
|
2,614
|
|
|
|
3,104
|
|
|
|
2,217
|
|
|
|
|
|
North America
|
|
|
5,720
|
|
|
|
3,152
|
|
|
|
2,428
|
|
|
|
|
|
|
|
|
|
|
|
13,500
|
|
|
|
10,709
|
|
|
|
9,400
|
|
|
|
|
|
|
|
|
Other revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia/NZ
|
|
|
3,366
|
|
|
|
5,751
|
|
|
|
3,145
|
|
|
|
|
|
Europe
|
|
|
4
|
|
|
|
7
|
|
|
|
5
|
|
|
|
|
|
North America
|
|
|
575
|
|
|
|
828
|
|
|
|
733
|
|
|
|
|
|
|
|
|
|
|
|
3,945
|
|
|
|
6,586
|
|
|
|
3,883
|
|
|
|
|
|
|
|
|
Total Revenue
|
|
|
17,445
|
|
|
|
17,295
|
|
|
|
13,283
|
|
|
|
|
|
|
|
|
21
Source and Availability of Raw Materials
Phenolic Pharmaceutical Compounds
Small quantities of the synthetic phenolic compounds used in the Companys pre-clinical studies and
clinical trials are currently being manufactured at the Companys pilot facility located at North
Ryde and through contracted third party manufacturers. The pilot plant facility has the capability
to provide sufficient product for pre-clinical and initial clinical trial purposes for the cancer,
cardiovascular and anti-inflammatory programs. 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 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.
In May 2007, the Company announced that it had decommissioned the existing isoflavone extraction
facility at Wyong NSW. In October 2007, the Company announced that it had sold the property
realizing A$4.0 million gross proceeds.
Marketing Channels
The Company is currently marketing a range of consumer health care products primarily based on its
isoflavone technology.
The Companys 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 in Singapore, South Africa, Austria, Ireland, Italy, Switzerland,
Belgium and the Netherlands and has licensed the U.S. rights to Promensil and Trinovin to
Natrol,Inc.
Patent Protection
The most important area of the intellectual property (IP) of the Company is the Companys
discovery that isoflavonoid-derived phenolic compounds have biological activity. This is the basis
of the Companys 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.
22
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 our
products. All current patent applications are filed in the name of, or assigned to either Novogen
Inc., Novogens wholly-owned U.S. subsidiary, or Novogen Research Pty Ltd, one of Novogens
wholly-owned Australian subsidiaries.
The areas with expanding patent applications cover include novel dimeric and novel aminated
isoflavones, isoflavone formulations and various uses, combined isoflavone/ chemotherapy and
isoflavone/ radiotherapy treatments and glucan preparation and uses.
The patent family covering a novel food product was abandoned.
During the year 22 patents were granted as follows:
|
|
|
AUSTRALIA
|
|
|
Patent # 2003257264
|
|
Repair of DNA mutagenic damage
|
Patent # 2004224982
|
|
Therapeutic methods and compositions involving isoflavones
|
Patent # 2004200117
|
|
Production of isoflavone derivatives
|
Patent # 2006200292
|
|
Treatment of restenosis
|
Patent # 2002227771
|
|
Regulation of lipids and/or bone density and compositions thereof
|
|
|
|
CANADA
|
|
|
Patent # 2288321
|
|
Preparation of isoflavones from legumes
|
Patent # 2214899
|
|
Process for glucan preparation and therapeutic uses of glucan
|
|
|
|
HONG
KONG
|
|
|
Patent # 1022425
|
|
Therapeutic methods and compositions involving isoflavones
|
|
|
|
ISRAEL
|
|
|
Patent # 128765
|
|
Therapeutic methods and compositions involving isoflavones
|
|
|
|
MEXICO
|
|
|
Patent # 250862
|
|
Therapeutic methods and compositions involving isoflavones
|
|
|
|
NEW
ZEALAND
|
|
|
Patent # 539149
|
|
Skin photoageing and actinic damage treatment
|
|
|
|
NORWAY
|
|
|
Patent # 325127
|
|
Preparation of isoflavones from legumes
|
Patent # 325456
|
|
Therapy of oestrogen associated disorders
|
|
|
|
SINGAPORE
|
|
|
Patent # 110763
|
|
Combination of chemotherapy compositions and methods
|
Patent # 122109
|
|
Combinational radiotherapy and chemotherapy compositions and methods
|
Patent # 111549
|
|
Aminated isoflavonoid derivatives and uses thereof
|
Patent # 111389
|
|
Skin photoageing and actinic damage treatment
|
Patent # 109379
|
|
Repair of DNA mutagenic damage
|
23
|
|
|
TURKEY
|
|
|
Patent # TR200301485B
|
|
Dimeric isoflavones
|
|
|
|
US
|
|
|
Patent # 7312344
|
|
Dimeric isoflavones
|
|
|
|
NEW
ZEALAND
|
|
|
Patent # 539819
|
|
Compositions and therapeutic methods involving isoflavones and analogues thereof
|
Patent # 529085
|
|
Compositions and therapeutic methods involving isoflavones and analogues thereof
|
These grants bring the number of patents issued to 90.
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 license for the use of soy under three Novogen patent
applications to Dupont Protein Technologies, Inc. (DTI) and DTIs subsequent joint venture with
Solae LLC (formerly know as Bunge). During fiscal 2005, this licence was transferred to Archer
Daniels Midland Company (ADM). Under the terms of the transfer, ADM assumes the rights and
obligations formally held by Solae LLC, including the obligation for royalty and milestone payments
under the terms of the licence. In connection with this licence agreement the Company received
royalty payments from ADM of A$1.4 million and A$1.7 million in fiscal years 2008 and 2007
respectively. In fiscal 2007, the Company also received payment of A$2.1 million in litigation
settlements and licence fees from Sante Naturelle, Chattem, Inc. and Natrol, Inc. This payments
were once-off and were not repeated in fiscal 2008. For further information refer to Item 5.
Operating and Financial Review and Prospects Operating Results Fiscal 2008 v. Fiscal 2007.
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.
24
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 Companys products and manufacturing facilities also are regulated by various Australian
federal and state authorities. The Companys 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 (over the counter medicines including vitamins) 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 drug for its intended use and payment of a fee. Application details are
available on the TGA website http://www.tga.gov.au.
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.
25
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. We believe, but cannot be certain, that our 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 FDAs Good Laboratory Practices regulations to assess
potential safety and effectiveness;
|
|
|
|
|
submission and approval of an Investigational New Drug Application, or IND,
application, including results of pre-clinical tests and protocols for clinical tests,
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 products 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, manufacture and
control information on the product to the FDA in a New Drug Approval Application, or NDA;
and
|
|
|
|
|
FDA review and approval of an NDA, prior to any commercial sale or shipment of a
product.
|
The testing and approval process requires substantial time, effort, and financial resources, and we
cannot be certain that any approval will be granted on a timely basis, if at all.
Pre-clinical tests and studies can take several years to complete, and there is no guarantee that
an IND we 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.
|
26
|
|
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 our 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.
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 an 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 an 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 products safety or efficacy. Even after an 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. We cannot be certain that any NDA we
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 FDAs fee schedule, effective on
October 1, 2008 for the fiscal year 2009, the user fee for an application requiring clinical data,
such as an NDA, is $1,247,200. The FDA adjusts the PDUFA user fees on an annual basis. PDUFA also
imposes an annual product fee for prescription drugs and biologics ($71,520), and an annual
establishment fee ($425,600) 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. We are not at the stage of development with our products where we are 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.
27
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.
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 tests and submission of an 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. We cannot be certain
that we, or our 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 FDAs policies may change, and additional governmental regulations may be enacted that could
delay, limit, or prevent regulatory approval of our products or affect our 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 our business. Our failure to obtain coverage, an
adequate level of reimbursement, or acceptable prices for our future products could diminish any
revenues we may be able to generate. Our 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. We 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.
28
Our activities also may be subject to state laws and regulations that affect our ability to develop
and sell our products. We are 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. We 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 our business prospects.
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 postmarketing 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.
29
European Union Regulatory Requirements
Outside the U.S., the Companys ability to market 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 (EMEA) 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 EMEA. 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 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.
30
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 2008,
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
|
|
Central Coast Properties Pty Ltd
|
|
Australia
|
|
|
100
|
|
Phytosearch Pty Ltd
|
|
Australia
|
|
|
100
|
|
Phytogen Pty Ltd
|
|
Australia
|
|
|
100
|
|
Glycotex Pty Ltd
|
|
Australia
|
|
|
100
|
|
Norvogen Pty Ltd
|
|
Australia
|
|
|
100
|
|
Novogen Inc
|
|
U.S.
|
|
|
100
|
|
Glycotex, Inc.
|
|
U.S.
|
|
|
81.0
|
|
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.
|
|
|
71.9
|
|
Marshall Edwards Pty Limited*
|
|
Australia
|
|
|
71.9
|
|
|
|
|
*
|
|
Indirect ownership through Marshall Edwards, Inc.
|
|
+
|
|
Ownership % at June, 30, 2008.
|
Property, Plant and Equipment
The Companys major isoflavone extraction manufacturing plant was located in Wyong in New South
Wales. This plant was used to manufacture the active raw material used in the Companys dietary
supplement products. The Company owned the land and buildings at Wyong site which covers an area of
approximately 3.37 hectares. The Company also owned the equipment used in the extraction process
and laboratories. In May 2007 the Company announced that it had entered into new arrangements for
the worldwide supply of isoflavones used in its consumer dietary supplement products. As a result,
the extraction facility located at Wyong NSW was decommissioned and the property sold. The sale of
the Wyong facility was concluded on October 10, 2007. The Company received gross proceeds of A$4.0
million from the sale.
The pilot plant used for the manufacture of the small scale synthetic drug compounds is located in
the Companys leased premises in North Ryde, Sydney. The North Ryde premises occupies 1,088 square
meters. These premises are also used as Novogens corporate headquarters. The Company owns the
equipment used in the pilot plant. The
plant has enough capacity to produce clinical trial quantities up to Phase II of the Companys
product candidates.
31
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 us on the date of this document and we assume 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.
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, 2006
|
|
|
456
|
|
|
|
454
|
|
|
|
814
|
|
|
|
96
|
|
Year ended June 30, 2007
|
|
|
96
|
|
|
|
380
|
|
|
|
351
|
|
|
|
125
|
|
Year ended June 30, 2008
|
|
|
125
|
|
|
|
145
|
|
|
|
223
|
|
|
|
47
|
|
32
Discounts
Discounts are generally calculated as deductions off our 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, 2006
|
|
|
194
|
|
|
|
895
|
|
|
|
952
|
|
|
|
137
|
|
Year ended June 30, 2007
|
|
|
137
|
|
|
|
688
|
|
|
|
708
|
|
|
|
117
|
|
Year ended June 30, 2008
|
|
|
117
|
|
|
|
554
|
|
|
|
592
|
|
|
|
79
|
|
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.
33
Results of Operations
The following table provides a summary of revenues and expenses to supplement the more detailed
discussions below:
INCOME STATEMENTS
for the year ended 30 June, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
Consolidated
|
|
|
|
|
|
|
|
2008
|
|
2007
|
|
2006
|
|
2008
|
|
|
|
|
|
|
A$000
|
|
A$000
|
|
A$000
|
|
US$000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
2
|
|
|
|
13,283
|
|
|
|
17,295
|
|
|
|
17,445
|
|
|
|
12,701
|
|
Cost of sales
|
|
|
|
|
|
|
(4,090
|
)
|
|
|
(6,945
|
)
|
|
|
(5,445
|
)
|
|
|
(3,911
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
9,193
|
|
|
|
10,350
|
|
|
|
12,000
|
|
|
|
8,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
2
|
|
|
|
1,623
|
|
|
|
2,710
|
|
|
|
793
|
|
|
|
1,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research & development expenses
|
|
|
|
|
|
|
(18,811
|
)
|
|
|
(16,134
|
)
|
|
|
(12,014
|
)
|
|
|
(17,987
|
)
|
Selling & promotional expenses
|
|
|
|
|
|
|
(6,134
|
)
|
|
|
(7,908
|
)
|
|
|
(9,013
|
)
|
|
|
(5,865
|
)
|
Shipping and handling expenses
|
|
|
|
|
|
|
(300
|
)
|
|
|
(392
|
)
|
|
|
(556
|
)
|
|
|
(287
|
)
|
General and administrative expenses
|
|
|
|
|
|
|
(9,792
|
)
|
|
|
(12,902
|
)
|
|
|
(8,769
|
)
|
|
|
(9,363
|
)
|
Other expenses
|
|
|
|
|
|
|
(528
|
)
|
|
|
(17
|
)
|
|
|
(301
|
)
|
|
|
(504
|
)
|
Finance costs
|
|
|
|
|
|
|
(24
|
)
|
|
|
(2
|
)
|
|
|
(52
|
)
|
|
|
(23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax
|
|
|
|
|
|
|
(24,773
|
)
|
|
|
(24,295
|
)
|
|
|
(17,912
|
)
|
|
|
(23,687
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
3
|
|
|
|
(4
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the period
|
|
|
|
|
|
|
(24,777
|
)
|
|
|
(24,296
|
)
|
|
|
(17,913
|
)
|
|
|
(23,691
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss attributable to minority interest
|
|
|
|
|
|
|
4,513
|
|
|
|
4,315
|
|
|
|
1,693
|
|
|
|
4,315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss attributable to members of
Novogen Limited
|
|
|
13
|
(c)
|
|
|
(20,264
|
)
|
|
|
(19,981
|
)
|
|
|
(16,220
|
)
|
|
|
(19,376
|
)
|
|
|
|
|
|
|
|
|
|
|
|
34
Operating Results Fiscal 2008v Fiscal 2007
Revenue
The Group earned gross revenues for the year ended 30 June, 2008 of A$13.3 million versus A$17.3
million in the previous corresponding period, a reduction of A$4.0 million. The reduction in
revenue was due to decreased sales of the Groups consumer health care products of A$1.3 million or
12%. The decrease in sales in fiscal 2007 to fiscal 2008 was mainly due to the Companys licensing
of its U.S. consumer health care products to Natrol, Inc. in 2007. Other revenue for the fiscal
year ended June 30, 2008 was A$3.9 million, which represented a decrease of A$2.7 million from
A$6.6 million for the fiscal year ended June 30, 2007. Other revenue was higher in fiscal 2007
than fiscal 2008 due to the Companys receipt of one time license fees from Natrol Inc. and
litigation settlement amounts from Sante Naturelle and Chattem Inc. in connection with license and
patent infringement in the U.S. and Canada.
Consumer product sales
Sales of consumer health care products decreased by A$1.3 million to A$9.4 million for the twelve
months ended 30 June, 2008 from A$10.7 million for the twelve months ended 30 June, 2007.
Sales in Australasia (including sales to export markets) for the year ended 30 June, 2008 were
A$4.8 million, an increase of A$0.3 million or 7% from A$4.5 million for the previous year. The
increase was due to the launch of Promensil Double Strength formulation and Promensil Vitality
products. There was no sales revenue from the U.S. as consumer products were licensed to Natrol,
Inc. from the end of October 2006 and this represents a reduction of A$1.4 million for the twelve
month period to 30 June last year. Canadian sales for the year ended 30 June 2008 increased by
A$0.6 million to A$2.3 million up from A$1.7 million for the previous 12 month period, due to the
launch of Promensil Double Strength formulation and increased volume sales as a result of
promotional programs. Sales revenue in Europe decreased by A$0.9 million to A$2.2 million for the
twelve month period to 30 June, 2008 compared to A$3.1 million for the same period last year.
European sales decline was caused by a reduction in the supplement market for menopause.
During the year ending 30 June, 2008 the Group expanded its consumer health care business with the
introduction of Promensil into Belgium. The Company also entered into a third party distribution
agreement in the Netherlands in an effort to maximise the contribution from the territory.
Novogens marketing strategy of developing consumer health care brands through consumer campaigns,
continual health care professional communications and retail expansion will continue.The Company
expects to achieve future growth through leveraging the Promensil brand into new markets.
35
Costs and expenses
Total expenses before interest and tax decreased by A$4.6 million to A$39.7 for the year ended June
2008 compared to A$44.3 million for the year ended June 2007. Cost of sales decreased A$2.9 million
corresponding with reduced sales from the licence of the U.S. health products. Savings were also
achieved as a result of disposing of the Wyong production facility. Selling and promotional
expenses decreased by A$1.8 million to A$6.1 million which was also related to the licence of the
U.S. health products in the prior year with U.S. expenses not recurring in fiscal 2008. Research
and development expenses increased by A$2.7 million compared to the corresponding period last year.
The increase was primarily due to expenses associated with the Phase III OVATURE clinical trial
being conducted by MEI. Research and development expenses also reflected an increase in costs
associated with the development of glucoprime the Companys glucan based product being developed by
Novogens subsidiary Glycotex. General and administration expenses were reduced by A$3.1 million
due to one-off amounts of A$2.1 million representing non-cash, share based payments incurred by MEI
in establishing the Standby Equity Distribution Agreement (SEDA) and a A$1.4 million employee
termination payment which were incurred in the financial year ended 30 June, 2007 and which were
not incurred in the 30 June, 2008 year.
Net loss
The operating loss attributable to Novogen shareholders for the financial year, after allowing for
losses attributable to minority interests of A$4.5 million, increased by A$0.3 million to A$20.3
million from a loss of A$20.0 million for the previous year.
The net loss from ordinary activities after income tax for the consolidated group for the year
ended 30 June, 2008 increased by A$0.5 million to A$24.8 million from A$24.3 million for the
previous year. The increase in the Groups net loss for the year ended 30 June, 2008 was due to
reduced revenues and other incomes being largely offset by reduced expenditures.
Operating Results Fiscal 2007 v Fiscal 2006
Revenue
The Group earned gross revenues for the year ended June 30, 2007 of A$17.3 million versus A$17.4
million in the previous corresponding period, a decrease of A$0.1 million. The decrease in revenue
was due to decrease in consumer product sales partially offset by increase in other revenue. Sale
of the Companys consumer products decreased by A$2.8 million or 21%, from A$13.5 million for the
previous year to A$10.7 million for the year ended June 30, 2007. The decrease in consumer product
sales was mainly due to the licensing of the U.S. consumer products to Natrol, Inc. Other revenue
increased by A$2.6 million to A$6.6 million verses A$3.9 million for the previous corresponding
period. The increase in other revenue was mainly due to licence fees received from Natrol, Inc,
litigation settlements amounts received from Sante Naturelle and Chattem, Inc. for licences and
settlement of patent infringements relating to consumer products in Canada and the U.S. and sale
of red clover inventories which were in excess of our production requirements. Interest revenues also increased reflecting higher interest rates achieved on
invested cash balances.
