6-K: Report of foreign issuer [Rules 13a-16 and 15d-16]
Published on
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_______________________________
Form
6-K
REPORT
OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE
SECURITIES
EXCHANGE ACT OF 1934
For
the
month of February 2006.
Commission
File Number ________________
NOVOGEN
LIMITED
(Translation
of registrant’s name into English)
140
Wicks
Road, North Ryde, NSW, Australia
(Address
of principal executive office)
___________________________________
Indicate
by check mark whether the registrant files or will file annual reports under
cover of Form 20-F or Form 40-F.
Form
20-F
x Form
40-F o
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(l):
Note:
Regulation S-T Rule 101 (b)( I) only permits the submission in paper of a
Form
6-K if submitted solely to provide an attached annual report to security
holders.
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule lO1(b)(7):
Note:
Regulation S-T Rule l01(b)(7) only permits the submission in paper of a Form
6-K
if submitted to furnish a report or other document that the registrant foreign
private issuer must furnish and make public under the laws of the jurisdiction
in which the registrant is incorporated, domiciled or legally organized (the
registrant’s “home country”), or under the rules of the home country exchange on
which the registrant’s securities are traded, as long as the report or other
document is not a press release, is not required to be and has not been
distributed to the registrant’s security holders, and, if discussing a material
event, has already been the subject of a Form 6-K submission or other Commission
filing on EDGAR.
Indicate
by check mark whether the registrant by furnishing the information contained
in
this Form is also thereby furnishing the information to the Commission pursuant
to Rule l2g3-2(b) under the Securities Exchange Act of 1934. Yes o No
o
If
“Yes”
is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
82-
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Novogen
Limited
(Registrant)
/s/
Ron Erratt
Ronald
Lea Erratt
Company
Secretary
Date
24 February, 2006
NOVOGEN
LIMITED
ABN
37-063-259-754
www.novogen.com
140
Wicks
Road, NORTH RYDE, NSW
2113
Telephone:
02 9878 0088
APPENDIX
4D
incorporating
INTERIM
FINANCIAL REPORT
FOR
THE HALF-YEAR
31
DECEMBER 2005
Lodged
with the ASX under Listing Rule 4.2A
This
is a
half yearly report. It is to be read in conjunction with the most recent annual
financial report.
Novogen
Limited
Appendix
4D Specific Requirements
31
December 2005
RESULTS
FOR ANNOUNCEMENT TO THE MARKET
$‘000
Revenues
from ordinary activities
down 10.0% to
8,637
Loss
from
ordinary activities after tax attributable
to
members up 34.0% to (6,547)
Loss
from
extraordinary items after tax attributable
to
members N/A
- to -
Net
Loss
for the period attributable to members up 34.0% to (6,547)
The
Directors do not propose to pay a dividend.
Refer
to
Review of Operations shown in the attached Directors’ Report for an explanation
of the above disclosures.
1
Novogen
Limited
Directors’
Report
31
December 2005
Directors’
report for the half-year 31 December, 2005
Your
directors submit their report for the half-year ended 31 December,
2005.
Directors
The
names
and qualifications of the directors that held office during the half year and
up
to the date of this report, unless otherwise indicated, are as
follows:-
Mr
PA
Johnston,
Chairman and Non-Executive Director - Dip Eng (Production)
Mr
C
Naughton,
Managing Director - BEc, LLB
Professor
GE Kelly
Executive Director - BSc (Vet), BVSc, PhD (resigned
2 September, 2005)
Professor
PJ Nestel AO,
Non-Executive Director - MD, FTSE, FRACP, FAHA
Mr
PB
Simpson,
Non-Executive Director - MPharm, PhC
Dr
LC
Read,
Non-Executive Director - BAgSc (Hons), PhD, FTSE
Mr
G
Leppinus,
Non-Executive Director - BEc, FCA
Review
of operations
Cash
Resources
At
the
end of December 2005, the Company had $42.4 million in cash resources available
to fund the drug development program and for ongoing business requirements.
During
the six months ended 31 December, 2005 the Company received $0.7 million from
the exercise of options, issued under the staff option plan.
Net
Loss
The
net
loss attributable to members, after allocating outside equity interests,
increased by $1.66 million or 34% to $6.55 million in the six months ended
31
December, 2005 from a loss of $4.89 million in the previous corresponding
period.
The
net
loss from ordinary activities after income tax for the consolidated group for
the six months to 31 December, 2005 increased by $2 million to $7.3 million
from
$5.3 million for the same period last year. The increase in our net loss for
the
six months ended 31 December, 2005 was due to a decrease in net sales revenues
of $0.9 million combined with an increase in selling and promotional expenses
of
$0.7 million, an increase of $0.3 million in research and development expenses
and an increase of $0.1 million in other expenses, compared to the corresponding
period last year.
Revenue
The
Company earned revenue for the six months ended December 2005 of $8.6 million
a
decrease of $1.0 million from $9.6 million for the same period last year. The
decrease in revenue was due to a decrease of $0.9 million in sales of consumer
products which were $6.4 million for the six months to 31 December, 2005 down
from $7.3 million for the same period last year. Revenues from non operating
activities were $2.2 million for the six months ended 31 December, 2005, a
decrease of $0.1 million from $2.3 million for the same period last year.
Included in revenues from non operating activities were milestone royalty
payments of approximately $0.7 million, due under a license agreement with
Archer Daniels Midland Company (ADM) (licence transferred from “The Solae
Company”) and $0.3 million, due under a licence agreement with Melbrosin.
Interest on cash balances increased by $0.1 million to $0.8 million for the
six
months ended 31 December, 2005.
