Grand Pharmaceutical Group Limited - Proxy Solicitation & Information Statement 2018

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in China Grand Pharmaceutical and Healthcare Holdings Limited (the “ Company ”), you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or transferee.

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**China Grand Pharmaceutical and Healthcare Holdings Limited 遠大醫藥健康控股有限公司[*]**

(Incorporated in Bermuda with limited liability) (Stock Code: 00512)

MAJOR TRANSACTION

THE ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF SIRTEX MEDICAL LIMITED

Capitalised terms used in this cover page shall have the same meanings as those defined in the section headed “Definitions” of this circular.

A letter from the Board is set out on pages 5 to 21 of this circular.

A notice convening the SGM to be held at Unit 3302, The Center, 99 Queen’s Road Central, Hong Kong on Friday, 17 August 2018 at 11:00 a.m. is set out on pages SGM-1 to SGM-2 of this circular.

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend the SGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish.

* For identification purpose only

26 July 2018

				Page
Definitions.	. . . . . . . . .		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
				1
Letter from the Board.			. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Appendix I	–	Financial information of the Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Appendix II	–	Financial information of Sirtex. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
		A1.	Financial report of Sirtex for the financial year ended
			30 June 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
		A2.	Chairman’s report and chief executive officer’s report
			for the financial year ended 30 June 2015 . . . . . . . . . . . . . . . . . . . . II-84
		A3.	Extracts from the annual report relating to employment policies . . . II-97
		B1.	Financial report of Sirtex for the financial year ended
			30 June 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-98
		B2.	Chairman’s report and chief executive officer’s report
			for the financial year ended 30 June 2016 . . . . . . . . . . . . . . . . . . . . II-183
		B3.	Extracts from the annual report relating to employment policies . . . II-200
		C1.	Financial report of Sirtex for the financial year ended
			30 June 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-202
		C2.	Chairman’s report and chief executive officer’s report
			for the financial year ended 30 June 2017 . . . . . . . . . . . . . . . . . . . . II-289
		C3.	Extracts from the annual report relating to employment policies . . . II-311
		D1.	Unaudited consolidated financial statements of
			Sirtex for the six months ended 31 December 2017 . . . . . . . . . . . . . II-313
		D2.	Directors’ report for the six months ended 31 December 2017 . . . . II-326
Appendix III–		Unaudited pro forma financial information of the Group. . . . . . . . . . . . III-1
Appendix IV–		General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1
Notice of the	SGM. . . .		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	SGM-1

DEFINITIONS

In this circular, the following expressions have the following meanings, unless the context otherwise requires:

“Acquisition” the proposed acquisition of 100% of the Sirtex Shares by way of the Scheme “ASIC” Australian Securities and Investments Commission “ASX” ASX Limited or the securities market operated by it “Bidders” CDH Genetech and the Company “Bidders’ Nominee” Grand Pharma Sphere (Australia Bidco) Pty Ltd, the special purpose vehicle incorporated in Victoria, Australia to acquire the Sirtex Shares pursuant to the Scheme Implementation Deed, which is wholly-owned by the Holdco “Board” the board of Directors “CDH Genetech” CDH Genetech Limited, a company incorporated in the Cayman Islands with limited liability “CFIUS” Committee on Foreign Investment of the United States of America “China” the People’s Republic of China, for the purpose of this circular, excluding Hong Kong, Macau Special Administrative Region of China and Taiwan “China Grand Enterprises” China Grand Enterprises Incorporation (中國遠大集團有限責任公司), the indirect controlling shareholder of the Company “close associate(s)” has the meaning ascribed to it under the Listing Rules “Company” China Grand Pharmaceutical and Healthcare Holdings Limited (遠大醫藥健康控股有限公司), a company incorporated in Bermuda with limited liability, and the issued Shares of which are listed and traded on the main board of the Stock Exchange “controlling shareholder(s)” has the meaning ascribed thereto under the Listing Rules “Corporations Act” Corporations Act 2001 (Cth) of Australia “Court” Federal Court of Australia (NSW registry) or such other court of competent jurisdiction under the Corporations Act agreed to in writing between the parties to the Scheme Implementation Deed “Deposit Account” an interest bearing A$ denominated bank account with an Australian bank opened in the name of the Deposit Holder as trustee for Sirtex and the Bidders

DEFINITIONS

“Deposit Agreement” the deposit agreement dated 14 June 2018 entered into between Sirtex, the Bidders, Bank of China Limited, Macau Branch and the Deposit Holder “Deposit Holder” the person so designated in the Deposit Agreement “Director(s)” director(s) of the Company “End Date” the date that is 12 months after the date of the Scheme Implementation Deed or such other date as is agreed in writing between the parties to the Scheme Implementation Deed

“FATA” Foreign Acquisitions and Takeovers Act 1975 (Cth) of Australia “FIRB” Foreign Investment Review Board of the Government of Australia “First Court Date” the first day on which an application made to the Court for orders that the Scheme Meeting be convened is heard or the day of any adjourned application is heard “Group” the Company and its subsidiaries “GST” goods and services tax under the A New Tax System (Goods and Services Tax) Act 1999 (Cth) of Australia “Holdco” Grand Pharma Sphere Pte Ltd., a company incorporated in Singapore which wholly owns the Bidders’ Nominee, and is owned as to 51% by CDH Genetech and 49% by a wholly-owned subsidiary of the Company “Hong Kong” the Hong Kong Special Administrative Region of China “Implementation Date” the 5th business day after the Record Date

“Independent Expert” the independent expert in respect of the Scheme appointed by Sirtex

“Initial Deposit” A$165.0 million (approximately HK$970.6 million), or such larger amount as may be determined by the Bidders up to a maximum amount of A$220 million

“Joint Venture Formation” the formation of the Bidders’ Nominee as contemplated by the Scheme Implementation Deed “Latest Practicable Date” 23 July 2018, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained herein

DEFINITIONS

“Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

“Outwit” Outwit Investments Limited, the direct controlling shareholder of the Company
“Permitted Dividend” one or more dividends declared or determined by the board of Sirtex in respect of the period from 1 July 2017 to 30 June 2018, provided that the maximum aggregate amount paid or payable by Sirtex in respect of all such dividends is A$0.30 per Sirtex Share
“Record Date” 7 p.m. on the 5th business day (or such other date as agreed in writing between Sirtex and the Bidders) after the date on which the Scheme becomes effective
“Scheme” the scheme of arrangement between Sirtex and the Sirtex Shareholders as at the relevant record date under Part 5.1 of the Corporations Act as contemplated under the Scheme Implementation Deed
“Scheme Consideration” the consideration per Sirtex Share to be provided by the Bidders or the Bidders’ Nominee in consideration for the transfer of the Sirtex Share to the Bidders (or the Bidders’ Nominee), being, in respect of each Sirtex Share, A$33.60 less the amount of any Permitted Dividend paid in respect of the Sirtex Share
“Scheme Implementation Deed” the scheme implementation deed dated 14 June 2018 entered into between Sirtex, CDH Genetech and the Company in connection with the Acquisition
“Scheme Meeting” the meeting of Sirtex Shareholders ordered by the Court to be convened in respect of the Scheme
“Second Court Date” the first day on which an application made to the Court for an order approving the Scheme is heard or the day of any adjourned application is heard
“Second Deposit” an amount equal to A$220 million less the amount of the Initial Deposit paid by the Bidders
“SFO” the Securities and Future Ordinance (Chapter 571 of the Laws of Hong Kong), as amended from time to time
“SGM” the special general meeting of the Company to be convened and held for considering and if thought fit, approving, among others, the Acquisition (including the Joint Venture Formation) and the transactions contemplated thereunder

DEFINITIONS

“Share(s)”	ordinary share(s) of HK$0.01 each in the share capital of the
	Company
“Shareholder(s)”	holder(s) of the Share(s)
“Sirtex”	Sirtex Medical Limited, a company incorporated in Australia with
	limited liability and the shares of which are listed on the ASX (code:
	SRX)
“Sirtex Group”	Sirtex and each of its subsidiaries
“Sirtex Right”	a performance right or a contractual right granted by Sirtex which
	confers the right to acquire one unissued Sirtex Share
“Sirtex Shareholders”	the holders of Sirtex Shares
“Sirtex Shares”	fully paid ordinary shares in the capital of Sirtex
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Varian”	Varian Medical Systems, Inc.
“Varian Transaction”	the proposed acquisition of Sirtex by Varian pursuant to the scheme
	implementation deed between Sirtex and Varian dated 30 January
	2018
“A$”	Australian dollar, the lawful currency of Australia
“HK$”	Hong Kong dollar, the lawful currency of Hong Kong
“US$”	United States dollar, the lawful currency of the United States of
	America
“%”	per cent.

In this circular:

(1) the English names of Chinese nationals, entities, facilities and localities are unofficial translation or transliteration from their Chinese names and are for identification purposes only.
(2) amounts denominated in A$ have been converted, for the illustration purpose only, into HK$ at the exchange rate of HK$1.00 = A$0.170.

LETTER FROM THE BOARD

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**China Grand Pharmaceutical and Healthcare Holdings Limited 遠大醫藥健康控股有限公司[*]**

(Incorporated in Bermuda with limited liability) (Stock Code: 00512)

Executive Directors: Mr Liu Chengwei (Chairman) Mr Hu Bo (Deputy Chairman) Dr Shao Yan Dr Niu Zhanqi

Registered office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Independent non-executive Directors: Ms So Tosi Wan, Winnie Dr Pei Geng

Head office and principal place of business in Hong Kong: Unit 3302, The Center 99 Queen’s Road Central Hong Kong

26 July 2018

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION THE ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF SIRTEX MEDICAL LIMITED

INTRODUCTION

Reference is made to the announcement of the Company dated 14 June 2018. On 14 June 2018 (after trading hours of the Stock Exchange), Sirtex, CDH Genetech and the Company entered into the binding Scheme Implementation Deed pursuant to which CDH Genetech and the Company will jointly acquire 100% of the Sirtex Shares.

The purpose of this circular is to provide you with, among other things, further details of (i) the Acquisition (including the Joint Venture Formation) and the transactions contemplated thereunder; (ii) the financial and other information of the Group; (iii) the financial and other information of Sirtex; and (iv) the pro forma financial information of the Group upon completion of the Acquisition, and a notice of the SGM and the form of proxy.

* For identification purpose only

LETTER FROM THE BOARD

SCHEME IMPLEMENTATION DEED

On 14 June 2018, Sirtex, CDH Genetech and the Company entered into the binding Scheme Implementation Deed pursuant to which CDH Genetech and the Company will jointly acquire 100% of the Sirtex Shares.

CDH Genetech and the Company are jointly and severally responsible and liable for all obligations attributed to the Bidders under the Scheme Implementation Deed except that the Company is solely responsible for the payment of the reimbursement fee to Sirtex as further described in the paragraph headed “Break fee, reimbursement fee and other indemnities”.

The Acquisition is conditional upon the fulfilment of certain conditions as set out in the paragraph headed “Pre-conditions to the Scheme” below.

The principal terms of the Scheme Implementation Deed are as follows:

Outline of the Scheme

Subject to the Scheme becoming effective in accordance with its terms, the general effect of the Scheme will be as follows:

(i) 100% of the Sirtex Shares will be transferred to the Bidders or the Bidders’ Nominee in accordance with the terms of the Scheme; and
(ii) the Sirtex Shareholders will receive the Scheme Consideration from the Bidders or the Bidders’ Nominee in accordance with the terms of the Scheme.

Formation of the Bidders’ Nominee

The Company and CDH Genetech have established the Bidders’ Nominee which has been nominated to acquire the Sirtex Shares pursuant to the Scheme Implementation Deed.

The Company (through its wholly-owned subsidiary) indirectly holds 49% of the issued share capital of the Holdco, and CDH Genetech holds 51% of the issued share capital of the Holdco. The Holdco holds the entire issued share capital of the Bidders’ Nominee.

Implementation of the Scheme

The board of directors of Sirtex unanimously recommends that Sirtex Shareholders vote in favour of the Scheme and intend to vote Sirtex Shares in their control in favour of the Scheme, subject to Sirtex not receiving a superior proposal and the Independent Expert concluding that the Scheme is in the best interests of Sirtex Shareholders.

LETTER FROM THE BOARD

The Bidders have nominated the Bidders’ Nominee to acquire the Sirtex Shares under the Scheme by providing a written notice which sets out the details of Bidders’ Nominee to Sirtex. Sirtex and the Bidders must procure that the Sirtex Shares transferred under the Scheme are transferred to the Bidders’ Nominee rather than the Bidders.

Based on the Scheme Consideration of A$33.60 per Sirtex Share (equivalent to approximately HK$197.65) and the total number of Sirtex Shares expected to be in issue on the Record Date (being 56,553,702 Sirtex Shares, assuming all existing Sirtex Rights are exercised on or before the Record Date), the Scheme Consideration for all the Sirtex Shares would be approximately A$1,900,204,387 (approximately HK$11,177,672,865).

The Scheme Consideration was determined with reference to, among other things, (i) the prevailing market prices of the Sirtex Shares as quoted on the ASX; (ii) the proposal put forward by Varian to acquire 100% of the Sirtex Shares at A$28.00 per Sirtex Share under the Variance Transaction; and (iii) Sirtex’s prospect after the completion of the Acquisition as described in the paragraph headed “Reasons and benefits of the Acquisition for the Company” below.

Sirtex is permitted to pay to the Sirtex Shareholders a Permitted Dividend for its financial year from 1 July 2017 to 30 June 2018 of up to A$0.30 per Sirtex Share. The Scheme Consideration payable by the Bidders will be reduced by the amount of any Permitted Dividend paid to Sirtex Shareholders.

The Bidders have already paid to Sirtex the Initial Deposit and the Second Deposit. The Bidders shall pay to Sirtex the Scheme Consideration less the sum of the Initial Deposit and Second Deposit no later than the business day prior to the date of the Scheme Meeting to the Deposit Holder, to be held by the Deposit Holder as independent stakeholder in accordance with the Deposit Agreement.

The implementation of the Scheme will be subject to the terms of the Scheme Implementation Deed and other customary conditions contained therein.

Pre-conditions to the Scheme

The Scheme will not become effective and the obligations of the Bidders will not become binding unless each of the following conditions precedent is satisfied or waived in accordance with the Scheme Implementation Deed:

Conditions precedent for benefit of all parties

(a) Termination of Varian Transaction [(note)] : the scheme implementation deed in respect of the Varian Transaction is terminated;
(b) Shareholder approval : Sirtex Shareholders approve the Scheme by the requisite majorities under section 411(4)(a)(ii) of the Corporations Act at the Scheme Meeting;

Note: Sirtex entered into a binding scheme implementation deed with Varian on 30 January 2018, under which it was proposed that Varian would acquire all Sirtex Shares by way of a scheme of arrangement for A$28.00 per Sirtex Share in cash (the “ Varian Scheme ”). On 22 May 2018, Sirtex received a competing offer capable of acceptance from CDH Genetech (which was later joined by the Company as one of the joint bidders) for the acquisition of all Sirtex Shares (the “ CDH-CGP Proposal ”). Ultimately on 14 June 2018 the board of directors of Sirtex unanimously formed the view that the CDH-CGP Proposal was superior to the Varian Scheme and Sirtex entered into the Scheme Implementation Deed with CDH Genetech and the Company. The scheme implementation deed for the Varian Scheme was terminated on the same date. Accordingly, this condition is satisfied.

LETTER FROM THE BOARD

(c) FIRB approval : before 8 a.m. on the Second Court Date, the Treasurer of the Commonwealth of Australia (or his delegate) either:
(i) gives the Bidders written advice, which is unconditional or subject only to conditions that are acceptable to the Bidders acting reasonably, that the Commonwealth Government does not object under FATA or its foreign investment policy to the transaction; or
(ii) is or, by passage of time, becomes precluded from making an order under FATA in respect of the transaction, and remains so precluded until that time;
(d) US anti-trust clearance : all applicable waiting periods (and any extensions thereof) under the Hart Scott Rodino Antitrust Improvements Act of 1976 expire or are otherwise terminated;
(e) No restraints : no temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction in, or government agency of, Australia, the United States of America, Germany, Italy, Belgium, the United Kingdom or Ireland preventing or imposing any legal restraint on the transaction is in effect in each case as at 8 a.m. on the Second Court Date;
(f) Court approval : the Court approves the Scheme in accordance with section 411(4)(b) of the Corporations Act;

Condition precedent for benefit of the Bidders only

(g) No prescribed occurrence : no prescribed occurrence event as set out in the Scheme Implementation Deed (including, amongst other things, any new issuance of shares or options over shares by any member of the Sirtex Group or winding up, liquidation or receivership of any member of the Sirtex Group) occurs between the date of the Scheme Implementation Deed and 8am on the Second Court Date;

Condition precedent for benefit of Sirtex only

(h) Independent Expert : the Independent Expert issues a report which concludes that the Scheme is in the best interests of Sirtex Shareholders before the time when the Scheme booklet is registered with ASIC and the Independent Expert has not publicly withdrawn or qualified this conclusion before 8 a.m. on the Second Court Date; and
(i) No bidder insolvency event : neither Bidder suffers an insolvency event between the date of the Scheme Implementation Deed and 8 a.m. on the Second Court Date.

Waiver of conditions precedent

The conditions precedent (a), (b), (c), (d) and (f) above cannot be waived.

LETTER FROM THE BOARD

The conditions precedent (e) above may only be waived by both of the Bidders and Sirtex in writing.

The condition precedent (g) above may only be waived by the Bidders in writing.

The conditions precedent (h) and (i) above may only be waived by Sirtex in writing.

The Company has no intention to waive any of the conditions precedent.

If a condition precedent is not fulfilled or waived

If a condition precedent cannot be fulfilled (or has not been fulfilled or waived) by the time or date specified in the Scheme Implementation Deed, or the Scheme has not become effective by the End Date, Sirtex and the Bidders must consult in good faith to determine whether:

(a) the Scheme may proceed by way of alternative means or methods and, if so, agree on the terms of such alternative means or methods;
(b) to extend the relevant time for satisfaction of the condition precedent;
(c) to adjourn or change the date of the Scheme Meeting; or
(d) to extend the End Date.

As at the Latest Practicable Date, conditions (a) (Termination of Varian Transaction) , (c) (FIRB approval) and (d) (US anti-trust clearance) above have been fulfilled.

The Shareholders are reminded that the obtaining of the approval from the Company’s shareholders for the Company’s participation in the Acquisition is NOT a condition precedent to the Scheme, and the effectiveness of the Scheme will not be subject to the shareholders’ approval of the Company.

CFIUS Approval

Pursuant to the terms of the Scheme Implementation Deed, Sirtex and the Bidders agree to use their reasonable endeavours to take any and all such actions and agree to such requirements or conditions to mitigate any national security concerns as may be requested or required by CFIUS in connection with the approval from CFIUS of the transaction subject to the terms of the Scheme Implementation Deed.

Termination

The Bidders or Sirtex may terminate the Scheme Implementation Deed without any liability to the other party because of that termination (except for any obligation of a party to pay the bidder facilitation/ break fee or reimbursement fee (as applicable)) if:

(i) the Scheme has not become effective by the End Date; or
(ii) any event occurs which would, or in fact does, prevent a condition precedent being satisfied and that condition precedent is not waived by Sirtex or the Bidders or both (as applicable),

LETTER FROM THE BOARD

The Scheme Implementation Deed may also be terminated:

(i) by Sirtex if any Bidder is in material breach of the terms of the Scheme Implementation Deed or of the representations and warranties given by it and such breach is not remedied within 10 business days;
(ii) by the Bidders if Sirtex is in material breach of the terms of the Scheme Implementation Deed or of the representations and warranties given by it and such breach is not remedied within 10 business days;
(iii) by the Bidders if a majority of the members of the board of Sirtex have changed, withdrawn or modified their recommendation that Sirtex Shareholders vote in favour of the Scheme at the Scheme Meeting as permitted under the Scheme Implementation Deed;
(iv) by Sirtex if a majority of the board of Sirtex publicly recommends a bona fide competing proposal that is a superior proposal under the terms of the Scheme Implementation Deed;
(v) by Sirtex if the Independent Expert concludes in its report that the Scheme is not in the best interests of the Sirtex Shareholders; and
(vi) if agreed to in writing by Sirtex and the Bidders.

Break fee, reimbursement fee and other indemnities

Sirtex agrees to pay an amount equal to 1% of the total Scheme Consideration (approximately A$19.0 million (equivalent to approximately HK$111.8 million)) payable for all the Sirtex Shares under the Scheme (excluding the reducing impact of any Permitted Dividend) to the Bidders if the Scheme does not proceed because of any of the following events as stated in the Scheme Implementation Deed:

(i) announcement and completion within 12 months of announcement of certain forms of a competing proposal for the Sirtex Shares or the shares of any material subsidiary of Sirtex by a third party (except where the Independent Expert concludes in its report that the Scheme is not in the best interests of the Sirtex Shareholders (other than where the reason for the conclusion is a competing proposal);
(ii) a majority of the members of the board of Sirtex make a public statement withdrawing or adversely changing or modifying their recommendation that Sirtex Shareholders vote in favour of the Scheme at the Scheme Meeting (except if the Independent Expert concludes in its report that the Scheme is not in the best interests of the Sirtex Shareholders (other than where the reason for the conclusion is a competing proposal)); or
(iii) Sirtex validly terminates the Scheme Implementation Deed due to the Independent Expert concluding in its report that the Scheme is not in the best interests of Sirtex Shareholders (where the reason for the conclusion is a competing proposal); or
(iv) the Bidders validly terminate the Scheme Implementation Deed as a result of a material breach by Sirtex.

LETTER FROM THE BOARD

The Company agrees to pay the bidder facilitation/break fee of A$220 million (approximately HK$1,294.1 million) (including 10% GST) to Sirtex within 5 business days of the date of termination of the Scheme Implementation Deed if the Scheme does not proceed because:

(i) the Scheme is not effective by the End Date and any of the conditions precedent (c), (d), (e) and (i) has not been satisfied or waived;
(ii) any event occurs which would, or in fact does, prevent any of the conditions precedent (c), (d), (e) and (i) being satisfied and that condition precedent is not waived;
(iii) Sirtex and the Bidders agree in writing to voluntarily withdraw the joint voluntary notice of the transaction to CFIUS and the Scheme Implementation Deed is terminated; or
(iv) Sirtex validly terminates the Scheme Implementation Deed as a result of a material breach by the Bidders.

The bidder facilitation/break fee payable by the Company to Sirtex will be satisfied by the Initial Deposit and the Second Deposit being paid out of the Deposit Account to Sirtex.

CDH Genetech and the Company have agreed in writing that, among other things, while the Company shall be responsible for the bidder facilitation/break fee pursuant to and upon entering into the Scheme Implementation Deed (which had been signed before the Bidders’ Nominee was established), the Bidders’ Nominee, when established, shall become fully responsible for the bidder facilitation/break fee and shall indemnify the Company against any losses, damages or expenses incurred by the Company arising out of or in connection with the bidder facilitation/break fee. The Bidders’ Nominee was incorporated on 23 July 2018.

The Company had agreed to solely assume the obligation to pay the bidder facilitation/break fee (before the Bidders’ Nominee was established) after considering the following:

CDH has been taking a leading role in the Acquisition. It has committed substantial resources at its own cost in the technical and feasibility studies and valuation analysis on Sirtex before the Company was invited to participate in the Acquisition.
The Company has also taken into account the fact that CDH Genetech has solely assumed certain obligations relating to the Acquisition, such as the obligations under debt facilities to CDH Genetech and the professional fees associated with the Acquisition before the Bidders’ Nominee was established. Such obligations and costs are intended to be assumed by the Company and CDH Genetech pro rata to their shareholdings in the Holdco.
The Company has considered that CDH is a reputable China-focused alternative fund management (see the paragraph headed “Information on CDH Genetech” for further information), and the Company’s long-term strategic shareholder and partner.

LETTER FROM THE BOARD

The chance of occurrence of the events which would trigger the payment of the bidder facilitation/break fee to Sirtex is low. In particular, it is noted that conditions (c) (FIRB approval) and (d) (US anti-trust clearance) above have been fulfilled.
The Bidders’ Nominee, which was incorporated on 23 July 2018, has become fully responsible for the bidder facilitation/break fee, thus the period for which the Company was solely responsible for the bidder facilitation/break fee was short.
It is beneficial for the Company to participate in the Acquisition (see further details in the paragraph headed “Reasons and benefits of the Acquisition for the Company”).

Based on the above, the Directors consider that the arrangements of the payment of the bidder facilitation/break fee under the Scheme Implementation Deed are fair and reasonable and are in the interests of the Company and its shareholders as a whole.

Under the Scheme Implementation Deed, the Bidders also agree to indemnify Sirtex for, amongst other things, (i) any reasonable third party cost or expense incurred by Sirtex from actions taken by Sirtex in relation to the fulfilment of conditions precedent (c), (d) and (e); (ii) any reasonable third party cost or expense incurred by Sirtex from any action taken by Sirtex for obtaining the approval from CFIUS in relation to the Acquisition; and (iii) the amount of any reimbursement fee or break fee payable by Sirtex to Varian under the scheme implementation deed of the Varian Transaction.

Exclusive China commercialisation rights

If the Scheme Implementation Deed is terminated in circumstances where Sirtex is entitled to payment of the bidder facilitation/break fee due to (i) the Scheme is not effective by the End Date and any of the conditions precedent (c), (d) and (e) have not been satisfied or waived; (ii) any event occurs which would, or in fact does prevent any of the conditions precedent (c), (d) and (e) being satisfied and that condition precedent is not waived; or (iii) Sirtex and the Bidders agree in writing to voluntarily withdraw the joint voluntary notice of the transaction to CFIUS, and Sirtex has received payment of the bidder facilitation/break fee, Sirtex and the Bidders acknowledge and agree to use their respective best endeavours to finalise the entry into a formal legal agreement that governs the grant by Sirtex of exclusive China commercialisation rights in favour of the Bidders for the China market including but not limited to any one or more of distribution rights, cooperation rights and licensing rights in respect of intellectual property of Sirtex.

If Sirtex and the Bidders do not reach agreement on terms within 40 business days from the date of the Scheme Implementation Deed (or such later date as agreed between Sirtex and the Bidder), the Bidders shall have a right of first refusal under which Sirtex may not enter into an agreement with any third party for the grant of such China commercialisation rights for a period of three years following termination of the Scheme Implementation Deed without first offering to enter into an agreement with either or both Bidders on terms no less favourable to it or them (as applicable) than those proposed to be entered into with the third party. The right of first refusal must be accepted by either or both Bidders within 20 business days of being notified by Sirtex in writing of the material terms of its proposed agreement with the third party, failing which the offer lapses.

As at the Last Practicable Date, Sirtex and the Bidders are continuing with these negotiations and have not concluded a formal legal agreement for exclusive China commercialisation rights.

LETTER FROM THE BOARD

Sirtex’s and the Bidders’ obligation above does not apply if it is finally determined that all or any of the obligations of, or restrictions applying to, Sirtex and the Bidders in relation to the China commercialisation rights (i) is unlawful or would if performed be, unlawful; (ii) involves a breach of the duties of the directors of Sirtex; or (iii) constitutes unacceptable circumstances within the meaning of the Corporations Act.

Irrevocable Undertakings

As the Bidders are jointly and severally committed to the Scheme under the Scheme Implementation Deed, the effectiveness of the Scheme will not be subject to the shareholders’ approval of the Company. Nonetheless, the Company is obliged to obtain shareholders’ approval for the Company’s participation in the Acquisition in accordance with the requirements under the Listing Rules in order to fulfil the commitment of the Company under the Scheme Implementation Deed. Under the terms of the Scheme Implementation Deed, the SGM shall be held at least 10 business days prior to the scheduled date of the Scheme Meeting.

Each of Outwit, East Ocean Capital (Hong Kong) Company Limited, Shanghai China Grand Asset Finance Investment Management Co., Limited (上海遠大產融投資管理有限公司) and China Grand Enterprises, the shareholders of the Company which in aggregate, directly or indirectly, hold approximately 58.5% of the issued share capital in the Company as at the Latest Practicable Date, has irrevocably undertaken to the Company, CDH Genetech and Sirtex that it will vote or procure the relevant shareholders to vote in favour of the relevant resolution(s) at the SGM.

Completion

Pursuant to the terms of the Scheme Implementation Deed, on the Implementation Date, the Bidders agree in favour of Sirtex that, in consideration of the transfer to the Bidders’ Nominee of each Sirtex Share under the Scheme, the Bidders’ Nominee will accept such transfer, and the Bidders will pay or procure the payment of the Scheme Consideration at the direction of Sirtex as trustee for the Sirtex Shareholders, in accordance with the terms of the Scheme.

All of the Sirtex Shares will be transferred to the Bidders’ Nominee in accordance with the terms of the Scheme.

Sirtex will become wholly-owned by the Bidders’ Nominee and the Sirtex Shares will be delisted from the ASX.

Each of the Holdco and the Bidders’ Nominee will be accounted for as an associated company of the Company. Upon completion of the Acquisition, Sirtex will become an associated company of the Company.

LETTER FROM THE BOARD

FUNDING CONTRIBUTIONS OF THE ACQUISITION

Details of the proposed funding contributions of the Acquisition are set forth below:

Contributions

Direct contribution from CDH Genetech(1) Direct contribution from the Company(2) Sub-total(3) Debt facilities from lenders to CDH Genetech(4) Total Scheme Consideration	A$ 493,104,238 473,766,816 966,871,054 933,333,333 1,900,204,387	HK$ 2,900,613,165 2,786,863,624 5,687,476,789 5,490,196,076 11,177,672,865	% of total 26.0% 24.9%
			50.9% 49.1%
			100.0%

Notes:

This is proposed to be funded by the equity contribution by CDH Genetech’s shareholder, CDH Fund V L.P.
This contribution is proposed to be funded by the proceeds from a rights issue of the Company and, if the net proceeds from the rights issue cannot cover the full amount of the Company’s contribution, the remaining balance will be funded by debt facilities, internal resources, and/or other financial resources available to the Company. Please refer to the announcement of the Company dated 4 July 2018 for further details of the rights issue of the Company.
The direct funding contributions from CDH Genetech and the Company are allocated between CDH Genetech and the Company based on their percentage shareholdings in the Holdco.
It is intended that CDH Genetech will either, subject to the relevant lending bank’s consent, novate to the Bidders’ Nominee the obligation to repay the loan under the debt facilities upon the Bidders’ Nominee’s establishment, or CDH Genetech will pay the Scheme Consideration on behalf of the Bidders’ Nominee and as a result an equivalent amount will be accounted for as being owed by the Bidders’ Nominee to CDH Genetech.

LETTER FROM THE BOARD

REASONS AND BENEFITS OF THE ACQUISITION FOR THE COMPANY

The cash price of the Acquisition and the consideration for the Acquisition was determined based on arm’s length negotiations between the Company and CDH Genetech with reference to the following reasons and benefits:

Sirtex is a global life science company that develops and delivers effective oncology products. Its core product, SIR-Spheres Y-90 resin microspheres, uses novel small particle ( microsphere ) technology to deliver radiation directly to the effected liver tissue. Radiotherapy is a major pillar in the treatment of cancer with external beam radiotherapy being limited due to the sensitivity of the uninvolved, healthy liver parenchyma. Direct delivery of the microspheres via the hepatic arteries in a procedure called Selective Internal Radiation Therapy ( SIRT ), is a targeted radiotherapy technology for liver cancer, that helps to achieve maximum disease control through optimal tumour coverage, with the microspheres lodging preferentially in the microvasculature of the tumour, maximising tumouricidal effects and minimising effects on uninvolved liver parenchyma. SIR-Spheres Y-90 resin microspheres are a permanent single-use implantable medical product loaded with the radioisotope Yttrium-90 for the treatment of primary and secondary liver tumour. Over 1,160 treatment centres worldwide have delivered more than 86,000 doses. The therapy works, has regulatory and reimbursement approvals across most major global geographies, and is included in many international clinical guidelines, including the new version of EASL Clinical Practice Guidelines: Management of hepatocellular carcinoma published in 2018, and the Diagnosis Management and Treatment of Hepatocellular Carcinoma published by the National Health and Family Planning Commission of China in 2017.

According to the report of IMS Health, for the 5-years’ time till 2015, the compound growth rate of the world-wide anti-tumours medicine market was approximately 7.4%, in which the tumours treatment medicine had a compound growth rate of approximately 9.8%. It is expected that the size of the global anti-tumours medicine will reach US$150 billion by 2020, up by nearly 50% increment compared with approximately US$107 billion in 2015.

Sirtex is the leading organisation in SIRT, with global regulatory and reimbursement approvals. Notwithstanding a brief period of disruption in 2017, Sirtex has demonstrated strong business growth over the years. After going through a business reset, Sirtex is focused on restoring growth and accelerating profitability.

The Company sees significant potential to introduce Sirtex’s liver cancer treatment product, SIRSpheres Y-90 resin microspheres, into China. Liver cancer is a leading cause of death in China, and China alone accounts for over half of the world’s population of liver cancer patients. However, the effectiveness of prevailing treatments is limited, and Chinese patients are facing fewer treatment options than those in developed countries.

LETTER FROM THE BOARD

The acquisition of Sirtex offers an opportunity for the Company to venture into the field of interventional oncology. Together the Company and CDH Genetech are ideally positioned to grow Sirtex’s existing global business, especially to unlock the great potential of SIR-Spheres Y-90 resin microspheres in China. The Company has significant experience in R&D, academic promotion and product commercialisation of innovative medical products in China and is able to leverage its well-established distribution network. CDH Genetech is recognised as a leading healthcare private equity investor in China and has participated in and completed a number of well-known investment and restructuring projects that have also helped many of its healthcare projects establish a good market credit and reputation, and enabled the invested company to achieve high-speed growth and outstanding performance.

Through the Acquisition, the Company and CDH Genetech will take full advantage of their respective capabilities, and actively and effectively expand the global business of Sirtex. In particular expansion will be pursued in geographies where the benefits of Sirtex’s main products have the greatest potential for development, such as China. The introduction of such global innovative medical product from Sirtex to the Chinese market will strengthen the pipeline of products available to the Group and will become one of the core drivers of the Group’s expected rapid growth in the mid- to long-term.

Taking into account the above factors, the Directors consider that the terms and conditions of the Acquisition (including the Joint Venture Formation) are fair and reasonable and entering into the Scheme Implementation Deed and the transactions contemplated thereunder are in the interests of the Company and its shareholders as a whole.

INFORMATION ON THE COMPANY

The Company is the holding company of the Group which is listed on the main board of the Stock Exchange. The Group is mainly engaged in the research and development, manufacturing and sales of pharmaceutical preparations, pharmaceutical intermediates, specialised pharmaceutical raw materials and healthcare products.

INFORMATION ON CDH GENETECH

CDH Genetech is a company incorporated in the Cayman Islands whose principal business is investment holding. It is wholly-owned by CDH Fund V, L.P. (“ CDH Fund V ”), a limited partnership formed under the laws of Cayman Islands, which is an offshore USD private equity fund managed by CDH. The general partner of CDH Fund V is CDH V Holdings Company Limited, a Cayman Islands holding company.

CDH is a China-focused alternative asset fund manager with over US$20 billion of committed capital under management. CDH was established in 2002 and has invested capital on behalf of leading international pension funds, endowments, family offices, corporates and sovereign wealth funds. CDH Fund V has approximately US$2.6 billion of total capital commitments.

LETTER FROM THE BOARD

As at the Latest Practicable Date, CDH Giant Health I Limited (which is wholly-owned by CDH Fund V, L.P.) held: (i) 108,408,000 shares of the Company (representing approximately 4.7% of the total issued share capital of the Company); (ii) convertible bonds issued by the Company which are convertible into 222,222,222 shares of the Company (representing approximately 9.6% of the total issued share capital of the Company); and (iii) a put option granted by Outwit pursuant to which it has the right to sell 108,408,000 shares in the Company to Outwit.

Saved as disclosed above, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, CDH Genetech and its ultimate beneficial owners are third parties independent of the Company and connected persons of the Company.

INFORMATION ON SIRTEX

Sirtex is an Australian-based global life-sciences company that generates revenue through the sale of SIR-Spheres, a targeted radiation therapy for liver cancer. Sirtex’s SIR-Spheres have been supplied to over 40 countries with revenue primarily generated in the United States. The shares of Sirtex are listed on the ASX.

Set out below is a summary of the audited consolidated financial information of Sirtex (as extracted from its annual reports and prepared in accordance with Australian Accounting Standards) for the two years ended 30 June 2017:

	For the financial year	For the financial year
	ended 30 June
	2016	2017
	(audited)	(audited)
Net profit/(loss) before tax	A$69,998,039	(A$40,953,964)
Net profit/(loss) after tax	A$53,582,392	(A$26,257,188)
	As at 30 June 2017
		(audited)
Net assets		A$149,467,490

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios as defined in Rule 14.07 of the Listing Rules in relation to the Acquisition (including the Joint Venture Formation) exceed 25% but all of them are less than 100%, the Company’s participation in the Acquisition constitutes a major transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting, announcement and shareholders’ approval requirements under the Listing Rules.

LETTER FROM THE BOARD

SGM

Set out on pages SGM-1 to SGM-2 of this circular is a notice convening the SGM to be held at Unit 3302, The Center, 99 Queen’s Road Central, Hong Kong at which the relevant resolution will be proposed at the SGM to approve, among other things, the Company’s participation in the Acquisition (including the Joint Venture Formation) and the transactions contemplated thereunder.

The resolution proposed to be approved at the SGM will be taken by poll and an announcement on the results of the SGM will be made by the Company after the SGM.

To the best knowledge, information and belief of the Directors having made all reasonable enquiries, there is (i) no voting trust nor other agreement nor arrangement nor understanding entered into or binding upon any Shareholders; and (ii) no obligation nor entitlement of any Shareholder as at the Latest Practicable Date, whereby it has or may have temporarily or permanently passed control over the exercise of the voting right in respect of its Shares to a third party, either generally or on a case-by-case basis.

In accordance with the Listing Rules, CDH Genetech and its respective close associates (to the extent they have an existing interest in the Shares), are required to abstain from voting on the relevant resolution to approve the Company’s participation in the Acquisition and the Scheme Implementation Deed and any vote exercised by the Shareholders at the SGM shall be taken by poll. As at the Latest Practicable Date, CDH Genetech and its respective close associates were the beneficial owners of 108,408,000 shares of the Company (representing approximately 4.7% of the total issued share capital of the Company).

Save as disclosed above, to the best of the Directors’ knowledge, information and belief, no other Shareholder has a material interest in the Acquisition that is required to abstain from voting on the relevant resolution at the SGM.

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend the SGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited, 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish.

RECOMMENDATION

The Board (including the independent non-executive Directors), having taken into account the reasons set out in the paragraphs headed “Reasons and benefits of the Acquisition for the Company” above, considers that the terms of Acquisition are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Accordingly, the Board recommends the Shareholders to vote in favour of the ordinary resolution which will be proposed at the SGM for approving the Company’s participation in the Acquisition (including the Joint Venture Formation) and the transactions contemplated thereunder.

LETTER FROM THE BOARD

WAIVER FROM STRICT COMPLIANCE WITH RULE 14.67(6)(a)(i) OF THE LISTING RULES

To comply with Rule 14.67(6)(a)(i) of the Listing Rules, an accountants’ report covering the historical results, statement of financial position, cash flow statement and statement of changes in equity of Sirtex for the three financial years ended 30 June 2017 plus a stub period which ends no earlier than 31 January 2018 shall be prepared in accordance with Chapter 4 of the Listing Rules and be included in this circular.

The Company has applied for and the Stock Exchange has granted a waiver from the strict compliance with the requirements of Rule 14.67(6)(a)(i) of the Listing Rules on the following grounds:

(1) Sirtex will not become a subsidiary of the Company

Rule 14.67(6)(a)(i) of the Listing Rules provides that where a company proposed to be acquired by a listed issuer has not or will not become a subsidiary of the listed issuer, the Stock Exchange may be prepared to relax the requirement under Rule 14.67(6)(a)(i) of the Listing Rules.

Upon completion of the Acquisition, Sirtex would become an associated company but not a subsidiary of the Company. The financial results of Sirtex would not be consolidated into the financial statements of the Company following the completion of the Acquisition.

(2) Sirtex is listed on the ASX and is unable to disclose any financial information which has not been disclosed in accordance with the ASX’s requirements

The shares of Sirtex have been listed on the ASX since August 2000.

As required by the regulatory requirements applicable to a company listed on the ASX, Sirtex has been publishing its financial information regularly. The financial statements and regulatory announcements and reports of Sirtex are available to the general public (including shareholders and potential investors of the Company) on the website of Sirtex (www.sirtex.com) and that of the ASX (www.asx.com.au).

Sirtex is not prepared to disclose any financial information which has not been disclosed on an annual and/or half-yearly basis in accordance with the ASX’s requirements.

(3) Strict compliance with the requirements of accountants’ report is impractical and unduly burdensome

The audited financial statements of Sirtex for the financial year ended 30 June 2018 are expected to be published on or about 29 August 2018, hence it had not been available before the despatch of this circular.

In light of the above, strict compliance with Rule 14.67(6)(a)(i) of the Listing Rules would mean that the Company had to prepare an accountants’ report covering the financial information of Sirtex for the three years ended 30 June 2017 plus a stub period which ended no earlier than 31 January 2018.

LETTER FROM THE BOARD

Since Sirtex is not prepared to disclose any financial information which has not been published in accordance with the ASX’s requirements, it would be impractical for the Company to prepare the accountants’ report required by Rule 14.67(6)(a)(i) of the Listing Rules.

Furthermore, the Directors believed that the preparation of such accountants’ report would be unduly burdensome. To do so, the Company has to incur substantial time and cost. In light of the alternative disclosures made in Appendix II to this circular (see paragraph (4) below), the inclusion of an accountants’ report in accordance with Rule 14.67(6)(a)(i) of the Listing Rules is unlikely to put the Shareholders in a substantially better position to understand Sirtex’s financial position.

(4) Alternative disclosures provide relevant, meaningful and reliable information on Sirtex’s financial position

Instead of including an accountant’s report on Sirtex’s financial information as required under Rule 14.67(6)(a)(i) of the Listing Rules, the following alternative disclosures are made in Appendix II to this circular:

(a) the full text of (i) the financial reports of Sirtex for the three financial years ended 30 June 2015, 2016 and 2017 (which include the audited consolidated financial statements for the three financial years ended 30 June 2015, 2016 and 2017 but exclude the sections headed “Additional stock exchange information” and “Company information” in the financial reports); and (ii) the unaudited but reviewed consolidated financial statements of Sirtex for the six months ended 31 December 2017 as extracted from the relevant annual and half-yearly reports of Sirtex;
(b) the full text of (i) the chairman’s report and the chief executive officer’s report (which contain discussion and analysis on results of operations) from the annual reports of Sirtex for the three financial years ended 30 June 2015, 2016 and 2017; and (ii) the paragraphs headed “Review of operations and financial results” in the directors’ report from the half-yearly report of Sirtex for the six months ended 31 December 2017;
(c) the reasons for and details of the waiver sought in respect of the requirements under Rule 14.67(6)(a)(i) of the Listing Rules.

The consolidated financial statements of Sirtex for the three financial years ended 30 June 2015, 2016 and 2017 have been prepared in accordance with Australian Accounting Standards and audited by Grant Thornton Audit Pty Ltd. There are no audit qualifications in the auditor’s reports for the relevant financial years.

The consolidated financial statements of Sirtex for the six months ended 31 December 2017 have been prepared in accordance with Australian Accounting Standards and reviewed by Grant Thornton Audit Pty Ltd., which has confirmed that nothing has come to their attention that causes them to believe Sirtex’s half-year financial report for the six months ended 31 December 2017 does not give a true and fair view of the financial position of the Sirtex Group.

LETTER FROM THE BOARD

The Directors believe that (i) there would be no principal differences between the financial information of Sirtex as prepared under Australian Accounting Standards and a restatement of the financial information of Sirtex as if it is prepared in accordance with the accounting policies presently adopted by the Company in compliance with Hong Kong Financial Reporting Standards; and (ii) there are no principal differences between the accounting policies adopted by the Company and Sirtex, which has been confirmed by HLB Hodgson Impey Cheng, the Company’s auditors, based on certain agreed upon procedures performed.

After considering the above factors, the Directors consider that it is practical and appropriate to make the aforesaid alternative disclosures in this circular based on publicly available financial information of Sirtex. The Directors are also of the view that the financial reports of Sirtex for the three financial years ended 30 June 2015, 2016 and 2017 and the unaudited but reviewed financial statements of Sirtex for the six months ended 31 December 2017, together with the discussion and analysis extracted from Sirtex’s annual and half-yearly reports, would provide relevant, meaningful and reliable information on the financial position of Sirtex for the relevant financial periods.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information as set out in the appendices to this circular.

Yours faithfully, For and on behalf of the Board China Grand Pharmaceutical and Healthcare Holdings Limited Liu Chengwei Chairman

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. SUMMARY OF FINANCIAL INFORMATION OF THE GROUP

The audited financial information of the Group for each of the three years ended 31 December 2017 can be found in to the annual reports of the Company for the financial years ended 31 December 2015 (pages 25 to 111), 2016 (pages 31 to 129) and 2017 (pages 33 to 131) respectively.

The abovementioned financial information has been published on both the websites of the Stock Exchange (www.hkexnews.hk) and the website of the Company (www.chinagrandpharm.com/html/ir_ reports.php). The auditors of the Company have not issued any qualified opinion on the Group’s financial statements for each of three financial years ended 2017.

2. STATEMENT OF INDEBTEDNESS

As at the close of business on 31 May 2018, being the latest practicable date for the purpose of ascertaining the indebtedness of the Group prior to the printing of this circular, the Group had total outstanding borrowings of approximately HK$2,173.55 million, comprising bank loans of approximately HK$2,128.23 million, a borrowing of approximately HK$22.03 million from an independent third party and amount due to immediately holding company of approximately HK$23.29 million. Certain bank loans are secured by the pledge of certain prepaid lease payments, buildings and pledged bank deposits of the Group. The remaining bank loans are guaranteed by China Grand Enterprises. The Group leased certain of its manufacturing equipment under finance lease, and the Group’s finance lease liabilities were approximately HK$112.36 million. The Company also issued a convertible bond with the principal amount of HK$300 million, which entitles the holder to convert to the Company’s ordinary share at a conversion price of HK$1.35 and maturity on 17 October 2019.

Disclaimers

Save as aforesaid above or as otherwise disclosed herein, and apart from intra-group liabilities and normal trade payables in ordinary course of business, at the close of business on 31 May 2018, the Group did not have any outstanding debts securities, bank overdrafts, liabilities under acceptances (other than normal trade bills) or acceptances credits, term loans, borrowings or indebtedness in the nature of borrowing including hire purchase commitments, mortgages or charges, which are either guaranteed, unguaranteed, secured or unsecured, guarantees or other contingent liabilities.

Save as disclosed above, the Directors have confirmed that there have been no material changes in the indebtedness and contingent liabilities of the Group since 31 May 2018, up to and including the Latest Practicable Date.

3. WORKING CAPITAL

The Directors are of the opinion that, after taking into account the cash flows generated from the operating activities, the financial resources presently available to the Group, and the estimated net consideration to be paid for the Acquisition, the Group has sufficient working capital for its present requirements and for the period up to twelve months from the date of this circular in the absence of unforeseen circumstances.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

4. MATERIAL ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

Since 31 December 2017, being the date of the latest published audited accounts of the Company, the Group has entered into the following material acquisitions:

(a) On 24 May 2018, the Company, GL Saino Investment Limited (“ GL Saino ”), and Taiwan Tung Yang International Company Limited (台灣東洋國際股份有限公司) (“ Taiwan Tung Yang ”) entered into an acquisition agreement, pursuant to which GL Saino conditionally agreed to sell and the Company conditionally agreed to acquire 100% of the issued shares of Taiwan Tung Yang at the aggregate consideration of RMB1,540 million (see the Company’s announcement dated 24 May 2018 for details).
(b) On 31 May 2018, Grand Pharmaceutical (China) Company Limited (遠大醫藥(中國)有限公司) (an indirect non-wholly owned subsidiary of the Company), Winguide Far East Limited (“ Winguide Far East ”) and Shanghai Winguide Huangpu Pharmaceutical Company Limited (上海運佳黃浦制藥有限公司) (“ Shanghai Winguide ”), among others, entered into an acquisition agreement, pursuant to which Winguide Far East conditionally agreed to sell and the Company conditionally agreed to acquire 100% equity interests in Shanghai Winguide at the aggregate consideration of approximately RMB1,551.3 million (see the Company’s announcement dated 1 June 2018 for details).

The aggregate of the remuneration payable to and benefits in kind receivable by the directors of Taiwan Tung Yang and Shanghai Winguide (if any) will not be varied in consequence of the above acquisitions.

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2017, being the date to which the latest published audited financial statements of the Group were made up.

6. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

As stated in the Company’s 2017 annual report, the global pharmaceutical market in 2017 recorded sales of US$1.13 trillion in 2017, according to TrendForce, a global market research organisation, representing a year-on-year growth of only 1.9%, and a CAGR of 4.9% over five years.

In the United States, the world’s largest pharmaceutical market, 46 new drugs was approved in 2017, a record high since 1996. More generic drugs entered the market, with 765 generic drugs approved in the first 11 months of 2017, representing a significant increase of over 130 approvals as compared with the number for the fully year of 2016. These figures revealed the direction of policy change in the market, that is, a focus on drug innovation and control of drug prices.

The main theme of the government’s policies in 2017 with respect to the Chinese pharmaceutical market, which is the second largest in the world, was also stringent monitoring and encouragement of innovation in pharmaceuticals and medical devices.

I-2

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The year of 2017 is the first year of policy reform in the Chinese pharmaceutical market, and also the first year of industry innovation. Firstly, in terms of new policies, the regulatory authorities in the medical and health industry in China issued a total of 1,562 policy documents throughout 2017, of which 134 documents were issued by China Food and Drug Administration (the “ CFDA ”), representing a year-on-year increment of 81%, covering five key sectors in the industry, including drug research and development, production, circulation, usage and payment. These policies included the issuance of the latest version of National Medical Reimbursement List in 2017 and the Chinese Medicines Law, the establishment of a pilot hierarchical diagnosis system in selected cities, the abolishment of markups on drug prices, medical two-ticket system and priority assessment arrangements to encourage innovation of new drugs. With respect to new drugs approval, the CFDA basically completed about 22,000 registration applications accumulated since the peak in 2015 by the end of 2017. The CFDA also approved the marketing of the third-generation target-oriented lung cancer drug in China 18 months after the approval of the drug by the Food and Drug Administration in the United States.

According to EvaluatePharm, the global orphan drugs market is growing at much faster pace than the general pharmaceutical market, with an average CAGR of 7.1% over the past decade, which more than doubled the growth rate of the sales of prescription drugs in the same period (5.3%). The global sales of orphan drugs in 2008 amounted to US$60 billion, accounting for 10.1% of the total sales of prescription drugs. According to the estimation of EvaluatePharm, this figure will reach US$209 billion by 2022, accounting for 21.4% of the total sales of prescription drugs. Therefore, it will be a period of rapid development for orphan drugs in the next five years in the global market.

According to the data from menet.com, a Chinese Pharmaceutical website, in 2016, sales of medicines through the hospital channel in China accounted for 77.4% of the pharmaceutical market, while sales through pharmacies accounted for 22.2%, and online pharmacies accounted for only 0.3%. According to the experience of global development, it is an inevitable trend to separate prescription from dispensing. In the pharmaceutical market of the United States, approximately 60-70% of drugs are sold through non-hospital channels, and about 70% of prescription drugs are sold by non-hospital channels in the Japanese pharmaceutical market. Therefore, a judgment can be made that the sales channels of the Chinese pharmaceutical market may experience material changes both in terms of national policies and actual market development. Sales from non-hospital channels or low-end markets are likely to become new growth points for drug sales.

After years of unremitting efforts, the Group has kept abreast of the market trend both in development strategy planning and implementation of specific tasks, achieving good operating results and performance. In respect of development strategy, the Group has developed from the strategy of two-front structure industry chain of pharmaceutical preparation and pharmaceutical ingredients to the strategy of being a market leader with its exclusive and core innovative products today. In 2017, the full staff of employees led by the management team made a lot of effort and investment into product development, introduction of acquisitions, improvement of production technology, as well as product quality enhancement, academic-based promotion, energy conservation and recycling, improvement of production environment and fulfilling corporate social responsibilities, all of which have laid a good foundation for maintaining and ensuring the rapid development of the enterprise.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

In order to consolidate and strengthen the established leading position in certain segments in the pharmaceutical market in China, the Group has made specific plans and deployment in the following areas:

Emphasise on research and development and introduction of innovative drugs and medical devices, and get prepared for a booming period in the innovative pharmaceutical market in China;
Complete the planning and construction of the second production base for biotechnology products, by fully utilise the Group’s existing advantages and the opportunities in international cooperation, develop and introduce internationally advanced technologies and products, provide the Group with favorable conditions for the breakthroughs in the area of biological technology;
Expedite the completion of consistency evaluation of solid preparations and explore bigger market for the core products of the Group;
Accelerate the process from development to market for orphan drugs, by taking advantage of existing development technology and cooperation as well as the government’s favorable policies toward this area, with a view to helping the patients of orphan diseases to get earlier treatments;
Make further improvements on the levels of production technology and production management, so as to improve product quality, product registration and certification for the achieving sales in the international market; and
Proactively respond to and comply with the new national laws and regulations on drug sales, establish the academic-based promotional system, strengthen the strategy of brand product, value and explore the primary medicine market, with a view to ensuring that the Company’s quality and effective drugs can be recognized and welcomed by the population of doctors and patients.

In the next few years, the Chinese pharmaceutical market will experience material changes with the progressive implementation of national reforms and innovation policies. By unremittingly following the path of product and technology innovation and regarding product quality as its lifeline, the Group will, in good faith, provide high-quality, genuine and effective pharmaceutical products for doctors and patients. While adhering to the initial objective and corporate vision, the Group is committed to becoming a pharmaceutical enterprise which is respected by patients and doctors, redounding to the society, maintaining stable growth of business for the enterprise and bringing better benefits and return to the investors.

7. EFFECT OF THE ACQUISITION

Upon completion of the Acquisition, the Group will indirectly owned 49% equity interests of Sirtex through the Holdco and the Bidders’ Nominee. Each of the Holdco, the Bidders’ Nominee and Sirtex will be classified as an associated company of the Company, and the financial results of the Holdco, the Bidders’ Nominee and Sirtex will not be consolidated into the financial statements of the Company following the completion of the Acquisition.

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FINANCIAL INFORMATION OF SIRTEX

APPENDIX II

This appendix contains the audited consolidated financial statements and the discussion and analysis of the results of Sirtex for the three financial years ended 30 June 2015, 2016 and 2017, and the unaudited but reviewed consolidated financial statements and the discussion and analysis of the results of Sirtex for the six months ended 31 December 2017, which were prepared in accordance with Australia Accounting Standards and are extracted from the respective annual and half-yearly reports of Sirtex for the three financial years ended 30 June 2015, 2016 and 2017 and the six months ended 31 December 2017.

Sirtex is a company listed on the ASX. Accordingly, it is obliged to comply with the ASX listing rules in respect of the continuous disclosure regime as it relates to its financial information. These financial statements of Sirtex are publicly available on the website of Sirtex (www.sirtex.com) and that of the ASX (www.asx.com.au).

Please note that these financial statements were originally prepared and issued by Sirtex in English only. The Chinese translation contained in the Chinese version of this circular is provided by the Company for information purposes only. In case of inconsistencies between the two versions, the English version shall prevail.

The Directors also wish to emphasise that the extracts reproduced below are not prepared for incorporation into this circular and the Group has not participated in their preparation. The Directors, therefore, do not express any view as to their truth, accuracy or completeness. No consent has been obtained from the auditors of Sirtex in respect of the reproduction of their reports contained in this appendix and Sirtex was not involved in the preparation of the extracts used in this circular. Shareholders and potential investors of the Company should exercise caution when considering the information contained in this appendix.

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APPENDIX II

A1. FINANCIAL REPORT OF SIRTEX FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015

The Directors of Sirtex Medical Ltd present their report, together with the financial statements of the consolidated entity, being Sirtex Medical Ltd and its controlled entities (“the Group”) for the year ended 30 June 2015.

DIRECTORS

The Directors of Sirtex Medical Ltd during the financial year and until the date of this report are Mr R Hill, Dr J Eady, Mr G Boyce, and Mr G Wong. Details of the Directors, including their skills, experience, and expertise, are set out below.

Richard Hill – Chairman (Non-Executive) BA, LLB (Sydney), LLM (London)

Experience and Expertise

Mr Hill was appointed a director in September 2004 and Chairman in August 2006. He previously held senior executive positions with HSBC Investment Bank in Hong Kong and New York and has extensive experience in international M&A and capital raising. He was a founding partner of Hill Young & Associates, a corporate advisory firm. He is also an attorney of the New York State Bar.

Directorships held in other listed entities during the last three years

Calliden Group Limited – Chairman (appointed April 2000) Biota Holdings Limited (appointed November 2008, delisted November 2012)

BlackWall Property Funds – Chairman (appointed July 2008)

Special Responsibilities

Member of the Audit Committee and the Remuneration Committee

Interest in Shares and Options

1,974 ordinary shares in Sirtex Medical Limited

2,959 share rights

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Dr John Eady – Deputy Chairman (Non-Executive) BSc (Hons), PhD, FTSE

Experience and Expertise

Dr Eady was appointed director in March 2005. He spent most of his career with CRA Limited in a range of senior executive positions. He has broad Board experience including that with the Australian Federal Government’s Industry, Research and Development Board. Dr Eady is a Fellow of the Academy of Technological Sciences and Engineering, and consults extensively on business improvement.

Directorships held in other listed entities during the last three years Nil

Special Responsibilities

Chairman of the Remuneration Committee and Member of the Audit Committee

Interest in Shares and Options

6,234 ordinary shares in Sirtex Medical Limited 1,850 share rights

Grant Boyce – Director Experience and Expertise (Non-Executive) CA, BCom

Mr Boyce was appointed director in December 2002. He is a Chartered Accountant and the founder of Montrose Partners, a West Australian firm of chartered accountants. He was a Partner with Ernst & Young and worked in their Perth and New York offices. He has also served previously as Company Secretary for Sirtex.

Directorships held in other listed entities during the last three

years

Nil

Special Responsibilities

Chairman of the Audit Committee and Member of the Remuneration Committee

Interest in Shares and Options

5,987 ordinary shares in Sirtex Medical Limited

1,480 share rights

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APPENDIX II

Gilman Wong – Executive Director and Chief Executive Officer

Experience and Expertise

Mr Wong was appointed Chief Executive Officer in May 2005 and director in June 2005. Mr Wong previously held CEO and senior executive positions in various industries. He has a strong planning, and sales and marketing background.

Directorships held in other listed entities during the last three years

Nil

Interest in Shares and Options

100,000 ordinary shares in Sirtex Medical Limited 328,000 Executive Performance Rights

COMPANY SECRETARY

Darren Smith – Company

Secretary and Chief Financial Officer MBA, BBus, FCPA

Experience and Expertise

Mr Smith was appointed company secretary in July 2008 and Chief Financial Officer in February 2009. Mr Smith previously held CFO and senior executive finance and general management positions in a number of international, Australian listed and private companies. Mr Smith holds an MBA from the Australian Graduate School of Management (AGSM), The University of New South Wales, a Bachelor of Business from the University of Western Sydney, and is a Fellow of CPA Australia and a member of AICD.

Interest in Shares and Options

33,000 ordinary shares in Sirtex Medical Limited

95,000 Executive Performance Rights

DIRECTORS’ MEETINGS

The number of Directors’ meetings (including meetings of committees of Directors) and number of meetings attended by each of the Directors of the company during the financial year are:

			Remuneration	Remuneration
	Board of	Directors	Committee			Audit Committee
	Held	Attended	Held	Attended		Held	Attended
R Hill (Chairman)	14	14	6		6	5	5
Dr J Eady	14	14	6		6	5	5
G Boyce	14	14	6		6	5	5
G Wong	14	14	–		–	–	–

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APPENDIX II

PRINCIPAL ACTIVITIES

Sirtex Medical Ltd and its controlled entities (“Group”) form a medical device group whose primary objective is to manufacture and to distribute effective liver cancer treatments utilising small particle technology to approved markets in Asia-Pacific, Europe, Middle East and Africa, and North and South America.

REVIEW OF OPERATIONS AND FINANCIAL RESULTS

The Group’s main product SIR-Spheres microspheres is a targeted radioactive treatment for liver cancer. The treatment is called Selective Internal Radiation Therapy (SIRT) and consists of a minimally invasive surgical procedure performed by an interventional radiologist. The SIR-Spheres microspheres lodge in the small blood vessels of the tumour where they destroy it from the inside over a short period while sparing the surrounding healthy tissue. During the year, the Group sold 10,252 doses worldwide representing less than 2 per cent of the addressable market.

Dose sales for the year increased by 19.8 per cent over the previous financial year. The Americas (US, Latin America) market with 7,076 doses achieved growth of 21.2 per cent, the Europe, Middle East and Africa (EMEA) market with 2,273 doses achieved growth of 18.6 per cent, and Asia Pacific (APAC) recorded 903 dose sales representing growth of 11.6 per cent. Doses have been sold to over 900 hospitals worldwide. The largest individual customer, a hospital in the US, represented 2.3 per cent of total dose sales during the year (2014: 1.3 per cent).

Sales revenue reached $176,087,520 for the financial year ended 30 June 2015, an increase of 36.1 per cent over last financial year ($129,363,426). The higher sales revenue growth compared to volume growth was driven by a $US1,000 price increase in the US market in June 2014 and positive foreign currency fluctuations, as the Australian Dollar depreciated against the US Dollar during the year.

Profit before tax has increased 69.6 per cent to $52,768,232 for the year ended 30 June 2015 (2014: $31,109,946), and profit after tax has increased by 69.0 per cent to $40,344,738 (2014: $23,867,803).

Earnings per share for the year ended 30 June 2015 have increased to $0.714 (2014: $0.425). During the year, a fully franked dividend of $0.14 (2014: $0.12) per share has been paid in respect of the previous financial year.

Net assets for the Group increased by 34.4 per cent to $144,635,697 (2014: $107,582,178), mainly due to the investment of $21,462,126 (2014: $18,848,091) in intangible assets and an increase in cash and short-term deposits of $21,446,091 (2014: $401,124).

A significant part of the Group’s clinical activities is focused on major post-marketing clinical studies. Consistent with last year, expenses for these studies have been capitalised as they continue to satisfy the recognition criteria for AASB 138 Intangible Assets. Additions to capitalised costs incurred for these trials as well as for two smaller development projects during the financial year ended 30 June 2015 represent a total of $17,800,798 compared to $18,848,091 for the previous financial year. One of the major clinical trials was completed during the year resulting in amortisation of $250,618 being recognised in the Consolidated Statement of Profit and Loss.

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DIVIDENDS

An ordinary dividend of 14 cents per share was declared for the financial year ended 30 June 2014 and paid during the financial year ended 30 June 2015 (2014: 12 cents).

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

During the financial year there were no significant changes in the state of affairs of the Group other than that referred to in the financial statements or notes thereto.

LIKELY DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES

The Group’s strategy focuses on promoting and developing SIR-Spheres microspheres to become a worldwide standard of care for patients with liver cancer, representing a market estimated at over 480,000 patients per year.

To achieve this objective, Sirtex continues to invest in major randomised controlled studies. With a Clinical Operations team comprising in excess of 25 employees in the US, Europe, and Asia Pacific, together with contract research organisations and other service providers, the Group possesses the project management and patient recruitment capabilities that are required to successfully manage and complete these large studies.

During the financial year ended 30 June 2015, the Group released the results of one of its five clinical studies. To prepare for future demand for SIR-Spheres microspheres following the release of the results, the Group has expanded its manufacturing capabilities. The additional manufacturing capabilities at our plant in Wilmington, USA became operational during the financial year and the new manufacturing facility in Frankfurt, Germany is anticipated to commence manufacturing commercial doses during the financial year ended 30 June 2016.

The Group has been successful in gaining regulatory approval for SIR-Spheres microspheres in key global markets. They include US, Argentina, Brazil, the European Union, Israel and various Middle East and African markets, Australia, New Zealand, Singapore, Hong Kong, Taiwan and various other Asian markets. Sirtex is working towards gaining regulatory approvals in other major markets such as Japan and China for its SIR-Spheres microspheres product to continue its geographic growth.