36
Consumer product sales
Sales in Australasia (including exports) for the year ended June 30, 2007 were A$4.5 million, a
decrease of A$0.7 million or 13% from A$5.2 million for the previous year due to de-stocking in the
wholesaler supply channels and a decline in the size of the menopause treatment market. Sales
revenue in U.S. was A$1.4 million for the four months ending October 2006 (U.S. consumer products
were licensed to Natrol, Inc. from the end of October 2006) down from A$3.4 million for the twelve
month period to June 30 last year. Canada sales for the year ended June 30 2007 declined by A$0.6
million to A$1.7 million down from A$2.3 million for the previous 12 month period, due to
significant inventory reduction in the two leading retail chains in Canada. Sales revenue in Europe
increased by A$0.5 million to A$3.1 million for the twelve month period to June 30, 2007 up from
A$2.6 million for the same period last year. European growth was driven by retail expansion and new
products into U.K.
During the year ending June 30, 2007 the Company expanded its consumer business with the
introduction of Promensil into Italy and Switzerland. Novogens marketing strategy of developing
consumer health brands through consumer campaigns, continual health care professional
communications and retail expansion will continue. Promensil is a market leading brand in most
countries it competes in and future growth is expected to be achieved through leveraging the
Promensil brand into new markets.
Costs and Expenses
Total expenses before interest and tax increased by A$8.2 million to A$44.3 million for the year
ended June 30, 2007 from A$36.1 million for the previous year. Cost of sales increased by A$1.5
million due to the costs of running the Wyong production facility at less than normal operation
capacity resulting in production cost variances not capitalised into inventory. Selling and
promotional expenses decreased by A$1.1 million to A$7.9 million. The decrease was associated with
decrease in costs in the U.S. following the U.S. consumer products being licensed to Natrol, Inc.
from the end of October 2006. Research and development expenses were A$16.1 million, an increase
of A$4.1 million from A$12.0 million last year. The increase was primarily due to expenses
associated with the Phase III OVATURE clinical trial being conducted by Marshall Edwards. Costs
were also incurred in connection with production scale up activities of phenoxodiol and manufacture
of clinical trial drug supplies. Research and development expenses also reflected an increase in
costs associated with pre clinical development of glucoprime the Companys glucan based product
being developed by the Companys subsidiary Glycotex, Inc. General and administration expenses were
A$12.9 million, an increase of A$4.1 million from A$8.8 million for the same period last year. The
increase was primarily due to A$2.1 million representing non-cash, share based payments incurred by
Marshall Edwards in establishing the SEDA and a A$1.4 million employee termination payment.
37
Net loss
The operating loss attributable to the Companys shareholders for the financial year, after
allowing for losses attributable to minority interests of A$4.3 million, increased by A$3.8 million
to A$20.0 million from a loss of A$16.2 million for the previous year.
The net loss after income tax for the consolidated Group for the year ended June 30, 2007 increased
by A$6.4 million to A$24.3 million from A$17.9 million for the previous year.
Liquidity and capital resources
The Company has continued to finance its operations primarily from equity capital.
Cash resources
At 30 June, 2008 the Group had total funds of A$37.4 million a reduction of A$2.1 million from the
previous years balance of A$39.5 million. Total funds available to the Group at year end included
cash and cash equivalents of A$35.4 million and term deposit investments of A$2.0 million maturing
within 12 months.
During fiscal 2008, the Company had net cash outflows from operating activities of A$20.1 million
compared to cash outflows of A$14.6 million in fiscal 2007. Cash was used to fund the Groups
operations including the OVATURE clinical trial program for the anti cancer drug phenoxodiol being
undertaken by MEI and the clinical development of wound healing compound GLYC-101 by Glycotex. Cash
resources were also used to fund the ongoing programs in the areas of cardiovascular and
anti-inflammatory research and development.
On August 1, 2007, Marshall Edwards entered into a securities subscription agreement with certain
accredited investors providing for the private placement of 5,464,001 shares of its common stock at
a purchase price of US$3.00 per share. The investors in the transaction also received a warrant to
purchase an additional 4 shares of common stock for every block of 10 shares of common stock
purchased. The warrants have an exercise price of US$3.60 per share. The warrants may be exercised
beginning February 6, 2008 and will expire five years from the date of issuance, on August 6, 2012.
Marshall Edwards also issued 62,091 warrants to Blue Trading, LLC, which acted as the placement
agent in the private placement, as part of the placement fee. The warrants issued to Blue Trading,
LLC have an exercise price of US$3.00 per share and each warrant is convertible for 4 shares of
common stock. These warrants may be exercised immediately and will expire five years from the date
of issuance, on August 6, 2012. Marshall Edwards closed the private placement on August 6, 2007 and
received gross proceeds of US$16.4 million.
38
In addition in August 2007, Marshall Edwards terminated its SEDA.
The Company invests its cash and cash equivalents in interest bearing facilities with various
maturity dates. At the end of fiscal 2008, deposits amounting to A$7.5 million had a weighted
average interest rate of 7.75% and cash deposits of A$27.9 million had a weighted average interest
rate of 2.02%. In addition the Company had A$2.0 million invested in a term deposit with a maturity
of less than 12 months with a weighted average interest rate of 8.5%
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 2008.
The Company does not use derivative financial instruments in managing its foreign currency.
The Company believes that it has sufficient cash resources to fund planned operations over the next
twelve months which includes progressing the OVATURE clinical trial.
The Company will require additional funds in order complete the OVATURE clinical trial and to
progress clinical development programs for other drug candidates. As a result of the uncertainty in
the financial markets, the Company does not anticipate being able to raise additional funds through
the equity markets in the short to medium term. In order to obtain the additional funding necessary
to conduct the business, 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
OVATURE clinical trial and other research programs, or find appropriate collaboration or licensing
opportunities.
There are no commitments for capital expenditure outstanding at the end of the financial year.
See Note 18 to the Financial Statements Financial Instruments for disclosures about financial
risk management including interest rate risk, foreign currency risk and liquidity risk.
Post balance date capital raising
On 29 July, 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
Companys issued and outstanding shares.
39
On 28 July, 2008 MEI entered into a securities subscription agreement with OppenheimerFunds Inc
(Oppenheimer) and Novogen Limited pursuant to which MEI sold 1,700,000 and 2,908,295 shares of
common stock to Oppenheimer and Novogen respectively, at a purchase price of US$2.17 per share. The
aggregate proceeds to MEI from the sale of shares was US$10,000,000. The shares are registered
under the Securities Act, pursuant to an effective shelf registration statement. On 30 July, 2008
MEI filed a prospectus supplement to the shelf registration statement covering the sale of shares
to Oppenheimer and Novogen.
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$18.8 million, A$16.1 million and A$12.0 million on gross research and
development expenditure during fiscal 2008, 2007 and 2006 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 Novogen 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 the Research and Development Director and
senior research and development staff. Budgets are prepared annually and agreed upon by the
Novogen Board. Expenses are monitored monthly, actual versus budget by expense line and in
total.
|
40
Trend Information
The Company expects to consume cash and incur operating losses for the foreseeable future. The
Company expects to continue its significant expenditure on research and development programs for
its phenolic drug compounds, particularly MEIs expenditure on OVATURE. The impact on cash
resources and results from operations of this expenditure 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.
Sales of the Companys consumer healthcare products decreased by A$1.3 million in fiscal 2008
compared to fiscal 2007, following the licencing of its consumer business in the U.S. to Natrol,
Inc.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
Table of Contractual Obligations
The following table summarizes our future payment obligations and commitments as at June 30, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments due by period
|
|
In A$000s
|
|
Total
|
|
|
Less than 1 year
|
|
|
1-3 years
|
|
|
4-5 years
|
|
|
After 5 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Leases
|
|
|
955
|
|
|
|
466
|
|
|
|
489
|
|
|
|
|
|
|
|
|
|
Other Expenditure Commitments *
|
|
|
19,046
|
|
|
|
10,493
|
|
|
|
8,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Contractual Cash Obligations
|
|
|
20,001
|
|
|
|
10,959
|
|
|
|
9,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
represents research and development contracts for services to be rendered.
|
41
Item 6. Directors, Senior Management and Employees.
DIRECTORS
The names and details of the Companys Directors during the financial year and up to the date of
this report are as follows:
Mr. Philip A. Johnston (Chairman)
Mr. Christopher Naughton (Managing Director)
Professor Alan J. Husband (Executive Director)
Mr. Geoffrey M. Leppinus
Professor Paul J. Nestel AO
Mr. Peter B. Simpson
Directors were in office for the entire period.
Names, qualifications, experience and special responsibilities
Philip A. Johnston
Non-executive Chairman
Dip Eng (Production)
Non-executive Director since 1997, Mr. Johnston was elected chairman of Novogen Limited
effective
January 1, 2001. Mr. Johnston has extensive experience in the pharmaceutical
industry, including 9 years as an Executive Director of Wellcome Australia Limited. He was
previously a Director of two subsidiary companies of GlaxoWellcome. He has had responsibility for
production, distribution, quality assurance and consumer product development and has been directly
involved in the establishment of strategic alliances and joint ventures. Mr. Johnston has completed
a number of executive development programs including the University of New South Wales and the
London Business School.
During the last three years, Mr. Johnston has served as a Director of the ASX listed company, Lipa
Pharmaceuticals Limited and is currently a Director of NASDAQ listed, Novogen subsidiary, Marshall
Edwards, Inc. Mr Johnstons directorship of Lipa ended when Lipa ceased to be a public company in
November 2007.
Christopher Naughton
Managing Director
BEc, LLB
Managing Director since March 1997, Mr. Naughton joined Novogen Limited in 1996 as Commercial
Director. Mr. Naughton has degrees in Economics from the Australian National University and in Law
from the University of New South Wales. He has completed the Program for Management Development at
the Harvard Business School and is an attorney in New South Wales. After working in merchant
banking, he has over 20 years experience in the pharmaceutical industry, including appointments as
a Director of Wellcome Australia Limited and in worldwide business development with The Wellcome
Foundation Limited in the UK.
42
During the last three years Mr. Naughton has served as Chief Executive Officer and Director and is
currently Chief Executive Officer and Director of the NASDAQ listed, Novogen subsidiary, Marshall
Edwards, Inc.
Professor Alan J. Husband
Executive Director
PhD, DSc, FASM
Professor Husband was appointed as a Director of Novogen Limited in May 2006. Professor Husband has
over 30 years experience in basic and applied scientific research and research management. His
academic research interests in immunology and pathology have been reflected in the publication of
over 200 scientific papers and several books. He currently holds a professorial appointment at the
University of Sydney. Professor Husbands activities in basic and applied research, coupled with
experience in the biotechnology industry, provided the foundations for his current appointment as
Group Director of Research for the Group. In this position, Professor Husband is responsible for
the development and commercialisation of the Groups flavonoid drug technology platform. Professor
Husband commenced working with the Company in 1996 and has managed the scientific discovery and
clinical trial programs, including development of oncology, cardiovascular and anti-inflammatory
therapeutics as well as wound healing technologies.
Geoffrey M. Leppinus
Non-executive Director
BEc, FCA
Non-executive Director since February 2005, Mr Leppinus was, until July 2002, a Senior Audit and
Advisory partner of KPMG with over 30 years experience in professional accounting and auditing. At
KPMG he was responsible for the audit of a number of large public companies and the Australian
subsidiaries of U.S. listed public corporations. Mr Leppinus has experience in the assessment of
systems of internal control over financial reporting and the financial reporting requirements
applicable to listed public companies. He also has a wide range of experience in conducting due
diligence for business acquisitions. Mr Leppinus has served as a member of the Australian Auditing
Standards Board and member of the State Council of the Institute of Chartered Accountants in
Australia.
Professor Paul J Nestel
Non-executive Director
AO, MD, FTSE, FRACP, FAHA, FCSANZ
Professor Nestel has served as a Director since 2001. Professor Nestel is currently on the Senior
Faculty at the Baker Heart Research Institute & International Diabetes Institute, Melbourne.
Professor Nestel is also a Consultant Physician at the Alfred Hospital, Melbourne. He is Honorary
Professor of Medicine in the Faculty of Health, Medicine, Nursing and Behavioural Science at Deakin
University, Melbourne. He was formerly Clinical Professor in Medicine, The Flinders University of
South Australia. Professor Nestel has been closely involved in national and international
pharmaceutical trials of cardiovascular drugs. He has been, and remains, a member of many national and
international committees for research and policy on cardiovascular disease. He has published over
420 scientific and medical papers and is a Fellow of the Australian Academy of Technological
Sciences and Engineering, the Royal Australasian College of Physicians, the American Heart
Association and the Cardiac Society of Australia and New Zealand. Professor Nestel is an Officer of
the Order of Australia and recipient of the Centenary Medal.
43
During the last three years Professor Nestel has served as a Director and is currently a Director
for the NASDAQ listed, Novogen subsidiary, Marshall Edwards, Inc.
Peter B. Simpson
Non-executive Director
MPharm, PhC
Non-executive Director since 1994, Mr. Simpson has extensive experience in the development of
pharmaceutical products for international markets. He was Research and Development Manager with
David Bull Laboratories for 8 years prior to his appointment as Chief Executive Officer of Biota
Holdings Limited (Biota) in 1987. At Biota Mr. Simpson oversaw the research and development of an
effective cure for influenza and the licensing of that discovery to Glaxo Limited. Mr. Simpson is
currently associated with a wide range of biotechnology and pharmaceutical interests, predominately
associated with the conduct of late stage clinical studies and the commercialisation of Australian
biomedical discoveries. Mr. Simpson is also the Chairman of Biogenerics Australia Pty Ltd.
Executive Officers profiles
David R. Seaton Chief Financial Officer
B Bus KCAE, M Com UNSW, CPA
Mr. Seaton has been the Chief Financial Officer of Novogen Limited since 1999. Mr. Seaton is a
graduate in Business Studies and holds a Master of Commerce degree from the University of New South
Wales. He has completed Management Development programs at Northwestern University in Chicago,
Illinois, Duke University in Durham, North Carolina and the London Business School. He has had over
20 years experience in the pharmaceutical industry. Prior to joining Novogen Limited he was the
Finance Director of GlaxoWellcome Australia Ltd. Mr. Seaton was also Finance Director of Wellcome
Australia Limited prior to its merger with Glaxo in 1995.
Mr. Seaton has been the Chief Financial Officer and Secretary of Marshall Edwards since 2000. He
has been a Director and the Secretary of Glycotex, Inc since September 2005. Mr. Seaton was
appointed Chief Financial Officer of Glycotex, Inc. in November 2006.
44
Warren Lancaster Vice President Commercial and Corporate Development
BSc, MBA
Mr. Lancaster is a graduate in Physics and holds a Masters Degree in Business Administration from
the Australian Graduate School of Management (Sydney). Mr. Lancaster worked as a business strategy
and management consultant with an Australian consulting firm before joining Novogen Limited in
March 1997, specifically to assume the role of Vice President- North America.
Bryan Palmer Operations General Manager
Mr. Palmer joined Novogen in 1993. Since that time he has held a number of senior management
positions within the Company. He completed the Program for Management Development at the Harvard
Business School in 2001.
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 18 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. 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 shareholder 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 personnels annual remuneration has no variable
performance bonus elements that are directly linked to Company financial performance with the
exception of the Chief Executive Officer of Glycotex, Inc. Refer to section C Employment
Agreements for details of performance bonus.
45
The Board has established a Remuneration Committee which is responsible for determining and
reviewing the compensation arrangements for the Managing Director, Executive Director and other key
management personnel.
Directors fees
The Constitution (formerly known as the Memorandum and Articles of Association) 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 latest determination for Novogen Limited was
at the Annual General Meeting held on 28 October, 2005 when the shareholders approved an aggregate
remuneration of A$560,000. The total Non-executive Director remuneration of Novogen Limited for the
year ended 30 June, 2008 utilised A$274,000, (2007: A$285,000) of this authorised amount.
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which
it is apportioned amongst Non-executive 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 that 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.
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 Managing Director, Executive Director and other 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 shareholder 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.
46
Long-term incentives.
All Executive Directors and executives have the opportunity to qualify for participation in the
Employee Share Option Plan after achieving a qualifying service period.
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 Research Director and each of the executives who are considered key
management personnel. The existing contracts for service commenced in June 2006 and are for terms
of three years with a notice period of six months. Under the terms of the contracts, the amount of
remuneration may be reviewed from time to time during the contract period 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.
In the event that the Company terminates the employment of an executive under the terms of an
existing contract, the Company must pay to the employee the pro-rata balance of the unexpired
contract term plus an additional amount of one and one half times the then current annual
remuneration of the employee. However, the maximum payable on termination by the Company will be
three years remuneration. The minimum payable on termination by the Company will be eighteen months
remuneration. The Company may terminate the contracts at anytime without notice if serious
misconduct has occurred. Where such termination with cause occurs, there is no entitlement to
termination payments under the contract. On termination, any unvested options issued under the
Employee Option Plan are immediately forfeited.
Each of the foregoing employment contracts, other than the employment contract with Warren
Lancaster, were filed as exhibits to the Companys Annual Report on Form 20-F for the fiscal year
ended June 30, 2006 filed with the U.S. Securities and Exchange Commission (the SEC) on November
29, 2006. The employment contract with Warren Lancaster was filed as an exhibit to the Companys
Annual Report on Form 20-F for the fiscal year ended June 30, 2007 filed with the SEC on December
14, 2007.
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. Unless otherwise stated
all Directors, other key management and Group executives were in office for the whole of the
financial year ended June 30, 2008.
