2013 Apr 15 Annual Report 2012 - Phosphagenics

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Notes to the consolidated fi nancial statements 17. SEGMENT INFORMATION Identification of reportable segments The group has identifi ed its operating segments based on the internal reports that are reviewed and used by the Chief Executive Offi cer and his management team (the chief operating decision makers) in assessing the performance and in determining the allocation of resources. The operating segments are identifi ed by management based on the group’s risks and returns that are affected predominantly by differences in the products and services provided. The reportable segments are based on aggregated operating segments determined according to the nature of the products and services provided, with each reportable segment representing a strategic business unit that offers different products and serves different markets. Types of products and services Nutraceuticals Nutraceuticals is the use of vitamins and nutritious products to improve human health. The nutraceutical business is developing active ingredients for the following market segments: • Dietary Supplements - e.g. vitamin capsules & tablets. Phosphagenics is using its patented technology to orally deliver dietary supplements aimed at improving bioavailability and effi cacy. 98 • Functional Foods and Beverages - e.g. nutritionally enhanced foods. Functional foods are an expanding nutraceutical market division, aimed at improving the nutritional benefi ts of everyday foods. • Personal care products. Discovery research at Phosphagenics has shown that -tocopheryl phosphate (TP) is a natural molecule with increased activity over standard Vitamin E ( tocopherol). TP has scientifi cally proven anti-infl ammatory properties, it reduces redness, protects against UV induced photo damage, and also helps to heal and prevent acne. The structure of TP allows it to act as a penetration enhancer, increasing dermal absorption compared to tocopherol acetate and -tocopherol, allowing it to penetrate deeper into the skin for increased action. TP is also able to increase the penetration of molecules formulated in the same cream. In April 2010 Phosphagenics launched its own brand of cosmetic products in Australia (Elixia ® ) sold through Myer, Priceline, TVSN, Pulse Pharmacies, and other retail outlets. Phosphagenics’ nutraceutical business is a revenue-generating growth business. The route to market for Phosphagenics’ nutraceutical products is through partnering with companies that have established distribution networks within the relevant market segments. Pharmaceuticals Phosphagenics’ pharmaceutical segment is focused on: • Drug delivery – enhancing the delivery of existing drugs orally or through the skin, utilising Phosphagenics’ delivery technology TPM • Drug enhancement – augmenting the biological activity of existing drugs by adding a phosphate group to the chemical structure of the drug The route to market for Phosphagenics’ pharmaceutical products is through partnering with larger pharmaceutical companies at the appropriate stage in a product’s development so as to maximise return on the Company’s research and development investment. The core competencies of the pharmaceutical business are generation of pharmaceutical intellectual property and translation of this knowledge base into commercially viable product candidates for the treatment of human conditions and disease. Phosphagenics’ strategy is to capitalise on its proprietary technology through joining its resources and development capabilities with co-development partners or licensees. PHOSPHAGENICS ANNUAL REPORT 2012
Notes to the consolidated fi nancial statements 17. SEGMENT INFORMATION (CONTINUED) The objective of any development or marketing agreement entered into is to generate revenues from three sources: • milestone payments and development fees during the pre-marketing phases of product development; • royalties on product sales by partners; and • manufacturing and supply of product to partners, predominantly of the phosphorylated delivery compound. Phosphagenics choice of development products is based on market opportunity and the overall commercial viability of each individual drug candidate, including assessment of the current and expected competition for the product, the cost, timing and degree of diffi culty to commercialise the product, the patent status of the drug compound and the market size of the product to be developed. Depreciation & amortisation expense, and Grant income is managed on a Group basis and is therefore not allocated to business segments. Accounting policies and inter-segment transactions Accounting policies used by the Group in reporting segments are contained in note 2 to the accounts. Major customers The Group has an expanding number of customers to which it provides products and services. The most signifi cant client accounts for 47% (2011: 32%) of external revenue within the nutraceuticals operating segment. The next most signifi cant client accounts for 16% (2011: 18%) of external revenue within the nutraceuticals operating segment. 99 Business segments 2012 Nutraceuticals $’000’s Pharmaceuticals $’000’s Total all Segments $’000s Unallocated $’000’s Total Group $’000’s Revenue Sales and Royalties 1,530 - 1,530 - 1,530 Grant Income - - - 3,355 3,355 Total segment revenue 1,530 - 1,530 3,355 4,885 Net operating profit/(loss) after tax (704) (717) (1,421) (9,634) (11,055) Interest revenue - - - 1,133 1,133 Depreciation and amortisation - (67) (67) (4,885) (4,952) Segment assets 2,923 901 3,824 60,297 64,121 Capital Expenditure - 23 23 116 139 Segment liabilities 18 537 555 954 1,509 Cash flow information Net cash fl ow from Operating activities (897) (4,936) (5,833) (5,835) (11,668) Net cash fl ow from investing activities - (23) (23) 1,051 1,028 Net cash fl ow from fi nancing activities - - - 356 356 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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20 12 Annual Report PHOSPHAGENICS P
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highlights March... April... May...
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03 Jonathan Addison Chairman & Inde
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COLLABORATIONS Strategic Collaborat
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The Phosphagenics Evolution THE STO
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“ We also reached agreement with
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Overview of our opioid development
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13 is branded as Butrans or Norspan
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Personal Care ASHLAND INC (FORMERLY
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BEAUTY IS MORE THAN SKIN DEEP 17 EL
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cellulite contour crème BioElixia
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Intellectual Property Title Countri
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2009 2008 2007 2006 6.8 7.8 22.2 23
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DR ESRA OGRU (AGED 37 YEARS) BSC (H
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Senior Management DR PAUL GAVIN Chi
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Phosphagenics Limited ABN 32 056 48
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Directors’ Report Your directors
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Directors’ Report continued Looki
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Directors’ Report continued Commi
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Directors’ Report continued REMUN
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Directors’ Report continued REMUN
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Directors’ Report continued Share
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Directors’ Report continued Share
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Exercise Price Expiry Date Net othe
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Page 119: corporate directory Phosphagenics L
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2013 Apr 15 Annual Report 2012 - Phosphagenics

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