Sales
in
Australasia for the six months ended 31 December, 2005 were down $0.1 million
to
$2.4 million from $2.5 million for the same period last year. Sales in North
2
Novogen
Limited
Directors’
Report
31
December 2005
America
reduced by $0.7 million to $2.6 million for the six months down from $3.3
million for the same period last year. Sales revenue in North America was
affected by a decline in the natural products market in the U.S. and increased
competitive efforts from HRT suppliers to restore their market franchise. Sales
in Europe of $1.4 million for the six months were the same as for the same
period last year.
Expenses
Total
expenses increased by $1.0 million to $15.9 million for the six months ended
31
December, 2005 from $14.9 million for the previous corresponding period. Cost
of
Goods Sold decreased by $0.1 million. The reduction in cost of goods sold due
to
reduced sales volumes were partially offset by an increase in production costs.
Selling and promotion expenses were $0.7 million higher than for the same period
last year representing increased advertising and promotional expenditure
predominantly in Australia. The increase in expenditure reflects our efforts
to
develop the natural products market in order to set a platform for planned
new
product initiatives. Research and Development expenses increased by $0.3 million
compared to the corresponding period last year. Research and development
expenses increased in line with the expanded clinical development program.
Administrative and Other Expenses increased by $0.4 million (excluding net
currency gains/losses). The net loss was favourably affected by currency
movements of $0.4 million in the six months ended 31 December, 2005 versus
the
previous corresponding period.
Corporate
Developments
In
September 2005, the Company announced
that
Glycotex, Inc., its US subsidiary had filed a registration statement with the
Securities Exchange Commission for an initial public offering (I.P.O.) of its
common stock units and listing on the Nasdaq National market.
In
December 2005 the Company received SEC approval of the Glycotex, Inc.
registration statement. This registration statement was withdrawn by the Company
in January 2006 with the Company deciding to postpone the I.P.O. while Glycotex,
Inc. further advances the development program for its wound healing and tissue
repair product candidates.
In
January 2006, the Company
announced that Glycotex, Inc. appointed Dr Reinhard Koenig as chief executive
officer and president. Following the appointment of Dr Koenig, Glycotex, Inc.
will be headquartered in San Francisco.
The
Company has been notified by the Therapeutic Goods Administration (TGA) that
it
is reviewing the current listing status of its dietary supplements products
in
Australia. These products are currently listed as “AUSTL” listed complementary
medicine. The Company believes that its products qualify for their current
listing status as “AUSTL” listed complementary medicines and the Company has
submitted supporting data to the TGA. In the event of a determination by the
TGA
that the products are not correctly listed the Company will consider what
further appropriate actions are available.
Clinical
Trial Developments
Major
advances were made during the six months ended 31 December, 2005 and up to
the
date of this report.
The
Company’s subsidiary, Marshall Edwards, Inc., announced in November 2005, plans
for a Phase Ib/IIa clinical study of the investigational anti-cancer drug,
phenoxodiol, in combination with docetaxel for women with recurrent ovarian
cancer. The investigator-initiated clinical study will take place at the Yale
University School of Medicine and is supported jointly by Sanofi-Aventis and
Marshall Edwards, Inc.
Also
in
November 2005, the Company’s subsidiary, Marshall Edwards, Inc., announced that
researchers from Yale University’s School of Medicine had reported a further
update on results from a clinical study in women with early-stage cancer of
the
cervix and vagina. These data were presented at the International
3
Novogen
Limited
Directors’
Report
31
December 2005
Conference
on Molecular Targets and Cancer. The data, presented by Yale researchers
indicates continuing confidence that the experimental drug phenoxodiol has
the
potential to change management options for this highly aggressive gynecological
cancer.
Further
data were presented in November 2005 at the International Conference on
Molecular Targets and Cancer Therapeutics in Philadelphia which showed that
phenoxodiol significantly delays tumour progression in men suffering from
late-stage hormone refractory prostate cancer.
In
September 2005, the Company announced that a new cardiovascular drug, trans
NV-04, had demonstrated significant reduction in blood pressure and reduced
arterial stiffness in a Phase Ib human clinical trial. The trial was completed
at the Baker Heart Research Institute in Melbourne, Australia.
In
July,
2005 the Company
announced the results of a Phase II clinical trial of its wound healing
compound, Glucoprime, in venous stasis ulcers. The trial was conducted at two
sites in Australia - Royal North Shore Hospital, Northern Metropolitan Area
Health Service (Sydney) and Heidelberg Repatriation Hospital (Melbourne) by
the
Company’s subsidiary, Glycotex, Inc. Glucoprime
was assessed for its effect on both the rate of wound closure and the degree
of
healing. Glucoprime promoted the rate at which wounds healed, with
Glucoprime-treated ulcers having a greater rate (mm2
per day)
of reduction in wound surface area compared to placebo-treated
ulcers.
The
Company announced in July 2005, that a new
drug
it has developed for the management of inflammatory bowel disease, code named
NV-52, an anti-inflammatory compound, would enter the first stage of human
clinical testing. A Phase I study is being conducted at the Gold Coast Hospital
under the direction of clinical pharmacologist, Professor Laurie
Howes.
Intellectual
Property Development
During
the six months ended 31 December, 2005, 6 patents were granted over the
Company’s intellectual property. The areas with expanding patent cover include
isoflavone formulation and uses, synthetic drug compounds and their use, and
a
novel food product.