47
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
|
|
Share based
|
|
|
|
|
|
|
|
|
Short term benefits
|
|
employment
|
|
benefits
|
|
payments
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary &
|
|
|
|
monetary
|
|
Superan-
|
|
Long Service
|
|
|
|
|
|
|
|
|
2008
|
|
fees
|
|
Cash bonus
|
|
benefits
|
|
nuation
|
|
Leave
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
%
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key management personnel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-executive Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PA Johnston (i)
|
|
|
97,038
|
|
|
|
|
|
|
|
|
|
|
|
99,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
196,754
|
|
GM Leppinus
|
|
|
27,522
|
|
|
|
|
|
|
|
|
|
|
|
31,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,000
|
|
PJ Nestel AO (ii)
|
|
|
104,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104,000
|
|
PB Simpson
|
|
|
54,585
|
|
|
|
|
|
|
|
|
|
|
|
4,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C Naughton (iii)
|
|
|
697,482
|
|
|
|
|
|
|
|
63,353
|
|
|
|
100,000
|
|
|
|
43,739
|
|
|
|
29,405
|
|
|
|
3.1
|
%
|
|
|
933,979
|
|
AJ Husband
|
|
|
325,881
|
|
|
|
|
|
|
|
55,694
|
|
|
|
100,000
|
|
|
|
21,667
|
|
|
|
41,844
|
|
|
|
7.7
|
%
|
|
|
545,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DR Seaton (iii)
|
|
|
381,815
|
|
|
|
|
|
|
|
55,883
|
|
|
|
100,000
|
|
|
|
18,197
|
|
|
|
70,963
|
|
|
|
11.3
|
%
|
|
|
626,858
|
|
WJ Lancaster (US)
|
|
|
195,485
|
|
|
|
|
|
|
|
31,808
|
|
|
|
|
|
|
|
|
|
|
|
32,066
|
|
|
|
12.4
|
%
|
|
|
259,359
|
|
BM Palmer
|
|
|
182,932
|
|
|
|
|
|
|
|
38,479
|
|
|
|
16,338
|
|
|
|
(4,030
|
)
|
|
|
38,826
|
|
|
|
14.2
|
%
|
|
|
272,545
|
|
CD Kearney
|
|
|
208,494
|
|
|
|
|
|
|
|
22,094
|
|
|
|
18,500
|
|
|
|
7,541
|
|
|
|
40,133
|
|
|
|
13.5
|
%
|
|
|
296,762
|
|
RL Erratt
|
|
|
101,109
|
|
|
|
|
|
|
|
42,877
|
|
|
|
100,000
|
|
|
|
15,894
|
|
|
|
37,445
|
|
|
|
12.6
|
%
|
|
|
297,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Group executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R Koenig (iv)
|
|
|
316,314
|
|
|
|
52,966
|
|
|
|
21,098
|
|
|
|
20,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
410,938
|
|
|
|
|
|
|
|
2,692,657
|
|
|
|
52,966
|
|
|
|
331,286
|
|
|
|
591,507
|
|
|
|
103,008
|
|
|
|
290,682
|
|
|
|
7.2
|
%
|
|
|
4,062,106
|
|
|
|
|
|
|
|
(i)
|
|
Remuneration includes Directors fees of A$100,754 paid by Marshall Edwards and Glycotex.
|
|
(ii)
|
|
Remuneration includes Directors fees of A$45,000 paid by Marshall Edwards.
|
|
(iii)
|
|
Remuneration includes Directors fees of A$55,754 paid by Glycotex.
|
|
(iv)
|
|
Remuneration includes performance milestone bonus of US$45,000 or 12.9% of total
remuneration.
|
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
All Executive Directors, Executives and other staff have the opportunity to qualify for
participation in the Employee Share Option Plan after achieving a qualifying service period. The
qualifying service period is determined from time to time by the Board under the terms of the
Employee Share Option Plan and employees are currently required to have completed one year service
before they are eligible for a grant of options. The
amount and timing of options issued under the terms of the Employee Share Option Plan is entirely
at the discretion of the Board.
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 ASX for the five days prior to the date of issue. Options
vest equally over a four year period from 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.
48
There are no performance criteria relating to employee share options because the philosophy behind
the Employee Share Option Plan is to encourage a general level of ownership in the Company by
employees and align their interests with those of shareholders. The Employee Share Option Plan is
modest in scale and is principally designed to foster teamwork and the benefits of pursuing shared
goals.
Options granted as part of Director and Executive emoluments have been valued using the binomial
option pricing model, which takes account of factors such as the option exercise price, the
volatility of the underlying share price, the risk free interest rate, expected dividends, the
current market price of the underlying share and the expected life of the option.
The fair value of such grants amortised are disclosed as part of Director and Executive emoluments
on a straight-line basis over the vesting period. No adjustments have been made or will be made to
reverse amounts in relation to options that never vest (i.e. forfeitures).
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 1,
|
|
October 26,
|
|
March 30,
|
|
April 21,
|
|
March 16,
|
|
February 27,
|
|
November 29,
|
|
|
2008
|
|
2007
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
2002
|
|
|
|
Dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
Expected volatility
|
|
|
57
|
%
|
|
|
55
|
%
|
|
|
59
|
%
|
|
|
66
|
%
|
|
|
69
|
%
|
|
|
69
|
%
|
|
|
68
|
%
|
Historical volatility
|
|
|
57
|
%
|
|
|
55
|
%
|
|
|
59
|
%
|
|
|
66
|
%
|
|
|
69
|
%
|
|
|
69
|
%
|
|
|
68
|
%
|
Risk-free interest rate
|
|
|
6.35
|
%
|
|
|
6.41
|
%
|
|
|
6.09
|
%
|
|
|
5.62
|
%
|
|
|
5.67
|
%
|
|
|
5.52
|
%
|
|
|
5.27
|
%
|
Expected life of option
|
|
5 years
|
|
4.4 years
|
|
5 years
|
|
5 years
|
|
5 years
|
|
5 years
|
|
5 years
|
Option fair value
|
|
|
A$0.60
|
|
|
|
A$0.66
|
|
|
|
A$1.40
|
|
|
|
A$2.10
|
|
|
|
A$2.96
|
|
|
|
A$2.82
|
|
|
|
A$1.26
|
|
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.
Further detail on the remuneration of Directors and Executives are also provided in Note 20.
49
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 2008, 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$1,147,000 during fiscal 2008 for employee superannuation benefits and
pension benefits.
Board Practices
Novogen Board of Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
Year First
|
|
Current Term
|
Name
|
|
Postion Held
|
|
Appointed
|
|
Expires
|
|
|
|
|
|
|
|
|
|
P. A. Johnston
|
|
Chairman
|
|
|
1997
|
|
|
October-2009
|
C. Naughton
|
|
Managing Director
|
|
|
1997
|
|
|
|
P. B. Simpson
|
|
Director
|
|
|
1994
|
|
|
October-2011
|
P. J. Nestel
|
|
Director
|
|
|
2001
|
|
|
October-2009
|
G. M. Leppinus
|
|
Director
|
|
|
2005
|
|
|
October-2010
|
A. J. Husband
|
|
Executive Director
|
|
|
2006
|
|
|
October-2011
|
Term of Directors
The term for each Director (excluding the Managing Director) is three years at which time that
Director retires from office and offers himself/herself for re-election at the next Annual General
Meeting. For more information about the term and details of the Managing Directors term refer to
the Employment contract attached filed as Exhibit 4.1 to the Companys Annual Report on Form 20F
for fiscal year ended June 30, 2007 filed with the SEC on November 29, 2007.
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.
50
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.
Since January 30, 2007, the Board has been comprised of six Directors four of whom are
non-Executive Directors. In addition, the Board has established an Audit Committee and a Capital
Works Committee.
There are also Scientific Advisory Boards whose membership includes the Executive Director which
advises on clinical and scientific strategy and direction.
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 42. 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 Companys 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
|
|
|
|
|
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.
|
51
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
|
Professor Paul J. Nestel AO
|
|
Non-Executive Director
|
Peter B. Simpson
|
|
Non-Executive Director
|
Geoffrey M. Leppinus
|
|
Non-Executive Director
|
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 Companys expense.
For additional details regarding appointments to the Board of Directors please refer to the
Companys web site.
Audit Committee
The Board of Directors has an Audit Committee, which operates under a charter approved by the
Board. It is the Boards 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 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
2008 were Mr. Geoffrey Leppinus (Chairman), Professor Paul J. Nestel, Mr. Philip A. Johnston and
Mr. Peter B. Simpson.
Performance
The performance of the Board of Directors and the key Executives is reviewed regularly against both
measurable and qualitative indicators. During the reporting period the Board of Directors conducted
a performance evaluation which involved the assessment of each Board members and key Executives
performance. The performance criteria against which Directors and Executives are assessed have
regard to the financial and non-financial objectives of Novogen Limited.
52
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 Remuneration Committee is responsible for the oversight of Board succession and proposing
candidates for Board vacancies. When a new Director is to be appointed, the Remuneration Committee
reviews the range of skills, experience and expertise on the Board, identifies its needs and
prepares a short list of candidates with appropriate skills and experience. The members of the
Remuneration Committee during the fiscal year 2008 were Mr. Philip A. Johnston (Chairman), Mr.
Geoffrey Leppinus, Professor Paul J. Nestel, and Mr. Peter B. Simpson.
Employees
The Company employed 68 people at June 30, 2008, 66 people at June 30, 2007 and 67 people at June
30, 2006 as follows
Category of Activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of People
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
Research and development
|
|
|
30
|
|
|
|
27
|
|
|
|
29
|
|
Production
|
|
|
14
|
|
|
|
14
|
|
|
|
13
|
|
Sales and marketing
|
|
|
12
|
|
|
|
13
|
|
|
|
13
|
|
Finance and administration
|
|
|
12
|
|
|
|
12
|
|
|
|
12
|
|
|
|
|
Total
|
|
|
68
|
|
|
|
66
|
|
|
|
67
|
|
|
|
|
Geographic Location
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of People
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
Australasia
|
|
|
63
|
|
|
|
63
|
|
|
|
63
|
|
North America
|
|
|
3
|
|
|
|
2
|
|
|
|
3
|
|
Europe
|
|
|
2
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
Total
|
|
|
68
|
|
|
|
66
|
|
|
|
67
|
|
|
|
|
53
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 October 31, 2008. The ordinary shares
held by Directors do not entitle them to voting rights different from those of the Companys
shareholders.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary
|
|
%
|
|
Options *
|
|
|
Shares Fully
|
|
Total Shares
|
|
Number
|
|
Exercise
|
|
Expiry
|
|
|
Paid
|
|
on Issue
|
|
Outstanding
|
|
Price (A$)
|
|
Date
|
|
|
|
P. A. Johnston
|
|
|
73,594
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. Naughton
|
|
|
633,511
|
|
|
|
0.6
|
|
|
|
91,196
|
|
|
|
2.41
|
|
|
|
30/03/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
218,664
|
|
|
|
1.06
|
|
|
|
1/03/2013
|
|
A. J. Husband
|
|
|
102,920
|
|
|
|
0.1
|
|
|
|
14,892
|
|
|
|
6.76
|
|
|
|
27/02/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
22,592
|
|
|
|
4.90
|
|
|
|
16/03/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
30,436
|
|
|
|
3.64
|
|
|
|
21/04/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
50,472
|
|
|
|
2.41
|
|
|
|
30/03/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
126,928
|
|
|
|
1.06
|
|
|
|
1/03/2013
|
|
P. J. Nestel
|
|
|
32,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. B. Simpson
|
|
|
5,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G.M. Leppinus
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Each option represents the right to purchase one ordinary share.
|
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 October 31, 2008. The ordinary
shares held by the named Executives do not entitle them to voting rights different from those of
the Companys shareholders.
54
Shares held
|
|
|
|
|
|
|
|
|
|
|
Ordinary
|
|
%
|
|
|
shares fully
|
|
Total shares
|
|
|
paid
|
|
on issue
|
|
|
|
|
|
|
|
|
|
D.R. Seaton
|
|
|
37,378
|
|
|
|
|
|
W .J. Lancaster (USA)
|
|
|
|
|
|
|
|
|
B.M. Palmer
|
|
|
205,636
|
|
|
|
0.2
|
|
C.D. Kearney
|
|
|
8,850
|
|
|
|
|
|
R.L. Erratt
|
|
|
241,368
|
|
|
|
0.2
|
|
Options granted to and held by named Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eligible
|
|
Exercise
|
|
|
|
|
|
Total
|
|
executives
|
|
price
|
|
|
|
|
|
options
|
|
participating
|
|
(A$)
|
|
Grant date
|
|
Expiry date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,332
|
|
|
|
5
|
|
|
|
6.76
|
|
|
|
27/02/2004
|
|
|
|
27/02/2009
|
|
|
|
69,560
|
|
|
|
5
|
|
|
|
4.90
|
|
|
|
16/03/2005
|
|
|
|
16/03/2010
|
|
|
|
93,632
|
|
|
|
5
|
|
|
|
3.64
|
|
|
|
21/04/2006
|
|
|
|
21/04/2011
|
|
|
|
157,728
|
|
|
|
5
|
|
|
|
2.41
|
|
|
|
30/03/2007
|
|
|
|
30/03/2012
|
|
|
|
379,772
|
|
|
|
5
|
|
|
|
1.06
|
|
|
|
1/03/2008
|
|
|
|
1/03/2013
|
|
|
Each option represents the right to purchase one ordinary share.
55
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 issuers country of domicile. In connection with
Novogens 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 Nasdaqs quorum requirements applicable to meetings of ordinary
shareholders. In keeping with the law of Australia and generally accepted business practices
in Australia, Novogens Constitution requires a quorum of three shareholders for a
shareholders meeting.
|
|
|
Novogen is exempt from Nasdaqs 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 Novogen is also subject generally
requires shareholder approval for a transaction with a director or director-controlled entity
unless on arms length terms.
56
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.
Bende Holdings Pty Limited, previously reported as a major shareholder reduced its shareholding
during fiscal 2008 to less than 5% of the Companys outstanding ordinary shares.
The major shareholders do not have voting rights that differ from those other shareholders of the
Company.
At October 31, 2008 there were 9,906,057 of the Companys ADRs outstanding, representing 49,530,285
Ordinary Shares (or 48.5% of the then outstanding Ordinary Shares). At October 31, 2008 there were
38 registered holders of the Companys ADRs.
On 29 July, 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
Companys 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 700,000 shares
of Marshall Edwards common stock at a purchase price of US$3.00 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 70,000 shares of common stock. All of the warrants have an
exercise price of US$3.60 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 764,000 shares
of Marshall Edwards common stock at a purchase price of U.S. $3.00 per share for an aggregate
purchase price of US $22,920,000. 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 305,600 shares of common stock. All of the warrants have
an exercise price of U.S. $3.60 per share. The exercise price and 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 1,700,000 shares of Marshall Edwards common stock
at a purchase price of U.S. $2.17 per share for an aggregate purchase price of U.S. $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.
57
Item 8. Financial Information
Consolidated financial statements are included in Item 18 Financial Statements on pages 76
through 123.
Export Sales
Export sales to third parties from Australia are not a significant portion 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 Companys financial position or loss, nor have any such proceedings had
any impact in the recent past.
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
On 29 July, 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 $1.2215 per share raising
gross proceeds of $5,535,390. Following the placement El Coronado LLC holds 19.9% of the Companys
issued and outstanding ordinary shares.
On 28 July, 2008 MEI entered into a securities subscription agreement with Oppenheimer and Novogen
Limited pursuant to which MEI sold 1,700,000 and 2,908,295 shares of common stock to Oppenheimer
and Novogen respectively, at a purchase price of US$2.17 per share. The aggregate proceeds to MEI
from the sale of shares was US$10,000,000. The shares are registered under the Securities Act
pursuant to an effective shelf registration statement. On 30 July, 2008 MEI filed a prospectus
supplement to the shelf registration statement covering the sale of shares to Oppenheimer and
Novogen.
There have been no other significant events occurring after balance date which have had a material
impact on the business.
58
Item 9. Offer and Listing Details
Trading Markets
Novogens principal listing exchange and the exchange upon which its Ordinary Shares are quoted is
the ASX. The trading symbol on ASX is NRT.
American Depositary Receipts
Novogens Ordinary Shares trade in the U.S. in the form of ADRs on the Nasdaq Global Market. Each
ADR represents five Ordinary Shares of Novogen. The trading symbol on the Nasdaq Global Market is
NVGN. Novogen has entered into a Deposit Agreement with the Bank of New York under which the Bank
of New York, acting as depositary, issues the ADRs.
The following table sets forth, for the calendar periods indicated, the high and low market
quotations for Novogens Ordinary Shares, as quoted on the ASX, and Novogens ADRs, as quoted on
the Nasdaq Global Market.
59
NOVOGEN LIMITED SHARE PRICE HISTORY
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Per Ordinary Share (A$)
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|
Per ADR (US$)
|
Period
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High
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Low
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High
|
|
Low
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Year Ended
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|
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|
|
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|
|
|
|
|
June 2004
|
|
|
8.80
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|
|
|
4.00
|
|
|
|
31.90
|
|
|
|
12.30
|
|
June 2005
|
|
|
6.25
|
|
|
|
4.15
|
|
|
|
24.35
|
|
|
|
14.85
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|
June 2006
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|
|
6.00
|
|
|
|
2.14
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|
|
|
22.08
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|
|
|
8.03
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|
June 2007
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|
|
3.80
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|
|
|
1.81
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|
|
|
13.25
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|
|
|
8.14
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|
June 2008
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|
|
2.14
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|
|
|
0.83
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|
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10.13
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|
|
3.89
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Quarter Ended
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|
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|
|
|
|
|
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|
|
September 2006
|
|
|
3.80
|
|
|
|
2.40
|
|
|
|
13.25
|
|
|
|
9.10
|
|
December 2006
|
|
|
3.01
|
|
|
|
2.32
|
|
|
|
11.58
|
|
|
|
9.51
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|
March 2007
|
|
|
3.49
|
|
|
|
2.32
|
|
|
|
12.82
|
|
|
|
9.41
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|
June 2007
|
|
|
2.56
|
|
|
|
1.81
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|
|
|
10.85
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|
|
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8.14
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|
|
|
|
|
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|
|
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|
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|
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September 2007
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|
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2.14
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|
|
|
1.70
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|
|
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8.97
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|
|
|
6.82
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|
December 2007
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|
|
1.88
|
|
|
|
1.10
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|
|
|
8.53
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|
|
|
4.57
|
|
March 2008
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|
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1.32
|
|
|
|
0.83
|
|
|
|
6.75
|
|
|
|
3.89
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|
June 2008
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|
|
1.84
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|
|
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1.01
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|
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10.13
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|
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4.88
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
September 2008
|
|
|
1.70
|
|
|
|
0.98
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|
|
|
7.45
|
|
|
|
4.19
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Month Ended
|
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|
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|
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|
|
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|
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|
|
|
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|
|
|
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|
|
|
|
|
|
May 2008
|
|
|
1.75
|
|
|
|
1.48
|
|
|
|
8.70
|
|
|
|
7.38
|
|
June 2008
|
|
|
1.53
|
|
|
|
1.14
|
|
|
|
7.53
|
|
|
|
5.59
|
|
July 2008
|
|
|
1.36
|
|
|
|
0.98
|
|
|
|
6.13
|
|
|
|
4.76
|
|
August 2008
|
|
|
1.65
|
|
|
|
1.06
|
|
|
|
7.45
|
|
|
|
5.21
|
|
September 2008
|
|
|
1.70
|
|
|
|
1.06
|
|
|
|
7.25
|
|
|
|
4.19
|
|
October 2008
|
|
|
1.15
|
|
|
|
0.90
|
|
|
|
5.07
|
|
|
|
2.95
|
|
60
Item 10. Additional Information
Constitution
The Companys 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
The Company entered into an employment contract in fiscal 2007 with Warren Lancaster, the Companys
VP Commercial and Corporate Development. This employment agreement is filed as Exhibit 4.9 to the
Companys Annual Report on Form 20-F for the fiscal year ended June 30, 2007 and is incorporated by
reference to this annual report.