The Group has invested $3,087,421 in a new integrated software application in order to bring greater efficiencies to our collection, storage and use of business information to empower our manufacturing, clinical and marketing teams, streamline our administrative procedures and further improve our competitiveness. In addition, significant investments have been made in human resources, with a further increase in staff numbers from 213 at the end of last financial year to 246 at the end of this financial year.

ENVIRONMENTAL REGULATIONS

The Group is not subject to significant environmental regulation under the law of any of the jurisdictions the Group is operating in.

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APPENDIX II

UNISSUED SHARES

Executive Performance rights on issue at year end

As at 30 June 2015, the unissued shares of Sirtex Medical Limited under Executive Performance Rights are as follows:

			Number under
Grant date	Date of Vesting	Exercise Price $	Rights
22 February 2011	3 July 2013	nil	33,000
23 August 2011	7 July 2014	nil	33,000
28 August 2012	30 June 2015	nil	678,500
26 November 2013	30 June 2016	nil	443,000
23 September 2014	30 June 2017	nil	281,320

Rights holders do not have any rights to participate in any issue of shares or other interests in the Company or any other entity. For further details on rights issued as remuneration, refer to the Remuneration Report.

Directors’ rights on issue at year end

As at 30 June 2015, the unissued shares of Sirtex Medical Limited under Non-Executive Directors Rights are as follows:

			Number under
Grant date	Date of Vesting	Exercise Price $	Rights
22 July 2014	22 July 2015	nil	6,289

Share options on issue at year end or exercised during the year

During the year ended 30 June 2015, there were no ordinary shares of Sirtex Medical Ltd issued on the exercise of options. No share options have been issued during the year, and no share options are outstanding at 30 June 2015.

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APPENDIX II

Directors’ interests

The relevant interest of each Director in the share capital of the Company, as notified by the Directors to the ASX in accordance with section 205G (1) of the Corporations Act 2001, as at 30 June 2015 is as follows:

	2015	2015	2014	2014
	Ordinary		Ordinary
	Shares	Rights	Shares	Rights
R Hill	1,974	2,959	–	1,974
Dr J Eady	6,234	1,850	5,000	1,234
G Boyce	5,987	1,480	5,000	987
G Wong	100,000	328,000	60,000	347,000

INDEMNIFICATION OF OFFICERS AND AUDITORS

During the financial year, the company paid a premium in respect of a contract insuring the directors of the company, the company secretary and all executive officers of the company and of any related body corporate against a liability incurred as such a director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

The company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the company or of any related body corporate against a liability incurred as such an officer or auditor.

EVENTS AFTER REPORTING DATE

On 10 July 2015, a total of 678,500 Executive Performance Rights issued on 28 August 2012 vested, having exceeded the performance target. As at the date of this report, a total of 583,314 of these performance rights have been exercised and issued as ordinary shares of Sirtex Medical Limited.

On 22 July 2015, a total of 6,289 Non-Executive Directors Rights issued on 22 July 2014 vested and 6,289 ordinary shares of Sirtex Medical Limited were purchased on market by the Trust.

Since the end of the year, the Directors have declared a fully franked dividend of 20c per share to be paid on 21 October 2015 (2014: 14 cents per share). The record date for the dividend is 30 September 2015.

No other matter or circumstance has arisen since the end of the financial year, that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.

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APPENDIX II

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year.

NON-AUDIT SERVICES

During the year, Grant Thornton, the Company’s auditors, performed certain other services in addition to their statutory audit duties. The Board of Directors, in accordance with advice from the audit committee, is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The directors are satisfied that their services disclosed below did not compromise the external auditor’s independence for the following reasons:

all non-audit services are reviewed and approved by the audit committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and
the nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of ethics for Professional Accountants set out by the Accounting Profession Ethical Standards Board.

Details of the amounts paid to the auditors of the Company, Grant Thornton, and its related practices for audit and non-audit services provided during the year are set out in Note 30 to the Financial Statements.

AUDITOR’S INDEPENDENCE DECLARATION

The auditor’s independence declaration for the year ended 30 June 2015 has been received and can be found on page 47 of the financial report and forms part of the Directors’ report.

ROUNDING OFF OF AMOUNTS

The Company is an entity to which ASIC Class Order 98/100 applies and, accordingly, amounts in the financial report and Directors’ Report have been rounded to the nearest thousand dollars, unless otherwise indicated.

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APPENDIX II

REMUNERATION REPORT (AUDITED)

LETTER FROM THE CHAIRMAN OF THE REMUNERATION COMMITTEE

Dear Shareholder,

I am pleased to present the remuneration report for the financial year ended 30 June 2015, outlining the nature and amount of remuneration for Sirtex’s non-executive directors and other Key Management Personnel (KMP), as defined under section 300A of the Corporations Act, 2001 and its associated regulations.

Sirtex’s remuneration levels and structure are critical to the Group’s ability to recruit and retain the calibre of people necessary if it is to grow and reach its full potential. It must be market-competitive, and at the same time fair to staff and responsible from a shareholder perspective. The Group’s remuneration for the financial year ended 30 June 2015 sought to achieve these goals.

Remuneration continues to comprise a fixed salary and a significant at-risk component. In this way, reward reflects performance and is higher when shareholder rewards are higher and lower when they are not.

It is currently the Group’s policy to set fixed salary at the median (middle of market) for the role in the relevant country (P50) and for the at-risk component to be structured so that remuneration equal to half-way between the median and top levels (P75) can be achieved if demanding targets are met.

It is also Sirtex’s policy to emphasise the long-term incentive (LTI) element of the at-risk component. While some cash short-term incentive (STI) bonus, reflecting individual and Group performance, is considered necessary to be fair to executives, the Board believes that this LTI emphasis encourages the longer term commitment favoured by Sirtex and shareholder groups. As a result, we have continued this emphasis and at this stage prefer this approach rather than introducing a two-part STI reward and its additional complexity.

At the same time the Board is considering improvements to the Executive Performance Rights Plan. For the financial year ended 30 June 2016, we intend to replace the current absolute Total Shareholder Return (TSR) measure with a market-adjusted TSR. This change is in response to concerns expressed as to the possibility of vesting being driven by broad market movement rather than company performance, although this has not occurred since the LTI plan was introduced. We are also considering whether changes are warranted in order to encourage executive KMP to retain significant portions of vested LTI shares.

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APPENDIX II

For the financial year ended 30 June 2015, KMP and other senior executive remuneration continued to be based on thorough data collection and market analysis for equivalent roles in similar companies in the countries in which Sirtex operates. The data were collected and analysed by the Group’s independent, expert remuneration consultant (Godfrey Remuneration Group), augmented where appropriate through other sources and considered by the Remuneration Committee, given prevailing circumstances.

Where possible, the comparator companies included organisations in the healthcare/biotechnology/ medical device industries, but it is evident that the most relevant comparison characteristic is size. Extensive research has shown a strong correlation between the remuneration levels of senior executives and market capitalisation, globally across all industries. The higher the capitalisation, the higher the remuneration levels, reflecting the significantly greater complexity, responsibility and impact the executive’s role has in the larger organisations.

For this reason, the determination of the appropriate market capitalisation to be used as a basis for the comparison of remuneration levels is a critical step, particularly given the significant share price growth and volatility experienced by Sirtex in recent times.

For the financial year ended 30 June 2015 analysis, the Remuneration Committee opted to take a conservative approach and used an underlying share value that reflects factors such as typical Price Earnings (PE) ratios, rather than the latest share price. Even so, because of the Group’s strong growth, remuneration for senior executives has needed to grow significantly more than would have been the case for a company with a relatively stable market capitalisation.

This has also been the case for the Group’s non-executive directors (NEDs). Sirtex believes that the same P75 positioning is necessary if it is to have the NEDs it needs to guide such a strategically exciting company. Accordingly, NED remuneration is based on fixed fees set at P50 for NEDs in similar companies and equities purchased through a salary sacrifice mechanism so that total remuneration approaches the P75 level.

Market comparisons have shown that NED remuneration also increases with company size. This has meant increases in total NED remuneration for financial year ended 30 June 2015. It should be noted, however, that when determining the 2015 NED remuneration components, it was decided to limit the indicated increases in fixed fees and use more of the market capitalisation-driven increases to salary sacrifice into equities. The objective was to accelerate NED shareholding growth.

These equities vest after only one year but have dealing restrictions while the NED remains on the Board, or for six years after vesting. This is a simple tax-effective mechanism to encourage NEDs to retain and build their shareholding in the Group.

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APPENDIX II

Sirtex strives to have remuneration structures and levels that are data-driven and based on objective, simple and transparent policies.

A fundamental requirement is that we continue to match market practice. We are committed to improving healthcare outcomes for patients worldwide, and to do that in a way that is responsible to all stakeholders.

As Chair of the Remuneration Committee, I would like to thank shareholders for their support and to invite feedback regarding the changes made during the financial year ended 30 June 2015. I hope you will continue to support us by voting to adopt this remuneration report at the upcoming Annual General Meeting.

Regards,

Dr John Eady

Chair of the Remuneration Committee

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APPENDIX II

CONTENT:

The Remuneration Report, which forms part of the Directors’ Report, provides information about the remuneration of the directors of Sirtex Medical Limited (Sirtex) and its other KMP for the year ended 30 June 2015. The remuneration report is set out under the following headings:

Persons covered by this report
Principles used to determine the nature and amount of remuneration
Service agreements
Performance outcomes and impact on shareholder wealth for the financial year ended 30 June 2015
Details of remuneration
Additional information

1. PERSONS COVERED BY THIS REPORT

This report covers remuneration arrangements and outcomes for the following KMP:

Non-executive Directors

Mr Richard Hill, Independent Non-executive Chairman
Dr John Eady, Independent Non-executive Director and Deputy Chairman – Chair of Remuneration Committee
Mr Grant Boyce, Independent Non-executive Director – Chair of the Audit Committee

Executives

Mr Gilman Wong, Managing Director & CEO
Mr Darren Smith, CFO and Company Secretary
Mr Michael Mangano, President Americas
Mr Nigel Lange, Chief Executive EMEA
Dr Burwood Chew, Chief Executive Asia Pacific

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APPENDIX II

Mr Robert Hardie, Global Head of Operations
Dr David Cade, Chief Medical Officer

All KMP held their positions throughout the financial year ended 30 June 2015.

2. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION

2.1 Remuneration Governance Framework

In order to base its decisions on broadly-based information and views, the Group seeks input from a wide range of sources:

Remuneration Committee members;
External remuneration consultants (ERCs);
Group management;
Stakeholder groups and shareholders;
Other experts and professionals such as tax advisors and lawyers; and
Individual KMP to understand roles and complexities.

Interactions between various parties on remuneration matters are overseen by the Remuneration Committee to ensure that there is appropriate independence and controls in place. The Remuneration Committee uses the input provided to inform its views on KMP remuneration issues, appropriate to the Group’s specific circumstances.

2.2 Executive KMP Remuneration Policy and Procedure

The Executive KMP Remuneration Policy and Procedure applies to executives defined as:

Managing Director – accountable to the Board for the Group’s performance and long term planning; and
Top Strata Direct Reports to the Managing Director – roles that are business unit, functional, or expertise heads regarded as KMP.

This policy outlines the Group’s intentions regarding executive remuneration, as well as how remuneration is intended to be structured, benchmarked and adjusted in response to changes in the circumstances of the Group, and in line with good governance.

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APPENDIX II

Broadly the policy states that for executive KMP:

Remuneration should be composed of:
Fixed Remuneration (inclusive of superannuation, allowances, benefits and any applicable fringe benefits tax (FBT),
STI which provides a reward for performance against annual objectives and personal effectiveness,
LTI which provides a securities-based reward for performance against indicators of shareholder benefit or value creation, over a three year period.
In total, the sum of the three elements will constitute total targeted remuneration (TTR).
Internal relativities should be considered to recognise Sirtex’s particular organisation design, using ‘strata’ to map the relationships between roles.
External market factors should be considered and used to benchmark practices.
TTR should be structured with reference to local market practice.
Remuneration will be managed within a range so as to allow for the recognition of individual differences such as the calibre of incumbents and the competency with which they fulfil roles.
Termination benefits will be in line with local regulation, and in Australia limited to the default amount allowed for under the Corporations Act.

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APPENDIX II

Executive KMP remuneration is linked closely to Group performance.

Policy Area

Relationship to Company Performance

Fixed Remuneration

Fixed remuneration is based on market practice where levels vary with market capitalisation which reflects Group performance through its share price.

At-risk components (STI and LTI)

The at-risk components are linked to business levers that drive strategic initiatives or indicators that reflect shareholder experience.

STI payments depend on the influence an individual senior executive has on Group performance, as compared to target, and are measured via key performance indicators (KPIs) reflecting the business levers necessary to implement Group strategy. While many influencing factors are quantitative, some are more subjective, aimed at assessing personal effectiveness, in the context of the prevailing circumstances.

STI KPIs generally focus on internal perspectives, such as dose sales, that can be considered as leading indicators for the external measures used for LTI awards.

LTI awards are based on direct measures of Group performance, as reflected in share price growth and the growth in earnings per share.

In this way, remuneration policies seek to link overall executive remuneration with longer-term strategies and the experience of shareholders, it being higher when longer term issues are being addressed effectively and the Group is doing well.

2.3 Short-term Incentives

The Short-term Incentive Plan (STI) is a key part of the remuneration offered to executives and aims to:

Create a strong link between performance and reward, and
Share Group success with the executives who contribute to it through their efforts.
Non-executive directors are excluded from participation.
Where possible, there are threshold, target and stretch levels of objectives, with awards being scaled on a pro-rata basis dependent on actual performance. This is intended to provide an opportunity to obtain a reward under a range of circumstances, including outperformance above the target level of performance.

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APPENDIX II

The responsibility for the ongoing administration of the STI plan rests with the Board. It is authorised to amend the Rules and establish and amend guidelines for the administration of the STI Plan, as deemed appropriate, and to make determinations under the STI Plan as may be deemed necessary or advisable.
The Clawback policy applies to STI awards.

Variable Remuneration – Executive Short-term Incentive (STI) Plan – Detail

Aspect

Plan Rules, Offers and Comments

Measurement Period From 1 July to the following 30 June.

Award Opportunities Determined each year, and for financial year ended 30 June 2015 the MD/CEO had a target STI award opportunity equal to 50% of Fixed Remuneration. The other executives who are KMPs had a target award opportunity equal to 35% of Fixed Remuneration.

Key Performance STIs are awarded based on KPI performance as compared to target, Indicators (KPIs) and other influencing factors. For the CEO, these measures were ‘Normalised Group EBITDA’ (40% weighting), ‘doses sold’ (40% weighting) and ‘leadership effectiveness’ (20% weighting). Those for the other executive KMP were based on two measurement groups, ‘Normalised Group EBITDA’ (50% weighting) and KPIs and other influencing factors (50% weighting). All measures reflect the nature of specific roles, while creating shared objectives where appropriate.

The shared KPI for the financial year ended 30 June 2015 was ‘Normalised Group EBITDA’ being Group earnings before interest, tax, depreciation and amortisation, excluding exchange rate fluctuations, clinical studies, and Research & Development expenditure.

These measures were judged by the Board as key levers for Group success. The Board limits the number used so as to encourage focus on those business levers deemed most important.

In the case of qualitative factors, such as leadership development, actual performance is judged by the Board based on a range of inputs, one of which is information from the MD/CEO in relation to his Direct Reports.

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Aspect

Plan Rules, Offers and Comments

Weightings are applied to the KPIs selected for each participant to reflect the relative importance of each KPI.

The award scale used in relation to the ‘Normalised Group EBITDA’ and dose sales KPIs is:

	STI Performance Reward	Scale
Performance	Budget		Percentage of
Level	Achievement	Target STI Payable
<Threshold	<95%		Nil
Threshold	95%		25%
	>95%, <105%		Pro-rata
Target	105%		100%
	>105%, <110%		Pro-rata
Stretch	≥110%		110%

Sirtex practice is to adopt budgets where the achievement of key parameters is considered a challenging but achievable objective.

Cessation of Employment During a Measurement Period

In the event of cessation of employment due to dismissal for cause, all entitlements in relation to the Measurement Period are forfeited.

In the event of cessation of employment due to resignation, all entitlements in relation to the Measurement Period are forfeited, unless otherwise determined by the Board.

In the event of cessation of employment for other reasons:

(a) The STI award opportunity for the Measurement Period will be pro-rata, reduced to reflect the portion of the Measurement Period worked, and
(b) Performance and STI awards will be determined following the end of the Measurement Period in the normal way. The Board, however, may determine to accelerate the determination and payment of STI awards.

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APPENDIX II

Aspect

Plan Rules, Offers and Comments

Change of Control

The Board has discretion to allow the Plan to continue for the Measurement Period or to terminate it at the point of Change of Control, and may make pro-rata awards based on performance up to that time.

Board Discretion

The Board determines the applicable targets annually and has discretion to vary the Plan Rules or terminate the STI Plan in relation to future periods, but may not reduce earned awards (being amounts already approved by the Board and payable for a completed measurement period) without the consent of the Participant.

2.4 Long-term Incentives

The Long-term Incentive Plan (LTI) is the third component of the remuneration offered to executives. It aims to:

Create a strong link between performance and reward over the long-term, and
Share long-term company success with the executives who contribute to it.
Non-executive directors are excluded from participation.
The Clawback Policy applies to the LTI Plan.

Variable Remuneration – Executive Long-term Incentive (LTI) Plan – Detail

Aspect Plan Rules, Offers and Comments (2015 Offers)

Measurement Period The measurement period for the 2015 offers is the three financial years from 1 July 2014 to 30 June 2017.

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APPENDIX II

Aspect

Award Opportunities

Plan Rules, Offers and Comments (2015 Offers)

Performance Rights were offered under the Executive Performance Rights (EPR) Plan during the financial year in accordance with the Group’s policies and Plan rules.

The target LTI value used to calculate grants was equal to 75% of Fixed Remuneration for the MD/CEO, and 35% of Fixed Remuneration for other executive KMP.

The number of LTI Performance Rights granted is calculated by applying the following formula:

Number of Performance Rights = Fixed Remuneration x Target LTI% ÷ Right Value ÷ Target Vesting %

The Right Value was the volume weighted average share price for the 10 days up to and including 30 June 2014, less assumed dividends over the Measurement Period.

In order to take into account special circumstances, the Board has discretion to modify the Target Vesting%. For 2015, this factor used was increased from 0.33, as in the vesting scale, to 0.5.

Vesting Scales

Performance conditions must be satisfied for Rights to vest.

The performance conditions specified as part of 2015 offers include two tranches, with 50% of Rights being subject to a Total Shareholder Return (TSR) vesting condition, and 50% being subject to an EPS Growth Rate vesting condition.

The vesting percentages are to be determined by the following scales:

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Aspect

Plan Rules, Offers and Comments (2015 Offers)

EPS Growth Rate Vesting	Scale
EPS Compound
Annual Growth
Rate Over
Measurement
Performance Level Period	Vesting Percentage
<Threshold <10%	0%
Threshold 10%	16.67%
>10% & <17.5%	Pro-rata
Target 17.5%	33.3%
>17.5% & <25%	Pro-rata
Stretch 25%	100%
TSR Vesting Scale
Absolute TSR
Compound Annual
Growth Rate Over
Measurement
Performance Level Period	Vesting Percentage
<Threshold <10%	0%
Threshold 10%	16.67%
>10% & <15%	Pro-rata
Target 15%	33.3%
>15% & <20%	Pro-rata
Stretch 20%	100%

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Aspect

Plan Rules, Offers and Comments (2015 Offers)

Comments

Absolute TSR is the cumulative gain for shareholders over a three year period, from growth in the share price and dividends, assuming that dividends are reinvested into the Group’s shares. TSR was chosen as one of the two measures for the 2015 offers because it has the highest correlation with Group performance from the perspective of shareholders. It is acknowledged that some stakeholder groups prefer a ‘relative TSR’ measure in order to take into account the possibility of windfall gains from a universally rising market. Although this concern has not materialised, the Board has considered the views of these stakeholders and will, for 2016 offers, replace the absolute TSR measure with a relative TSR measure.

Sirtex’s TSR is calculated by the Group with the calculations reviewed by the Group’s auditor. In selecting 10%, 15% and 20% as the threshold, target and stretch levels for TSR, the Board referenced the accepted long-term average return received by shareholders from investing in stocks on major stock exchanges around the world. It was also recognised that investors in Sirtex would be seeking returns in excess of the long-term average.

EPS growth was selected as the most appropriate second measure. This measure is intended to give a different perspective on Group performance. Earnings-per-share growth is a method of tracking the ability of the Group to grow profit on a per-share basis. Increasing earnings per share indicates increasing returns on the funds provided by shareholders.

The vesting scale relative to performance is reviewed each year and altered if the circumstances of the Group or the market are sufficiently different, such that the difficulty of the scale is no longer appropriate. Board discretion to vary vesting will generally only be applied when the vesting that would otherwise apply is considered by the Board to be inappropriate.

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Aspect

Plan Rules, Offers and Comments (2015 Offers)

Exercise of Vested Incentive Rights
On vesting, a Performance Right confers an entitlement on the Participant to exercise the Performance Right to the value of an ordinary share in the Holding Company (Share). On exercise, the Participant is paid $1,000 in cash by the Group and the trustee of the EPR Plan Trust (Trustee) receives the balance of the value of the vested Performance Rights (from the Company) to subscribe for Shares or acquire Shares on market on behalf of the Participant. The partial cash payment is intended to manage the tax impact of the EPR Plan on Australian Participants. Overseas Participants may have a portion of their Shares sold to account for withholding tax and other amounts payable by the Company in respect of the vested Performance Rights.

The Trustee holds Shares that it has subscribed for, or acquired on behalf of, a Participant, until the Participant directs the Trustee to transfer the Shares to the Participant or sell the Shares and remit the proceeds to the Participant.

No amount is payable by Participants to exercise their vested Executive Performance Rights.

Dealing Restrictions Shares acquired when vested Incentive Rights are exercised will be on Shares subject to the restrictions set out in the Group’s share trading policy, the insider trading provisions of the Corporations Act or any other additional dealing restrictions included in the offer of the Incentive Rights. No additional restrictions were specified as part of offers for the financial year ended 30 June 2015.
Cessation of In the event of cessation of employment due to dismissal for cause, Employment all unvested Performance Rights are forfeited.

In the event of cessation of employment due to resignation, all unvested Performance Rights are forfeited unless otherwise determined by the Board.

In the event of cessation of employment for other reasons all unvested Rights granted in the 12 months preceding the termination of employment lapse. All other unvested Rights granted in prior years will not lapse, and will continue and, if they become vested at some later time, will be able to be exercised in accordance with their terms.

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Aspect

Plan Rules, Offers and Comments (2015 Offers)

Change of Control of the Company (Compulsory Acquisition)
In the event of a compulsory acquisition of Shares following a takeover bid or a scheme of arrangement, vested Performance Rights may be exercised and unvested Performance Rights may be exercised by the Participant in the same proportion as the Share price (assessed via 10 day VWAP) has increased since the beginning of the Measurement Period.
Board Discretion
The Board has absolute discretion in the exercise of its powers and in making determinations under the EPRP rules or taking action under its rules.

The Board recognises that with the benefit of hindsight, the level of vesting as outlined in an offer may not be appropriate and therefore it reserves the right to adjust the level of vesting. In exercising this discretion the Board will have regard to the circumstances that prevailed over the Measurement Period and the experience of shareholders relative to their expectation at the beginning of the Measurement Period.

2.5 Non-executive Director’s Remuneration

The NED Remuneration is governed by formal Board policies and procedures.

Remuneration may be composed of:
Board fees,
Committee fees,
Superannuation, and
Securities.
Remuneration will be managed within the aggregate fee limit (AFL) or fee pool approved by shareholders of the Company.
Remuneration should be reviewed annually.
Termination benefits will not be paid to NEDs.
In line with other KMP policy, NED TRP targets the P75 market positioning for comparable companies, with fixed remuneration being set by reference to the P50 of market practice.

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The P75 positioning is reached by salary-sacrificing the gap into equity grants. It is recognised that it is not appropriate to provide performance-based incentives to NEDs.

Accordingly, NED remuneration is variable moving with shareholder value, as reflected in share growth.

Variable Remuneration – Non-executive (NED) Director Rights Plan – Detail

Aspect

Plan Rules, Offers and Comments

Purpose

The NED Rights Plan has been recommended to the Board of Sirtex as suitable to the Group’s circumstances, constituting part of a market-competitive main-board package that aims to align the interests of NEDs directly with shareholders.

The plan helps address the preference of many shareholders for NEDs to increase their shareholdings in the Group without breaching the insider trading provisions of the Corporations Act. The disposal restrictions applicable to shares acquired under the plan ensure that NEDs maintain their shareholdings, avoiding the need for a NED shareholding policy, but in such a manner as to avoid any adverse impact on their independence.

Plan Process

Rights offered to NEDs are not subject to performance conditions or any vesting conditions other than a one year period of service. The Restricted Shares that are acquired by the trustee of the NEDs Plan trust (NEDs Trustee) in respect of the vested Rights are, however, subject to a dealing restriction such that they may not be dealt with until the earlier of ceasing to be a NED of the Group or the elapsing of seven years from the grant date. This ensures that the NEDs Trustee holds the shares on behalf of the NEDS for as long as possible to create the strongest alignment with shareholders.

Extreme care has been taken to distinguish the NED Rights Plan from the Executive Rights Plan in order to ensure no conflicts of interest can arise. Only the average weighted share price used to calculate the number of Rights awarded to a NED is in common.

It is intended that vested NED Rights will be satisfied via on-market purchase of Sirtex Shares, rather than by new issues of Shares.

Measurement Period The Measurement Period is one year from grant.

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Aspect

Grant Value

Plan Rules, Offers and Comments

Grants of Rights were made to NEDs during financial year ended 30 June 2015 with the intended value of the grants being as follows:

$50,000 for the Board Chair,
$31,250 for the Deputy Chair, and
$25,000 for the other NED.

Generally, grants of NED Rights are calculated by broadly applying the following formula:

Number of NED Rights = (P75-P50 of market data) ÷ Right Value

The Right Value was the volume weighted average share price of Shares over the 10 days up to and including 30 June 2014.

The Board retains discretion to modify the amounts that the NEDs Rights are based upon. For the financial year ended 30 June 2015, it was determined that increases in the fixed remuneration component would be limited, not increasing sufficiently to match P50 of similar ASX-listed companies, and more would be sacrificed into equities.

Shareholder approval of grants of NED Rights was not obtained because such approval is not required under the ASX Listing Rules and they form part of the shareholder approved aggregate fees limit.

Vesting Rights

Participants must complete a full year of service for Rights to vest.

NED Rights that do not vest will lapse.

Dividends
NED Rights
Cessation of Being a NED

NEDs will be entitled to all dividends received by the NEDs Trustee in respect of Shares held for the benefit of those NEDs.

Without the approval of the Board, Rights may not be sold, transferred, mortgaged, charged or otherwise dealt with or encumbered.

If a NED is no longer on the Board, the unvested NEDs Rights will be forfeited unless otherwise determined in the discretion of the other NEDs.

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3. SERVICE AGREEMENTS

On appointment to the Board, all non-executive directors enter into a service agreement with the Group in the form of a letter of appointment. Upon termination of a director’s appointment, the director will be paid his or her director’s fees on a pro-rata basis, to the extent that they are unpaid, up to the date of termination. The director will also receive all vested shares held in trust on the date of termination.

Remuneration and other terms of employment for the MD/CEO and other key management personnel are also formalised in service agreements. The major provisions of the agreements are set out below. Generally, most contracts with executives may be terminated early by either party with six months’ notice, subject to termination payments as detailed below.

	Duration of	Period of Notice	Period of Notice	Termination
Name	Contract	From Company	From KMP	Payments
Mr G Wong	No fixed term	6 months	6 months	Up to 12 months*
Mr D Smith	No fixed term	6 months	6 months	Up to 12 months*
Mr M Mangano	No fixed term	6 months	6 months	Up to 12 months*
Mr N Lange	No fixed term	6 months	6 months	Up to 12 months*
Dr B Chew	No fixed term	6 months	6 months	6 months
Mr R Hardie	No fixed term	6 months	6 months	Up to 12 months*
Dr D Cade	No fixed term	6 months	6 months	Up to 12 months*

Under the Corporations Act the Termination Benefit Limit is 12 months average salary (last 3 years) unless shareholder approval is obtained.

4. PERFORMANCE OUTCOMES AND IMPACT ON SHAREHOLDER WEALTH FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015

The following outlines the performance of the Group over the 2015 financial year and the previous four financial years:

						Short-term change in	Short-term change in	Long-term change in	Long-term change in
				Change in		Shareholder Value over		Shareholder Value over
		Profit	Share	Share		1 year (SP increase +		3 years (SP increase +
Date	Revenue	after Tax	Price	Price	Dividends	dividends)		dividends)
	$m	$m	$	$	$	$	%	$	%
30-Jun-11	70.7	11.5	4.90	0.00	0.07	0.07	1.43
30-Jun-12	82.6	17.1	6.09	1.19	0.07	1.26	25.71	2.95	88.06
30-Jun-13	96.7	18.3	11.98	5.89	0.10	5.99	98.36	7.32	149.39
30-Jun-14	129.4	23.9	16.88	4.90	0.12	5.02	41.90	12.27	250.41
30-Jun-15	176.1	40.3	29.05	12.17	0.14	12.31	72.93	23.32	382.92

The table shows very strong Group performance over the last 12 months, 3 and 5 years in terms of TSR. The Board believes that this level of performance reflects the quality and commitment of its staff and the leadership given, all being enabled by fair and appropriate remunerations structures and packages.

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Other indications of Group performance include:

Dose sales have been growing strongly in each of the last five years, with an approximately 20 per cent growth during 2014-2015.
Revenue has grown in each of the last five years, with an approximately 36 per cent growth during 2014-2015.

The LTI is the main component of executive remuneration that is intended to be strongly related to external indicators of Group performance. The following table gives an indication of Group performance against those measures that are part of the LTI:

			EPS		TSR
	12	month	12 month		12 month	3 year
Date		EPS	EPS growth	3 year EPS	TSR	TSR
		$	%	%	%	%
30-Jun-11		0.206	(28.5)		1.4
30-Jun-12		0.307	49.0	(6.1)	25.7	88.1
30-Jun-13		0.328	6.8	13.9	98.4	149.4
30-Jun-14		0.425	29.6	106.3	41.9	250.4
30-Jun-15		0.714	68.0	132.6	72.9	382.9

4.1 Links between Performance and Reward

The remuneration of executives is composed of three parts as outlined earlier, being:

Fixed Remuneration, which is not intended to vary with performance,
STI which is intended to vary with indicators of Group and individual performance, and
LTI which is also intended to deliver a variable reward based on shareholder experience.

Estimates of the STI to be paid in relation to the 2015 financial year were accrued in the 30 June 2015 accounts. Adjustments will be made subsequent to the completion of the audit process and finalisation of the assessment process, as summarised below. Based on the strong financial performance of the Group during financial year ended 30 June 2015, 100 per cent of the award opportunity available (i.e. of the maximum opportunity) was accrued.

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STI Links

					Percentage of
					Max STI to be
Name	Position	Objectives	Contribution to success	Measurement	paid
Mr G Wong	Managing Director	Normalised Group	The MD/CEO role has	Earnings were measured	100%
	& CEO	EBITDA (40%	primary responsibility	via Normalised Group
		weighting) Dose sold	for Group earnings	EBITDA, dose sales by
		(40% weighting)	(EBITDA) and was	comparison to budget/
		Leadership	asked to focus on	plans, and individual
		effectiveness (20%	increasing dose sales	effectiveness by NED
		weighting)	and long- term	assessment on defined
			leadership development	achievements and
			as key factors for	capabilities.
			success at the CEO
			level in 2015.
Mr D Smith	Stratum 2 Direct	Normalised Group	Other executives shared	Achievement of the	100%
Mr M Mangano	Report to MD/CEO	EBITDA (50%	the EBITDA objective	earnings objective was
Mr N Lange		weighting) KPIs and	with the MD/CEO to	measured as for the
Dr B Chew		other Influencing	encourage teamwork	MD/CEO. KPI and other
Mr R Hardie		Factors (50% weighting)	and the one-company	influencing factors were
Dr D Cade			culture. KPIs and other	assessed against
			influencing factors for	qualitative and
			the Regional Heads	quantitative objectives
			included regional sales	set at the beginning of
			growth, expense control,	the year in relation to
			debtor management	each role, with some
			and contribution margin.	Board discretion to take
			Factors for the other	into account relevant
			KMPs included where	circumstances. In this
			relevant, audit	way awards aligned with
			compliance, DIFOT,	each individual’s
			cost of goods sold,	contributions to the
			marketing objectives,	Group during the year,
			proctor development,	as assessed by the Board.
			clinical trial recruitment
			and the achievement of
			project milestones. Each
			factor was identified and
			selected as being a key
			lever for each role, in
			order to drive group
			success for 2015.

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The LTI, being dependent on TSR and EPS growth, is strongly related to external indicators of Group performance.

The following table outlines the extent that the LTIs vested in relation to the completion of the 2014 financial year and those that were granted during the 2012 financial year:

Name Mr G Wong Mr D Smith Mr M Mangano Mr N Lange Dr B Chew Mr R Hardie Dr D Cade Total	Target LTI Value (at grant) 206,062 73,913 73,913 73,913 73,913 73,913 53,755 629,382	2012 Grant Number 92,000 33,000 33,000 33,000 33,000 33,000 24,000 281,000	TSR Achieved 52.6% 52.6% 52.6% 52.6% 52.6% 52.6% 52.6% 52.6%	% of Grant Vested 100% 100% 100% 100% 100% 100% 100% 100%	Number Vested 92,000 33,000 33,000 33,000 33,000 33,000 24,000 281,000

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5. DETAILS OF REMUNERATION

5.1 Executive Remuneration

The following table outlines the remuneration received by executives of the Group during the 2015 and 2014 financial years, in accordance with the statutory requirements for disclosure and accounting standards:

Name Year Mr G Wong 2015 2014 Mr D Smith 2015 2014 Mr M Mangano 2015 2014 Mr N Lange 2015 2014 Dr B Chew 2015 2014 Mr R Hardie 2015 2014 Dr D Cade 2015 2014 Total 2015 2014	Salary $ 800,217 719,465 413,467 367,225 511,213 435,286 532,750 552,980 450,321 361,520 390,717 362,225 390,717 347,225 3,489,402 3,145,926	Other Benefits $ – – – – 54,504 20,992 36,454 45,619 38,826 13,191 – – – – 129,784 79,802	Short-term Incentive (STI)** $ % of TRP 365,860 21 279,000 21 129,425 18 101,063 17 148,290 17 152,350 21 94,617 12 145,157 17 152,234 20 94,899 17 116,375 18 99,750 17 122,812 19 95,813 18 1,129,613 18 968,032 19	Short-term Employee Benefits Retirement Benefits/ Super- annuation Termination Benefits $ % of TRP $ $ 1,166,077 68 18,783 – 998,465 74 24,535 – 542,892 78 18,783 – 468,288 80 17,775 – 714,007 83 12,922 – 608,628 85 10,196 – 663,821 83 – – 743,756 88 – – 641,381 82 – – 469,610 83 – – 507,092 76 18,783 – 461,975 80 17,775 – 513,529 78 18,783 – 443,038 82 17,775 – 4,748,799 77 88,054 – 4,193,760 81 88,056 –	Equity-settled Long-term Incentive (LTI) $ % of TRP 519,662 30 317,371 24 138,514 20 99,606 17 138,514 16 99,606 14 138,514 17 99,606 12 138,514 18 99,606 17 138,514 21 99,606 17 126,183 19 80,213 15 1,338,415 22 895,614 17	Total Target Remuner- ation Change in Accrued Leave $ $ 1,704,522 43,637 1,340,371 62,324 700,189 (3,550) 585,669 25,054 865,443 39,554 718,430 (9,997) 802,335 (1,066) 843,362 4,226 779,895 5,040 569,216 (18,683) 664,389 (18,285) 579,356 5,140 658,495 (6,339) 541,026 11,599 6,175,268 58,990 5,177,430 79,663

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The following table outlines the LTIs granted to executive KMP during the financial year ended 30 June 2015. The LTIs will vest over three years.

Name Grant date Mr G Wong 23-Sep-14 Mr D Smith 23-Sep-14 Mr M Mangano 23-Sep-14 Mr N Lange 23-Sep-14 Dr B Chew 23-Sep-14 Mr R Hardie 23-Sep-14 Dr D Cade 23-Sep-14 Total	Number granted Value per option at grant date 73,000 9.44 17,000 9.44 17,000 9.44 17,000 9.44 17,000 9.44 17,000 9.44 17,000 9.44 175,000	Value of options at grant date 689,120 160,480 160,480 160,480 160,480 160,480 160,480 1,652,000	Number vested – – – – – – – –	Exercise price First exercise date Last exercise date $ – 1-Jul-17 30-Jun-21 – 1-Jul-17 30-Jun-21 – 1-Jul-17 30-Jun-21 – 1-Jul-17 30-Jun-21 – 1-Jul-17 30-Jun-21 – 1-Jul-17 30-Jun-21 – 1-Jul-17 30-Jun-21 –

Changes in Securities Held – Executives

The following table outlines the changes in the number of Performance Rights held by executives over the financial year:

Name Mr G Wong Mr D Smith Mr M Mangano Mr N Lange Dr B Chew Mr R Hardie Dr D Cade Total	Rights held at 1 July 2014 Number Value at Grant $ 347,000 1,088,512 111,000 328,553 111,000 328,553 111,000 328,553 144,000 397,176 111,000 328,553 88,000 273,395 1,023,000 3,073,295	Granted during year Number Value at Grant $ 73,000 689,120 17,000 160,480 17,000 160,480 17,000 160,480 17,000 160,480 17,000 160,480 17,000 160,480 175,000 1,652,000	Forfeited Number Value $ – – – – – – – – – – – – – – – –	Vested & Exercised Number Value $ 92,000 206,062 33,000 73,913 33,000 73,913 33,000 73,913 – – 33,000 73,913 24,000 53,755 248,000 555,469	Rights Held at 30 June 2015 Number Value at Grant $ 328,000 1,571,570 95,000 415,120 95,000 415,120 95,000 415,120 161,000 557,656 95,000 415,120 81,000 380,120 950,000 4,169,826	Rights Held at 30 June 2015 Number Value at Grant $ 328,000 1,571,570 95,000 415,120 95,000 415,120 95,000 415,120 161,000 557,656 95,000 415,120 81,000 380,120 950,000 4,169,826
						4,169,826

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The following table outlines the changes in the number of Shares held by executives over the financial year:

Name Mr G Wong Mr D Smith Mr M Mangano Mr N Lange Dr B Chew Mr R Hardie Dr D Cade Total	Balance at beginning of year 60,000 5,000 – – – – – 65,000	Granted as remuneration – – – – – – – –	Issued on exercise of Rights 91,947 32,947 32,946 32,946 – 32,947 23,946 247,679	Disposals (51,947) (4,947) (32,946) (32,946) – (32,947) (23,946) (179,679)	Balance at end of year 100,000 33,000 – – – – –
					133,000

Conditions attached to Performance Rights issued during the year are included in note 23 in the Financial Report.

5.2 Non-Executive Director Remuneration

The following table outlines the remuneration received by non-executive directors of the Group during the 2015 and 2014 financial years, in accordance with the statutory requirements for disclosure and accounting standards:

Name Year Mr R Hill 2015 2014 Dr J Eady 2015 2014 Mr G Boyce 2015 2014 Total 2015 2014	Board Fees Committee Fees $ $ 210,000 – 200,000 – 96,595 10,000 90,570 10,000 105,000 10,000 100,000 10,000 411,595 20,000 390,570 20,000	Super- annuation $ – – 34,655 34,430 – – 34,655 34,430	Other Benefits $ – – – – – – – –	Equity* $ 58,494 20,897 36,570 13,063 29,256 10,449 124,320 44,409	Total $ 268,494
					220,897
					177,820
					148,063
					144,256
					120,449
					590,570

					489,409

pro-rated from date of grant until 30 June 2015.

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Changes in Securities Held – Non-executive Directors

The following table outlines the changes in the number of NED Rights held by non-executive directors over the financial year:

	Rights held at	Rights held at										Rights	Held at
	1 July 2014			Granted	during year		Forfeited			Vested & Exercised		30 June 2015
		Value at			Value at								Value at
Name	Number	Grant		Number	Grant		Number		Value	Number	Value	Number	Grant
		$			$				$		$		$
Mr R Hill	1,974	24,000		2,959	50,000		–		–	1,974	24,000	2,959	50,000
Dr J Eady	1,234	15,000		1,850	31,250		–		–	1,234	15,000	1,850	31,250
Mr G Boyce	987	12,000		1,480	25,000		–		–	987	12,000	1,480	25,000
Total	4,195	51,000		6,289	106,250		–		–	4,195	51,000	6,289	106,250

The following table		outlines	the changes in			the number of Shares					held by	non-executive
rs over the financial year:
		Balance	at					Issued on
		beginning	of		Granted as			exercise of				Balance at end
Name		year		remunerations				Rights*			Disposals		of year
Mr R Hill			–			–			1,974		–		1,974
Dr J Eady		5,000				–			1,234		–		6,234
Mr G Boyce		5,000				–			987		–		5,987
Total		10,000				–			4,195		–		14,195

The following table outlines the changes in the number of Shares held by non-executive directors over the financial year:

Dealing restrictions apply with shares held in trust until the earlier of ceasing to be a non-executive director of the Group or the lapsing of seven years from the grant date.

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5.3 Future KMP Payments

The following table outlines amounts of LTI for executives that have been granted but which have not yet vested or been paid:

Name Grant date Mr G Wong 23-Aug-11 28-Aug-12 26-Nov-13 23-Sep-14 Mr D Smith 23-Aug-11 28-Aug-12 26-Nov-13 23-Sep-14 Mr M Mangano 23-Aug-11 28-Aug-12 26-Nov-13 23-Sep-14 Mr N Lange 23-Aug-11 28-Aug-12 26-Nov-13 23-Sep-14 Dr B Chew 23-Aug-11 28-Aug-12 26-Nov-13 23-Sep-14 Mr R Hardie 23-Aug-11 28-Aug-12 26-Nov-13 23-Sep-14 Dr D Cade 23-Aug-11 28-Aug-12 26-Nov-13 23-Sep-14 Total	Total value $ 206,062 350,000 532,450 689,120 73,913 125,000 129,640 160,480 73,913 125,000 129,640 160,480 73,913 125,000 129,640 160,480 73,913 125,000 129,640 160,480 73,913 125,000 129,640 160,480 53,755 90,000 129,640 160,480 4,656,674	Value expensed in 2014 % of grant 72,181 35 123,311 35 121,879 23 – – 25,891 35 44,040 35 29,675 23 – – 25,891 35 44,040 35 29,675 23 – – 25,891 35 44,040 35 29,675 23 – – 25,891 35 44,040 35 29,675 23 – – 25,891 35 44,040 35 29,675 23 – – 18,830 35 31,708 35 29,675 23 – – 895,612	Value expensed in 2015 % of grant – – 123,311 35 205,004 39 191,347 28 – – 44,040 35 49,914 39 44,560 28 – – 44,040 35 49,914 39 44,560 28 – – 44,040 35 49,914 39 44,560 28 – – 44,040 35 49,914 39 44,560 28 – – 44,040 35 49,914 39 44,560 28 – – 31,708 35 49,914 39 44,560 28 1,338,414

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APPENDIX II

The following table outlines amounts for equities for non-executive directors that have been granted but which have not yet vested.

Name Grant date Mr R Hill 24-Sep-13 22-Jul-14 Dr J Eady 24-Sep-13 22-Jul-14 Mr G Boyce 24-Sep-13 22-Jul-14 Total	Total value $ 27,241 55,333 17,029 34,595 13,621 27,676 175,495	Value expensed in 2014 % of grant 20,897 77 – – 13,063 77 – – 10,449 77 – – 44,410	Value expensed in 2015 % of grant 6,344 23 52,150 94 3,966 23 32,605 94 3,172 19 26,084 75 124,319

6. ADDITIONAL INFORMATION

6.1 Loans to Key Management Personnel

At 30 June 2015, $9,222 (2014: $nil) was payable to key management personnel.

At 30 June 2015, $12,702 (2014: $nil) was receivable from key management personnel.

The loans relate to withholdings tax on the performance rights granted to Key Management Personnel and expense reimbursements. The Group does not have an allowance account for receivables relating to outstanding loans and has not recognised any expense for impaired receivables during the reporting period.

The loans are short-term in nature and are usually settled in full within 30 days. These loans are unsecured, arm’s length and interest free. There were no individuals with loans above $100,000 during the financial year.

6.2 Transactions with Key Management Personnel

There have been no other transactions with Key Management Personnel or their related entities other than those disclosed in this report.

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6.3 External Remuneration Consultant Advice

During the year KMP remuneration recommendations and data were received from external remuneration consultant(s). The consultants and the amount payable for the information and work that led to their recommendations are listed below:

Godfrey Remuneration Group Pty Limited $16,000 Hay Group Limited $60,375

The consultant(s) also provided other advice during the year and the kinds of advice and remuneration payable for such advice is summarised below:

Godfrey Remuneration	Assistance drafting new and up-dating	$74,000
Group Pty Limited	existing remuneration policies and
	documents related to the independent
	development of the Remuneration
	Governance Framework, Remuneration
	Report drafting and Notice of Meeting
	drafting.

So as to ensure that KMP remuneration recommendations were free from undue influence from the KMP to whom they relate, the Company has policies and procedures governing engagements with external remuneration consultants. The key aspects include:

(a) KMP remuneration recommendations may only be received from consultants who have been approved by the Board. This is a legal requirement. Before such approval is given and before each engagement the Board ensures that the consultant is independent of KMP.
(b) As required by law, KMP remuneration recommendations are only received by non-executive directors, mainly the Chair of the Remuneration Committee.
(c) The policy seeks to ensure that the Board controls any contact by management of Board-approved remuneration consultants and any interactions between management and external remuneration consultants when undertaking work leading to KMP remuneration recommendations.

The Board is satisfied that the KMP remuneration recommendations received were free from undue influence from KMP to whom the recommendations related. The reasons the Board is so satisfied include that it is confident that the policy for engaging external remuneration consultants is being adhered to and is operating as intended, the Board has been closely involved in all dealings with the external remuneration consultants and each KMP remuneration recommendation received during the year was accompanied by a legal declaration from the consultants to the effect that their advice was provided free from undue influence from the KMP to whom the recommendations related.

Gilman Wong Director

13 August 2015

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APPENDIX II

AUDITOR’S INDEPENDENCE DECLARATION

Level 17, 383 Kent Street Sydney NSW 2000

Correspondence to: Locked Bag Q800 QVB Post Office Sydney NSW 1230

T +61 2 8297 2400 F +61 2 9299 4445 E [email protected] W www.granthornton.com.au

Auditor’s Independence Declaration To the Directors of Sirtex Medical Limited

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Sixtex Medical Limited for the year ended 30 June 2015, I declare that, to the best of my knowledge and belief, there have been:

a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b no contraventions of any applicable code of professional conduct in relation to the audit.

GRANT THORNTON AUDIT PTY LYD

Chartered Accountants

N J Bradley

Partner – Audit & Assurance

Sydney, 13 August 2015

GRANT THORNTON AUDIT PTY LTD ACN 130 913 594

a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member films, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTHL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. DGTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one anothe’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thrnton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australia subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thonrton Australia Limed.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

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Directors’ Declaration

The Directors of the Company declare that:

the financial statements and notes, as set out on pages 52 to 83, are in accordance with the Corporations Act 2001 and
(a) comply with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001, which, as stated in accounting policy Note 1 to the financial statements, constitutes explicit and unreserved compliance with International Financial Reporting Standards (IFRS), and
(b) give a true and fair view of the financial position as at 30 June 2015 and of the performance for the year ended on that date of the company and consolidated group
the Chief Executive Officer and Chief Financial Officer have each declared, as required by section 295A of the Corporations Act 2001 , that:
(a) the financial records of the company for the financial year have been properly maintained in accordance with s 286 of the Corporations Act 2001
(b) the financial statements and notes for the financial year comply with Accounting Standards, and
(c) the financial statements and notes for the financial year give a true and fair view.
in the directors’ opinion, there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

Gilman Wong Director

Sydney, 13 August 2015

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APPENDIX II

INDEPENDENT AUDITOR’S REPORT

Independent Auditor’s Report

To the Members of Sirtex Medical Limited

Report on the financial report

We have audited the accompanying financial report of Sirtex Medical Limited (the “Company”), which comprises the consolidated statement of financial position as at 30 June 2015, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the consolidated entity comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ responsibility for the financial report

The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001. The Directors’ responsibility also includes such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. The Directors also state, in the notes to the financial report, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, the financial statements comply with International Financial Reporting Standards.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require us to comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is plan and perform ne audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report.

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APPENDIX II

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit,we have complied with the independence requirements of the Corporations Act 2001.

Auditor’s opinion

In our opinion:

(a) the financial report of Sirtex Medical Limited is in accordance with the Corporations Act 2001, including:
i. giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015 and of its performance for the year ended on that date; and
ii. complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in the notes to the financial statements.

Report on the remuneration report

We have audited the remuneration report included in pages 31 to 46 of the directors’ report for the year ended 30 June 2015. The Directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s opinion on the remuneration report

In our opinion,the remuneration report of Sirtex Medical Limited for the year ended 30 June 2015, complies with section 300A of the Corporations Act 2001.

GRANT THORNTON AUDIT PTY LTD

Chartered Accountants

N J Bradley

Partner – Audit & Assurance

Sydney, 13 August 2015

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APPENDIX II

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2015

Note
Revenue from the sale of goods
2(a)
Cost of sales
Gross profit
Other revenue
2(b)
Other income
2(c)
Marketing expenses
Research expenses
Regulatory expenses
Quality assurance expenses
Clinical trial expenses
Medical expenses
Administration expenses
Other expenses
Profit before income tax
Income tax expense
4
Profit for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation (net of tax) of foreign operations
Total comprehensive income for the year
attributable to members of the parent entity
Earnings per share
Basic earnings per share
20
Diluted earnings per share
20
Dividends per share
21

Consolidated
2015
2014
$’000
$’000
176,088
129,363
(27,700)
(20,356)
148,388
109,007
1,889
1,876
2,124
53
(65,081)
(49,196)
(5,797)
(5,773)
(1,388)
(967)
(1,810)
(1,529)
(5,649)
(5,528)
(4,660)
(2,756)
(15,248)
(13,564)
–
(513)
52,768
31,110
(12,423)
(7,242)
40,345
23,868
1,193
162
41,538
24,030
Cents
Cents
71.4
42.5
69.7
41.3
14.0
12.0

The financial statements should be read in conjunction with the accompanying notes.

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APPENDIX II

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2015

Note Assets Current Assets Cash and cash equivalents 5 Other short-term deposits 6 Trade and other receivables 7 Inventories 8 Other financial assets 9 Other current assets 10 Current tax assets 11(a) Total – Current Assets Non-Current Assets Property, plant and equipment 12 Intangible assets 13 Deferred tax assets 11(b) Total – Non-Current Assets Total Assets Liabilities Current Liabilities Trade and other payables 14 Current tax liabilities 15(a) Short-term provisions 16(a) Total – Current Liabilities Non-Current Liabilities Long-term provisions 16(b) Deferred tax liabilities 15(b) Total – Non-Current Liabilities Total Liabilities Net Assets Equity Issued capital 18 Reserves 19 Retained earnings Total – Equity	Consolidated 2015 2014 $’000 $’000 21,941 22,495 52,000 30,000 35,000 25,714 1,836 1,678 1,213 1,276 3,210 2,024 – 554 115,200 83,741 13,164 13,592 68,027 47,364 5,085 4,013 86,276 64,969 201,476 148,710 24,290 14,657 4,746 – 6,666 10,058 35,702 24,715 1,104 874 20,034 15,538 21,138 16,412 56,840 41,127 144,636 107,583 27,021 24,893 5,615 3,121 112,000 79,569 144,636 107,583	Consolidated 2015 2014 $’000 $’000 21,941 22,495 52,000 30,000 35,000 25,714 1,836 1,678 1,213 1,276 3,210 2,024 – 554 115,200 83,741 13,164 13,592 68,027 47,364 5,085 4,013 86,276 64,969 201,476 148,710 24,290 14,657 4,746 – 6,666 10,058 35,702 24,715 1,104 874 20,034 15,538 21,138 16,412 56,840 41,127 144,636 107,583 27,021 24,893 5,615 3,121 112,000 79,569 144,636 107,583
		83,741

		13,592 47,364 4,013
		64,969

		148,710

		14,657 – 10,058
		24,715

		874 15,538
		16,412

		41,127

		107,583

		24,893 3,121 79,569

		107,583

The financial statements should be read in conjunction with the accompanying notes.

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APPENDIX II

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2015

Consolidated Entity Balance at 30 June 2013 Foreign currency translation reserve Profit attributable to members of parent entity Total comprehensive income for the year attributable to the members of parent entity Ordinary shares issued Deferred tax on performance rights Contribution to performance rights reserve Dividends paid or provided for Total transaction with owners Balance at 30 June 2014 Foreign currency translation reserve Profit attributable to members of parent entity Total comprehensive income for the year attributable to the members of parent entity Ordinary shares issued Deferred tax on performance rights Purchase of Non-Executive Directors’ shares on market Contribution to performance rights reserve Dividends paid or provided for Total transaction with owners Balance at 30 June 2015	Ordinary Share $’000 23,521 – – – 708 664 – – 1,372 24,893 – – – 949 1,271 (92) – – 2,128 27,021	Shares Rights Reserve $’000 1,998 – – – (708) – 1,484 – 776 2,774 – – – (949) – – 2,250 – 1,301 4,075	Foreign Currency Translation Reserve $’000 185 162 – 162 – – – – – 347 1,193 – 1,193 – – – – – – 1,540	Retained Earnings $’000 62,434 – 23,868 23,868 – – – (6,733) (6,733) 79,569 – 40,345 40,345 – – – – (7,914) (7,914) 112,000	Total $’000 88,138 162 23,868 24,030 – 664 1,484 (6,733) (4,585) 107,583 1,193 40,345 41,538 – 1,271 (92) 2,250 (7,914) (4,485) 144,636

The financial statements should be read in conjunction with the accompanying notes.

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APPENDIX II

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2015

Note
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Net income tax paid
Net cash provided by operating activities
5(b)
Cash flows from investing activities
Investment in other short-term deposits
Proceeds from plant & equipment
Purchase of plant and equipment
Intangible assets
Net cash used in investing activities
Cash flows from financing activities
Payment of dividends
Net cash used in financing activities
Net (decrease)/increase in cash held
Cash and cash equivalents at the beginning of
financial year
Cash and cash equivalents at the end of financial year
5(a)

Consolidated
2015
2014
$’000
$’000
168,926
125,048
(116,339)
(90,450)
1,815
1,777
(2,428)
(4,204)
51,974
32,171
(22,000)
2,000
201
–
(1,692)
(6,189)
(21,123)
(18,848)
(44,614)
(23,037)
(7,914)
(6,733)
(7,914)
(6,733)
(554)
2,401
22,495
20,094
21,941
22,495

The financial statements should be read in conjunction with the accompanying notes.

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APPENDIX II

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2015

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The report includes the consolidated financial statements and notes of Sirtex Medical Limited and controlled entities. Sirtex Medical Limited is a for-profit entity for the purpose of preparing the financial statements.

Compliance with Australian Accounting Standards ensures that the financial report of the Group complies with International Financial Reporting Standards (IFRS) in their entirety. Material accounting policies adopted in the preparation of this financial report are presented below and have been consistently applied unless otherwise stated.

Sirtex Medical Limited is the Group’s Ultimate Parent Company. Sirtex Medical Limited is a Public Company incorporated and domiciled in Australia.

The consolidated financial statements were approved and authorised for issue by the directors on 13 August 2015.

This financial report has been prepared on an accruals basis and is based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

(a) Basis of consolidation

The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of 30 June 2015. The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of 30 June.

All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable.

(b) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates allowed. All revenue is stated net of the amount of GST.

Revenue from the sale of goods is recognised when the Group has transferred the significant risks and rewards of ownership to the buyer. Due to different legislative and market environments in the regions where the Group is operating, the date of transfer of risks and rewards is different by region. In the US, this date is on the delivery of goods to the customer, and in all other regions this date is the treatment day of the patient which usually occurs one to two days after the delivery day.

Interest revenue is recognised on an accrual basis using the effective interest method.

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APPENDIX II

(c) Operating expenses

Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin.

(d) Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the relevant revenue authorities. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.

Receivables and payables are shown inclusive of GST. The net amount of GST recoverable from, or payable to the relevant revenue authorities is included as a current asset or liability in the Consolidated Statement of Financial Position.

Cash flows are presented in the Consolidated Statement of Cash Flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(e) Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of manufactured products includes direct materials, direct labour and an appropriate portion of variable and fixed overheads. Costs are assigned on the basis of weighted average costs.

(f) Plant and equipment

All assets acquired are initially recorded at their cost of acquisition, being fair value of the consideration provided plus incidental costs directly attributable to the acquisition. Depreciation and amortisation is recognised in accordance with (h) below.

The cost of plant and equipment constructed by the Group includes the cost of material and direct labour, an appropriate proportion of fixed and variable overheads and capitalised interest. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

All items of plant and equipment are carried at the lower of cost less accumulated depreciation, amortisation and impairment losses and their recoverable amount.

(g) Intangibles

Intellectual property

The fair value of intellectual property contributed by an equity interest holder to Sirtex Medical Ltd, has been capitalised and recorded at fair value at the time of the contribution. Amortisation is recognised in accordance with (h) below.

Internally generated intangible assets

Expenditure on the research phase of projects are recognised as an expense as incurred.

Development costs and certain clinical trial costs have been capitalised to the extent they satisfy the recognition criteria for internally generated intangible assets.

Following the initial recognition of the capitalised development expenditure, the cost model is applied requiring the assets to be carried at cost less accumulated impairment losses. Amortisation is recognised in accordance with (h) below.

The Group uses its judgment in continually assessing whether development expenditure meet the recognition criteria of an intangible asset.

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APPENDIX II

The carrying value of an intangible asset arising from development costs is tested for impairment annually when the asset is not yet available for use or more frequently when an indicator of impairment arises during the reporting period.

(h) Depreciation and amortisation

Items of plant and equipment, including leasehold assets, and intangible assets are depreciated or amortised on a straight line basis so as to write off the net cost of each asset over its expected useful life.

Plant and equipment and intangible assets other than capitalised development costs are depreciated from the date of acquisition. Capitalised development costs are amortised from the date they are ready for use.

Depreciation and amortisation rates are reviewed annually for appropriateness. When changes are made, adjustments are reflected prospectively in current and future financial periods only.

The depreciation and amortisation rates used for each class of asset are:

Plant and Equipment Buildings and Leasehold improvements 5% – 10% Plant & Equipment 10% – 33.33% Assets work in progress 0% Intangible Assets Intellectual Property 5% – 12.5% Internally Generated Intangible Assets 12.5%

(i) Impairment of plant and equipment and intangible assets

For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level.

Individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and value-in-use. To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Group’s latest approved budget, adjusted as necessary to exclude the effects of future reorganisations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect management’s assessment of respective risk profiles, such as market and asset-specific risks factors.

(j) Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term, highly liquid instruments with original maturity of three months or less. Restricted cash assets are shown within other current financial assets.

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(k) Financial instruments

Financial instruments are initially measured at fair value 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 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. Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation.

Foreign currency options entered into to hedge highly probable forecast transactions are accounted for as a derivative. Changes in the fair value of derivatives are recorded in the Consolidated Statement of Profit or Loss and Other Comprehensive Income, together with any changes in the fair value of hedged assets or liabilities that are attributable to the hedged risk.

At each reporting date, the Group assesses whether there is objective evidence that a financial instrument has been impaired. Impairment losses are recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.

Financial assets are derecognised when the contractual rights to receipt of cash flows expire or the asset is transferred to another party. Financial liabilities are derecognised where the related obligations are discharged, cancelled or expired.

(l) Employee benefits

Wages, salaries and annual leave

Liabilities for employee benefits for wages, salaries and annual leave expected to settle wholly within 12 months of the year end represent present obligations resulting from employees’ services provided up to reporting date, calculated as undiscounted amounts based on remuneration wage and salary rates that the Group expects to pay as at reporting date including related on costs, such as workers’ compensation insurance and payroll tax. Employee benefits expected to be settled beyond 12 months are carried at the present value of the estimated future cash flows.

Long service leave

The provision for employee benefits to long service leave represents the present value of estimated future cash outflows to be made by the employer resulting from employees’ services provided up to reporting date. The provision is calculated using expected future increases in remuneration rates, including related costs, and expected settlement dates based on turnover history, and is discounted using the rates attaching to high quality corporate bonds at reporting date, which most closely match the terms of maturity of the related liabilities.

Post-employment benefit plans

The Group contributes to various employee superannuation plans. The Group has no legal or constructive obligations to pay contributions in addition to its fixed contributions. Contributions are recognised as an in the period that relevant employee services are rendered.

Share-based payments

The Group provides benefits to certain employees in the form of share-based payment transactions, whereby employees render services in exchange for rights over shares (equity- settled transactions). For this purpose, the Group has an Executive Performance Rights Plan in place.

The cost of these equity-settled transactions is measured by reference to the fair value at the date at which they are granted. The fair value of the rights is determined using a Monte Carlo simulation and the binomial option valuation models.

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APPENDIX II

The cost of the equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the vesting conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award.

All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding credit to the share rights reserve. The expense is allocated over the vesting period, based on the best available estimate of the number of share rights expected to vest.

Upon exercise of performance rights, the proceeds received net of any directly attributable transaction costs are allocated to share capital.

Further information can be found in Note 23 to the financial statements.

(m) Leases

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.

Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.

(n) Provisions, contingent liabilities and contingent assets

Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow of economic resources will be required and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain.

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at reporting date. Provisions are discounted to their present value, where the time value of money is material.

No liability is recognised if an outflow of economic resources as a result of a present obligation is not probable. Such situations are disclosed as contingent liabilities, unless the outflow of resources is remote in which case no liability is recognised.

(o) Segment reporting

The Group has identified its operating segments based on internal reports that are reviewed and used by the Board of Directors in assessing performance and determining the allocation of resources.

As the Group manufactures and distributes only one product, identical for each of the three regional markets, no further segmentation across products or services is made.

(p) Equity, reserves and dividend payments

Share capital represents the fair value of shares that have been issued. Any transaction costs associated with the issuing of shares are deducted from share capital, net of any related income tax benefits. Equity also includes the Foreign currency translation reserve which comprises foreign currency translation differences arising on the translation of financial statements of the Group’s foreign entities into AUD.

Retained earnings include all current and prior period retained profits.

Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been approved prior to the reporting date.

All transactions with owners of the parent entity are recorded separately within equity.

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(q) Income tax

The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the reporting date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the statement of profit or loss and other comprehensive income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the consolidated entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

Sirtex Medical Ltd and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. Each entity in the group recognises its own current and deferred tax liabilities, except for any deferred tax liabilities resulting from unused tax losses and tax credits, which are immediately assumed by the parent entity. The current tax liability of each group entity is then subsequently assumed by the parent entity. The group notified the Australian Tax Office that it had formed an income tax consolidated group to apply from 1 July 2004. The tax consolidated group has entered a tax sharing agreement whereby each company in the group contributes to the income tax payable in proportion to their contribution to the net profit before tax of the consolidated group.

R&D tax credits arising from the recognition of eligible R&D expenditure under the Federal Government’s R&D Tax Incentive Scheme are offset against any income tax payable.

(r) Foreign Currency Transactions and Balances

All foreign currency transactions are brought to account using the exchange rate in effect at the date of the transaction. Foreign currency monetary items at reporting date are translated at the exchange rate at that date.

Exchange differences arising on the translation of monetary items are recognised in the Consolidated Statement of Profit or Loss. Exchange differences arising on the translation of non- monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.

The financial results and position of foreign operations whose functional currency is different from the Group’s presentation currency are translated as follows:

assets and liabilities are translated at year-end exchange rates prevailing at that reporting date
income and expenses are translated at average exchange rates for the period, and
retained earnings are translated at the exchange rate prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the foreign currency translation reserve in the Consolidated Statement of Profit or Loss and Other Comprehensive Income. These differences are recognised in the statement of profit or loss and other comprehensive income in the period in which the operation is disposed.