Australia
Patent
No. 2002238278 Dimeric
Isoflavones
Sweden
|
Patent
No. 0002286-3
|
Compositions and Methods for Protecting Skin from UV Induced
Immunosuppression and Skin Damage
|
Israel
|
Patent
No. 136784
|
Compositions and Methods for Protecting Skin from UV Induced
Immunosuppression and Skin Damage
|
Patent
No. 138129 Therapy
of Estrogen-Associated Disorders
China
Patent
No. 222038 Preparation
of Isoflavones from Legumes
Czech
Republic
Patent
No. 295625 Therapeutic
Methods and Compositions Involving Isoflavones
These
grants bring the number of Company patents to 51.
4
Novogen
Limited
Directors’
Report
31
December 2005
In
January 2006, the Company announced that it had sought an injunction in the
Netherlands seeking to immediately enforce its phytoestrogen extracts patent
EP
0 656 786 B1 “Use of isoflavone phyto-oestrogen extracts of soy or clover” and
that the Provisional Measures Judge in the Netherlands dismissed the request
for
an injunction to enforce the patent prior to the conclusion of the existing
opposition proceedings that have been lodged in Europe to this granted patent.
Novogen will appeal and seek the immediate enforcement of its granted
patent.
Novogen
believes there are very strong grounds for a successful appeal of the injunction
proceedings and an appeal will be filed to seek an injunction to activate the
prompt enforcement of the patent.
A
counterclaim sought by the defendant in the injunction proceedings was also
dismissed by the judge, confirming that Novogen is entitled to uphold its patent
rights.
Dividends
Paid or Recommended
The
Directors of Novogen Limited do not recommend the payment of a dividend. No
dividends were declared or paid during the six months ended 31 December, 2005.
Adoption
of Australian Equivalents to IFRS
This
interim financial report has been prepared under Australian equivalents to
IFRS.
A reconciliation of the differences between previous GAAP and Australian
equivalents to IFRS has been included in Note 2 of this report.
Auditor's
Independence Declaration
A
copy of
the Auditor's independence declaration as required under section 307C of the
Corporations Act 2001 is included following the Directors' Report.
Rounding
The
amounts and figures shown in this report have been rounded to the nearest
thousand dollars (where rounding is applicable) under the option available
to
the Company under ASIC Class Order 98/0100. The Company is an entity to which
the Class Order applies.
Signed
in
accordance with a resolution of the directors on behalf of the
board.
/s/
C
Naughton
Managing
Director
Sydney,
23 February 2006
5
Novogen
Limited
Auditor’s
Independence Declaration
31
December 2005
AUDITOR’S
INDEPENDENCE DECLARATION
As
lead
auditor for the review of Novogen Limited for the half year ended 31 December
2005, I declare that, to the best of my knowledge and belief, there have been
no
contraventions of:
| a) |
the
auditor independence requirements of the Corporations Act 2001 in
relation
to the review; and
|
| b) |
any
applicable code of professional conduct in relation to the review.
|
/s/
BDO
[
BDO
Chartered
Accountants
/s/
K R
Reid
K
R REID
Partner
Dated
Sydney, this 23rd
day of
February 2006
6
Novogen
Limited
Condensed
Income Statement
For
the half-year ended 31 December 2005
|
Notes
|
Consolidated
|
|||||||||
|
2005
|
2004
|
|||||||||
|
|
|
|
|
|
$'000
|
|
$'000
|
|||
|
Revenue
|
3
|
8,637
|
9,592
|
|||||||
|
Expenses
|
3
|
(15,890
|
)
|
(14,883
|
)
|
|||||
|
Finance
costs
|
(13
|
)
|
(35
|
)
|
||||||
|
Loss
before income tax
|
(7,266
|
)
|
(5,326
|
)
|
||||||
|
Income
tax expense
|
-
|
(2
|
)
|
|||||||
|
Loss
after tax from continuing operations
|
(7,266
|
)
|
(5,328
|
)
|
||||||
|
Loss
for the period
|
(7,266
|
)
|
(5,328
|
)
|
||||||
|
Loss
attributable to minority equity interest
|
719
|
443
|
||||||||
|
Loss
attributable to members of Novogen Limted
|
(6,547
|
)
|
(4,885
|
)
|
||||||
|
Basic
and Diluted Earnings per share (cents)
|
(6.7
|
)
|
(5.0
|
)
|
||||||
The
above
condensed income statement should be read in conjunction with the accompanying
notes.
7
Novogen
Limited
Condensed
Balance Sheet
For
the half-year ended 31 December 2005
|
Consolidated
|
|||||||
|
December
|
June
|
||||||
|
2005
|
2005
|
||||||
|
|
$'000
|
|
$'000
|
||||
|
CURRENT
ASSETS
|
|||||||
|
Cash
|
42,396
|
47,260
|
|||||
|
Receivables
|
3,241
|
3,477
|
|||||
|
Inventories
|
5,746
|
5,488
|
|||||
|
Other
|
296
|
821
|
|||||
|
Total
Current Assets
|
51,679
|
57,046
|
|||||
|
NON-CURRENT
ASSETS
|
|||||||
|
Inventories
|
3,888
|
4,580
|
|||||
|
Property,
plant and equipment
|
5,349
|
5,859
|
|||||
|
Deferred
offering costs
|
937
|
-
|
|||||
|
Total
Non-Current Assets
|
10,174
|
10,439
|
|||||
|
TOTAL
ASSETS
|
61,853
|
67,485
|
|||||
|
CURRENT
LIABILITIES
|
|||||||
|
Trade
and other payables
|
5,340
|
5,501
|
|||||
|
Interest
bearing liabilities
|
461
|
750
|
|||||
|
Provisions
|
632
|
474
|
|||||
|
Total
Current Liabilities
|
6,433
|
6,725
|
|||||
|
NON-CURRENT
LIABILITIES
|
|||||||
|
Interest
bearing liabilities
|
-
|
15
|
|||||
|
Provisions
|
146
|
253
|
|||||
|
Total
Non-Current Liabilities
|
146
|
268
|
|||||
|
TOTAL
LIABILITIES
|
6,579
|
6,993
|
|||||
|
NET
ASSETS
|
55,274
|
60,492
|
|||||
|
EQUITY
|
|||||||
|
Parent
Entity Interest
|
|||||||
|
Contributed
equity
|
176,907
|
176,235
|
|||||
|
Reserves
|
(2,426
|
)
|
(3,413
|
)
|
|||
|
Accumulated
losses
|
(122,383
|
)
|
(116,069
|
)
|
|||
|
Total
parent entity interest in equity
|
52,098
|
56,753
|
|||||
|
Total
outside equity interest
|
3,176
|
3,739
|
|||||
|
TOTAL
EQUITY
|
55,274
|
60,492
|
|||||
The
above
condensed balance sheet should be read in conjunction with the accompanying
notes.