The Company entered into employment agreements in fiscal 2006 with Christopher Naughton, the
Companys Chief Executive Officer, Professor Alan Husband, the Companys Research and Development
Director, Ronald Erratt, the Companys Secretary, David Seaton, the Companys Chief Financial
Officer, Bryan Palmer, the Companys Operations General Manager and Craig Kearney, the Companys
General Manager Consumer Business. These employment agreements were filed as Exhibits 4.1 through
4.8 to the Companys Annual Report on Form 20-F for the fiscal year ended June 30, 2006 filed with
the SEC on November 29, 2006 and are incorporated by reference to this Annual Report
There have been no other 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.
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 shares 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).
61
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 outstanding shares of an entity such as Novogen, whose
total share value or gross assets exceed A$100 million, unless the person is a U.S. investor, in
which case a threshold of A$913 million rather than A$100 million threshold applies. Where an
acquisition is made in breach of these requirements, the Australian Treasurer may make an order
requiring the acquirer to dispose of those shares within a specified period of time. In addition,
if a foreign person acquires shares 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 those shares within a specified 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 shares, 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 shares which could otherwise result in the Australian Treasurer making an order
requiring the foreign person to dispose of the shares.
If a foreign person holds more than 15% of the shares 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 totaling over A$100
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 Treasurers approval unless the amount
to be invested or the value of the target Australian company or business exceeds A$913 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 and the Company only owns commercial property which falls
within the exceptions to the prohibition on acquiring Australian urban land. The Companys
Constitution does not contain any additional limitations on a non-residents right to hold or vote
the Companys 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; and
62
(b) 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 may be subject to withholding tax 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 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 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,
to the extent that dividends are paid out of income on which Australian income tax has been levied,
such dividends are considered as franked dividends to that same extent. 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.
Broadly, the 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).
63
Australian capital gains tax (CGT) is payable by non-residents on gains made on 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 holds 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.
However, shares or ADRs will be taxable Australian property and the disposal of such shares or ADRs
will be subject to capital gains tax if they have at any time been used 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 may be eligible to
have their capital gain (after applying any capital losses against it) discounted if they have held
their shares or ADRs for at least 12 months. The CGT discount is 50%. 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 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.
64
Non-residents 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 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
will not be subject to tax in Australia unless the profits are attributable to the carrying on of a
business through a permanent establishment of the non-resident 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 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. shareholder. However, the transfer by a U.S. resident 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 SECs website at www.sec.gov.
65
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
because all of the Companys long-term borrowings relate to lease agreements that contain fixed
rates of interest. 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 16.
Foreign Currency Risk
The Company conducts a portion of its business in various foreign currencies, primarily in the U.S.
and the U.K. As of June 30, 2008, the Company had not established a foreign currency hedging
program. 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 costs are local currency
based. Net foreign currency gain in fiscal year 2008 was A$937,000 compared with net foreign
currency gain of A$893,000 in fiscal year 2007.
For additional disclosure regarding market risk see Item 18 Note 16.
Item 12. Description of Securities Other than Equity Securities
Item 12 details are not required to be disclosed as part of the Annual Report.
66
PART II
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 Companys management, with the
participation of the Companys Chief Executive Officer and Chief Financial Officer, evaluated the
effectiveness of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act). Based on that evaluation, the Companys Chief Executive
Officer and Chief Financial Officer have concluded that the Companys 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 SECs rules and forms.
(b) Managements 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
Limiteds internal control was designed to provide reasonable assurance to the Companys 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 managements 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.
67
Management assessed the effectiveness of the Companys internal control over financial reporting as
of June 30, 2008 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 believes that the Companys internal control over financial reporting is effective as of
June 30, 2008.
(c) Attestation Report
The attestation report of the Companys independent registered public accounting firm regarding the
Companys internal control over financial reporting appears in the independent public account
firms report on page 74.
(d) Changes in Internal Controls
During the fiscal year ended June 30, 2008, there has been no change in internal control over
reporting that has materially affected or is reasonably likely to materially affect our internal
control over financial reporting.
Item 16. Reserved
Item 16A. Audit Committee Financial Expert
The Board of Directors has determined that Mr. Geoffrey Leppinus, qualifies as an audit committee
financial expert as that term is defined in Item 16A of Form 20-F. Mr. Leppinus meets the
independence requirements of the Nasdaq Global Market and SECs rules and regulations.
Item 16B. Code of Ethics
The Company has adopted a Code of Ethics that applies to all its employees, Executive Officers and
Directors, including its Chief Executive Officer, 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 Limiteds 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 Companys website.
68
Item 16C. Principal Accounting Fees and Services
BDO Kendalls (NSW) (BDO) has audited the Companys annual financial statements acting as the
independent registered public accountant for the fiscal years ended June 30, 2008 and 2007.
The charts below set forth the total fees for services performed by BDO in 2008 and 2007 and
summarizes these amounts by the category of service.
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
2007
|
BDO Kendalls
|
|
A$000
|
|
A$000
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit fees
|
|
|
334
|
|
|
|
264
|
|
Audit related fees
|
|
|
29
|
|
|
|
14
|
|
Tax fees
|
|
|
26
|
|
|
|
40
|
|
Other Fees
|
|
|
8
|
|
|
|
4
|
|
|
|
|
Total fees
|
|
|
397
|
|
|
|
322
|
|
|
|
|
Audit fees
The audit fees include the aggregate fees incurred in fiscal years 2008 and 2007 for professional
services rendered in connection with the audit of the Companys 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 Companys Annual Report on Form 20-F, consents and other services related to SEC matters).
Audit Related Services
Fees for audit related services billed in each of the fiscal years 2008 and 2007 include audit
related services provided in connection with the filing of a registration statement for Marshall
Edwards and the requirements of the provisions of government grant agreements pursuant to which the
Company receives reimbursement of certain expenses incurred in research and development including
START grants and Pharmaceutical Partnership Program.
Tax Fees
Tax fees billed in each of the fiscal years 2008 and 2007 were for the preparation of tax returns.
All Other Fees
Other fees incurred by the Company in fiscal years 2008 and 2007 relate to the costs associated
with regulatory compliance and other general matters.
69
Pre-approval Policies and Procedures
The Audit Committee Charter sets forth the Companys 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.
70
PART III
Item 17. Financial Statements
Not Applicable
Item 18. Financial Statements
The financial statements filed as part of this Annual Report are included on pages 76 through 123
hereof.
Item 19. Exhibits
(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
|
|
Employment Contract between the Company and Professor Alan
Husband dated June 21, 2006. (4)
|
|
|
|
4.4
|
|
Lease between Kendall Glen Pty Limited (Lessor) and Novogen
Laboratories Pty Ltd for the Companys corporate headquarters
at 140 Wicks Road, North Ryde, New South Wales. (3)
|
|
|
|
4.5
|
|
Employment Contract between the Company and Bryan Palmer dated
June 21, 2006. (4)
|
|
|
|
4.6
|
|
Employment Contract between the Company and Craig Kearney
dated June 21, 2006. (4)
|
|
|
|
4.7
|
|
Employment Contract between the Company and David Seaton dated
June 21, 2006. (4)
|
|
|
|
4.8
|
|
Employment Contract between the Company and Ronald Erratt
dated June 21 30, 2006. (4)
|
|
|
|
4.9
|
|
Employment Contract between the Company and Warren Lancaster
dated June 21, 2006. (5)
|
71
|
|
|
Exhibit
|
|
|
No.
|
|
Exhibit Description
|
|
|
|
8.1
|
|
Company Subsidiaries. (*)
|
|
|
|
12.1
|
|
Certification of Chief Executive Officer pursuant to Rule 13a
14(a) of the Securities Exchange Act of 1934, as amended.
(*)
|
|
|
|
12.2
|
|
Certification of Chief Financial Officer a pursuant to Rule
13a 14(a) of the Securities Exchange Act of 1934, as
amended. (*)
|
|
|
|
13.1
|
|
Certification by the Chief 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.
|
|
(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)
|
72
Report of Independent Registered Public Accounting Firm
The Board of Directors
Novogen Limited
We have audited the accompanying consolidated balance sheets of Novogen Limited as of June 30, 2008
and 2007 and the related consolidated income statements, consolidated statements of changes in
equity, and consolidated statements of cash flows for each of the three years in the period ended
June 30, 2008. These consolidated financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these consolidated financial statements
based on our audit.
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 as of June 30, 2008 and 2007, and the
consolidated results of its operations and its cash flows for each of the three years in the period
ended June 30, 2008 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), the effectiveness of Novogen Limiteds internal control over financial
reporting as of June 30, 2008, 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 November 28, 2008 expressed an unqualified opinion thereon.
BDO Kendalls (NSW)
Sydney, NSW Australia
November 28, 2008.
73
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors
Novogen Limited
We have audited Novogen Limiteds internal control over financial reporting as of June 30, 2008,
based on criteria established in
Internal ControlIntegrated Framework
issued by the Committee of
Sponsoring Organizations of the Treadway Commission (the COSO criteria). Novogen Limiteds
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 Item15(b), Managements Report on Internal Control Over Financial Reporting. Our
responsibility is to express an opinion on the companys 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 companys 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 companys 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 companys 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, 2008, based on the COSO criteria.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the accompanying consolidated balance sheets of Novogen Limited as of June
30, 2008 and June 30, 2007, and the related consolidated income statements, consolidated statements
of changes in equity and consolidated statements of cash flows for each of the three years in the
period ended June 30, 2008 and our report dated November 28, 2008 expressed an unqualified opinion.
BDO Kendalls (NSW)
Sydney, NSW, Australia
November 28, 2008
74
Directors Declaration
In accordance with a resolution of the Directors of Novogen Limited, I state that:
1.
|
|
In the opinion of the Directors:
|
|
a)
|
|
the financial statements and notes of the Company are in accordance with the
Corporations Act 2001, including:
|
|
i)
|
|
giving a true and fair view of the Companys financial position as at June
30, 2008 and of their performance for the year ended on that date; and
|
|
|
ii)
|
|
complying with Accounting Standards and Corporations Regulations 2001; and
|
|
b)
|
|
there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable.
|
2.
|
|
This declaration has been made after receiving the declarations required to be made to the
directors in accordance with section 295A of the Corporations Act 2001 for the financial
period ending June 30, 2008.
|
|
3.
|
|
In the opinion of the Directors, as at the date of this declaration, there are reasonable
grounds to believe that the members of the Closed Group identified in Note 18, will be able to
meet any obligations or liabilities to which they are or may become subject to, by virtue of
the Deed of Cross Guarantee.
|
On behalf of the Board,
Christopher Naughton
Managing Director
Sydney, November 28, 2008
75
INCOME STATEMENTS
for the year ended 30 June, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
2007
|
|
2006
|
|
2008
|
|
|
Notes
|
|
A$000
|
|
A$000
|
|
A$000
|
|
US$000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
2
|
|
|
|
13,283
|
|
|
|
17,295
|
|
|
|
17,445
|
|
|
|
12,701
|
|
Cost of sales
|
|
|
|
|
|
|
(4,090
|
)
|
|
|
(6,945
|
)
|
|
|
(5,445
|
)
|
|
|
(3,911
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
9,193
|
|
|
|
10,350
|
|
|
|
12,000
|
|
|
|
8,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
2
|
|
|
|
1,623
|
|
|
|
2,710
|
|
|
|
793
|
|
|
|
1,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research & development expenses
|
|
|
|
|
|
|
(18,811
|
)
|
|
|
(16,134
|
)
|
|
|
(12,014
|
)
|
|
|
(17,987
|
)
|
Selling & promotional expenses
|
|
|
|
|
|
|
(6,134
|
)
|
|
|
(7,908
|
)
|
|
|
(9,013
|
)
|
|
|
(5,865
|
)
|
Shipping and handling expenses
|
|
|
|
|
|
|
(300
|
)
|
|
|
(392
|
)
|
|
|
(556
|
)
|
|
|
(287
|
)
|
General and administrative expenses
|
|
|
|
|
|
|
(9,792
|
)
|
|
|
(12,902
|
)
|
|
|
(8,769
|
)
|
|
|
(9,363
|
)
|
Other expenses
|
|
|
|
|
|
|
(528
|
)
|
|
|
(17
|
)
|
|
|
(301
|
)
|
|
|
(504
|
)
|
Finance costs
|
|
|
|
|
|
|
(24
|
)
|
|
|
(2
|
)
|
|
|
(52
|
)
|
|
|
(23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax
|
|
|
|
|
|
|
(24,773
|
)
|
|
|
(24,295
|
)
|
|
|
(17,912
|
)
|
|
|
(23,687
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
3
|
|
|
|
(4
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the period
|
|
|
|
|
|
|
(24,777
|
)
|
|
|
(24,296
|
)
|
|
|
(17,913
|
)
|
|
|
(23,691
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss attributable to minority interest
|
|
|
|
|
|
|
4,513
|
|
|
|
4,315
|
|
|
|
1,693
|
|
|
|
4,315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss attributable to members of
Novogen Limited
|
|
|
13
|
(c)
|
|
|
(20,264
|
)
|
|
|
(19,981
|
)
|
|
|
(16,220
|
)
|
|
|
(19,376
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings/(loss) per
share (cents)
|
|
|
4
|
|
|
|
(20.8
|
)
|
|
|
(20.5
|
)
|
|
|
(16.7
|
)
|
|
|
(19.9
|
)
|
The above Income Statements should be read in conjunction with the accompanying notes.
76
BALANCE SHEETS
as at 30 June, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
|
Notes
|
|
A$000
|
|
A$000
|
|
US$000
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
5
|
|
|
|
35,386
|
|
|
|
39,511
|
|
|
|
33,836
|
|
Trade and other receivables
|
|
|
6
|
|
|
|
4,969
|
|
|
|
4,276
|
|
|
|
4,751
|
|
Inventories
|
|
|
7
|
|
|
|
1,929
|
|
|
|
3,899
|
|
|
|
1,845
|
|
Other current assets
|
|
|
8
|
|
|
|
542
|
|
|
|
630
|
|
|
|
518
|
|
Assets held for sale
|
|
|
9
|
|
|
|
|
|
|
|
2,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
|
|
|
42,826
|
|
|
|
50,519
|
|
|
|
40,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
10
|
|
|
|
575
|
|
|
|
838
|
|
|
|
550
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current assets
|
|
|
|
|
|
|
575
|
|
|
|
838
|
|
|
|
550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
|
|
|
|
|
43,401
|
|
|
|
51,357
|
|
|
|
41,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
11
|
|
|
|
6,671
|
|
|
|
5,920
|
|
|
|
6,379
|
|
Provisions
|
|
|
12
|
|
|
|
708
|
|
|
|
539
|
|
|
|
677
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
|
|
|
7,379
|
|
|
|
6,459
|
|
|
|
7,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions
|
|
|
12
|
|
|
|
385
|
|
|
|
272
|
|
|
|
368
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current liabilities
|
|
|
|
|
|
|
385
|
|
|
|
272
|
|
|
|
368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
|
|
|
|
7,764
|
|
|
|
6,731
|
|
|
|
7,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS
|
|
|
|
|
|
|
35,637
|
|
|
|
44,626
|
|
|
|
34,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed equity
|
|
|
13
|
(a)
|
|
|
200,432
|
|
|
|
191,876
|
|
|
|
191,653
|
|
Reserves
|
|
|
13
|
(b)
|
|
|
(7,491
|
)
|
|
|
(5,155
|
)
|
|
|
(7,163
|
)
|
Accumulated losses
|
|
|
13
|
(c)
|
|
|
(162,251
|
)
|
|
|
(146,147
|
)
|
|
|
(155,144
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Parent interest
|
|
|
|
|
|
|
30,690
|
|
|
|
40,574
|
|
|
|
29,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority Interest
|
|
|
13
|
(d)
|
|
|
4,947
|
|
|
|
4,052
|
|
|
|
4,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EQUITY
|
|
|
|
|
|
|
35,637
|
|
|
|
44,626
|
|
|
|
34,076
|
|
|
|
|
|
|
|
|
|
|
|
|
The above Balance Sheets should be read in conjunction with the accompanying notes.