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APPENDIX II

(s) Comparative figures

When required by accounting standards, comparative figures have been adjusted to conform to changes in the presentation for the current financial year.

(t) Key estimates

Impairment

The Group assesses impairment at each reporting date by evaluating conditions specific to the group that may lead to impairment of assets. Where impairment exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates.

Impairment assessment of internally generated intangible assets is performed in accordance with AASB 136 Impairment of Assets. For the year ended 30 June 2015, no impairment has been recognised for the clinical trials and development projects which meet the recognition criteria for internally generated intangible assets.

Research and development tax incentive

Share-based payment transactions

The Group measures the cost of equity-settled transactions with employees by reference to their fair value of the equity instruments at the date at which they are granted. The fair value is determined with a Monte Carlo simulation and binomial option valuation models using the assumptions detailed in Note 23.

Long service leave provision

The liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account.

Lease make good provision

A provision is made for the present value of anticipated costs for future restoration of leased premises. The provision includes future cost estimates associated with closure of the premises. The calculation of this provision requires assumptions such as application of closure dates and cost estimates. The provision recognised for each site is periodically reviewed and updated based on the facts and circumstances available at the time. Changes to the estimated future costs for sites are recognised in the statement of financial position by adjusting the expenses or asset, if applicable, and provision.

(u) Rounding of amounts

The Parent Entity has applied the relief available to it under ASIC Class Order 98/100 and accordingly, amounts in the financial statements and directors’ report have been rounded off to the nearest $1,000, or in cases, the nearest dollar.

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(v) Adoption of new and revised accounting standards

A number of new and revised standards and an interpretation became effective for the first time to annual periods beginning on or after 1 July 2014. Information on these new standards is presented below.

AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities

AASB 2012-3 adds application guidance to AASB 132 to address inconsistencies identified in applying some of the offsetting criteria of AASB 132, including clarifying the meaning of ‘currently has a legally enforceable right of set-off’ and that some gross settlement systems may be considered equivalent to net settlement.

AASB 2012-3 is applicable to annual reporting periods beginning on or after 1 January 2014.

The adoption of these amendments has not had a material impact on the Group as the amendments merely clarify the existing requirements in AASB 132.

AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets

These narrow-scope amendments address disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal.

When developing IFRS 13 Fair Value Measurement, the IASB decided to amend IAS 36 Impairment of Assets to require disclosures about the recoverable amount of impaired assets. The IASB noticed however that some of the amendments made in introducing those requirements resulted in the requirement being more broadly applicable than the IASB had intended. These amendments to IAS 36 therefore clarify the IASB’s original intention that the scope of those disclosures is limited to the recoverable amount of impaired assets that is based on fair value less costs of disposal.

AASB 2013-3 makes the equivalent amendments to AASB 136 Impairment of Assets and is applicable to annual reporting periods beginning on or after 1 January 2014.

The adoption of these amendments has not had a material impact on the Group as they are largely of the nature of clarification of existing requirements.

AASB 2014-1 Amendments to Australian Accounting Standards (Part A: Annual Improvements 2010-2012 and 2011-2013 Cycles)

Part A of AASB 2014-1 makes amendments to various Australian Accounting Standards arising from the issuance by the IASB of International Financial Reporting Standards Annual Improvements to IFRSs 2010-2012 Cycle and Annual Improvements to IFRSs 2011-2013 Cycle.

Among other improvements, the amendments arising from Annual Improvements to IFRSs 2010-2012 Cycle:

clarify that the definition of a ‘related party’ includes a management entity that provides key management personnel services to the reporting entity (either directly or through a group entity)
amend AASB 8 Operating Segments to explicitly require the disclosure of judgements made by management in applying the aggregation criteria

Among other improvements, the amendments arising from Annual Improvements to IFRSs 2011-2013 Cycle clarify that an entity should assess whether an acquired property is an investment property under AASB 140 Investment Property and perform a separate assessment under AASB 3 Business Combinations to determine whether the acquisition of the investment property constitutes a business combination.

Part A of AASB 2014-1 is applicable to annual reporting periods beginning on or after 1 July 2014.

The adoption of these amendments has not had a material impact on the Group as they are largely of the nature of clarification of existing requirements.

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(w) New Accounting Standards for Application in Future Periods

The AASB has issued new and amended accounting standards and interpretations that have mandatory application dates for future reporting periods. The Group has decided against early adoption of these standards. A discussion of those future requirements and their impact on the Group follows:

AASB 9 Financial Instruments (applicable for annual reporting periods beginning on or after 1 January 2018:

The standard introduces new requirements for the classification and measurement of financial assets and liabilities. These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of AASB 139. The main changes are:

(a) Financial assets that are debt instruments will be classified based on
i. the objective of the entity’s business model for managing the financial assets; and
ii. the characteristics of the contractual cash flows.
(b) Allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income (instead of in profit or loss). Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument.
(c) Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on different bases.
(d) Where the fair value option is used for financial liabilities the change in fair value is to be accounted for as follows:
i. the change attributable to changes in credit risk are presented in other comprehensive income (OCI); and
ii. the remaining change is presented in profit or loss.

If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in credit risk are also presented in profit or loss.

Otherwise, the following requirements have been carried forward unchanged from AASB 139 into AASB 9:

i. classification and measurement of financial liabilities; and
ii. de-recognition requirements for financial assets and liabilities.

AASB 9 requirements regarding hedge accounting represent a substantial overhaul of hedge accounting that will enable entities to better reflect their risk management activities in the financial statements.

Furthermore, AASB 9 introduces a new impairment model based on expected credit losses. This model makes use of more forward-looking information and applies to all financial instruments that are subject to impairment accounting.

The entity is yet to undertake a detailed assessment of the impact of AASB 9. However, based on the entity’s preliminary assessment, the Standard is not expected to have a material impact on the transactions and balances recognised in the financial statements when it is first adopted for the year ending 30 June 2019.

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AASB 15 Revenue from Contracts with Customers

AASB 15:

replaces AASB 118 Revenue, AASB 111 Construction Contracts and some revenue-related Interpretations
establishes a new revenue recognition model
changes the basis for deciding whether revenue is to be recognised over time or at a point in time
provides new and more detailed guidance on specific topics (e.g., multiple element arrangements, variable pricing, rights of return, warranties and licensing)
expands and improves disclosures about revenue

The entity is yet to undertake a detailed assessment of the impact of AASB 15. However, based on the entity’s preliminary assessment, the Standard is not expected to have a material impact on the transactions and balances recognised in the financial statements when it is first adopted for the year ending 30 June 2018.

AASB 2014-1 Amendments to Australian Accounting Standards (Part E: Financial Instruments)

Part E of AASB 2014-1 makes amendments to Australian Accounting Standards to reflect the AASB’s decision to defer the mandatory application date of AASB 9 Financial Instruments to annual reporting periods beginning on or after 1 January 2018. Part E also makes amendments to numerous Australian Accounting Standards as a consequence of the introduction of Chapter 6 Hedge Accounting into AASB 9 and to amend reduced disclosure requirements for AASB 7 Financial Instruments: Disclosures and AASB 101 Presentation of Financial Statements.

When these amendments are first adopted for the year ending 30 June 2016, there will be no material impact on the Group.

AASB 2014-4 Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of Depreciation and Amortisation

The amendments to AASB 116 prohibit the use of a revenue- based depreciation method for property, plant and equipment. Additionally, the amendments provide guidance in the application of the diminishing balance method for property, plant and equipment.

The amendments to AASB 138 present a rebuttable presumption that a revenue-based amortisation method for intangible assets is inappropriate. This rebuttable presumption can be overcome (i.e., a revenue-based amortisation method might be appropriate) only in two (2) limited circumstances:

The intangible asset is expressed as a measure of revenue, for example when the predominant limiting factor inherent in an intangible asset is the achievement of a revenue threshold (for instance, the right to operate a toll road could be based on a fixed total amount of revenue to be generated from cumulative tolls charged); or
When it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated.

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AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101

The amendments:

clarify the materiality requirements in AASB 101, including an emphasis on the potentially detrimental effect of obscuring useful information with immaterial information
clarify that AASB 101’s specified line items in the statement(s) of profit or loss and other comprehensive income and the statement of financial position can be disaggregated
add requirements for how an entity should present subtotals in the statement(s) of profit and loss and other comprehensive income and the statement of financial position
clarify that entities have flexibility as to the order in which they present the notes, but also emphasise that understandability and comparability should be considered by an entity when deciding that order
remove potentially unhelpful guidance in IAS 1 for identifying a significant accounting policy

When these amendments are first adopted for the year ending 30 June 2017, there will be no material impact on the financial statements.

AASB 2015-3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality

The Standard completes the AASB’s project to remove Australian guidance on materiality from Australian Accounting Standards.

When this Standard is first adopted for the year ending 30 June 2016, there will be no impact on the financial statements.

The Group does not anticipate the early adoption of any of the above Australian Accounting Standards.

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APPENDIX II

2. REVENUE AND OTHER INCOME

(a) Revenue from the sale of goods

Consolidated
2015	2014
$’000	$’000
176,088	129,363

(b) Other revenue

Income from financial institutions
(c)
Other income
Realised foreign exchange gains
Unrealised foreign exchange gains
Other
PROFIT FOR THE YEAR
Profit before income tax includes the following:
Cost of sales
Employee benefits expense
Superannuation contributions
Other employee benefits expenses
Depreciation and amortisation of
Plant and equipment
Intangible assets
Operating lease expenses
Minimum lease payments

Consolidated
2015
2014
$’000
$’000
1,889
1,876
1,889
1,876
Consolidated
2015
2014
$’000
$’000
953
–
928
–
243
53
2,124
53
Consolidated
2015
2014
$’000
$’000
27,700
20,356
1,268
1,057
51,839
39,761
1,919
1,405
460
187
2,406
1,775

3. PROFIT FOR THE YEAR

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4. INCOME TAX EXPENSE

(a) The components of tax expense comprise:

Current tax Deferred tax Under/(over) provision in respect of prior years (permanent and timing)	Consolidated 2015 2014 $’000 $’000 8,587 2,515 3,424 5,491 412 (764) 12,423 7,242

(b) The prima facie tax on profit from ordinary activities before income tax is reconciled to the income tax as follows:

Net profit before tax
Prima facie tax payable on profit from ordinary activities
before income tax at 30%
Add/(less): Tax effect of
– Non-deductible amortisation
– Non-deductible expenses
– Non-assessable income
– Overprovision in respect of prior years (permanent)
Effect of higher tax rates on overseas income
Effect of Foreign Currency translation of tax balances
Recognition of tax losses not previously brought to account
Eliminations for the tax consolidated group
Income tax attributable to entity
The applicable weighted average effective tax rates are as follows
(c)
Franking Account
Franking account balance

Consolidated
2015
2014
$’000
$’000
52,768
31,110
15,830
9,333
54
54
360
92
(2,748)
(1,798)
(317)
(188)
(580)
(137)
(94)
39
(199)
(191)
117
38
12,423
7,242
23.5%
23.3%
Consolidated
2015
2014
$’000
$’000
7,456
9,014

Legislation to allow groups, comprising a parent entity and its Australian resident wholly-owned entities, to elect to consolidate and be treated as a single entity for income tax purposes was substantially enacted on 21 October 2002. This legislation, which includes both mandatory and elective elements, is applicable to the company. The directors elected for those entities within the consolidated entity that are wholly-owned Australian resident entities to be taxed as single entity from 1 July 2004. The implementation of the tax consolidation system was notified to the Australian Tax Office. The head entity within the tax-consolidated group for the purposes of the tax consolidation system is Sirtex Medical Limited.

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5. CASH AND CASH EQUIVALENTS

(a) Reconciliation of cash

Cash at the end of the financial year as shown in the statement of cash flows is reconciled to items in the statement of financial position as follows: Cash at bank and on hand Short-term deposits with financial institutions	Consolidated 2015 2014 $’000 $’000 11,941 8,495 10,000 14,000 21,941 22,495	Consolidated 2015 2014 $’000 $’000 11,941 8,495 10,000 14,000 21,941 22,495
		22,495

Short-term deposits are term deposits with maturity date of less than 90 days. The effective interest rate on short-term deposits was 3.7% (2014: 4.06%). These deposits have an average maturity of 50 days as at 30 June 2015 (2014: 51 days).

(b) Reconciliation of cash flow from operations with profit after income tax

Profit after income tax Non-cash flows in profit: Depreciation and amortisation Decrease/(increase) in current tax assets (Increase) in deferred assets Share rights reserve Net foreign exchange differences Changes in net assets and liabilities (Increase)/decrease in assets Trade receivables Other receivables Inventories Other current assets Increase/(decrease) in liabilities Payables Current tax liabilities Short-term provisions Other current liabilities Long-term provisions Deferred tax liabilities Net cash flow from operating activities	Consolidated 2015 2014 $’000 $’000 40,345 23,868 2,379 1,591 554 (553) (1,072) (1,083) 2,250 1,484 22 816 (8,207) (4,369) – (700) (158) 12 (1,123) (397) 9,633 1,090 6,017 (1,895) (3,392) 3,203 – 2,495 230 43 4,496 6,566 51,974 32,171	Consolidated 2015 2014 $’000 $’000 40,345 23,868 2,379 1,591 554 (553) (1,072) (1,083) 2,250 1,484 22 816 (8,207) (4,369) – (700) (158) 12 (1,123) (397) 9,633 1,090 6,017 (1,895) (3,392) 3,203 – 2,495 230 43 4,496 6,566 51,974 32,171
		32,171

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APPENDIX II

6. OTHER SHORT-TERM DEPOSITS

Other short-term deposits with financial institutions	Consolidated 2015 2014 $’000 $’000 52,000 30,000 52,000 30,000	Consolidated 2015 2014 $’000 $’000 52,000 30,000 52,000 30,000
		30,000

Other short-term deposits are term deposits with maturity date of more than 90 days and less than 360 days.

The average maturity as at 30 June 2015 of these term deposits is 225 days (2014: 207 days). The effective interest rate on the deposits is 3.42% (2014: 3.91%).

7. TRADE AND OTHER RECEIVABLES

(a) Trade receivables

Trade receivables Provision for impairment	Consolidated 2015 2014 $’000 $’000 33,306 23,795 (92) (318) 33,214 23,477	Consolidated 2015 2014 $’000 $’000 33,306 23,795 (92) (318) 33,214 23,477
		23,477

(b) Other receivables

GST receivables Other receivables	Consolidated 2015 2014 $’000 $’000 717 1,238 1,069 999 1,786 2,237 35,000 25,714	Consolidated 2015 2014 $’000 $’000 717 1,238 1,069 999 1,786 2,237 35,000 25,714
		2,237
		25,714

Receivables are assessed for recoverability based on the underlying terms of the contract. A provision for impairment is recognised when there is objective evidence that an individual trade or term receivable is impaired. These amounts have been included in the other expenses item.

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APPENDIX II

FINANCIAL INFORMATION OF SIRTEX

Movement in the provision for impairment of receivables is as follows:

	Opening	Change for	Amounts	Closing
	balance	the year	written off	balance
	$’000	$’000	$’000	$’000
30 June 2015
Trade receivables	(318)	226	–	(92)
30 June 2014
Trade receivables	(454)	136	–	(318)

An amount of $92,000 was considered impaired as at 30 June 2015 (2014: $318,000).

Trade receivables past due but not impaired

Less than 30 days overdue 30-60 days overdue More than 60 days overdue Total	Consolidated 2015 2014 $’000 $’000 26,238 5,165 2,990 2,133 3,986 1,787 33,214 9,085	Consolidated 2015 2014 $’000 $’000 26,238 5,165 2,990 2,133 3,986 1,787 33,214 9,085
		9,085

Collection history from previous year’s supports management’s view that receivables less than 180 days overdue are not considered impaired.

Credit risk

The Group has no significant concentration of credit risk with respect to any single counter party or group of counter parties other than those receivables specifically provided for and shown above.

The class of assets described as Trade and Other Receivables is considered to be the main source of credit risk related to the Group. No collateral has been received from any of the trade debtors in form of a financial guarantee.

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APPENDIX II

8. INVENTORIES

Raw materials – at cost 9. OTHER FINANCIAL ASSETS Other current financial assets Security deposits paid	Consolidated 2015 2014 $’000 $’000 1,836 1,678 1,836 1,678 Consolidated 2015 2014 $’000 $’000 1,213 1,276 1,213 1,276	Consolidated 2015 2014 $’000 $’000 1,836 1,678 1,836 1,678 Consolidated 2015 2014 $’000 $’000 1,213 1,276 1,213 1,276
		1,276

10. OTHER CURRENT ASSETS

Prepayments	Consolidated 2015 2014 $’000 $’000 3,210 2,024 3,210 2,024	Consolidated 2015 2014 $’000 $’000 3,210 2,024 3,210 2,024
		2,024

11. TAX ASSETS

(a) Current tax assets

Current tax assets	Consolidated 2015 2014 $’000 $’000 – 554 – 554	Consolidated 2015 2014 $’000 $’000 – 554 – 554
		554

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APPENDIX II

(b) Deferred tax assets

Tax losses revenue
Timing differences attributable to:
Fixed assets
Employee provisions
Unrealised foreign exchange losses
Other
Other includes the following major components:
Executive performance rights
AMT credit (US)
Non-amortised patent costs
The movement in tax losses is as follows:
Opening balance
Credit/(debit) to the statement of profit or loss and other comprehensive income
(Debit) to equity
Closing Balance
The movement in fixed assets is as follows:
Opening balance
Credit to the statement of profit or loss and other comprehensive income
Credit to equity
Closing Balance
The movement in employee provisions is as follows:
Opening balance
Credit to the statement of profit or loss and other comprehensive income
Closing Balance
The movement in unrealised FX is as follows:
Opening balance
(Debit)/credit to the statement of profit or loss and other comprehensive income
(Debit) to equity
Closing Balance
The movement in other is as follows:
Opening balance
Credit to the statement of profit or loss and other comprehensive income
Closing Balance
The overall movement in the deferred tax account is as follows:
Opening balance
Credit to the statement of profit or loss and other comprehensive income
Closing Balance

Consolidated
2015
2014
$’000
$’000
415
282
279
181
2,001
849
–
916
2,390
1,785
5,085
4,013
1,141
754
–
160
201
160
282
628
133
(344)
–
(2)
415
282
181
114
98
63
–
4
279
181
849
595
1,152
254
2,001
849
916
12
(916)
911
–
(7)
–
916
1,785
1,581
605
204
2,390
1,785
4,013
2,930
1,072
1,083
5,085
4,013

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APPENDIX II

12. PROPERTY, PLANT AND EQUIPMENT

Buildings and leasehold improvements
At cost
Accumulated depreciation
Net carrying amount
Plant and equipment
At cost
Accumulated depreciation
Net carrying amount
Asset work in progress
At cost
Net carrying amount
Total Property, Plant and Equipment
At cost
Accumulated depreciation
Net carrying amount
Movements in carrying amounts
Buildings and leasehold improvements
Carrying amount at beginning
Depreciation expense
Carrying amount at end
Plant and equipment
Carrying amount at beginning
Additions
Transfers
Disposals
Depreciation expense
Carrying amount at end
Asset work in progress
Carrying amount at beginning
Additions
Transfers
Carrying amount at end
Total Property, Plant and Equipment
Carrying amount at beginning
Additions
Disposals
Depreciation expense
Carrying amount at end

Consolidated
2015
2014
$’000
$’000
1,063
1,063
(472)
(407)
591
656
16,716
11,512
(6,335)
(5,415)
10,381
6,097
2,192
6,839
2,192
6,839
19,971
19,414
(6,807)
(5,822)
13,164
13,592
656
709
(65)
(53)
591
656
6,097
6,417
777
1,106
5,562
–
(201)
(74)
(1,854)
(1,352)
10,381
6,097
6,839
2,003
915
4,836
(5,562)
–
2,192
6,839
13,592
9,129
1,692
5,942
(201)
(74)
(1,919)
(1,405)
13,164
13,592

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APPENDIX II

13. INTANGIBLE ASSETS

Software
At cost
Accumulated amortisation
Net carrying amount
Internally generated intangibles
At cost
Accumulated amortisation
Net carrying amount
Intellectual property
At cost
Accumulated amortisation
Net carrying amount
Asset work in progress
At Cost
Net Carrying amount
Total intangible assets
At cost
Accumulated amortisation
Net carrying amount
Movements in carrying amounts
Software
Carrying amount at beginning
Additions
Transfers
Amortisation expense
Carrying amount at end
Internally generated intangibles
Carrying amount at beginning
Additions
Amortisation expense
Carrying amount at end

Consolidated
2015
2014
$’000
$’000
818
539
(506)
(536)
312
3
64,326
46,525
(251)
–
64,075
46,525
3,607
3,607
(3,276)
(3,096)
331
511
3,309
325
3,309
325
72,060
50,996
(4,033)
(3,632)
68,027
47,364
3
7
–
2
338
–
(29)
(6)
312
3
46,525
27,677
17,801
18,848
(251)
–
64,075
46,525

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APPENDIX II

Intellectual property Carrying amount at beginning Amortisation expense Carrying amount at end Asset work in progress Carrying amount at beginning Additions Transfers Carrying amount at end Total intangible assets Carrying amount at beginning Additions Amortisation expense Carrying amount at end	Consolidated 2015 2014 $’000 $’000 511 692 (180) (181) 331 511 325 – 3,322 325 (338) – 3,309 325 47,364 28,376 21,123 19,175 (460) (187) 68,027 47,364	Consolidated 2015 2014 $’000 $’000 511 692 (180) (181) 331 511 325 – 3,322 325 (338) – 3,309 325 47,364 28,376 21,123 19,175 (460) (187) 68,027 47,364
		511

		– 325 –
		325

		28,376 19,175 (187)
		47,364

Recognition of internally generated intangible assets

The consolidated group undertakes clinical and R&D activities. These have been classified as internally generated intangible assets, in accordance with AASB 138 Intangible Assets.

On 1 June 2015, one of the major Phase IV post-marketing clinical trials was completed. Amortisation expense on the trial was recognised for one month. At year end, the remaining useful life on this trial is 95 months.

At year end, the Group had four major Phase IV post-marketing clinical trials and two development projects aiming at improving the use of SIR-Spheres that were still in the development phase. The activities satisfy all tests as set out in AASB 138, in particular the technical feasibility of technical completion and the availability of sufficient financial resources for the completion.

Amortisation on the remaining four major Phase IV post-marketing clinical trials and two development projects will be recognised from the date of completion of these activities and calculated over the estimated useful life of the assets which has been assessed at 8 years.

The carrying value of the intangible assets arising from development costs has been tested for impairment as the asset is not yet available for use. The cash generating unit was determined at Group level. No impairment has been recognised based on value-in-use calculations covering a detailed one-year forecast, followed by an extrapolation of expected cash flows for the next 4 years assuming no growth rates and a discount rate of 12%.

14. TRADE AND OTHER PAYABLES

Trade payables Other payables	Consolidated 2015 2014 $’000 $’000 13,638 7,649 10,652 7,008 24,290 14,657	Consolidated 2015 2014 $’000 $’000 13,638 7,649 10,652 7,008 24,290 14,657
		14,657

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15. TAX LIABILITIES

(a) Current tax liabilities

Current tax liability	Consolidated 2015 2014 $’000 $’000 4,746 – 4,746 –	Consolidated 2015 2014 $’000 $’000 4,746 – 4,746 –
		–

(b) Deferred tax liabilities

Timing differences attributable to: Capitalisation of development expenditure Fixed assets Other Opening balance Debit to the statement of profit or loss and other comprehensive income Closing balance The movement in the fixed assets is as follows: Opening balance Debit/(credit) to the statement of profit or loss and other comprehensive income Closing balance The movement in other is as follows: Opening balance (Credit)/debit to the statement of profit or loss and other comprehensive income Debit to equity Closing balance The overall movement in the deferred tax account is as follows: Opening balance Debit to the statement of profit or loss and other comprehensive income Debit to equity Closing balance	Consolidated 2015 2014 $’000 $’000 19,222 13,957 724 624 88 957 20,034 15,538 13,957 8,303 5,265 5,654 19,222 13,957 624 630 100 (6) 724 624 958 39 (870) 910 – 9 88 958 15,538 8,972 4,495 6,558 1 8 20,034 15,538	Consolidated 2015 2014 $’000 $’000 19,222 13,957 724 624 88 957 20,034 15,538 13,957 8,303 5,265 5,654 19,222 13,957 624 630 100 (6) 724 624 958 39 (870) 910 – 9 88 958 15,538 8,972 4,495 6,558 1 8 20,034 15,538
		15,538

		8,303 5,654
		13,957

		630 (6)
		624

		39 910 9
		958

		8,972 6,558 8
		15,538

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16. PROVISIONS AND ACCRUALS

(a) Short-term Provisions and Accruals

Provision for long service leave Provision for clinical studies Miscellaneous provisions	Consolidated 2015 2014 $’000 $’000 385 196 3,180 6,669 3,101 3,193 6,666 10,058	Consolidated 2015 2014 $’000 $’000 385 196 3,180 6,669 3,101 3,193 6,666 10,058
		10,058

(b) Long-term Provisions

Accruals for long service leave The overall movement in the short-term provision account is as follows: Opening balance Additional provisions for the year Amounts used during the year Closing balance The overall movement in the long-term provision account is as follows: Opening balance Additional provisions for the year Amounts used during the year Closing balance	Consolidated 2015 2014 $’000 $’000 1,104 874 1,104 874 196 91 625 117 (436) (12) 385 196 874 831 233 43 (3) – 1,104 874	Consolidated 2015 2014 $’000 $’000 1,104 874 1,104 874 196 91 625 117 (436) (12) 385 196 874 831 233 43 (3) – 1,104 874
		874

		91 117 (12)
		196

		831 43 –
		874

17. CONTINGENT LIABILITIES

Litigation is in process against the one of the companies in the Group relating to a dispute with a distributor whose agreement has been terminated. The information usually required by AASB 137 Provisions, Contingent Liabilities and Contingent Assets is not disclosed on the grounds that it can be expected to prejudice seriously the outcome of the litigation.

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18. ISSUED CAPITAL

Issued capital Share issue cost Purchase of Non-Executive Directors’ shares on market Deferred tax on performance rights Number of shares issued Fully paid ordinary shares Balance at beginning of the year Purchase of Non-Executive Directors’ shares on market Issued on exercise of performance rights Balance at end of the year	Consolidated 2015 2014 $’000 $’000 26,436 25,487 (1,258) (1,258) (92) – 1,935 664 27,021 24,893 56,530,231 56,108,439 2015 2014 No. (000) $’000 No. (000) $’000 56,108 24,893 55,768 23,521 – (92) – – 422 2,220 340 1,372 56,530 27,021 56,108 24,893

A total of 421,792 fully paid ordinary shares have been issued as a result of the exercise of performance rights at an average price of $19.36. The value of $2,219,787 booked to share capital represents the accounting expense previously recognised in relation to the performance rights and deferred tax on the performance rights exercised. Fully paid ordinary shares carry one vote per share and carry the right to dividends. On winding up, ordinary shares participate in dividends and the proceeds, in proportion to the number of shares held. The Company does not have a limited authorised capital and issued shares do not have a par value.

The purchase of Non-Executive Directors’ shares on market represent the Restricted Shares that are acquired by the trustee of the NEDs Plan trust in respect of the vested Rights, and are subject to a dealing restriction such that they may not be dealt with until the earlier of ceasing to be a NED of the Group or the elapsing of seven years from the grant date. The Restricted Shares were acquired via on-market purchase of Sirtex Shares, rather than by new issues of Shares.

Share options

At reporting date, there were no share options outstanding, and no share option plan was in place.

Share rights

At reporting date, there is an Executive Performance Rights Plan and a Non-Executive Director’s Rights Plan in place. Refer to note 23 for further details.

Capital management

Management controls the capital of the group in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns and ensure that the group can fund its operations and continue as a going concern. Management effectively manages the group’s capital by assessing the group’s financial risk and adjusting its capital structure in response to changes in these risks and in the market. The responses include the management of debt levels, distributions to shareholders, and share issues.

The company has no debt as at 30 June 2015.

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19. RESERVES

Share Rights Reserve Foreign Currency Translation Reserve	Consolidated 2015 2014 $’000 $’000 4,075 2,774 1,540 347 5,615 3,121	Consolidated 2015 2014 $’000 $’000 4,075 2,774 1,540 347 5,615 3,121
		3,121

The Executive Performance Rights Plan and the Non-Executive Director’s Right Plan give rise to a share rights reserve. The translation of foreign controlled subsidiaries into the functional currency of the group gives rise to a foreign currency translation reserve.

20. EARNINGS PER SHARE

(a) Basic earnings per share

Profit from continuing operations attributable to equity holders
Weighted average number of shares used in the calculation of
basic earnings per share
Add to number of shares used in the calculation of diluted earnings per share:
Effect of potential conversion to ordinary shares under the Executive
Performance and the Non-Executive Director’s Rights Plans
(refer to note 23 for further details)
(b)
Diluted earnings per share
Profit from continuing operations attributable to equity holders
Weighted average number of shares used in the calculation of diluted
earnings per share
DIVIDENDS
Distributions paid
Declared fully franked ordinary dividend of 14 cents (2014: 12 cents) per share
franked at the tax rate of 30% (2014: 30%)
Balance of franking credit amount at year end adjusted for franking
credits arising from payment of provision for income tax

Consolidated
2015
2014
$
$
40,345,232
23,868,000
56,511,106
56,097,812
1,352,605
1,665,434
Consolidated
2015
2014
$
$
40,345,232
23,868,000
57,863,711
57,763,246
Consolidated
2015
2014
$’000
$’000
7,914
6,733
7,456
9,014

21. DIVIDENDS

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22. OPERATING SEGMENTS

Identification of reportable segments

The group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors in assessing performance and determining the allocation of resources.

The group is managed primarily on the basis of regional markets which have different structures and performance assessment criteria. Operating segments are therefore determined on the same basis. The three regional markets currently serviced by the group are Asia Pacific, Americas and Europe, Middle East and Africa (EMEA).

As the group manufactures and distributes only one product, identical for each of the three regional markets, no further segmentation across products or services is made.

Basis of accounting for purposes of reporting by operating segments

Accounting policies adopted

Unless stated otherwise, all amounts reported to the Board of Directors with respect to operating segments are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group.

Inter-segment transactions

An internally determined transfer price is set for all inter-entity sales. This price is re-set annually and is based on what would be realised in the event the sale was made to an external party at arm’s length. All such transactions are eliminated on consolidation for the Group’s financial statements.

Inter-segment loans payable and receivable are initially recognised at the consideration received net of transaction costs. If inter-segment loans are not on commercial terms, these are not adjusted to fair value based on market interest rates. This policy represents a departure from that applied to the statutory financial statements.

Segment assets

Where an asset is used across multiple segments, the asset is allocated to the segment that received the majority of economic value from the asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location.

Segment liabilities

Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a whole and are not allocated. Segment liabilities include trade and other payables and certain direct borrowings.

Unallocated items

Unallocated revenue comprises interest income from financial institutions and legal settlement UWA.

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Segment performance

Segment revenues

External sales Inter-segment 2015 2014 2015 2014 $’000 $’000 $’000 $’000 Asia Pacific 6,913 5,738 151,944 109,510 Americas 136,738 95,962 11,110 9,227 EMEA 32,436 27,664 11,963 298 Total of all segments Interest Eliminations Consolidated	Total 2015 2014 $’000 $’000 158,857 115,248 147,848 105,189 44,399 27,962 351,104 248,399 1,889 1,876 (175,016) (119,036) 177,977 131,239

The total revenue represented for the Group’s operating segments reconcile to the key financial figures as presented in its financial statements as follows:

Revenue from the sale of goods Other segment revenue From other segments Elimination of intersegment revenues Group revenues *Segment net profit after tax*	2015 $’000 176,088 1,889 175,016 (175,016) 177,977	2014 $’000 129,363 1,876 119,036 (119,036) 131,239

Asia Pacific Americas EMEA Total of all segments Eliminations Profit before income tax expense Income tax expense Profit after income tax expense	2015 $’000 42,472 3,364 6,932 52,768 – 52,768 (12,423) 40,345	2014 $’000 31,223 411 (524) 31,110 – 31,110 (7,242) 23,868

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Segment assets and liabilities

Asia Pacific Americas EMEA Total of all segments Eliminations Consolidated	Assets 2015 2014 $’000 $’000 244,707 188,769 44,687 31,622 26,734 17,746 316,128 238,137 (114,652) (89,427) 201,476 148,710	Liabilities 2015 2014 $’000 $’000 100,128 72,525 30,083 20,062 17,421 14,141 147,632 106,728 (90,792) (65,601) 56,840 41,127	Liabilities 2015 2014 $’000 $’000 100,128 72,525 30,083 20,062 17,421 14,141 147,632 106,728 (90,792) (65,601) 56,840 41,127
			41,127

Other segment information

	Asia	Pacific	Americas
	2015	2014	2015	2014	2015	2014
	$’000	$’000	$’000	$’000	$’000	$’000
Acquisition of segment assets
– Plant and equipment	553	1,457	166	643	973	4,086
– Intangible assets	21,123	19,173	–	–	–	2
Depreciation and amortisation
of segment assets
– Plant and equipment	1,003	816	519	406	397	182
– Intangibles	460	185	–	–	–	2

Major customers

The Group has a number of customers to whom it provides products. No single external customer represents more than 10% of total revenue.

23. SHARE-BASED PAYMENTS

Executive Performance Rights

On 23 September 2014, a total of 284,720 performance rights were granted to executives and senior managers under the Executive Performance Rights Plan, to take up performance rights which may convert into ordinary shares, for nil consideration. The performance rights are exercisable following 30 June 2017. The performance rights hold no voting or dividend rights, and are not transferable.

Performance rights granted to executives and senior management are as follows:

Grant Date	Number
22 February 2011	374,188
23 August 2011	456,000
28 August 2012	687,000
26 November 2013	448,850
23 September 2014	284,720

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During the year, a total of 73,000 rights were granted to the Chief Executive Officer, and a total of 211,720 rights to other executives and senior managers of the Group. The performance rights vest after 30 June 2017, and the extent to which vesting occurs, depends on the achievement of performance conditions.

The Board has determined that there will be two performance conditions with equal weight of 50% each, calculated over a three year period from 1 July 2014 to 30 June 2017 (the Measurement Period), namely Total Shareholder Return (TSR) and Earnings per Share (EPS). The percentage of rights vested will be determined as follows:

TSR (% pa compounded) Vesting (%) less than 10% 0% 10% 16.67% 10% – 15% Pro-rata 15% 33.33% 15% – 20% Pro-rata 20% and more 100% EPS (% pa compounded) Vesting (%) less than 10% 0% 10% 16.67% 10% – 17.5% Pro-rata 17.5% 33.33% 17.5% – 25% Pro-rata 25% and more 100%

A summary of the movements of all performance rights issued is as follows:

			Balance	Granted	Exercised	Forfeited	Balance	Vested	Vested
	Vesting	Exercise	at start of	during the	during the	during the	at end of	and	and
Grant Date	Date	Price	year	year	year	year	year	exercisable	unexercisable
22-Feb-11	30-Jun-13	nil	374,188	–	341,188	–	33,000	33,000	–
23-Aug-11	30-Jun-14	nil	456,000	–	423,000	–	33,000	33,000	–
28-Aug-12	30-Jun-15	nil	687,000	–	–	8,500	678,500	–	–
26- Nov-13	30-Jun-16	nil	448,500	–	–	5,500	443,000	–	–
23-Sep-14	30-Jun-17	nil	–	284,720	–	3,400	281,320	–	–

The weighted fair value of the performance rights issued during the financial year ended 30 June 2015 has been calculated at $9.44 (2014: $4.63).

The price was calculated by using a Monte Carlo simulation model and binomial option pricing model applying the following inputs:

Exercise price	$nil
Performance rights life	3 years
Underlying share price	$22.20
Expected share price volatility	33%
Expected dividend	$0.14 per share
Risk-free interest rate	2.78%

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Historical volatility has been the basis for determining expected share price volatility as it is assumed that this is the best indicator of future volatility, which may not eventuate.

Included in the statement of profit or loss and other comprehensive income is $2,249,474 (2014: $1,484,000) of performance rights plan expense, and relates in full to equity-settled share-based payment transactions.

Non-Executive Director’s Rights

On 22 July 2014, a total of 6,289 rights were granted to Non-Executive Directors under the Non-Executive Director’s Rights Plan, to take up rights which may convert into ordinary shares, for nil consideration. The rights will vest one year after grant provided that the Non- Executive Director continues to be a Director at that time. There are no performance criteria attached to the vesting of the rights. Upon vesting of the rights and conversion into ordinary shares, the shares will be subject to a dealing restriction until the earlier of either the seventh anniversary of the grant or the date of cessation in being a Director.

Rights granted to Non-Executive Directors are as follows:

Grant Date	Number
24 September 2013	4,195
22 July 2014	6,289

A summary of the movements of all rights issued is as follows:

			Balance	Granted	Exercised	Forfeited	Balance	Vested	Vested
	Vesting	Exercise	at start of	during the	during the	during the	at end of	and	and
Grant Date	Date	Price	year	year	year	year	year	exercisable	unexercisable
24-Sep-13	24-Sep-14	nil	4,195	–	4,195	–	–	–	–
22-Jul-14	22-Jul-15	nil	–	6,289	–	–	6,289	–	–

24. KEY MANAGEMENT PERSONNEL

Refer to the Remuneration Report in the Report of the Directors for details of the remuneration paid or payable to each member of the Group’s key management personnel for the year ended 30 June 2015 and 30 June 2014.

The totals of remuneration paid to key management personnel of the Group during the year are as follows:

Short-term employee benefits Post-employment benefits Share-based payment	2015 $ 5,180,394 122,709 1,462,735 6,765,838	2014 $ 4,604,329 122,486 940,023
		5,666,838

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25. PARENT ENTITY

Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Equity Issued capital Reserves Retained earnings Reserves Share rights reserve Total reserves Financial performance Profit for the year Total comprehensive income Financial guarantees	2015 $’000 93,831 17,377 111,208 16,564 584 17,148 37,482 (9,746) 66,324 94,060 1,613 1,613 7,086 7,086	2014 $’000 81,312 13,978 95,290 1,923 1,016 2,939 28,426 (3,228) 67,152 92,350 618 618 30,215 30,215

No guarantees have been provided to its wholly-owned subsidiaries by the parent entity.

Contingent liabilities

The parent entity does not have any contingent liability as at 30 June 2015.

Contractual commitments

The parent entity has an operating lease commitment for the office lease in Sydney. Refer to note 26 for further details.

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26. COMMITMENTS

Operating Leases

The consolidated entity leases offices in Sydney, Singapore, Germany and in the United States, with no option to purchase the leased assets at the expiry of the leased assets.

Duration and remaining periods for the office leases are as follows:

Location	Lease term	Remaining lease period
Sydney	84 months	60 months
Singapore	60 months	2 months
Bonn (GER)	98 months	79 months
Frankfurt (GER)	120 months	98 months
Boston (US)	62 months	18 months

The consolidated entity also leases various items of plant and equipment in Germany with lease terms of up to 48 months, and remaining periods of 2 to 46 months.

Non-cancellable operating leases No longer than 1 year Longer than 1 year and not longer than 5 years Longer than 5 years	Consolidated 2015 2014 $’000 $’000 2,299 2,454 7,897 7,653 2,538 4,348 12,734 14,455	Consolidated 2015 2014 $’000 $’000 2,299 2,454 7,897 7,653 2,538 4,348 12,734 14,455
		14,455

Research commitments

The consolidated entity has entered into various research and development agreements with Universities and other external research institutions for ongoing research and clinical trials.

Under these agreements, the consolidated entity is committed to providing funds over future periods, payable within one year of $920,000 (2014: $820,000).

Clinical Trial commitments

The consolidated entity has entered into various clinical study agreements with Clinical Research Organisations (CRO) and specialist service providers for the management of clinical studies, and with a range of major hospitals for the recruitment of patients into these trials.

Under these agreements, the consolidated entity is committed to providing funds over future periods, payable within one year, of $7,107,000 (2014: $10,602,000). The amount of all outstanding contractual commitments as at 30 June 2015 is $20,810,000 (2014: $21,384,000).

Capital commitments

The consolidated entity has entered into various agreements for property, plant and equipment and intangible assets. Under these agreements, the consolidated entity is committed to providing funds over future periods within one year of $419,000 (2014: $207,000). The amount of all outstanding contractual commitments as at 30 June 2015 is $839,000 (2014: $821,000).

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Lease commitments

The consolidated entity entered into an operating lease agreement subsequent to year end to extend the lease on the premises in Singapore. The lease agreement is for three years. Under this agreement, the consolidated entity is committed to providing funds over future periods, payable within one year, of $419,000. The total amount of the contractual commitment as at 30 June 2015 is $1,300,000.

27. CONTROLLED ENTITIES

		Ownership	interest
Name of entity	Country of incorporation	2015	2014
		%	%
Parent entity
Sirtex Medical Limited	Australia
Controlled entities
Sirtex Medical Products Pty Ltd	Australia	100	100
Sirtex Global Pty Ltd	Australia	100	100
Sirtex Technology Pty Ltd	Australia	100	100
Sirtex SIR-Spheres Pty Ltd	Australia	100	100
Sirtex Thermospheres Pty Ltd	Australia	100	100
Sirtex Medical Holdings Inc	USA	100	100
Sirtex Medical Inc	USA	100	100
Sirtex Wilmington LLC	USA	100	100
Sirtex Germany Holding GmbH	Germany	100	100
Sirtex Medical Europe GmbH	Germany	100	100
Sirtex Germany Manufacturing GmbH	Germany	100	100
Sirtex Technology Germany GmbH	Germany	100	100
Sirtex Medical United Kingdom Ltd	United Kingdom	100	–
Sirtex Medical MEA FZE	United Arab Emirates	100	–
Sirtex Singapore Holding Pte Ltd	Singapore	100	100
Sirtex Medical Singapore Pte Ltd	Singapore	100	100
Sirtex Global Singapore Pte Ltd	Singapore	100	100
Sirtex Singapore Manufacturing Pte Ltd	Singapore	100	100
Sirtex Technology Japan KK	Japan	100	100

Sirtex Medical United Kingdom was incorporated on 27 February 2015. Sirtex Medical MEA FZE was incorporated on 15 June 2015.

Sirtex Medical Ltd and all its Australian-controlled entities are included in the tax-consolidated group. Sirtex Medical Ltd is the head entity in the tax consolidation group. These entities are taxed as a single entity.

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28. RELATED PARTY TRANSACTIONS

(a) Equity interests in related parties

Details of the percentage of ordinary shares held in controlled entities are disclosed in Note 27.

(b) Loans and transactions with key management personnel and related entities

At 30 June 2015, $9,222 (2014: $nil) was payable to directors, key management personnel and director related entities.

At 30 June 2015, $12,702 (2014: $nil) was receivable from directors, key management personnel and director related entities.

(c) Transactions with the wholly-owned group

The ultimate parent entity in the wholly-owned group is Sirtex Medical Limited. During the financial year, Sirtex Medical Limited paid management fees of $144,228 (2014: $139,327) to entities in the wholly-owned group.

(d) Outstanding balances arising from transactions with the wholly-owned group

The following balances are outstanding at the reporting date in relation to transactions with the wholly-owned group:

Current payables from subsidiaries: $12,169,332 (2014: Current receivables from subsidiaries: $10,887,513)

Loans receivable from subsidiaries: $14,885,016 (2014: $12,909,941)

29. EVENTS AFTER REPORTING DATE

On 10 July 2015, a total of 687,000 Executive Performance Rights issued on 28 August 2012 fully vested, having achieved the performance target. As at the date of this report, a total of 583,314 of these performance rights have been exercised and issued as ordinary shares of Sirtex Medical Limited.

On 22 July 2015, a total of 6,289 Non-Executive Directors Rights issued on 22 July 2014 vested and 6,289 ordinary shares of Sirtex Medical Limited were purchased on market by the Trust.

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30. REMUNERATION OF AUDITORS

During the year, the following were paid or were payable for services provided by the auditor of the parent entity, its related party practices and non-related audit firms:

	Consolidated
	2015	2014
	$’000	$’000
Remuneration of the auditor of the parent entity for
audit and review of financial reports	140	155
Agreed upon procedures performed for the parent entity	34	–
Remuneration of other auditors of subsidiaries for
audit and review of financial reports	143	126

The auditor of Sirtex Medical Ltd and its Australian subsidiaries is Grant Thornton Audit Pty Ltd. The auditor of the German subsidiary is Warth & Klein Grant Thornton AG. The auditor of the US entities is Grant Thornton LLP. The auditor of the Singapore entities is Grant Thornton Advisory Pte Ltd.

31. FINANCIAL RISK MANAGEMENT

The Audit Committee has been delegated responsibility by the Board of Directors for, amongst other issues, monitoring and managing financial risk exposures of the Group. The Audit Committee monitors the Group’s financial risk management policies and exposures and approves financial transactions within the scope of its authority. It also reviews the effectiveness of internal controls relating to counter party credit risk, currency risk, and interest rate risk.

The Group’s activities expose it to a variety of financial risks, including but not limited to, market risk (currency risk and interest rate risk), credit risk and liquidity risk. The overall risk management strategy seeks to measure and to mitigate these risks, in using different methods measure the different types of risk, and in using derivate instruments to minimise certain risk exposures.

The Group’s financial instruments consist mainly of deposits with banks, short-term investments, account receivable and payable, and loans to and from subsidiaries.

The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial instruments, are as follows:

Financial Assets Cash and cash equivalents Other short-term deposits Trade and other receivables Other financial assets Financial Liabilities* Trade and other payables	Consolidated 2015 2014 $’000 $’000 21,941 22,495 52,000 30,000 35,000 25,714 1,213 1,276 110,154 79,485 24,290 14,657 24,290 14,657	Consolidated 2015 2014 $’000 $’000 21,941 22,495 52,000 30,000 35,000 25,714 1,213 1,276 110,154 79,485 24,290 14,657 24,290 14,657
		79,485

		14,657
		14,657

Other financial assets comprise security deposits.

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The carrying amounts of financial assets and financial liabilities recorded in the financial statements represent their respective net fair values, determined in accordance with the accounting policies disclosed in note 1 to the financial statements.

Financial Risk Exposures and Management

The main risks the Group is exposed to through its financial instruments are interest rate risk, foreign exchange risk, liquidity risk and credit risk as follows:

(a) Interest rate risk

The Group’s exposure to interest rate risk relates to its cash and short-term deposits. The interest rate as at 30 June 2015 on cash was 0.9% (2014: 2.05%) and on short-term deposits 3.46% (2014: 3.95%). All other financial assets and liabilities are non-interest bearing.

Sensitivity analysis

The sensitivity analysis is based on an expected overall volatility of interest rates using market data and forecasts. A change in interest rate of 2% on cash and short-term deposits would result in changes in profit and equity as follows:

	Consolidated
	2015	2014
	$’000	$’000
Change in profit:
Increase in interest rate by 2%	1,331	945
Decrease in interest rate by 2%	(1,331)	(945)
Change in equity:
Increase in interest rate by 2%	1,331	945
Decrease in interest rate by 2%	(1,331)	(945)

(b) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral or other securities where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group measures credit risk on a fair value basis.

The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The carrying amounts of financial assets recorded in the financial statements, net of any provision for impairment, represent the Group’s maximum exposure to credit risk without taking into account any collateral or other security obtained.

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(c) Liquidity risk

Liquidity risk management requires maintaining sufficient cash and cash equivalents, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Surplus funds are invested in term deposits with short-term maturities.

As at 30 June 2015, the Group had only non-interest bearing financial liabilities with less than 1 year maturity (refer note 14).

(d) Foreign exchange risk

The Group is exposed to foreign exchange risk resulting in fluctuations in the fair value and in future cash flows of its financial instruments due to a movement in foreign exchange rates of currencies other than the Group’s measurement currency.

It is the Group’s policy that hedging, as a percentage of net foreign exchange rate exposure, be maintained within the limits of the foreign exchange risk management policy.

The Group does not have any currency options open at reporting date.

Sensitivity analysis

The sensitivity analysis is based on an expected overall volatility of the relevant currencies, using management’s assessment of reasonable fluctuations taking into account movements over the last 6 months and forecasts for the next 12 months. A change in foreign exchange rates of 15% would result in changes in profit and equity as follows:

	Consolidated
	2015	2014
	$’000	$’000
Change in profit:
Increase of AUD to USD by 15%	(20,511)	(14,394)
Decrease of AUD to USD by 15%	20,511	14,394
Increase of AUD to EUR by 15%	(4,865)	(4,150)
Decrease of AUD to EUR by 15%	4,865	4,150
Change in equity:
Increase of AUD to USD by 15%	(20,511)	(14,394)
Decrease of AUD to USD by 15%	20,511	14,394
Increase of AUD to EUR by 15%	(4,865)	(4,150)
Decrease of AUD to EUR by 15%	4,865	4,150

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The following table shows the foreign currency risk on the financial assets and liabilities of the Group’s operations, denominated in currencies other than the functional currency of the operations. The foreign currency risk in the books of the parent entity is considered immaterial and is therefore not shown.

2015 Group entity (Functional currency) North American entities (USD) European entity (EUR) Singapore entities (SGD) Japanese entities (JPY) Balance sheet exposure 2014 Group entity (functional currency) North American entities (USD) European entity (EUR) Singapore entities (SGD) Japanese entities (JPY) Balance sheet exposure	USD 17,816 – – – 17,816 14,823 – – – 14,823	Net financial EUR – 4,493 – – 4,493 – 3,978 – – 3,978	assets/(liabilities) in ’000 SGD JPY – – – – 1,062 – – 3,253 1,062 3,253 – – – – 1,001 – – 9,009 1,001 9,009	AUD 23,198 6,543 1,027 35
				30,804

				15,736 5,760 936 94
				22,526

Foreign Currency Call/Put Options

The Group has no currency option open at reporting date.

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A2. CHAIRMAN’S REPORT AND CHIEF EXECUTIVE OFFICER’S REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015

CHAIRMAN’S REPORT

It is a great pleasure to present the 2015 Sirtex Annual Report to investors. It was a milestone year with the results of our flagship clinical study SIRFLOX reported, and an additional three clinical studies having completed patient recruitment. Our core SIR-Spheres Y-90 resin microspheres business recorded another year of record growth and profits and our share price continued to appreciate over the previous year. Once again, Sirtex outperformed both the S&P/ASX 200 and S&P/ASX 200 Healthcare indices.

When reflecting on just how far Sirtex has come, it is worth remembering that the company was first included in the S&P/ASX 200 Index in December 2012 when our market capitalisation was $740 million. As at 30 June, our market capitalisation sits at approximately $1.6 billion. Underlying the strength of the shareholder value created has been the minimal change to our issued capital.

As our market capitalisation and share price have risen, so too has awareness of our business within the financial market community, with 11 sell-side analysts from global investment banks and domestic stockbroking firms now providing research coverage on Sirtex.

As we have stated previously, our goal is to help change liver cancer from a terminal disease to a chronic, manageable condition. While ambitious, we recognise how significant the potential reward of this paradigm is for thousands of medical professionals, patients and our shareholders.

Under our 2020Vision strategy, we are ensuring the long-term sustainability and growth of our organisation for investors. The runway of opportunity for our technology remains sound, and our business is on track to achieve these goals.

2015 Financial Results

Global dose sales of 10,252 set a new company record and represented an improvement of 19.8 per cent on the previous year. Total product revenue for 2015 was $176.1 million, up 36.1 per cent. Profit before tax was up 69.6 per cent to $52.8 million while net profit after tax was $40.3 million, up 69.0 per cent on last year.

Cash from operations was $52.0 million, up 61.6 per cent on the previous year and the company increased its cash holdings from $52.5 million to $73.9 million at the end of the reporting period.

The company’s activities and financial results are discussed in detail in the Directors’ Report.

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Dividends

Our financial outlook remains strong given our solid cash position and zero debt. This has permitted the company to pay dividends to shareholders over the last five years. The Directors have approved a fully franked final dividend of 20 cents per share for the 2015 financial year, up 42.9 per cent over the prior period. The record date for the dividend is 30 September 2015 and the payment date is 21 October 2015. Inclusive of the 2015 financial year dividend payment to be made on 21 October 2015, Sirtex will have returned to shareholders a total of $35.4 million in dividends since 2011.

Manufacturing and infrastructure investment to meet future growth

As our financial results demonstrate, Sirtex is a rapidly growing medical device company, and a market leader in the interventional oncology space. Our shareholders are aware of our commitment to creating long-term value and our growth has necessitated investments into infrastructure, capabilities and support functions that will equip us for future expansion.

The expansion of our global capacity will ensure the company is able to meet the future demand anticipated for SIR-Spheres microspheres. Our upgraded Wilmington plant in Massachusetts, USA, became fully operational during the financial year, tripling its manufacturing capability.

==> picture [455 x 184] intentionally omitted <==

----- Start of picture text -----

SHAREHOLDER DIVIDENDS DECLARED GROWTH IN MARKET CAPITALISATION
$’000 $MILLIONS (AS AT 30 JUNE)
2011 2012 2013 2014 2015 2011 2012 2013 2014 2015
3,904 5,577 6,733 7,914 11,423 273 339 668 947 1,642
----- End of picture text -----

Our new manufacturing facility in Frankfurt, Germany is anticipated to commence commercial supply during the 2016 financial year.

Another major capital investment has been our commitment to enhancing our internal systems and resource planning capabilities. I am pleased to report Sirtex’s investment into this new globally integrated software application was implemented on time and on budget on 1 July 2015 with expenditure of approximately $3 million. The system will bring greater efficiencies to our collection, storage and use of business information. It will also empower our manufacturing, clinical and marketing teams, streamline our administrative procedures and further improve our competitiveness.

Together these investments put our business in a solid position following the release of the SIRFLOX clinical data, and the completion of patient recruitment in several other large studies.

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Sirflox reports clinical data

Our large financial commitment to ongoing clinical studies continued to deliver meaningful milestones during 2015. These studies are critical to expanding the use of SIR-Spheres microspheres from a last resort or salvage treatment to an initial or first-line treatment option in patients with inoperable liver cancer.

The company’s flagship clinical study, SIRFLOX, reported clinical data during the year, revealing a significant delay in the progression of liver tumours in patients who received our innovative therapy in combination with standard chemotherapy. While the effect of the treatment was profound, resulting in a 7.9 month delay in progression of tumours in the liver, the study did not meet the primary endpoint of overall Progression-Free Survival, which measures the progression of disease at any site in the body, or the emergence of new disease.

However, based on the peer review process at the ASCO meeting where our data was presented by Associate Professor Peter Gibbs, we remain confident that our product has the necessary clinical and safety attributes for adoption by the medical community in the future for inoperable, first-line metastatic colorectal cancer patients. We eagerly await the scientific publication of the SIRFLOX study and look forward to keeping our investors abreast of progress.

Other major clinical studies complete patient recruitment

2015 was also a significant year for Sirtex’s clinical program outside of SIRFLOX, with three additional clinical studies completing recruitment, representing over 1,000 patients worldwide. The SARAH study is forecast to deliver clinical results during calendar year 2016 and the FOXFIRE and FOXFIRE Global studies during calendar year 2017. Our two remaining large studies, SORAMIC and SIRveNIB are anticipated to complete recruitment during the 2016 financial year.

We continue to explore the potential for our innovative SIR-Spheres microspheres product outside of the liver. Our pilot study in renal cell carcinoma (RCC or kidney cancer) has shown promising results.

The entire team at Sirtex strives to make a difference in the lives of people suffering from cancer and we hope that the continued application of our technology for liver and non-liver cancers can offer hope to many patients across the globe.

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Research & Development

The ongoing enhancement of Sirtex’s Research & Development (R&D) capability centres on three levers. Firstly, we ensure projects of suitable merit have sufficient financial resources to reach each successive stage of development. Secondly, our financial capability is leveraged with government incentives. In our case, this involves reducing our effective tax rate via recognition of federal government R&D tax credits from eligible expenditure. Thirdly, we partner with thought leaders in the field and associated centres of excellence, both domestically and globally, to drive the innovation process.

Continual innovation is crucial to the success of Sirtex over the coming years, and forms one of the key pillars of our 2020Vision. 4.9 per cent of revenue was invested back into R&D during the reporting period to support the development of new product technologies and improvements to our SIRSpheres microspheres product offering.

We have had measurable success in this regard during 2015, with improvements made in the ease of delivery of our product into patients and the maturation of several core platform technologies through the pre-clinical process.

Director and Board Activities

Stability at Board level is one measure of strength of the company. The Sirtex Board has worked cohesively and constructively over a number of years, and this approach continued in 2015 with Board membership remaining unchanged.

The Board works diligently to ensure the Sirtex global management team has the expertise, capability and resources to execute on their global growth initiatives both now and into the future.

Under the leadership of our Chief Executive Officer, Gilman Wong, the company has continued to deliver exceptional returns to shareholders over a number of years. Our staff numbers continue to rise, commensurate with the growth in our business, all within the stated objectives of the 2020Vision.

Our dedicated employees worldwide

Our employees are highly motivated individuals who share our common corporate vision for the business. Approximately 46 per cent of our workforce operates in a sales and marketing capacity. At the end of the 2015 financial year, women represented 43 per cent of the total number of employees globally.

Our people are talented and united in their focus to deliver on our 2020Vision to create market leadership by delivering solutions to the problems faced by our medical customers. They are also committed to deploying our resources wisely and delivering financial performance to create long-term shareholder value.

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Diversity

We benefit from a diverse workforce which reflects the multiple and varied communities in which we seek to do business. Our diverse workforce also provides the necessary insights and innovation required to remain successful in a global environment.

The Board acknowledges the tireless work and commitment of Sirtex employees in realising this vision, which has enhanced Sirtex’s reputation among its customers, the medical and scientific community and its key stakeholders, both domestically and across the globe in over 40 countries.

A Responsible Community Member

Sirtex is committed to conducting business ethically and contributing to the social, environmental and economic wellbeing of the many communities in which we operate.

Our report this year details our commitment and support for a range of stakeholders in the medical, patient research and local communities worldwide.

Outlook

Minimally invasive interventional oncology products like SIR-Spheres microspheres continue to generate higher levels of clinician interest with each passing year. Now, with the reporting of the SIRFLOX data which was the largest such study ever undertaken, the Board believes such a solid foundation of evidence and benefit will see this segment of the oncology market continue to grow over the coming years.

Patients will continue to seek out treatments that offer greater precision with better clinical outcomes and lower side-effects. On the other hand, Governments globally are looking to reduce healthcare expenditures by providing their citizens with cost-effective medical solutions. We believe SIRSpheres microspheres are uniquely positioned in this regard.

The Board is pleased with the progress made on all fronts and the performance of the Sirtex team. 2016 is shaping up to be another year of growth and prosperity for Sirtex as we pursue our goal of making a meaningful difference in the lives of people with cancer.

RICHARD HILL CHAIRMAN

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CHIEF EXECUTIVE OFFICER’S REPORT

Another year of strong progress and major milestones delivered.

The 2015 financial year was another milestone year at Sirtex, with the reporting of the SIRFLOX study – the largest ever randomised, multi-centre clinical study involving SIR-Spheres microspheres in patients with metastatic colorectal cancer. SIRFLOX was also the largest interventional oncology study ever conducted.

DOSE SALES GROWTH

19.8%

REVENUE GROWTH

36.1%

NET PROFIT AFTER TAX GROWTH 69.0%

The SIRFLOX study provided for the first time the necessary Level 1 clinical evidence required by clinicians when making informed treatment decisions for their liver cancer patients. SIRFLOX highlighted the significant benefits of SIR-Spheres microspheres in patients suffering from metastatic colorectal cancer where the cancer had spread to the liver. Importantly, through the peer review process at the American Society for Clinical Oncology (ASCO) Annual Meeting in Chicago in late May, our study results were deemed to be both clinically meaningful and significant in the liver. In short, we are delighted by the results, which now provide us with an opportunity to generate sales at an earlier stage of treatment for patients with metastatic colorectal cancer than is currently the case with our salvage business.

In addition to the exciting potential resulting from the SIRFLOX study results, our current business delivered another outstanding year of growth. We remain focused in our determination to see as many patients as possible with inoperable liver cancer benefit from our treatment. Our addressable global market is large, and our 2015 dose sales imply we have less than a two per cent share. Our runway of opportunity is therefore significant.

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We must work in a proactive manner with the medical community, patients, insurance companies, government regulators and hospital administrators to achieve our long- term growth objectives.

Behind every treatment we sell is a patient living with liver cancer. Despite recent advances in the field, the five-year survival rate for patients with inoperable liver cancer remains very low. Like all medical paradigms, changing the basic three tenets of cancer care, namely surgery, external radiotherapy and drug therapy (chemotherapy) to include a fourth option of ‘loco-regional’ or organ-specific treatments such as SIR-Spheres microspheres will require education and time. At Sirtex, we are committed to ensuring the relatively new specialty of interventional oncology gains wider acceptance by the general medical community.

We have an ambitious aim of increasing the number of patients who are effectively able to live with their cancer by controlling the burden of their disease in the liver. It is these patients who motivate and inspire us at Sirtex to ensure every patient who is eligible for our treatment has the potential to receive it.

Much of what we aim to achieve in the longer term is embodied in our core strategy, the 2020Vision.

==> picture [454 x 153] intentionally omitted <==

----- Start of picture text -----

Sirtex has
structured the
business for
sustainable 1 2 3
long-term growth
based on three SIR-SPHERES RESEARCH & MERGERS &
MICROSPHERES DEVELOPMENT ACQUISITIONS
core foundations
----- End of picture text -----

2020 Vision Strategy

Our 2020Vision which aims to define where Sirtex could be in the year 2020 is now well into its third year of implementation. It continues to shape our near and long-term decision-making across three core pillars.

The first pillar involves fully exploiting the SIR-Spheres microspheres technology platform by significantly expanding the current ‘salvage’ market opportunity by investing into sales and marketing to build awareness and increase adoption, while at the same time investing in clinical studies that will expand its use in existing primary and secondary liver cancer markets. We are also examining its use in other cancers outside the liver, such as the kidneys. We are very pleased with our progress under this pillar, with three of our six major clinical studies completing recruitment during 2015 and in the case of SIRFLOX, reporting results.

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The second pillar is aimed at evolving the current SIR-Spheres microspheres platform and related technologies, which include developments in carbon cage nanoparticles, coated nanoparticles, radioprotector and other technologies. We continue to make good progress across all programs and are moving closer to commencing human clinical studies.

The third pillar is focused on potential merger and acquisition activities. While the opportunities for SIR-Spheres microspheres are substantial, it is important for the company to leverage its key capabilities and infrastructure in seeking appropriate products or technologies that may facilitate additional growth.

The 2020Vision is a pragmatic approach to managing strategic risk while increasing shareholder value and returns over the long-term. We look forward to updating shareholders as further key milestones are met.

Sirflox Clinical Study Results

In 2015 Sirtex reported the results of its flagship clinical study SIRFLOX, which examined the combination of SIR-Spheres microspheres with standard chemotherapy versus chemotherapy alone. While the study did not meet the primary endpoint of overall Progression-Free Survival (PFS), the study did meet the key secondary endpoint of PFS in the liver. The addition of SIR-Spheres microspheres to standard chemotherapy resulted in a 7.9 month improvement in PFS in the liver from 12.6 months to 20.5 months with a 31 per cent lower risk of the patient’s tumours progressing at any time during the study, with strong statistical significance.

The SIRFLOX results presented at ASCO were considered clinically meaningful in the liver and received strong endorsement by a number of Key Opinion Leaders who commented on the findings publicly. This is a remarkable achievement, and we extend our thanks to the study investigators, hospitals and patients who participated in this important clinical study.

In recognition of the quality of both the study and its findings, ASCO selected SIRFLOX as one of the ‘Best of ASCO’ presentations, which facilitates a greater dissemination of the results by national oncology leaders to Medical Oncologists in their home countries.

Study data continues to be generated beyond what was presented at the ASCO meeting. In July, Professor Guy van Hazel, Co-Principal Investigator on the SIRFLOX study from the University of Western Australia presented further sub-set analyses at the World Congress on Gastrointestinal Cancer (WCGIC). This data once again highlighted the positive clinical benefits of SIR-Spheres microspheres in patients with liver-only and liver-dominant disease. Importantly, from a clinical practice perspective, the significant effect of SIR-Spheres microspheres was independent of whether a patient was intended to be treated with the biologic drug bevacizumab or not and there was no impact on the duration of systemic therapy given to patients.