8
Novogen
Limited
Condensed
Statement of Changes in Equity
For
the half-year ended 31 December 2005
|
|
Issued
capital
|
Accumulated
losses
|
Other
reserves
|
Total
|
Outside
equity interest
|
Total
equity
|
|||||||||||||
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
|||||||||||||
|
|
|||||||||||||||||||
|
At
1 July 2004
|
170,276
|
(104,972
|
)
|
(449
|
)
|
64,855
|
4,356
|
69,211
|
|||||||||||
|
Options
exercised (1)
|
995
|
995
|
77
|
1,072
|
|||||||||||||||
|
less
Outside Equity Interest
|
(77
|
)
|
(77
|
)
|
(77
|
)
|
|||||||||||||
|
Loss
for the period
|
(4,885
|
)
|
(4,885
|
)
|
(443
|
)
|
(5,328
|
)
|
|||||||||||
|
Share
of opening accumulated losses transferred to OEI due to issuance
of
further shares by subsidiary
|
10
|
10
|
(10
|
)
|
-
|
||||||||||||||
|
Exchange
differences on translation of foreign operations
|
(3,418
|
)
|
(3,418
|
)
|
(513
|
)
|
(3,931
|
)
|
|||||||||||
|
Share-based
payment expense
|
195
|
195
|
195
|
||||||||||||||||
|
At
31 December 2004
|
171,194
|
(109,652
|
)
|
(3,867
|
)
|
57,675
|
3,467
|
61,142
|
|||||||||||
|
|
|||||||||||||||||||
|
At
1 July 2005
|
176,235
|
(116,069
|
)
|
(3,413
|
)
|
56,753
|
3,739
|
60,492
|
|||||||||||
|
Options
exercised (2)
|
672
|
672
|
672
|
||||||||||||||||
|
Loss
for the period
|
(6,547
|
)
|
(6,547
|
)
|
(719
|
)
|
(7,266
|
)
|
|||||||||||
|
Exchange
differences on translation of foreign operations
|
987
|
987
|
156
|
1,143
|
|||||||||||||||
|
Share-based
payment expense
|
233
|
233
|
233
|
||||||||||||||||
|
At
31 December 2005
|
176,907
|
(122,383
|
)
|
(2,426
|
)
|
52,098
|
3,176
|
55,274
|
|||||||||||
|
|
|||||||||||||||||||
|
(1)
- during the period 45,359 Novogen Limited shares and 90,000 Glycotex,
Inc. shares (which amounts to 630,000 shares following the Glycotex
share
split 29 November, 2005) were issued following the exercise of
options.
|
|||||||||||||||||||
|
(2)
- during the period 201,982 Novogen Limited shares were issued following
the exercise of options.
|
|||||||||||||||||||
The
above
condensed statement of changes in equity should be read in conjunction with
the
accompanying notes.
9
Novogen
Limited
Condensed
Cash Flow Statement
For
the half-year ended 31 December 2005
|
Consolidated
|
|||||||
|
2005
|
2004
|
||||||
|
$'000
|
$'000
|
||||||
|
Cash
flows from operating activities
|
|||||||
|
Receipts
from customers
|
6,679
|
7,035
|
|||||
|
Payments
to suppliers and employees
|
(14,658
|
)
|
(14,290
|
)
|
|||
|
Interest
received
|
799
|
552
|
|||||
|
Interest
paid
|
(13
|
)
|
(35
|
)
|
|||
|
Grants
received/(repaid)
|
(33
|
)
|
152
|
||||
|
Income
tax paid
|
-
|
(2
|
)
|
||||
|
Royalty
Received
|
944
|
32
|
|||||
|
Goods
and services tax (paid)/refunded
|
(34
|
)
|
49
|
||||
|
Net
cash flows used in operating activities
|
(6,316
|
)
|
(6,507
|
)
|
|||
|
Cash
flows from investing activities
|
|||||||
|
Acquisition
of property, plant and equipment
|
(178
|
)
|
(235
|
)
|
|||
|
Proceeds
from sale of plant and equipment
|
10
|
-
|
|||||
|
Net
cash flows used in investing activities
|
(168
|
)
|
(235
|
)
|
|||
|
Cash
flows from financing activities
|
|||||||
|
Proceeds
from the issue of ordinary shares
|
672
|
994
|
|||||
|
Repayment
of borrowings
|
(303
|
)
|
(352
|
)
|
|||
|
Net
cash flows from financing activities
|
369
|
642
|
|||||
|
Net
decrease in cash held
|
(6,115
|
)
|
(6,100
|
)
|
|||
|
Add
opening cash brought forward
|
47,260
|
58,431
|
|||||
|
Effect
of exchange rate changes on opening cash
|
1,251
|
(4,303
|
)
|
||||
|
Closing
cash carried forward
|
42,396
|
48,028
|
|||||
The
above
condensed cash flow statement should be read in conjunction with the
accompanying notes.