77
STATEMENTS OF CHANGES IN EQUITY
for the year ended 30 June, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
Contributed
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Minority
|
|
Total
|
|
Total
|
|
|
equity
|
|
losses
|
|
Reserves
|
|
Total
|
|
interest
|
|
equity
|
|
equity
|
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
$000
|
|
US$000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 July 2005
|
|
|
176,235
|
|
|
|
(116,069
|
)
|
|
|
(3,413
|
)
|
|
|
56,753
|
|
|
|
3,739
|
|
|
|
60,492
|
|
|
|
57,842
|
|
Exchange differences on translation
of foreign operations
|
|
|
|
|
|
|
|
|
|
|
566
|
|
|
|
566
|
|
|
|
90
|
|
|
|
656
|
|
|
|
627
|
|
Share-based payments
|
|
|
|
|
|
|
589
|
|
|
|
|
|
|
|
589
|
|
|
|
|
|
|
|
589
|
|
|
|
563
|
|
|
|
|
|
|
Net income recognised directly in
equity
|
|
|
176,235
|
|
|
|
(115,480
|
)
|
|
|
(2,847
|
)
|
|
|
57,908
|
|
|
|
3,829
|
|
|
|
61,737
|
|
|
|
59,033
|
|
Options exercised (1)
|
|
|
754
|
|
|
|
|
|
|
|
|
|
|
|
754
|
|
|
|
|
|
|
|
754
|
|
|
|
721
|
|
Loss for the period
|
|
|
|
|
|
|
(16,220
|
)
|
|
|
|
|
|
|
(16,220
|
)
|
|
|
(1,693
|
)
|
|
|
(17,913
|
)
|
|
|
(17,129
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2006
|
|
|
176,989
|
|
|
|
(131,700
|
)
|
|
|
(2,847
|
)
|
|
|
42,442
|
|
|
|
2,136
|
|
|
|
44,578
|
|
|
|
42,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 July, 2006
|
|
|
176,989
|
|
|
|
(131,700
|
)
|
|
|
(2,847
|
)
|
|
|
42,442
|
|
|
|
2,136
|
|
|
|
44,578
|
|
|
|
42,625
|
|
Exchange differences on translation
of foreign operations
|
|
|
|
|
|
|
|
|
|
|
(2,607
|
)
|
|
|
(2,607
|
)
|
|
|
(1,312
|
)
|
|
|
(3,919
|
)
|
|
|
(3,747
|
)
|
Share-based payments
|
|
|
|
|
|
|
2,303
|
|
|
|
|
|
|
|
2,303
|
|
|
|
478
|
|
|
|
2,781
|
|
|
|
2,659
|
|
|
|
|
|
|
Net income recognised directly in
equity
|
|
|
176,989
|
|
|
|
(129,397
|
)
|
|
|
(5,454
|
)
|
|
|
42,138
|
|
|
|
1,302
|
|
|
|
43,440
|
|
|
|
41,537
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue of share capital by subsidiary
|
|
|
24,371
|
|
|
|
|
|
|
|
|
|
|
|
24,371
|
|
|
|
|
|
|
|
24,371
|
|
|
|
23,304
|
|
less minority interest
|
|
|
(5,277
|
)
|
|
|
|
|
|
|
|
|
|
|
(5,277
|
)
|
|
|
5,277
|
|
|
|
|
|
|
|
|
|
Options exercised (2)
|
|
|
513
|
|
|
|
|
|
|
|
|
|
|
|
513
|
|
|
|
|
|
|
|
513
|
|
|
|
491
|
|
Loss for the period
|
|
|
|
|
|
|
(19,981
|
)
|
|
|
|
|
|
|
(19,981
|
)
|
|
|
(4,315
|
)
|
|
|
(24,296
|
)
|
|
|
(23,232
|
)
|
Share of opening equity transferred
to minority interest due to
issuance of shares by subsidiary
|
|
|
(4,720
|
)
|
|
|
3,231
|
|
|
|
299
|
|
|
|
(1,190
|
)
|
|
|
1,788
|
|
|
|
598
|
|
|
|
572
|
|
|
|
|
|
|
At 30 June, 2007
|
|
|
191,876
|
|
|
|
(146,147
|
)
|
|
|
(5,155
|
)
|
|
|
40,574
|
|
|
|
4,052
|
|
|
|
44,626
|
|
|
|
42,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 July, 2007
|
|
|
191,876
|
|
|
|
(146,147
|
)
|
|
|
(5,155
|
)
|
|
|
40,574
|
|
|
|
4,052
|
|
|
|
44,626
|
|
|
|
42,672
|
|
Exchange differences on translation
of foreign operations
|
|
|
|
|
|
|
|
|
|
|
(2,729
|
)
|
|
|
(2,729
|
)
|
|
|
(1,046
|
)
|
|
|
(3,775
|
)
|
|
|
(3,610
|
)
|
Share-based payments
|
|
|
|
|
|
|
850
|
|
|
|
|
|
|
|
850
|
|
|
|
284
|
|
|
|
1,134
|
|
|
|
1,084
|
|
|
|
|
|
|
Net income recognised directly in
equity
|
|
|
191,876
|
|
|
|
(145,297
|
)
|
|
|
(7,884
|
)
|
|
|
38,695
|
|
|
|
3,290
|
|
|
|
41,985
|
|
|
|
40,146
|
|
Issue of share capital by subsidiary
|
|
|
18,429
|
|
|
|
|
|
|
|
|
|
|
|
18,429
|
|
|
|
|
|
|
|
18,429
|
|
|
|
17,622
|
|
less minority interest
|
|
|
(5,334
|
)
|
|
|
|
|
|
|
|
|
|
|
(5,334
|
)
|
|
|
5,334
|
|
|
|
|
|
|
|
|
|
Loss for the period
|
|
|
|
|
|
|
(20,264
|
)
|
|
|
|
|
|
|
(20,264
|
)
|
|
|
(4,513
|
)
|
|
|
(24,777
|
)
|
|
|
(23,692
|
)
|
Share of opening equity transferred
to minority interest due to
issuance of shares by subsidiary
|
|
|
(4,539
|
)
|
|
|
3,310
|
|
|
|
393
|
|
|
|
(836
|
)
|
|
|
836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June, 2008
|
|
|
200,432
|
|
|
|
(162,251
|
)
|
|
|
(7,491
|
)
|
|
|
30,690
|
|
|
|
4,947
|
|
|
|
35,637
|
|
|
|
34,076
|
|
|
|
|
|
|
|
|
|
(1)
|
|
During the period 248,392 Novogen Limited shares were issued following the exercise of
options.
|
|
(2)
|
|
During the period 300,207 Novogen Limited shares were issued following the exercise of
options.
|
The above Statements of Changes in Equity should be read in conjunction with the accompanying
notes.
78
STATEMENTS OF CASH FLOWS
for the year ended 30 June, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
2006
|
|
2008
|
|
|
A$000
|
|
A$000
|
|
A$000
|
|
US$000
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)/profit before tax
|
|
|
(24,773
|
)
|
|
|
(24,295
|
)
|
|
|
(17,912
|
)
|
|
|
(23,688
|
)
|
Income tax paid
|
|
|
(4
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net (loss)/profit
to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortisation
|
|
|
353
|
|
|
|
976
|
|
|
|
1,389
|
|
|
|
338
|
|
Net (gain)/loss on disposal of property, plant and
equipment
|
|
|
(1,623
|
)
|
|
|
17
|
|
|
|
291
|
|
|
|
(1,552
|
)
|
Share-based payments
|
|
|
602
|
|
|
|
2,686
|
|
|
|
589
|
|
|
|
576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(increase)/decrease in trade receivables
|
|
|
300
|
|
|
|
388
|
|
|
|
574
|
|
|
|
287
|
|
(increase)/decrease in other receivables
|
|
|
1,007
|
|
|
|
(128
|
)
|
|
|
(829
|
)
|
|
|
963
|
|
(increase)/decrease in inventories
|
|
|
1,970
|
|
|
|
4,487
|
|
|
|
1,682
|
|
|
|
1,884
|
|
(increase)/decrease in prepayments
|
|
|
88
|
|
|
|
55
|
|
|
|
136
|
|
|
|
84
|
|
increase/(decrease) in trade and other payables
|
|
|
751
|
|
|
|
274
|
|
|
|
145
|
|
|
|
718
|
|
increase/(decrease) in provisions
|
|
|
282
|
|
|
|
(48
|
)
|
|
|
(166
|
)
|
|
|
270
|
|
exchange rate change on opening cash
|
|
|
937
|
|
|
|
981
|
|
|
|
(335
|
)
|
|
|
896
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in operating activities
|
|
|
(20,110
|
)
|
|
|
(14,608
|
)
|
|
|
(14,437
|
)
|
|
|
(19,228
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of property, plant and equipment
|
|
|
(95
|
)
|
|
|
(299
|
)
|
|
|
(319
|
)
|
|
|
(91
|
)
|
Proceeds from sale of plant and equipment
|
|
|
3,831
|
|
|
|
262
|
|
|
|
10
|
|
|
|
3,663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from/(used in) investing activities
|
|
|
3,736
|
|
|
|
(37
|
)
|
|
|
(309
|
)
|
|
|
3,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from the issue of ordinary shares
|
|
|
|
|
|
|
513
|
|
|
|
754
|
|
|
|
|
|
Proceeds from the issue of shares by subsidiary
|
|
|
18,961
|
|
|
|
24,371
|
|
|
|
|
|
|
|
18,130
|
|
Repayment of borrowings
|
|
|
|
|
|
|
(15
|
)
|
|
|
(750
|
)
|
|
|
|
|
Investment in short-term deposits
|
|
|
(2,000
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,912
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by/(used in) financing activities
|
|
|
16,961
|
|
|
|
24,869
|
|
|
|
4
|
|
|
|
16,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents
|
|
|
587
|
|
|
|
10,224
|
|
|
|
(14,742
|
)
|
|
|
562
|
|
Cash and cash equivalents at beginning of period
|
|
|
38,511
|
|
|
|
30,513
|
|
|
|
44,110
|
|
|
|
36,824
|
|
Effect of exchange rates on cash holdings in
foreign currencies
|
|
|
(4,712
|
)
|
|
|
(4,226
|
)
|
|
|
995
|
|
|
|
(4,506
|
)
|
Movements in secured facility
|
|
|
|
|
|
|
2,000
|
|
|
|
150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
|
34,386
|
|
|
|
38,511
|
|
|
|
30,513
|
|
|
|
32,880
|
|
|
|
|
|
|
The above Statements of Cash Flows should be read in conjunction with the accompanying notes.
79
NOTES TO THE FINANCIAL STATEMENTS
The financial report of Novogen Limited for the year ended 30 June, 2008 was authorised for issue
in accordance with a resolution of the Board of Directors on 27 August, 2008.
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, other
authorative pronouncements of the AASB and UIG Interpretations. 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.
Statement of compliance
This financial report complies with International Financial Reporting Standards (IFRS) as adopted
by the International Accounting Standards Board (IASB).
References in this financial report to Australian Accounting Standards refer to the Australian
equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures
that the financial report, comprising the financial statements and notes thereto, complies with
IFRS as adopted by the IASB.
Basis of consolidation
The consolidated financial statements comprise the financial statements of Novogen Limited and its
subsidiaries as at 30 June each year (the Group).
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.
Minority 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 Income Statement and
within equity in the consolidated Balance Sheet.
80
Significant accounting judgements, estimates and assumptions
(i) Significant accounting judgements
In the process of applying the Groups 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.
(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 15.
Impairments
The Group assesses impairment at each reporting date 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-use calculations performed in assessing recoverable amounts
incorporate a number of key estimates.
Adoption of new accounting standards
The Group has adopted AASB 7
Financial Instruments: Disclosures
and all consequential amendments
which became applicable on 1 January, 2007. The adoption of this standard has only affected the
disclosure in these financial statements. There has been no affect on profit and loss or the
financial position of the Group.
The Group has adopted AASB Interpretation 11 which clarifies the accounting treatment under AASB 2:
Share-Based Payments
where the parent entity grants rights to its equity instruments to employees
of its subsidiaries, or where a subsidiary grants to its employees rights to equity instruments of
its parent. The Interpretation applies to periods commencing on or after 1 March 2007. Novogen
Limited issued share options to employees of subsidiaries for employee services rendered to these
subsidiaries. Comparatives in the 30 June 2008 financial report of the parent entity have been
restated to increase the investment in subsidiary and equity by $549,000 at 30 June, 2007. A
corresponding restatement to increase the allowance for write down to recoverable amount of the
investment and decrease equity by $549,000 has also been made at 30 June, 2007.
AASB 2007 4 inserts accounting treatment options that currently exist under IFRSs into AIFRSs and
removes Australian-specific disclosures that were added into AIFRSs on first-time adoption from 1
January, 2005. These amendments apply to periods commencing on or after 1 July, 2007. AASB 2007 -4 amends AASB 107 whereby it allows the use of the
indirect method of reporting cash flows from operations in the Statements of Cash Flows. The Group
has adopted the indirect method for the financial year ending 30 June, 2008 and has restated the
prior year to conform with the new reporting method.
81
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.
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 income statement
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.
Borrowing costs
Borrowing costs are recognised as an expense when incurred.
82
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 income statement on a straight-line
basis over the lease term. Lease incentives are recognised in the income statement 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 Balance Sheet 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 Statements 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 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.
83
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.
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.
Non-current assets held for sale
Non-current assets are classified as held for sale and stated at the lower of their carrying amount
and fair value less cost to sell if their carrying amount will be recovered principally through a
sale transaction rather than through continuing use.
An impairment loss is recognised for any initial or subsequent write-down of the asset to fair
value less costs to sell. A gain is recognised for any subsequent increases in fair value less cost
to sell of an asset, but not in excess of any cumulative impairment loss previously recognised. A
gain or loss not previously recognised by the date of the sale of the non-current asset is
recognised at the date of derecognition.
Non-current assets are not depreciated or amortised while they are classified as held for sale.
Non-current assets classified as held for sale are presented separately from the other assets in
the balance sheet.
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 at the balance sheet date.
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.
84
Translation of financial reports of overseas operations
As at the reporting date the assets and liabilities of overseas subsidiaries are translated into
the presentation currency of the Group at the rate of exchange ruling at the balance sheet date and
the Income Statements 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 Income Statement. The exchange differences
arising on the retranslation of overseas operations which have a functional 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 balance sheet
date.
Deferred income tax is provided on all temporary differences at the balance sheet date 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 each balance sheet date 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 at the balance sheet date.
Unrecognised deferred income tax assets are reassessed at each balance sheet date 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 Income Statement.
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.
|
85
The net amount of GST recoverable from, or payable to, the taxation authority is included as part
of receivables or payables in the Balance Sheet.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable
to, the taxation authority.
Property, plant & 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 each reporting date, 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 assets 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.
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.
86
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 reporting date. Liabilities for annual leave
are recognised in current provisions in respect of employees services up to the reporting date.
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 reporting date 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 reporting date 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.
87
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 14.
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 reporting date until vesting date reflects (i) the extent to
which the vesting period has expired and (ii) the Groups best estimate of the number of equity
instruments that will ultimately vest. The income statement 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 minority interests, the parent
company may make a gain or loss due to dilution of minority interests. These gains or losses are
recognised in equity attributable to the parent company.
88
Earnings per share (EPS)
Basic EPS is calculated as net profit/(loss) attributable to members of the parent, adjusted to
exclude costs of servicing equity (other than dividends) and preference share dividends, divided by
the weighted average number of ordinary shares, adjusted for any bonus element.
Diluted EPS is calculated as net profit/(loss) attributable to members of the parent, adjusted for:
|
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costs of servicing equity (other than dividends) and preference share dividends;
|
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|
|
|
the after tax effect of dividends and interest associated with dilutive potential
ordinary shares that have been recognised as expenses; and
|
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|
|
|
other non-discretionary changes in revenues or expenses during the period that would
result from the dilution of potential ordinary shares,
|
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares
adjusted for any bonus element.
Deferred offering costs
Where costs associated with a capital raising have been incurred at balance date and it is probable
that the capital raising will be successfully completed after balance date, 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.
89
New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for
the 30 June, 2008 reporting period. The Groups and parent entitys assessment of the impact of
these new standards and interpretations is set out below.
i) AASB 8
Operating Segments
and AASB 2007 3
Amendments to Australian Accounting Standards
arising from AASB 8
AASB 8 and AASB 2007-3 are effective for annual reporting periods commencing on or after 1 January,
2009. AASB 8 will result in a significant change in the approach to segment reporting, as it
requires adoption of a management approach to reporting on financial performance. The information
being reported will be based on what the key decision makers use internally for evaluating segment
performance and deciding how to allocate resources to operating segments. The Group has not yet
adopted AASB 8. Application of AASB 8 may result in different segments, segment results and
different types of information being reported in the segment note of the financial report. However,
at this stage it is not expected to affect any of the amounts recognised in the financial
statements upon adoption.
ii) Revised AASB 123
Borrowing costs
and AASB 2007-6 Amendments to Australian Accounting Standards
arising from AASB 123 [ AASB 1, AASB 101, AASB 107,AASB 111, AASB 116 & AASB 138 and
Interpretations 1 & 12].
The revised AASB 123 is applicable to annual reporting periods commencing on or after 1 January,
2009. It has removed the option to expense all borrowing costs and when adopted will require the
capitalisation of all borrowing costs directly attributable to the acquisition, construction or
production of a qualifying asset. We have assessed the application of this standard and there will
be no impact on the Groups or the parent entitys financial statements upon adoption.
iii) Revised AASB 101
Presentation of Financial Statements and AASB 2007-8 Amendments to Australian
Accounting Standards arising from AASB 101
A revised AASB 101 was issued in September 2007 and is applicable for all annual reporting periods
beginning on or after 1 January, 2009. It requires the presentation of a Statement of Comprehensive
Income and makes changes to the Statement of Changes in Equity, but will not affect any of the
amounts recognised in the financial statements. The Group intends to apply the revised standard
from 1 July, 2009.