We anticipate the use of our unique product in earlier treatment lines, including first-line, for metastatic colorectal cancer, will gain momentum over time.

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Other major clinical studies continue to progress strongly

Our $60.0 million investment over five years into five major clinical studies additional to SIRFLOX was designed to significantly expand the use of SIR-Spheres microspheres beyond the current salvage treatment market segment. This is a key tenet of our 2020Vision. As mentioned, 2015 was a year of significant progress in these clinical programs with three of them completing recruitment and the final two studies now having recruited 85 per cent of the total patients required by the end of the 2015 financial year.

In January, we announced the completion of the FOXFIRE and FOXFIRE Global studies, which recruited over 360 and over 200 patients, respectively. The primary endpoint of these studies is Overall Survival (OS). When combined with the SIRFLOX OS data it will provide the necessary statistical power in over 1,100 patients to see if there is a clinically meaningful difference in survival between the chemotherapy arm and the chemotherapy plus SIR-Spheres microspheres arm of the study. We anticipate the results will be available during calendar year 2017.

In March, the SARAH study completed recruitment of 460 patients, across 25 specialist sites in France. This landmark study is the largest randomised study to compare SIR-Spheres microspheres, or any liver-directed therapy, against the standard systemic therapy sorafenib (Nexavar® – Bayer Healthcare Pharmaceuticals). We believe if the SARAH study results are positive, it could elevate the use of SIRSpheres microspheres to a standard treatment for patients with advanced primary liver cancer, also known as hepatocellular carcinoma (HCC). Results from the SARAH study are anticipated in late calendar year 2016.

The remaining two studies, SORAMIC (pan European) and SIRveNIB (Asia Pacific) are anticipated to complete recruitment during the 2016 financial year. The target recruitment for SORAMIC is 375 patients and for SIRveNIB 360 patients. As our large studies move closer to completion, we are directing our resources and skills towards providing therapies for a range of other potential indications.

Our RESIRT kidney cancer pilot study has continued to show great promise with minimal side-effects in patients treated with high doses of SIR-Spheres microspheres. To date, we have treated 18 patients, with promising results delivered. Patient recruitment is expected to be complete by early calendar year 2016.

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Research & Development

Research & Development (R&D) is a crucial component of our long-term 2020Vision. We continually seek to improve our core product offering while simultaneously investing in new technologies that leverage our in-house scientific expertise and collaborations with world-leading universities and institutes. During the reporting period our R&D investment was $8.6 million or 4.9 per cent of total revenue.

Under our SIR-Spheres microspheres evolution program our advanced patient treatment planning system and new delivery apparatus continued to make good progress.

Our collaborations with The Australian National University, Peter MacCallum Institute and National Cancer Centre of Singapore all achieved developmental milestones during the year. We believe our R&D activities are sufficiently diversified to manage the inherent risks associated with new technology development. Several of our programs are moving closer to human clinical trials, which it is hoped will commence during the 2016 financial year.

Record dose sales and profit

We continue to make strong inroads with our ‘deep and wide’ strategy. This approach seeks to increase the use of SIR-Spheres microspheres on a per site basis (‘deep’) and commensurately increase the number of accredited treatment sites able to use our innovative treatment (‘wide’). In 2015 we saw dose sales accelerate, up 19.8 per cent over the prior year. Revenue growth of 36.1 per cent to $176.1 million outpaced dose sales growth reflecting the material benefit of a price rise in the key US market and the translation effect of a weaker Australian dollar versus the US dollar over the period. With tight cost control, our net profit after tax rose 69.0 per cent to $40.3 million.

Key milestones achieved by the Sirtex team during the reporting period include:

Record dose sales of 10,252, up 19.8 per cent on 2014
Record revenues of $176.1 million, up 36.1 per cent on 2014
Earnings per share of 71.4 cents, up 67.8 per cent
Dividend per share of 20.0 cents, up 42.9 per cent on the previous year
Operating cash flow of $52.0 million, up 61.6 per cent on 2014
Cash balance of $73.9 million and no debt
Reporting of SIRFLOX clinical study results and presentations at ASCO and WCGIC annual meetings
Completion of patient recruitment in the SARAH clinical study
Completion of patient recruitment in the FOXFIRE and FOXFIRE Global clinical studies
Strong investor interest in Sirtex’s ‘Lunch and Learn’ seminars in Melbourne and Sydney with a Key Opinion Leader presentation

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Sales & marketing

Sales and marketing expenditure was up 32.3 per cent on the prior year to $65.1 million, or 37.0 per cent of sales. Our major focus was on expanding our sales and marketing infrastructure in readiness for presentation of the SIRFLOX study results at ASCO.

In 2015 we allocated an additional $10.0 million in sales and marketing expenditure. This was specifically targeted at educating and building awareness within the medical oncology and interventional radiology community both prior to and immediately following the release of the SIRFLOX study results.

Our SIRFLOX sales and marketing initiative culminated with our significant exposure at ASCO where over 30,000 people attended the Annual Meeting and approximately 3,500 attended the presentation of the SIRFLOX study results by Associate Professor Peter Gibbs. We believe most in the audience were relatively unfamiliar with our product.

Our sales and marketing teams globally are now armed with the necessary knowledge and expertise to position SIR-Spheres microspheres as a first-line treatment option for clinicians considering a liver-directed therapy to complement their use of systemic chemotherapy when treating liver-only or liver- dominant metastatic colorectal cancer.

Sirtex now has a global team of 246 people across 20 countries, representing growth of 15 per cent over the prior period. Reflecting our innovative, supportive and inclusive culture at Sirtex is our high participation rate, with 30 per cent of our global workforce having achieved five years’ service. Our staff turnover rates remain low as a direct result of initiatives aimed at attracting, developing and promoting high performers.

Sirtex is committed to providing a healthy and safe workplace for all employees. To achieve this we appointed a dedicated Global Health and Safety Manager to oversee the implementation of a comprehensive program to build on our solid track record in this area. We also used the occasion of World Safety Day 2015 to launch our inaugural Health, Safety and Environment Policy via a video message to all employees.

Manufacturing and supply chain

Sirtex has manufacturing capabilities in Singapore as well as Wilmington, Massachusetts, USA and more recently in Frankfurt, Germany. These facilities are close to major transport hubs, allowing our product to be efficiently dispatched across the Americas, EMEA and Asia Pacific. We operate a highly efficient but complex logistical supply chain to ensure our products are delivered on time to over 900 hospitals globally and the thousands of patients they treat each year. The complexity of our global manufacturing and supply chains is one of our most valuable assets, particularly when managing a product with a short half-life of only 64.1 hours. The infrastructure we have in place allows for expanded production volumes in the coming years while ensuring tight cost control and margin stability.

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Our expanded manufacturing facility in Wilmington was completed during the year, with commercial doses now being supplied throughout the Americas from this facility. We anticipate our Frankfurt facility will be supplying commercial doses across the EMEA region during the 2016 financial year. Sirtex has mitigated the risk of unexpected shut downs at any site, by ensuring each facility is certified to supply any one of our three regions, should the need arise.

The major upgrade of our global information technology systems in the 2015 financial year will allow us to more effectively manage our supply chain, streamline administrative procedures, enhance both sales and customer management and increase the overall enterprise-wide efficiency. This will enable Sirtex to manage future growth more readily.

Outlook

The 2015 financial year was a watershed year for Sirtex with the strong clinical results delivered from the SIRFLOX study. Such large-scale clinical studies not only seek to educate the broader medical community on the benefits of our treatment, but provide us with a robust platform to pursue growth opportunities in both existing and new markets for SIR-Spheres microspheres.

With such a large addressable market for SIR-Spheres microspheres in patients with inoperable liver cancer, the reporting of important clinical information from the SIRFLOX study and additionally from our other major studies from 2016 onwards will provide us with the necessary evidence to materially penetrate this market in the coming years.

With governments worldwide seeking to limit the growth in their healthcare expenditures, it is important for us to demonstrate to governments and private insurers that innovative treatments like ours offer the patient an improved survival outlook at a price that is deemed cost-effective.

We believe our multi-faceted approach ensures that we will continue to build upon our strong leadership position in the rapidly growing field of interventional oncology in the years ahead.

We remain equally excited by our new technologies under development, which made good progress during 2015. Such technologies have the potential to become meaningful contributors to sales growth in the coming years.

Our strong financial and market leading position also affords us the opportunity to take advantage of any potential product or company acquisition targets that may arise in the future. On all fronts, we are particularly pleased with our progress under the 2020Vision.

The operational excellence of our global business is built on a working culture of cooperation and mutual respect. This ensures that every talented Sirtex team is able to meet our ongoing commitment to the medical professionals and their patients who depend on our product for their quality of life.

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We remain very confident in our long-term growth prospects and look forward to another successful year in 2016.

GILMAN E WONG CHIEF EXECUTIVE OFFICER

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A3. EXTRACTS FROM THE ANNUAL REPORT RELATING TO EMPLOYMENT POLICIES

We deploy a holistic People Strategy with a focus on attracting and retaining exceptional talent to support our growth and develop outstanding future business leaders.

Our comprehensive employee induction program continues to evolve to meet the demands of the business and our consistent approach fosters the alignment of all employees from their first day at Sirtex. Face-to-face technical product training as well as Sirtex business process training is provided to all employees globally.

A CULTURE BUILT ON QUALITY

Articulating the Sirtex culture has enabled the business to attract talented individuals who share the ethics, integrity and values we hold as a company.

We are fortunate to have a dedicated and passionate group of people around the world who regard Sirtex as a great place to begin and grow their careers. In striving to provide an environment in which our employees can progress professionally, we also remain mindful of the need to maintain personal balance and quality of life.

With a dedicated global team of Human Resources professionals now in place, we are equipped to actively support our growing workforce and their unique requirements in all markets.

CARING FOR OUR PEOPLE AND BUILDING A GLOBAL WORKFORCE

Sirtex has a diverse and inclusive working environment that empowers employees and supports the achievement of our long-term business goals. The Sirtex Diversity Program will continue to foster equality, flexible work practices and promote further opportunities for women to participate at all levels of the organisation.

An inclusive environment cultivates different knowledge, experiences and working styles that foster innovation and creative thinking, providing scope to build a diverse group of decision-makers and integrate a range of perspectives into our business. By embracing this powerful formula, Sirtex is in a strong position to capitalise on opportunities in all markets, particularly emerging markets that could provide solid business growth in the coming decade.

Key to the long-term, sustainable growth and success of Sirtex will be our ability to continually attract, shape and motivate a highly skilled workforce. A broad program of engagement has been created, combining traditional hiring processes with more modern recruitment solutions that harness the power of social media. This has seen an increase in employees hired via direct referrals during the reporting period.

With these sound strategic engagement plans in place, we are well positioned to manage the expansion of our workforce as we move towards the fulfillment of the Sirtex 2020Vision.

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B1. FINANCIAL REPORT OF SIRTEX FOR THE FINANCIAL YEAR ENDED 30 JUNE 2016

DIRECTORS

The Directors of Sirtex Medical Ltd during the financial year and until the date of this report are Mr R Hill, Dr J Eady, Mr G Boyce, Dr K Woodthorpe and Mr G Wong. Details of the Directors, including their skills, experience, and expertise, are set out below.

Richard Hill – Chairman

(Non-Executive)

BA, LLB (Sydney), LLM (London)

Experience and Expertise

Directorships held in other listed entities during the last three years

Calliden Group Limited – Chairman (appointed April 2000, resigned December 2014)

BlackWall Property Funds – Chairman (appointed July 2008)

Special Responsibilities

Member of the Audit Committee, the Health, Risk and Safety Committee and the Remuneration Committee

Interest in Shares and Options

9,617 ordinary shares in Sirtex Medical Ltd

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Dr John Eady – Deputy Chairman (Non-Executive) BSc (Hons), PhD, FTSE

Experience and Expertise

Dr Eady was appointed a Director in March 2005. He spent most of his career in a range of senior executive positions with CRA/ Rio Tinto and Pacific Dunlop, in Australia and overseas. He has broad Board experience with start-up and established companies, and with government bodies. Dr Eady is a Fellow of the Academy of Technological Sciences and Engineering and consults extensively on business leadership and improvement.

Directorships held in other listed entities during the last three years Nil

Special Responsibilities

Chairman of the Remuneration Committee and Member of the Audit Committee and the Health, Risk and Safety Committee

Interest in Shares and Options

9,137 ordinary shares in Sirtex Medical Ltd

Grant Boyce – Director (Non-Executive) CA, BCom

Experience and Expertise

Mr Boyce was appointed a director in December 2002. He is a Chartered Accountant with his own practice and was previously a partner with Ernst and Young where he worked in their Perth and New York offices. During that time Mr Boyce worked advising multiple clients including ASX listed entities. He was board member and Chairman of the West Australian Institute of Sport for over 10 years.

Directorships held in other listed entities during the last three

years

Nil

Special Responsibilities

Chairman of the Audit Committee and Member of the Remuneration Committee and the Health, Risk and Safety Committee

Interest in Shares and Options

8,309 ordinary shares in Sirtex Medical Ltd

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Dr Katherine Woodthorpe

– Director (Non-Executive) BSc (Hons), PhD, FAICD

Experience and Expertise

Dr Woodthorpe was appointed a director in September 2015. Dr Woodthorpe was the Chief Executive of AVCAL, the Australian Private Equity and Venture Capital Association for seven years. She has a deep knowledge of the private equity and the superannuation industry in the financial sector and a strong track record in a broad range of technology orientated industries including healthcare.

Directorships held in other listed entities during the last three years Nil

Special Responsibilities

Chairman of the Health, Risk and Safety Committee and Member of the Remuneration

Committee and the Audit Committee

Interest in Shares and Options

651 ordinary shares in Sirtex Medical Ltd

Gilman Wong – Executive Director and Chief Executive Officer

Experience and Expertise

Directorships held in other listed entities during the last three

years Nil

Interest in Shares and Options

160,000 ordinary shares in Sirtex Medical Ltd 233,930 Executive Performance Rights

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COMPANY SECRETARY

Darren Smith – Company Secretary and Chief Financial Officer MBA, BBus, FCPA

Experience and Expertise

Mr Smith was appointed Company Secretary in July 2008 and Chief Financial Officer in February 2009. Mr Smith previously held CFO and senior executive finance and general management positions in a number of international, Australian listed and private companies. Mr Smith holds an MBA from the Australian Graduate School of Management (AGSM), The University of New South Wales, a Bachelor of Business from the University of Western Sydney, and is a Fellow of CPA Australia and a member of AICD.

Interest in Shares and Options

30,000 ordinary shares in Sirtex Medical Ltd 56,010 Executive Performance Rights

DIRECTORS’ MEETINGS

The number of Directors’ meetings (including meetings of committees of Directors) and number of meetings attended by each of the Directors of the Company during the financial year are:

	Board of		Remuneration				Risk, Health and
	Directors		Committee		Audit Committee		Safety Committee
	Held Attended		Held Attended		Held	Attended	Held Attended
R Hill (Chairman)	13	12	6	6	8	7	2 1
Dr J Eady	13	13	6	6	8	8	2 2
G Boyce	13	12	6	6	8	8	2 2
Dr K Woodthorpe	10	10	5	5	6	6	2 2
G Wong	13	13	–	–	–	–	– –

PRINCIPAL ACTIVITIES

Sirtex Medical Ltd and its controlled entities (‘Group’) form a medical device group whose primary objective is to manufacture and to distribute effective liver cancer treatments utilising small particle technology to approved markets in Asia-Pacific, Europe, Middle East and Africa, and North and South America.

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REVIEW OF OPERATIONS AND FINANCIAL RESULTS

The Group’s main product SIR-Spheres microspheres is a targeted radioactive treatment for liver cancer. The treatment is called Selective Internal Radiation Therapy (SIRT) and consists of a minimally invasive surgical procedure performed by an interventional radiologist. The SIR-Spheres microspheres lodge in the small blood vessels of the tumour where they destroy it from the inside over a short period while sparing the surrounding healthy tissue. During the year, the Group sold 11,931 doses worldwide representing approximately 2 per cent of the addressable market.

Dose sales for the year increased by 16.4 per cent over the previous financial year. The Americas (North and Latin America) market with 8,420 doses achieved growth of 19.0 per cent, the Europe, Middle East and Africa (EMEA) market with 2,528 doses achieved growth of 11.2 per cent, and Asia Pacific (APAC) recorded 983 dose sales, representing growth of 8.9 per cent. The number of treatment centres certified to use SIR-Spheres microspheres now exceeds 1,000 globally.

Sales revenue reached $232,491,500 for the financial year ended 30 June 2016, an increase of 32.0 per cent over last financial year ($176,087,520). The higher sales revenue growth compared to volume growth was driven by positive foreign currency fluctuations as the Australian dollar depreciated against the US dollar and Euro during the year.

Profit before tax has increased 32.7 per cent to $69,998,039 for the year ended 30 June 2016 (2015: $52,768,232), and profit after tax has increased by 32.8 per cent to $53,582,392 (2015: $40,344,738).

Earnings per share for the year ended 30 June 2016 have increased to $0.937 (2015: $0.714). During the year, a fully franked dividend of $0.20 (2015: $0.14) per share has been paid in respect of the previous financial year.

Net assets for the Group increased by 33.8 per cent to $193,503,996 (2015: $144,635,697), mainly due to the investment of $19,196,227 (2015: $21,462,126) in intangible assets and an increase in cash and short-term deposits of $33,084,007 (2015: $21,446,091).

A significant part of the Group’s clinical activities is focused on major post-marketing clinical studies. Consistent with last year, expenses for these studies have been capitalised as they continue to satisfy the recognition criteria of AASB 138 Intangible Assets. Additions to capitalised costs incurred for these trials as well as for two smaller development projects during the financial year ended 30 June 2016 represent a total of $15,085,427 compared to $17,800,798 for the previous financial year. One of the major clinical trials was completed during the prior financial year. An amortisation expense of $3,007,416 (2015: $250,618) relating to the SIRFLOX trial has been recognised in the Consolidated Statement of Profit and Loss for the year.

DIVIDENDS

An ordinary dividend of 20 cents per share was declared for the financial year ended 30 June 2015 and paid during the financial year ended 30 June 2016 (2015: 14 cents).

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SIGNIFICANT CHANGES IN STATE OF AFFAIRS

During the financial year there were no significant changes in the state of affairs of the Group other than that referred to in the financial statements or notes thereto.

LIKELY DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES

The Group’s strategy focuses on promoting and developing SIR-Spheres microspheres to become a worldwide standard of care for patients with primary and secondary forms of liver cancer, representing a market estimated at over 488,000 patients per year. The Group’s 2016 financial year dose sales imply that approximately 2 per cent of this annual market has been penetrated.

In order to achieve this goal, the Group continues to expand its sales and marketing, regulatory and medical function. In total, 48 per cent of the Group’s workforce is engaged in a sales and marketing role, to help build the awareness and use of SIR-Spheres microspheres by the global medical community.

Major randomised clinical studies are required to provide the necessary Level 1 evidence of benefit, which has been a considerable focus for the Group’s clinical operations team. During the financial year ended 30 June 2016, the Group released a high impact scientific publication from one of its five studies. During the year, the Group completed patient recruitment of a further two major clinical studies. As a result, the at the end of the financial year the Group had completed patient recruitment across all five of its major clinical studies. Additionally, Sirtex completed recruitment in a pilot clinical study examining the effects of SIR-Spheres microspheres in kidney cancer patients; the first time a human clinical study has been conducted for this disease with our product.

To prepare for future demand for SIR-Spheres microspheres following the release of the results, the Group has continued to expand its manufacturing capabilities. An additional manufacturing facility in Frankfurt, Germany is anticipated to commence manufacturing commercial doses during the first half of the 2017 financial year.

The Group has been successful in gaining regulatory clearances for SIR-Spheres microspheres in key global markets. They include North America, Argentina, Brazil, the European Union, Israel and various Middle East and African markets, Australia, New Zealand, Singapore, Hong Kong, Taiwan and various other Asian markets. During the year, the Group received regulatory clearance in Canada. Sirtex is working towards gaining regulatory clearances in other major markets such as Japan and China for its SIR-Spheres microspheres product to continue its geographic growth. The Group was also successful in expanding government and private sector reimbursement for SIR-Spheres microspheres during the financial year, with reimbursement granted in the Netherlands and South Africa. Expanded reimbursement coverage helps ensure as many patients as possible who suffer from liver cancer can receive SIR-Spheres microspheres.

During the financial year, the Group invested an additional $4,108,913, included in intangible asset work-in-progress, in its integrated software application in order to bring greater efficiencies to our collection, storage and use of business information to empower our manufacturing, clinical and marketing teams, streamline our administrative procedures and further improve our competitiveness. In addition, significant investments have been made in human resources, with a further increase in staff numbers by 13% from 246 at the end of last financial year to 279 at the end of this financial year.

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ENVIRONMENTAL REGULATIONS

The Group is not subject to significant environmental regulation under the law of any of the jurisdictions the Group is operating in.

UNISSUED SHARES

Executive Performance rights on issue at year end

As at 30 June 2016, the unissued shares of Sirtex Medical Ltd under Executive Performance Rights are as follows:

			Number under
Grant date	Date of Vesting	Exercise Price	Rights
		$
26 November 2013	30 June 2016	nil	443,000
23 September 2014	30 June 2017	nil	281,320
1 September 2015	30 June 2018	nil	96,244
27 October 2015	30 June 2018	nil	45,930
4 February 2016	30 June 2018	nil	61,900

Directors’ rights on issue at year end

As at 30 June 2016, there were no unissued shares of Sirtex Medical Ltd under Non-Executive Directors Rights.

Share options on issue at year end or exercised during the year

During the year ended 30 June 2016, there were no ordinary shares of Sirtex Medical Ltd issued on the exercise of options. No share options have been issued during the year, and no share options are outstanding at 30 June 2016.

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Directors’ interests

	2016	2016	2015	2015
	Ordinary		Ordinary
	Shares	Rights	Shares	Rights
R Hill	9,617	–	1,974	2,959
Dr J Eady	9,137	–	6,234	1,850
G Boyce	8,309	–	5,987	1,480
Dr K Woodthorpe	651	–	–	–
G Wong	160,000	233,930	100,000	328,000

INDEMNIFICATION OF OFFICERS AND AUDITORS

During the financial year, the Company paid a premium in respect of a contract insuring the directors of the Company, the Company Secretary and all executive officers of the Company and of any related body corporate against a liability incurred as such a director, secretary or executive officer to the extent permitted by the Corporations Act 2001 . The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor.

EVENTS AFTER REPORTING DATE

On 20 July 2016, a total of 443,000 Executive Performance Rights issued on 26 November 2013 vested, having exceeded the performance target. As at the date of this report, a total of 443,000 of these performance rights have been exercised and issued as ordinary shares of Sirtex Medical Ltd.

Since the end of the year, the Directors have declared a partially franked dividend of 30 cents per share to be paid on 19 October 2016 (2015: 20 cents per share). The record date for the dividend is 28 September 2016.

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PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year.

NON-AUDIT SERVICES

During the year, Grant Thornton, the Company’s auditors, performed certain other services in addition to their statutory audit duties.

The Board of Directors, in accordance with advice from the audit committee, is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The directors are satisfied that their services disclosed below did not compromise the external auditor’s independence for the following reasons:

all non-audit services are reviewed and approved by the audit committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and
the nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of ethics for Professional Accountants set out by the Accounting Profession Ethical Standards Board.

Details of the amounts paid to the auditors of the Company, Grant Thornton, and its related practices for audit and non-audit services provided during the year are set out in Note 29 to the Financial Statements.

AUDITOR’S INDEPENDENCE DECLARATION

The auditor’s independence declaration for the year ended 30 June 2016 has been received and can be found on page 42 of the financial report and forms part of the Directors’ report.

ROUNDING OFF OF AMOUNTS

Sirtex Medical Ltd is the type of Company referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and therefore the amounts contained in this report and in the financial report have been rounded to the nearest $1,000, or in certain cases, to the nearest dollar.

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LETTER FROM THE CHAIRMAN OF THE REMUNERATION COMMITTEE

Dear Shareholder,

I am pleased to present the remuneration report for the financial year ended 30 June 2016, outlining the nature and amount of remuneration for Sirtex’s Non-Executive Directors (“NEDs”) and other Key Management Personnel (“KMP”), as defined under section 300A of the Corporations Act, 2001 and its associated regulations.

During the past year, our remuneration policies and procedures have evolved further, as Sirtex continued to build foundations for future growth and worked to make an even bigger contribution to patient health outcomes. The aim is to have remuneration policies that enable us to recruit and retain the calibre of executives needed to realise the Company’s potential, reflecting market practice and shareholder views.

In order to facilitate transparency and input, the Company has also up-graded its website creating a specific remuneration governance section. It has been designed to make it easier for external stakeholders to review our policies and procedures and provide feedback on the published material and on remuneration or governance generally.

Policies and procedures have been revisited in order to assess their effectiveness and in the context of suggestions raised by shareholders and Proxy Advisors. We also sought formal assessment and input from our independent Remuneration Consultant, the Godfrey Remuneration Group.

Our current total remuneration (TRP) structure for senior executives, which comprises a fixed component and at-risk components customized to reflect regional practice, has proven to be effective, as has our targeted P75 (75th percentile of market practice) TRP positioning. With the P75 target (met where 100% of the at-risk components are awarded) we have been able to recruit quality KMP. The at-risk components are encouraging focus, providing rewards for effort and ensuring that executive TRP reflects shareholder experience.

As preferred by shareholders, the Long-Term Incentive (LTI) component of our executive TRP is core to the remuneration packages.

It has grown while the STI component remains largely unchanged, and has been the focus of much of our recent research and review. So as to ensure that our move from an ‘absolute total shareholder return’ (TSR) measure to an ‘indexed TSR’ measure (i-TSR, also called ‘market adjusted TSR’), as foreshadowed in last year’s Report, does not mean that executives can benefit from LTI awards even if shareholder gains were negative, modifications have been made to the enabling documents to ensure that its intent is clear. For example, Rights will not vest if Sirtex TSR is negative, even if it outperforms the ASX300. In effect, elements of the absolute TSR measure remain as a hurdle to vesting.

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The choice of the ASX300 as the comparator index group was also revisited and, as noted in the Company Remuneration web section, was considered appropriate as it includes a wide range of industries and a balance between smaller groups (e.g. ASX 100) that could be influenced excessively by very large companies with fairly steady share prices, and much bigger groups which would include many small and volatile companies. It is our view that the ASX 300 accurately reflects general stock-market sentiment and performance.

Another suggestion made by shareholders was that 4 year LTI performance periods could replace the current 3 year periods. The Godfrey Remuneration Group was asked to investigate this option and found that of the wide range of companies studied “only around 14% have periods longer than 4 years, and 9% have tranches less than 3 years”. Godfrey’s view is that an important reason behind the 3 year preference is its fit with business planning and implementation cycles, and this is certainly relevant for Sirtex. For this reason the Company has opted at this time to retain the 3 year performance period.

Fee structures for non-executive directors also continue to be reviewed in the context of Board renewal. As disclosed at last year’s AGM, the NED’s salary sacrifice Rights Plan has been modified to extend the disposal restrictions from the sooner of 7 years after granting or ceasing to be a director, to 15 years or ceasing to be a director. These Rights vest immediately.

The Company believes that it is imperative that its remuneration policies for all KMP match market practice, encourage desired behaviour and are aligned with a culture of care and professionalism. Accordingly, Sirtex strives to have remuneration structures and levels that are data-driven, transparent and benefit from widespread input.

As Chair of the Remuneration Committee, I would like to thank shareholders for their support and helpful comments made during the financial year ended 30 June 2016. I hope that you will continue to support us by voting to adopt this remuneration report at the upcoming Annual General Meeting.

Regards, Dr John Eady

Chair of the Remuneration Committee

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REMUNERATION REPORT (AUDITED)

CONTENT:

The Remuneration Report, which forms part of the Directors’ Report, provides information about the remuneration of the directors of Sirtex Medical Ltd (Sirtex) and other KMP, for the year ended 30 June 2016. It is set out under the following headings:

Persons covered by this report
Principles used to determine the nature and amount of remuneration
Service agreements
Performance outcomes and impact on shareholder wealth for the financial year ended 30 June 2016
Details of remuneration
Additional information

1. PERSONS COVERED BY THIS REPORT

This report covers remuneration arrangements and outcomes for the following KMP:

Non-executive Directors

Mr Richard Hill, Independent Non-Executive Chairman
Dr John Eady, Independent Non-Executive Director and Deputy Chairman – Chair of Remuneration Committee
Mr Grant Boyce, Independent Non-Executive Director – Chair of the Audit Committee
Dr Katherine Woodthorpe, Independent Non-Executive Director – Chair of the Risk, Health and Safety Committee (appointed 22 September 2015)

Executives

Mr Gilman Wong, Managing Director & CEO
Mr Darren Smith, CFO and Company Secretary
Mr Michael Mangano, President Americas (resigned 30 June 2016)

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Mr Nigel Lange, Chief Executive EMEA, acting Chief Executive Asia Pacific (as of 5 November 2015)
Dr Burwood Chew, Chief Executive Asia Pacific (departed 5 November 2015)
Mr Robert Hardie, Global Head of Operations
Dr David Cade, Chief Medical Officer

Unless otherwise stated, the KMP held their positions throughout the financial year ended 30 June 2016.

2. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION

2.1 Remuneration Governance Framework

In order to base its decisions on broadly-based information and views, the Group seeks input from a wide range of sources:

Remuneration Committee members;
External remuneration consultants (ERCs);
Stakeholder groups and shareholders;
Remuneration Committee peers within Australia;
Other experts and professionals such as tax advisors and lawyers; and
Individual KMP to understand roles and complexities.

Care is taken to ensure that interaction with and between these sources regarding Remuneration Committee business is independent, not improperly influenced by personal interests and reflects the current Sirtex circumstances.

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2.2 Executive KMP Remuneration Policy and Procedure

The Executive KMP Remuneration Policy and Procedure applies to executives defined as:

Managing Director – accountable to the Board for the Group’s performance and long term planning; and
Top Strata Direct Reports to the Managing Director – roles that are business unit, functional, or expertise heads.

The policies and procedures outline the Company’s intentions regarding executive remuneration, as well as how remuneration is intended to be structured, benchmarked and adjusted in response to changes in the circumstances of the Group, and in line with good governance. Broadly the policy states that for executive KMP:

Total remuneration (TRP) comprises Fixed Remuneration and at-risk STI and LTI components so that executive reward reflects performance and shareholder experience.
The components when put together, are structured so as to achieve a TRP positioned at P75 of the market for equivalent roles in each region, if demanding performance hurdles are achieved. P75 remuneration is the total targeted remuneration (TTR). Internal relativities should be considered to recognise Sirtex’s particular organisation design, using ‘strata’ to map the relationships between roles.
Appropriate amounts and ratios of the various components are based on extensive and objective market data and regional practice.
Internal relativities and any special circumstances are considered so as to:
Recognise Sirtex’s organisational design, and the use of ‘strata’ to define role complexities and map relationships,
Manage TTR within a range so as to allow for individual differences such as the calibre of incumbents and the competency with which they fulfil roles.
Termination benefits will be in line with local regulations, and in Australia limited to the default amount allowed for under the Corporations Act.

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Sirtex policy aims to link executive remuneration to Company performance, with an emphasis on longer-term strategies and the experience of shareholders. The intent is for executive remuneration to be higher when longer term issues are being addressed effectively and the Group is doing well.

Policy Area

Relationship to Company Performance

Fixed Remuneration

As fixed remuneration is based on market practice and data shows that levels increase as market capitalisation increases, amounts reflect Company performance through the impact on share price and resulting market capitalisation.

At-risk components (STI and LTI)

The at-risk components are linked to business levers that drive strategic initiatives or indicators that reflect shareholder experience.

STI payments depend on the influence an individual executive has on Group performance. They are based on key performance indicators (KPIs), each having defined targets. While many influencing factors are quantitative, some are more subjective, aimed at assessing personal effectiveness in the context of prevailing circumstances.

The STI KPIs are designed generally to drive focus on internal factors, such as dose sales, that can be considered as leading indicators for the external measures used for LTI awards.

LTI awards are based on direct measures of Group performance, as reflected in share price growth and the growth in earnings per share.

2.3 Executive Short-term Incentives STI Plan – Process

The Short-term Incentive Plan (STI) is an important part of the remuneration offered to Executives as it:
Encourages focus on factors that are considered critical over the coming year to meet the Company’s purpose and implement its strategies, and
Shares Company success with the Executives who contribute through their efforts.
STI amounts awarded depend on thresholds being exceeded and in accordance with pro-rata scales to stretch levels. The ability to receive P75 TRP depends on meeting defined and demanding targets.

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• The responsibility for the ongoing administration of the STI plan rests with the Board. It determines the applicable targets annually and has discretion to vary the Plan Rules or terminate the STI Plan in relation to future periods, but may not reduce earned awards (being amounts already approved by the Board and payable for a completed measurement period) without the consent of the Participant.

The Clawback policy applies to STI awards.

2.4 Executive Short-term Incentive (STI) Plan – Detail

Aspect

Plan Rules, Offers and Comments

Measurement Period From 1 July to the following 30 June. Award Opportunities

Determined each year, and for the financial year ended 30 June 2016 the MD/CEO had a target STI award opportunity equal to 50% of Fixed Remuneration. The other executives who are KMPs had a target award opportunity equal to 35% of Fixed Remuneration.

Key Performance Indicators (KPIs)

The CEO’s focusing measures were ‘Normalised Group EBITDA’ (40% weighting), ‘doses sold’ (40% weighting) and ‘leadership effectiveness’ (20% weighting). Those for the other executive KMP were based on two measurement groups, ‘Normalised Group EBITDA’ (50% weighting) and influencing factors specific to their roles (50% weighting).

‘Normalised Group EBITDA’ is defined as Group earnings before interest, tax, depreciation and amortisation, excluding exchange rate fluctuations, clinical studies, and Research & Development expenditure. It is a major KPI for all executive KMP as teamwork across the Group and a ‘one Company’ culture is considered critical for ongoing success.

Role-specific influencing indicators included such factors as dose sales, expense control, delivery performance, cost-of-goods sold, audit compliance and to cover project-style work, progress against milestones. Weightings are applied to the KPIs selected to reflect the relative importance of each KPI.

These measures were judged by the Board as key levers for Group success. The Board limits the number applicable to any one executive so as to encourage focus on those business levers deemed most important to that role.

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Aspect

Plan Rules, Offers and Comments

The award hurdle and scale used in relation to the ‘Normalised Group EBITDA’ KPIs is:

	STI Performance Reward	Scale
Performance	Budget	Percentage of
Level	Achievement	Target STI Payable
<Threshold	<95%	Nil
Threshold	95%	25%
	>95%, <105%	Pro-rata
Target	105%	100%
	>105%, <110%	Pro-rata
Stretch	≥110%	110%

Cessation of Employment During a Measurement Period

In the event of cessation of employment due to dismissal for cause, all entitlements in relation to the Measurement Period are forfeited.

In the event of cessation of employment due to resignation, all entitlements in relation to the Measurement Period are forfeited, unless otherwise determined by the Board.

In the event of cessation of employment for other reasons:

(a) The STI award opportunity for the Measurement Period will be reduced pro-rata to reflect the portion of the Measurement Period worked, and
(b) Performance and STI awards will be determined following the end of the Measurement Period in the normal way although the Board, may accelerate the determination and payment of STI awards in special circumstances.

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2.5 Executive Long-term Incentive (LTI) Plan – Process

The Long-term Incentive Plan (LTI) is a key part of the at-risk component of the remuneration offered to Executives and aims to:
- Build a sense of ownership and encourage a longer term view, and
- Share Company success with the executives who contributed through their efforts.
LTIs offer the greater proportion of at-risk reward with the number of LTI grants awarded to each Executive customised to reflect regional practice.
Vesting depends on thresholds being exceeded and in accordance with pro-rata scales to stretch levels. As is the case with STIs, the ability to receive P75 TRP depends on meeting defined and demanding targets.
The responsibility for the ongoing administration of the LTI plan rests with the Board. It determines annually the LTI proportions of TRP, the measures to be used and applicable vesting scales. It has discretion to vary the Plan Rules or terminate the LTI Plan in relation to future periods, but may not reduce granted awards (being grants already approved by the Board and available for vesting at the completion of the measurement period) without the consent of the Participant.
The Clawback policy applies to LTI awards.
Non-Executive Directors are excluded from participation.
2.6 Executive Long-term Incentive (LTI) Plan – Detail

Aspect Plan Rules, Offers and Comments

Measurement Period

The measurement period for the 2016 offers is the three financial years from 1 July 2015 to 30 June 2018.

Award Opportunities

Performance Rights were offered under the Executive Performance Rights (EPR) Plan during the financial year in accordance with the Group’s policies and Plan rules.

The target LTI value used to calculate grants was equal to 100% of Fixed Remuneration for the MD/CEO, and between 90% and 35% of Fixed Remuneration for other executive KMP (depending on region), calculated by applying the following formula:

Number of Performance Rights

= Fixed Remuneration x Target LTI% ÷ Right Value

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Aspect

Plan Rules, Offers and Comments

The Right Value was the volume weighted average share price for the 10 days up to and including 30 June 2015, less assumed dividends over the Measurement Period.

Vesting Scales

Specific performance conditions must be satisfied for Rights to vest.

The performance conditions specified as part of the most recent offers comprise two tranches, with 50% of Rights being subject to an Indexed Total Shareholder Return (i-TSR) vesting measure, and 50% being subject to an EPS Growth vesting measure. With regard to the i-TSR measure, offer documents make it clear that the Board would use its discretion and these Rights would not vest if Sirtex TSR is negative, even if it outperforms the ASX300.

Percentages of grants to vest are to be determined in accordance with the following scales:

TSR Growth Rate Vesting Scale

		Number of
Indexed TSR	Performance	Rights to Vest
Threshold	100% of ASX300	0%
	TSR and greater
	than 10%
Recognition	Above market	1% for each
	average but	1% above market
	not reaching target	average (pro-rata)
P75 Target	200% of	100% of Target
	ASX300 TSR	grants (66.7% of
		Plan grants)
Further Reward	Surpassing target	0.5% for each 1%
		above target up to
		1.5 times entitlement

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Aspect

Plan Rules, Offers and Comments

	EPS Vesting Scale
Earnings per		Number of
Share	Performance	Rights to Vest
Threshold	EPS compound	0%
	growth of 10%
Recognition	Above threshold	10% for each 1%
	but not reaching	above threshold
	target	(pro-rata)
P75 Target	EPS compound	100% of Target
	growth of 20%	Rights (66.7% of
		Plan Rights)
Further Reward	Surpassing target	5% for each 1%
		above target up to
		1.5 times entitlement

i-TSR is the cumulative gain for shareholders over a three year period, from growth in the share price and dividends, assuming that dividends are reinvested into the Group’s shares, compared to that of the Australian stock-market’s ASX300 index. i-TSR has replaced absolute TSR so that gains rewarded are due to Company performance rather than general stock-market movement, but with an implied absolute TSR threshold hurdle.

The selection of two times the average ASX300 growth as the P75 target is based on past performance data that showed that an ASX300 Company performing at the P75 level over recent years outperformed the market average by a factor of about two. Sirtex must match this P75 performance if executive TRP is to match the targeted P75 level.

EPS growth remained as the most appropriate second measure. This measure is intended to give a different perspective on Group performance. Earnings-per-share growth is a method of tracking the ability of the Group to grow profit on a per-share basis. Increasing earnings per share indicates increasing returns on the funds provided by shareholders.

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Aspect

Exercise of Vested Incentive Rights

Plan Rules, Offers and Comments

On vesting, a Performance Right confers an entitlement for the Participant to exercise the Performance Right to the value of an ordinary share (Share) in the Holding Company. On exercise, the EPR Plan Trust (Trustee) subscribes for Shares or acquires Shares on market on behalf of the Participant. Care is taken to manage the tax impact of the EPR Plan on Participants. For overseas Participants, this may involve having a portion of Shares sold to account for withholding tax and/or other amounts payable in respect of the vested Performance Rights.

The Trustee holds Shares that it has subscribed for, or acquired on behalf of a Participant, until the Participant directs the Trustee to transfer the Shares to the Participant or sell the Shares and remit the proceeds to the Participant.

No amount is payable by Participants to exercise their vested Executive Performance Rights.

Dealing Restrictions on Shares

Cessation of Employment

Shares acquired when vested grants are exercised will be subject to the restrictions set out in the Group’s share trading policy, the insider trading provisions of the Corporations Act or any other additional dealing restrictions included in the offer of the Incentive Rights.

In the event of cessation of employment other than due to Special Circumstances, all unvested Performance Rights are forfeited unless otherwise determined by the Board.

In the event of cessation of employment due to Special Circumstances, unless otherwise determined by the Board, the number of unvested Performance Rights that will be retained by the Employee will be based on a pro-rata calculation. All other unvested Rights granted in prior years will not lapse, and will continue and, if they become vested at some later time, will be able to be exercised in accordance with their terms.

Change of Control of the Company (Compulsory Acquisition)

In the event of a compulsory acquisition of Shares following a takeover bid or a scheme of arrangement, vested Performance Rights may be exercised and unvested Performance Rights may be exercised by the Participant in the same proportion as the Share price (assessed via 10 day VWAP) has increased since the beginning of the Measurement Period.

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2.7 Non-Executive Director’s Remuneration Policies and Procedures
Total NED Remuneration will be managed within the aggregate fee limit (AFL) or fee pool approved by shareholders of the Company.
NED remuneration practice is governed by formal Board policies whereby NED TRP comprises:
- Board fees (inclusive of any superannuation, and any applicable fringe benefits tax (FBT));
- Salary-sacrificed equity grants; and
- Committee fees.
Levels are to be based on market data and reviewed annually, with fees plus the amount salary sacrificed targeting P75 practice for companies similar to Sirtex.
- Board fees are set by reference to the P50 of market practice; and
- P75 positioning is reached by salary-sacrificing the gap into equity grants. It is recognised that it is not appropriate to provide performance-based incentives to NEDs.
The Board retains discretion and may alter the proportion of NED remuneration salary sacrificed in order to meet prevailing circumstances.
Termination benefits are not paid to NEDs.

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2.8 Salary Sacrificed Equity Grants – Non-executive (NED) Director Rights Plan – Detail

Aspect

Plan Rules, Offers and Comments

Purpose

The NED Rights Plan constitutes part of a market-competitive main-board package and aims to align the interests of NEDs further and directly with shareholders.

The Plan helps address the preference of many shareholders for NEDs to have significant shareholdings in the Group, without breaching the insider trading provisions of the Corporations Act. The disposal restrictions incorporated in the Plan supports this aim.

Plan Process

Rights offered to NEDs are not subject to performance conditions or any vesting condition.

They vest immediately but cannot be exercised until three months after granting. At that time the shares are transferred to each NED, but with a CHESS holding lock. Disposal restrictions stipulate that, except by force of law, exercised shares may not be dealt with until the earlier of ceasing to be a NED of the Group or the elapsing of fifteen years from the grant date.

It is intended that NED Rights will be satisfied via on-market purchase of Sirtex Shares, rather than by new issues of Shares.

Measurement Period

The Measurement Period is one year from grant.

Grant Value

Grants of Rights were made to NEDs during financial year ended 30 June 2016 with the intended value of the grants being as follows (pro-rated for part of the year where applicable):

$50,000 for the Board Chair,
$31,250 for the Deputy Chair, and
$25,000 for the other NEDs.

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Aspect

Plan Rules, Offers and Comments

Grants of NED Rights were calculated by applying the following formula:

Number of NED Rights = Salary sacrifice amount ÷ Right Value

The Right value was the volume weighted average share price of shares traded in the 10 days up to and including 30th June 2015.

Treatment

NEDs will be entitled to receive all dividends.

Without the approval of the Board, Rights may not be transferred, mortgaged, charged or otherwise dealt with or encumbered.

3. SERVICE AGREEMENTS

On appointment to the Board, all non-executive directors enter into a service agreement with the Group in the form of a letter of appointment. Upon termination of a director’s appointment, the director will be paid his or her director’s fees on a pro-rata basis, to the extent that they are unpaid, up to the date of termination. Unless determined otherwise by the Board, the director will also receive all vested shares held on the date of termination.

Remuneration and other terms of employment for the executive KMP are also formalised in service agreements. The major provisions of the agreements are set out below. Generally, most contracts with executives may be terminated early by either party with six months’ notice, subject to termination payments as detailed below.

		Period of Notice	Period of Notice
	Duration of			Termination
Name	Contract	From Company	From KMP	Payments
Mr G Wong	No fixed term	6 months	6 months	Up to 12 months*
Mr D Smith	No fixed term	6 months	6 months	Up to 12 months*
Mr M Mangano**	No fixed term	6 months	6 months	Up to 12 months*
Mr N Lange	No fixed term	6 months	6 months	Up to 12 months*
Dr B Chew**	No fixed term	6 months	6 months	6 months
Mr R Hardie	No fixed term	6 months	6 months	Up to 12 months*
Dr D Cade	No fixed term	6 months	6 months	Up to 12 months*

Under the Corporations Act the Termination Benefit Limit is 12 months average salary (last 3 years) unless shareholder approval is obtained.
** Ceased employment during the year.

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4. PERFORMANCE OUTCOMES AND IMPACT ON SHAREHOLDER WEALTH FOR THE FINANCIAL YEAR ENDED 30 JUNE 2016

4.1 Group Performance

The following outlines the performance of the Group over the 2016 financial year and the previous four financial years:

						Short-term change in	Short-term change in	Long-term change in	Long-term change in
				Change in		Shareholder Value over		Shareholder Value over
		Profit		Share		1 year (SP increase +		3 years (SP increase +
Date	Revenue	after Tax Share Price		Price	Dividends	dividends)		dividends)
	$m	$m	$	$	$	$	%	$	%
30-Jun-12	82.6	17.1	6.09	1.19	0.07	1.26	25.71	2.95	88.06
30-Jun-13	96.7	18.3	11.98	5.89	0.10	5.99	98.36	7.32	149.39
30-Jun-14	129.4	23.9	16.88	4.90	0.12	5.02	41.90	12.27	250.41
30-Jun-15	176.1	40.3	29.05	12.17	0.14	12.31	72.93	23.32	382.92
30-Jun-16	232.5	53.6	25.57	(3.48)	0.20	(3.28)	(11.3)	14.05	117.30

The table shows strong Group performance in particular over the last 3 and 5 years in terms of TSR. The Board believes that this level of performance reflects the quality and commitment of its staff and the leadership given, all being enabled by fair and appropriate remunerations structures and packages.

The following table gives an indication of Group performance against the LTI measures:

			EPS		TSR
	12	month	12 month		12 month	3 year
Date		EPS	EPS growth	3 year EPS	TSR	TSR
		$	%	%	%	%
30-Jun-12		0.307	49.0	(6.1)	25.7	88.1
30-Jun-13		0.328	6.8	13.9	98.4	149.4
30-Jun-14		0.425	29.6	106.3	41.9	250.4
30-Jun-15		0.714	68.0	132.6	72.9	382.9
30-Jun-16		0.937	31.2	185.6	(11.3)	117.3

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4.2 Links between Performance and Reward

4.2.1 Short-term incentive

The actual STI to be paid in relation to the 2016 financial year were accrued in the 30 June 2016 accounts. The links between performance and reward is summarised below.

STI Links

Percentage of
Max STI to be
Name Position Objectives Contribution to success Measurement paid Mr G Wong Managing Director Normalised Group The MD/CEO role has Earnings were measured via 69.2% & CEO EBITDA (40% primary responsibility Normalised Group weighting) Dose for Group earnings EBITDA, dose sales to sold (40% weighting) (EBITDA) and was budget/plans, and Leadership asked to focus on by individual effectiveness effectiveness comparison increasing by NED assessment on (20% weighting) dose sales and longdefined achievements and term leadership capabilities. development as key factors for success at the CEO level in FY16.

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Percentage of Max STI to be Name Position Objectives Contribution to success Measurement paid Mr D Smith Stratum 2 Direct Report to Normalised Group These executives shared Achievement of the Average 81.7% Mr M Mangano MD/ CEO EBITDA (50% the EBITDA objective earnings objective was Mr N Lange weighting) KPIs and with the MD/CEO to as measured for the MD/ Dr B Chew other Influencing encourage teamwork CEO. Mr R Hardie Factors and the one- company Dr D Cade (50% weighting) culture. KPIs and other KPI and other influencing influencing factors for factors were assessed the Regional Heads against qualitative and included regional sales quantitative objectives set growth, expense control, at the beginning of the debtor management and year in relation to each contribution margin. role, with some Board Factors for the other discretion to take into KMPs included where account relevant relevant, audit circumstances. In this compliance, DIFOT, way awards aligned with cost of goods sold, each individual’s marketing objectives, contribution to the Group proctor development, during the year, as clinical trial recruitment assessed by the Board. and the achievement of project milestones. Each factor was identified and selected as being a key lever for each role, in order to drive group success for FY16.

In relation to the 2015 financial year, the average STI paid was 90% of the available amount, reflecting the very strong financial performance of the Group during that year.

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4.2.2 Long-term incentive

The LTI, being dependent on i-TSR and EPS growth, is strongly related to external indicators of Group performance.

The following table outlines the extent that the LTIs vested in relation to the completion of the 2015 financial year and those that were granted during the 2013 financial year:

Name Mr G Wong Mr D Smith Mr M Mangano Mr N Lange Dr B Chew Mr R Hardie Dr D Cade Total	Target LTI Value (at grant) $ 350,000 125,000 125,000 125,000 125,000 125,000 90,000 1,065,000	2013 Grant Number 140,000 50,000 50,000 50,000 50,000 50,000 36,000 426,000	TSR Achieved 74.1% 74.1% 74.1% 74.1% 74.1% 74.1% 74.1% 74.1%	% of Grant Vested 100% 100% 100% 100% 100% 100% 100% 100%	Number Vested 140,000 50,000 50,000 50,000 50,000 50,000 36,000 426,000

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5. DETAILS OF REMUNERATION

5.1 Executive Remuneration

The following table outlines the remuneration received or receivable by executives of the Group for the 2016 and 2015 financial years, in accordance with the statutory requirements for disclosure and accounting standards:

Name Year Mr G Wong 2016 2015 Mr D Smith 2016 2015 Mr M Mangano 2016 2015 Mr N Lange 2016 2015 Dr B Chew 2016 2015 Mr R Hardie 2016 2015 Dr D Cade 2016 2015 Total 2016 2015	Salary $ 875,695 800,217 452,763 413,467 599,242 511,213 582,480 532,750 476,027 450,321 419,335 390,717 444,751 390,717 3,850,293 3,489,402	Other Benefits $ – – – – 70,280 54,504 39,038 36,454 16,158 38,826 – – – – 125,476 129,784	Short-term Incentive (STI)** $ % of TRP 314,514 16 409,500 23 133,854 17 139,940 20 209,735 21 177,186 20 133,782 14 97,799 12 – – 138,918 18 124,563 17 132,580 19 122,638 16 136,160 20 1,039,086 15 1,232,083 20	Short-term Employee Benefits Retirement Benefits/ Super- annuation Termination Benefits $ % of TRP $ $ 1,190,209 61 33,305 – 1,209,717 69 18,783 – 586,617 74 31,337 – 553,407 78 18,783 – 879,257 87 23,944 – 742,903 83 12,922 – 755,301 77 – – 667,003 83 – – 492,185 82 – – 628,065 82 – – 543,898 73 31,165 – 523,297 77 18,783 – 567,389 73 30,249 – 526,877 78 18,783 – 5,014,854 73 150,000 – 4,851,268 77 88,054 –	Equity-settled Long-term Incentive (LTI) $ % of TRP 742,690 38 519,662 30 174,027 22 138,514 19 108,090 11 138,514 15 228,526 23 138,514 17 108,090 18 138,514 18 169,476 23 138,514 20 172,770 23 126,183 19 1,703,669 25 1,338,415 21	Total Target Remuner- ation Change in Accrued Leave $ $ 1,966,204 85,343 1,748,162 43,637 791,981 27,029 710,704 (3,550) 1,011,291 (79,842) 894,339 39,554 983,827 (19,340) 805,517 (1,066) 600,275 (27,802) 766,579 5,040 744,539 31,174 680,594 (18,285) 770,408 23,577 671,843 (6,339) 6,868,525 40,139 6,267,223 58,990

Ceased employment during the year.
** STI figures included in the table represent STI’s received or receivable for the financial years presented.

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The following table outlines the LTIs granted to executive KMP during the financial year ended 30 June 2016. The LTIs will vest over three years.

Name Grant date Mr G Wong 27-Oct-2015 Mr D Smith 01-Sep-2015 Mr N Lange 01-Sep-2015 Mr R Hardie 01-Sep-2015 Dr D Cade 01-Sep-2015 Total	Number granted Value per option at grant date 45,930 21.32 11,010 20.37 20,110 20.37 10,250 20.37 10,800 20.37 98,100	Value of options at grant date 979,228 224,274 409,641 208,793 219,996 2,041,932	Number vested – – – – – –	Exercise price First exercise date Last exercise date $ – 1-Jul-18 30-Jun-22 – 1-Jul-18 30-Jun-22 – 1-Jul-18 30-Jun-22 – 1-Jul-18 30-Jun-22 – 1-Jul-18 30-Jun-22 –

5.2 Changes in Securities Held – Executives

The following table outlines the changes in the number of Performance Rights held by executives over the financial year:

Name Mr G Wong Mr D Smith Mr M Mangano Mr N Lange Dr B Chew Mr R Hardie Dr D Cade Total	Rights held at 1 July 2015 Number Value at Grant $ 328,000 1,571,570 95,000 415,120 95,000 415,120 95,000 415,120 161,000 557,656 95,000 415,120 81,000 380,120 950,000 4,169,826	Granted during year Number Value at Grant $ 45,930 979,228 11,010 224,274 – – 20,110 409,641 – – 10,250 208,793 10,800 219,996 98,100 2,041,932	Exercised Number Value $ 140,000 350,000 50,000 125,000 50,000 125,000 50,000 125,000 116,000 267,536 50,000 125,000 36,000 90,000 492,000 1,207,536	Rights Held at 30 June 2016 Number Value $ 233,930 2,200,798 56,010 514,394 45,000 290,120 65,110 699,761 45,000 290,120 55,250 498,913 55,800 510,116 556,100 5,004,222	Vested $ Exercisbable Number Value at Grant $ 115,000 532,450 28,000 129,640 28,000 129,640 28,000 129,640 28,000 129,640 28,000 129,640 28,000 129,640 283,000 1,310,290	Vested $ Exercisbable Number Value at Grant $ 115,000 532,450 28,000 129,640 28,000 129,640 28,000 129,640 28,000 129,640 28,000 129,640 28,000 129,640 283,000 1,310,290
						1,310,290

Ceased employment during the year.

No rights were forfeited during the financial year.

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The following table outlines the changes in the number of Shares held by executives over the financial year:

Name Balance at beginning of year Granted as remuneration Mr G Wong 100,000 – Mr D Smith 33,000 – Mr M Mangano – – Mr N Lange – – Dr B Chew – – Mr R Hardie – – Dr D Cade – – Total 133,000 – * Ceased employment during the year.	Issued on exercise of Rights 139,965 49,965 49,965 49,965 115,916 49,965 35,965 491,706	Disposals (79,965) (52,965) (49,965) (49,965) (65,942) (49,965) (35,965) (384,732)	Balance at end of year 160,000 30,000 – – 49,974 – –
			239,974

Conditions attached to Performance Rights issued during the year are included in note 22 in the Financial Report.

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5.3 Non-Executive Director Remuneration

The following table outlines the remuneration received by non-executive directors of the Group during the 2016 and 2015 financial years, in accordance with the statutory requirements for disclosure and accounting standards:

Name Year Mr R Hill 2016 2015 Dr J Eady 2016 2015 Mr G Boyce 2016 2015 Dr K Woodthorpe 2016 2015 Total 2016 2015	Board Fees Committee Fees $ $ 220,000 – 210,000 – 103,036 20,000 96,595 10,000 110,000 20,000 105,000 10,000 74,321 10,869 – – 507,357 50,869 411,595 20,000	Super- annuation $ – – 34,464 34,655 – – – – 34,464 34,655	Other Benefits $ – – – – – – – – – –	Equity* $ 69,382 58,494 43,384 36,570 34,691 29,256 25,591 – 173,048 124,320	Total $ 289,382
					268,494
					200,884
					177,820
					164,691
					144,256
					110,781
					–
					765,738

					590,570

pro-rated from date of grant until 30 June 2016.

5.4 Changes in Securities Held – Non-executive Directors

The following table outlines the changes in the number of NED Rights held by non-executive directors over the financial year:

Name Mr R Hill Dr J Eady Mr G Boyce Dr K Woodthorpe Total	Rights held at 1 July 2015 Number Value at Grant $ 2,959 55,333 1,850 34,595 1,480 27,676 – – 6,289 117,604	Granted during year Number Value at Grant $ 1,684 66,198 1,053 41,393 842 33,099 651 25,591 4,230 166,281	Forfeited Number Value $ – – – – – – – – – –	Exercised Number Value $ 4,643 121,531 2,903 75,988 2,322 60,775 651 25,591 10,519 283,885	Rights Held at 30 June 2016 Number Value at Grant $ – – – – – – – – –	Rights Held at 30 June 2016 Number Value at Grant $ – – – – – – – – –
						–

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The following table outlines the changes in the number of Shares held by Non-Executive Directors over the financial year:

Name Mr R Hill Dr J Eady Mr G Boyce Dr K Woodthorpe Total	Balance at beginning of year 1,974 6,234 5,987 – 14,195	Purchased 3,000 – – – 3,000	Issued on exercise of Rights* 4,643 2,903 2,322 651 10,519	Disposals – – – – –	Balance at end of year 9,617 9,137 8,309 651 27,714

Dealing restrictions apply with shares held in trust until the earlier of ceasing to be a non-executive director of the Group or the lapsing of fifteen years from the grant date.

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5.5 Future KMP Payments

The following table outlines amounts of LTI for executives that have been granted but which have not yet vested or been paid:

Name Grant date Mr G Wong 28-Aug-12 26-Nov-13 23-Sep-14 27-Oct-15 Mr D Smith 28-Aug-12 26-Nov-13 23-Sep-14 01-Sep-15 Mr M Mangano 28-Aug-12 26-Nov-13 23-Sep-14 Mr N Lange 28-Aug-12 26-Nov-13 23-Sep-14 01-Sep-15 Dr B Chew 28-Aug-12 26-Nov-13 23-Sep-14 Mr R Hardie 28-Aug-12 26-Nov-13 23-Sep-14 01-Sep-15 Dr D Cade 28-Aug-12 26-Nov-13 23-Sep-14 01-Sep-15 Total	Total value $ 350,000 532,450 689,120 979,228 125,000 129,640 160,480 224,274 125,000 129,640 160,480 125,000 129,640 160,480 409,641 125,000 129,640 160,480 125,000 129,640 160,480 208,793 90,000 129,640 160,480 219,996 6,069,222	Value expensed in 2015 % of grant 123,311 35 205,004 39 191,347 28 – – 44,040 35 49,914 39 44,560 28 – – 44,040 35 49,914 39 44,560 28 44,040 35 49,914 39 44,560 28 – – 44,040 35 49,914 39 44,560 28 44,040 35 49,914 39 44,560 28 – – 31,708 35 49,914 39 44,560 28 – – 1,338,414	Value expensed in 2016 % of grant – – 205,566 39 249,227 36 287,897 29 – – 50,051 39 58,039 36 65,937 29 – – 50,051 39 58,039 36 – – 50,051 39 58,039 36 120,436 29 – – 50,051 39 58,039 36 – – 50,051 39 58,039 36 61,386 29 – – 50,051 39 58,039 36 64,680 29 1,703,669

Ceased employment during the year.

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The following table outlines amounts for equities for non-executive directors that have been granted but which have not yet vested.

Name Grant date Mr R Hill 24-Sep-13 22-Jul-14 23-Nov-15 Dr J Eady 24-Sep-13 22-Jul-14 23-Nov-15 Mr G Boyce 24-Sep-13 22-Jul-14 23-Nov-15 Dr K 24-Sep-13 Woodthorpe 22-Jul-14 23-Nov-15 Total	Total value $ 27,241 55,333 66,198 17,029 34,595 41,393 13,621 27,676 33,099 – – 25,591 341,776	Value expensed in 2015 % of grant 6,344 23 52,150 94 – – 3,966 23 32,605 94 – – 3,172 23 26,084 94 – – – – – – – – 124,321	Value expensed in 2016 % of grant – – 3,183 6 66,198 100 – – 1,990 6 41,393 100 – – 1,592 6 33,099 100 – – – – 25,591 100 173,046

6. ADDITIONAL INFORMATION

6.1 Loans to Key Management Personnel

At 30 June 2016, $1,255,046 (2015: $9,222) was payable to key management personnel.

At 30 June 2016, $1,493 (2015: $12,702) was receivable from key management personnel.

The payable relates to deferred remuneration which is fully secured with a corporate asset and recognised net in the financial statements (2015: withholdings tax on the performance rights granted to Key Management Personnel and expense reimbursements). The payable is long-term in nature and will be paid over a period of 10 years. The receivable relates to expense reimbursement.

The Group does not have an allowance account for receivables relating to outstanding loans and has not recognised any expense for impaired receivables during the reporting period.

There were no individuals with loans above $100,000 during the financial year.

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6.2 Transactions with Key Management Personnel

There have been no other transactions with Key Management Personnel or their related entities other than those disclosed in this report.

6.3 External Remuneration Consultant Advice

During the year KMP remuneration recommendations and data were received from the Board-approved, external remuneration consultant.

Godfrey Remuneration Group Pty Limited $102,400

The Board also received other independent remuneration-related advice during the year.

Godfrey Remuneration Group	Assistance drafting new and up-dating	$20,000
Pty Limited	existing remuneration policies and
	documents; Upgrade to the Remuneration
	Portal; Review of Remuneration
	Committee operations.

So as to ensure that KMP remuneration recommendations were free from undue influence from the KMP to whom they relate, the Company has policies and procedures governing engagement with external remuneration consultants. The key aspects include:

(a) KMP remuneration recommendations may only be received from consultants who have been approved by the Board. This is a legal requirement. Before such approval is given and before each engagement the Board ensures that the consultant is independent of KMP.
(b) As required by law, KMP remuneration recommendations are only received by non-executive directors, mainly the Chair of the Remuneration Committee.
(c) The policy seeks to ensure that the Board controls any contact by management of Board-approved remuneration consultants and any interactions between management and external remuneration consultants when undertaking work leading to KMP remuneration recommendations.

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FINANCIAL INFORMATION OF SIRTEX

The Board is satisfied that the KMP remuneration recommendations received were free from undue influence from KMP to whom the recommendations related. It has been closely involved in all dealings with the external remuneration consultants and each KMP remuneration recommendation received during the year was accompanied by a legal declaration from the consultants to the effect that their advice was provided free from undue influence from the KMP to whom the recommendations related.

Gilman Wong Director

24 August 2016

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AUDITOR’S INDEPENDENCE DECLARATION

Level 17, 383 Kent Street Sydney NSW 2000

Correspondence to: Locked Bag Q800 QVB Post Office Sydney NSW 1230

T +61 2 8297 2400 F +61 2 9299 4445 E [email protected] W www.granthornton.com.au

Auditor’s Independence Declaration To the Directors of Sirtex Medical Limited

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Sixtex Medical Limited for the year ended 30 June 2016, I declare that, to the best of my knowledge and belief, there have been:

a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b no contraventions of any applicable code of professional conduct in relation to the audit.