10
Novogen
Limited
Notes
to the Half-Year Financial Statements
31
December 2005
Note
1. Basis of preparation of the half-year financial report
The
half-year financial report does not include all notes of the type normally
included within the annual financial report and therefore cannot be expected
to
provide as full an understanding of the financial performance, financial
position and financing and investing activities of the consolidated entity
as
the full financial report.
The
half-year financial report should be read in conjunction with the annual
Financial Report of Novogen Limited as at 30 June, 2005, which was prepared
based on the Australian Accounting Standards applicable before 1 January, 2005
(AGAAP).
As
this
is the first interim financial report prepared under Australian equivalents
to
IFRS, the accounting policies applied are inconsistent with those applied in
the
30 June, 2005 annual report as this report was presented under previous
Australian GAAP. Accordingly, a summary of the significant accounting policies
under Australian equivalents to IFRS has been included below. A reconciliation
of equity and profit and loss between previous GAAP and Australian equivalents
to IFRS has been prepared per Note 2.
It
is
also recommended that the half-year financial report be considered together
with
any public pronouncements made by Novogen Limited and its controlled entities
during the half-year ended 31 December, 2005 in accordance with the continuous
disclosure obligations arising under the Corporations Act 2001.
Basis
of accounting
This
half-year financial report is a general purpose financial report, which has
been
prepared in accordance with applicable Accounting Standards including AASB
134
“Interim Financial Reporting”, the Corporations Act 2001 and Chapter 4 ASX
Listing Rules.
The
half-year report has been prepared in accordance with the historical cost
convention.
For
the
purpose of preparing the half- year financial report, the half-year has been
treated as a discrete reporting period.
Principles
of consolidation
The
consolidated financial statements are those of the economic entity, comprising
Novogen Limited and all entities controlled by Novogen Limited from time to
time
during the year and at balance date. Novogen Limited and its controlled entities
together are referred to in this financial report as the economic entity or
Group.
The
financial statements of the subsidiaries are prepared for the same reporting
period as the parent Company, using consistent accounting policies.
All
intercompany balances and transactions, including unrealised profits or losses
arising from intra-group transactions, have been eliminated in full.
Where
controlled entities have entered or left the economic entity during the year,
their operating results have been included/excluded from the date control was
obtained or until the date control ceased.
Minority
equity interests in the equity and results of the entities that are controlled
are shown as a separate item in the consolidated financial report.
Where
a
subsidiary makes a new issue of capital subscribed by outside equity interests,
the benefit
11
Novogen
Limited
Notes
to the Half-Year Financial Statements
31
December 2005
accruing
to the parent entity, due to dilution of outside equity interests on
subscription, is reflected as capital in the Group.
Foreign
currency
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.
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 Company 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.
Cash
and cash equivalents
Cash
and
cash equivalents includes cash on hand, deposits held at call with banks, other
short-term highly liquid investments with original maturities of three months
or
less, and bank overdrafts.
Receivables
Receivables
are recognised and carried at original invoice value less a provision for any
uncollectible debts. Debts, which are known to be uncollectible, are written
off
when identified. A provision for doubtful debts is recognised when collection
of
the full nominal amount is no longer probable. Repayment terms are generally
30
days.
Inventories
Inventories
are measured at the lower of cost and net realisable value.
Costs
incurred in bringing each product to its present location and condition are
accounted for as follows:
| · |
Raw
materials - purchase cost on a first-in-first-out basis;
and
|
| · |
Finished
goods and work-in-progress - cost of direct material, direct labour
and a
proportion of manufacturing overheads based on normal operating
capacity
but excluding borrowing
costs.
|
12
Novogen
Limited
Notes
to the Half-Year Financial Statements
31
December 2005
Net
realisable value is the estimated selling price in the ordinary course of
business, less estimated costs of completion and estimated costs necessary
to
make the sale.
Recoverable
amount 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 asset’s value in use cannot be
estimated to be close to its fair value less costs to sell and it does not
generate cash inflows that are largely independent of those from other assets
or
groups of assets, in which case, the recoverable amount is determined for the
cash-generating unit to which the asset belongs.
In
assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the
asset.
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 (excluding land) over its expected
useful life to the economic entity.
Major
depreciation periods are:
Buildings 8
- 20
years
Plant and equipment
2.5-10
years
Leasehold improvements
the
lease
term
Leases
Leases
are classified at their inception as either operating or finance leases based
on
the economic substance of the agreement so as to reflect the risks and benefits
incidental to ownership.
Operating
leases
The
minimum lease payments of operating leases, where the lessor effectively retains
substantially all of the risks and benefits of ownership of the leased item,
are
recognised as an expense on a straight line basis.
Lease
incentives under operating leases are recognised as a liability and amortised
on
a straight-line basis over the life of the lease term.
Finance
leases
Leases
which effectively transfer substantially all of the risks and benefits
incidental to ownership of the leased item to the group 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.
13
Novogen
Limited
Notes
to the Half-Year Financial Statements
31
December 2005
Capitalised
lease assets are depreciated over the shorter of the estimated useful life
of
the asset or the lease term.
Lease
payments are allocated between interest expense and reduction of the lease
liability with the interest expense, calculated using the interest rate implicit
in the lease, charged directly against income.
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.
Intangible
assets
Patents
and Trademarks
Costs
incurred in respect of patents and trademarks are expensed as incurred unless
future recoverability is assured beyond reasonable doubt, to exceed these costs.