90
Note 2 (LOSS) BEFORE INCOME TAX
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|
|
Consolidated
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
A$000
|
|
|
A$000
|
|
|
A$000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue and expenses from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of goods
|
|
|
9,400
|
|
|
|
10,709
|
|
|
|
13,500
|
|
|
|
|
|
|
|
9,400
|
|
|
|
10,709
|
|
|
|
13,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank interest
|
|
|
1,773
|
|
|
|
1,912
|
|
|
|
1,460
|
|
Royalties
|
|
|
1,749
|
|
|
|
1,746
|
|
|
|
1,753
|
|
Licence fees
|
|
|
224
|
|
|
|
1,122
|
|
|
|
|
|
Litigation settlements
|
|
|
|
|
|
|
1,026
|
|
|
|
613
|
|
Other
|
|
|
137
|
|
|
|
780
|
|
|
|
119
|
|
|
|
|
|
|
|
3,883
|
|
|
|
6,586
|
|
|
|
3,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
13,283
|
|
|
|
17,295
|
|
|
|
17,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Other income
|
|
|
|
|
|
|
|
|
|
|
|
|
Government grants research and development
|
|
|
|
|
|
|
2,710
|
|
|
|
783
|
|
Net gains on disposal of property, plant
and equipment
|
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|
1,623
|
|
|
|
|
|
|
|
10
|
|
|
|
|
|
|
|
1,623
|
|
|
|
2,710
|
|
|
|
793
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
(c) Other expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-down of plant and equipment
|
|
|
|
|
|
|
|
|
|
|
301
|
|
Loss on disposal of plant and equipment
|
|
|
|
|
|
|
17
|
|
|
|
|
|
Reassessment of expected grant income
|
|
|
915
|
|
|
|
|
|
|
|
|
|
Reversal of inventory impairment provision
|
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(387
|
)
|
|
|
|
|
|
|
|
|
Impairment loss financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
(29
|
)
|
|
|
29
|
|
|
|
|
|
Other debtors
|
|
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
561
|
|
|
|
46
|
|
|
|
301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) Finance costs
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance charges payable under finance leases
|
|
|
|
|
|
|
2
|
|
|
|
52
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(e) Depreciation, amortisation and cost of
inventories included in the income statement
|
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|
|
|
|
|
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Included in cost of sales:
|
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|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
2
|
|
|
|
367
|
|
|
|
499
|
|
Amortisation of leased assets
|
|
|
|
|
|
|
|
|
|
|
197
|
|
91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
A$'000
|
|
|
A$'000
|
|
|
A$'000
|
|
|
|
|
(f) Lease payments and other expenses included in
the income statement
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in administrative expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
351
|
|
|
|
609
|
|
|
|
669
|
|
Amortisation
|
|
|
|
|
|
|
|
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum lease payments operating
leases
|
|
|
663
|
|
|
|
668
|
|
|
|
669
|
|
Net foreign exchange differences
|
|
|
937
|
|
|
|
893
|
|
|
|
(112
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(g) Employee benefit expense
|
|
|
|
|
|
|
|
|
|
|
|
|
Wages and salaries
|
|
|
7,248
|
|
|
|
8,163
|
|
|
|
7,121
|
|
Workers compensation costs
|
|
|
61
|
|
|
|
67
|
|
|
|
66
|
|
Defined contribution plan expense
|
|
|
1,147
|
|
|
|
1,022
|
|
|
|
735
|
|
Share-based payments expense
|
|
|
576
|
|
|
|
549
|
|
|
|
562
|
|
|
|
|
|
|
|
9,032
|
|
|
|
9,801
|
|
|
|
8,484
|
|
|
|
|
92
Note 3 INCOME TAX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
2006
|
|
|
A$000
|
|
A$000
|
|
A$000
|
|
|
|
A reconciliation between tax expense and the product of accounting
(loss)/profit before income tax multiplied by the Groups
applicable tax rate is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounting (loss)/profit before tax from operations
|
|
|
(24,773
|
)
|
|
|
(24,295
|
)
|
|
|
(17,912
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the Groups statutory income tax rate of 30% (2007 and 2006: 30%)
|
|
|
(7,432
|
)
|
|
|
(7,289
|
)
|
|
|
(5,374
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign tax rate differentials
|
|
|
619
|
|
|
|
(250
|
)
|
|
|
(132
|
)
|
Non deductible expenses
|
|
|
307
|
|
|
|
975
|
|
|
|
598
|
|
Deductible balancing adjustment
|
|
|
3
|
|
|
|
|
|
|
|
|
|
Research and development allowance
|
|
|
(1,165
|
)
|
|
|
(143
|
)
|
|
|
(466
|
)
|
|
|
|
Sub-total
|
|
|
(7,668
|
)
|
|
|
(6,707
|
)
|
|
|
(5,374
|
)
|
Tax losses and timing differences not recognised
|
|
|
7,672
|
|
|
|
6,708
|
|
|
|
5,375
|
|
|
|
|
Tax expense
|
|
|
4
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
Components of Income Tax Expense/(Benefit)
|
|
|
|
|
|
|
|
|
|
|
|
|
Current tax
|
|
|
(7,668
|
)
|
|
|
(6,707
|
)
|
|
|
(5,374
|
)
|
Defferred tax
|
|
|
7,672
|
|
|
|
6,708
|
|
|
|
5,375
|
|
|
|
|
Income Tax Expense
|
|
|
4
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
Deferred Income Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
2006
|
|
|
$000
|
|
A$000
|
|
A$000
|
|
|
|
Deferred income tax at 30 June relates to the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
761
|
|
|
|
733
|
|
|
|
806
|
|
Provisions accruals
|
|
|
1,025
|
|
|
|
1,042
|
|
|
|
1,536
|
|
Exchange gains
|
|
|
78
|
|
|
|
549
|
|
|
|
|
|
Other
|
|
|
6
|
|
|
|
113
|
|
|
|
102
|
|
Losses carried forward
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia
|
|
|
33,238
|
|
|
|
24,157
|
|
|
|
19,319
|
|
USA
|
|
|
11,876
|
|
|
|
14,729
|
|
|
|
12,904
|
|
Other countries
|
|
|
3,653
|
|
|
|
5,139
|
|
|
|
4,200
|
|
|
|
|
Total deferred tax assets not recognised
|
|
|
50,637
|
|
|
|
46,462
|
|
|
|
38,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liability
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange losses
|
|
|
|
|
|
|
|
|
|
|
(165
|
)
|
Other
|
|
|
(117
|
)
|
|
|
(304
|
)
|
|
|
(117
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax liability not recognised
|
|
|
(117
|
)
|
|
|
(304
|
)
|
|
|
(282
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset not recognised
|
|
|
50,520
|
|
|
|
46,158
|
|
|
|
38,585
|
|
|
|
|
93
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.
94
Note 4 EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing net loss for the year attributable to
ordinary equity holders 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 ordinary
equity holders of the parent by the weighted average number of ordinary shares outstanding 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. The notional issue of potential
ordinary shares resulting from the exercise of options detailed in Note 15 does not result in
diluted earnings per share that shows a different view of the earnings performance of the Company,
therefore the information has not been disclosed.
Potential ordinary shares (non-dilutive) and not included in determining earnings per share:
2,430,996 options (refer Note 14).
There have been no conversions to, calls of, or subscriptions for ordinary shares or issues of
potential ordinary shares since the reporting date 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
|
|
|
2008
|
|
2007
|
|
2006
|
|
|
A$000
|
|
A$000
|
|
A$000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to ordinary equity holders of the parent
|
|
|
(20,264
|
)
|
|
|
(19,981
|
)
|
|
|
(16,220
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
2007
|
|
2006
|
|
|
Thousands
|
|
Thousands
|
|
Thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares used in
calculating basic and diluted earnings per share
|
|
|
97,594
|
|
|
|
97,567
|
|
|
|
97,207
|
|
|
|
|
95
Note 5 CASH AND CASH EQUIVALENTS
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at bank and in hand
|
|
|
27,930
|
|
|
|
30,059
|
|
Short-term deposits
|
|
|
6,456
|
|
|
|
8,452
|
|
|
|
|
|
|
|
34,386
|
|
|
|
38,511
|
|
|
|
|
|
|
|
|
|
|
Secured cash (Refer Note 16)
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
|
|
|
|
35,386
|
|
|
|
39,511
|
|
|
|
|
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Short-term deposits 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.
Note 6 TRADE AND OTHER RECEIVABLES
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
2,042
|
|
|
|
2,368
|
|
Allowance for doubtful debts
|
|
|
(20
|
)
|
|
|
(46
|
)
|
|
|
|
|
|
|
2,022
|
|
|
|
2,322
|
|
|
|
|
|
|
|
|
|
|
Deposits held
|
|
|
427
|
|
|
|
415
|
|
Term deposits greater than three months to maturity
|
|
|
2,000
|
|
|
|
|
|
Deferred offering costs
|
|
|
114
|
|
|
|
30
|
|
Other debtors
|
|
|
468
|
|
|
|
1,509
|
|
Allowance for doubtful debts other
|
|
|
(62
|
)
|
|
|
|
|
|
|
|
|
|
|
4,969
|
|
|
|
4,276
|
|
|
|
|
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, 2008 trade receivables of $20,000 (2007: $46,000) were considered
doubtful. These amounts have been included in selling and promotional expenses.
96
Parent entity receivables provision represent the non recovery of outstanding intercompany balances
between Novogen Limited and its wholly owned controlled entities with no fixed term for repayment.
Movements in the allowance for doubtful debts were as follows:
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 July, 2007
|
|
|
(46
|
)
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in allowance for the year
|
|
|
29
|
|
|
|
(29
|
)
|
Amounts (recovered)/written off during the year
|
|
|
(3
|
)
|
|
|
(10
|
)
|
|
|
|
Balance at 30 June, 2008
|
|
|
(20
|
)
|
|
|
(46
|
)
|
|
|
|
Past due but not considered doubtful
At 30 June, 2008 trade receivables of $645,000 (2007: $811,000) 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:
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
|
|
|
|
|
|
|
|
|
|
|
|
1 - 30 days overdue
|
|
|
447
|
|
|
|
682
|
|
31 - 60 days overdue
|
|
|
196
|
|
|
|
112
|
|
61 - 90 days overdue
|
|
|
2
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
645
|
|
|
|
811
|
|
|
|
|
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, 2008 other receivables of $86,000 (2007: $65,000) were past due but were not considered
to be doubtful.
97
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
|
|
|
|
|
|
|
|
|
|
|
|
1 - 30 days overdue
|
|
|
9
|
|
|
|
9
|
|
31 - 60 days overdue
|
|
|
28
|
|
|
|
56
|
|
61 - 90 days overdue
|
|
|
|
|
|
|
|
|
91 + days overdue
|
|
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86
|
|
|
|
65
|
|
|
|
|
Other receivable balances which are neither overdue nor impaired are expected to be received when
due.
Related party receivables
Related party receivables see Note 18(a) for terms and conditions.
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 are disclosed in Note 16.
Note 7 INVENTORIES
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Work in progress (at cost)
|
|
|
536
|
|
|
|
2,183
|
|
Finished goods (at cost)
|
|
|
1,393
|
|
|
|
1,716
|
|
|
|
|
|
|
|
1,929
|
|
|
|
3,899
|
|
|
|
|
98
Note 8 OTHER CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
|
|
|
Prepayments
|
|
|
542
|
|
|
|
630
|
|
|
|
|
Note 9 ASSETS HELD FOR SALE
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
|
|
|
Land and buildings
|
|
|
|
|
|
|
2,203
|
|
|
|
|
The extraction facility located at Wyong NSW was decommissioned and the property sold in October
2007.
99
Note 10 PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant and equipment at cost
|
|
|
2,753
|
|
|
|
2,806
|
|
Accumulated depreciation
|
|
|
(2,236
|
)
|
|
|
(2,048
|
)
|
|
|
|
|
|
|
517
|
|
|
|
758
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasehold improvements at cost
|
|
|
112
|
|
|
|
112
|
|
Accumulated depreciation
|
|
|
(54
|
)
|
|
|
(32
|
)
|
|
|
|
|
|
|
58
|
|
|
|
80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property, plant and equipment at cost
|
|
|
2,865
|
|
|
|
2,918
|
|
Accumulated amortisation and depreciation
|
|
|
(2,290
|
)
|
|
|
(2,080
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property, plant and equipment
|
|
|
575
|
|
|
|
838
|
|
|
|
|
Reconciliations
Reconciliations of the carrying amount of plant, property and equipment at the beginning and at the
end of the current financial year:
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
|
|
|
Plant and equipment
|
|
|
|
|
|
|
|
|
Carrying amount at beginning of financial year
|
|
|
758
|
|
|
|
1,950
|
|
Additions
|
|
|
95
|
|
|
|
287
|
|
Disposals
|
|
|
(5
|
)
|
|
|
(766
|
)
|
Depreciation expense
|
|
|
(331
|
)
|
|
|
(713
|
)
|
|
|
|
Carrying amount at end of financial year
|
|
|
517
|
|
|
|
758
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasehold improvements
|
|
|
|
|
|
|
|
|
Carrying amount at beginning of financial year
|
|
|
80
|
|
|
|
90
|
|
Additions
|
|
|
|
|
|
|
12
|
|
Depreciation expense
|
|
|
(22
|
)
|
|
|
(22
|
)
|
|
|
|
Carrying amount at end of financial year
|
|
|
58
|
|
|
|
80
|
|
|
|
|
100
Note 11 TRADE AND OTHER PAYABLES
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables
|
|
|
3,427
|
|
|
|
3,636
|
|
Accrued trade payables
|
|
|
1,239
|
|
|
|
1,346
|
|
Accrued clinical trial payments
|
|
|
2,005
|
|
|
|
938
|
|
|
|
|
|
|
|
6,671
|
|
|
|
5,920
|
|
|
|
|
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 Groups and the parent entitys exposure to foreign exchange risk and
liquidity risk is provided in Note 16.
Fair value
Due to the short term nature of these payables, their carrying value is assumed to approximate
their fair value.
Note 12 PROVISIONS
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
|
|
|
Employee benefit provision
|
|
|
|
|
|
|
|
|
Current
|
|
|
708
|
|
|
|
539
|
|
Non-current
|
|
|
339
|
|
|
|
226
|
|
|
|
|
|
|
|
1,047
|
|
|
|
765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Make good provision
|
|
|
|
|
|
|
|
|
Opening balance at beginning of the year
|
|
|
46
|
|
|
|
46
|
|
Additional provision made in the period
|
|
|
|
|
|
|
|
|
|
|
|
Closing balance at the end of the year
|
|
|
46
|
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
Non-current
|
|
|
46
|
|
|
|
46
|
|
|
|
|
|
|
|
46
|
|
|
|
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$46,000 was made in respect of the Groups
expected obligation.
101
Note 13 CONTRIBUTED EQUITY AND RESERVES
(a) Issued and paid up capital
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
|
|
|
Fully Paid Ordinary Shares
|
|
|
|
|
|
|
|
|
Novogen Limited
97,594,261 (2007: 97,594,261) ordinary shares
|
|
|
127,573
|
|
|
|
127,573
|
|
|
|
|
|
|
|
127,573
|
|
|
|
127,573
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
Gain arising on issue of shares by subsidiaries to outside shareholders:
|
|
|
|
|
|
|
|
|
Marshall Edwards, Inc.
|
|
|
65,654
|
|
|
|
57,388
|
|
Glycotex, Inc.
|
|
|
7,205
|
|
|
|
6,915
|
|
|
|
|
|
|
|
72,859
|
|
|
|
64,303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed Equity
|
|
|
200,432
|
|
|
|
191,876
|
|
|
|
|
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the
Company, to participate in the proceeds from the sale of all surplus assets in proportion to the
number of and amounts paid up on shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the
Company.
Movements in issued and paid up ordinary share capital of Novogen Limited are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue
|
|
|
|
|
|
|
Number of
|
|
|
price
|
|
|
|
|
|
|
shares
|
|
|
A$
|
|
|
A$000
|
|
|
|
|
On issue 1 July, 2006
|
|
|
97,294,054
|
|
|
|
|
|
|
|
127,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options converted to shares
|
|
|
101,950
|
|
|
|
2.05
|
|
|
|
209
|
|
Options converted to shares
|
|
|
196,304
|
|
|
|
1.53
|
|
|
|
300
|
|
Options converted to shares
|
|
|
1,953
|
|
|
|
2.10
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
Total options exercised during the period
|
|
|
300,207
|
|
|
|
|
|
|
|
513
|
|
|
On issue 30 June, 2007
|
|
|
97,594,261
|
|
|
|
|
|
|
|
127,573
|
|
|
|
|
|
|
|
|
|
|
|
|
On issue 30 June, 2008
|
|
|
97,594,261
|
|
|
|
|
|
|
|
127,573
|
|
|
|
|
|
|
|
|
|
|
|
|
Share options
The Company has an employee share option plan under which options to subscribe for the Companys
shares have been granted to certain executive and other employees (refer Note 14).
102
(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
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
|
|
|
Balance at the beginning of the year
|
|
|
(5,155
|
)
|
|
|
(2,847
|
)
|
Share of opening reserve transferred to minority
interest due to issuance of shares by subsidiary
|
|
|
393
|
|
|
|
299
|
|
Exchange differences on translation of foreign
operations
|
|
|
(2,729
|
)
|
|
|
(2,607
|
)
|
|
|
|
Balance at the end of the year
|
|
|
(7,491
|
)
|
|
|
(5,155
|
)
|
|
|
|
(c) Accumulated losses
Movements in accumulated losses were as follows:
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the beginning of the year
|
|
|
(146,147
|
)
|
|
|
(131,700
|
)
|
|
|
|
|
|
|
|
|
|
Adjustment to opening retained earnings
attributed to minority interest holders
|
|
|
3,310
|
|
|
|
3,231
|
|
Equity attributable to share based payments
|
|
|
850
|
|
|
|
2,303
|
|
Current year (loss)/profit
|
|
|
(20,264
|
)
|
|
|
(19,981
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the end of the year
|
|
|
(162,251
|
)
|
|
|
(146,147
|
)
|
|
|
|
(d) Minority interests
The minority interests are detailed as follows:
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares
|
|
|
27,567
|
|
|
|
17,694
|
|
Foreign currency translation reserve
|
|
|
(2,875
|
)
|
|
|
(1,436
|
)
|
Accumulated losses
|
|
|
(19,745
|
)
|
|
|
(12,206
|
)
|
|
|
|
|
|
|
4,947
|
|
|
|
4,052
|
|
|
|
|
103
Note 14 SHARE BASED PAYMENT PLANS
Employee Share Option Plan
The Employee Share Option Plan provides for the issue of options to eligible employees being an
employee or Director of the Company or related company. Each option 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 issued under the Employee Share Option Plan vest in four equal
annual instalments over the vesting period. Options are not transferable and cannot be settled by
the Company in cash. The option lapses if the employee ceases to be an employee during the vesting
period. There are currently 45 employees eligible to receive option grants under the Employee Share
Option Plan. (2007: 45)
The expense recognised in the income statement in relation to employee share-based payments is
disclosed in Note 2(g).
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 income statement relation
to consultant options is $26,216. (2007:$48,537)
The contractual life of all options granted is five years. There are no cash settlement
alternatives.