GRANT THORNTON AUDIT PTY LTD

Chartered Accountants

N J Bradley

Partner – Audit & Assurance

Sydney, 24 August 2016

GRANT THORNTON AUDIT PTY LTD ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member films, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. DGTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one anothe’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thrnton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australia subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thonrton Australia Limed.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

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DIRECTORS’ DECLARATION

The Directors of the Company declare that:

the financial statements and notes, as set out on pages 47 to 80, are in accordance with the Corporations Act 2001 and
(a) comply with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001 , which, as stated in accounting policy Note 1 to the financial statements, constitutes explicit and unreserved compliance with International Financial Reporting Standards (IFRS); and
(b) give a true and fair view of the financial position as at 30 June 2016 and of the performance for the year ended on that date of the Company and Consolidated Group.
the Chief Executive Officer and Chief Financial Officer have each declared, as required by section 295A of the Corporations Act 2001 , that:
(a) the financial records of the company for the financial year have been properly maintained in accordance with s 286 of the Corporations Act 2001 ;
(b) the financial statements and notes for the financial year comply with Accounting Standards; and
(c) the financial statements and notes for the financial year give a true and fair view.
in the directors’ opinion, there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

Gilman Wong Director

Sydney, 24 August 2016

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INDEPENDENT AUDITOR’S REPORT

Independent Auditor’s Report

To the Members of Sirtex Medical Limited

Report on the financial report

We have audited the accompanying financial report of Sirtex Medical Limited (the “Company”）, which comprises the consolidated statement of financial position as at 30 June 2016, the consolidated statement of profit or loss and other comprehensive income. consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the consolidated entity comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ responsibility for the financial report

Auditor’s responsibility

Auditor’s responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require us to comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

Auditor’s opinion

In our opinion:

(a) the financial report of Sirtex Medical Limited is in accordance with the Corporations Act 2001, including:
i. giving a true and fair view of the consolidated entity’s financial position as at 30 June 2016 and of its performance for the year ended on that date; and
ii. complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in the notes to the financial statements.

Report on the remuneration report

We have audited the remuneration report included in pages 27 to 41 of the directors’ report for the year ended 30 June 2016. The Directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s opinion on the remuneration report

In our opinion, the remuneration report of Sirtex Medical Limited for the year ended 30 June 2016, complies with section 300A of the Corporations Act 2001.

GRANT THORNTON AUDIT PTY LTD

Chartered Accountants

N J Bradley

Partner – Audit & Assurance

Sydney, 24 August 2016

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2016

Note
Revenue from the sale of goods
2(a)
Cost of sales
Gross profit
Other revenue
2(b)
Other income
2(c)
Marketing expenses
Research expenses
Regulatory expenses
Quality assurance expenses
Clinical trial expenses
Medical expenses
Administration expenses
Other expenses
Profit before income tax
Income tax expense
4
Profit for the year
Items that may be reclassified subsequently to profit or loss
Foreign currency translation (net of tax) of foreign operations
Total comprehensive income for the year attributable
to members of the parent entity
Earnings per share
Basic earnings per share
19
Diluted earnings per share
19
Dividends per Share
20

Consolidated
2016
2015
$’000
$’000
232,492
176,088
(35,287)
(27,700)
197,205
148,388
2,229
1,889
2,099
2,124
(79,338)
(65,081)
(8,717)
(5,797)
(1,626)
(1,388)
(2,232)
(1,810)
(10,672)
(5,649)
(6,356)
(4,660)
(20,915)
(15,248)
(1,679)
–
69,998
52,768
(16,416)
(12,423)
53,582
40,345
464
1,193
54,046
41,538
Cents
Cents
93.7
71.4
92.2
69.7
20.0
14.0

The financial statements should be read in conjunction with the accompanying notes.

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2016

Note Assets Current Assets Cash and cash equivalents 5 Other short-term deposits 6 Trade and other receivables 7 Inventories 8 Other financial assets 9 Other current assets 10 Total – Current Assets Non-Current Assets Property, plant and equipment 12 Intangible assets 13 Deferred tax assets 11(b) Total – Non-Current Assets Total Assets Liabilities Current Liabilities Trade and other payables 14 Current tax liabilities 15(a) Short-term provisions 16(a) Total – Current Liabilities Non-Current Liabilities Long-term provisions 16(b) Deferred tax liabilities 15(b) Total – Non-Current Liabilities Total Liabilities Net Assets Equity Issued capital 17 Reserves 18 Retained earnings Total – Equity	Consolidated 2016 2015 $’000 $’000 21,025 21,941 86,000 52,000 42,272 35,000 1,918 1,836 1,687 1,213 4,212 3,210 157,114 115,200 13,987 13,164 82,821 68,027 7,795 5,085 104,603 86,276 261,717 201,476 28,090 24,290 7,239 4,746 7,009 6,666 42,338 35,702 1,153 1,104 24,722 20,034 25,875 21,138 68,213 56,840 193,504 144,636 32,684 27,021 6,656 5,615 154,164 112,000 193,504 144,636	Consolidated 2016 2015 $’000 $’000 21,025 21,941 86,000 52,000 42,272 35,000 1,918 1,836 1,687 1,213 4,212 3,210 157,114 115,200 13,987 13,164 82,821 68,027 7,795 5,085 104,603 86,276 261,717 201,476 28,090 24,290 7,239 4,746 7,009 6,666 42,338 35,702 1,153 1,104 24,722 20,034 25,875 21,138 68,213 56,840 193,504 144,636 32,684 27,021 6,656 5,615 154,164 112,000 193,504 144,636
		115,200

		13,164 68,027 5,085
		86,276

		201,476

		24,290 4,746 6,666
		35,702

		1,104 20,034
		21,138

		56,840

		144,636

		27,021 5,615 112,000
		144,636

The financial statements should be read in conjunction with the accompanying notes.

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2016

Consolidated Entity Balance at 30 June 2014 Foreign currency translation reserve Profit attributable to members of parent entity Total comprehensive income for the year attributable to the members of the parent entity Ordinary shares issued Deferred tax on performance rights Purchase of Non-Executive Directors’ shares on market Contribution to performance reserve Dividends paid or provided for Total transactions with owners Balance at 30 June 2015 Foreign currency translation reserve Profit attributable to members of parent entity Total comprehensive income for the year attributable to the members of the parent entity Ordinary shares issued Rights forfeited Deferred tax on performance rights Exercise of Non-Executive Directors’ rights Purchase of Non-Executive Directors’ shares on market Contribution to performance reserve Dividends paid or provided for Total transactions with owners Balance at 30 June 2016	Ordinary Share $’000 24,893 – – – 949 1,271 (92) – – 2,128 27,021 – – – 1,839 – 3,777 341 (294) – – 5,663 32,684	Shares Rights Reserve $’000 2,774 – – – (949) – – 2,250 – 1,301 4,075 – – – (1,839) (14) – (341) – 2,771 – 577 4,652	Foreign Currency Translation Reserve $’000 347 1,193 – 1,193 – – – – – – 1,540 464 – 464 – – – – – – – – 2,004	Retained Earnings $’000 79,569 – 40,345 40,345 – – – – (7,914) (7,914) 112,000 – 53,582 53,582 – 14 – – – – (11,432) (11,418) 154,164	Total $’000 107,583 1,193 40,345 41,538 – 1,271 (92) 2,250 (7,914) (4,485) 144,636 464 53,582 54,046 – – 3,777 – (294) 2,771 (11,432) (5,178) 193,504

The financial statements should be read in conjunction with the accompanying notes.

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CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2016

Note
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Net income tax paid
Net cash provided by operating activities
5(b)
Cash flows from investing activities
Investment in other short-term deposits
Proceeds from plant and equipment
Purchase of plant and equipment
Intangible assets
Net cash used by investing activities
Cash flows from financing activities
Payment of dividends
Net cash used by financing activities
Net increase/(decrease) in cash held
Cash and cash equivalents at beginning of financial year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of financial year
5(a)

Consolidated
2016
2015
$’000
$’000
225,153
168,926
(153,992)
(116,339)
2,184
1,815
(8,134)
(2,428)
65,211
51,974
(34,000)
(22,000)
137
201
(1,718)
(1,692)
(19,196)
(21,123)
(54,777)
(44,614)
(11,432)
(7,914)
(11,432)
(7,914)
(998)
(554)
21,941
22,495
82
–
21,025
21,941

The financial statements should be read in conjunction with the accompanying notes.

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2016

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The report includes the consolidated financial statements and notes of Sirtex Medical Ltd and controlled entities. Sirtex Medical Ltd is a for-profit entity for the purpose of preparing the financial statements.

Sirtex Medical Ltd is the Group’s Ultimate Parent Company. Sirtex Medical Ltd is a Public Company incorporated and domiciled in Australia.

The consolidated financial statements were approved and authorised for issue by the directors on 24 August 2016.

(a) Basis of consolidation

The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of 30 June 2016. The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of 30 June.

(b) Revenue recognition

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Interest revenue is recognised on an accrual basis using the effective interest method.

(c) Operating expenses

Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin.

(d) Goods and services tax (GST)

Cash flows are presented in the Consolidated Statement of Cash Flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(e) Inventories

(f) Plant and equipment

All items of plant and equipment are carried at the lower of cost less accumulated depreciation, amortisation and impairment losses and their recoverable amount.

(g) Intangibles

Intellectual property

Internally generated intangible assets

Expenditure on the research phase of projects are recognised as an expense as incurred.

Development costs and certain clinical trial costs have been capitalised to the extent they satisfy the recognition criteria for internally generated intangible assets.

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The Group uses its judgment in continually assessing whether development expenditure meet the recognition criteria of an intangible asset.

(h) Depreciation and amortisation

Depreciation and amortisation rates are reviewed annually for appropriateness. When changes are made, adjustments are reflected prospectively in current and future financial periods only.

The depreciation and amortisation rates used for each class of asset are:

Plant and Equipment
Buildings and Leasehold improvements	5% – 10%
Plant & Equipment	10% – 33.33%
Assets work in progress	0%
Intangible Assets
Intellectual Property	5% – 12.5%
Internally Generated Intangible Assets	12.5%
Software	33.3%
Assets work in progress	0%

(i) Impairment of plant and equipment and intangible assets

Individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and value-in-use. To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Group’s latest approved budget, adjusted as necessary to exclude the effects of future reorganisations and asset enhancements. Discount factors are determined individually for each cash- generating unit and reflect management’s assessment of respective risk profiles, such as market and asset-specific risks factors.

(j) Cash and cash equivalents

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(k) Financial instruments

(l) Employee benefits

Wages, salaries and annual leave

Long service leave

Post-employment benefit plans

Share-based payments

The Group provides benefits to certain employees in the form of share-based payment transactions, whereby employees render services in exchange for rights over shares (equity-settled transactions). For this purpose, the Group has an Executive Performance Rights Plan in place.

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Upon exercise of performance rights, the proceeds received net of any directly attributable transaction costs are allocated to share capital.

Further information can be found in Note 22 to the financial statements.

Deferred compensation benefits

The Group provides deferred compensation benefits to certain employees. The net deferred compensation liability (asset) is recognised taking into account the present value of the liability and the fair value of the corporate assets securing the liability. Any gain or loss in recognised in profit or loss.

(m) Leases

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.

Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.

(n) Provisions, contingent liabilities and contingent assets

(o) Segment reporting

The Group has identified its operating segments based on internal reports that are reviewed and used by the Board of Directors in assessing performance and determining the allocation of resources.

The Group is managed primarily on the basis of regional markets which have different structures and performance assessment criteria. Operating segments are therefore determined on the same basis. The three regional markets currently serviced by the Group are Asia Pacific, The Americas, and Europe, Middle East and Africa (EMEA). As the Group manufactures and distributes only one product, identical for each of the three regional markets, no further segmentation across products or services is made.

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(p) Equity, reserves and dividend payments

Retained earnings include all current and prior period retained profits.

Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been approved prior to the reporting date.

All transactions with owners of the parent entity are recorded separately within equity.

(q) Income tax

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

Sirtex Medical Ltd and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. Each entity in the group recognises its own current and deferred tax liabilities, except for any deferred tax liabilities resulting from unused tax losses and tax credits, which are immediately assumed by the parent entity. The current tax liability of each group entity is then subsequently assumed by the parent entity. The group notified the Australian Tax Office that it had formed an income tax consolidated group to apply from 1 July 2004. The tax consolidated group has entered a tax sharing agreement whereby each Company in the Group contributes to the income tax payable in proportion to their contribution to the net profit before tax of the Consolidated Group.

R&D tax credits arising from the recognition of eligible R&D expenditure under the Federal Government’s R&D Tax Incentive Scheme are offset against any income tax payable.

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(r) Foreign Currency Transactions and Balances

Exchange differences arising on the translation of monetary items are recognised in the Consolidated Statement of Profit or Loss. Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.

The financial results and position of foreign operations whose functional currency is different from the Group’s presentation currency are translated as follows:

assets and liabilities are translated at year-end exchange rates prevailing at that reporting date
income and expenses are translated at average exchange rates for the period, and
retained earnings are translated at the exchange rate prevailing at the date of the transaction.

(s) Comparative figures

When required by accounting standards, comparative figures have been adjusted to conform to changes in the presentation for the current financial year.

(t) Key estimates

Impairment

The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to impairment of assets. Where impairment exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates.

Impairment assessment of internally generated intangible assets is performed in accordance with AASB 136 Impairment of Assets. For the year ended 30 June 2016, no impairment has been recognised for the clinical trials and development projects which meet the recognition criteria for internally generated intangible assets.

Research and development tax incentive

The Group estimates the research and development tax incentive by reference to the percentage of research and development expenditure that contributed to the prior year research and development tax incentive with consideration to any changes in research and development activities or legislation during the year.

Share-based payment transactions

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Long service leave provision

Lease make good provision

(u) Rounding of amounts

The Parent Entity has applied the relief available to it under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and accordingly, amounts in the financial statements and directors’ report have been rounded off to the nearest $1,000, or in certain cases, the nearest dollar.

(v) Adoption of new and revised accounting standards

A number of new and revised standards and an interpretation became effective for the first time to annual periods beginning on or after 1 July 2015. Information on these new standards is presented below.

AASB 2014-1 Amendments to Australian Accounting Standards (Part E: Financial Instruments)

The adoption of these amendments has not had a material impact on the Group as they are largely of the nature of clarification of existing requirements.

AASB 2015-3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality

The Standard completes the AASBs project to remove Australian guidance on materiality from Australian Accounting Standards.

The adoption of these amendments has not had a material impact on the Group as they are largely of the nature of clarification of existing requirements.

(w) New Accounting Standards for Application in Future Periods

AASB 9 Financial Instruments (applicable for annual reporting periods beginning on or after 1 January 2018):

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The main changes are:

(a) Financial assets that are debt instruments will be classified based on
i. the objective of the entity’s business model for managing the financial assets; and
ii. the characteristics of the contractual cash flows.
(b) Allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income (instead of in profit or loss).
Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument.
(c) Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on different bases.
(d) Where the fair value option is used for financial liabilities the change in fair value is to be accounted for as follows:
i. the change attributable to changes in credit risk are presented in other comprehensive income (OCI); and
ii. the remaining change is presented in profit or loss.

If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in credit risk are also presented in profit or loss.

Otherwise, the following requirements have been carried forward unchanged from AASB 139 into AASB 9:

i. classification and measurement of financial liabilities; and
ii. de-recognition requirements for financial assets and liabilities.

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AASB 15 Revenue from Contracts with Customers

AASB 15:

replaces AASB 118 Revenue, AASB 111 Construction Contracts and some revenue-related Interpretations:
establishes a new revenue recognition model
changes the basis for deciding whether revenue is to be recognised over time or at a point in time
provides new and more detailed guidance on specific topics (e.g., multiple element arrangements, variable pricing, rights of return, warranties and licensing)
expands and improves disclosures about revenue

AASB 16 Leases

AASB 16:

replaces AASB 117 Leases and some lease-related Interpretations
requires all leases to be accounted for ‘on-balance-sheet’ by lessees, other than short-term and low value asset leases
provides new guidance on the application of the definition of lease and on sale and lease back accounting
requires new and different disclosures about leases

The entity is yet to undertake a detailed assessment of the impact of AASB 16. However, based on the entity’s preliminary assessment, the likely impact on the first time adoption of the Standard for the year ending 30 June 2020 includes:

there will be a significant increase in the lease assets and financial liabilities recognised on the balance sheet
the reported equity will reduce as the carrying amount of lease assets will reduce more quickly than the carrying amount of lease liabilities
EBIT in the statement of profit or loss and other comprehensive income will be higher as the implicit interest in the lease payments for former off balance sheet leases will be presented as part of the finance costs rather than being included in operating expenses
operating cash outflows will be lower and financing cash flows will be higher in the statement of cash flows as principal repayments on all lease liabilities will now be included in financing activities rather than operating activities. Interest can also be included within financing activities

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AASB 1057 Application of Australian Accounting Standards

In May 2015, the AASB decided to revise Australian Accounting Standards that incorporate IFRSs to minimise Australian-specific wording even further. The AASB noted that IFRSs do not contain application paragraphs that identify the entities and financial reports to which the Standards (and Interpretations) apply. As a result, the AASB decided to move the application paragraphs previously contained in each Australian Accounting Standard (or Interpretation), unchanged, into a new Standard AASB 1057 Application of Australian Accounting Standards.

When this Standard is first adopted for the year ending 30 June 2017, there will be no impact on the financial statements.

AASB 2014-4 Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of Depreciation and Amortisation

The intangible asset is expressed as a measure of revenue, for example when the predominant limiting factor inherent in an intangible asset is the achievement of a revenue threshold (for instance, the right to operate a toll road could be based on a fixed total amount of revenue to be generated from cumulative tolls charged); or
When it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated.

When these amendments are first adopted for the year ending 30 June 2017, there will be no material impact on the transactions and balances recognised in the financial statements.

AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101

The amendments:

clarify the materiality requirements in AASB 101, including an emphasis on the potentially detrimental effect of obscuring useful information with immaterial information
clarify that AASB 101’s specified line items in the statement(s) of profit or loss and other comprehensive income and the statement of financial position can be disaggregated
add requirements for how an entity should present subtotals in the statement(s) of profit and loss and other comprehensive income and the statement of financial position
clarify that entities have flexibility as to the order in which they present the notes, but also emphasise that understandability and comparability should be considered by an entity when deciding that order
remove potentially unhelpful guidance in IAS 1 for identifying a significant accounting policy.

When these amendments are first adopted for the year ending 30 June 2017, there will be no material impact on the financial statements.

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2. REVENUE AND OTHER INCOME

(a) Revenue from the sale of goods

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Consolidated
2016 2015
$’000 $’000
232,492 176,088
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(b) Other revenue

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Consolidated
2016 2015
$’000 $’000
Interest income from financial institutions 2,229 1,889
2,229 1,889
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(c) Other income Realised and unrealised foreign exchange gains Other	Consolidated 2016 2015 $’000 $’000 1,900 1,881 199 243 2,099 2,124	Consolidated 2016 2015 $’000 $’000 1,900 1,881 199 243 2,099 2,124
		2,124

3. PROFIT FOR THE YEAR

	Consolidated
	2016	2015
	$’000	$’000
Profit before income tax includes the following:
Cost of sales	35,287	27,700
Employee benefits expense
Superannuation contributions	2,367	1,268
Other employee benefits expenses	66,941	51,839
Depreciation and amortisation of
Plant and equipment	2,164	1,919
Intangible assets	4,403	460
Operating lease expenses
Minimum lease payments	2,593	2,406
Other expenses
Provision for legal settlement	1,389	–

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4. INCOME TAX EXPENSE

(a) The components of tax expense comprise:

Current tax Deferred tax Under/(over) provision in respect of prior years (permanent and timing)	Consolidated 2016 2015 $’000 $’000 14,671 8,587 1,923 3,424 (178) 412 16,416 12,423	Consolidated 2016 2015 $’000 $’000 14,671 8,587 1,923 3,424 (178) 412 16,416 12,423
		12,423

(b) Prima facie tax on profit from ordinary activities before income tax is reconciled to income tax as follows:

Net profit before tax
Prima facie tax payable on profit from ordinary
activities before income tax at 30%
Add/(less): Tax effect of
– Non-deductible amortisation
– Non-deductible expenses
– Non-assessable income
– Over-provision in respect of prior years (permanent)
Effect of lower tax rates on overseas income
Effect of Foreign Currency translation of tax balances
Recognition of tax losses not previously brought to account
Eliminations for the tax consolidated group
Income tax attributable to entity
The applicable weighted average effect tax rates are as follows
(c)
Franking account
Franking account balance

Consolidated
2016
2015
$’000
$’000
69,998
52,768
20,999
15,830
54
54
3,411
360
(4,118)
(2,748)
(307)
(317)
(3,351)
(580)
476
(94)
(688)
(199)
(60)
117
16,416
12,423
23.5%
23.5%
Consolidated
2016
2015
$’000
$’000
6,206
7,456

Legislation to allow Groups, comprising a parent entity and its Australian resident wholly-owned entities, to elect to consolidate and be treated as a single entity for income tax purposes was substantially enacted on 21 October 2002. This legislation, which includes both mandatory and elective elements, is applicable to the Company. The directors elected for those entities within the consolidated entity that are wholly-owned Australian resident entities to be taxed as single entity from 1 July 2004. The implementation of the tax consolidation system was notified to the Australian Tax Office. The head entity within the tax-consolidated Group for the purposes of the tax consolidation system is Sirtex Medical Ltd.

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5. CASH AND CASH EQUIVALENTS

(a) Reconciliation of cash

Cash at the end of the financial year as shown in the statement of cash flows is reconciled to items in the statement of financial position as follows: Cash at bank and on hand Short-term deposits with financial institutions	Consolidated 2016 2015 $’000 $’000 15,025 11,941 6,000 10,000 21,025 21,941	Consolidated 2016 2015 $’000 $’000 15,025 11,941 6,000 10,000 21,025 21,941
		21,941

Short-term deposits are term deposits with maturity date of less than 90 days. The effective interest rate on short-term deposits was 2.93% (2015: 3.7%). These deposits have an average maturity of 43 days as at 30 June 2016 (2015: 50 days).

(b) Reconciliation of cash flow from operations with profit after income tax

Profit after income tax Non-cash flows in profit: Depreciation and amortisation Share rights reserve Net foreign exchange differences Changes in net assets and liabilities (Increase)/decrease in assets Trade receivables Inventories Decrease in current tax assets Other current assets Deferred assets Increase/(decrease) in liabilities Payables Current tax liabilities Short-term provisions Long-term provisions Deferred tax liabilities Net cash flow from operating activities	Consolidated 2016 2015 $’000 $’000 53,582 40,345 6,567 2,379 2,771 2,250 (449) 22 (8,322) (8,207) 39 (158) – 554 (1,360) (1,123) (2,639) (1,072) 3,650 9,633 2,483 6,017 321 (3,392) 130 230 8,438 4,496 65,211 51,974	Consolidated 2016 2015 $’000 $’000 53,582 40,345 6,567 2,379 2,771 2,250 (449) 22 (8,322) (8,207) 39 (158) – 554 (1,360) (1,123) (2,639) (1,072) 3,650 9,633 2,483 6,017 321 (3,392) 130 230 8,438 4,496 65,211 51,974
		51,974

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6. OTHER SHORT-TERM DEPOSITS

Other short-term deposits with financial institutions	Consolidated 2016 2015 $’000 $’000 86,000 52,000 86,000 52,000	Consolidated 2016 2015 $’000 $’000 86,000 52,000 86,000 52,000
		52,000

Other short-term deposits are term deposits with maturity date of more than 90 days and less than 360 days.

The average maturity as at 30 June 2016 of these term deposits is 206 days (2015: 225 days). The effective interest rate on the deposits is 3.09% (2015: 3.42%).

7. TRADE AND OTHER RECEIVABLES

(a) Trade receivables

Trade receivables Provision for impairment	Consolidated 2016 2015 $’000 $’000 40,152 33,306 (260) (92) 39,892 33,214	Consolidated 2016 2015 $’000 $’000 40,152 33,306 (260) (92) 39,892 33,214
		33,214

(b) Other receivables

GST receivables Other receivables	Consolidated 2016 2015 $’000 $’000 1,256 717 1,124 1,069 2,380 1,786 42,272 35,000	Consolidated 2016 2015 $’000 $’000 1,256 717 1,124 1,069 2,380 1,786 42,272 35,000
		1,786
		35,000

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Movement in the provision for impairment of receivables is as follows:

	Opening	Change for	Amounts	Closing
	balance	the year	written off	balance
	$’000	$’000	$’000	$’000
30 June 2016
Trade receivables	(92)	(168)	–	(260)
30 June 2015
Trade receivables	(318)	226	–	(92)

An amount of $260,000 was considered impaired as at 30 June 2016 (2015: $92,000).

Trade receivables past due but not impaired

Less than 30 days overdue 30-60 days overdue More than 60 days overdue Total	Consolidated 2016 2015 $’000 $’000 7,644 7,179 4,544 2,990 3,218 3,981 15,406 14,150	Consolidated 2016 2015 $’000 $’000 7,644 7,179 4,544 2,990 3,218 3,981 15,406 14,150
		14,150

Collection history from previous year’s supports management’s view that receivables less than 180 days overdue are not considered impaired.

Credit risk

The Group has no significant concentration of credit risk with respect to any single counter party or group of counter parties other than those receivables specifically provided for and shown above.

The class of assets described as Trade and other Receivables is considered to be the main source of credit risk related to the Group. Collateral has been received from certain trade debtors with a history of slow payment in form of a financial guarantee.

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8. INVENTORIES

Raw mate rials – at cost

Consolidated
2016	2015
$’000	$’000
1,918	1,836
1,918	1,836

9. OTHER FINANCIAL ASSETS

Other current financial assets: Security deposits paid	Consolidated 2016 2015 $’000 $’000 1,687 1,213 1,687 1,213	Consolidated 2016 2015 $’000 $’000 1,687 1,213 1,687 1,213
		1,213

10. OTHER CURRENT ASSETS

Prepayments

Consolidated
2016	2015
$’000	$’000
4,212	3,210
4,212	3,210

11. TAX ASSETS

(a) Current tax assets

Current tax asset

Consolidated
2016	2015
$’000	$’000
–	–
–	–

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(b) Deferred tax assets

Tax losses revenue
Timing differences attributable to:
Fixed Assets
Employee provisions
Unrealised foreign exchange losses
Other
Other includes the following major components:
Executive Performance rights
AMT credit (US)
Non-amortised patent costs
The movement in tax losses is as follows:
Opening balance
Credit to the statement of profit or loss and other comprehensive income
Credit to equity
Closing balance
The movement in fixed assets is as follows:
Opening balance
Credit to the statement of profit or loss and other comprehensive income
Closing balance
The movement in employee provisions is as follows:
Opening balance
Credit to the statement of profit or loss and other comprehensive income
(Debit) to equity
Closing balance
The movement in unrealised FX is as follows:
Opening balance
Credit/(debit) to the statement of profit or loss and other comprehensive
income
Closing balance
The movement in other is as follows:
Opening balance
Credit to the statement of profit or loss and other comprehensive income
Credit to equity
Closing balance
The overall movement in the deferred tax account is as follows:
Opening balance
Credit to the statement of profit or loss and other comprehensive income
Credit to equity
Closing balance

Consolidated
2016
2015
$’000
$’000
1,166
415
1,053
279
2,468
2,001
268
–
2,840
2,390
7,795
5,085
1,092
1,141
464
–
301
201
415
282
688
133
63
–
1,166
415
279
181
774
98
1,053
279
2,001
849
471
1,152
(4)
–
2,468
2,001
–
916
268
(916)
268
–
2,390
1,785
397
605
53
–
2,840
2,390
5,085
4,013
2,598
1,072
112
–
7,795
5,085

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12. PROPERTY, PLANT AND EQUIPMENT

Buildings and leasehold improvements
At cost
Accumulated depreciation
Net carrying amount
Plant and equipment
At cost
Accumulated depreciation
Net carrying amount
Asset work in progress
At cost
Accumulated depreciation
Net carrying amount
Total property, plant and equipment
At cost
Accumulated depreciation
Net carrying amount
Movements in carrying amounts
Buildings and leasehold improvements
Carrying amount at beginning
Additions
Depreciation expense
Carrying amount at end
Plant and equipment
Carrying amount at beginning
Additions
Transfers
Disposals
Depreciation expense
Carrying amount at end
Asset work in progress
Carrying amount at beginning
Additions
Disposals/Transfers
Carrying amount at end
Total property, plant and equipment
Carrying amount at beginning
Additions
Disposals
Depreciation expense
Carrying amount at end

Consolidated
2016
2015
$’000
$’000
1,348
1,063
(567)
(472)
781
591
20,509
16,716
(9,558)
(6,335)
10,951
10,381
2,255
2,192
–
–
2,255
2,192
24,112
19,971
(10,125)
(6,807)
13,987
13,164
591
656
246
–
(56)
(65)
781
591
10,381
6,097
2,807
777
–
5,562
(129)
(201)
(2,108)
(1,854)
10,951
10,381
2,192
6,839
71
915
(8)
(5,562)
2,255
2,192
13,164
13,592
3,124
1,692
(137)
(201)
(2,164)
(1,919)
13,987
13,164

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13. INTANGIBLE ASSETS

Software
At cost
Accumulated amortisation
Net carrying amount
Internally generated intangibles
At cost
Accumulated amortisation
Net carrying amount
Intellectual property
At cost
Accumulated amortisation
Net carrying amount
Asset work in progress
At cost
Accumulated amortisation
Net carrying amount
Total Intangible assets
At cost
Accumulated amortisation
Net carrying amount
Movements in carrying amounts
Software
Carrying amount at beginning
Transfers
Amortisation expense
Carrying amount at end
Internally generated intangibles
Carrying amount at beginning
Additions
Amortisation expense
Carrying amount at end

Consolidated
2016
2015
$’000
$’000
4,122
818
(1,723)
(506)
2,399
312
79,411
64,326
(3,258)
(251)
76,153
64,075
3,607
3,607
(3,456)
(3,276)
151
331
4,118
3,309
–
–
4,118
3,309
91,258
72,060
(8,437)
(4,033)
82,821
68,027
312
3
3,303
338
(1,216)
(29)
2,399
312
64,075
46,525
15,085
17,801
(3,007)
(251)
76,153
64,075

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Intellectual property Carrying amount at beginning Amortisation expense Carrying amount at end Asset work in progress Carrying amount at beginning Additions Transfers Carrying amount at end Total intangible assets Carrying amount at beginning Additions Amortisation expense Carrying amount at end	Consolidated 2016 2015 $’000 $’000 331 511 (180) (180) 151 331 3,309 325 4,112 3,322 (3,303) (338) 4,118 3,309 68,027 47,364 19,197 21,123 (4,403) (460) 82,821 68,027

Recognition of internally generated intangible assets

The Group undertakes clinical and development activities. These have been classified as internally generated intangible assets, in accordance with AASB 138 Intangible Assets.

On 1 June 2015, one of the major Phase IV post-marketing clinical trials was completed. Amortisation expense of $3,007,411 was recognised during the year (2015: $250,618). At year end, the remaining useful life on the trial was 83 months.

At year end, the Group had four major Phase IV post-marketing clincial trials and two development projects aimed at improving the use of SIR-Spheres microspheres that were not yet ready for use. The activities satisfy all tests as set out in AASB 138, in particular the technical feasibility of completion and the availability of sufficient financial resources for completion.

The carrying value of the four major Phase IV post-marketing clinical trials and the two development projects have been tested for impairment as the assets are not yet available for use. The cash-generating unit (“CGU”) was determined at a Group level.

The recoverable amount of the CGU is based on value-in-use calculations. Those calculations use five year cash flow projections estimated in the currencies in which they will be generated based on actual operating results and the next year’s budget. Cash flows beyond the five year forecast period are extrapolated using prudent terminal growth rates as follows: USD2.1%, EUR 1.3%, GBP 2.0%, SGD 2.2% and AUD 3.1% per annum which is consistent with long-term economic growth rates. The pre-tax discount rate used is as follows: USD16.9%, EUR 15.9%, GBP 15.8%, SGD 16.8% and AUD 19.0%.

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The key assumptions and the approach to determining the value-in-use in the current year are:

Assumption	How determined
Discount rate	Based on the weighted average cost of capital reflecting current market
	assessments of the time value of money and risks specific to the currency in which
	the cash will be generated.
Sales volume growth rate	Based on five year cash flow projection taking into account historical growth rates
	and product lifecycle.
Terminal value growth rate	Based on five year cash flow projection taking into account historical growth rates
	and product lifecycle.

The recoverable amount of the CGU is in excess of the carrying amount and therefore no impairment charge was recognised. The excess of recoverable amount over carrying amount is such that a reasonably possible change in assumptions is unlikely to reduce the recoverable amount below the carrying amount.

14. TRADE AND OTHER PAYABLES

Trade payables Other payables	Consolidated 2016 2015 $’000 $’000 16,296 13,638 11,794 10,652 28,090 24,290	Consolidated 2016 2015 $’000 $’000 16,296 13,638 11,794 10,652 28,090 24,290
		24,290

15. CURRENT TAX LIABILITIES

(a) Current tax liabilities

Current tax liability	Consolidated 2016 2015 $’000 $’000 7,239 4,746 7,239 4,746	Consolidated 2016 2015 $’000 $’000 7,239 4,746 7,239 4,746
		4,746

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(b) Deferred tax liabilities

Timing differences attributable to:
Capitalisation of development expenditure
Fixed assets
Other
The movement in the capitalisation of development expenditure is as
follows:
Opening balance
Debit/(credit) to the statement of profit or loss and other
comprehensive income
Closing balance
The movement in the fixed assets is as follows:
Opening balance
Debit/(credit) to the statement of profit or loss and other
comprehensive income
Debit to equity
Closing balance
The movement in other is as follows:
Opening balance
(Credit)/debit to the statement of profit or loss and other
comprehensive income
Debit to equity
Closing balance
The overall movement in the deferred tax account is as follows:
Opening balance
Debit to the statement of profit or loss and other comprehensive income
Debit to equity
Closing balance

Consolidated
2016
2015
$’000
$’000
22,846
19,222
945
724
931
88
24,722
20,034
19,222
13,957
3,624
5,265
22,846
19,222
724
624
220
100
1
–
945
724
88
958
833
(870)
10
–
931
88
20,034
15,538
4,677
4,495
11
1
24,722
20,034

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16. PROVISIONS AND ACCRUALS

(a) Short-term Provisions and Accruals

Provision for long service leave
Provision for clinical studies
Provision for legal settlement
Miscellaneous provisions
Long-term Provisions
Provision for long service leave
Miscellaneous provisions
The overall movement in the short-term provision for long service
leave account is as follows:
Opening balance
Additional provision for the year
Amounts used during the year
Closing balance
The overall movement in the short-term provision for clinical studies
account is as follows:
Opening balance
Additional provisions for the year
Amounts used during the year
Closing balance
The overall movement in the short-term provision for
legal settlement account is as follows:
Opening balance
Additional provisions for the year
Closing balance

Consolidated
2016
2015
$’000
$’000
463
385
1,940
3,180
1,389
–
3,217
3,101
7,009
6,666
Consolidated
2016
2015
$’000
$’000
671
521
482
583
1,153
1,104
385
196
106
192
(28)
(3)
463
385
3,180
6,665
8,228
12,649
(9,468)
(16,134)
1,940
3,180
–
–
1,389
–
1,389
–

(b) Long-term Provisions

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FINANCIAL INFORMATION OF SIRTEX

The overall movement in the short-term miscellaneous provision
account is as follows:
Opening balance
Additional provisions for the year
Amounts used during the year
Closing balance
The overall movement in the long-term for long service leave
provision account is as follows:
Opening balance
Additional provisions for the year
Amounts used during the year
Closing balance
The overall movement in the long-term miscellaneous
provision account is as follows:
Opening balance
Additional provisions for the year
Amounts used during the year
Closing balance

Consolidated
2016
2015
$’000
$’000
3,101
3,197
23,506
4,750
(23,390)
(4,846)
3,217
3,101
521
574
163
(53)
(13)
–
671
521
583
300
–
283
(101)
–
482
583

Provision for legal settlement is management’s best estimate of the liability at year end relating to a dispute that arose in the prior financial year. There is no contingent liability in the current year.

17. ISSUED CAPITAL

Issued capital Share issue costs Purchase of Non-Executive Directors’ share on market Deferred tax on performance rights Number of shares issued	Consolidated 2016 2015 $’000 $’000 28,616 26,436 (1,258) (1,258) (386) (92) 5,712 1,935 32,684 27,021 57,273,893 56,530,231

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Fully paid ordinary shares

Balance at beginning of the year Purchase of Non-Executive Directors’ share on market Issued on exercise of performance rights Balance at end of the year	2016 No (000) $’000 56,530 27,021 – (294) 744 5,957 57,274 32,684	2015 No (000) $’000 56,108 24,893 – (92) 422 2,220 56,530 27,021

A total of 743,662 fully paid ordinary shares have been issued as a result of the exercise of performance rights at an average price of $30.74. The value of $5,957,694 booked to share capital represents the accounting expense previously recognised in relation to the performance rights and deferred tax on the performance rights exercised. Fully paid ordinary shares carry one vote per share and carry the right to dividends. On winding up, ordinary shares participate in dividends and the proceeds, in proportion to the number of shares held. The Company does not have a limited authorised capital and issued shares do not have a par value.

The purchase of Non-Executive Directors’ shares on market represent the Restricted Shares that are acquired by the trustee of the NEDs Plan trust in respect of the vested Rights. At the time the shares vest, they are subject to a CHESS holding lock and may not be dealt with until the earlier of ceasing to be a NED of the Group or the elapsing of fifteen years from the grant date. The Restricted Shares were acquired via on-market purchase of Sirtex Shares, rather than by new issues of Shares.

Share options

At reporting date, there were no share options outstanding, and no share option plan was in place.

Share rights

At reporting date, there is an Executive Performance Rights Plan and a Non-Executive Director’s Rights Plan in place. Refer to note 22 for further details.

Capital management

Management controls the capital of the Group in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going concern. Management effectively manages the Group’s capital by assessing the Group’s financial risk and adjusting its capital structure in response to changes in these risks and in the market. The responses include the management of debt levels, distributions to shareholders, and share issues.

The company has no debt as at 30 June 2016.

18. RESERVES

Share Rights Reserve Foreign Currency Translation Reserve	Consolidated 2016 2015 $’000 $’000 4,652 4,075 2,004 1,540 6,656 5,615	Consolidated 2016 2015 $’000 $’000 4,652 4,075 2,004 1,540 6,656 5,615
		5,615

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19. EARNINGS PER SHARE

(a) Basic earnings per share

Profit from continuing operations attributable to equity holders
Weighted average number of shares used in the calculation of basic
earnings per share
Add to number of shares used in the calculation of diluted earnings per
share:
Effect of potential conversion to ordinary shares under the Executive
Performance Rights and Non-Executive Directors’ Rights Plans (refer
to note 22 for further details)
(b)
Diluted earnings per share
Profit from continuing operations attributable to equity holders
Weighted average number of shares used in the calculation of
diluted earnings per share
DIVIDENDS
Distributions paid
Declared fully franked ordinary dividend of 20 cents (2015: 14 cents) per share
franked at the tax rate of 30% (2015: 30%)
Balance of franking credit amount at year end adjusted for franking credits arising
from payment of provision for income tax

Consolidated
2016
2015
$’000
$’000
53,581,892
40,345,232
57,197,572
56,511,106
942,027
1,352,605
Consolidated
2016
2015
$’000
$’000
53,581,892
40,345,232
58,139,599
57,863,711
Consolidated
2016
2015
$’000
$’000
11,432
7,914
6,206
7,456

20. DIVIDENDS

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21. OPERATING SEGMENTS

Identification of reportable segments

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors in assessing performance and determining the allocation of resources.

As the Group manufactures and distributes only one product, identical for each of the three regional markets, no further segmentation across products or services is made.

Basis of accounting for purposes of reporting by operating segments

Accounting policies adopted

Inter-segment transactions

Segment assets

Segment liabilities

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Segment revenues

External Sales Inter-segment(s) 2016 2015 2016 2015 $’000 $’000 $’000 $’000 Asia Pacific 8,361 6,913 163,751 151,944 Americas 185,204 136,738 13,819 11,110 EMEA 38,927 32,436 – 11,963 Total of all segments Interest – unallocated Eliminations Consolidated	Total 2016 2015 $’000 $’000 172,112 158,857 199,023 147,848 38,927 44,399 410,062 351,104 2,229 1,889 (177,570) (175,016) 234,721 177,977

The total revenue represented for the Group’s operating segments reconcile to the key financial figures as presented in its financial statements as follows:

Revenue from the sale of goods Other segment revenue From other segments Elimination of intersegment revenues Group revenues *Segment net profit after tax*	Consolidated 2016 2015 $’000 $’000 232,492 176,088 2,229 1,889 177,570 175,016 (177,570) (175,016) 234,721 177,977

Asia Pacific Americas EMEA Total of all segments Eliminations Profit before income tax expense Income tax expense Profit after income tax expense	Consolidated 2016 2015 $’000 $’000 95,397 62,507 13,547 3,364 33,634 6,932 142,578 72,803 (72,580) (20,035) 69,998 52,768 (16,416) (12,423) 53,582 40,345

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Segment assets and liabilities

Asia Pacific Americas EMEA Total of all segments Eliminations Consolidated	Assets 2016 2015 $’000 $’000 273,960 244,707 55,959 44,687 52,865 26,734 382,784 316,128 (121,067) (114,652) 261,717 201,476	Liabilities 2016 2015 $’000 $’000 86,408 100,128 36,100 30,083 29,998 17,421 152,506 147,632 (84,293) (90,792) 68,213 56,840	Liabilities 2016 2015 $’000 $’000 86,408 100,128 36,100 30,083 29,998 17,421 152,506 147,632 (84,293) (90,792) 68,213 56,840
			56,840

Other segment information

	Asia	Pacific	Americas
	2016	2015	2016	2015	2016	2015
	$’000	$’000	$’000	$’000	$’000	$’000
Acquisition of segment assets
– Plant and equipment	1,045	553	1,406	166	673	973
– Intangibles	19,197	21,123	–	–	–	–
Depreciation and amortisation
of segment assets
– Plant and equipment	763	1,003	812	519	589	397
– Intangibles	4,403	460	–	–	–	–

Major customers

The Group has a number of customers to whom it provides products. No single external customer represents more than 10% of total revenue.

22. SHARE-BASED PAYMENTS

Executive Performance Rights

During the financial year, a total of 204,074 performance rights were granted to executives and senior managers under the Executive Performance Rights Plan, to take up performance rights which may convert into ordinary shares, for nil consideration. The performance rights are exercisable following 30 June 2018. The performance rights hold no voting or dividend rights, and are not transferable.

Performance rights granted to executives and senior management are as follows:

Grant Date	Number
22 February 2011	374,188
23 August 2011	456,000
28 August 2012	687,000
26 November 2013	448,500
23 September 2014	284,720
1 September 2015	96,244
27 October 2015	45,930
4 February 2016	61,900

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During the year, a total of 45,930 rights were granted to the Chief Executive Officer, and a total of 185,324 rights to other executives and senior managers of the Group. The performance rights vest after 30 June 2018, and the extent to which vesting occurs, depends on the achievement of performance conditions.

The Board has determined that there will be two performance conditions with equal weight of 50% each, calculated over a three year period from 1 July 2015 to 30 June 2018 (the Measurement Period), namely Indexed Total Shareholder Return (i-TSR) and Earnings per Share (EPS). The percentage of rights vested will be determined as follows:

TSR (% pa compounded)

Vesting (%)

100% of ASX300 TSR and greater than 10% 0% Above market average but not reaching target 1% for each 1% above market average (pro-rata) 200% of ASX300 TSR 100% of Target grants (66.7% of Plan grants) Surpassing target 0.5% for each 1% above target up to 1.5 times entitlement EPS (% pa compounded) Vesting (%) EPS compound growth of 10% 0% Above threshold but not reaching target 10% for each 1% above threshold (pro-rata) EPS compound growth of 20% 100% of Target Rights (66.7% of Plan Rights) Surpassing target 5% for each 1% above target up to 1.5 times entitlement

A summary of the movements of all performance rights issued is as follows:

			Balance	Granted	Exercised	Forfeited	Balance	Vested
	Vesting	Exercise	at start of	during the	during the	during the	at end of	and
Grant Date	Date	Price	year	year	year	year	year	exercisable
22-Feb-11	30-Jun-13	–	33,000	–	33,000	–	–	–
23-Aug-11	30-Jun-14	–	33,000	–	33,000	–	–	–
28-Aug-12	30-Jun-15	–	678,500	–	678,500	–	–	–
26-Nov-13	30-Jun-16	–	443,000	–	–	–	443,000	443,000
23-Sep-14	30-Jun-17	–	281,320	–	–	–	281,320	–
01-Sep-15	30-Jun-18	–	–	96,244	–	–	96,244	–
27-Oct-15	30-Jun-18	–	–	45,930	–	–	45,930	–
04-Feb-16	30-Jun-18	–	–	61,900	–	–	61,900	–

The weighted fair value of the performance rights issued during the financial year ended 30 June 2016 has been calculated at $17.83 (2015: $9.44).

The price was calculated by using a Monte Carlo simulation model and binomial option pricing model applying the following inputs:

Exercise price	Nil
Performance rights life	3 years
Expected share price volatility	30%
Expected index volatility	10%
Distribution yield	1.05%
Correlation	12.5%
Risk-free interest rate	2.04%

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23. KEY MANAGEMENT PERSONNEL

Historical volatility has been the basis for determining expected share price volatility as it is assumed that this is the best indicator of future volatility, which may not eventuate. The underlying share price for the rights granted during the year was:

1 September 2015	$33.29
27 October 2015	$34.60
4 February 2016	$36.04

Included in the statement of profit or loss and other comprehensive income is $2,771,860 (2015: $2,249,474) of performance rights plan expense, and relates in full to equity-settled share-based payment transactions.

Non-Executive Directors’ Rights

On 23 November 2015, a total of 4,230 rights were granted to Non-Executive Directors under the Non-Executive Directors’ Rights Plan to take up rights which may convert into ordinary shares, for nil consideration. The rights will vest three months after grant provided that the Non-Executive Directors continue to be a Director at that time. There are no performance criteria attached to the vesting of the rights. Upon vesting of the rights and conversion into ordinary shares, the shares are transferred to each NED, but with a CHESS holding lock. Disposal restrictions stipulate that, except by force of law, exercised shares may not be dealt with until the earlier of ceasing to be a NED of the Group or the elapsing of fifteen years from the grant date.

Rights granted to Non-Executive Directors are as follows:

Grant Date	Number
24-Sep-13	4,195
22-Jul-14	6,289
23-Nov-15	4,230

A summary of the movements of rights issued is as follows:

			Balance	Granted	Exercised	Forfeited	Balance	Vested	Vested
	Vesting	Exercise	at start of	during the	during the	during the	at end of	and	and
Grant Date	Date	Price	year	year	year	year	year	exercisable	unexercisable
22-Jul-14	22-Jul-15	nil	6,289	–	6,289	–	–	–	–
23-Nov-15	23-Feb-16	nil	–	4,230	4,230	–	–	–	–

The totals of remuneration paid to key management personnel of the Group during the year are as follows:

Short-term employee benefits Post-employment benefits Share-based payment	2016 $ 5,547,004 184,463 1,876,717 7,608,184	2015 $ 5,180,394 122,709 1,462,735
		6,765,838

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24. PARENT ENTITY

Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Equity Issued capital Reserves Retained earnings Total Equity Reserves Share rights reserve Total reserves Financial performance Profit for the year Total comprehensive income Financial guarantees	2016 $’000 127,962 30,428 158,390 27,976 1,243 29,219 32,684 (2,032) 98,519 129,171 874 874 43,626 43,626	2015 $’000 93,831 17,377
		111,208

		16,564 584
		17,148

		26,122 1,614 66,324
		94,060

		1,613
		1,613

		7,086
		7,086

No guarantees have been provided to its wholly-owned subsidiaries by the parent entity.

Contingent liabilities

The parent entity does not have any contingent liability as at 30 June 2016 (2015: $nil).

Contractual commitments

The parent entity has an operating lease commitment for the office lease in Sydney. Refer to note 25 for further details.

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25. COMMITMENTS

Operating Leases

The consolidated entity leases offices in Sydney, Singapore, Germany and in the United States, with no option to purchase the leased assets at the expiry of the leased assets.

Duration and remaining periods for the office leases are as follows:

Location	Lease term	Remaining lease period
Sydney – North Sydney	84 months	49 months
Sydney – St Leonards	60 months	55 months
Singapore	36 months	26 months
Bonn (GER)	98 months	67 months
Frankfurt (GER)	120 months	86 months
Boston (US)	123 months	67 months
London (UK)	24 months	14 months

The consolidated entity also leases various items of plant and equipment in Germany and the United States with lease terms of up to 48 months, and remaining periods of 1 to 58 months.

Non-cancellable operating leases Not longer than 1 year Longer than 1 year and not longer than 5 years Longer than 5 years	Consolidated 2016 2015 $’000 $’000 3,299 2,299 10,623 7,897 1,865 2,538 15,787 12,734	Consolidated 2016 2015 $’000 $’000 3,299 2,299 10,623 7,897 1,865 2,538 15,787 12,734
		12,734

Research commitments

The consolidated entity has entered into various research and development agreements with Universities and other external research institutions for ongoing research and clinical trials.

Under these agreements, the consolidated entity is committed to providing funds over future periods, payable within one year of $1,469,000 (2015: $920,000). The amount of all outstanding contractual commitments as at 30 June 2016 is $1,981,000 (2015: $920,000).

Clinical Trial commitments

Under these agreements, the consolidated entity is committed to providing funds over future periods, payable within one year, of $9,358,000 (2015: $7,107,000). The amount of all outstanding contractual commitments as at 30 June 2016 is $17,574,000 (2015: $20,810,000).

Capital commitments

The consolidated entity has entered into various agreements for property, plant and equipment and intangible assets. Under these agreements, the consolidated entity is committed to providing funds over future periods within one year of $196,000 (2015: $419,000). The amount of all outstanding contractual commitments as at 30 June 2016 is $196,000 (2015: $839,000).

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26. CONTROLLED ENTITIES

		Ownership	interest
Name of entity	Country of incorporation	2016	2015
		%	%
Parent entity
Sirtex Medical Ltd	Australia
Controlled entities
Sirtex Medical Products Pty Ltd	Australia	100	100
Sirtex Global Pty Ltd	Australia	100	100
Sirtex Technology Pty Ltd	Australia	100	100
Sirtex Sir-Spheres Pty Ltd	Australia	100	100
Sirtex Thermosperes Pty td	Australia	100	100
Sirtex Medical Holdings Inc	USA	100	100
Sirtex Medical Inc	USA	100	100
Sirtex Wilmington LLC	USA	100	100
Sirtex Germany Holding GmbH	Germany	100	100
Sirtex Medical Europe GmbH	Germany	100	100
Sirtex Technology Germany GmbH	Germany	100	100
Sirtex Germany Manufacturing GmbH	Germany	100	100
Sirtex Medical United Kingdom Ltd	United Kingdom	100	100
Sirtex Medical France S.A.R.L.	France	100	–
Sirtex Medical MEA FZE	United Arab Emirates	100	100
Sirtex Singapore Holding Pte Ltd	Singapore	100	100
Sirtex Medical Singapore Pte Ltd	Singapore	100	100
Sirtex Global Singapore Pte Ltd	Singapore	100	100
Sirtex Singapore Manufacturing Pte Ltd	Singapore	100	100
Sirtex Technology Japan KK	Japan	100	100

Sirtex Medical France S.A.R.L. was incorporated on 2 February 2016.

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27. RELATED PARTY TRANSACTIONS

(a) Equity interests in related parties

Details of the percentage of ordinary shares held in controlled entities are disclosed in Note 26.

(b) Loans and transactions with key management personnel and related entities

At 30 June 2016, $1,255,046 (2015: $9,222) was payable to directors, key management personnel and director related entities.

At 30 June 2016, $1,493 (2015: $12,702) was receivable from directors, key management personnel and director related entities.

The payable relates to deferred remuneration which is fully offset with a corporate asset and recognised net in the financial statements (2015: withholdings tax on the performance rights granted to Key Management Personnel and expense reimbursements). The receivable relates to expense reimbursement.

(c) Transactions with the wholly-owned group

The ultimate parent entity in the wholly-owned group is Sirtex Medical Ltd. During the financial year, Sirtex Medical Ltd paid management fees of $23,213 (2015: $144,228) to entities in the wholly-owned group.

(d) Outstanding balances arising from transactions with the wholly-owned group

The following balances are outstanding at the reporting date in relation to transactions with the wholly-owned group:

Current payables from subsidiaries: $23,932,288 (2015: $12,169,332)

Loans receivable from subsidiaries: $15,317,888 (2015: $14,885,016)

28. EVENTS AFTER REPORTING DATE

On 20 July 2016, a total of 443,000 Executive Performance Rights issued on 26 November 2013 fully vested, having achieved the performance target. As at the date of this report, a total of 443,000 of these performance rights have been exercised and issued as ordinary shares of Sirtex Medical Ltd.

Since the end of the year, the Directors have declared a partially franked dividend of 30c per share to be paid on 19 October 2016 (2015: 20 cents per share). The record date for the dividend is 28 September 2016.

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29. REMUNERATION OF AUDITORS

During the year, the following were paid or were payable for services provided by the auditor of the parent entity, its related party practices and non-related audit firms:

	Consolidated
	2016	2015
	$’000	$’000
Remuneration of the auditor of the parent entity for
audit and review of financial reports	164	140
Agreed upon procedures performed for the parent entity	78	34
Remuneration of the auditors of subsidiaries
for audit and review of financial reports	159	143

30. FINANCIAL RISK MANAGEMENT

The Group’s financial instruments consist mainly of deposits with banks, short-term investments, account receivable and payable, and loans to and from subsidiaries.

The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial instruments, are as follows:

Financial Assets Cash and cash equivalents Other short-term deposits Trade and other receivables Other financial assets Financial Liabilities* Trade and other payables	Consolidated 2016 2015 $’000 $’000 21,025 21,941 86,000 52,000 42,272 35,000 1,687 1,213 150,984 110,154 28,090 24,290 28,090 24,290	Consolidated 2016 2015 $’000 $’000 21,025 21,941 86,000 52,000 42,272 35,000 1,687 1,213 150,984 110,154 28,090 24,290 28,090 24,290
		110,154

		24,290
		24,290

Other financial assets comprise security deposits

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Financial Risk Exposures and Management

The main risks the Group is exposed to through its financial instruments are interest rate risk, foreign exchange risk, liquidity risk and credit risk as follows:

(a) Interest rate risk

The Group’s exposure to interest rate risk relates to its cash and short-term deposits. The interest rate as at 30 June 2016 on cash was 0.45% (2015: 0.9%) and on short-term deposits 3.08% (2015: 3.46%). All other financial assets and liabilities are non-interest bearing.

Sensitivity analysis

	Consolidated
	2016	2015
	$’000	$’000
Change in profit:
Increase in interest rate by 2%	1,926	1,331
Decrease in interest rate by 2%	(1,926)	(1,331)
Change in equity:
Increase in interest rate by 2%	1,926	1,331
Decrease in interest rate by 2%	(1,926)	(1,331)

(b) Credit risk

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(c) Liquidity risk

As at 30 June 2016, the Group had only non-interest bearing financial liabilities with less than 1 year maturity (refer note 14).

(d) Foreign exchange risk

It is the Group’s policy that hedging, as a percentage of net foreign exchange rate exposure, be maintained within the limits of the foreign exchange risk management policy.

The Group does not have any currency hedging instruments open at reporting date.

Sensitivity analysis

	Consolidated
	2016	2015
	$’000	$’000
Change in profit:
Increase of AUD to USD by 15%	(16,840)	(20,511)
Decrease of AUD to USD by 15%	16,840	20,511
Increase of AUD to EUR by 15%	(2,022)	(4,865)
Decrease of AUD to EUR by 15%	2,022	4,865
Change in equity:
Increase of AUD to USD by 15%	(16,840)	(20,511)
Decrease of AUD to USD by 15%	16,840	20,511
Increase of AUD to EUR by 15%	(2,022)	(4,865)
Decrease of AUD to EUR by 15%	2,022	4,865

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2016 Group entity (Functional currency) US Entities (USD) European Entities (EUR) UK Entities (GBP) Singapore Entities (SGD) Japanese Entities (JPY) Middle Eastern Entities (AED) Balance Sheet Exposure 2015 Group entity (Functional currency) US Entities (USD) European Entities (EUR) Singapore Entities (SGD) Japanese Entities (JPY) Balance Sheet Exposure	USD 000 19,096 19,096 17,816 17,816	EUR 000 7,463 7,463 4,493 4,493	GBP 000 (66) (66) 1,062 –	SGD 000 (467) (467) 3,253 1,062	JPY 000 4,292 4,292 3,253	AED 000 – – –	AUD 000 25,718 11,143 (118) (465) 56 – 36,334 23,198 6,543 1,027 35 30,803

Foreign Currency Call/Put Options

The Group has no currency option open at reporting date.

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APPENDIX II

B2. CHAIRMAN’S REPORT AND CHIEF EXECUTIVE OFFICER’S REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2016

CHAIRMAN’S REPORT

On behalf of the Sirtex Board and management, I take great pleasure in presenting the 2016 Annual Report. Our market execution strategies and investment into multiple, large scale clinical studies will continue to drive our growth now and into the future. Given the large global market available for SIR-Spheres[®] Y-90 resin microspheres, it is important that we continue to invest ahead of the curve to fully capitalise on this unique opportunity. The interventional oncology space is rapidly progressing towards being considered as a fourth pillar of cancer care, alongside long-standing surgical, radiotherapy and chemotherapy- based approaches. Sirtex remains a global leader in this dynamic, growing specialty.

Throughout the year, we continued to expand our geographic footprint of treatment centres, received new regulatory clearances and added new country-specific reimbursement. We completed patient recruitment for our two remaining large clinical studies, SORAMIC and SIRveNIB, which is a major achievement. We continued to build awareness on our SIRFLOX data and now have the benefit of the study outcomes being published in a high impact scientific journal, which occurred in February.

Additionally, we added new talent including at Board and senior management levels.

We have not wavered from the commitment we made under our 2020Vision strategy to build long term, sustainable growth for our investors and other stakeholders.

2016 Financial Performance

Sirtex delivered another record year of sales and profits. The Company reported SIR- Spheres microspheres dose sales of 11,931, representing growth of 16.4 per cent over the prior corresponding period. The primary driver of the strong dose sales performance during the year was the Americas region, which delivered outstanding dose sales growth of 19.0 per cent over the prior corresponding period.

Total product revenue was $232.5 million, up 32.0 per cent on the prior period. Earnings before interest, tax, depreciation and amortisation (EBITDA) was $74.3 million, up 39.6 per cent, profit before tax was up 32.7 per cent to $70.0 million and net profit after tax was $53.6 million, up 32.8 per cent on last year. This financial year, we recognised a full 12 months of SIRFLOX clinical study amortisation of $3.0 million.

Cash from operations was $65.2 million, up 25.5 per cent on the previous year with net cash flow of $33.1 million recorded.

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Financial Position

Sirtex ended the financial year in a very strong financial position with cash and cash equivalents of $107.0 million. The Company has no debt. The strength of Sirtex’s balance sheet provides the financial flexibility required to drive long term growth by purusing opportunities as they arise.

Dividends

The Board of Directors is committed to the payment of dividends to our shareholders. The Directors have approved a partially franked final dividend of 30.0 cents per share for the 2016 financial year, up 50.0 per cent over the prior period. This represents a dividend payout ratio of 32.0 per cent on reported earnings per share. The record date for the dividend is 28th September 2016 and the payment date is 19th October 2016. Inclusive of the 2016 financial year dividend payment to be made on 19th October 2016, Sirtex will have returned to shareholders a total of $52.9 million in dividends since 2011.

Director And Board Activities

The Board works diligently to ensure the Sirtex global management team has the expertise, capability and resources to execute on their global growth initiatives both now and into the future.

In September, the Board welcomed Dr Katherine Woodthorpe as an independent Non-Executive Director of the Company. Dr Woodthorpe has an outstanding track record of achievement across multiple industries, including the medical devices sector and is a valuable addition to the Board. Dr Woodthorpe serves as Chairperson of the Risk, Health and Safety Committee, and is a member of the Audit Committee and the Remuneration Committee.

Corporate Governance & Remuneration

The Board is committed to achieving and demonstrating the highest standards of corporate governance. As such, Sirtex Medical Limited and its controlled entities (“the Group”) have adopted a corporate governance framework and practices to ensure they meet the interests of shareholders.

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The Group complies with the Australian Securities Exchange Corporate Governance Principles and Recommendations 3rd Edition (the “ASX Principles”). Our Corporate Governance Statement incorporates the disclosures required by the ASX Principles under the headings of the eight core principles. All of these practices, unless otherwise stated, were in place for the full reporting period.

SHAREHOLDER DIVIDENDS DECLARED

$’000

==> picture [148 x 186] intentionally omitted <==

----- Start of picture text -----

2012 2013 2014 2015 2016
5,577 6,733 7,914 11,423 17,292
----- End of picture text -----

“Sirtex ended the financial year in a very strong financial position with cash and cash equivalents of $107.0 million. The Company has no debt. Such a strong balance sheet provides the financial flexibility for the business to pursue opportunities as they arise to drive long term growth.”

Sirtex’s Codes and Policies are a key element of our corporate responsibility and govern the way our Directors and employees work. During the year we updated our website to ensure that all Sirtex’s Corporate Governance policies and procedures are available to shareholders and other stakeholders in a single, easy-to-read format within the Investors section of our website.

Additionally, we published our Anti-Bribery, Anti-Corruption Policy during the year, and updated our Diversity Policy. Following the release of Guidance Note 8 from the ASX relating to continuous disclosure obligations by listed entities, we also updated our Corporate Communications and Continuous Disclosure Policy to reflect a number of the updated recommendations proposed by the ASX.

Sirtex’s remuneration levels, structure and processes are designed to reflect high ethical standards, the laws of the countries in which the executives are employed, and that all staff are treated fairly. During the year, we updated the remuneration pages within the Investors section of our website to include all charters, policies, procedures and rules that relate to Executive and Non- Executive remuneration at Sirtex. We actively encourage investors with any questions or comments regarding the Company’s remuneration structure and processes to contact us directly via the website.

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Our People

With a global workforce of 279 talented individuals across 20 countries, it is not hard to imagine the knowledge, passion, innovation and expertise our employees bring to the organisation each day. The Board recognises and congratulates all staff members for their efforts in helping to shape Sirtex into a global leader in the emerging field of interventional oncology.

Sirtex continues to benefit as an organisation with a diverse workforce. At the end of the 2016 financial year, women represented 47 per cent of the total number of employees globally. Sirtex continues to encourage diversity across the business in order to build on identifiable individual strengths within a professional development framework. This is a key focus of our Growing with Sirtex program.

As a business, it is important to have a long term strategic focus like the 2020Vision. With such a clear and concise articulation of our long term goals and growth objectives under this strategy, we believe every employee understands his or her role and importance in helping us to realise this vision.

A Responsible Corporate Citizen

Sirtex recognises the importance of corporate responsibility, and remains committed to conducting business ethically while contributing to the social, environmental and economic wellbeing in those locations in which we operate. We are committed to being a responsible member of the international business community, and acknowledge that our operational integrity and reputation are crucial to our success.

The Company assists its employees to become active supporters of worthwhile causes and participate in community programs outside the workplace. During the year, Sirtex made charitable contributions of $0.4 million, representing 0.7 per cent of our FY16 net profit after tax. This is consistent with our global healthcare peers.

Outlook

Sirtex remains a long term growth proposition by virtue of a significantly under-penetrated market for our innovative SIR-Spheres microspheres product and the growing clinical acceptance of our product for both primary and secondary cancers of the liver. These factors, coupled with continued geographic expansion and new government reimbursement, will continue to underpin our dose sales growth and profitability.

It has never been a more exciting time to be at Sirtex. With recruitment now complete in all of our major clinical studies, we eagerly await the reporting of these results, which are anticipated to become progressively available over the next two years.

RICHARD HILL CHAIRMAN

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CHIEF EXECUTIVE OFFICER’S REPORT

NET PROFIT AFTER TAX

+32.8%

REVENUE GROWTH +32.0%

DOSE SALES GROWTH

+16.4%

Our mission is to improve the lives of the many people suffering from cancer or other diseases through the development of innovative new therapies. Our 2016 progress is testament to this foundation belief, which I would now like to outline in more detail. I am pleased to report another record year in dose sales and profits for Sirtex Medical. Our SIR-Spheres[®] Y-90 resin microspheres business continues to perform strongly. This was underpinned by the Americas, which delivered outstanding dose sales growth of 19.0 per cent and now represents 70.6 per cent of our global mix by volume and 79.7 per cent by revenue. Dose sales in EMEA grew 11.2 per cent. This was a pleasing result despite some timing issues associated with achieving new government reimbursement in several important jurisdictions and a generally tighter reimbursement environment in some existing markets. Dose sales in APAC grew 8.9 per cent, including a very strong performance in Australia, where dose sales grew close to 20 per cent.