Research
and development
Costs
incurred on research and development projects are expensed as incurred, unless
future recoverability can be reasonably regarded as assured. Where research
and
development costs are deferred such costs are amortised over future periods
on a
basis related to expected benefits. Unamortised costs are reviewed at each
reporting date to determine the amount (if any) that is no longer recoverable
and any amount identified is written off.
Payables
Liabilities
for trade creditors and other amounts are carried at cost which is the fair
value of the consideration to be paid in the future for goods and services
received, whether or not billed to the consolidated entity. Payables are
unsecured and generally have repayment terms of 30 days.
Payables
to related parties are carried at the principal amount.
Borrowing
costs
Borrowing
costs are recognised as an expense when incurred.
Contributed
equity
Ordinary
share capital is recognised at the fair value of consideration received by
the
Company. Any transaction costs arising on the issue of ordinary shares are
recognised directly in equity as a reduction in the share proceeds
received.
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
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 goods have been dispatched to a customer
pursuant to a sales order and invoice.
14
Novogen
Limited
Notes
to the Half-Year Financial Statements
31
December 2005
Interest
Interest
revenue is recognised when control of a right to receive consideration for
the
investment in assets has been attained.
Grant
income
Grant
income is recognised when the control of a right to receive grant funds has
been
attained, evidenced by confirmation from the relevant government or other
body.
Royalties
Royalty
revenue is recognised in accordance with the substance of the relevant
agreement.
Taxes
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.
Income
taxes relating to items recognised directly in equity are recognised in equity
and not in the income statement.
Tax
consolidation
Novogen
Limited and all its Australian resident wholly-owned subsidiaries have
implemented the tax consolidation legislation for the whole financial year.
Novogen Limited is the head entity in the tax consolidated group. Novogen
Limited assumes all the current tax liabilities and the deferred tax assets
arising from unused tax losses for the tax consolidated group.
Employee
benefits
Wages,
salaries, and annual leave
Liabilities
for wages, salaries and annual leave are recognised, and are measured as the
amount unpaid at the reporting date at expected future pay rates in respect
of
employees' services up to that date.
Long
service leave
The
amounts expected to be paid to employees for their pro-rata entitlement to
long
service leave, including 'on-costs', are accrued annually at expected future
pay
rates having regard to experience of employee departures and period of service.
These entitlements are measured at the present value of the estimated future
cash outflow to be made in respect of services provided by employees up to
the
reporting date. In determining the present value of future cash out flows,
the
interest rates attaching to Government guaranteed securities, which have terms
to maturity approximating the terms of the related liability, are
used.
15
Novogen
Limited
Notes
to the Half-Year Financial Statements
31
December 2005
Share
option plans
The
Group
provides benefits to employees in the form of share-based payments
(equity-settled transactions).
The
cost
of these share-based payments is measured by reference to the fair value at
the
date at which they are granted. This cost is recognised, together with a
corresponding increase in equity, over the period in which the performance
conditions are fulfilled, ending on the date on which the relevant employees
become fully entitled to the award (vesting date).
The
cumulative expense recognised at each reporting date until vesting date reflects
(i) the extent to which the vesting period has expired and (ii) the number
of
awards that, in the opinion of the directors, will ultimately vest.
No
expense is recognised for awards that do not ultimately vest.
Earnings
per share (EPS)
Basic
EPS
is calculated as net profit/(loss) attributable to members adjusted for the
tax
effect of preference dividends and preference shares classified as equity,
if
any, divided by the weighted average number of ordinary shares, adjusted for
any
bonus element.
Earnings
used to calculate diluted earnings per share are calculated by adjusting the
basic earnings by the after tax effect of dividends and interest associated
with
dilutive potential ordinary shares. The weighted average number of shares used
is adjusted for the weighted average number of shares assumed to have been
issued for no consideration in relation to dilutive potential ordinary
shares.
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.
Rounding
The
amounts and figures shown in this report have been rounded to the nearest
thousand dollars (where rounding is applicable) under the option available
to
the Company under ASIC Class Order 98/0100. The Company is an entity to which
the Class Order applies.
Comparatives
Where
necessary, comparatives have been reclassified and repositioned for consistency
with current year disclosures.
16
Novogen
Limited
Notes
to the Half-Year Financial Statements
31
December 2005
Note
2. First-time adoption of Australian equivalents to International Financial
Reporting Standards (AIFRS)
(a)
Reconciliation of total equity presented under AGAAP to that under
AIFRSs
|
|
Consolidated
Entity
|
|||||||||
|
|
30-Jun-05
|
31-Dec-04
|
1-Jul-04
|
|||||||
|
|
|
|
$'000
|
|
$'000
|
$'000
|
||||
|
Notes
|
||||||||||
|
Total
equity under AGAAP
|
60,492
|
61,142
|
69,211
|
|||||||
|
|
||||||||||
|
Total
equity under AIFRSs
|
60,492
|
61,142
|
69,211
|
|||||||
(b)
Reconciliation of accumulated losses presented under AGAAP to that under
AIFRSs
|
|
|
Consolidated
Entity
|
|||||||||||
|
|
|
30-Jun-05
|
31-Dec-04
|
1-Jul-04
|
|||||||||
|
|
|
$'000
|
$'000
|
$'000
|
|||||||||
|
|
Notes
|
|
|
|
|||||||||
|
Accumulated
losses under AGAAP
|
(116,069
|
)
|
(109,652
|
)
|
(104,972
|
)
|
|||||||
|
Share-based
payment offset
|
(i
|
)
|
389
|
195
|
215
|
||||||||
|
Share-based
payment expense
|
(389
|
)
|
(195
|
)
|
(215
|
)
|
|||||||
|
Accumulated
losses under AIFRSs
|
(116,069
|
)
|
(109,652
|
)
|
(104,972
|
)
|
|||||||
(c)
Reconciliation of loss after tax presented under AGAAP to that under
AIFRSs
|
|
|
Consolidated
Entity
|
|
|
|
|
|
Year
ended
|
Half-year
ended
|
|
|
|
|
30-Jun-05
|
31-Dec-04
|
|
|
|
Notes
|
$'000
|
$'000
|
|
|
|
|
|
|
|
|
Loss
after tax as previously reported under AGAAP
|
(12,281)
|
(5,133)
|
|
|
|
Share-based
payment expense
|
(i)
|
(389)
|
(195)
|
|
|
Loss
after tax under AIFRSs
|
|
(12,670)
|
(5,328)
|
|
(i)
Share-based payments must now be expensed under AIFRSs, AASB 2: Share-Based
Payments. Various options were granted to employees. These options vest after
1
January 2005. The retrospective adjustment on 1 July 2004 amounting to $215,000
has no impact on profit or equity. However, the share-based payment expensed
under AIFRSs (not expensed under AGAAP) results in a reduction in profits for
the half-year ended 31 December, 2004 and the financial year ended 30 June,
2005
of $195,000 and $389,000 respectively, but no change in equity.