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
2007
|
|
|
No.
|
|
WAEP
|
|
No.
|
|
WAEP
|
|
|
|
Outstanding at the beginning of the year
|
|
|
1,446,054
|
|
|
|
A$3.37
|
|
|
|
1,294,638
|
|
|
|
A$3.55
|
|
Granted
|
|
|
1,326,552
|
|
|
|
A$1.20
|
|
|
|
539,912
|
|
|
|
A$2.41
|
|
Forfeited
|
|
|
(184,114
|
)
|
|
|
A$3.27
|
|
|
|
(190,239
|
)
|
|
|
A$3.83
|
|
Exercised (i)
|
|
|
|
|
|
|
N/A
|
|
|
|
(198,257
|
)
|
|
|
A$1.54
|
|
Expired
|
|
|
(260,516
|
)
|
|
|
A$2.10
|
|
|
|
|
|
|
|
N/A
|
|
|
|
|
Outstanding at the end of the year
|
|
|
2,327,976
|
|
|
|
A$2.28
|
|
|
|
1,446,054
|
|
|
|
A$3.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at the end of the year
|
|
|
534,192
|
|
|
|
A$4.33
|
|
|
|
547,442
|
|
|
|
A$3.68
|
|
|
|
|
|
|
|
(i)
|
|
There were no options exercised during the year ended 30 June, 2008. Options exercised during
the year ended 30 June, 2007 had a weighted average share price of A$2.78 at exercise date.
|
104
The following table details the exercise price, expiry date and number of options issued to
employees that were outstanding as at the end of the year:
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
|
|
Expiry
|
|
No. outstanding
|
|
No. outstanding
|
Price A$
|
|
Date
|
|
30 June, 2008
|
|
30 June, 2007
|
|
A$2.10
|
|
|
30/11/07
|
|
|
|
|
|
|
|
268,430
|
|
A$6.76
|
|
|
27/02/09
|
|
|
|
118,468
|
|
|
|
132,344
|
|
A$4.90
|
|
|
16/03/10
|
|
|
|
182,868
|
|
|
|
201,596
|
|
A$3.64
|
|
|
16/04/11
|
|
|
|
272,536
|
|
|
|
315,824
|
|
A$2.41
|
|
|
30/03/12
|
|
|
|
427,552
|
|
|
|
527,860
|
|
A$2.41
|
|
|
30/03/12
|
|
|
|
141,668
|
|
|
|
|
|
A$1.06
|
|
|
1/03/13
|
|
|
|
1,184,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,327,976
|
|
|
|
1,446,054
|
|
|
|
|
|
|
|
|
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;
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
2007
|
|
|
No.
|
|
WAEP
|
|
No.
|
|
WAEP
|
|
|
|
Outstanding at the beginning of the year
|
|
|
130,012
|
|
|
|
A$3.08
|
|
|
|
187,510
|
|
|
|
A$2.68
|
|
Granted
|
|
|
35,460
|
|
|
|
A$1.06
|
|
|
|
44,452
|
|
|
|
A$2.41
|
|
Forfeited
|
|
|
(25,252
|
)
|
|
|
A$3.24
|
|
|
|
|
|
|
|
N/A
|
|
Exercised
|
|
|
|
|
|
|
N/A
|
|
|
|
(101,950
|
)
|
|
|
A$2.05
|
|
Expired
|
|
|
(37,200
|
)
|
|
|
A$2.10
|
|
|
|
|
|
|
|
N/A
|
|
|
|
|
Outstanding at the end of the year
|
|
|
103,020
|
|
|
|
A$2.69
|
|
|
|
130,012
|
|
|
|
A$3.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at the end of the year
|
|
|
31,633
|
|
|
$
|
4.27
|
|
|
|
56,181
|
|
|
$
|
3.06
|
|
105
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 A$
|
|
Date
|
|
30 June, 2008
|
|
30 June, 2007
|
|
$2.10
|
|
|
30/11/07
|
|
|
|
|
|
|
|
37,200
|
|
$6.76
|
|
|
27/02/09
|
|
|
|
6,660
|
|
|
|
6,660
|
|
$4.90
|
|
|
16/03/10
|
|
|
|
9,184
|
|
|
|
14,244
|
|
$3.64
|
|
|
16/04/11
|
|
|
|
20,624
|
|
|
|
27,456
|
|
$2.41
|
|
|
30/03/12
|
|
|
|
31,092
|
|
|
|
44,452
|
|
$1.06
|
|
|
1/03/13
|
|
|
|
35,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103,020
|
|
|
|
130,012
|
|
|
|
|
|
|
|
|
The weighted average remaining contractual life for the share options outstanding as at 30 June,
2008 is between 1 and 5 years. (2007: 1 and 5 years)
The weighted average fair value of options granted during the year was A$0.61. (2007: A$1.40)
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 March,
|
|
26 October,
|
|
30 March,
|
|
21 April,
|
|
16 March,
|
|
27 February,
|
|
|
2008
|
|
2007
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
|
|
Dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
Expected volatility
|
|
|
57
|
%
|
|
|
55
|
%
|
|
|
59
|
%
|
|
|
66
|
%
|
|
|
69
|
%
|
|
|
69
|
%
|
Historical volatility
|
|
|
57
|
%
|
|
|
55
|
%
|
|
|
59
|
%
|
|
|
66
|
%
|
|
|
69
|
%
|
|
|
69
|
%
|
Risk-free interest rate
|
|
|
6.35
|
%
|
|
|
6.41
|
%
|
|
|
6.09
|
%
|
|
|
5.62
|
%
|
|
|
5.67
|
%
|
|
|
5.52
|
%
|
Expected life of option
|
|
5 years
|
|
4.4 years
|
|
5 years
|
|
5 years
|
|
5 years
|
|
5 years
|
Option fair value
|
|
|
A$0.60
|
|
|
|
A$0.66
|
|
|
|
A$1.40
|
|
|
|
A$2.10
|
|
|
|
A$2.96
|
|
|
|
A$2.82
|
|
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.
106
Note 15 SEGMENT INFORMATION
The Group generally accounts for intercompany sales and transfers as if the sales or transfers were
to third parties. Revenues are attributed to geographic areas based on the location of the assets
producing the revenues.
The Novogen Group operates subsidiary companies in 3 major geographical areas being Australia,
North America (including the US, licenced to Natrol, Inc. from October 2006, and Canada), and
Europe (including the U.K. and the Netherlands). The subsidiaries are involved in the selling and
marketing of Novogens consumer healthcare products.
Segment accounting policies are the same as the Groups policies described in Note 1. During the
financial year there were no changes in the segment accounting policies that had a material effect
on the segment information.
107
Geographic Segments
The following table presents revenue and profit information and certain asset and liability
information regarding business segments for the years ended June 30, 2008, June 30, 2007, and June
30, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia/NZ
|
|
North America
|
|
Europe
|
|
Elimination
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
2006
|
|
2008
|
|
2007
|
|
2006
|
|
2008
|
|
2007
|
|
2006
|
|
2008
|
|
2007
|
|
2006
|
|
2008
|
|
2007
|
|
2006
|
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales to external customers
|
|
|
4,755
|
|
|
|
4,453
|
|
|
|
5,166
|
|
|
|
2,428
|
|
|
|
3,152
|
|
|
|
5,720
|
|
|
|
2,217
|
|
|
|
3,104
|
|
|
|
2,614
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,400
|
|
|
|
10,709
|
|
|
|
13,500
|
|
Other revenues from external customers
|
|
|
2,171
|
|
|
|
4,691
|
|
|
|
2,703
|
|
|
|
5
|
|
|
|
54
|
|
|
|
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
(79
|
)
|
|
|
(71
|
)
|
|
|
(218
|
)
|
|
|
2,110
|
|
|
|
4,674
|
|
|
|
2,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inter-segment revenues
|
|
|
1,206
|
|
|
|
3,543
|
|
|
|
2,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,206
|
)
|
|
|
(3,543
|
)
|
|
|
(2,021
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment revenue
|
|
|
8,132
|
|
|
|
12,687
|
|
|
|
9,890
|
|
|
|
2,433
|
|
|
|
3,206
|
|
|
|
5,720
|
|
|
|
2,230
|
|
|
|
3,104
|
|
|
|
2,614
|
|
|
|
(1,285
|
)
|
|
|
(3,614
|
)
|
|
|
(2,239
|
)
|
|
|
11,510
|
|
|
|
15,383
|
|
|
|
15,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,773
|
|
|
|
1,912
|
|
|
|
1,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,283
|
|
|
|
17,295
|
|
|
|
17,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Result (from continuing operations)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment result (loss)
|
|
|
(27,435
|
)
|
|
|
(18,684
|
)
|
|
|
(11,883
|
)
|
|
|
997
|
|
|
|
(1,493
|
)
|
|
|
(6,798
|
)
|
|
|
139
|
|
|
|
105
|
|
|
|
(985
|
)
|
|
|
1,550
|
|
|
|
(4,221
|
)
|
|
|
1,807
|
|
|
|
(24,749
|
)
|
|
|
(24,293
|
)
|
|
|
(17,859
|
)
|
Unallocated expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(24
|
)
|
|
|
(2
|
)
|
|
|
(53
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated entity (loss) before income tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(24,773
|
)
|
|
|
(24,295
|
)
|
|
|
(17,912
|
)
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(24,777
|
)
|
|
|
(24,296
|
)
|
|
|
(17,913
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets
|
|
|
61,667
|
|
|
|
71,533
|
|
|
|
79,051
|
|
|
|
82,874
|
|
|
|
70,414
|
|
|
|
53,237
|
|
|
|
1,026
|
|
|
|
1,722
|
|
|
|
1,379
|
|
|
|
(102,166
|
)
|
|
|
(92,312
|
)
|
|
|
(82,569
|
)
|
|
|
43,401
|
|
|
|
51,357
|
|
|
|
51,098
|
|
Segment liabilities
|
|
|
7,272
|
|
|
|
6,471
|
|
|
|
5,555
|
|
|
|
39,572
|
|
|
|
44,107
|
|
|
|
49,051
|
|
|
|
10,495
|
|
|
|
11,331
|
|
|
|
11,092
|
|
|
|
(49,575
|
)
|
|
|
(55,178
|
)
|
|
|
(59,178
|
)
|
|
|
7,764
|
|
|
|
6,731
|
|
|
|
6,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other segment information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure
|
|
|
88
|
|
|
|
269
|
|
|
|
260
|
|
|
|
4
|
|
|
|
27
|
|
|
|
53
|
|
|
|
3
|
|
|
|
3
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95
|
|
|
|
299
|
|
|
|
319
|
|
Depreciation
|
|
|
341
|
|
|
|
954
|
|
|
|
1,106
|
|
|
|
7
|
|
|
|
15
|
|
|
|
53
|
|
|
|
5
|
|
|
|
7
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
353
|
|
|
|
976
|
|
|
|
1,168
|
|
Amortisation
|
|
|
|
|
|
|
|
|
|
|
221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
221
|
|
|
Impairment loss recognised in loss
|
|
|
|
|
|
|
|
|
|
|
301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
301
|
|
Other non-cash expenses
|
|
|
514
|
|
|
|
1,395
|
|
|
|
1,207
|
|
|
|
31
|
|
|
|
2,208
|
|
|
|
(63
|
)
|
|
|
(18
|
)
|
|
|
35
|
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
527
|
|
|
|
3,638
|
|
|
|
1,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment net gain/(loss) on foreign currency
|
|
|
(6,466
|
)
|
|
|
(7,031
|
)
|
|
|
2,748
|
|
|
|
4,767
|
|
|
|
5,573
|
|
|
|
(2,013
|
)
|
|
|
764
|
|
|
|
581
|
|
|
|
(522
|
)
|
|
|
(2
|
)
|
|
|
(16
|
)
|
|
|
(101
|
)
|
|
|
(937
|
)
|
|
|
(893
|
)
|
|
|
112
|
|
108
Business Segments
The following table presents revenue, expenditure and certain asset information regarding business
segments for the years ended June 30, 2008, June 30, 2007 and June 30, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceutical
|
|
|
|
|
|
|
Consumer healthcare
|
|
research and development
|
|
Elimination
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
2006
|
|
2008
|
|
2007
|
|
2006
|
|
2008
|
|
2007
|
|
2006
|
|
2008
|
|
2007
|
|
2006
|
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment revenue
|
|
|
10,507
|
|
|
|
12,450
|
|
|
|
14,362
|
|
|
|
2,776
|
|
|
|
4,845
|
|
|
|
3,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,283
|
|
|
|
17,295
|
|
|
|
17,445
|
|
Segment assets
|
|
|
21,469
|
|
|
|
28,461
|
|
|
|
32,611
|
|
|
|
22,717
|
|
|
|
23,790
|
|
|
|
19,042
|
|
|
|
(785
|
)
|
|
|
(894
|
)
|
|
|
(555
|
)
|
|
|
43,401
|
|
|
|
51,357
|
|
|
|
51,098
|
|
Note 16 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 Groups overall strategy remains unchanged from 2007, whereby future operating cash flows
generated by a profitable Consumer Health business will supplement the funds raised in equity
markets by the Groups listed subsidiary companies. Also the Group intends to fund its operations
through licence opportunities for our pharmaceutical product candidates.
Financial Risk Management
The Groups principal financial instruments comprise cash and short term deposits, receivables and
payables. The Group is not exposed to significant debt or borrowings.
The Groups activities expose it to a variety of financial risks. The main risks arising from the
Groups 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.
109
Market Risk
Interest rate risk
The Groups 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 balance date the Group had the following exposure to variable interest rate risk:
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
Financial assets
|
|
|
|
|
|
|
|
|
|
Cash at bank and in hand
|
|
|
27,930
|
|
|
|
30,059
|
|
Short term deposits
|
|
|
6,456
|
|
|
|
8,452
|
|
|
|
|
|
|
|
34,386
|
|
|
|
38,511
|
|
|
|
|
|
|
|
|
|
|
Secured cash
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net exposure
|
|
|
35,386
|
|
|
|
39,511
|
|
|
|
|
At 30 June, 2008, 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)
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
|
|
|
Judgements of reasonably possible movements:
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
+1% (100 basis points)
|
|
|
354
|
|
|
|
395
|
|
-1% (100 basis points)
|
|
|
(354
|
)
|
|
|
(395
|
)
|
110
The Groups 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
|
|
Fixed
|
|
Fixed
|
|
Non-interest
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Interest Rate
|
|
1 year or less
|
|
Over 1 to 5 years
|
|
bearing
|
|
Total
|
|
average rate of
|
|
|
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
interest
|
|
|
Note
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
A$000
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
5
|
|
|
|
25,049
|
|
|
|
28,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,881
|
|
|
|
1,531
|
|
|
|
27,930
|
|
|
|
30,059
|
|
|
|
2.02
|
%
|
|
|
3.84
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
7,456
|
|
|
|
9,452
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,456
|
|
|
|
9,452
|
|
|
|
7.75
|
%
|
|
|
6.35
|
%
|
Trade and other receivables
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
2,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,969
|
|
|
|
4,276
|
|
|
|
4,969
|
|
|
|
4,276
|
|
|
|
8.50
|
%
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,456
|
|
|
|
9,452
|
|
|
|
|
|
|
|
|
|
|
|
2,969
|
|
|
|
4,276
|
|
|
|
12,425
|
|
|
|
13,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
25,049
|
|
|
|
28,528
|
|
|
|
9,456
|
|
|
|
9,452
|
|
|
|
|
|
|
|
|
|
|
|
5,850
|
|
|
|
5,807
|
|
|
|
40,355
|
|
|
|
43,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,671
|
|
|
|
5,920
|
|
|
|
6,671
|
|
|
|
5,920
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities
at amortised cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,671
|
|
|
|
5,920
|
|
|
|
6,671
|
|
|
|
5,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net financial assets/
(liabilities)
|
|
|
|
|
|
|
25,049
|
|
|
|
28,528
|
|
|
|
9,456
|
|
|
|
9,452
|
|
|
|
|
|
|
|
|
|
|
|
(821
|
)
|
|
|
(113
|
)
|
|
|
33,684
|
|
|
|
37,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency risk
The Group and the parent entity operate internationally and are 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 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
entitys functional currency and net investments in foreign operations.
As of 30 June, 2008, the Group did not use derivative financial instruments in managing its foreign
currency. 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.
111
The Groups exposure to foreign currency risk at 30 June, 2008 was as follows:
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
USD denominated
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
3,524
|
|
|
|
5,175
|
|
Trade and other receivables
|
|
|
268
|
|
|
|
179
|
|
|
|
|
|
|
|
3,792
|
|
|
|
5,354
|
|
|
|
|
Financial liablities
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
110
|
|
|
|
141
|
|
|
|
|
Net exposure
|
|
|
3,682
|
|
|
|
5,213
|
|
|
|
|
GBP denominated
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
18
|
|
|
|
(3
|
)
|
Trade and other receivables
|
|
|
474
|
|
|
|
638
|
|
|
|
|
|
|
|
492
|
|
|
|
635
|
|
|
|
|
Financial liablities
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
319
|
|
|
|
201
|
|
|
|
|
Net exposure
|
|
|
173
|
|
|
|
434
|
|
|
|
|
CAD denominated
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
138
|
|
|
|
95
|
|
Trade and other receivables
|
|
|
200
|
|
|
|
169
|
|
|
|
|
|
|
|
338
|
|
|
|
264
|
|
|
|
|
Financial liablities
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
79
|
|
|
|
60
|
|
|
|
|
Net exposure
|
|
|
259
|
|
|
|
204
|
|
|
|
|
EURO denominated
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
49
|
|
|
|
60
|
|
Trade and other receivables
|
|
|
660
|
|
|
|
569
|
|
|
|
|
|
|
|
709
|
|
|
|
629
|
|
|
|
|
Financial liablities
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
779
|
|
|
|
200
|
|
|
|
|
Net exposure
|
|
|
(70
|
)
|
|
|
429
|
|
|
|
|
AUD denominated
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
441
|
|
|
|
483
|
|
Trade and other receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
441
|
|
|
|
483
|
|
|
|
|
Financial liablities
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
1,695
|
|
|
|
1,099
|
|
|
|
|
Net exposure
|
|
|
(1,254
|
)
|
|
|
(616
|
)
|
|
|
|
112
The following sensitivity is based on the foreign currency risk exposures in existence at the
balance sheet date:
|
|
|
|
|
|
|
|
|
|
|
Post tax profit
|
|
|
Higher/(Lower)
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
Judgements of reasonably possible movements:
|
|
|
|
|
|
|
|
|
USD denominated
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
AUD/USD +10%
|
|
|
(335
|
)
|
|
|
(474
|
)
|
AUD/USD -5%
|
|
|
194
|
|
|
|
274
|
|
|
GBP denominated
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
AUD/GBP +10%
|
|
|
(16
|
)
|
|
|
(39
|
)
|
AUD/GBP -5%
|
|
|
9
|
|
|
|
23
|
|
|
CAD denominated
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
AUD/CAD +5%
|
|
|
(12
|
)
|
|
|
(10
|
)
|
AUD/CAD -5%
|
|
|
14
|
|
|
|
11
|
|
|
EURO denominated
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
AUD/EURO +5%
|
|
|
3
|
|
|
|
(20
|
)
|
AUD/EURO -5%
|
|
|
(4
|
)
|
|
|
23
|
|
|
AUD denominated
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
AUD/USD +10%
|
|
|
114
|
|
|
|
56
|
|
AUD/USD -5%
|
|
|
(66
|
)
|
|
|
(32
|
)
|
113
Credit risk
The Group trades only with recognised, creditworthy third parties.