The field of interventional oncology is moving very rapidly. Our goal, and that of our interventional oncology peers, is to update the current cancer treatment medical paradigm of surgery, chemotherapy and radiotherapy to include a fourth pillar of interventional oncology. Innovative products such as SIR-Spheres microspheres that have robust clinical evidence of safety and benefit are at the leading edge of changes in the practice of cancer medicine. The journey is still in its early stages, with our 2016 dose sales implying approximately 2 per cent penetration of the addressable market for our product, which we estimate at 488,000 patients annually.

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Continued Strong Progress

In 2016 we saw global dose sales increase 16.4 per cent over the prior year. Revenue growth outpaced dose sales growth reflecting the translation effect of a weaker Australian dollar versus the US dollar and Euro over the period. Our net profit after tax rose 32.8 per cent to $53.6 million.

Sirtex delivered a number of important milestones in the 2016 financial year:

Record dose sales of 11,931, up 16.4 per cent on 2015
Record revenues of $232.5 million, up 32.0 per cent
Earnings before interest, tax, depreciation and amortisation (“EBITDA”) growth of 39.6 per cent to $74.3 million
Earnings per share of 93.7 cents, up 31.3 per cent
Dividend per share of 30.0 cents, up 50.0 per cent on the previous year
Operating cash flow of $65.2 million, up 25.5 per cent
Publication of the SIRFLOX clinical results in the prestigious Journal of Clinical Oncology
Completion of patient recruitment in the SORAMIC clinical study
Completion of patient recruitment in the SIRveNIB clinical study
Completion of patient recruitment in the RESIRT pilot study
Reimbursement granted in the Netherlands and South Africa
Regulatory clearance in Canada
Appointment of a new CEO for the Americas region, effective 1st July 2016

Elevation Into The S&P/Asx 100 Index

In December, Sirtex was included in the S&P/ASX 100 Index, which represents the ASX top 100 companies by float-adjusted market capitalisation, and accounts for approximately 74 per cent of the Australian equity market. Inclusion in this Index has led to significantly more enquiries from domestic and international institutional investors, and has broadened equity research on the Company, with several new analysts initiating research coverage in 2016. We look forward to further diversifying our share register and welcoming new investors to the Company over the coming years.

Sirflox Study Published

In February, we were delighted to announce the publication of the SIRFLOX study in the prestigious peer-reviewed Journal of Clinical Oncology (JCO), the official journal of the American Society of Clinical Oncology (ASCO). SIRFLOX was published as a Rapid Communication. The scientific importance of the study was also highlighted by the JCO via its online early release alert to its more than 26,000 subscribers. Here it described the Rapid Communication as required reading, with the paper fast-tracked and considered practice-changing. The JCO is consistently rated in the top 1 per cent of all journals, as measured by impact factor.

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APPENDIX II

The interest this publication generated throughout the medical oncology community has been significant. SIRFLOX was the most read Original Report in the month of March according to the JCO. It was also the second most read Original Report for May, highlighting the enduring nature of the study publication. The education and awareness building continues each and every day. We were also pleased to see the SIRFLOX study included in the Best of JCO: 2016 Annual Meeting Edition.

In June this year at the ASCO Annual Meeting in Chicago, Professor Volker Heinemann, European Principal Investigator on the SIRFLOX study, from the University of Munich, presented additional Depth of Response (DpR) data from the study.

He presented the data again at the World Congress on Gastrointestinal Cancer (WCGIC) in Barcelona. DpR has recently been proposed as a measure of efficacy that predicts the long-term treatment outcome for metastatic colorectal cancer (mCRC).

The authors concluded that addition of SIR-Spheres microspheres to standard chemotherapy significantly increased hepatic DpR and that Progression-Free Survival (PFS) was greatest in patients with a baseline tumour burden > 12 per cent, whereas the impact on the Complete Response (CR) rate was greater where tumour burden was < 12 per cent.

Patient Recruitment Completed For All Major Clinical Studies

While completing large randomised controlled studies in the interventional oncology space can be challenging, our talented and motivated clinical team has ensured that all of our major clinical studies completed recruitment in a timely manner. This is a wonderful achievement. We committed approximately $60 million over five years to run six important clinical studies, across two important disease indications; mCRC and hepatocellular carcinoma, also known as primary liver cancer, or HCC.

If the results are positive, all studies will generate the necessary Level 1 evidence required to elevate the use of SIR-Spheres microspheres from a last resort or salvage option to a first resort or first-line option for clinicians to consider. In total, approximately 2,340 patients have been recruited onto these studies, with around 1,100 patients in our first-line mCRC studies SIRFLOX, FOXFIRE and FOXFIRE Global and approximately 1,240 across our three HCC studies SARAH, SORAMIC and SIRveNIB.

In March, the SORAMIC study completed recruitment, with 420 patients recruited into the palliative (SIR-Spheres microspheres) arm of the study. This study is comparing the combination of sorafenib (Nexavar[®] , Bayer HealthCare Pharmaceuticals, Germany) and SIR-Spheres microspheres compared to sorafenib alone in advanced HCC.

This is the largest interventional oncology study ever undertaken with SIR-Spheres microspheres in combination with the only current standard of care in HCC. Study results are anticipated some time in calendar year 2018.

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In June, the SIRveNIB study completed recruitment. The SIRveNIB study is designed to examine the efficacy and safety of SIR-Spheres microspheres compared to sorafenib in a predominately Asian population suffering from advanced HCC. SIRveNIB is the largest Asia-Pacific study to directly compare SIR-Spheres microspheres and sorafenib, and indeed is the largest randomised study conducted on sorafenib in the region. The study recruited over 360 patients.

Results of the SIRveNIB study are anticipated in the first half of calendar year 2017, along with the SARAH study.

==> picture [450 x 231] intentionally omitted <==

----- Start of picture text -----

PROGRESS OF OUR LEAD CLINICAL PROGRAMS
SIRFLOX
530 Patients Primary endpoint
reported
FOXFIRE/
FOXFIRE GLOBAL
573 Patients Completion of Estimate of primary
patient recruitment endpoint available
SARAH
460 Patients
Completion of Estimate of primary
patient recruitment endpoint available
SIR NIBve
360 Patients Completion of Estimate of primary
patient recruitment endpoint available
SORAMIC
420 Patients
Completion of Estimate of primary
patient recruitment endpoint available
2014 2015 2016 2017 2018 2019
METASTATIC COLORECTAL CANCER (mCRC)
HEPATOCELLULAR CARCINOMA (HCC)
----- End of picture text -----

In addition, Sirtex continues to support a wide range of smaller studies, and I encourage investors to read about all our current studies via our website.

One such smaller study is our RESIRT kidney cancer pilot study. RESIRT completed patient recruitment in April, with 21 patients treated with progressively higher doses of SIR-Spheres microspheres. Initial results from the study are expected in the fourth quarter of calendar year 2016.

New CEO of The Americas

We were delighted to appoint Mr Kevin Richardson to the role of CEO of the Americas, after Mr Michael Mangano elected to resign from the CEO position at the end of the 2016 financial year. We thank Mike for all his dedication and hard work over the last six years at Sirtex. Having been responsible for overall sales, market development, customer service and health economics at Sirtex in the US for the past six years, Kevin was an obvious and highly qualified choice for the role. Prior to joining Sirtex Medical, Kevin held Senior Director roles in sales and marketing at St. Jude Medical and was a Global Marketing Director at Boston Scientific.

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APPENDIX II

In November, our Chief Executive of Asia Pacific departed, with the Chief Executive of our EMEA region, Mr Nigel Lange assuming overall management responsibility for the region, in addition to EMEA. Prior to filling the position we wish to further develop our entry strategies into Japan and China, whereby a suitable candidate with an appropriate skill set will be appointed. There were no other key management personnel changes made during the year.

Driving Reimbursement Globally

Despite reimbursement in some markets taking longer than anticipated, we made excellent progress on our strategy to ensure as many patients as possible are treated with our product. Reimbursement is a key factor in the execution of this strategy. In January, we saw the Centers for Medicare and Medicaid Services (CMS) in the United States (US) increase the reimbursement available for SIR-Spheres microspheres by 2.8 per cent to marginally above our selling price, which supports our current pricing structures in that market. In March, we were granted government reimbursement in the Netherlands for patients with colorectal liver metastases who have failed or are intolerant to chemotherapy. This is a high priced market, and no volume-based limits have been imposed. In May, we received reimbursement coverage from a large South African private insurer, for treating all forms of inoperable liver cancers. This insurer has a greater than 50 per cent share of the private health insurance market, representing over 2.6 million covered lives.

In Canada, existing reimbursement is available for radioembolisation treatments such as SIRSpheres microspheres.

In April, the UK National Institute for Health and Care Excellence (NICE) issued a new Medtech Innovation Briefing (MIB), stating that National Health Service (NHS) doctors and commissioners may consider SIR-Spheres microspheres as an alternative to standard drug or chemoembolization therapy in the treatment of patients with inoperable hepatocellular carcinoma (HCC). This should see additional HCC patients receiving SIR-Spheres microspheres in the UK market.

Outcome Focused Operations

We continued to invest in our core capabilities throughout the year as they relate to sales and marketing, regulatory and quality assurance, medical and administration.

Sales and marketing, our largest expenditure item, was up 21.9 per cent on the prior year to $79.3 million, or 34.1 per cent of sales. Our major focus was on expanding our sales and marketing infrastructure following the release of the SIRFLOX results in June 2015 at ASCO. This was a particular focus in the US, where we materially expanded our sales force to capitalise on the interest from medical oncologists following the release of the SIRFLOX clinical data, and interventional radiologists seeking to establish a SIR- Spheres microspheres practice within their hospital.

Since the publication of the SIRFLOX results in the Journal of Clinical Oncology in February and the growth evident in the US market, we are further investing into our sales and marketing infrastructure in this important region.

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INVESTMENT IN SALES &
MARKETING
$’000
2012 2013 2014 2015 2016
27,896 34,187 49,196 65,081 79,338
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INVESTMENT IN CLINICAL
STUDIES []
$’000
2012 2013 2014 2015 2016
Excluding SIRFLOX amortisation expense.
12,243 15,872 22,168 20,473 20,631
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As we increase our manufacturing capability, expand into new markets, complete and report our clinical studies and pursue new treatment indications, our regulatory and quality assurance function needs to keep pace with the increased demands posed by government regulators, customers and patients. Regulatory and quality assurance expenses were up 20.6 per cent to $3.9 million.

We were pleased to receive regulatory approval in Canada during the period, which opens up an important new market for Sirtex in the coming years. In South America, we currently supply doses in Argentina and Brazil. These markets are still at an early stage of adoption, and have significant growth potential.

Medical expenditure grew 36.4 per cent to $6.4 million during the year to support the many clinicians globally who use, or seek to use our innovative product. As the line of enquiry has accelerated following the SIRFLOX results, we have had to add capability to this important function, as ultimately it leads to more clinicians referring patients to SIR-Spheres microspheres.

During the year we also launched the RESIN liver tumour patient registry in the US. This registry is aims to recruit over 500 patients per annum with both primary and secondary

Sirtex now has a global team of 279 people across 20 countries, representing growth of approximately 13 per cent over the prior period. Reflecting our innovative, supportive and inclusive culture at Sirtex is our high retention rate, with approximately 33 per cent of our workforce having achieved five years’ service. We continue to experience relatively low staff turnover rates.

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INVESTMENT IN R&D
$’000
2012 2013 2014 2015 2016
5,723 6,615 7,981 8,641 10,835
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Manufacturing And Supply Chain

Sirtex has manufacturing capabilities in Singapore as well as Boston, USA and shortly in Frankfurt, Germany. These facilities are close to major transport hubs, allowing our product to be efficiently dispatched across the Americas, EMEA and Asia Pacific.

Given the very short half-life of SIR-Spheres microspheres (64.1 hours), we have invested significant time and resources over the years to optimise the supply of this valuable asset, to over 1,000 treatment centres globally.

Our success to date highlights our ability to meet the demands of a strongly growing market, while also maintaining and even expanding our gross margins. It is important to note that during the 2016 financial year, over 95 per cent of commercial doses sold reached the patient/hospital within a 30 minute window of the time stipulated.

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GLOBAL TREATMENT
SIR-SPHERES
CENTRES MICROSPHERES
01
02
MERGERS & RESEARCH &
ACQUISITIONS DEVELOPMENT
2012 2013 2014 2015 2016 03
628 714 795 919 1,003
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Our Frankfurt facility has experienced some building work delays owing to design changes required by local government authorities. As a result, we were unable to supply commercial doses from this plant as planned during the latter part of the 2016 financial year. Once the requisite regulatory clearances have been achieved, we will commence commercial supply, which is anticipated during the first half of the 2017 financial year.

The Frankfurt facility will supply the EMEA region, but as is the case for our manufacturing facilities in the US and Singapore, any one site can supply commercial doses across the globe in the event of an unforeseen manufacturing shut-down.

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Information Technology

Our global technology team successfully completed the implementation of SAP, now our primary Enterprise Resource Planning (ERP) solution, which went live throughout the organisation during the year. I am pleased to report that the anticipated efficiency gains in managing our supply chain, administration, sales and customer management have materialised through the use of this new platform.

Phase 2 of the implementation will involve integrating our three manufacturing sites in the US, Singapore and Germany. This will drive further efficiency gains for the organisation.

During the year significant improvements in content for our public website were made, allowing for simple and transparent communication with investors, clinicians and patients.

Research And Development

Research and Development (R&D) at Sirtex remains a core pillar of our 2020Vision strategy. During the reporting period our R&D expenses were $8.7 million, up 50.4 per cent on the prior period, and represented 3.7 per cent of sales.

Our investment in R&D is contingent on the delivery of meaningful pre-specified milestones, which ensures appropriate cost controls are in place. Our collaborations with The Australian National University, University of Sydney, Peter MacCallum Cancer Institute and National Cancer Centre of Singapore continues and we have made good progress during the year. During FY16 we had expected to be in a position to provide investors with an update on our new technologies, this will now occur prior to the end of the 2016 calendar year.

2020Vision Strategy

The 2020Vision articulates our longer term strategies at Sirtex, with the principal goal of delivering on our growth objectives by focusing our efforts across three core pillars.

The first pillar seeks to fully exploit the long term growth opportunity of our existing SIR-Spheres microspheres product. This is a multi-faceted strategy that encompasses growing the current ‘salvage’ market opportunity by investing in sales, marketing and reimbursement infrastructure to build awareness, increase adoption and expand reimbursement coverage by government and private payers. In parallel, the investment we have made into clinical studies will expand its use in existing primary and secondary liver cancer markets, notably mCRC and HCC, if the studies deliver positive findings. In total, we have penetrated just 2 per cent of the total addressable annual opportunity for SIR-Spheres microspheres, so there is much still to be done. We are also examining its use in other cancers outside the liver, such as the kidneys. We are very pleased with our progress under this pillar, with all of our major clinical studies completing recruitment during 2016. We now await the final results from these studies, which will progressively occur over the next two years.

The second pillar is aimed at evolving the current SIR-Spheres microspheres platform and developing new technologies, which include developments in carbon cage nanoparticles, coated nanoparticles, radioprotector and other technologies. As mentioned, we continue to make progress across all programs and are moving closer to commencing clinical studies.

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The third pillar is focused on potential merger and acquisition activities. We continue to seek out opportunities for our business where we can leverage our key capabilities and infrastructure across new products, technologies or businesses to provide even higher levels of growth and returns for shareholders into the future.

We will continue to update shareholders as we progress each of the three pillars under the 2020Vision.

Regional Update

Region Dose Sales Revenue THE AMERICAS 8,420 up 19.0% $185.2M up 35.4% EUROPE, MIDDLE EAST, AFRICA 2,528 up 11.2% $38.9M up 20.0% ASIA PACIFIC 983 up 8.9% $8.4M up 20.9%

Solid Regional Growth Delivered, Despite Global Economic Headwinds.

Sirtex’s continued investment in the business, which has resulted in geographic expansion, treatment centre expansion, higher rates of clinical adoption, new regulatory clearances and expanded reimbursement, has seen the business deliver another solid overall performance this year.

The Americas

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PERFORMANCE DOSE SALES: Up 19.0% to 8,420 REVENUE: Up 35.4% to $185.2 million (up 18.9% on constant currency basis)

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Year In Review

The Americas achieved another year of strong dose sales and revenue growth. This was driven by the continued expansion in the number of centres certified to use SIR-Spheres microspheres, a focus on increasing the utilisation of our product within existing centres, the expansion of our sales force targeting both medical oncologists and interventional radiologists following the results of the SIRFLOX study, and finally a concerted focus on building awareness and increasing patient referrals amongst medical professionals. We have also expanded the infrastructure necessary to support continued growth in key areas such as reimbursement, customer service and marketing. At the end of the financial year, the number of hospitals certified in the use of SIR-Spheres microspheres across the region had grown by 14.4 per cent to 564 treatment sites.

Several structural changes in our key US market were also beneficial. In November, The Centers for Medicare and Medicaid Services (CMS) increased the reimbursement of SIR-Spheres microspheres by 2.8 per cent for the 2016 calendar year, to slightly above our selling price. In December, the US government suspended the 2.3 per cent US Medical Device Excise Tax for two years, which represented a tax on our US product revenues.

In addition, we achieved regulatory clearance for SIR-Spheres microspheres in Canada in the month of April. This allows Sirtex to supply our product as a Class III medical device for the treatment of patients with advanced inoperable liver cancer in the Canadian market. This market is expected to positively contribute to our dose sales mix in the 2017 financial year.

The depreciation of the Australian dollar relative to the US dollar provided a material tailwind to our revenue growth, which significantly outpaced our dose sales growth, despite our US pricing remaining stable over the same period.

As part of our strategy to build awareness and interest following from the SIRFLOX results, the Sirtex Americas team had a major presence at a number of important conferences throughout the year including the Clinical Interventional Oncology (CIO) meeting, the Society for Interventional Radiology (SIR) meeting, the World Congress on Interventional Oncology (WCIO), the American Society of Clinical Oncology – Gastrointestinal (ASCO-GI) meeting and the ASCO annual meeting. Such meetings provide the opportunity to directly engage with a large number of clinicians, and help to build consensus among Key Opinion Leaders.

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Europe, Middle East, Africa

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PERFORMANCE DOSE SALES: Up 11.2% to 2,528 REVENUE: Up 20.0% to $38.9 million (up 13.2% on constant currency basis)

Year In Review

Across the EMEA region, we recorded double digit growth in our more established Western European markets of Germany, Belgium and the UK. However, growth in several jurisdictions was impacted by a general tightening in reimbursement, or the geopolitical situation, while anticipated new government reimbursement decisions were announced later in the year than originally anticipated. Revenue growth outpaced dose sales growth principally due to the positive impact of the Australian dollar depreciation against the Euro, coupled with a greater percentage of dose sales recorded in higher priced markets. At the end of the financial year, the number of hospitals certified in the use of SIRSpheres microspheres across the region had grown by 5.2 per cent to 306 treatment sites.

The EMEA sales and marketing team focused on a number of key priority areas over the year, including a continuation of educating and awareness building among clinicians following on from the SIRFLOX study results, expanding geographic coverage, building endorsement from key government bodies and obtaining new reimbursement.

Our focus on reimbursement showed tangible benefits throughout the year, with new reimbursement achieved in a number of countries. In March, we were granted government reimbursement in the Netherlands for patients with colorectal liver metastases who have failed or are intolerant to chemotherapy. In May, we received reimbursement coverage from a leading South African private insurer, for treating all forms of inoperable liver cancers. This insurer has a greater than 50 per cent share of the private health insurance market, representing over 2.6 million covered lives.

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In April, the UK National Institute for Health and Care Excellence (NICE) issued a new Medtech Innovation Briefing (MIB), stating that National Health Service (NHS) doctors and commissioners may consider SIR-Spheres microspheres as an alternative to standard drug or chemoembolization therapy in the treatment of patients with inoperable hepatocellular carcinoma (HCC). Over time, we believe such a comprehensive review of our product encompassed in the MIB will lead to additional HCC patients receiving SIR-Spheres microspheres.

Throughout the year, our sales and marketing team focused on a number of key conferences including the European Neuroendocrine Tumour Society (ENETS), the Global Embolization Symposium & Technologies (GEST) meeting, and the 18th World Congress on Gastrointestinal Cancer (WCGIC). The EMEA team also worked alongside our US colleagues at the major global meetings, namely SIR, ASCO and ASCO-GI meeting.

Asia Pacific

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PERFORMANCE DOSE SALES: 8.9% to 983 REVENUE: Up 20.9% to 8.4 million (up 16.7% on constant currency basis)

Year In Review

Regional dose sales during the year reflected a very strong double digit growth contribution from our key Australian market, and good growth achieved by several key Asian countries including Taiwan and Singapore. However, Asian growth was impacted by supply disruptions in several Asian markets, including South Korea. We have since resumed supply into the South Korean market with a new distribution partner. At the end of the financial year, the number of hospitals certified in the use of SIRSpheres microspheres across the region remained steady at 133 treatment sites.

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In September, Associate Professor Peter Gibbs presented an Australian mCRC patient registry analysis of SIR-Spheres microspheres use in first-line mCRC treatment at the Australasian GastroIntestinal Trial Group (AGITG) annual meeting. Although retrospective in nature, the analysis showed a statistically significant Overall Survival benefit of five months was observed in the SIR-Spheres plus chemotherapy arm versus the chemotherapy alone arm, despite no statistically significant difference in overall Progression-Free Survival (PFS) shown between the two arms.

Excellent progress has been made in our market development strategy, following on from the SIRFLOX results, as we seek to build awareness and educate clinicians on the significance of the study across the region. We hosted a number of important workshops and masterclasses for clinicians and other medical professionals throughout the year, which were well received. Additional investment in our Australian sales and marketing team was made during the year, reflecting the solid growth delivered and continued progress achieved with the medical oncology referral community.

Our sales and marketing team also attended a number of important scientific conferences during the year, including The Liver Transplant Symposium – Singapore, ESMO Asia conference – Singapore, The Liver Week – Korea, AGITG – Sydney and the major global meetings ASCO and ASCO-GI.

We continue to explore our entry strategies for both China and Japan. Both markets are attractive, long term opportunities for the APAC region. China represents approximately 50 per cent of the annual incidence of HCC, while Japan is the second largest medical device market globally behind the US, with generally high pricing and a well-established government reimbursement environment upon regulatory clearance.

Looking Ahead

Our long term strategies, as encompassed by the 2020Vision will help ensure Sirtex is positioned to achieve long term growth and build shareholder value. We have made progress under each of the pillars in 2016. Of particular note, we are especially proud to have completed recruitment in all our major clinical studies, and the continuation of our treatment centre roll out, globally.

Our market position remains strong and highly defendable, but we must continue to invest in the business to remain ahead of the curve, and fully exploit the long term growth potential the interventional oncology market represents.

This financial year will be punctuated with a number of clinical studies reporting scientific findings. Irrespective of what the results from these studies show, whether positive, indifferent or negative, it is important to recognise our core ‘salvage’ business will be largely unaffected by such study outcomes and will continue to show solid growth in 2017.

In conclusion, 2017 is shaping up as a very exciting year for Sirtex, and we look forward to keeping you, our investors, abreast of our progress throughout the year as we continue to deliver on our long term growth plans.

GILMAN E WONG

CHIEF EXECUTIVE OFFICER

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B3. EXTRACTS FROM THE ANNUAL REPORT RELATING TO EMPLOYMENT POLICIES

OUR PEOPLE

We are proud of the culture we have built and the values we hold as an organisation.

We are strong believers in our people, and the expertise they bring to Sirtex Medical. We seek to develop a collegiate workplace, which actively fosters idea generation and innovation across all levels of the business.

Our strong financial results delivered this year are testament to the continued dedication of our global workforce. During the year, the number of employees grew by 13 per cent to 279, with women representing 47 per cent of the Sirtex workforce.

To manage the growth in Sirtex’s workforce effectively, our dedicated global team of human resources professionals continue to deploy our comprehensive People Strategy. This encompasses a broad program of engagement to identify and recruit talented individuals to the business, while ensuring alignment with our core vales and beliefs from the employee induction program.

Our employee engagement programs continue to show great success. Growing with Sirtex is a series of integrated activity streams, which aim to methodically build a team of highly skilled and capable individuals, who will continue to develop with Sirtex, enabling the continued growth of the business and the delivery of our 2020Vision strategy. Our Onboarding, Professional Development Framework (PDF) and Continuing Professional Development Programs (CPDP) have commenced their implementation phase. A further two activity streams will commence in the 2017 financial year.

During the year, our employee base in the Americas expanded significantly. This reflected a concerted sales and marketing increase, following the presentation of our SIRFLOX data at ASCO in June. The Americas now consitutes 41 per cent of our total workforce.

Our workforce operates across nine key functional areas of the business, with 48 per cent of our employees engaged within a sales and marketing function at Sirtex.

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A COMMITMENT TO DIVERSITY

‘Sirtex is committed to developing a culture of diversity and recognises the benefits that arise from embracing all available talent. We believe a diverse workforce is one of the keys to achieving long term business growth and sustainability.

We have three key objectives relating to diversity. Specifically, we provide updated online training to all current and new staff on our Economic, Environmental and Social Sustainability Report and Diversity Policy. Secondly, we aim to include at least one female candidate in the short list of applicants for every management role. Our target is to increase female participation across all levels of management from 36 per cent to 40 per cent over three to five years. As at 30 June 2016, our female participation rate was 47 per cent up from 43 per cent in the 2015 financial year.

In 2016 we launched the Leadership and Management Development Program. Part of this extensive program is to identify females who should participate in the program with a target of 40 per cent of the participating population being women. This is in addition to the Growing with Sirtex career development program introduced in 2015.

Growing with Sirtex has been designed to foster a continuous cycle of planning, feedback and review to support and strengthen all employee performance and personal growth in line with Sirtex goals and its overall vision.

Finally we continually seek to improve our approach to flexible working to make it more accessible and culturally acceptable for all employees.

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C1. FINANCIAL REPORT OF SIRTEX FOR THE FINANCIAL YEAR ENDED 30 JUNE 2017

DIRECTORS

The Directors of Sirtex Medical Ltd during the financial year and until the date of this report are Mr R Hill (Chairman), Dr J Eady, Mr G Boyce, Dr K Woodthorpe AO, Mr N Mitchell, Mr A McLean and Mr G Wong (ceased employment on 13 January 2017).

Information on the directors is presented in the Annual Report. This information includes the qualifications, experience and special responsibilities of each director. It also gives details of the directors’ other directorships. Information on the Company Secretary including his qualifications and experience is presented in the Annual Report.

DIRECTORS’ MEETINGS

The number of Directors’ meetings (including meetings of committees of Directors) and number of meetings attended by each of the Directors of the Company during the financial year are:

	Board of		Remuneration		Audit		Risk, Health and	Risk, Health and
	Directors		Committee		Committee		Safety Committee
	Held Attended		Held Attended		Held Attended		Held Attended
R Hill (Chairman)	15	15	8	8	6	6	5	5
Dr J Eady	15	15	8	8	6	6	5	5
G Boyce	15	15	8	8	6	6	5	5
Dr K Woodthorpe	15	15	8	8	6	6	5	5
N Mitchell	3	3	1	1	1	1	–	–
A McLean	1	1	–	–	–	–	–	–
G Wong	5	5	–	–	–	–	–	–

PRINCIPAL ACTIVITIES

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REVIEW OF OPERATIONS AND FINANCIAL RESULTS

The Group’s main product SIR-Spheres[®] Y-90 resin microspheres is a targeted radioactive treatment for liver cancer. The treatment is called Selective Internal Radiation Therapy (SIRT) and consists of a minimally invasive surgical procedure performed by an interventional radiologist. The SIRSpheres microspheres lodge in the small blood vessels of the tumour where they destroy it from the inside over a short period while sparing the surrounding healthy tissue. During the year, the Group sold 12,578 doses worldwide.

During 2017, we reported the clinical findings from the combined SIRFLOX/FOXFIRE/FOXFIRE Global clinical study in metastatic colorectal cancer (mCRC) representing 1,103 patients and the SARAH and SIRveNIB studies in hepatocellular carcinoma (HCC), which recruited 467 and 360 patients, respectively.

In April 2017, the results of the SARAH study were presented at the European Association for the Study of the Liver, International Liver Congress™. The primary endpoint of the study, which was to show that SIR-Spheres microspheres was superior to sorafenib in advanced HCC patients, was not met, as there was no statistically significant difference in overall survival (OS) outcomes. In May 2017, the results of the combination SIRFLOX/FOXFIRE/FOXFIRE Global study was released in abstract form and the results presented as an oral abstract at the American Society of Clinical Oncology (ASCO) annual meeting in June 2017. The primary endpoint of OS was not met, as there was no statistically significant difference between SIR-Spheres microspheres plus chemotherapy versus chemotherapy alone. In May 2017, the results of the SIRveNIB study was released in abstract form and the results presented as an oral abstract at the ASCO annual meeting in June 2017. The primary endpoint of the study was also not met.

Dose sales for the year increased by 5.4 per cent over the previous financial year. The Americas (North and Latin America) market with 8,807 doses achieved growth of 4.6 per cent, the Europe, Middle East and Africa (EMEA) market with 2,677 doses achieved growth of 5.9 per cent, and Asia Pacific (APAC) recorded 1,094 dose sales, representing growth of 11.3 per cent. The number of treatment centres certified to use SIR-Spheres microspheres stands at 1,093 centres globally, representing growth of 9.0 per cent.

Sales revenue reached $234,282,498 for the financial year ended 30 June 2017, an increase of 0.8 per cent over last financial year ($232,491,500). The lower sales revenue growth compared to volume growth is as a result of changes in geographic revenue mix with stronger growth in the APAC region, and of negative foreign currency fluctuations, as the Australian Dollar appreciated against the US Dollar and the Euro during the year when compared to the prior year.

In June 2017, the Board reviewed the carrying value of the Company’s clinical and R&D assets in accordance with AASB138 Intangible Assets following the results of the aforementioned clinical studies and the completion of development activities relating to our core SIR-Spheres microspheres product. As a result of that review, the Board impaired the entire carrying value of those assets, representing a one-off, non-cash impairment charge to the profit and loss account of $90,540,640 for the financial year ended 30 June 2017. At the same time, management restructured the business and a one-off restructuring provision of $4,065,626 was recognised in June 2017. This significantly impacted reported net profit after tax for the year.

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Profit before tax has decreased 158.5 per cent to a loss before tax of $40,953,964 for the year ended 30 June 2017 (2016: profit of $69,998,039), and profit after tax has decreased by 149.0 per cent to a loss of $26,257,188 (2016: profit of $53,582,392). Excluding the impact of the asset impairments, write-down of receivables and the restructuring costs, underlying profit before tax decreased 18.3 per cent to $57,182,789.

Earnings per share for the year ended 30 June 2017 has decreased to a loss per share of $0.455 (2016: earnings per share of $0.937).

Net assets for the Group decreased by 22.8 per cent to $149,467,490 (2016: $193,503,996), as a result of the impairment of capitalised intangible R&D and clinical assets of $90,540,640. There was an increase in cash and short-term deposits of $11,323,760 (2016: $33,084,007).

SHARE BUY-BACK

A $30,000,000 on-market share buy-back was announced in February 2017, which commenced in early June 2017. For the year ended 30 June 2017, we have bought back $2,873,348 worth of the Company’s stock, representing 231,379 shares. A further $27,126,652 remains to be bought back which is expected to be completed by 8 September 2017.

DIVIDENDS

A partially franked ordinary dividend of 30 cents per share was declared for the financial year ended 30 June 2016 and paid during the financial year ended 30 June 2017 (2016: 20 cents).

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

During the financial year there were no significant changes in the state of affairs of the Group other than that referred to in the financial statements or notes thereto.

LIKELY DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES

The Group’s strategy focuses on promoting and developing SIR-Spheres microspheres to become a worldwide standard of care for patients with primary and secondary forms of liver cancer.

The execution of this strategy has required the Group to expand its sales and marketing, regulatory, and medical function. In total, 51 per cent of the Group’s workforce is engaged in a sales and marketing role, to help build the awareness and use of SIR-Spheres microspheres by the global medical community.

The Group completed the expansion of its manufacturing capabilities during the year, with a new state of the art facility in Frankfurt, Germany commencing the supply of commercial doses into the EMEA region during the second half of the 2017 financial year.

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FINANCIAL INFORMATION OF SIRTEX

The Group has been successful in gaining regulatory clearances for SIR-Spheres microspheres in key global markets. They include the United States, Canada, Argentina, Brazil, the European Union, Israel and various Middle East and African markets, Australia, New Zealand, Singapore, Hong Kong, Taiwan and various other Asian markets. We continue to make progress as we develop our entry strategies for both China and Japan. Both markets are attractive, long term opportunities for the Company. China represents approximately 50 per cent of the annual incidence of HCC, while Japan is the second largest medical device market globally behind the US, with generally high pricing and a well-established government reimbursement environment upon regulatory clearance. The Group was also successful in expanding government and private sector reimbursement for SIR-Spheres microspheres during the financial year, with reimbursement granted in France for refractory mCRC. Expanded reimbursement coverage helps ensure as many patients as possible who suffer from liver cancer can receive SIR-Spheres microspheres.

During the financial year, the Group invested an additional $4,132,641, included in intangible asset work-in-progress, in its integrated software application in order to bring greater efficiencies to our collection, storage and use of business information to empower our manufacturing, clinical and marketing teams, streamline our administrative procedures and further improve our competitiveness.

UNISSUED SHARES

Executive Performance rights on issue at year end

As at 30 June 2017, the unissued shares of Sirtex Medical Ltd under Executive Performance Rights Plan are as follows:

	Date of	Exercise	Number
Grant date	Vesting	Price	under Rights
		$
26 November 2013	30 June 2016	nil	20,000
23 September 2014	30 June 2017	nil	204,920
1 September 2015	30 June 2018	nil	96,244
4 February 2016	30 June 2018	nil	54,900
21 December 2016	30 June 2019	nil	180,076

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Employee Service rights on issue at year end

As at 30 June 2017, the unissued shares of Sirtex Medical Ltd under the Employee Service Rights Plan are as follows:

	Date of	Exercise	Number
Grant date	Vesting	Price	under Rights
		$
20 September 2016	30 June 2019	nil	61,900
9 March 2017	30 June 2019	nil	3,250

Rights holders do not have any rights to participate in any issue of shares or other interests in the Company or any other entity.

Directors’ rights on issue at year end

As at 30 June 2017, there were no unissued shares of Sirtex Medical Ltd under Non-Executive Directors Rights.

Share options on issue at year end or exercised during the year

During the year ended 30 June 2017, there were no ordinary shares of Sirtex Medical Ltd issued on the exercise of options. No share options have been issued during the year, and no share options are outstanding at 30 June 2017.

Directors’ interests

The relevant interest of each Director in the share capital of the Company, as notified by the Directors to the ASX in accordance with section 205G (1) of the Corporations Act 2001 , as at 30 June 2017 is as follows:

	2017	2017	2016	2016
	Ordinary		Ordinary
	Shares	Rights	Shares	Rights
R Hill	11,871	–	9,617	–
Dr J Eady	10,546	–	9,137	–
G Boyce	9,436	–	8,309	–
Dr K Woodthorpe	1,778	–	651	–
N Mitchell	3,000	–	–	–
A McLean	–	–	–	–
G Wong	–	–	160,000	233,930

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INDEMNIFICATION OF OFFICERS AND AUDITORS

EVENTS AFTER REPORTING DATE

On 4 August 2017, it was determined that none of the Executive Performance Rights issued on 23 September 2014 vested. The Board exercised its discretion to disallow any vesting of rights.

Since the end of the year, the Directors have declared an unfranked dividend of 30 cents per share to be paid on 18 October 2017 (2016: 30 cents per share). The record date for the dividend is 27 September 2017.

Sirtex Medical Limited (Sirtex) is the respondent to a representative proceeding (shareholder class action) brought in the Federal Court of Australia. Details are in Note 15 Contingent Liabilities.

PROCEEDINGS ON BEHALF OF THE COMPANY

ENVIRONMENTAL REGULATIONS

The Group is not subject to significant environmental regulation under the law of any of the jurisdictions the Group is operating in.

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NON-AUDIT SERVICES

During the year, Grant Thornton, the Company’s auditors, performed other services in addition to their statutory audit duties.

all non-audit services are reviewed and approved by the audit committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and
the nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of ethics for Professional Accountants set out by the Accounting Profession Ethical Standards Board.

AUDITOR’S INDEPENDENCE DECLARATION

The auditor’s independence declaration for the year ended 30 June 2017 has been received and can be found on page 45 of the financial report and forms part of the Directors’ report.

ROUNDING OFF OF AMOUNTS

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LETTER FROM THE CHAIRMAN OF THE REMUNERATION COMMITTEE

Dear Shareholder,

I am pleased to present the Remuneration Report for the financial year ended 30 June 2017, outlining the nature and amount of remuneration for Sirtex’s non-executive directors and other Key Management Personnel (KMP), as defined under section 300A of the Corporations Act, 2001 and its associated regulations.

As detailed in the recent Remuneration Portal update, work has continued to refine and further develop our remuneration structure and policies during the past year. Our objective is for the remuneration structure and policies to:

Enable us to recruit, motivate and retain the calibre of non-executive directors, executives and staff needed to guide and run our complex Company, in a way that delivers on its potential to all stakeholders;
Motivate and encourage focus through performance-based short-term incentives, and a longer-term perspective and a sense of ownership through an equity-based long-term incentive.

And:

We listen, with decisions data-driven and based on considered analysis; and
Where Total Remuneration Packages are aligned to the complexity of the role and reflect the contribution being delivered and results obtained.

As would be expected, and in line with our remuneration structure, the past year’s circumstances have had a marked impact on our executive Total Remuneration Packages.

While circumstances meant that over the second half of FY17 the demands on many of our executives were increased substantially, given the Company’s performance, the average STI awarded for our KMP executives for the year was less than 20% of target. None of the 2015 LTI grants vested. In line with these circumstances, FY18 base salary movements were minimal, with changes to the at- risk components limited to improving KPI alignment for the STI portion and to address stakeholder concerns with our LTI Plan and structure. Non-executive directors received no increase in their fees.

I hope that you will continue to support our approach to remuneration by voting to adopt this Remuneration Report at the upcoming Annual General Meeting.

Sincerely,

Dr John Eady

Chair of the Remuneration Committee

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APPENDIX II

REMUNERATION REPORT (AUDITED)

CONTENT:

The Remuneration Report, which forms part of the Directors’ Report, provides information about the remuneration of the directors of Sirtex Medical Limited (Sirtex) and other KMP, for the year ended 30 June 2017. It is set out under the following headings:

Persons covered by this report;
Principles used to determine the nature and amount of remuneration;
Service agreements;
Performance outcomes and impact on shareholder wealth for the financial year ended 30 June 2017;
Details of remuneration; and
Additional information

1. PERSONS COVERED BY THIS REPORT

This report covers remuneration arrangements and outcomes for the following KMP:

Non-executive Directors

Mr Richard Hill, Independent Non-Executive Chairman
Dr John Eady, Independent Non-Executive Director and Deputy Chairman – Chair of Remuneration Committee
Mr Grant Boyce, Independent Non-Executive Director – Chair of the Audit Committee
Dr Katherine Woodthorpe, Independent Non-Executive Director – Chair of the Risk, Health and Safety Committee
Mr Neville Mitchell, Independent Non-Executive Director (appointed 13 April 2017)

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Executives

Mr Andrew McLean, Managing Director & CEO (appointed 5 June 2017)
Mr Gilman Wong, Managing Director & CEO (ceased employment on 13 January 2017)
Mr Darren Smith, CFO and Company Secretary
Mr Nigel Lange, Executive Vice President, Sales and Marketing, EMEA (1 July 2016 to 31 October 2016), Chief Operating Officer (1 November 2016 to 13 January 2017), Interim CEO (13 January 2017 to 4 June 2017), and Chief Commercial Officer (5 June 2017 to current)
Mr Kevin Richardson, Executive Vice President, Sales and Marketing, Americas (promoted 1 July 2016, departed 18 May 2017)
Mr Anthony Dixon, Executive Vice President, Sales and Marketing, EMEA (promoted 13 January 2017)
Mr Reuben Teo, Executive Vice President, Sales and Marketing, APAC (appointed 27 March 2017)
Mr Robert Hardie, Global Head of Operations
Dr David Cade, Chief Medical Officer

Unless otherwise stated, the KMP held their positions throughout the financial year ended 30 June

2. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION

2.1 Remuneration Governance Framework

The Remuneration Committee relies on and benefits from input provided by a wide range of sources:

Remuneration Committee members;
External remuneration consultants (ERCs);
Stakeholder groups and shareholders;
Remuneration Committee peers within Australia;

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Other experts and professionals such as tax advisors and lawyers; and
Individual KMP to understand roles and complexities.

2.2 Executive KMP Remuneration Policy and Procedure

The Executive KMP Remuneration Policy and Procedure applies to executives defined as:

Managing Director & CEO – accountable to the Board for the Group’s performance and long term planning;
Top Strata Direct Reports to the Managing Director/Chief Executive Officer – Chief Commercial Officer, Chief Financial Officer and Chief Medical Officer who provide corporate expertise and operational overview; and
Regional Executive Vice Presidents and Global Head of Operations.

Each of these roles have the opportunity to materially influence the integrity, strategy and the operations of the Company and its performance.

Comprehensive policies and procedures are in place that reflect the Company’s values and intentions regarding executive remuneration. These include those covering Senior Executive Remuneration, Senior Executive STIs and LTIs, Clawback, Diversity and Privacy. They are amended to clarify and improve alignment from time to time and are documented on the Company’s website. Processes are also in place to determine how KMP remuneration is to be benchmarked and adjusted to reflect performance and changes in the circumstances of the Group.

Broadly, the remuneration policies state that:

Total remuneration (TRP) should comprise Fixed Remuneration and significant at-risk STI and LTI components so that executive reward reflects performance and shareholder experience;
When combined, the components are designed so as to provide a TRP able to attract and retain the calibre of executives required for the Company to achieve its goals;
Proportions are tailored to regional practice and are based on extensive and objective market data;
Internal relativities and any special circumstances are considered so as to recognise Sirtex’s organisational design;

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‘Strata’ are used to define role complexities and manage TRP within a range so as to allow for individual differences such as the calibre of incumbents and the competency with which they fulfil roles.
Termination benefits will be in line with local regulations, and in Australia limited to the default amount allowed for under the Corporations Act.

As such, the Company’s executive KMP remuneration policies and procedures ensure that executive remuneration is linked to Company performance, with an emphasis on longer-term results and the experience of shareholders. Executive TRP will be higher when longer term issues are being addressed effectively and the Group is doing well.

Policy Area

Relationship to Company Performance

Fixed Remuneration

At-risk components (STI and LTI)

The at-risk components are linked to business levers that drive strategic initiatives or indicators that reflect shareholder experience.

The STI KPIs are designed generally to drive focus on internal factors, such as dose sales, that can be considered as leading indicators for the external measures used for LTI awards.

LTI awards are based on direct measures of Group performance, as reflected in share price growth and the growth in earnings per share.

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2.3 At-risk remuneration: Executive Short-term Incentives STI Plan – Process

The Short-term Incentive Plan (STI) is an important part of the remuneration offered to executives as it:
Encourages focus on factors that are considered critical over the coming year to meet the Company’s purpose and implement its strategies, and
Shares Company success with the executives who contribute through their efforts.
Management of the STI structure and process rests with the Board.
It determines the applicable KPIs and targets annually to align with Company strategy, with input from the CEO. While many of the measures are quantitative, some are more subjective, aimed at assessing personal effectiveness in the context of prevailing circumstances, and
It assesses performance against the KPI measures annually, based on objective data and information provided by the CEO and determines the quantum of STI awarded.
The Board has discretion to vary the Plan Rules or terminate the STI Plan in relation to future periods.
The Clawback policy applies to STI awards.

2.4 Executive Short-term Incentive (STI) Plan – Detail

Aspect

Plan Rules, Offers and Comments

Measurement Period From 1 July to the following 30 June.

Award Opportunities

For the financial year ended 30 June 2017 the MD/CEO had a target STI award opportunity equal to 50% of Fixed Remuneration. The COO/CCO, CFO and CMO proportion was 40% and the remaining executive KMP had a target award opportunity equal to 35% of Fixed Remuneration.

Key Performance Indicators (KPIs)

The CEO’s focusing measures were ‘Normalised Group EBITDA’ (40% weighting), ‘doses sold’ (40% weighting) and ‘leadership effectiveness’ (20% weighting). Those for the other executive KMP were based on two measurement groups, ‘Normalised Group EBITDA’ (50% weighting) and focusing KPIs specific to their roles (50% weighting).

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Aspect

Plan Rules, Offers and Comments

The scale used to determine the STI earned in relation to the ‘Normalised Group EBITDA’ KPIs is:

STI Performance Reward Scale

		Percentage of
Performance	Budget	Target
Level	Achievement	STI Payable
<Threshold	<95%	Nil
Threshold	95%	25%
	>95%, <100%	Pro-rata
	100%	75%
	>100%, <105%	Pro-rata
Target	105%	100%
	>105%, <110%	Pro-rata
Stretch	≥110%	110%

Role-specific, focusing KPIs included such factors as dose sales, expense control, delivery performance, cost-of-goods sold, audit compliance and to cover project-style work, progress against milestones. Weightings are applied to reflect the relative importance of each KPI.

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Aspect

Plan Rules, Offers and Comments

Cessation of Employment In the event of cessation of employment due to dismissal for During a Measurement cause, all entitlements in relation to the Measurement Period are Period forfeited.

In the event of cessation of employment due to resignation, all entitlements in relation to the Measurement Period are forfeited, unless otherwise determined by the Board.

In the event of cessation of employment for other reasons:

     - (a) The STI award opportunity for the Measurement Period will be reduced pro-rata to reflect the portion of the Measurement Period worked, and

     - (b) Performance and STI awards will be determined following the end of the Measurement Period in the normal way, although the Board may accelerate the determination and payment of STI awards in special circumstances.

2.5 At-risk remuneration: Executive Long-term Incentive (LTI) Plan – Process
The Long-term Incentive Plan (LTI) is a key part of the at-risk component of the remuneration offered to executives and aims to:
- Build a sense of ownership and encourage a longer term view;
- Share Company success with the executives who contributed through their efforts; and
- Link executive reward with shareholder experience.
In most instances LTIs offer the greater proportion of at-risk reward with the number of LTI grants awarded to each executive customised to reflect regional practice.
Vesting depends on thresholds being exceeded and in accordance with pro-rata scales to stretch levels. As is the case with STIs, the ability to receive target TRP depends on meeting defined and demanding targets.
The responsibility for the ongoing administration of the LTI plan rests with the Board. It determines annually:
- The LTI proportions of TRP;

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The measures to be used; and
Applicable vesting scales.
The Board has absolute and unfettered discretion, at any time, to increase or decrease (including to nil) the level of vesting of Rights, if the Board forms the view that it is appropriate to do so, having regard to prevailing circumstances.
The Clawback policy applies to LTI awards.

2.6 Executive Long-term Incentive (LTI) Plan – Detail

Aspect Plan Rules, Offers and Comments

Measurement Period

The measurement period for the 2017 offers is the three financial years from 1 July 2016 to 30 June 2019.

Award Opportunities

The FY17 grant target award opportunity was tailored to regional practice. It varied from 110% of Fixed Remuneration for the MD/ CEO, 75% for the COO/CCO, CFO and CMO and a lesser proportion, mostly around 55%, for the remaining executive KMP.

Vesting Scales

Specific performance conditions must be satisfied for Rights to vest. The performance conditions specified as part of the most recent offers comprise two tranches, with 50% of Rights being subject to an Indexed Total Shareholder Return (iTSR) vesting measure, and 50% being subject to an EPS Growth vesting measure. With regard to the indexed TSR measure, offer documents make it clear that the Board has absolute and unfettered discretion, at any time, to increase or decrease (including to nil) the level of vesting of Rights, if the Board forms the view that it is appropriate to do so, having regard to prevailing circumstances. It noted that the Board would use this discretion if the Company’s TSR is negative, even if it outperforms the indexed ASX300.

Indexed TSR is the cumulative gain for shareholders over a three year period, from growth in the share price and dividends, assuming that dividends are reinvested into the Group’s shares, compared to that of the Australian stock-market’s ASX300 index. iTSR has replaced absolute TSR so that gains rewarded are due to Company performance rather than general stock-market movement, but with an implied absolute TSR threshold hurdle.

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Aspect

Plan Rules, Offers and Comments

The selection of two times the average ASX300 growth as the target is based on past performance data that showed that an ASX300 company performing at the P75 level over recent years outperformed the market average by a factor of about two.

Normalised EPS growth remained as the most appropriate second measure. The Rights that were considered for vesting on 30th June 2017 where granted in July 2015, at which time the normalisation elements were understood to comprise expenditure on clinical trials, R&D and adjusted for exchange rate movements. This has subsequently been tightened and for the awards to be granted for the financial year 2018, the Compound Average Growth Rate (CAGR) for earnings per share will be adjusted only for significant and specified, non-recurring items, and expressed in constant currency.

This measure is intended to give a different perspective on Group performance. Earnings-per- share growth is a method of tracking the ability of the Group to grow profit on a per-share basis. Increasing earnings per share indicates increasing returns on the funds provided by shareholders.

Vesting Scales Percentages of grants to vest for the FY17 LTI grants are to be determined in accordance with the following scales:

TSR Growth Rate Vesting Scale

		Number of
Indexed TSR	Performance	Rights to Vest
Threshold	100% of ASX300 TSR	0%
	and greater than 10%
Recognition	Above threshold but not	1% for each 1%
	reaching target	above threshold
		(pro-rata)
P75 Target	200% of ASX300 TSR	100% of Target
		grants (66.7% of
		Plan grants)
Further Reward	Surpassing target	0.5% for each 1%
		above target up
		to 1.5 times
		entitlement

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Aspect

Plan Rules, Offers and Comments

	EPS Vesting Scale
Earnings		Number of
per Share	Performance	Rights to Vest
Threshold	EPS compound growth	0%
	of 10%
Recognition	Above threshold but not	10% for each 1%
	reaching target	above threshold
		(pro-rata)
P75 Target	EPS compound growth	100% of Target
	of 20%	Rights (66.7% of
		Plan Rights)
Further Reward	Surpassing target	5% for each 1%
		above target up
		to 1.5 times
		entitlement

Exercise of Vested Incentive Rights

On vesting, a Performance Right confers an entitlement for the Participant to exercise the Performance Right to the value of an ordinary share (Share) in the Holding Company. On exercise, the Executive Performance Rights (EPR) Plan Trust (Trustee) subscribes for Shares or acquires Shares on market on behalf of the Participant. Care is taken to manage the tax impact of the EPR Plan on Participants. For overseas Participants, this may involve having a portion of Shares sold to account for withholding tax and/or other amounts payable in respect of the vested Performance Rights.

No amount is payable by Participants to exercise their vested Executive Performance Rights.

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Aspect

Plan Rules, Offers and Comments

Dealing Restrictions on Shares

Shares acquired when vested grants are exercised will be subject to the dealing restrictions set out in the Group’s share trading policy, the insider trading provisions of the Corporations Act or any other additional dealing restrictions included in the offer of the Incentive Rights. Further restrictions are stipulated in the Performance Rights Plan to take effect for the FY18 and subsequent grants.

Cessation of Employment

In the event of cessation of employment other than due to Special Circumstances, all unvested Performance Rights are forfeited unless otherwise determined by the Board.

In the event of cessation of employment due to Special Circumstances, unless otherwise determined by the Board, in respect of the grant made in the financial year of the cessation, the number of unvested Performance Rights that will be retained by the Employee will be based on a pro-rata calculation relative to the full financial year. All other unvested Rights granted in prior years will not lapse, and will continue and, if they become vested at some later time, will be able to be exercised in accordance with their terms.

Change of Control of the Company (Compulsory Acquisition)
In the event of a compulsory acquisition of Shares following a takeover bid or a scheme of arrangement, vested Performance Rights may be exercised and unvested Performance Rights may be exercised by the Participant in the same proportion as the Share price (assessed via 10 day VWAP) has increased since the beginning of the Measurement Period.

2.7 Non-Executive Director’s Remuneration Policies and Procedures

NED remuneration policies and procedures are designed so as to be consistent with other Sirtex remuneration policies but to reflect the governance requirements required of non-executive directors. These are documented on the Company’s website. NED remuneration is to be benchmarked and adjusted to reflect changes in the circumstances of the Group.

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Broadly, the remuneration policies state that:
Total NED Remuneration is to be managed within the aggregate fee limit (AFL) or fee pool approved by shareholders of the Company;
NED TRP comprises Board fees (inclusive of any superannuation, and any applicable fringe benefits tax (FBT), Salary- sacrificed equity grants and Committee fees. It is recognised that it is not appropriate to provide performance-based incentives to NEDs;
Amounts are to be reviewed annually and based on market data;
The Board retains discretion and may alter the proportion of NED remuneration salary sacrificed in order to meet prevailing circumstances;
Termination benefits are not paid to NEDs.

2.8 Salary Sacrificed Equity Grants – Non-executive (NED) Director Rights Plan – Detail

Aspect

Plan Rules, Offers and Comments

Purpose

The NED Rights Plan constitutes part of a market-competitive main-board package and aims to align the interests of NEDs further and directly with shareholders.

The Plan helps address the preference of many shareholders for NEDs to have significant shareholdings in the Group. The disposal restrictions incorporated in the Plan support this aim.

Plan Process

Rights offered to NEDs are not subject to performance conditions or any vesting condition.

FY17 Rights vested immediately but could not be exercised until three months after granting. At that time the shares are transferred to each NED, but with a CHESS holding lock. Disposal restrictions stipulate that, except by force of law, exercised shares may not be dealt with until the earlier of ceasing to be a NED of the Group or the elapsing of fifteen years from the grant date.

NED Rights will be satisfied via on-market purchase of Sirtex Shares, rather than by new issues of Shares.

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Aspect

Grant Value

Plan Rules, Offers and Comments

Grants of Rights were made to NEDs during financial year ended 30 June 2017 with the intended value of the grants being as follows (pro-rated for part of the year where applicable):

$59,125 for the Board Chair,
$36,953 for the Deputy Chair, and
$29,563 for the other NEDs.

Grants of NED Rights were calculated by applying the following formula:

Number of NED Rights = Salary sacrifice amount ÷ Right Value

The Right value was the volume weighted average share price of shares traded in the 10 days up to and including 30 June 2016.

Treatment

NEDs will be entitled to receive all dividends.

Without the approval of the Board, Rights may not be transferred, mortgaged, charged or otherwise dealt with or encumbered.

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3. SERVICE AGREEMENTS

On appointment to the Board, all non-executive directors enter into a service agreement with the Group in the form of a letter of appointment. Upon termination of a director’s appointment, the director will be paid his or her director’s fees on a pro-rata basis, to the extent that they are unpaid up to the date of termination. Unless determined otherwise by the Board, the director will also receive all vested shares held on the date of termination.

Remuneration and other terms of employment for the executive KMP are also formalised in service agreements. The major provisions of the agreements are set out below.

		Period of Notice	Period of Notice
	Duration of	From		From	Termination
Name	Contract	Company		KMP	Payments
Mr A McLean	No fixed term	12 months	12	months	Up to 12 months*
Mr G Wong**	No fixed term	6 months	6	months	Up to 12 months*
Mr D Smith	No fixed term	6 months	6	months	Up to 12 months*
Mr N Lange	No fixed term	6 months	6	months	Up to 12 months*
Mr K Richardson**	No fixed term	6 months	6	months	Up to 12 months*
Mr A Dixon	No fixed term	6 months	6	months	Up to 12 months*
Mr R Teo	No fixed term	6 months	6	months	6 months***
Mr R Hardie	No fixed term	6 months	6	months	Up to 12 months *
Dr D Cade	No fixed term	6 months	6	months	Up to 12 months*

Under the Corporations Act the Termination Benefit Limit is 12 months average salary (last 3 years) unless shareholder approval is obtained.
** Ceased employment during the year.
*** Not entitled to redundancy payout.

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APPENDIX II

4. PERFORMANCE OUTCOMES AND IMPACT ON SHAREHOLDER WEALTH FOR THE FINANCIAL YEAR ENDED 30 JUNE 2017

4.1 Group Performance

The following outlines the performance of the Group over the 2017 financial year and the previous four financial years:

						Short-term change Long-term change	Short-term change Long-term change	Short-term change Long-term change
		Profit/		Change		in Shareholder Value in Shareholder Value
		(loss)	Share	in Share		over 1 year (SP over 3 years (SP
Date	Revenue	after Tax	Price	Price	Dividends	increase + dividends) increase + dividends)
	$m	$m	$	$	$	$	% $	%
30-Jun-13	96.7	18.3	11.98	5.89	0.10	5.99	98.36 7.32	149.39
30-Jun-14	129.4	23.9	16.88	4.90	0.12	5.02	41.90 12.27	250.41
30-Jun-15	176.1	40.3	29.05	12.17	0.14	12.31	72.93 23.32	382.92
30-Jun-16	232.5	53.6	25.57	(3.48)	0.20	(3.28)	(11.3) 14.05	117.30
30-Jun-17	234.3	(26.3)	16.25	(9.32)	0.30	(9.02)	(35.28) 0.01	0.06
The following	table gives an indication of Group performance against the LTI measures:
			EPS				TSR
		12 month	12	month	3	year	12 month	3 year
Date		EPS	EPS growth			EPS	TSR	TSR
		$		%		%	%	%
30-Jun-13		0.328		6.8		13.9	98.4	149.4
30-Jun-14		0.425		29.6	106.3		41.9	250.4
30-Jun-15		0.714		68.0	132.6		72.9	382.9
30-Jun-16		0.937		31.2	185.6		(11.3)	117.3
30-Jun-17		(0.455)		(148.6)	(207.1)		(35.3)	0.1

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APPENDIX II

4.2 Links between Performance and Reward

4.2.1 Short-term incentive

The actual STI to be paid in relation to the 2017 financial year were accrued in the 30 June 2017 accounts. The links between performance and reward is summarised below.

STI Links

			Contribution		Maximum STI	Percentage of Max
Name	Position	Objectives	to success	Measurement	payable	STI to be paid
Mr G Wong	Managing	Normalised	The MD/CEO role has	Earnings were measured	Mr G Wong = 50%	Mr G Wong = 0%
Mr A McLean	Director & CEO	Group EBITDA	primary responsibility	via Normalised Group
		(40% weighting)	for Group earnings	EBITDA, dose sales by	Mr A McLean = not	Mr A McLean = not
		Dose sold	(EBITDA) and was	comparison to budget/	entitled to be included due	entitled to be included
		(40% weighting)	asked to focus on	plans, and individual	to limited employment	due to limited
		Leadership	increasing dose sales and	effectiveness by NED	period.	employment period.
		effectiveness	long- term leadership	assessment on defined
		(20% weighting)	development as key	achievements and
			factors for success at the	capabilities.
			CEO level in FY17.
Mr D Smith	Stratum 1.4	Normalised	These executives shared	Achievement of the	Mr D Smith = 17.5%	0% of pro-rata
Mr N Lange	and 1.3 Direct	Group EBITDA (50%	the EBITDA objective	earnings objective was as	Mr N Lange = 17.5%	amount.
Mr A Dixon	Reports to	weighting)	with the MD/CEO to	measured for the MD/	Mr A Dixon = 12.5%
Dr R Teo	MD/CEO		encourage teamwork and	CEO.	Dr R Teo = 0%
Mr R Hardie			the one-company culture.		Mr R Hardie = 17.5%
Dr D Cade					Dr D Cade = 17.5%
Mr K Richardson		KPIs and other	KPIs and other	KPI and other	Mr K Richardson = 12.5%	Ranged from 0% to
		Influencing Factors	influencing factors for	influencing factors were	Mr D Smith = 17.5%	88% of pro-rata
		(50% weighting)	the Regional Heads	assessed against	Mr N Lange = 17.5%	amount.
			included regional sales	qualitative and	Mr A Dixon = 12.5%
			growth, expense control,	quantitative objectives	Dr R Teo = 0%
			debtor management and	set at the beginning of	Mr R Hardie = 17.5%
			contribution margin.	the year in relation to	Dr D Cade = 17.5%
			Factors for the other	each role, with some	Mr K Richardson = 12.5%
			KMPs included where	Board discretion to take
			relevant, audit	into account relevant
			compliance, DIFOT, cost	circumstances. In this
			of goods sold, marketing	way awards aligned with
			objectives, proctor	each individual’s
			development, clinical	contribution to the Group
			trial recruitment and the	during the year, as
			achievement of project	assessed by the Board.
			milestones. Each factor
			was identified and
			selected as being a key
			lever for each role, in
			order to drive group
			success for FY17.

The average STI awarded for all executive KMP equated to 19.8% of the target amount.

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4.2.2 Long-term incentive

The LTI, being dependent on i-TSR and EPS growth, is strongly related to external indicators of Group performance.

The following table outlines the extent that the LTIs vested in relation to the completion of the 2016 financial year and those that were granted during the 2014 financial year:

Name Target LTI Value (at grant) $ Mr G Wong 532,450 Mr D Smith 129,640 Mr N Lange 129,640 Mr M Mangano 129,640 Mr K Richardson 25,465 Mr A Dixon 25,465 Mr B Chew 129,640 Mr R Hardie 129,640 Dr D Cade 129,640 Total** 1,361,220	2014 Grant Number 115,000 28,000 28,000 28,000 5,500 5,500 28,000 28,000 28,000 294,000	TSR Achieved 30.2 30.2 30.2 30.2 30.2 30.2 30.2 30.2 30.2	% of Grant Vested 100% 100% 100% 100% 100% 100% 100% 100% 100%	Number Vested 115,000 28,000 28,000 28,000 5,500 5,500 28,000 28,000 28,000 294,000

Ceased employment during the year
** Ceased employment during the prior year

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5. DETAILS OF REMUNERATION

5.1 Executive Remuneration

The following table outlines the remuneration received or receivable by executives of the Group for the 2017 and 2016 financial years, in accordance with the statutory requirements for disclosure and accounting standards:

Name Year Mr A McLean 2017 2016 Mr G Wong 2017 2016 Mr D Smith 2017 2016 Mr N Lange 2017 2016 Mr M Mangano 2017 2016 Mr K Richardson 2017 2016 Mr A Dixon 2017 2016 Mr B Chew 2017 2016 Mr R Teo 2017 2016 Mr R Hardie 2017 2016 Dr D Cade 2017 2016 Total** 2017 2016	Salary $ 41,250 – 552,201 875,695 488,684 452,763 638,583 582,480 – 599,242 647,177 734,512 318,047 251,441 – 476,027 95,104 – 439,659 419,335 466,983 444,751 3,687,688 4,836,246	Other Benefits $ 842,425^ – – – – – 74,409 39,038 24,545 70,280 59,343 49,861 43,212 38,915 – 16,158 18,153 – – – – – 532,087 214,252	Short-term Incentive (STI)*** $ % of TRP – – – – – – 314,514 16 50,830 9 133,854 17 30,720 4 133,782 14 – – 209,735 21 25,314 2 – – 35,752 9 45,259 12 – – – – 12,887 10 – – 72,820 13 124,563 17 49,875 9 122,638 16 278,198 5 1,084,345 13	Short-term Employee Benefits $ % of TRP 883,675 100 – – 552,201 (343) 1,190,209 61 539,514 96 586,617 74 743,712 96 755,301 77 24,545 9 879,257 87 731,834 63 784,373 93 397,012 98 335,616 91 – – 492,185 82 126,144 100 – – 512,479 94 543,898 73 516,858 94 567,389 73 5,027,974 98 6,134,845 76	Retirement Benefits/ Super- annuation $ 1,509 – 15,217 33,305 19,616 31,337 6,036 – 8,268 23,944 39,909 23,403 – – – – – – 33,366 31,165 31,767 30,249 155,688 173,403	Termination Benefits $ – – – – – – – – 289,301 – 385,734 – – – – – – – – – – – 675,035 –	Equity-settled Long-term Incentive (LTI) $ % of TRP – – – – (728,471) 452 742,690 38 2,008 – 174,027 22 24,742 3 228,526 23 (34,854) (12) 108,090 11 13,283 1 39,996 5 9,974 2 34,429 9 (34,854) 100 108,090 18 – – – – (3,292) (1) 169,476 23 1,310 – 172,770 23 (750,154) (15) 1,778,094 22	Total Target Remuner- ation Change in Accrued Leave $ $ 885,184 6,198 – – (161,053) (381,820) 1,966,204 85,343 561,138 (10,190) 791,981 27,029 774,490 9,773 983,827 (19,340) 287,259 – 1,011,291 (79,842) 1,170,761 (33,989) 847,772 8,815 406,985 28,382 370,045 (18,223) (34,854) – 600,275 (27,802) 126,144 11,764 – – 542,553 216 744,539 31,174 549,935 28,665 770,408 23,577 5,108,542 (341,001) 8,086,342 30,731

Ceased employment during the year.