17
Novogen
Limited
Notes
to the Half-Year Financial Statements
31
December 2005
Note
3. Revenue and expenses
|
Consolidated
|
|||||||
|
2005
|
2004
|
||||||
|
|
|
|
$'000
|
|
$'000
|
||
|
Revenue
|
|||||||
|
Revenue
from the sale of goods
|
6,425
|
7,277
|
|||||
|
Interest
- other persons/corporations
|
762
|
652
|
|||||
|
Grants
received
|
(33
|
)
|
152
|
||||
|
Royalties
received
|
1,033
|
1,140
|
|||||
|
Other
revenue
|
450
|
371
|
|||||
|
2,212
|
2,315
|
||||||
|
Total
revenue
|
8,637
|
9,592
|
|||||
|
Consolidated
|
|||||||
|
2005
|
2004
|
||||||
|
$'000
|
$'000
|
||||||
|
Expenses
|
|||||||
|
Cost
of goods sold
|
(2,311
|
)
|
(2,397
|
)
|
|||
|
Shipping
and handling expenses
|
(245
|
)
|
(224
|
)
|
|||
|
Selling
and promotion expenses
|
(4,586
|
)
|
(3,858
|
)
|
|||
|
Research
& development expenses
|
(4,908
|
)
|
(4,617
|
)
|
|||
|
Administration
expenses
|
|||||||
|
Administration
- Net currency (losses)
|
(2
|
)
|
(371
|
)
|
|||
|
Administration
- other expenses
|
(3,423
|
)
|
(3,183
|
)
|
|||
|
Other
expenses
|
(415
|
)
|
(233
|
)
|
|||
|
(15,890
|
)
|
(14,883
|
)
|
||||
|
Borrowing
costs
|
(13
|
)
|
(35
|
)
|
|||
|
Expenses
included in the numbers above, specifically
disclosed:
|
|||||||
|
Depreciation
of non-current assets
|
|||||||
|
Plant
and equipment
|
(407
|
)
|
(514
|
)
|
|||
|
Buildings
|
(145
|
)
|
(145
|
)
|
|||
|
Leasehold
improvements
|
(2
|
)
|
(33
|
)
|
|||
|
|
|||||||
|
Amortisation
of non-current assets
|
|||||||
|
Plant
and equipment under lease
|
(135
|
)
|
(190
|
)
|
|||
|
Total
depreciation and amortisation expenses
|
(689
|
)
|
(882
|
)
|
|||
|
Expense
of share-based payments
|
233
|
195
|
|||||
18
Novogen
Limited
Notes
to the Half-Year Financial Statements
31
December 2005
Note
4. Contingent assets and liabilities
Since
the
last annual reporting date, there has been no material change in any contingent
assets.
The
parent company entered into a Guarantee Agreement as at December 6, 2005 to
guarantee the payment obligations of Glycotex, Inc. for any loss, damage or
liability asserted against Dr Koenig in his capacity as an officer and director
of Glycotex, Inc. in relation to any registration statement which is the subject
of Registration Statement on Form S-1 Registration Statement No. 333-128212
to
the extent that Glycotex, Inc. or any insurer there-of shall fail to pay. Refer
to Note 7 - “Events after balance sheet date”.
Since
the
last annual reporting date, there has been no other material change in any
contingent liabilities.
19
Novogen
Limited
Notes
to the Half-Year Financial Statements
31
December 2005
Note
5. Segment information
Segment
Accounting Policies
The
Group
generally accounts for inter-company sales and transfers as if the sales or
transfers were to third parties at current market prices. Revenues are
attributed to geographic areas based on the location of the assets producing
the
revenues.