It is the Groups 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 Groups exposure to bad debts is not significant.
The Group does not use 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.
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 Groups maximum exposures to credit risk at balance date in relation to each class of
recognised financial assets is the carrying amount of those assets as indicated in the Balance
Sheet.
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 managements 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 Groups overall liquidity risk.
114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
£
6 months
|
|
|
6-12 months
|
|
|
1-5 Years
|
|
|
> 5 years
|
|
|
Total
|
|
Year ended 30 June
2008
|
|
A$000
|
|
|
A$000
|
|
|
A$000
|
|
|
A$000
|
|
|
A$000
|
|
|
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
6,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,671
|
|
|
|
|
|
Total
|
|
|
6,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
£
6 months
|
|
|
6-12 months
|
|
|
1-5 Years
|
|
|
> 5 years
|
|
|
Total
|
|
Year
ended 30 June 2007
|
|
A$000
|
|
|
A$000
|
|
|
A$000
|
|
|
A$000
|
|
|
A$000
|
|
|
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
5,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,920
|
|
|
|
|
|
Total
|
|
|
5,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,920
|
|
|
|
|
Financing facilities available
At reporting date, the following financing facilities had been negotiated and were available:
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
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.
115
Note 17 COMMITMENTS
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
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
|
|
|
466
|
|
|
|
471
|
|
Later than 1 year but not later than 2 years
|
|
|
431
|
|
|
|
476
|
|
Later than 2 years but not later than 3 years
|
|
|
58
|
|
|
|
444
|
|
Later than 3 years but not later than 4 years
|
|
|
|
|
|
|
81
|
|
Later than 4 years but not later than 5 years
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
955
|
|
|
|
1,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Other expenditure commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development contracts for
service to be rendered:
|
|
|
|
|
|
|
|
|
Not later than 1 year
|
|
|
10,493
|
|
|
|
8,220
|
|
Later than 1 year but not later than 2 years
|
|
|
6,328
|
|
|
|
4,520
|
|
Later than 2 years but not later than 3 years
|
|
|
2,225
|
|
|
|
260
|
|
|
|
|
|
|
|
19,046
|
|
|
|
13,000
|
|
|
|
|
|
|
|
*
|
|
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.
116
Note 18 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
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
Novogen Laboratories Pty Ltd ^
|
|
Australia
|
|
|
100
|
|
|
|
100
|
|
|
|
1,551
|
|
|
|
949
|
|
Novogen Research Pty Ltd ^
|
|
Australia
|
|
|
100
|
|
|
|
100
|
|
|
|
7,000
|
|
|
|
7,000
|
|
Phytosearch Pty Ltd #
|
|
Australia
|
|
|
100
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
Phytogen Pty Ltd #
|
|
Australia
|
|
|
100
|
|
|
|
100
|
|
|
|
20
|
|
|
|
20
|
|
Glycotex Pty Ltd #
|
|
Australia
|
|
|
100
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
Norvogen Pty Ltd #
|
|
Australia
|
|
|
100
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
Central Coast Properties Pty Ltd ^
|
|
Australia
|
|
|
100
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
Novogen Inc
|
|
US
|
|
|
100
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
Glycotex, Inc.
|
|
US
|
|
|
81.0
|
|
|
|
81.3
|
|
|
|
857
|
|
|
|
54
|
|
Novogen Limited (UK)
|
|
UK
|
|
|
100
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
Promensil Limited
|
|
UK
|
|
|
100
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
Novogen BV
|
|
Netherlands
|
|
|
100
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
Novogen Canada Limited
|
|
Canada
|
|
|
100
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
Marshall Edwards, Inc.
|
|
US
|
|
|
71.9
|
|
|
|
78.1
|
|
|
|
|
|
|
|
|
|
Marshall Edwards Pty Limited #
|
|
Australia
|
|
|
71.9
|
|
|
|
78.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,428
|
|
|
|
8,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
117
The consolidated income statement and balance sheet of the entities that are members of the Closed
Group are as follows:
Consolidated Income Statement
|
|
|
|
|
|
|
|
|
|
|
CLOSED GROUP
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
|
|
|
Loss from continuing operations before income tax
|
|
|
(12,452
|
)
|
|
|
(5,921
|
)
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
Loss after tax from continuing operations
|
|
|
(12,452
|
)
|
|
|
(5,921
|
)
|
Accumulated losses at the beginning of the period
|
|
|
(61,327
|
)
|
|
|
(56,004
|
)
|
Net income recognised directly in equity
|
|
|
602
|
|
|
|
598
|
|
|
|
|
Accumulated losses at the end of the financial year
|
|
|
(73,177
|
)
|
|
|
(61,327
|
)
|
|
|
|
Consolidated Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
CLOSED GROUP
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
13,718
|
|
|
|
17,339
|
|
Trade and other receivables
|
|
|
4,506
|
|
|
|
3,635
|
|
Inventories
|
|
|
1,162
|
|
|
|
2,952
|
|
Other current assets
|
|
|
433
|
|
|
|
539
|
|
Assets held for sale
|
|
|
|
|
|
|
2,203
|
|
|
|
|
Total current assets
|
|
|
19,819
|
|
|
|
26,668
|
|
|
|
|
|
NON-CURRENT ASSETS
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
38,047
|
|
|
|
42,356
|
|
Property, plant and equipment
|
|
|
549
|
|
|
|
806
|
|
Other financial assets
|
|
|
|
|
|
|
54
|
|
|
|
|
Total non-current assets
|
|
|
38,596
|
|
|
|
43,216
|
|
|
|
|
|
TOTAL ASSETS
|
|
|
58,415
|
|
|
|
69,884
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
2,958
|
|
|
|
2,922
|
|
Provisions
|
|
|
676
|
|
|
|
490
|
|
|
|
|
Total current liabilities
|
|
|
3,634
|
|
|
|
3,412
|
|
|
|
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
Provisions
|
|
|
385
|
|
|
|
226
|
|
|
|
|
Total non-current liabilities
|
|
|
385
|
|
|
|
226
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
4,019
|
|
|
|
3,638
|
|
|
|
|
|
NET ASSETS
|
|
|
54,396
|
|
|
|
66,246
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
Contributed equity
|
|
|
127,573
|
|
|
|
127,573
|
|
Accumulated losses
|
|
|
(73,177
|
)
|
|
|
(61,327
|
)
|
|
|
|
TOTAL EQUITY
|
|
|
54,396
|
|
|
|
66,246
|
|
|
|
|
118
Note 19 REMUNERATION OF AUDITORS
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
A$
|
|
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;
|
|
|
252,523
|
|
|
|
263,899
|
|
(b) other services in relation to the entity and any
other entity in the consolidated entity
|
|
|
|
|
|
|
|
|
- Tax compliance services
|
|
|
26,109
|
|
|
|
40,073
|
|
- MEI Form S-3 audit and review services
|
|
|
25,726
|
|
|
|
12,705
|
|
- Sarbanes-Oxley Section 404 services
|
|
|
81,195
|
|
|
|
|
|
- Review of government grants
|
|
|
2,980
|
|
|
|
1,600
|
|
- Other
|
|
|
8,007
|
|
|
|
3,573
|
|
|
|
|
|
|
|
396,540
|
|
|
|
321,850
|
|
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
|
|
|
21,600
|
|
|
|
46,885
|
|
- other non-audit services local statutory auditors
|
|
|
33,662
|
|
|
|
44,089
|
|
|
|
|
|
|
|
451,802
|
|
|
|
412,824
|
|
|
|
|
119
Note 20 DIRECTOR AND EXECUTIVE DISCLOSURES
a) Details of key management personnel and Group executives
|
|
|
(i) Directors
|
|
|
Philip A. Johnston
|
|
Chairman (Non-executive)
|
Christopher Naughton
|
|
Chief Executive Officer
|
Alan J. Husband
|
|
Executive Director
|
Paul J. Nestel AO
|
|
Director (Non-executive)
|
Peter B. Simpson
|
|
Director (Non-executive)
|
Geffery M. Leppinus
|
|
Director (Non-executive)
|
|
|
|
(ii) Other key management personnel
|
David R. Seaton
|
|
Chief Financial Officer
|
Warren J. Lancaster
|
|
VP Commercial and Corporate Development
|
Bryan M. Palmer
|
|
General Manager Operations
|
Craig D. Kearney
|
|
General Manager Consumer Business
|
Ronald L. Erratt
|
|
Company Secretary
|
|
|
|
(iii) Group executives
|
|
|
Reinhard Koenig
|
|
Chief Executive Officer Glycotex, Inc.
|
b) Compensation of key management personnel and Group executives
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
2008
|
|
2007
|
|
|
A$000
|
|
A$000
|
|
|
|
Short term employee benefits
|
|
|
3,076,909
|
|
|
|
2,889,344
|
|
Post employment benefits
|
|
|
591,507
|
|
|
|
468,563
|
|
Long term employee benefits
|
|
|
103,008
|
|
|
|
64,656
|
|
Share-based payment
|
|
|
290,682
|
|
|
|
241,430
|
|
|
|
|
Total Compensation
|
|
|
4,062,106
|
|
|
|
3,663,993
|
|
|
|
|
Further information regarding key management personnel and their compensation can be found in Item
6 Directors, Senior Management and Employees commencing on page 42.
120
c) Option holding of key management personnel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2007
|
|
remuneration
|
|
exercised
|
|
other
|
|
30 June, 2008
|
|
2008
|
|
2008
|
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
|
|
Executive Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C Naughton
|
|
|
|
|
|
|
91,196
|
|
|
|
|
|
|
|
|
|
|
|
91,196
|
|
|
|
|
|
|
|
91,196
|
|
AJ Husband
|
|
|
106,176
|
|
|
|
50,472
|
|
|
|
|
|
|
|
(38,256
|
)
|
|
|
118,392
|
|
|
|
59,672
|
|
|
|
58,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DR Seaton
|
|
|
156,860
|
|
|
|
125,492
|
|
|
|
|
|
|
|
(38,468
|
)
|
|
|
243,884
|
|
|
|
59,672
|
|
|
|
184,212
|
|
WJ Lancaster (US)
|
|
|
60,090
|
|
|
|
53,020
|
|
|
|
|
|
|
|
(5,374
|
)
|
|
|
107,736
|
|
|
|
27,735
|
|
|
|
80,001
|
|
BM Palmer
|
|
|
89,112
|
|
|
|
67,864
|
|
|
|
|
|
|
|
(24,108
|
)
|
|
|
132,868
|
|
|
|
32,803
|
|
|
|
100,065
|
|
CD Kearney
|
|
|
90,612
|
|
|
|
69,560
|
|
|
|
|
|
|
|
(23,812
|
)
|
|
|
136,360
|
|
|
|
33,326
|
|
|
|
103,034
|
|
RL Erratt
|
|
|
87,864
|
|
|
|
63,836
|
|
|
|
|
|
|
|
(24,524
|
)
|
|
|
127,176
|
|
|
|
32,214
|
|
|
|
94,962
|
|
|
|
|
|
Total
|
|
|
590,714
|
|
|
|
521,440
|
|
|
|
|
|
|
|
(154,542
|
)
|
|
|
957,612
|
|
|
|
245,422
|
|
|
|
712,190
|
|
|
|
|
|
|
|
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, 2006
|
|
remuneration
|
|
exercised
|
|
other
|
|
30 June, 2007
|
|
2007
|
|
2007
|
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
|
|
Executive Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AJ Husband
|
|
|
147,948
|
|
|
|
|
|
|
|
(41,772
|
)
|
|
|
|
|
|
|
106,176
|
|
|
|
68,330
|
|
|
|
37,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DR Seaton
|
|
|
127,530
|
|
|
|
50,472
|
|
|
|
(21,142
|
)
|
|
|
|
|
|
|
156,860
|
|
|
|
68,542
|
|
|
|
88,318
|
|
WJ Lancaster (US)
|
|
|
35,678
|
|
|
|
24,412
|
|
|
|
|
|
|
|
|
|
|
|
60,090
|
|
|
|
19,430
|
|
|
|
40,660
|
|
BM Palmer
|
|
|
84,872
|
|
|
|
27,676
|
|
|
|
(23,436
|
)
|
|
|
|
|
|
|
89,112
|
|
|
|
40,660
|
|
|
|
48,452
|
|
CD Kearney
|
|
|
61,844
|
|
|
|
28,768
|
|
|
|
|
|
|
|
|
|
|
|
90,612
|
|
|
|
40,438
|
|
|
|
50,174
|
|
RL Erratt
|
|
|
91,476
|
|
|
|
26,400
|
|
|
|
(30,012
|
)
|
|
|
|
|
|
|
87,864
|
|
|
|
40,903
|
|
|
|
46,961
|
|
|
|
|
|
Total
|
|
|
549,348
|
|
|
|
157,728
|
|
|
|
(116,362
|
)
|
|
|
|
|
|
|
590,714
|
|
|
|
278,303
|
|
|
|
312,411
|
|
|
|
|
121
d) Shareholdings of key management personnel and their related parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
|
|
Granted as
|
|
On exercise
|
|
Net change
|
|
Balance
|
|
|
1 July, 2007
|
|
remuneration
|
|
of options
|
|
other
|
|
30 June, 2008
|
|
|
Number Ord
|
|
Number Ord
|
|
Number Ord
|
|
Number Ord
|
|
Number Ord
|
|
|
|
Executive Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PA Johnston
|
|
|
58,594
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
73,594
|
|
C Naughton
|
|
|
633,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
633,511
|
|
AJ Husband
|
|
|
102,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,920
|
|
GM Leppinus
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
PJ Nestel AO
|
|
|
32,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,000
|
|
PB Simpson
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
5,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DR Seaton
|
|
|
37,378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,378
|
|
BM Palmer
|
|
|
134,023
|
|
|
|
|
|
|
|
|
|
|
|
71,613
|
|
|
|
205,636
|
|
CD Kearney
|
|
|
8,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,850
|
|
RL Erratt
|
|
|
232,368
|
|
|
|
|
|
|
|
|
|
|
|
(1,000
|
)
|
|
|
231,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,243,144
|
|
|
|
|
|
|
|
|
|
|
|
90,613
|
|
|
|
1,333,757
|
|
|
|
|
|
|
|
Balance
|
|
Granted as
|
|
On exercise
|
|
Net change
|
|
Balance
|
|
|
1 July, 2006
|
|
remuneration
|
|
of options
|
|
other
|
|
30 June, 2007
|
|
|
Number Ord
|
|
Number Ord
|
|
Number Ord
|
|
Number Ord
|
|
Number Ord
|
|
|
|
Executive Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PA Johnston
|
|
|
48,594
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
58,594
|
|
C Naughton
|
|
|
633,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
633,511
|
|
AJ Husband
|
|
|
61,148
|
|
|
|
|
|
|
|
41,772
|
|
|
|
|
|
|
|
102,920
|
|
GM Leppinus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
3,000
|
|
PJ Nestel AO
|
|
|
32,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,000
|
|
LC Read *
|
|
|
2,000
|
|
|
|
|
|
|
|
|
|
|
|
(2,000
|
)
|
|
|
|
|
PB Simpson
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DR Seaton
|
|
|
16,236
|
|
|
|
|
|
|
|
21,142
|
|
|
|
|
|
|
|
37,378
|
|
BM Palmer
|
|
|
128,702
|
|
|
|
|
|
|
|
23,436
|
|
|
|
(18,115
|
)
|
|
|
134,023
|
|
CD Kearney
|
|
|
8,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,850
|
|
RL Erratt
|
|
|
202,356
|
|
|
|
|
|
|
|
30,012
|
|
|
|
|
|
|
|
232,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,133,897
|
|
|
|
|
|
|
|
116,362
|
|
|
|
(7,115
|
)
|
|
|
1,243,144
|
|
|
|
|
* resigned as a Director 30 January, 2007.
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 arms length.
122
Note 21 EVENTS AFTER THE BALANCE SHEET DATE
On 29 July, 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 $1.2215 per share raising
gross proceeds of $5,535,390. Following the placement El Coronado Holdings LLC holds 19.9% of the
Companys issued and outstanding shares.
On 28 July, 2008 MEI entered into a securities subscription agreement with OppenheimerFunds Inc and
Novogen Limited pursuant to which MEI sold 1,700,000 and 2,908,295 shares of common stock to
Oppenheimer and Novogen respectively, at a purchase price of US$2.17 per share. The aggregate
proceeds to MEI from the sale of shares was US$10,000,000. The shares are registered under the
Securities Act of 1933, as amended, pursuant to an effective shelf registration statement. On
30 July, 2008 MEI filed a prospectus supplement to the shelf registration statement covering the
sale of shares to Oppenheimer and Novogen. Following the raising Novogen owned 71.3% of MEIs
issued and outstanding shares.
There have been no other significant events occurring after balance date which have had a material
impact on the business.
Note 22 DIVIDENDS
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 23 CONTINGENT ASSETS AND CONTINGENT LIABILITIES
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.
123
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
/s/
Christopher
Naughton
Mr. Christopher Naughton
Managing Director
Date: November 28, 2008
124
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
|
|
Employment Contract between the Company and Professor Alan
Husband dated June 21, 2006. (4)
|
|
|
|
4.4
|
|
Lease between Kendall Glen Pty Limited (Lessor) and Novogen
Laboratories Pty Ltd for the Companys corporate headquarters
at 140 Wicks Road, North Ryde, New South Wales. (3)
|
|
|
|
4.5
|
|
Employment Contract between the Company and Bryan Palmer dated
June 21, 2006. (4)
|
|
|
|
4.6
|
|
Employment Contract between the Company and Craig Kearney
dated June 21, 2006. (4)
|
|
|
|
4.7
|
|
Employment Contract between the Company and David Seaton dated
June 21, 2006. (4)
|
|
|
|
4.8
|
|
Employment Contract between the Company and Ronald Erratt
dated June 21 30, 2006. (4)
|
|
|
|
4.9
|
|
Employment Contract between the Company and Warren Lancaster
dated June 21, 2006. (5)
|
|
|
|
8.1
|
|
Company Subsidiaries. (*)
|
125
|
|
|
Exhibit No.
|
|
Exhibit Description
|
|
|
|
12.1
|
|
Certification of Chief Executive Officer pursuant to Rule 13a
14(a) of the Securities Exchange Act of 1934, as amended.
(*)
|
|
|
|
12.2
|
|
Certification of Chief Financial Officer a pursuant to Rule
13a 14(a) of the Securities Exchange Act of 1934, as
amended. (*)
|
|
|
|
13.1
|
|
Certification by the Chief 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.
|
|
(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)
|
126
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