** Ceased employment during the prior year.

*** STI figures included in the table represent STIs received or receivable for the financial years presented.

^ Made up of relocation allowance and sign-on bonus.

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The following table outlines the LTIs granted to executive KMP during the financial year ended 30 June 2017 subject to TSR vesting criteria. The LTIs will vest over three years.

Name Grant date Mr A McLean – Mr G Wong – Mr D Smith 21-Dec-2016 Mr N Lange 21-Dec-2016 Mr K Richardson 21-Dec-2016 Mr A Dixon 21-Dec-2016 Mr R Teo – Mr R Hardie 21-Dec-2016 Dr D Cade 21-Dec-2016 Total	Number granted Value per option at grant date – – – – 9,928 5.05 13,063 5.05 15,064 5.05 1,838 5.05 – – 7,436 5.05 9,741 5.05 57,070	Value of options at grant date – – 50,134 65,968 76,073 9,282 – 37,552 49,192 288,201	Number vested – – – – – – – – – –	Exercise price First exercise date Last exercise date $ – – – – – – – 1-Jul-19 30-Jun-23 – 1-Jul-19 30-Jun-23 – 1-Jul-19 30-Jun-23 – 1-Jul-19 30-Jun-23 – – – – 1-Jul-19 30-Jun-23 – 1-Jul-19 30-Jun-23 –

Ceased employment during the year.

The following table outlines the LTIs granted to executive KMP during the financial year ended 30 June 2017 subject to EPS vesting criteria. The LTIs will vest over three years.

Name Grant date Mr A McLean – Mr G Wong – Mr D Smith 21-Dec-2016 Mr N Lange 21-Dec-2016 Mr K Richardson 21-Dec-2016 Mr A Dixon 21-Dec-2016 Mr R Teo – Mr R Hardie 21-Dec-2016 Dr D Cade 21-Dec-2016 Total	Number granted Value per option at grant date – – – – 9,928 14.04 13,063 14.04 15,064 14.04 1,838 14.04 – – 7,436 14.04 9,741 14.04 57,070	Value of options at grant date – – 139,382 183,405 211,499 25,806 – 104,401 136,764 801,257	Number vested – – – – – – – – – –	Exercise price First exercise date Last exercise date $ – – – – – – – 1-Jul-19 30-Jun-23 – 1-Jul-19 30-Jun-23 – 1-Jul-19 30-Jun-23 – 1-Jul-19 30-Jun-23 – – – – 1-Jul-19 30-Jun-23 – 1-Jul-19 30-Jun-23 –

Ceased employment during the year.

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5.2 Changes in Securities Held – Executives

The following table outlines the changes in the number of Performance Rights held by executives over the financial year:

Name Mr A McLean Mr G Wong Mr D Smith Mr N Lange Mr K Richardson Mr M Mangano Mr A Dixon Mr R Teo Dr B Chew Mr R Hardie Dr D Cade Total	Rights held at 1 July 2016 Number Value at Grant $ – – 233,930 2,200,798 56,010 514,394 65,110 699,761 13,900 167,649 45,000 290,120 12,400 134,622 – – 45,000 290,120 55,250 498,913 55,800 510,116 582,400 5,306,493	Granted during year Number Value at Grant $ – – – – 19,855 189,516 26,126 249,373 30,128 287,572 – – 3,676 35,087 – – – – 14,872 141,953 19,482 185,956 114,139 1,089,457	Exercised Number Value at Grant $ – – 115,000 532,450 28,000 129,640 28,000 129,640 5,500 25,465 28,000 129,640 5,500 25,465 – – 28,000 129,640 28,000 129,640 28,000 129,640 294,000 1,361,220	Forfeited Number Value at Grant $ – – 118,930 1,668,348 – – – – 30,128 287,572 – – – – – – – – – – – – 149,058 1,955,920	Rights Held at 30 June 2017 Number Value at Grant $ – – – – 47,865 574,270 63,236 819,494 8,400 142,184 17,000 160,480 10,576 144,244 – – 17,000 160,480 42,122 511,226 47,282 566,432 253,481 3,078,810	Rights Held at 30 June 2017 Number Value at Grant $ – – – – 47,865 574,270 63,236 819,494 8,400 142,184 17,000 160,480 10,576 144,244 – – 17,000 160,480 42,122 511,226 47,282 566,432 253,481 3,078,810
						3,078,810

Ceased employment during the year.
** Ceased employment during the prior year.

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APPENDIX II

The following table outlines the changes in the number of Shares held by executives over the financial year:

Name Mr A McLean Mr G Wong Mr D Smith Mr N Lange Mr K Richardson Mr M Mangano Mr A Dixon Mr R Teo Dr B Chew Mr R Hardie Dr D Cade Total	Balance at beginning of year Granted as remuneration – – 160,000 – 30,000 – – – – – – – – – – – 49,974 – – – – – 239,974 –	Issued on exercise of Rights – 114,968 27,968 27,968 5,468 27,968 5,468 – 27,968 27,968 27,968 293,712	Disposals*** – 274,968 57,968 27,968 5,468 27,968 5,468 – 42,942 27,968 – 470,718	Balance at end of year – – – – – – – – 35,000 – 27,968
				62,968

Ceased employment during the year.

** Ceased employment during the prior year.

*** Future LTI grants will include requirements for the retention of shares.

Conditions attached to Performance Rights issued during the year are included in note 21 in the Financial Report.

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5.3 Non-Executive Director Remuneration

The following table outlines the remuneration received by non-executive directors of the Group during the 2017 and 2016 financial years, in accordance with the statutory requirements for disclosure and accounting standards:

Name Year Mr R Hill 2017 2016 Dr J Eady 2017 2016 Mr G Boyce 2017 2016 Dr K Woodthorpe 2017 2016 Mr N Mitchell 2017 2016 Total 2017 2016	Board Fees $ 236,500 220,000 113,051 103,036 118,250 110,000 118,250 74,321 24,261 – 610,312 507,357	Committee Fees $ – – 20,000 20,000 20,000 20,000 20,000 10,869 – – 60,000 50,869	Super- annuation $ – – 34,759 34,464 – – – – 2,305 – 37,064 34,464	Other Benefits $ – – – – – – – – – – – –	Equity* $ 57,635 69,382 36,028 43,384 28,817 34,691 28,817 25,591 – – 151,297 173,048	Total $ 294,135
						289,382
						203,838
						200,884
						167,067
						164,691
						167,067
						110,781
						26,566
						–
						858,673

						765,738

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5.4 Changes in Securities Held – Non-executive Directors

The following table outlines the changes in the number of NED Rights held by non-executive directors over the financial year:

	Rights	held at	Granted	Granted					Rights	Held at
Name	1 July 2016		during year		Forfeited		Exercised		30 June 2017
		Value at		Value at		Value at		Value at		Value at
	Number	Grant	Number	Grant	Number	Grant	Number	Grant	Number	Grant
		$		$		$		$		$
Mr R Hill	–	–	2,254	57,635	–	–	2,254	57,635	–	–
Dr J Eady	–	–	1,409	36,028	–	–	1,409	36,028	–	–
Mr G Boyce	–	–	1,127	28,817	–	–	1,127	28,817	–	–
Dr K Woodthorpe	–	–	1,127	28,817	–	–	1,127	28,817	–	–
Mr N Mitchell	–	–	–	–	–	–	–	–	–	–
Total	–	–	5,917	151,297	–	–	5,917	151,297	–	–

The following table outlines the changes in the number of Shares held by Non-Executive Directors over the financial year:

Name Mr R Hill Dr J Eady Mr G Boyce Dr K Woodthorpe Mr N Mitchell Total	Balance at beginning of year Held on commencement as NED 9,617 – 9,137 – 8,309 – 651 – – 3,000 27,714 3,000	Issued on exercise of Rights* 2,254 1,409 1,127 1,127 – 5,917	Disposals – – – – – –	Balance at end of year 11,871 10,546 9,436 1,778 3,000
				36,631

Dealing restrictions apply with shares held in trust until the earlier of ceasing to be a non-executive director of the Group or the lapsing of fifteen years from the grant date.

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5.5 Future KMP Payments

The following table outlines amounts of LTI for executives that have been granted but which have not yet vested or been paid:

			Value		Value
			expensed in		expensed in
Name	Grant date	Total value	2016	% of grant	2017	% of grant
		$
Mr G Wong*	26-Nov-13	532,450	205,566	39	–	–
	23-Sep-14	–	249,227	–	(440,574)	–
	27-Oct-15	–	287,897	–	(287,897)	–
Mr D Smith	26-Nov-13	129,640	50,051	39	–	–
	23-Sep-14	67,745	58,039	86	(34,854)	(51)
	01-Sep-15	135,478	65,937	49	21,717	16
	21-Dec-16	50,134	–	–	15,146	30
Mr N Lange	26-Nov-13	129,640	50,051	39	–	–
	23-Sep-14	67,745	58,039	86	(34,854)	(51)
	01-Sep-15	247,454	120,436	49	39,667	16
	21-Dec-16	65,968	–	–	19,929	30
Mr A Dixon	26-Nov-13	25,465	9,831	39	–	–
	23-Sep-14	13,549	11,608	86	(6,971)	(51)
	04-Feb-16	46,498	12,990	28	14,178	30
	21-Dec-16	9,282	–	30	2,767	30
Mr K Richardson*	26-Nov-13	25,465	9,831	39	–	–
	23-Sep-14	13,549	11,608	86	(6,971)	(51)
	04-Feb-16	66,425	18,557	17	20,254	30
Mr M Mangano**	26-Nov-13	129,640	50,051	39	–	–
	23-Sep-14	67,745	58,039	86	(34,854)	(51)
Dr B Chew**	26-Nov-13	129,640	50,051	39	–	–
	23-Sep-14	67,745	58,039	86	(34,854)	(51)
Mr R Hardie	26-Nov-13	129,640	50,051	39	–	–
	23-Sep-14	67,745	58,039	86	(34,854)	(51)
	01-Sep-15	126,126	61,386	49	20,218	16
	21-Dec-16	37,552	–	–	11,345	30
Dr D Cade	26-Nov-13	129,640	50,051	39
	23-Sep-14	67,745	58,039	86	(34,854)	(51)
	01-Sep-15	132,894	64,680	49	21,303	16
	21-Dec-16	49,192	–	–	14,861	30
Total		2,761,791	1,778,094		(750,152)

Ceased employment during the year.

** Ceased employment during the prior year.

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The following table outlines amounts for equities for non-executive directors that have been granted.

			Value		Value
			expensed in		expensed in
Name	Grant date	Total value	2016	% of grant	2017	% of grant
		$
Mr R Hill	01-Jul-16	57,635	–	–	57,635	100
Dr J Eady	01-Jul-16	36,028	–	–	36,028	100
Mr G Boyce	01-Jul-16	28,817	–	–	28,817	100
Dr K Woodthorpe	01-Jul-16	28,817	–	–	28,817	100
Mr N Mitchell	N/A	–	–	–	–	–
Total		151,297			151,297

6. ADDITIONAL INFORMATION

6.1 Loans to Key Management Personnel

At 30 June 2017, $2,531,294 (2016: $1,255,046) was payable to key management personnel.

At 30 June 2017, $1,486 (2016: $1,493) was receivable from key management personnel.

The payable relates to deferred remuneration which is fully offset with a corporate asset and recognised net in the financial statements (2016: deferred remuneration which is fully offset with a corporate asset and recognised net in the financial statements). The payable is long-term in nature and will be paid over a period of 10 years. The receivable relates to expense reimbursement.

The Group does not have an allowance account for receivables relating to outstanding loans and has not recognised any expense for impaired receivables during the reporting period.

There were no individuals with loans above $100,000 during the financial year.

6.2 Transactions with Key Management Personnel

There have been no other transactions with Key Management Personnel or their related entities other than those disclosed in this report.

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6.3 External Remuneration Consultant Advice

During the year KMP remuneration recommendations and data were received from the Board-approved, external remuneration consultant.

Godfrey Remuneration Group Pty $82,000 Limited

The Board also received other independent remuneration-related advice during the year.

Godfrey Remuneration Group Pty Advice on proposed organisational design and $10,200 Limited remuneration implications;

Advice for NED Equity Plan’s disposal restriction cessation point and disposal by executives of shares acquired under LTI plan;

Research market practice for senior executive incentive plans;

Review Remuneration Committee Charter.

So as to ensure that KMP remuneration recommendations were free from undue influence from the KMP to whom they relate, the Company has policies and procedures governing engagement with external remuneration consultants. The key aspects include:

(a) KMP remuneration recommendations may only be received from consultants who have been approved by the Board. This is a legal requirement. Before such approval is given and before each engagement the Board ensures that the consultant is independent of KMP.
(b) As required by law, KMP remuneration recommendations are only received by non-executive directors, mainly the Chair of the Remuneration Committee.
(c) The policy seeks to ensure that the Board controls any contact by management of Board-approved remuneration consultants and any interactions between management and external remuneration consultants when undertaking work leading to KMP remuneration recommendations.

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FINANCIAL INFORMATION OF SIRTEX

Richard Hill Director

23 August 2017

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APPENDIX II

AUDITOR’S INDEPENDENCE DECLARATION

Level 17, 383 Kent Street Sydney NSW2000

Correspondence to: Locked Bag Q800 QVB Post Office Sydney NSW 1230

T +61 2 8297 2400 F +61 2 9299 4445 E [email protected] W www.grantthornton.com.au

Auditor’s Independence Declaration To the Directors of Sirtex Medical Limited

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Sirtex Medical Limited for the year ended 30 June 2017, I declare that, to the best of my knowledge and belief, there have been:

a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b no contraventions of any applicable code of professional conduct in relation to the audit.

GRANT THORNTON AUDIT PTY LTD

Chartered Accountants

N J Bradley

Partner – Audit & Assurance

Sydney, 23 August 2017

Grant Thornton Audit Pty Ltd ACN 130 913 594

a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation.

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DIRECTORS’ DECLARATION

The Directors of the Company declare that:

the financial statements and notes, as set out on pages 52 to 87 are in accordance with the Corporations Act 2001 and
(a) comply with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001 , which, as stated in accounting policy Note 1 to the financial statements, constitutes explicit and unreserved compliance with International Financial Reporting Standards (IFRS); and
(b) give a true and fair view of the financial position as at 30 June 2017 and of the performance for the year ended on that date of the Company and Consolidated Group.
the Chief Executive Officer and Chief Financial Officer have each declared, as required by section 295A of the Corporations Act 2001 , that:
(a) the financial records of the company for the financial year have been properly maintained in accordance with s 286 of the Corporations Act 2001 ;
(b) the financial statements and notes for the financial year comply with Accounting Standards; and
(c) the financial statements and notes for the financial year give a true and fair view.
in the directors’ opinion, there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

Richard Hill

Director

Sydney, 23 August 2017

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APPENDIX II

INDEPENDENT AUDITOR’S REPORT

Independent Auditor’s Report

To the Members of Sirtex Medical Limited

Report on the audit of the financial report

Opinion

We have audited the financial report of Sirtex Medical Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2017, the consolidated statement of profit or loss and other comprehensive income consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies, and the directors’ declaration.

In our opinion, the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including:

(a) giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its performance for the year ended on that date; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter

How our audit addressed the key audit matter

Intangible Assets (Note 12)

During the year the Group impaired all capitalised research and development costs relating to clinical trials. The impairment was a result of the clinical trials not achieving their primary endpoints.

Our procedures included, amongst others:

reviewing management’s impairment position p a p e r a n d v e r i f y i n g t h e u n d e r l y i n g information used to support the position;

AASB 136 ‘Impairment of Assets’ requires that an entity shall assess at the end of each reporting period whether there is any indication that an asset may be impaired. If any indication exists, the entity shall estimate the recoverable amount of the asset. Irrespective of whether there is any indication of impairment, an entity shall also test an intangible asset not yet available for use for impairment annually by comparing its carrying amount with its recoverable amount.

This area is a key audit matter due to the inherent subjectivity that is involved in management making judgements as well as the evaluation for any impairment indicators as part of their annual impairment review.

discussing the assumptions and details with the Chief Medical Officer and agreeing key inputs to published clinical trial results to substantiate the conclusions;
consideration of each of the internal and external factors outlined by AASB 136 ‘Impairment of Assets’; and
ensuring appropriate disclosures within the financial statements and the adequacy of disclosures surrounding the impairment writedown in line with management’s position paper.

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Key audit matter Taxation (Note 4)

Taxation for the Group is considered to be a complex area given the different geographical locations and transfer pricing agreements between group entities.

The Group also account for the research & development (R&D) tax incentive under the requirements of AASB112 ‘Income Taxes’. Under AASB112, any eligible R&D expenditure expensed in the statement of profit or loss should b e a d d e d b a c k a n d t h e n c l a i m e d a s a (non-refundable) tax offset. Management make an estimate of this tax offset amount at year end.

Taxation is a key audit matter due to its complex nature and due to the inherent subjectivity that is involved in the Group making judgements in relation to key tax matters.

How our audit addressed the key audit matter

Our procedures included, amongst others:

making enquiries with management to obtain and document an understanding of their process to calculate the taxation for the Group;
check the reasonableness and accuracy of the tax calculations prepared by management’s internal tax expert;
assessing and comparing the historical reliability of prior period estimates and budgets to support the reliability of the tax calculation including the R&D tax incentive estimate;
evaluation of the qualifications and expertise of management’s internal tax expert and external expert in order to assess their professional competence and capabilities as they relate to the work undertaken;
engaging our taxation experts in Australia and the US to review management’s tax calculations for reasonableness and compliance with the relevant tax legislations and accounting policies;
inspecting copies of relevant correspondence with relevant tax authorities; and
reviewing relevant disclosures in the financial statements.

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Key audit matter

How our audit addressed the key audit matter

Performance rights (Note 21)

During the year performance rights (issued in financial year 2014) were exercised and ordinary shares of Sirtex Medical Limited were issued. A corresponding transfer was made between reserves and share capital. This transaction was accounted for as a contribution to the employee share trust and deferred tax was recognised directly in equity in relation to the difference between the accounting treatment and the tax treatment.

Executive performance rights were granted to executive and senior management during the year. Management determined the fair value of the rights using a Monte Carlo Simulation Model and Binomial option pricing model.

This area is a key audit matter due to the complexities in the taxation treatment of performance rights, as well as the complexities and the inherent subjectivity involved in the Company making judgements relating to the key inputs and assumptions used to value the performance rights, including historical volatility and the risk free rate of return.

Our procedures included, amongst others:

determining the reasonableness of the input assumptions used in the Monte Carlo Simulation Model and Binomial Option pricing model with the assistance of our internal valuation experts we checked the methodology, key assumptions and outputs including the underlying equity, interest rate, volatility, dividend yield, expected life, grant date and granting criteria and average granting percentage;
checking the appropriateness of the treatment of the vested rights and the transfer of the fair value to share capital against the requirements of AASB2 ‘Share based payments’;
evaluating the qualifications and expertise of managements external valuations expert in order to assess their professional competence and capabilities as they relate to the work undertaken;
o b t a i n i n g t h e o p i n i o n p r o v i d e d b y management’s external tax expert in relation to the tax treatment of the performance rights and assessing whether management’s accounting treatment is consistent with the external tax expert opinion;
engaging our own taxation experts in Australia to review the treatment of the share contribution to the employee trust and the associated taxation treatment; and
evaluating the qualifications and expertise of management’s external tax expert in order to assess their professional competence and capabilities as they relate to the work undertaken; and
reviewing relevant disclosures in the financial statements.

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APPENDIX II

Information Other than the Financial Report and Auditor’s Report Thereon

The Directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2017, but does not include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors’ for the Financial Report

In preparing the financial report, the Directors are responsible for assessing the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

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Auditor’s Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ ar1.pdf. This description forms part of our auditor’s report.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 29 to 44 of the directors’ report for the year ended 30 June 2017.

In our opinion, the Remuneration Report of Sirtex Medical Limited, for the year ended 30 June 2017, complies with section 300A of the Corporations Act 2001.

Responsibilities

The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

GRANT THORNTON AUDIT PTY LTD

Chartered Accountants

N J Bradley

Partner – Audit & Assurance

Sydney, 23 August 2017

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2017

Note
Revenue from the sale of goods
2 (a)
Cost of sales
3
Gross profit
Other revenue
2 (b)
Other income
2 (c)
Marketing expenses
Research expenses
Regulatory expenses
Quality assurance expenses
Clinical trial expenses
Medical expenses
Administration expenses
Impairment of intangible assets
12
Other expenses
(Loss)/profit before income tax
3
Income tax benefit/(expense)
4
(Loss)/profit for the year
Items that may be reclassified subsequently to profit or loss
Foreign currency translation (net of tax) of foreign operations
Total comprehensive (loss)/income for the year
attributable to members of the parent entity
Earnings per share
Basic (loss)/earnings per share
18
Diluted (loss)/earnings per share
18
Dividends per Share
19

Consolidated
2017
2016
$’000
$’000
234,282
232,492
(36,177)
(35,287)
198,105
197,205
2,645
2,229
169
2,099
(89,281)
(79,338)
(10,558)
(8,717)
(2,370)
(1,626)
(2,218)
(2,232)
(11,771)
(10,672)
(7,660)
(6,356)
(22,515)
(20,915)
(90,541)
–
(4,959)
(1,679)
(40,954)
69,998
14,697
(16,416)
(26,257)
53,582
(713)
464
(26,970)
54,046
Cents
Cents
(45.5)
93.7
(45.5)
92.2
30.0
20.0

The financial statements should be read in conjunction with the accompanying notes.

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2017

Note Assets Current Assets Cash and cash equivalents 5 Other short-term deposits 6 Trade and other receivables 7 Inventories 8 Other financial assets 9 Other current assets 10 Total – Current Assets Non-Current Assets Property, plant and equipment 11 Intangible assets 12 Deferred tax assets 4.1(a) Total – Non-Current Assets Total Assets Liabilities Current Liabilities Trade and other payables 13 Current tax liabilities 4.1(c) Short-term provisions 14(a) Total – Current Liabilities Non-Current Liabilities Long-term provisions 14(b) Deferred tax liabilities 4.1(b) Total – Non-Current Liabilities Total Liabilities Net Assets Equity Issued capital 16 Reserves 17 Retained earnings Total – Equity	Consolidated 2017 2016 $’000 $’000 50,349 21,025 68,000 86,000 36,976 42,272 1,993 1,918 1,575 1,687 3,583 4,212 162,476 157,114 12,045 13,987 9,436 82,821 10,165 7,795 31,646 104,603 194,122 261,717 26,433 28,090 8,412 7,239 7,972 7,009 42,817 42,338 919 1,153 919 24,722 1,838 25,875 44,655 68,213 149,467 193,504 34,792 32,684 3,257 6,656 111,418 154,164 149,467 193,504	Consolidated 2017 2016 $’000 $’000 50,349 21,025 68,000 86,000 36,976 42,272 1,993 1,918 1,575 1,687 3,583 4,212 162,476 157,114 12,045 13,987 9,436 82,821 10,165 7,795 31,646 104,603 194,122 261,717 26,433 28,090 8,412 7,239 7,972 7,009 42,817 42,338 919 1,153 919 24,722 1,838 25,875 44,655 68,213 149,467 193,504 34,792 32,684 3,257 6,656 111,418 154,164 149,467 193,504
		157,114

		13,987 82,821 7,795
		104,603

		261,717

		28,090 7,239 7,009
		42,338

		1,153 24,722
		25,875

		68,213

		193,504

		32,684 6,656 154,164
		193,504

The financial statements should be read in conjunction with the accompanying notes.

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2017

Consolidated Entity Balance at 30 June 2015 Foreign currency translation reserve Profit attributable to members of parent entity Total comprehensive income for the year attributable to the members of the parent entity Ordinary shares issued Forfeited rights Deferred tax on performance rights Exercise of Non-Executive Directors shares Purchase of Non-Executive Directors’ shares on market Contribution to performance reserve Dividends paid or provided for Total transactions with owners Balance at 30 June 2016 Foreign currency translation reserve (Loss)/profit attributable to members of parent entity Total comprehensive income for the year attributable to the members of the parent entity Ordinary shares issued Forfeited rights Deferred tax on performance rights Exercise of Non-Executive Directors shares Purchase of Non-Executive Directors’ shares on market Contribution to performance reserve Share buy-back Dividends paid or provided for Total transactions with owners Balance at 30 June 2017	Ordinary Shares $’000 27,021 – – – 1,839 – 3,777 341 (294) – – 5,663 32,684 – – – 3,384 – 1,599 152 (154) – (2,873) – 2,108 34,792	Share Rights Reserve $’000 4,075 – – – (1,839) (14) – (341) – 2,771 – 577 4,652 – – – (3,384) (817) – (152) – 1,667 – – (2,686) 1,966	Foreign Currency Translation Reserve $’000 1,540 464 – 464 – – – – – – – – 2,004 (713) – (713) – – – – – – – – – 1,291	Retained Earnings $’000 112,000 – 53,582 53,582 – 14 – – – – (11,432) (11,418) 154,164 – (26,257) (26,257) – 817 – – – – – (17,306) (16,489) 111,418	Total $’000 144,636 464 53,582 54,046 – – 3,777 – (294) 2,771 (11,432) (5,178) 193,504 (713) (26,257) (26,970) – – 1,599 – (154) 1,667 (2,873) (17,306) (17,067) 149,467

The financial statements should be read in conjunction with the accompanying notes.

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CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2017

Note
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Net income tax paid
Net cash provided by operating activities
5(b)
Cash flows from investing activities
Utilisation/(investment) in other short-term deposits
Proceeds from plant and equipment
Purchase of plant and equipment
Purchase of intangible assets
Net cash used by investing activities
Cash flows from financing activities
Share buy-back
Payment of dividends
Net cash used by financing activities
Net increase/(decrease) in cash held
Cash and cash equivalents at beginning of
financial year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of financial year
5(a)

Consolidated
2017
2016
$’000
$’000
239,375
225,153
(177,823)
(153,992)
2,611
2,184
(8,191)
(8,134)
55,972
65,211
18,000
(34,000)
–
137
(1,239)
(1,718)
(21,701)
(19,196)
(4,940)
(54,777)
(2,873)
–
(17,306)
(11,432)
(20,179)
(11,432)
30,853
(998)
21,025
21,941
(1,529)
82
50,349
21,025

The financial statements should be read in conjunction with the accompanying notes.

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

1. BASIS OF PREPARATION

This section sets out the Company’s accounting policies that relate to the financial statements as a whole. Where an accounting policy is specific to one note, the policy is described in the note to which it relates.

1.1 Reporting Entity

Sirtex Medical Ltd (the Company) is a Public Company incorporated and domiciled in Australia. The consolidated financial statements of the Company as at and for the year ended 30 June 2017 comprise the Company and its controlled entities (together referred to as the Group). Sirtex Medical Ltd is a for-profit entity.

1.2 Basis of Preparation

(a) Statement of compliance

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial statements comply with International Financial Reporting Standards (IFRS) and Interpretations adopted by the International Accounting Standards Board.

The consolidated financial statements were approved and authorised for issue by the directors on 23 August 2017.

(b) Basis of measurement

The consolidated financial statements have been prepared on an accruals basis and are based on historical costs modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

(c) Functional and presentation currency

These consolidated financial statements are presented in Australian dollars (AUD), which is the Company’s functional currency.

The Company has applied the relief available to it under ASIC Corporations (Rounding in Financial/ Directors’Reports) Instrument 2016/191 and in accordance with that Instrument, all financial information presented in AUD has been rounded to the nearest one thousand dollars unless otherwise stated.

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(d) Foreign currency

Foreign currency transactions

Exchange differences arising on the translation of monetary items are recognised in the Consolidated Statement of Profit or Loss. Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.

Financial statements of foreign operations

The assets and liabilities of foreign operations are translated at year-end exchange rates prevailing at that reporting date.

The income and expenses of foreign operations are translated at average exchange rates for the period.

The retained earnings of foreign operations are translated at the exchange rate prevailing at the date of the transaction.

(e) Use of judgments and estimates

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the financial year in which the estimate is revised and in any future years affected.

Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements is included in the following notes:

Note 4 – Income Tax Note 12 – Intangibles Note 14 – Provisions Note 17 – Reserves

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(f) Basis of consolidation

Controlled entities

The Consolidated Entity controls an entity if it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of controlled entities are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Transactions eliminated on consolidation

(g)

Goods and services tax (GST)

Cash flows are presented in the Consolidated Statement of Cash Flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(h) New accounting standards and interpretations for application in future periods

AASB 9 Financial Instruments (applicable for annual reporting periods beginning on or after 1 January 2018):

The main changes are:

(a) Financial assets that are debt instruments will be classified based on
i. the objective of the entity’s business model for managing the financial assets; and
ii. the characteristics of the contractual cash flows.
(b) Allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income (instead of in profit or loss). Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument.
(c) Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on different bases.

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(d) Where the fair value option is used for financial liabilities the change in fair value is to be accounted for as follows:
i. the change attributable to changes in credit risk are presented in other comprehensive income (OCI); and
ii. the remaining change is presented in profit or loss.

If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in credit risk are also presented in profit or loss.

Otherwise, the following requirements have been carried forward unchanged from AASB 139 into AASB 9:

i. classification and measurement of financial liabilities; and

ii. de-recognition requirements for financial assets and liabilities.

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AASB 16: Leases

Nature of the change in accounting policy

AASB 16 will cause the majority of the leases of an entity to be brought onto the Balance Sheet. There are limited exceptions relating to short-term leases and low value assets which may remain off-balance sheet.

The calculation of the lease liability will take into account appropriate discount rates, assumptions about lease term and increases in lease payments. A corresponding right to use an asset will be recognised which will be amortised over the term of the lease.

Rent expense will no longer be shown, the profit and loss impact of the leases will be through amortisation and interest charges.

Effective date

Annual reporting periods beginning on or after 1 January 2019.

Expected impact on the financial statements

For the financial year ended 30 June 2020, there will be a significant increase in lease assets and financial liabilities recognised on the balance sheet. The reported equity will reduce as the carrying amount of lease assets will reduce more quickly than the carrying amount of lease liabilities. Group EBIT in the statement of profit or loss and other comprehensive income will be higher as the implicit interest in lease payments for former off balance sheet leases will be presented as part of finance costs rather than being included in operating expenses. Operating cash outflows will be lower and financing cash flows will be higher in the statement of cash flows as principal repayments on all lease liabilities will now be included in financing activities rather than operating activities. Interest can also be included within financing activities

AASB 15: Revenue from Contracts with Customers

Nature of the change in accounting policy

AASB 15 introduces a five step process for revenue recognition with the core principle of the new Standard being for entities to recognise revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the entity expects to be entitled in exchange for those goods or services.

Accounting policy changes will arise in timing of revenue recognition, treatment of contracts costs and contracts which contain a financing element.

AASB 15 will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and improve guidance for multiple-element arrangements.

Effective date

Annual reporting periods beginning on or after 1 January 2018.

Expected impact on the financial statements

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2. REVENUE AND OTHER INCOME

(a) Revenue from the sale of goods

Consolidated
2017	2016
$’000	$’000
234,282	232,492

(b) Other revenue Interest income from financial institutions	Consolidated 2017 2016 $’000 $’000 2,645 2,229 2,645 2,229	Consolidated 2017 2016 $’000 $’000 2,645 2,229 2,645 2,229
		2,229

(c) Other income

Realised and unrealised foreign exchange gains Other	Consolidated 2017 2016 $’000 $’000 – 1,900 169 199 169 2,099	Consolidated 2017 2016 $’000 $’000 – 1,900 169 199 169 2,099
		2,099

Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates allowed.

Interest revenue is recognised on an accrual basis using the effective interest method.

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3. PROFIT FOR THE YEAR

	Consolidated
	2017	2016
	$’000	$’000
Profit before income tax includes the following:
Cost of sales	36,177	35,287
Employee benefits expense
Superannuation contributions	2,788	2,367
Other employee benefits expenses	73,373	66,941
Depreciation and amortisation of
Plant and equipment	2,371	2,164
Intangible assets	4,545	4,403
Operating lease expenses
Minimum lease payments	2,642	2,593
Other expenses
Impairment of intangible assets	90,541	–
Impairment of property, plant and equipment	637	–
Onerous lease provision	626	–
Provision for legal settlement	–	1,389

Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin.

Employee Benefits

Wages, salaries and annual leave

Long service leave

The provision for long service leave represents the present value of estimated future cash outflows to be made by the employer resulting from employees’ services provided up to reporting date. The provision is calculated using expected future increases in remuneration rates, including related costs, and expected settlement dates based on turnover history, and is discounted using the rates attaching to high quality corporate bonds at reporting date, which most closely match the terms of maturity of the related liabilities.

Post-employment benefit plans

Deferred compensation benefits

Leases

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.

Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.

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4. INCOME TAX EXPENSE

(a) The components of tax expense comprise:

Current tax Deferred tax Under/(over) provision in respect of prior years (permanent and timing)	Consolidated 2017 2016 $’000 $’000 11,391 14,671 (26,185) 1,923 97 (178) (14,697) 16,416

(b) Prima facie tax on profit from ordinary activities before income tax is reconciled to income tax as follows:

Net profit before tax
Prima facie tax payable on profit from ordinary activities before
income tax at 30%
Add/(less): Tax effect of
– Non-deductible amortisation
– Non-deductible expenses
– Non-assessable income
– Over-provision in respect of prior years (permanent)
Effect of higher tax rates on overseas income
Effect of Foreign Currency translation of tax balances
Recognition of tax losses not previously brought to account
Eliminations for the tax consolidated group
Income tax attributable to entity
The applicable weighted average effect tax rates are as follows

Consolidated
2017
2016
$’000
$’000
(40,954)
69,998
(12,286)
20,999
45
54
3,146
3,411
(3,439)
(4,118)
558
(307)
(2,221)
(3,351)
225
476
(770)
(688)
45
(60)
(14,697)
16,416
35.5%
23.5%

The Company and its wholly owned Australian subsidiaries are part of a tax-consolidated group. As a consequence, all members of the tax-consolidated group are taxed as a single entity. The head entity within the tax-consolidated group is Sirtex Medical Limited.

Income tax expense includes current and deferred tax. Current and deferred tax are recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income except to the extent that they relate to items recognised directly in other comprehensive income or equity.

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Current tax is the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to tax payable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date.

(c) Consolidated Entity – Numerical reconciliation between income tax expense and cash taxes paid

Income tax expense on profit before income tax Timing differences recognised in deferred tax Effect of tax rate in foreign jurisdictions Current tax instalments payable next year Prior year tax instalments paid this year Cash taxes paid per statement of cash flows	2017 $’000 (14,697) 26,088 (2,221) (2,706) 1,727 8,191	2016 $’000 16,416 (1,745) (3,351) (7,427) 4,241 8,134

(d) Sirtex Medical Limited’s Australian tax consolidated group – numerical reconciliation between income tax expense and profit before income tax

Profit before income tax (excluding dividends from wholly owned foreign subsidiaries) Add: Dividends from wholly owned foreign subsidiaries Profit before income tax Tax at the Australian tax rate of 30% Add/(less): Tax effect of Non-deductible amortisation Other non-deductible expenses Research and development allowances Exempt foreign sourced dividends from wholly owned subsidiaries Adjustment for prior years Income tax expense on profit before income tax	2017 $’000 (75,487) 24,546 (50,941) (15,282) 45 9 (806) (7,364) (23,398) 98 (23,300)	2016 $’000 29,040 63,178 92,218 27,665 54 6 (931) (18,954) 7,840 558 8,398

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4.1 CURRENT AND DEFERRED TAX ASSETS AND LIABILITIES

(a) Deferred tax assets

Tax losses revenue Timing differences attributable to: Fixed Assets Employee provisions Unrealised foreign exchange losses Other Other includes the following major components: Executive Performance rights AMT credit (US) Non-amortised patent costs The movement in tax losses is as follows: Opening balance Credit to the statement of profit or loss and other comprehensive income Credit to equity Closing balance The movement in fixed assets is as follows: Opening balance (Debit)/credit to the statement of profit or loss and other comprehensive income Closing balance The movement in employee provisions is as follows: Opening balance (Debit)/credit to the statement of profit or loss and other comprehensive income Credit/(debit) to equity Closing balance The movement in unrealised FX is as follows: Opening balance (Debit)/credit to the statement of profit or loss and other comprehensive income Closing balance	2017 $’000 2,031 1,034 2,340 11 4,749 10,165 1,092 74 430 1,166 770 95 2,031 1,053 (19) 1,034 2,469 (129) – 2,340 268 (257) 11	2016 $’000 1,166 1,053 2,468 268 2,840 7,795 1,092 464 301 415 688 63 1,166 279 774 1,053 2,001 471 (3) 2,469 – 268 268

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FINANCIAL INFORMATION OF SIRTEX

The movement in other is as follows: Opening balance Credit to the statement of profit or loss and other comprehensive income Credit to equity Closing balance The overall movement in the deferred tax account is as follows: Opening balance Credit to the statement of profit or loss and other comprehensive income Credit to equity Closing balance (b) Deferred tax liabilities Timing differences attributable to: Capitalisation of development expenditure Fixed assets Other The movement in the capitalisation of development expenditure is as follows: Opening balance (Credit)/debit to the statement of profit or loss and other comprehensive income Closing balance The movement in the fixed assets is as follows: Opening balance (Credit)/debit to the statement of profit or loss and other comprehensive income Debit to equity Closing balance	2017 $’000 2,840 1,909 – 4,749 7,795 2,275 95 10,165 2017 $’000 – 134 785 919 22,846 (22,846) – 945 (812) 1 134	2016 $’000 2,390 397 53
		2,840

		5,085 2,598 112
		7,795

		2016 $’000 22,846 945 931
		24,722

		19,222 3,624
		22,846

		724 220 1
		945

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FINANCIAL INFORMATION OF SIRTEX

The movement in other is as follows: Opening balance (Credit)/debit to the statement of profit or loss and other comprehensive income Debit to equity Closing balance The overall movement in the deferred tax account is as follows: Opening balance (Credit)/debit to the statement of profit or loss and other comprehensive income Debit to equity Closing balance	2017 $’000 931 (145) – 786 24,722 (23,804) 1 919	2016 $’000 88 833 10
		931

		20,034 4,677 11
		24,722

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

(c) Current tax assets and liabilities

The current tax liabilities for the Consolidated entity of $8,412,000 (2016: $7,239,000) represent the amount of income taxes payable in respect of current and prior financial years.

5. CASH AND CASH EQUIVALENTS

(a) Reconciliation of cash

Cash at the end of the financial year as shown in the statement of cash flows is reconciled to items in the statement of financial position as follows:

Cash at bank and on hand Short-term deposits with financial institutions	Consolidated 2017 2016 $’000 $’000 36,349 15,025 14,000 6,000 50,349 21,025	Consolidated 2017 2016 $’000 $’000 36,349 15,025 14,000 6,000 50,349 21,025
		21,025

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Short-term deposits are term deposits with maturity date of less than 90 days. The effective interest rate on short-term deposits was 2.78% (2016: 2.93%). These deposits have an average maturity of 31 days as at 30 June 2017 (2016: 43 days).

(b) Reconciliation of cash flow from operations with profit after income tax

Profit after income tax Non-cash flows in profit: Depreciation and amortisation Loss on disposal of plant & equipment Impairment of internally generated intangibles Impairment of property, plant and equipment Onerous lease provision Share rights reserve Net foreign exchange differences Changes in net assets and liabilities (Increase)/decrease in assets Trade receivables Other receivables Inventories Other current assets Deferred tax assets Increase/(decrease) in liabilities Payables Current tax liabilities Short-term provisions Other current liabilities Long-term provisions Deferred tax liabilities Net cash flow from operating activities	Consolidated 2017 2016 $’000 $’000 (26,257) 53,582 6,916 6,567 205 – 90,541 – 637 – 626 – 1,667 2,771 1,604 (449) 4,924 (8,322) 373 – (74) 39 740 (1,360) (2,371) (2,639) (2,746) 3,650 1,173 2,483 962 321 1,088 – (234) 130 (23,802) 8,438 55,972 65,211	Consolidated 2017 2016 $’000 $’000 (26,257) 53,582 6,916 6,567 205 – 90,541 – 637 – 626 – 1,667 2,771 1,604 (449) 4,924 (8,322) 373 – (74) 39 740 (1,360) (2,371) (2,639) (2,746) 3,650 1,173 2,483 962 321 1,088 – (234) 130 (23,802) 8,438 55,972 65,211
		65,211

6. OTHER SHORT-TERM DEPOSITS

Other short-term deposits with financial institutions	Consolidated 2017 2016 $’000 $’000 68,000 86,000 68,000 86,000	Consolidated 2017 2016 $’000 $’000 68,000 86,000 68,000 86,000
		86,000

Other short-term deposits are term deposits with maturity date of more than 90 days and less than 360 days.

The average maturity as at 30 June 2017 of these term deposits is 175 days (2016: 206 days). The effective interest rate on the deposits is 2.78% (2016: 3.09%).

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7. TRADE AND OTHER RECEIVABLES

(a) Trade receivables

Trade receivables Provision for impairment	Consolidated 2017 2016 $’000 $’000 37,474 40,152 (2,505) (260) 34,969 39,892	Consolidated 2017 2016 $’000 $’000 37,474 40,152 (2,505) (260) 34,969 39,892
		39,892

(b) Other receivables

GST receivables Other receivables	Consolidated 2017 2016 $’000 $’000 816 1,256 1,191 1,124 2,007 2,380 36,976 42,272	Consolidated 2017 2016 $’000 $’000 816 1,256 1,191 1,124 2,007 2,380 36,976 42,272
		2,380
		42,272

Movement in the provision for impairment of receivables is as follows:

	Opening	Amounts	Amounts	Closing
	balance	provided for	written off	balance
	$’000	$’000	$’000	$’000
30 June 2017
Trade receivables	(260)	(3,566)	1,321	(2,505)
30 June 2016
Trade receivables	(92)	(168)	–	(260)

Trade receivables past due but not impaired

Less than 30 days overdue 30 - 60 days overdue More than 60 days overdue	Consolidated 2017 2016 $’000 $’000 6,928 7,644 2,850 4,544 2,302 3,218 12,080 15,406	Consolidated 2017 2016 $’000 $’000 6,928 7,644 2,850 4,544 2,302 3,218 12,080 15,406
		15,406

Collection history from previous year’s supports management’s view that receivables less than 180 days overdue are not considered impaired.

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Credit risk

The Group has no significant concentration of credit risk with respect to any single counter party or group of counter parties other than those receivables specifically provided for and shown above.

The class of assets described as Trade and Other Receivables is considered to be the main source of credit risk related to the Group. The Group’s trading terms do not generally include the requirement for customers to provide collateral as security for financial assets.

8. INVENTORIES

Raw materials - at cost	Consolidated 2017 2016 $’000 $’000 1,993 1,918 1,993 1,918	Consolidated 2017 2016 $’000 $’000 1,993 1,918 1,993 1,918
		1,918

9. OTHER FINANCIAL ASSETS

Other current financial assets: Security deposits paid	Consolidated 2017 2016 $’000 $’000 1,575 1,687 1,575 1,687	Consolidated 2017 2016 $’000 $’000 1,575 1,687 1,575 1,687
		1,687

10. OTHER CURRENT ASSETS

Prepayments	Consolidated 2017 2016 $’000 $’000 3,583 4,212 3,583 4,212	Consolidated 2017 2016 $’000 $’000 3,583 4,212 3,583 4,212
		4,212

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APPENDIX II

11. PROPERTY, PLANT AND EQUIPMENT

Buildings
At cost
Accumulated depreciation
Net carrying amount
Plant and equipment
At cost
Accumulated depreciation
Accumulated impairment loss
Net carrying amount
Asset work in progress
At cost
Accumulated depreciation
Net carrying amount
Total property, plant and equipment
At cost
Accumulated depreciation
Accumulated impairment loss
Net carrying amount
Movements in carrying amounts
Buildings
Carrying amount at beginning
Additions
Depreciation expense
Carrying amount at end
Plant and equipment
Carrying amount at beginning
Additions
Disposals
Depreciation expense
Impairment loss
Carrying amount at end
Asset work in progress
Carrying amount at beginning
Additions
Disposals/Transfers
Carrying amount at end

Consolidated
2017
2016
$’000
$’000
1,304
1,348
(595)
(567)
709
781
21,788
20,509
(9,815)
(9,558)
(637)
–
11,336
10,951
–
2,255
–
–
–
2,255
23,092
24,112
(10,410)
(10,125)
(637)
–
12,045
13,987
781
591
–
246
(72)
(56)
709
781
10,951
10,381
3,494
2,807
(173)
(129)
(2,299)
(2,108)
(637)
–
11,336
10,951
2,255
2,192
–
71
(2,255)
(8)
–
2,255

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Total property, plant and equipment

Carrying amount at beginning Additions Disposals Depreciation expense Impairment loss Carrying amount at end	Consolidated 2017 2016 $’000 $’000 13,987 13,164 1,239 3,124 (173) (137) (2,371) (2,164) (637) – 12,045 13,987

Owned assets

All assets acquired are initially recorded at their cost of acquisition, being fair value of the consideration provided plus incidental costs directly attributable to the acquisition.

All items of plant and equipment are carried at the lower of cost less accumulated depreciation, amortisation and impairment losses and their recoverable amount.

Depreciation

Items of plant and equipment, including leasehold assets, are depreciated on a straight line basis so as to write off the net cost of each asset over its expected useful life. The estimated useful lives in the current and comparative years are as follows: leasehold improvements between 10 to 20 years and plant and equipment between 3 to 10 years.

Plant and equipment assets other than capitalised development costs are depreciated from the date of acquisition. Capitalised development costs are amortised from the date they are ready for use.

Depreciation and amortisation rates are reviewed annually for appropriateness. When changes are made, adjustments are reflected prospectively in current and future financial periods only.

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12. INTANGIBLE ASSETS

Software
At cost
Accumulated amortisation
Net carrying amount
Internally generated intangibles
At cost
Accumulated amortisation
Accumulated impairment loss
Net carrying amount
Intellectual property
At cost
Accumulated amortisation
Net carrying amount
Asset work in progress
At cost
Accumulated amortisation
Net carrying amount
Total Intangible assets
At cost
Accumulated amortisation
Accumulated impairment loss
Net carrying amount
Movements in carrying amounts
Software
Carrying amount at beginning
Additions
Transfers in from work in progress
Amortisation expense
Carrying amount at end

Consolidated
2017
2016
$’000
$’000
12,372
4,122
(2,936)
(1,723)
9,436
2,399
96,977
79,411
(6,436)
(3,258)
(90,541)
–
–
76,153
3,607
3,607
(3,607)
(3,456)
–
151
–
4,118
–
–
–
4,118
112,956
91,258
(12,979)
(8,437)
(90,541)
–
9,436
82,821
2,399
312
13
3,303
8,240
–
(1,216)
(1,216)
9,436
2,399

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Internally generated intangibles
Carrying amount at beginning
Additions
Amortisation expense
Impairment loss
Carrying amount at end
Intellectual property
Carrying amount at beginning
Additions
Disposals
Amortisation expense
Impairment loss
Carrying amount at end
Asset work in progress
Carrying amount at beginning
Additions
Transfers
Amortisation expense
Impairment loss
Carrying amount at end
Total intangible assets
Carrying amount at beginning
Additions
Amortisation expense
Impairment loss
Carrying amount at end

Consolidated
2017
2016
$’000
$’000
76,153
64,075
17,566
15,085
(3,178)
(3,007)
(90,541)
–
–
76,153
151
331
–
–
–
–
(151)
(180)
–
–
–
151
4,118
3,309
4,122
4,112
(8,240)
(3,303)
–
–
–
–
–
4,118
82,821
68,027
21,701
19,197
(4,545)
(4,403)
(90,541)
–
9,436
82,821

Intellectual property

The fair value of intellectual property contributed by an equity interest holder to Sirtex Medical Ltd, has been capitalised and recorded at fair value at the time of the contribution.

Recognition of internally generated intangible assets

The Group undertakes clinical and R&D activities. These have been classified as internally generated intangible assets, in accordance with AASB 138 Intangible Assets. Expenditure on the research phase of projects are recognised as an expense.

As at 30 June 2017, four of the five major Phase IV post-marketing clinical trials were completed. Amortisation expense of $3,178,141 was recognised during the year (2016: $3,007,411).

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Following the initial recognition of the capitalised development expenditure, the cost model is applied requiring the assets to be carried at cost less accumulated amortisation and accumulated impairment losses.

The Group uses its judgment in continually assessing whether development expenditure meet the recognition criteria of an intangible asset.

Impairment

Individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

The carrying value of the five major Phase IV post-marketing clinical trials and the two development projects have been tested for impairment at the end of the financial year. The clinical trials did not achieve their primary end-points which was to demonstrate superiority over the standard of care used in the market by showing an overall increase in survival. Given the outcome, management determined that there is no future economic benefit to be derived from the capitalised clinical trials. The Group has conducted a review of its strategy. As a result of this, all intangible assets ready for use and not ready for use including development projects with a total carrying amount of $90,540,640 were considered for impairment and it was assessed that no future economic benefit could be generated.

Amortisation

Amortisation of intangible asset is recognised from the date of completion and calculated over the estimated useful life of these assets.

13. TRADE AND OTHER PAYABLES

Trade payables Other payables	Consolidated 2017 2016 $’000 $’000 13,550 16,296 12,883 11,794 26,433 28,090	Consolidated 2017 2016 $’000 $’000 13,550 16,296 12,883 11,794 26,433 28,090
		28,090

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APPENDIX II

14. PROVISIONS AND ACCRUALS

(a) Short-term Provisions and Accruals

Provision for long service leave Provision for clinical studies Provision for legal settlement Redundancy provision Onerous lease provision Miscellaneous provisions	Consolidated 2017 2016 $’000 $’000 390 463 3,514 1,940 – 1,389 2,704 – 626 – 738 3,217 7,972 7,009	Consolidated 2017 2016 $’000 $’000 390 463 3,514 1,940 – 1,389 2,704 – 626 – 738 3,217 7,972 7,009
		7,009

(b) Long-term Provisions

Provision for long service leave Miscellaneous provisions The overall movement in the short-term provision for long service leave account is as follows: Opening balance Additional provisions for the year Amounts used during the year Closing balance The overall movement in the short-term provision for clinical studies account is as follows: Opening balance Additional provisions for the year Amounts used during the year Closing balance The overall movement in the short-term provision for legal settlement account is as follows: Opening balance Additional provisions for the year Amounts used during the year Closing balance	Consolidated 2017 2016 $’000 $’000 513 671 406 482 919 1,153 463 385 216 106 (289) (28) 390 463 1,940 3,180 7,442 8,228 (5,868) (9,468) 3,514 1,940 1,389 – – 1,389 (1,389) – – 1,389	Consolidated 2017 2016 $’000 $’000 513 671 406 482 919 1,153 463 385 216 106 (289) (28) 390 463 1,940 3,180 7,442 8,228 (5,868) (9,468) 3,514 1,940 1,389 – – 1,389 (1,389) – – 1,389
		1,153

		385 106 (28)
		463

		3,180 8,228 (9,468)
		1,940

		– 1,389 –
		1,389

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The overall movement in the short-term provision for
redundancy provision account is as follows:
Opening balance
Additional provisions for the year
Amounts used during the year
Closing balance
The overall movement in the onerous lease provision
account is as follows:
Opening balance
Additional provisions for the year
Amounts used during the year
Closing balance
The overall movement in the short-term miscellaneous
provision account is as follows:
Opening balance
Additional provisions for the year
Amounts used during the year
Closing balance
The overall movement in the long-term for long service
leave provision account is as follows:
Opening balance
Additional provisions for the year
Amounts used during the year
Closing balance
The overall movement in the long-term miscellaneous
provision account is as follows:
Opening balance
Additional provisions for the year
Amounts used during the year
Closing balance

Consolidated
2017
2016
$’000
$’000
–
–
2,704
–
–
–
2,704
–
–
–
626
–
–
–
626
–
3,217
3,101
22,748
23,506
(25,227)
(23,390)
738
3,217
671
521
3
163
(161)
(13)
513
671
482
583
58
–
(134)
(101)
406
482

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14. PROVISIONS AND ACCRUALS (CONTINUED)

Long service leave provision

Lease make good provision

Restructuring provision

Restructuring provisions are recognised only if a detailed plan for the restructuring has been developed and implemented, or management has at least announced the plan’s main features to those affected by it. Provisions are not recognised for future operating losses.

Onerous lease provision

An onerous lease provision is recognised when the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. A provision is recognised to reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it.

15. CONTINGENT LIABILITIES

As previously disclosed, Sirtex Medical Limited (Sirtex) is the respondent to a representative proceeding (shareholder class action) brought in the Federal Court of Australia. The statement of claim filed in the proceeding alleges breaches by Sirtex of its continuous disclosure obligations in the period prior to 9 December 2016 and misleading and deceptive conduct arising out of statements made by Sirtex on 24 August 2016 and 25 October 2016.

The class of applicants is said to include all persons who acquired ordinary shares in Sirtex on or after 24 August 2016 and who were at the commencement of trading on 9 December 2016 holders of any of those shares. The applicants are seeking declarations, damages and costs. Sirtex wholly rejects the claims and is vigorously defending the proceeding. Since the case commenced on 13 February 2017, there have been several interlocutory disputes and Sirtex filed a defence on 21 July 2017. At the most recent case management hearing on 15 August 2017, the Court made timetable orders for the provision of discovery and the filing of lay and expert evidence and set the matter down for trial commencing in late October 2018.

Having regard to the status of the proceeding, the current pleadings and the other information available, the directors believe that any liability potentially arising out of the class action cannot be reliably assessed or estimated at this point in time. Therefore, no contingent asset or liability has been recorded in the financial statements.

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APPENDIX II

16. ISSUED CAPITAL

Issued capital Share issue costs Share buy-back Purchase of Non-Executive Directors’ shares on market Deferred tax on performance rights Number of shares issued Fully paid ordinary shares Balance at beginning of the year Purchase of Non-Executive Directors’ share on market Issued on exercise of performance rights Share buy-back Balance at end of the year	Consolidated 2017 2016 $’000 $’000 32,154 28,616 (1,258) (1,258) (2,873) – (540) (386) 7,309 5,712 34,792 32,684 57,465,062 57,273,893 2017 2016 No (000) $’000 No (000) $’000 57,274 32,684 56,530 27,021 – (154) – (294) 422 5,135 744 5,957 (231) (2,873) – – 57,465 34,792 57,274 32,684

Share capital

A total of 422,548 fully paid ordinary shares have been issued as a result of the exercise of performance rights at an average price of $31.66. The value of $5,135,337 booked to share capital represents the accounting expense previously recognised in relation to the performance rights and deferred tax on the performance rights exercised. Fully paid ordinary shares carry one vote per share and carry the right to dividends. On winding up, ordinary shares participate in dividends and the proceeds, in proportion to the number of shares held. The Company does not have a limited authorised share capital and issued shares do not have a par value.

The purchase of Non-Executive Directors’ (NEDs) share on market represent the Restricted Shares that are acquired by the trustee of the NEDs Plan trust in respect of the vested Rights and are subject to a dealing restriction such that they may not be dealt with until the earlier of ceasing to be a NED of the Group or the lapsing of fifteen years from the grant date. The Restricted Shares were acquired via on-market purchase of Sirtex shares rather than by new issues of shares.

Share options

At reporting date, there were no share options outstanding and no share option plan was in place.

Share rights

At reporting date, there is an Executive Performance Rights Plan and a Non-Executive Directors’ Rights Plan in place. Refer to note 21 for further details.

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APPENDIX II

Capital management

Management controls the capital of the Group in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going concern. Management effectively manages the Group’s capital by assessing financial risk and adjusting its capital structure in response to changes in these risks and in the market. The responses include the management of debt levels, distributions to shareholders and share issues.

The company has no debt as at 30 June 2017.

17. RESERVES

Share Rights Reserve Foreign Currency Translation Reserve	Consolidated 2017 2016 $’000 $’000 1,966 4,652 1,291 2,004 3,257 6,656	Consolidated 2017 2016 $’000 $’000 1,966 4,652 1,291 2,004 3,257 6,656
		6,656

The Executive Performance Rights Plan, the Non-Executive Directors’ Rights Plan and the Sirtex Equity Plan gives rise to a share rights reserve. The translation of foreign controlled subsidiaries into the functional currency of the Group gives rise to a foreign currency translation reserve.

18. EARNINGS PER SHARE

(a) Basic earnings per share

(Loss)/profit from continuing operations attributable to equity holders Weighted average number of shares used in the calculation of basic earnings per share Add to number of shares used in the calculation of diluted earnings per share: Effect of potential conversion to ordinary shares under the Executive Performance Rights and Non-Executive Directors’ Rights Plans (refer to note 21 for further details) Diluted earnings per share (Loss)/profit from continuing operations attributable to equity holders Weighted average number of shares used in the calculation of diluted earnings per share	Consolidated 2017 2016 $ $ (26,257,188) 53,581,892 57,668,660 57,197,572 – 942,027 Consolidated 2017 2016 $ $ (26,257,188) 53,581,892 57,668,660 58,139,599	Consolidated 2017 2016 $ $ (26,257,188) 53,581,892 57,668,660 57,197,572 – 942,027 Consolidated 2017 2016 $ $ (26,257,188) 53,581,892 57,668,660 58,139,599
		58,139,599

(b) Diluted earnings per share

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APPENDIX II

19. DIVIDENDS

	Consolidated
	2017	2016
	$	$
Distributions paid
Declared 77.8% franked (2016: 100% franked) ordinary dividend of 30 cents
(2016: 20 cents) cents per share franked at the tax rate of 30% (2016: 30%)	17,306	11,432
Balance of franking credit amount at year end adjusted for franking credits
arising from payment of provision for income tax	1,570	6,206

Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been approved prior to the reporting date.

Dividend franking account

Dividends paid during the financial year were partially franked at the tax rate of 30% (2016: 30%). There are no further tax consequences as a result of paying dividends other than a reduction in the franking account.

At 30 June 2017 there were $1,570,000 of franking credits (2016: $6,206,000) available to shareholders of Sirtex Medical Limited for subsequent financial years.

The ability to utilise the franking account credits is dependent upon the ability to declare dividends. Dividends in excess of the dividend franking account balance will be unfranked.

20. OPERATING SEGMENTS

Identification of reportable segments

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors in assessing performance and determine the allocation of resources.

As the Group manufactures and distributes only one product, identical for each of the three regional markets, no further segmentation across products or services is made.

Basis of accounting for purposes of reporting by operating segments

Accounting policies adopted

Intersegment transactions

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Segment assets

Segment liabilities

Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a whole and are not allocated. Segment liabilities include trade and other payables and certain direct borrowings.

Unallocated items

Unallocated revenue comprises interest income from financial institutions.

Segment performance

Segment revenue

Asia Pacific Americas EMEA Total of all segments Interest Eliminations Consolidated	External Sales 2017 2016 $’000 $’000 9,076 8,361 186,883 185,204 38,323 38,927	Inter-segment(s) 2017 2016 $’000 $’000 8,832 163,751 14,149 13,819 163,974 –	Total 2017 2016 $’000 $’000 17,908 172,112 201,032 199,023 202,297 38,927 421,237 410,062 2,645 2,229 (186,955) (177,570) 236,927 234,721

The total revenue presented for the Group’s operating segments reconcile to the key financial figures as presented in its financial statements as follows:

Revenue from the sale of goods Other segment revenue From other segments Elimination of intersegment revenues Group revenues	2017 $’000 234,282 2,645 186,955 (186,955) 236,927	2016 $’000 232,492 2,229 177,570 (177,570) 234,721

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Segment net (loss)/profit after tax

Asia Pacific Americas EMEA Total of all segments Eliminations Profit before income tax expense Income tax benefit/(expense) (Loss)/Profit after income tax expense	2017 $’000 (50,268) 7,750 26,111 (16,407) (24,547) (40,954) 14,697 (26,257)	2016 $’000 95,397 13,547 33,634 142,578 (72,580) 69,998 (16,416)
		53,582

Segment assets and liabilities

Asia Pacific Americas EMEA Total of all segments Eliminations Consolidated	Assets 2017 2016 $’000 $’000 207,797 273,960 50,804 55,959 58,772 52,865 317,373 382,784 (123,251) (121,067) 194,122 261,717	Liabilities 2017 2016 $’000 $’000 66,860 86,408 27,718 36,100 37,961 29,998 132,539 152,506 (87,884) (84,293) 44,655 68,213	Liabilities 2017 2016 $’000 $’000 66,860 86,408 27,718 36,100 37,961 29,998 132,539 152,506 (87,884) (84,293) 44,655 68,213
			68,213

Other segment information

	Asia	Pacific	Americas
	2017	2016	2017	2016	2017	2016
	$’000	$’000	$’000	$’000	$’000	$’000
Acquisition of segment assets
– Plant and equipment	379	1,045	444	1,406	416	673
– Intangibles	21,701	19,197	–	–	–	–
Depreciation and amortisation
of segment assets
– Plant and equipment	779	763	856	812	736	589
– Intangibles	4,545	4,403	–	–	3	–
Impairment expense of segment
assets
–Plant and equipment	637	–	–	–	–	–
–Intangibles	90,541	–	–	–	–	–

Major customers

The Group has a number of customers to whom it provides products. No single external customer represents more than 10% of the total revenue.

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APPENDIX II

21. SHARE BASED PAYMENTS

Executive Performance Rights

The Group provides benefits to certain employees in the form of share-based payment transactions, whereby employees render services in exchange for rights over shares (equity-settled transactions). For this purpose, the Group has an Executive Performance Rights Plan in place.

Upon exercise of performance rights, the proceeds received net of any directly attributable transaction costs are allocated to share capital.

On 21 December 2016, a total of 221,575 executive performance rights were granted to executives and senior managers under the Executive Performance Rights Plan, to take up performance rights which may convert into ordinary shares, for nil consideration. The performance rights are exercisable after 30 June 2019. The performance rights hold no voting or dividend rights, and are not transferable.

Performance rights granted to key management personnel are as follows:

Grant Date	Number
26 November 2013	448,500
23 September 2014	284,720
1 September 2015	96,244
27 October 2015	45,930
4 February 2016	61,900
21 December 2016	221,575

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APPENDIX II

The Board has determined that there will be two performance conditions with equal weight of 50% each, calculated over a three year period from 1 July 2016 to 30 June 2019 (the Measurement period), namely Indexed Shareholder Return (i-TSR) and Earnings per Share (EPS). The percentage of rights vested will be determined as follows:

TSR (% pa compounded) Vesting (%) 100% of ASX300 TSR and greater than 10% 0% Above market average but not reaching target 1% for each 1% above market average (pro-rata) 200% of ASX300 TSR 100% of Target grants (66.7% of Plan grants) Surpassing target 0.5% for each 1% above target up to 1.5 times entitlement EPS (% pa compounded) Vesting (%) EPS compound growth of 10% 0% Above threshold but not reaching target 10% for each 1% above market average (pro-rata) EPS compound growth of 20% 100% of Target Rights (66.7% of Plan Rights) Surpassing target 5% for each 1% above target up to 1.5 times entitlement

A summary of the movements of all performance rights issued is as follows:

			Balance	Granted	Exercised	Forfeited	Balance
	Vesting	Exercise	at start of	during the	during the	during the	at end of	Vested and
Grant Date	Date	Price	year	year	year	year	year	exercisable	Lapsed
26-Nov-13	30-Jun-16	–	443,350	–	423,350	–	20,000	20,000	–
23-Sep-14	30-Jun-17	–	281,320	–	–	76,400	204,920	204,920
1-Sep-15	30-Jun-18	–	96,244	–	–	–	96,244	–	–
27-Oct-15	30-Jun-18	–	45,930	–	–	45,930	–	–	–
4-Feb-16	30-Jun-18	–	61,900	–	–	7,000	54,900	–	–
21-Dec-16	30-Jun-19	–	–	221,575	–	41,499	180,076	–	–

The weighted fair value of the performance rights issued during the financial year ended 30 June 2017 has been calculated at $6.04 (2016: $17.83).