Primary
Segment
|
Geographical
Segments
|
Australia/NZ
|
North
America
|
Europe
|
Elimination
|
Consolidated
(continuing operations)
|
||||||||||||||||||||||||||
|
2005
|
2004
|
2005
|
2004
|
2005
|
2004
|
2005
|
2004
|
2005
|
2004
|
||||||||||||||||||||||
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
||||||||||||||||||||||
|
Revenue
|
|||||||||||||||||||||||||||||||
|
Sales
to customers outside the consolidated entity
|
2,422
|
2,549
|
2,588
|
3,332
|
1,416
|
1,396
|
-
|
-
|
6,425
|
7,277
|
|||||||||||||||||||||
|
Other
revenues from customers outside the consolidated entity
|
1,599
|
1,663
|
-
|
-
|
-
|
-
|
(149
|
)
|
-
|
1,450
|
1,663
|
||||||||||||||||||||
|
Intersegment
Revenues
|
989
|
1,577
|
-
|
29
|
-
|
-
|
(989
|
)
|
(1,606
|
)
|
-
|
-
|
|||||||||||||||||||
|
Total
segment revenue
|
5,009
|
5,789
|
2,588
|
3,361
|
1,416
|
1,396
|
(1,138
|
)
|
(1,606
|
)
|
7,875
|
8,940
|
|||||||||||||||||||
|
Unallocated
revenue
|
762
|
652
|
|||||||||||||||||||||||||||||
|
Total
Consolidated Revenue
|
8,637
|
9,592
|
|||||||||||||||||||||||||||||
|
Results
|
|||||||||||||||||||||||||||||||
|
Segment
result
|
(8,162
|
)
|
(12,101
|
)
|
(4,117
|
)
|
3,349
|
(277
|
)
|
374
|
5,302
|
3,087
|
(7,253
|
)
|
(5,291
|
)
|
|||||||||||||||
|
Unallocated
expenses
|
(13
|
)
|
(35
|
)
|
|||||||||||||||||||||||||||
|
Consolidated
entity loss before income tax
|
(7,266
|
)
|
(5,326
|
)
|
|||||||||||||||||||||||||||
|
Income
tax expense
|
-
|
(2
|
)
|
||||||||||||||||||||||||||||
|
Net
loss
|
(7,266
|
)
|
(5,328
|
)
|
|||||||||||||||||||||||||||
Note
6. Net tangible assets per share
|
NET
TANGIBLE ASSETS PER SHARE
|
|||||||
|
Consolidated
|
|||||||
|
2005
|
2004
|
||||||
|
Net
tangible asset backing per share
|
$
|
0.57
|
$
|
0.63
|
|||
20
Novogen
Limited
Notes
to the Half-Year Financial Statements
31
December 2005
Note
7. Events after balance sheet date
On
18
January, 2006 the Company’s US subsidiary, Glycotex, Inc., withdrew its Form S-1
Registration Statement from the Securities Exchange Commission postponing the
initial public offering of its common stock units. Glycotex wishes to further
advance the development program for its wound healing and tissue repair product
candidates. Costs associated with this listing of $937,000 have been held as
a
non-current asset on the balance sheet as at 31 December, 2005. These costs
will
now be expensed in the next reporting period.
21
Novogen
Limited
Directors’
Declaration
31
December 2005
Financial
report for the half-year ended 31 December 2005
The
Directors declare that the financial statements and notes as set out on pages
7
to 21:
(a)
comply with Accounting Standards, the Corporations Regulations 2001;
and
(b)
give
a true and fair view of the consolidated entity's financial position as at
31
December 2005 and of its performance, as represented by the results of its
operations and cash flows, for the half year ended on that date.
In
the
Directors' opinion:
(a)
the
financial statements and notes are in accordance with the Corporations Act
2001;
and
(b)
there
are reasonable grounds to believe that Company Limited will be able to pay
its
debts as and when they become due and payable.
This
declaration is made in accordance with a resolution of Directors.
On
behalf
of the board
/s/ C
Naughton
C
Naughton
Managing
Director
Sydney,
23 February, 2006
22
Novogen
Limited
Independent
Review Report
31
December 2005
INDEPENDENT
REVIEW REPORT
TO
THE MEMBERS OF NOVOGEN LIMITED
Scope
We
have
reviewed the financial report comprising the Income Statement, Balance Sheet,
Statement of Cash Flows, Statement of Changes in Equity, accompanying notes
and
Directors' Declaration of Novogen Limited for the half-year ended 31 December
2005. The disclosing entity’s directors are responsible for the financial
report. We have performed an independent review of the financial report in
order
to state whether, on the basis of the procedures described, anything has come
to
our attention that would indicate that the financial report is not presented
fairly in accordance with Accounting Standard AASB 134: Interim Financial
Reporting, other mandatory professional reporting requirements in Australia
and
statutory requirements, so as to present a view which is consistent with our
understanding of the disclosing entity’s financial position, and performance as
represented by the results of its operations and its cash flows, and in order
for the disclosing entity to lodge the financial report with the Australian
Securities & Investments Commission.
Our
review has been conducted in accordance with Australian Auditing Standards
applicable to review engagements. A review is limited primarily to inquiries
of
the disclosing entity’s personnel and analytical procedures applied to the
financial data. These procedures do not provide all the evidence that would
be
required in an audit, thus the level of assurance provided is less than given
in
an audit. We have not performed an audit and, accordingly, we do not express
an
opinion.
Independence
In
conducting our review, we followed applicable independence requirements of
Australian professional ethical pronouncements and the Corporations Act
2001.
The
independence declaration given to the directors in accordance with section
307C
would be in the same terms if it had been given at the date of this
report.
23
Novogen
Limited
Independent
Review Report
31
December 2005
Statement
Based
on
our review, which is not an audit, we have not become aware of any matter
that
makes us believe that the half-year financial report of Novogen Limited is
not
in accordance with:
| (a) |
the
Corporations Act 2001, including:
|
|
(i)
|
giving
a true and fair view of the disclosing entity’s financial position as at
31 December 2005 and of its performance for the half-year ended
on that
date; and
|
|
(ii)
|
complying
with Accounting Standard AASB 134: Interim Financial Reporting
and the
Corporations Regulations 2001; and
|
| (b) |
other
mandatory professional reporting requirements in
Australia.
|
/s/
BDO
/s
B
BDO
Chartered
Accountants
[
/s/
K R
Reid
K
R REID
Partner
Dated
Sydney, this 23rd
day of
February 2006
24