The price was calculated by using a Monte Carlo simulation model and the binomial option pricing model applying the following inputs:

Exercise price	$nil
Performance rights life	3 years
Underlying share price	$14.76
Expected share price volatility	30%
Expected index volatility	10%
Expected dividend	$0.14 per share
Distribution yield	1.05%
Correlation	12.50%
Risk-free interest rate	2.04%

Historical volatility has been the basis for determining expected share price volatility as it is assumed that this is the best indicator of future volatility, which may not eventuate.

Included in the statement of profit or loss and other comprehensive income is $1,666,747 (2016: $2,771,860) of performance rights plan expense, and relates in full to equity-settled share-based payment transactions.

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Non-Executive Directors’ Rights

On 1 July 2016, a total of 5,917 rights were granted to Non-Executive Directors under the Non-Executive Directors’ Rights Plan to take up rights which may convert into ordinary shares, for nil consideration. The rights will vest three months after grant provided that the Non-Executive Directors continues to be a Director at that time. There are no performance criteria attached to the vesting of the rights. Upon vesting of the rights and conversion into ordinary shares, the shares are transferred to each NED, but with a CHESS holding lock. Disposal restrictions stipulate that, except by force of law, exercised shares may not be dealt with until the earlier of ceasing to be a NED of the Group or the elapsing of fifteen years from the grant date.

Rights granted to Non-Executive Directors are as follows:

Grant Date	Number
23-Nov-15	4,230
01-Jul-16	5,917

A summary of the movements of all rights issued is as follows:

			Balance	Granted	Exercised	Forfeited	Balance
	Vesting	Exercise	at start of	during the	during the	during the	at end of	Vested and	Vested and
Grant Date	Date	Price	year	year	year	year	year	exercisable	unexercisable
1 July 2016	1-Oct-16	–	–	5,917	5,917	–	–	–	–

Sirtex Equity Plan

The purpose of the Sirtex Equity Plan is to encourage employees to hold Sirtex shares, and to align their interests to shareholders’ interests.

The first grant of performance rights under the Plan was made on 20 September 2016. with a subsequent grant on 9 March 2017.

During the financial year ended 30 June 2017, a total of 78,590 performance rights were granted to Eligible Employees under the Sirtex Equity plan, to take up performance rights which may convert into ordinary shares, for nil consideration. The performance rights are exercisable after 30 June 2019. The performance rights hold no voting or dividend rights, and are not transferable.

Rights granted to Eligible Employees are as follows:

Grant Date	Number
20 September 2016	75,340
9 March 2017	3,250

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The Board has determined that there will be a performance condition based on Indexed Shareholder Return (i-TSR) calculated over a three year period from 1 July 2016 to 30 June 2019 (the Measurement period). The percentage of rights vested will be determined as follows:

TSR (% pa compounded)									Vesting(%)
Less than 100% of ASX300 TSR									0%
At least 100% of ASX300 TSR and positive SRX TSR								100% of Plan grants
A summary of the movements of	all rights issued is as		follows:
		Balance	Granted	Exercised		Forfeited	Balance
Vesting	Exercise	at start of	during		during	during	at end of	Vested &	Vested &
Grant Date Date	Price	year	the year	the year		the year	year	exercisable	unexercisable
20-Sep-16 30-Jun-19	–	–	75,340		–	13,440	61,900	–	–
9-Mar-17 30-Jun-19	–	–	3,250		–	–	3,250	–	–

The weighted fair value of the performance rights issued during the financial year ended 30 June 2017 has been calculated at $17.59.

22. KEY MANAGEMENT PERSONNEL

Refer to the Remuneration Report contained in the Report of the Directors for details of the remuneration paid or payable to each member of the Group’s key management personnel for the year ended 30 June 2017 and 30 June 2016.

The totals of remuneration paid to KMP of the company and the Group during the year are as follows:

Short-term employee benefits Post-employment benefits Termination benefits Share-based payment	2017 $ 5,035,196 155,687 675,035 (750,154) 5,115,764	2016 $ 6,134,843 173,403 – 1,778,095
		8,086,341

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23. PARENT ENTITY

Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Equity Issued capital Reserves Retained earnings Total Equity Reserves Share rights reserve Share capital reserve Total reserves Financial performance Profit for the year Total comprehensive income	2017 $’000 134,997 33,537 168,534 50,066 939 51,005 34,792 (5,907) 88,644 117,529 (584) (5,323) (5,907) 7,430 7,430	2016 $’000 127,962 30,428 158,390 27,976 1,243 29,219 32,684 (2,032) 98,519 129,171 874 (2,906) (2,032) 43,626 43,626

Financial guarantees

No guarantees have been provided to its wholly-owned subsidiaries by the parent entity.

Contingent liabilities

Refer to note 15.

Contractual commitments

The parent entity has an operating lease commitment for the office lease in Sydney. Refer to note 24 for further details.

Changes in accounting policies

There have been no changes to accounting standards impacting the parent entity in the current financial year.

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24. COMMITMENTS

Operating Leases

The consolidated entity leases offices in Sydney, Singapore, Germany and in the United States, with no option to purchase the leased assets at the expiry of the leased assets.

Duration and remaining periods for the office leases are as follows:

Location	Lease term	Remaining lease period
Sydney – North Sydney	84 months	37 months
Sydney – St Leonards	60 months	43 months
Singapore	36 months	14 months
Bonn (GER)	98 months	55 months
Frankfurt (GER)	120 months	74 months
Boston (US)	123 months	55 months
London (UK)	48 months	26 months

The consolidated entity also leases various items of plant and equipment in Germany and the United States with lease terms up to 60 months, and remaining periods of up to 46 months.

Non-cancellable operating leases: Not longer than 1 year Longer than 1 year and not longer than 5 years Longer than 5 years	Consolidated 2017 2016 $’000 $’000 3,557 3,299 8,497 10,623 727 1,865 12,781 15,787	Consolidated 2017 2016 $’000 $’000 3,557 3,299 8,497 10,623 727 1,865 12,781 15,787
		15,787

Research Commitments

The consolidated entity has entered into various research and development agreements with Universities and other external research institutions for ongoing research and clinical trials.

Under these agreements, the consolidated entity is committed to providing funds over future periods, payable within one year of $512,000 (2016: $1,469,000). The amount of all outstanding contractual commitments as at 30 June 2017 is $512,000 (2016: $1,981,000).

Clinical Trial Commitments

The consolidated entity has entered into various clinical study agreements with Clinical Research Organisations and specialist Service Providers for the management of clinical studies, and with a range of major hospitals for the recruitment of patients into the clinical trials.

Under these agreements, the consolidated entity is committed to providing funds over future periods, payable within one year, of $4,716,000 (2016:$9,358,000). The amount of all outstanding contractual commitments as at 30 June 2017 is $6,126,000 (2016: $17,574,000).

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25. CONTROLLED ENTITIES

		Ownership	interest
Name of entity	Country of incorporation	2017	2016
		%	%
Parent entity
Sirtex Medical Limited	Australia
Controlled entities
Sirtex Medical Products Pty Ltd	Australia	100	100
Sirtex Global Pty Ltd	Australia	100	100
Sirtex Technology Pty Ltd	Australia	100	100
Sirtex Sir-Spheres Pty Ltd	Australia	100	100
Sirtex Thermospheres Pty Ltd	Australia	100	100
Sirtex Executive Share Trust	Australia	100	100
NEDS Rights Plan Trust	Australia	100	100
Sirtex Medical Holdings Inc	USA	100	100
Sirtex Medical Inc	USA	100	100
Sirtex Wilmington LLC	USA	100	100
Sirtex Germany Holding GmbH	Germany	100	100
Sirtex Medical Europe GmbH	Germany	100	100
Sirtex Technology Germany GmbH	Germany	–	100
Sirtex Germany Manufacturing GmbH	Germany	100	100
Sirtex Medical United Kingdom Ltd	United Kingdom	100	100
Sirtex Medical France S.A.R.L.	France	100	100
Sirtex Medical MEA FZE	United Arab Emirates	100	100
Sirtex Medikal LimitedŞirketi	Turkey	100	–
Sirtex Singapore Holding Pte Ltd	Singapore	100	100
Sirtex Medical Singapore Pte Ltd	Singapore	100	100
Sirtex Global Singapore Pte Ltd	Singapore	100	100
Sirtex Singapore Manufacturing Pte Ltd	Singapore	100	100
Sirtex Technology Japan KK	Japan	100	100
Sirtex Medikal LimitedŞirketi was incorporated	on 15 June 2017.

Sirtex Technology Germany GmbH was deregistered during the year ended 30 June 2017.

Sirtex Medical Ltd and all its Australian controlled entities are included in the tax-consolidated group. Sirtex Medical Ltd is the head entity in the tax consolidation group. These entities are taxed as a single entity.

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26. RELATED PARTY TRANSACTIONS

(a) Equity interests in related parties

Details of the percentage of ordinary shares held in controlled entities are disclosed in Note 25.

(b) Loans and transactions with key management personnel and related entities

At 30 June 2017, $2,531,294 (2016: $1,255,046) was payable to directors, key management personnel and director related entities.

At 30 June 2017, $1,486 (2016: $1,493) was receivable from directors, key management personnel and director related entities.

The payable relates to deferred remuneration which is fully offset with a corporate asset and recognised net in the financial statements (2015: deferred remuneration which is fully offset with a corporate asset and recognised net in the financial statements). The receivable relates to expense reimbursement.

(c) Transactions with the wholly-owned group

The ultimate parent entity in the wholly-owned group is Sirtex Medical Limited. During the financial year, Sirtex Medical Ltd paid management fees of $163,242 (2016: $23,213) to entities in the wholly-owned group.

(d) Outstanding balances arising from transactions with the wholly-owned group

The following balances are outstanding at the reporting date in relation to transactions with the wholly-owned group:

Current payables to subsidiaries: $46,601,600 (2016: $23,932,288)

Loans receivable from subsidiaries: $15,045,768 (2016: $15,317,888)

27. EVENTS AFTER REPORTING DATE

On 4 August 2017, it was determined that none of the Executive Performance Rights issued on 23 September 2014 vested. The Board exercised its discretion to disallow any vesting of rights.

Sirtex Medical Limited (Sirtex) is the respondent to a representative proceeding (shareholder class action) brought in the Federal Court of Australia. Details are in Note 15 Contingent Liabilities.

No other matter or circumstance has arisen since the end of the financial year, that has significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in future financial years.

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28. REMUNERATION OF AUDITORS

During the year the following were paid or payable for services provided by the auditor of the parent entity, its related party practices and non-related audit firms:

	Consolidated
	2017	2016
	$’000	$’000
Remuneration of the auditor of the parent entity for
audit and review of financial reports	255	164
Agreed upon procedures performed for the parent entity	–	78
Remuneration of the auditors of subsidiaries for
audit and review of financial reports	201	159

29. FINANCIAL RISK MANAGEMENT

The Group’s financial instruments consist mainly of deposits with banks, short-term investments, account receivable and payable, and loans to and from subsidiaries.

The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial instruments, are as follows:

Financial Assets Cash and cash equivalents Other short-term deposits Trade and other receivables Other financial assets Financial Liabilities* Trade and other payables	Consolidated 2017 2016 $’000 $’000 50,349 21,025 68,000 86,000 36,976 42,272 1,575 1,687 156,900 150,984 26,432 28,090 26,432 28,090	Consolidated 2017 2016 $’000 $’000 50,349 21,025 68,000 86,000 36,976 42,272 1,575 1,687 156,900 150,984 26,432 28,090 26,432 28,090
		150,984

		28,090
		28,090

Other financial assets comprise security deposits

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Financial Risk Exposures and Management

The main risks the Group is exposed to through its financial instruments are interest rate risk, foreign exchange risk, liquidity risk and credit risk as follows:

(a) Interest rate risk

The Group’s exposure to interest rate risk relates to its cash and short-term deposits. The interest rate as at 30 June 2017 on cash was 0.70% (2016: 0.45%) and on short-term deposits 2.78% (2016: 3.08%). All other financial assets and liabilities are non-interest bearing.

Sensitivity analysis

	Consolidated
	2017	2016
	$’000	$’000
Change in profit:
Increase in interest rate by 2%	2,130	1,926
Decrease in interest rate by 2%	(2,130)	(1,926)
Change in equity:
Increase in interest rate by 2%	2,130	1,926
Decrease in interest rate by 2%	(2,130)	(1,926)

(b) Credit risk

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(c) Liquidity risk

As at 30 June 2017, the Group had only non-interest bearing financial liabilities with less than 1 year maturity (refer note 14).

(d) Foreign exchange risk

It is the Group’s policy that hedging, as a percentage of net foreign exchange rate exposure, be maintained within the limits of the foreign exchange risk management policy.

The Group does not have any currency hedging instruments open at reporting date.

Sensitivity analysis

	Consolidated
	2017	2016
	$’000	$’000
Change in profit:
Increase of AUD to USD by 15%	(14,237)	(16,840)
Decrease of AUD to USD by 15%	14,237	16,840
Increase of AUD to EUR by 15%	(211)	(2,022)
Decrease of AUD to EUR by 15%	211	2,022
Change in equity:
Increase of AUD to USD by 15%	(14,237)	(16,840)
Decrease of AUD to USD by 15%	14,237	16,840
Increase of AUD to EUR by 15%	(211)	(2,022)
Decrease of AUD to EUR by 15%	211	2,022

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2017 Group entity (Functional currency) US Entities (USD) European Entities (EUR) UK Entities (GBP) Singapore Entities (SGD) Japanese Entities (JPY) Middle Eastern Entities (AED) Turkish Entities (TRY) Balance Sheet Exposure 2016 Group entity (Functional currency) US Entities (USD) European Entities (EUR) UK Entities (GBP) Singapore Entities (SGD) Japanese Entities (JPY) Middle Eastern Entities (AED) Turkish Entities (TRY) Balance Sheet Exposure	USD 000 17,993 – – – – – – 17,993 19,096 – – – – – – 19,096	EUR 000 – 9,791 – – – – – 9,791 – 7,463 – – – – – 7,463	GBP 000 – – (1,417) – – – – (1,417) – – (66) – – – – (66)	SGD 000 – – – 1,365 – – – 1,365 – – – (467) – – – (467)	JPY 000 – – – – 8,283 – – 8,283 – – – – 4,292 – – 4,292	AED 000 – – – – – – – – – – – – – – – –	TRY 000 – – – – – – 3 3 – – – – – – –	AUD 000 23,394 14,550 (2,397) 1,288 94 – 1 36,930 25,718 11,143 (118) (465) 56 – – 36,334

Foreign Currency Call/Put Options

The Group has no currency option open at reporting date.

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C2. CHAIRMAN’S REPORT AND CHIEF EXECUTIVE OFFICER’S REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2017

CHAIRMAN’S REPORT

On behalf of the Sirtex Board and management, I hereby present the 2017 Sirtex Annual Report. The 2017 financial year was a challenging one for the Company. We have seen a decline in the historical growth rates achieved for our core product, and none of our major clinical studies met their primary endpoints. Accordingly, we faced the difficult decision of writing off the value associated with those clinical studies, and reducing our global headcount to reflect the wind-down of our major clinical studies, a discontinuation of the majority of non-core R&D and a pull- back in discretionary marketing spend. Importantly, these changes were designed to optimise our corporate structure for growth and enhanced engagement with key clinician users, while more effectively targeting new users and ensuring as many patients as possible receive our innovative therapy through new or expanded reimbursement. We ended the year with a new Chief Executive Officer in place, and the senior management team ready to implement our growth strategies.

It is important for shareholders to recognise that there is still a large global market available for SIR-Spheres[®] Y-90 resin microspheres. Following the results of all our major clinical studies, with the exception of one study yet to report findings, we now have a very clear understanding of that market opportunity. In the markets in which we currently operate, the salvage-only market opportunity represents 184,000 patients annually. In addition, the SARAH and SIRveNIB results in hepatocellular carcinoma (HCC), the most common form of primary liver cancer showed that despite SIR-Spheres microspheres not meeting the primary endpoint of superiority in Overall Survival (OS) versus the current standard of care, SIR- Spheres microspheres conferred statistically significant safety and toxicity benefits for these patients. In addition, beneficial quality of life benefits were also seen in the SARAH study favouring SIR-Spheres microspheres. HCC represents an annual opportunity of approximately 61,000 patients in our current markets. The interventional oncology space is continuing towards being considered as a fourth tenet of cancer care, alongside long-standing surgical, radiotherapy and chemotherapy-based approaches. Sirtex remains a global leader in the rapidly evolving interventional oncology field.

2017 Financial Performance

Sirtex recorded a disappointing financial performance this year, with a significant decline in volume growth as measured by dose sales. This unexpected abatement in growth saw profits significantly impacted during the year. For the first time since 2010, the Company recorded a reduction in underlying net profit after tax versus the prior year. The profit and loss statement was additionally impacted by the non-cash recognition of asset write-offs related to the capitalised costs of our major clinical studies and R&D development programs, along with provisions relating to the organisational restructure. This has resulted in a material reported loss for the Company of $26.3 million in 2017.

The Company reported SIR-Spheres microspheres dose sales of 12,578, representing growth of 5.4 per cent over the prior corresponding period. The primary headwind of the dose sales performance during the year was the Americas region, which delivered dose sales growth of 4.6 per cent over the prior corresponding period (pcp). EMEA dose sales were up 5.9 per cent and APAC dose sales were up 11.3 per cent versus the pcp. Total product revenue was $234.3 million, up 0.8 per cent on the prior period.

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Earnings before interest, tax, depreciation and amortisation (EBITDA) was -$36.7 million, the loss before tax was $41.0 million and as mentioned the net loss after tax was $26.3 million. Excluding the impact of asset impairments and provisions related to restructuring costs, underlying EBITDA was down 17.3 per cent to $61.5 million and underlying net profit before tax was down 18.3 per cent to $57.2 million. Underlying net profit after tax was down 20.9 per cent to $42.4 million.

Cash from operations was $56.0 million, down 14.2 per cent on the previous year with net cash flow after dividend payments and the share buy-back of $12.9 million recorded.

Financial Position

Sirtex ended the financial year in a strong financial position with cash and cash equivalents of $118.3 million. The Company has no short term or long term debt.

During the year, the Board reviewed the carrying value of the Company’s clinical and R&D assets in accordance with AASB138 Intangible Assets following the results of the clinical studies and the completion of development activities relating to our core SIR-Spheres microspheres product. The Board assessed the carrying value of the SIRFLOX/FOXFIRE/FOXFIRE Global studies in metastatic colorectal cancer (mCRC) and the SARAH/SIRveNIB studies in hepatocellular carcinoma (HCC) following data release and presentation at major oncology conferences, noting in all instances the primary endpoint was not met. Included in this review was the SORAMIC study in HCC, which has yet to report findings. For SIR-Spheres microspheres, the capitalised costs associated with two development projects relating to delivery and dosing were also tested for impairment. As a result of that review, the Board decided to impair the entire carrying value of those assets, representing a one-off, non-cash impairment charge of $90.5 million in FY17. This significantly impacted reported net profit after tax for the year.

SHAREHOLDER DIVIDENDS DECLARED

$’000

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----- Start of picture text -----

2013 2014 2015 2016 2017
6,733 7,914 11,423 17,292 18,848
----- End of picture text -----

“The Board of Sirtex works diligently to ensure the Sirtex global management team has the expertise, capability and resources to execute on its global strategies and growth initiatives.”

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As part of the organisational restructure announced in June, pre-tax provisioning costs of $4.1 million were recognised, principally related to employee redundancy payments associated with the reduction in the global workforce. These occurred predominately in the clinical, R&D and global marketing functions of the business.

Despite the asset write-offs, the Sirtex balance sheet remains strong, with net assets of $149.5 million, consisting predominately of cash and property, plant and equipment.

Class Action

In January, the Company received a letter and draft statement of claim, foreshadowing the commencement of a representative proceeding against the Company in the Federal Court of Australia. The statement of claim alleged breaches by the Company of its continuous disclosure obligations, and alleged misleading and deceptive conduct. The statement of claim was subsequently filed at the Federal Court of Australia, Victoria Registry in early February and proceedings commenced. Sirtex will continue to vigorously defend the proceeding. The matter is set down for a trial commencing late October 2018.

Share Buy-Back

A $30 million on-market share buy-back was announced in February. This was anticipated to commence in March 2017 but was delayed until early June owing to the applicant of the class action seeking a Federal court injunction against the commencement of the buy-back. Thankfully for our shareholders, this injunction was dismissed in late May, and the Company commenced the buy-back following the release of results from our clinical studies at the American Society of Clinical Oncology (ASCO) Annual Meeting.

At the end of the FY17 period, we have bought back $2.9 million worth of our stock, representing approximately 231,000 shares. A further $27.1 million remains to be bought back which is expected to be complete by 8 September 2017. Accordingly, the expected earnings accretion from the buy-back will be skewed towards the FY18 period. The Board will continue to monitor its level of cash on hand and capital efficiency of the business.

Dividends

The Board of Directors is committed to the payment of dividends to our shareholders. The Directors have approved an unfranked final dividend of 30.0 cents per share for the 2017 financial year, identical to the prior period. The record date for the dividend is 27 September 2017 and the payment date is 18 October 2017.

Inclusive of the 2017 financial year dividend payment to be made on 18 October 2017, Sirtex will have returned to shareholders a total of $69.8 million in dividends since 2011.

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Director And Board Activities

The Board of Sirtex works diligently to ensure the Sirtex global management team has the expertise, capability and resources to execute on its global strategies and growth initiatives.

In April, Mr Neville Mitchell was appointed as an independent Non-Executive Director of the Company. He is a qualified Chartered Accountant with over 25 years of experience as a Chief Financial Officer at Cochlear Limited (ASX: COH). Cochlear is the world’s leading company for the development, manufacture and sale of cochlear implants with annual revenue in excess of $1 billion. During that time, Mr Mitchell was responsible for all financial aspects of the business, including ASX compliance and governance, banking, acquisitions and mergers, together with forecasting and budgetary management and responsibility for accounting data, legal and company secretarial and facilities.

Mr Mitchell serves as a Member of the Audit Committee and member of the Remuneration Committee and the Risk, Health and Safety Committee.

There have also been significant changes to the composition of our Executive Management Team during 2017. In January, our CEO, Mr Gilman Wong, ceased his employment with Sirtex following an investigation into his share trading by the Company’s legal advisers, Watson Mangioni. All unvested performance rights previously issued to Mr Wong were subsequently forfeited.

Following the dismissal of Mr Wong in January, Mr Nigel Lange was appointed as Interim CEO of Sirtex Medical. Prior to this appointment, Mr Lange was Chief Operating Officer of Sirtex. Mr Lange joined Sirtex US in 2002 and then established Sirtex operations in Europe. Before joining Sirtex, Mr Lange held senior roles at Nordion Inc (NYSE: NDZ) and has over 20 years of experience in the healthcare industry.

During his time as Interim CEO of Sirtex, Mr Lange made some difficult, but necessary decisions for the business and the Board thanks him for his efforts and diligence in this role. Mr Lange resumed his role of Chief Operating Officer, which was re-named as Chief Commerical Officer in May.

In May, we announced the appointment of Mr Andrew McLean as the CEO of Sirtex Medical. This followed a comprehensive global recruitment process that considered both internal and external candidates for the role.

Mr McLean has over 20 years of experience with a track record of success in regional and global leadership roles. His most recent roles were CEO, Applied Sterilisation Technologies and Laboratories with Synergy Health plc, and he leaves STERIS Corporation (NYSE: STE) as Senior Vice President, Corporate Strategy to join Sirtex.

He has a Master of Business Administration from the Macquarie Graduate School of Management and a Bachelor of Economics from Macquarie University. In June, Mr McLean was appointed as an Executive Director of the Company.

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Corporate Governance & Remuneration

The Board is committed to achieving and demonstrating the highest standards of corporate governance. As such, Sirtex Medical Limited and its controlled entities (‘the Group’) have adopted a corporate governance framework and practices to ensure they meet the interests of shareholders.

The Group complies with the Australian Securities Exchange Corporate Governance Principles and Recommendations 3rd Edition (the ‘ASX Principles‘). Our Corporate Governance Statement incorporates the disclosures required by the ASX Principles under the headings of the eight core principles. All of these practices, unless otherwise stated, were in place for the full reporting period.

Sirtex’s Codes and Policies are a key element of our corporate responsibility and govern the way our Directors and employees work. Sirtex’s Corporate Governance policies and procedures are available to shareholders and other stakeholders in a single, easy-to- read format within the Investors section of our website. As the policies are updated, where required they are lodged with the ASX and updated on our website. Sirtex strives for transparency in the way the Company is governed.

We were particularly pleased to formally launch The Sirtex Code during the year, which clearly summarises our many corporate level policies into an easy-to-read format and communicates our commitment to integrity, and the highest ethical standards in what we do. The Sirtex Code outlines the key information we expect all employees to know, understand, implement and comply with across a range of policy areas.

In March, we updated our Securities Trading Policy to include a streamlined clearance process for securities dealing for all employees and directors. Other policies updated or introduced during the year included our Privacy Policy, Flexible Working Arrangements Policy, External Audit Inspection Policy and Procedure and our Quality Manual.

Sirtex’s remuneration levels, structure and processes are designed to reflect high ethical standards, the laws of the countries in which the executives are employed, and the fair treatment of all staff.

All charters, policies, procedures and rules that relate to Executive and Non- Executive remuneration at Sirtex can be found within the Investors section of our website. We actively encourage investors with any questions or comments regarding the Company’s remuneration structure and processes to contact us directly via the website.

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Our People

Sirtex works hard to attract and retain top talent who can make a positive contribution to our innovative and dynamic culture that is focused on delivering outcomes for people who suffer from the debilitating effects of liver cancer.

With a global workforce of 292 talented individuals across 20 countries, our employees bring a wealth of knowledge, passion, innovation and expertise to the organisation each day. The Board recognises the dedication and hard work of all our staff members in making Sirtex a global leader in the emerging field of interventional oncology.

The health and safety of our staff is paramount and we are committed to a values-based health and safety culture that harmonises with our overall organisational culture. I am particularly pleased to report that only a single lost time injury (LTI) was recorded across our entire global workforce during the year, which emphasises our focus on workplace safety.

Sirtex continues to benefit as an organisation with a diverse workforce. Our workforce represents a number of different cultures and ethnic backgrounds and our people speak multiple languages. Where possible, we seek to align our global workforce to reflect the diversity of our customers across the 40+ countries in which our doses are sold.

At the end of the 2017 financial year, women represented 45 per cent of the total number of employees globally. Sirtex continues to encourage diversity across the business in order to build on identifiable individual strengths within a professional development framework.

This is a key focus of our Growing with Sirtex program. Our aim is to increase this percentage at the senior level and we are investing in strategies to achieve increased representation.

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Corporate Social Responsibility

Sirtex recognises the importance of corporate social responsibility, and remains committed to conducting business ethically while contributing to the social, environmental and economic wellbeing in those locations in which we operate. We acknowledge the benefits the commitments we make in these three key areas can have on our clinician customers, the patients we treat and our shareholders.

We are committed to being a responsible member of the international business community, and acknowledge that our operational integrity and reputation are crucial to our success.

The Company assists its employees to become active supporters of worthwhile causes and participate in community programs outside the workplace. During the year, Sirtex made charitable contributions of $0.34 million, representing 0.6 per cent of our FY17 underlying net profit before tax. This is consistent with our global healthcare peers.

Outlook

We are resolute in our focus on the long term growth opportunity in our under-penetrated market for SIR-Spheres microspheres. With the majority of the clinical results now having delivered findings, it is important to continue to drive dose sales via new and existing clinicians.

We will continue to develop our plans for geographic expansion in Japan and China, and parts of South America.

Government and private payer reimbursement remains an important consideration when patients receive our therapy, and we will continue to work with these groups to ensure as many patients as possible are covered for their SIR-Spheres microspheres treatment.

Finally, we intend to file with the US FDA for additional regulatory clearances for our therapy in the US market during the 2018 financial year. Assuming we are granted such clearance, it will greatly enhance our sales and marketing efforts in this key market to include diseases outside of mCRC.

RICHARD HILL CHAIRMAN

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CHIEF EXECUTIVE OFFICER’S REPORT

It was a great honour and privilege to commence the role of new CEO of Sirtex Medical in June. The product we take to clinicians fills a vital need and makes unquestionable differences to the lives of many liver cancer patients and their families.

I am pleased to report another year of growth in dose sales and revenue for Sirtex Medical. Our SIR-Spheres[®] Y-90 resin microspheres business continues to perform, although growth slowed during the year, reflecting increased competition in the interventional oncology market, new drug therapies and some inefficiencies in our US sales force following the strong expansion in FY16 and the first half of FY17. Dose sales in the Americas, grew 4.6 per cent on the prior corresponding period (pcp), dose sales in EMEA grew 5.9 per cent and dose sales in APAC grew 11.3 per cent. Unfortunately, this slowdown in growth necessitated a change in our levels of investment into the business following the results of the clinical studies in April-June. On an underlying basis, and reflecting the growth in expenditure ahead of these studies, our earnings before interest, tax, depreciation and amortisation (EBITDA) declined by 17.3 per cent to $61.5 million and underlying net profit after tax fell 20.9 per cent to $42.4 million. In June, we took decisive action to address our cost base and levels of expenditure. The Board also reviewed the carrying value of our capitalised clinical and R&D assets. As a result, we took several non-cash, one-off charges to our profit and loss statement, including a $90.5 million non-cash, pre-tax asset impairment and a $4.1 million restructuring charge following a review of our global headcount. This delivered a reported net loss after tax of $26.3 million for the year.

While the interventional oncology market continues to show a solid long term growth profile, Sirtex needs to respond to the global and competitive environment we currently operate in by becoming more productive, efficient and most importantly innovative, to meet the needs of our clinician customers and our valued patients suffering from the debilitating effects of liver cancer. The results of our clinical studies have provided us with a clearly defined market opportunity moving forward. For example, in hepatocellular carcinoma (HCC) the SARAH and SIRveNIB study data allows us to contest an annual market opportunity of 61,000 patients in Sirtex’s current markets and the total salvage opportunity is 184,000 patients per annum. We have a long way to go before our global market opportunity for SIRSpheres microspheres reaches saturation, however we need to expand our global footprint, grow our approved disease indications, and expand our reimbursement.

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APPENDIX II

Dose Sales Growth Continues

In FY17 we saw global dose sales increase 5.4 per cent over the prior year. Revenue growth trailed dose sales growth reflecting the translation effect of a stronger Australian dollar versus the US dollar and Euro over the period. We reported a net loss after tax of $26.3 million, resulting from the significant clinical and R&D asset impairment and restructuring costs both recognised in the second half. The highlights for the 2017 financial year are as follows:

Dose sales of 12,578, up 5.4 per cent on 2016
Revenues of $234.3 million, up 0.8 per cent
Underlying EBITDA of $61.5 million, down 17.3 per cent
Underlying earnings per share of 73.5cents, down 21.6 per cent
Dividend per share of 30.0 cents, identical to the previous year
Operating cash flow of $56.0 million, down 14.2 per cent
Announced a $30 million on-market share buy-back
Reported results from the SARAH clinical study
Reported results from the SIRFLOX/FOXFIRE/FOXFIRE Global clinical study
Reported results from the SIRveNIB clinical study
Reported results from the RESIRT pilot study in kidney cancer
Reimbursement granted in France
Commercial supply of doses from our state-of-the art manufacturing facility in Frankfurt, Germany

Our Approach

During the first half of the financial year, our strategy was directed towards building the awareness and educating clinicians on our product ahead of the outcomes from the majority of our clinical studies. Additional to this investment was the continued build of our sales and marketing infrastructure globally to support the results, when delivered. Unfortunately, the lowered dose sales growth delivered in the first half negatively impacted our financial performance relative to the additional expenditures made.

DOSE SALES GROWTH SALES REVENUE GROWTH NET LOSS AFTER TAX +5.4% +0.8% $26.3m

UNDERLYING UNDERLYING EBITDA NET PROFIT AFTER TAX $61.5m $42.4m

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APPENDIX II

With the clinical studies reporting out in the second half, we made the necessary adjustments to our cost base to reflect those outcomes.

I certainly look forward to updating investors on our future plans and strategies in the coming months.

Driving Reimbursement Is A Key Organisational Objective

We continue to make progress on our strategy to ensure as many patients as possible are treated with our product. We expanded our Global Pricing, Reimbursement and Market Access team during the year, reflecting our commitment to driving reimbursement expansion across markets, with a focus on EMEA and APAC. As our expansion plans into parts of South America continue, the Company will seek to work with government and private payers. For example, in Brazil, the Decentralized Unified Healthcare System (Sistema Único de Saúde, SUS) is one of the largest public health systems in the world, and provides medical services to 60–80 per cent of the Brazilian population, representing coverage of 51 million people in 2014. The Brazilian private healthcare insurance system is the world’s second largest.

In January, we saw the Centers for Medicare and Medicaid Services (CMS) in the United States (US) increase the reimbursement available for SIR-Spheres microspheres by approximately 3 per cent to approximately 3 per cent above our selling price.

In May, we received reimbursement coverage in France. The French Ministry of Health, Ministère des Affaires sociales et de la Santé, agreed to provide reimbursement for SIR-Spheres microspheres for patients with colorectal liver metastases who have failed on or are intolerant to prior chemotherapy. Reimbursement in France is specific to our product and recognises the innovative and specific product characteristics of this trademarked product.

Offsetting the success we achieved in France, the National Health Service (NHS) England confirmed that the funding for SIR-Spheres microspheres within the Commissioning through Evaluation (CtE) scheme would cease at the end of March 2017, after three years of funding. This was disappointing, but Sirtex is continuing its efforts to overturn this decision for the benefit of our patients. This decision did not impact private health insurance reimbursement, where SIR- Spheres microspheres is covered for most primary and secondary forms of liver cancer.

We plan to utilise the results of our major clinical studies which reported during the year to drive new reimbursement where possible. In particular, we see opportunities for the SARAH study data to drive new reimbursement across EMEA, and eventually the US once regulatory clearance is achieved. Within Asia, the results of the SIRveNIB study will be important in our discussions with government payers, given the very high incidence of HCC caused by hepatitis B and C viruses in these markets.

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APPENDIX II

Operations

We continued to invest in our core capabilities throughout the year as they related to sales and marketing, regulatory and quality assurance, medical and administration.

Sales and marketing, our largest expenditure item, was up 12.5 per cent on the prior year to $89.3 million, or 38.1 per cent of sales.

We continued to focus on expanding the awareness of our product across the clinical community and invested significantly ahead of the results from our three major studies reported from April-June, including at the major medical conferences where the data was presented.

As we continue to increase our manufacturing capability, expand into new markets, market our clinical studies and pursue new treatment indications, our regulatory and quality assurance function needs to keep pace with the increased demands posed by government regulators, customers and patients. Regulatory and quality assurance expenses were up 18.9 per cent to $4.6 million.

Medical Affairs – Servicing The Clinicians

Medical expenditure grew 20.5 per cent to $7.7 million during the year to educate the many clinicians globally who use, or seek to use our SIR-Spheres microspheres product and wish to enquire on our clinical studies program. One very large initiative established by our skilled medical team has been the RESiN registry.

The RESiN liver tumour patient registry in the US continues to perform above expectations, since its commencement in FY16. As at 30 June 2017, there were 34 active sites and approximately 600 patients enrolled onto the registry. This registry aims to recruit over 500 patients per annum with both primary and secondary (metastatic) liver cancer, so the performance has been very pleasing.

We recently expanded the RESiN registry to include sites from Australia and New Zealand, with new sites up and running and other sites planned.

The RESiN registry will provide considerable benefits to Sirtex, including:

Clinical data – Rapidly generates real-world data outside of a narrowly defined clinical trial population

Reimbursement – May support decisions by private payers and Medicare in rarer tumour types

Regulatory clearances – Generates post-marketing data that may support regulatory applications

Clinician awareness – Structured scientific publication strategy

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Sirtex was a key sponsor of the 6th European Multidisciplinary Symposium on Liver-Directed Cancer Therapy using 90Y Microspheres in Rome, Italy held in November. This two day, bi-annual symposium attracts hundreds of clinicians and key opinion leaders in the field of radioembolisation from across Europe, Asia and the US to discuss the latest advances in the field.

Manufacturing And Supply Chain

Sirtex has manufacturing capabilities in Singapore as well as Wilmington, Massachusetts and now in Frankfurt, Germany. These facilities are close to major transport hubs, allowing for efficient dispatch of our product across the Americas, EMEA and Asia Pacific regions.

We were pleased to commence commercial supply from our state-of-the-art Frankfurt facility during June. This occurred later than originally anticipated owing to some delays in obtaining the requisite regulatory clearances. The Frankfurt facility will supply the EMEA region. I am pleased to report that to date we have not encountered any significant issues in the commencement of commercial supply into this important region for Sirtex.

Given the very short half-life of SIR- Spheres microspheres (64.1 hours), we have invested significant time and resources over the years to optimise our logistical and supply infrastructure, to now cover over 1,090 treatment centres globally. We have demonstrated the ability to scale our business over time to meet the needs of our growing SIR-Spheres microspheres franchise, while preserving our gross margins.

We pride ourselves on the ability to meet our customer requirements in a timely manner. During the 2017 financial year, approximately 97.5 per cent of commercial doses sold reached the patient/ hospital no later than 30 minutes from the delivery time stipulated.

Information Technology

This year our global information technology (IT) team successfully rolled out Phase 2 of our SAP Enterprise Resource Planning (ERP) solution across all three manufacturing sites. This has improved the accuracy and timeliness of data across functions and is assisting in monitoring production operations, from ordering to logistics, in real time. Access to real time data allows for efficiencies in production scheduling, assessing of capacity utilisation, product defect analysis, as well as improved inventory control.

In the past year our IT team has relocated our email platform onto a subscription-based service that reduces our reliance, risk and cost of on-premise equipment. We have also shifted further into a cloud-based platform, which is running some internal business workloads, but most importantly the Sirtex corporate website, bringing performance improvements and uptime capabilities that could not be realised with on-premise equipment. In FY18 we will continue to use and migrate other lines of business applications onto the cloud.

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APPENDIX II

We continued to refine and improve the content on our website, making it easier for key stakeholders to obtain information on Sirtex. This included further refinements to the way we present information to our investors, clinicians, patients and the media. With particular reference to the Media section of the website, we have significantly increased the available information on our Company and products to facilitate a greater level of understanding for news articles and feature stories on Sirtex.

Research And Development

During the reporting period our Research & Development (R&D) expenses were $10.6 million, up 21.1 per cent on the prior period, representing 4.5 per cent of sales.

In February, Sirtex reviewed its R&D activities to align with its redefined strategic direction. This resulted in the Company electing to wind down and then cease the development of the Carbon-Cage Nanoparticles (CCN), Polymer-Coated Nanoparticles (PCN), and radioprotector programs beyond existing contractual obligations. Where possible, those assets will be divested. For the Histone Inhibition Program (HIP), Sirtex intends to complete the Phase 1 safety and toxicity study for its lead compound STC314, which commenced in the second half of the financial year and is expected to report findings in the second half of next financial year. Once these results are available, we will conduct an evaluation of our commercial options for this program.

Our remaining R&D capability will be directed towards product enhancements and user interface enhancements associated with SIR- Spheres microspheres.

Clinical Studies

During 2017, we reported the clinical findings from the combined SIRFLOX/FOXFIRE/FOXFIRE Global clinical study in metastatic colorectal cancer (mCRC) representing 1,103 patients and the SARAH and SIRveNIB studies in HCC, which recruited 467 and 360 patients, respectively.

These studies were unique in a number of ways. Firstly, the combined SIRFLOX study was the largest ever interventional oncology (IO) study comparing a liver-directed therapy, namely SIR-Spheres microspheres, in combination with standard of care chemotherapy and biologic therapy in first-line mCRC for patients with liver-only or liver-dominant disease.

The SARAH study was the largest IO study ever to compare the current (and only) standard of care chemotherapy agent sorafenib with a liver-directed therapy in HCC. While SIRveNIB, which was of a similar design to SARAH, was the largest ever study to examine a liver-directed therapy versus sorafenib in a predominately Asian population.

A single remaining study, known as SORAMIC, which is examining the combination of SIRSpheres microspheres with sorafenib in 420 patients across Europe, is due to report findings in the first half of the 2018 calendar year. The fact all our studies completed recruitment and have mostly reported findings is an incredible achievement. Sirtex would like to thank all those hospitals, clinicians, and of course our patients who participated in these ground- breaking studies.

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APPENDIX II

Sirflox/Foxfire/Foxfire Global Studies In Metastatic Colorectal Cancer

In May, the results of our major combination study in mCRC, SIRFLOX/FOXFIRE/FOXFIRE Global, was released in abstract form and the results presented as an oral abstract at the American Society of Clinical Oncology (ASCO) annual meeting in June.

The primary endpoint of overall survival (OS) showed no statistically significant difference between SIR-Spheres microspheres plus chemotherapy versus chemotherapy alone (Hazard Ratio (HR) = 1.04; 95% Confidence Interval (CI) 0.90-1.19, p=0.609) in first-line mCRC patients.

Additionally, there was no statistically significant difference in overall progression- free survival (PFS) between SIR-Spheres plus chemotherapy versus chemotherapy alone (HR=0.90, 95% CI 0.79-1.02, p=0.108). There was also no statistically significant difference in OS in either the liver-only disease and liver-dominant disease sub-groups.

We were disappointed that the combined analyses did not meet the primary endpoint of an OS benefit in these first-line patients and that no statistically significant survival benefit was observed in the pre-specified sub-groups, including those patients with metastatic disease confined to their liver.

SIR-Spheres microspheres will continue to be used clinically for those patients who are unable to tolerate, or progress on standard chemotherapy regimens. Current US and European treatment guidelines supporting ‘salvage use’ of SIR-Spheres microspheres are expected to remain unchanged.

However, an exploratory analyses of the combined SIRFLOX and FOXFIRE Global studies (n=530 and n=209, respectively) showed that for patients with a right-sided primary tumour, median OS was significantly improved with the addition of SIR-Spheres microspheres to standard chemotherapy versus chemotherapy alone (22.0 vs. 17.1 months, respectively; p=0.007; HR = 0.64 (95% CI: 0.46-0.89)), but not for patients with a left-sided primary tumour (24.6 vs. 25.6 months; p=0.279; HR = 1.12 (95% CI: 0.92-1.36)).

This data was subsequently presented at the 19th European Society for Medical Oncology (ESMO) World Congress on Gastrointestinal Cancer (WCGIC) in Barcelona, Spain. Professor Guy van Hazel, Clinical Professor of Medicine at the University of Western Australia and Co- Principal Investigator on the SIRFLOX study, presented the study data.

There is now increased evidence that supports primary tumour location (left side or right side) as being an important prognostic factor in both early and advanced colorectal cancer. Tumours that arise in the right side of the colon are clinically and biologically distinct from tumours on the left side of the colon. The incidence of right- sided primary colon cancers averages 38% in mCRC patients, based on clinical studies and population-based analysis.

Colon cancer patients who present with a right-sided primary tumour in their colon are clinically more difficult to treat, being less responsive to standard of care chemotherapies and biologic agents.

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APPENDIX II

Approximately 24 per cent of patients who were enrolled in the SIRFLOX and FOXFIRE Global studies, where this information was prospectively collected, had a right-sided primary colon cancer.

The statistically significant 4.9 month OS benefit observed in patients who received SIR-Spheres microspheres is clinically meaningful and subject to further confirmatory analyses, coupled with additional supporting evidence of this OS benefit from the FOXFIRE study. Such additional supporting evidence may support consideration of right-sided liver-only or liver-dominant mCRC patients for SIRSpheres microspheres treatment.

Sarah And Sirvenib Studies In Hepatocellular Carcinoma

In April, the results of the SARAH study were presented at the European Association for the Study of the Liver, International Liver Congress™ by Professor Valérie Vilgrain MD, PhD. Professor Vilgrain is the Principal Investigator of the SARAH study, Head of Department of Radiology, Beaujon Hospital, AP-HP and Professor at the Université Paris Diderot, Sorbonne Paris Cité, France. The primary endpoint of the study, which was to show that SIR-Spheres microspheres was superior to sorafenib in advanced HCC patients, was not met.

In patients who were randomised to receive treatment, the so-called Intention-To-Treat (ITT) group, the median OS in the SIR-Spheres microspheres arm of 8.0 months versus 9.9 months in the sorafenib arm was not significantly different (HR = 1.15; 95% CI: 0.94-1.41; p=0.18). However, 27 per cent of patients who were randomised to receive SIR-Spheres microspheres did not ultimately receive therapy, which impacted results.

The study investigators therefore examined those patients who actually received SIR- Spheres microspheres, the so-called per- protocol (PP) group. For this comparison, the median OS in the SIRSpheres microspheres arm was identical to sorafenib (9.9 months, HR = 0.99; 95% CI: 0.79-1.24; p=0.92).

Significantly fewer patients treated with SIR- Spheres microspheres had any treatment- related side effects at all (76.5% versus 94.0% for sorafenib; p<0.001), and these were also less severe (grade ≥3; 40.7% versus 63.0%, respectively; p<0.001). Patients treated with SIR-Spheres microspheres who reported treatment-related side effects experienced a median of only five such events over the course of the SARAH study, compared to a median of 10 events in those who received sorafenib (p<0.001).

Quality of Life (QoL) analysis showed patients treated with SIR-Spheres microspheres maintained their health status over the duration of the SARAH study, whereas patients receiving sorafenib reported a significant and sustained decline in QoL (group effect: p=0.005; time effect: p<0.001; between group difference increase over time: p=0.045).

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We were very pleased with the SARAH results, and we can now market these important findings globally, excluding the US and Taiwan where we are not approved for HCC. As announced, we plan on filing for FDA clearance in the first half of FY18 in support of these results. In Asia, our marketing efforts have been complemented by the findings of SIRveNIB, which showed a similar outcome to SARAH in an Asian population.

In May, the results of the SIRveNIB study were released in abstract form and the results presented as an oral abstract at the ASCO annual meeting in June by Professor Pierce Chow, Principal Investigator of the SIRveNIB study, and Senior Consultant Surgeon at the National Cancer Centre Singapore and the Singapore General Hospital.

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OVERALL SURVIVAL FOR mCRC PATIENTS
LEFT-SIDED PRIMARY TUMOURS RIGHT-SIDED PRIMARY TUMOURS
SPLENIC FLEXURE
TRANSVERSE COLON
1.0
0.8 MIDGUT (RIGHT-SIDED)
RIGHT COLON LEFT COLON
(ASCENDING) (DESCENDING)
0.6
HINDGUT (LEFT-SIDED)
0.4
CAECUM
RECTUM SIGMOID COLON
0.2
0.0
TIME FROM RANDOMIZATION (MONTHS)
0 12 24 36 48 60 72 84 96 0 12 24 36 48 60 72 84 96
AT RISK (N) 264 199 130 47 20 12 2 0 98 78 43 14 5 3 1 1 0
276 223 150 54 22 7 2 1 0 81 51 15 6 2 1 0
n MEDIAN SURVIVAL (95% CI) n MEDIAN SURVIVAL (95% CI)
CHEMO + SIRT 264 24.6 MONTHS (22.3–26.7) CHEMO + SIRT 98 22.0 MONTHS (18.9–25.6)
CHEMO 276 26.6 MONTHS (24.8–29.9) CHEMO 81 17.1 MONTHS (13.9–19.9)
HAZARD RATIO 1.12 (0.92–1.36) p=0.279 HAZARD RATIO 0.64 (0.46–0.89) p=0.007
CENSORED CENSORED
PROBABILITY OF OVERALL SURVIVAL
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The primary endpoint of the study was not met. In patients who actually received treatment (PP) median OS in the SIR- Spheres microspheres arm of 11.3 months versus 10.4 months for sorafenib was not significantly different (p=0.273; HR = 0.86 (95% CI: 0.66-1.13)).

In patients who were randomised to receive treatment (ITT) the median OS in the SIR- Spheres microspheres arm was 8.5 months versus 10.6 months in the sorafenib arm and this was not significantly different (p=0.360; HR=1.17 (95% CI: 0.88 to 1.42)). In other words, for both the ITT and PP populations, there was statistically no difference in the OS conferred by SIR-Spheres microspheres in comparison to sorafenib.

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APPENDIX II

However, patients treated with SIR-Spheres microspheres showed a significantly better tumour response rate in the treated population versus sorafenib (23.1% versus 1.9%, p<0.001), and a significantly fewer total number of adverse events (27.7% versus 50.6%, p<0.0001) and severe adverse events versus sorafenib (20.8% versus 35.2%, p=0.0091).

The global opportunity for HCC in our current markets based on these findings represents around 61,000 patients annually.

Ongoing Clinical Studies

Sirtex continues to fund a number of smaller clinical studies, which are typically investigator-initiated trials.

In October, we announced the launch of a new randomised controlled clinical study of SIR-Spheres microspheres in patients with unresectable intrahepatic cholangiocarcinoma, also known as iCCA.

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SIR-SPHERES Y-90 RESIN MICROSPHERES IS SIGNIFICANTLY SIR-SPHERES Y-90 RESIN MICROSPHERES
BETTER TOLERATED THAN SORAFENIB PROVIDED SIGNIFICANTLY BETTER
QUALITY OF LIFE
54% LESS TREATMENT-RELATED AEs SIGNIFICANTLY FEWER PATIENTS
WITH TREATMENT-RELATED AEs GROUP EFFECT, SIRT vs SORAFENIB P=0.005
TIME EFFECT P<0.001
p<0.001 [1] BETWEEN-GROUP DIFFERENCE INCREASE OVER TIME P=0.045
2,837 94.0% 100
76.5% 80
63.0% 60
1,297 40.7% 40
20
411
230 0
0 3 6 9 12
SIR-SPHERES Y-90 RESIN MICROSPHERES (N = 226) SORAFENIB (N = 216) MONTHS SINCE RANDOMIZATION
ANY GRADE ANY GRADE SIRT
GRADE ≥3 GRADE ≥3 SORAFENIB
INCLUDES 26 PATIENTS RECEIVING ONLY SORAFENIB INSTEAD OF SIRT 1FOR BOTH ANY GRADE AND GRADE ≥3
AE (%)≥
ADVERSE EVENTS (N) PATIENTS WITH
MEAN GLOBAL HEALTH STATUS SUB-SCORE (%)
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SIR ve NIB

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OVERALL SAFETY TUMOUR RESPONSE RATE
SUBJECTS WHO EXPERIENCED AT LEAST:
ONE AE 60.0% (p <0.0001) POPULATIONINTENT-TO-TREAT TREATED POPULATION
84.6%
p<0.001 p<0.001
ONE TREATMENT-RELATED AE 31.5% (p <0.0001)
74.7% 23.1%
ONE ≥3 GRADE AE 27.7% (p <0.0001)
50.6%
16.5%
13.1% (p <0.0001)
ONE TREATMENT RELATED ≥3 GRADE AE
37.7%
20.8% (p=0.0091)
ONE SAE
35.2%
4.6% (p=0.1715) 1.7% 1.9%
ONE TREATMENT-RELATED SAE
9.3%
SIRT
SIRT (N=130) INCLUDES ADVERSE EVENTS (AES) AND SERIOUS ADVERSE EVENTS (SAES)
WITH ONSET DATE ON OR AFTER STUDY TREATMENT START DATE. SORAFENIB
SORAFENIB (N=162) TREATMENT-RELATED AE OR SAE DEFINED AS THOSE WITH CERTAIN,
PROBABLE, POSSIBLE, OR MISSING RELATIONSHIP TO STUDY TREATMENT.
P VALUES WERE COMPUTED FOR COMPARISON BETWEEN TREATMENT ARMS
USING THE FISHER’S EXACT TEST.
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The study, known as SIRCCA, is a prospective, multi-centre, randomised, controlled clinical study evaluating SIR-Spheres microspheres preceding cisplatin-gemcitabine (CIS-GEM) chemotherapy versus CIS-GEM chemotherapy alone as a first-line treatment of patients with unresectable iCCA.

Although a relatively rare disease, iCCA is the second most common form of primary liver cancer and starts in the bile duct, with an annual incidence of approximately 5,000 patients in the US, which appears to be increasing. Treatment options are limited and survival is typically less than 12 months.

SIRCCA is expected to recruit 180 patients and is being conducted in 30 centres across Australia and Europe. The study is anticipated to complete recruitment in late 2018.

Also in October, we announced the results of our RESIRT study; an Australian-based, single arm, dose escalation study in patients with renal cell carcinoma (the most common form of kidney cancer) that were not suitable for curative therapy by surgical re-section, ablation or other conventional techniques.

A total of 21 patients were treated with SIR-Spheres microspheres in a serial manner, across six dose-escalating cohorts. In terms of initial efficacy of SIR-Spheres microspheres, the best overall tumour responses were: partial response 1/19 (5.3%), stable disease 17/19 (89.5%) and progressive disease 1/19 (5.3%).

In terms of safety data presented, the intended doses were delivered without any dose-limiting toxicity. Furthermore, there were no serious adverse events related to SIR-Spheres microspheres. We are currently assessing our clinical development options.

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Our clinical expenses in FY17 were $11.8 million, up 10.3 per cent or 5.0 per cent of sales. Our total investment, including capitalised expenditure and excluding amortisation expense was $24.9 million, up 20.5 per cent.

Regional Growth Performance In 2017

During the year, Sirtex maintained a high level of sales and marketing activity across the three distinct regions. The number of centres accredited to use our therapy continued to expand across all three regions, with the total number of treatment centres globally expanding 9.0 per cent to 1,093. A major focus has been on the results of the major clinical studies, which were progressively presented in the latter half of the 2017 financial year.

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REGIONAL UPDATE THE AMERICASTHE AMERICAS EUROPE, MIDDLE ASIA PACIFIC
EAST, AFRICA
DOSE SALES 8,807 2,677 1,094
up 4.6% up 5.9% up 11.3%
REVENUE $186.9M $38.3M $9.1M
up 0.9% down 1.6% up 8.6%
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THE AMERICAS PERFORMANCE DOSE SALES: Up 4.6% to 8,807 REVENUE: Up 0.9% to $186.9 million

Year In Review

The growth achieved in the Americas was disappointing in light of the growth achieved in prior periods. Our sales trajectory during the period was impacted by the convergence of multiple factors, including a decline in referrals for SIR-Spheres microspheres in salvage metastatic colorectal cancer, increased competition for patients with liver- directed therapies, and a lack of sustained momentum in the use of SIR-Spheres microspheres in higher treatment lines prior to the delivery of the SIRFLOX/ FOXFIRE/FOXFIRE Global survival data. In May, we announced a change to the Americas leadership and have re-organised our sales and marketing function in the Americas to reset the foundations in that region for enhanced future sales growth.

At the end of the financial year, the number of hospitals certified in the use of SIR- Spheres microspheres across the region had grown by 13.3 per cent to 639 treatment sites.

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APPENDIX II

There were a number of important structural changes in our key US market during the year. In November, The Centers for Medicare and Medicaid Services (CMS) increased the reimbursement of SIRSpheres microspheres by 3 per cent for the 2017 calendar year. The CMS final rule with comment period revises the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for CY17.

The suspension of the 2.3 per cent US Medical Device Excise Tax, which represented a tax on our US product revenues, continued throughout the financial year. The tax is anticipated to re- commence on 1 January 2018 although the legislation to permanently repeal the tax is currently before the US Senate.

In late November, revised National Comprehensive Cancer Network (NCCN) Clinical Practice Guidelines in Oncology for colon and rectal cancer were published. The revised guidelines have seen SIR- Spheres microspheres re-classified from a Category 3 level of evidence and consensus to a Category 2A. The NCCN concluded ‘Consensus amongst panel members is that arterially directed catheter therapy and, in particular, yttrium-90 microsphere selective internal radiation is an option in highly selected patients with chemotherapy- resistant/refractory disease and with predominant hepatic metastases. Over time, the revision to a Category 2A is expected to positively impact discussions with clinicians.

As part of our strategy to build awareness of our product among the medical community, the Sirtex Americas team had a presence at a number of important conferences throughout the year including the Clinical Interventional Oncology (CIO) meeting, the Society for Interventional Radiology (SIR) meeting, the World Congress on Interventional Oncology (WCIO), the American Society of Clinical Oncology – Gastrointestinal (ASCO-GI) meeting and the ASCO Annual Meeting. Such meetings provide the opportunity to directly engage with a large number of clinicians, and help to build consensus among key opinion leaders.

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APPENDIX II

EUROPE, MIDDLE EAST, AFRICA PERFORMANCE DOSE SALES: Up 5.9% to 2,677 REVENUE: Down 1.6% to $38.3 million

Year In Review

Across the EMEA region, we experienced solid growth in several of our established markets including Italy, Spain and Belgium while Germany, our largest market, was flat. Growth was impacted by changes to reimbursement in the UK in the fourth quarter, partially offset by strong initial dose sales in France following the granting of reimbursement. Revenue growth was lower than dose sales growth principally due to the negative impact of the Australian dollar depreciation against the Euro, partially offset by a greater percentage of dose sales recorded in higher priced markets.

At the end of the financial year, the number of hospitals certified in the use of SIR- Spheres microspheres across the region had grown by 0.7 per cent to 308 treatment sites.

In February, the French Ministry of Health, Ministère des Affaires sociales et de la Santé, agreed to provide reimbursement for SIR-Spheres microspheres for patients with colorectal liver metastases who have failed on or are intolerant to prior chemotherapy. Reimbursement in France is specific to our product and recognises the innovative and specific product characteristics of this trademarked product. The estimated annual incidence of colorectal cancer in France was approximately 41,000 cases in 2012. It is also the country’s third most common cause of cancer mortality, accounting for approximately 17,000 deaths each year.

Since September 2013, limited funding for SIR-Spheres microspheres has been available via the Commissioning through Evaluation (CtE) scheme across England. During the year, the National Health Service England confirmed that the funding for SIR-Spheres microspheres within the CtE scheme would cease at the end of March 2017. A decision about whether to routinely fund SIRT by the NHS could take up to 16 months from the end of March 2017.

Sirtex continues to actively engage clinicians, their professional societies and patient groups in contesting this decision, directly and via elected representatives, to NHSE. Unfortunately for our patients at this juncture, the funding deficiency remains. The cessation of the CtE does not impact private insurance coverage of SIR-Spheres microspheres in the UK.

Throughout the year, our sales and marketing team focused on a number of key conferences including the European Association for the Study of the Liver (EASL) International Liver Congress™, where the SARAH data was presented. Additionally, we attended the European Conference on Interventional Oncology (ECIO), the Global Embolization Symposium & Technologies (GEST) meeting, and the 19th World Congress on Gastrointestinal Cancer (WCGIC). The EMEA team also worked alongside our US colleagues at the major global meetings, namely SIR, ASCO and ASCO-GI meetings.

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ASIA PACIFIC PERFORMANCE DOSE SALES: Up 11.3% to 1,094 REVENUE: Up 8.6% to $9.1 million

Year In Review

Regional dose sales growth during the year was driven by a solid performance across several key Asian markets including Singapore, Taiwan and India. We re-entered South Korea during the year, following the appointment of a new distributor in that market.

At the end of the financial year, the number of hospitals certified in the use of SIR- Spheres microspheres across the region grew 9.8 per cent to 146 treatment sites.

Our sales and marketing team also attended a number of important scientific conferences during the year, including the APPLE meeting in Hong Kong, the Best of ASCO meeting in Singapore, and the major global meeting ASCO, where Professor Pierce Chow presented the Asian clinical study SIRveNIB.

Looking Ahead

I am excited by the potential of our business to deliver on its long term growth objectives. The reshaping of our business following the results of the clinical studies is specifically designed to drive efficiencies, productivity and effectiveness across the organisation as we seek to expand our global footprint and treat more liver cancer patients.

We now have a clear mission and vision in which to execute our short, medium and longer term strategies. Our business remains in a strong financial position, which affords us the opportunity to continue to reward shareholders.

I look forward to keeping you abreast of our progress throughout the 2018 financial year.

ANDREW McLEAN

CHIEF EXECUTIVE OFFICER

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C3. EXTRACTS FROM THE ANNUAL REPORT RELATING TO EMPLOYMENT POLICIES

OUR PEOPLE

We are proud of the culture we have built and the values we hold as an organisation. Sirtex employees are critical to achieving business and organisational success.

We are strong believers in our people, and the expertise they bring to the organisation. We seek to develop a collegiate workplace, which actively fosters productivity, efficiency, idea generation and innovation across all levels of the business. We have implemented a number of important policies that empower our employees to achieve their career goals. The Sirtex Code has assimilated these important codes and policies into a single easy-to-read document. The three broad categories of policies relate to our operating environment, corporate regulations to which we are subject, and policies that relate more directly to individual employees.

The Sirtex Code assists employees in a number of ways, but particularly as a source document, it provides a ‘quick conduct test’ to easily allow our people to assess what is the right thing to do in challenging situations.

At the end of the 2017 financial year, our total workforce of 292 talented people was located across more than 20 countries, representing growth of 4.7 per cent over the prior period.

Women represent 45 per cent of the Sirtex workforce. Our workforce distribution shows 41 per cent of our dedicated employees are located in the Americas, 30 per cent located in EMEA and 29 per cent located in APAC. Our workforce operates across nine key functional areas of the business, with 54 per cent of our employees engaged within a sales and marketing function at Sirtex.

Our People Strategy seeks to engage, identify and recruit talented individuals to the business, while ensuring alignment with our core values and beliefs from the employee induction program.

Our employee engagement programs continued throughout FY17. Growing with Sirtex is a series of integrated activity streams, which aim to methodically build a team of highly skilled and capable individuals, who will continue to develop with Sirtex. Our Onboarding, Professional Development Framework and Continuing Professional Development Programs have commenced their implementation phase.

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THE IMPORTANCE OF DIVERSITY

The concept of diversity has four main tenets: understanding, acceptance, respect and appreciation. A workplace that values and respects its diversity and is free from discrimination or bias is more productive. There is strong evidence globally that diversity offers businesses and their employees a range of benefits, both short term and long term.

Sirtex is committed to developing a culture of diversity. We recognise the benefits of diversity in terms of enhancements to productivity and efficiency that arise from facilitating any individual, irrespective of gender, ethnicity, sexual orientation, disability, age, marital status and religious background, to reach their full potential. We believe a diverse workforce is one of the keys to achieving long term business growth and sustainability.

In 2016 we launched the Leadership and Management Development Program. Part of this extensive and ongoing program is to identify females who should participate in the program with a target of 40 per cent of the participating population being women. This is in addition to the Growing with Sirtex career development program introduced in 2015. Our Growing with Sirtex program, now in its second year of implementation, and part of the Sirtex Professional Development Framework has been designed to strengthen the dialogue between individuals and managers and foster a continuous cycle of alignment, planning, feedback and review to support and enhance personal growth in line with the Sirtex strategy and regional objectives.

Finally we continually seek to improve our approach to flexible working to make it more accessible and culturally acceptable for all employees. A large percentage of our employees are not based in any one of our three main offices across the globe.

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D1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF SIRTEX FOR THE SIX MONTHS ENDED 31 DECEMBER 2017

INDEPENDENT AUDITOR’S REPORT

Independent Auditor’s Review Report

to the Members of Sirtex Medical Limited

Report on the Half-Year Financial Report

Conclusion

We have reviewed the accompanying half-year financial report of Sirtex Medical Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31 December 2017, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, a description of accounting policies, other selected explanatory notes, and the directors’ declaration.

Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the half-year financial report of Sirtex Medical Limited does not give a true and fair view of the financial position of the Group as at 31 December 2017, and of its financial performance and its cash flows for the half-year ended on that date, in accordance with the Corporations Act 2001, including complying with Accounting Standard AASB 134 Interim Financial reporting .

Directors Responsibility for the Half-Year Financial Report

The Directors of the Company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group’s financial position as at 31 December 2017 and its performance for the half-year ended on that date, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of Sirtex Medical Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

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A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.

GRANT THORNTON AUDIT PTY LTD

Chartered Accountants

L M Worsley

Partner – Audit & Assurance

Sydney, 21 February 2018

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APPENDIX II

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE HALF-YEAR ENDED 31 DECEMBER 2017

Note
Revenue from the sale of goods
Cost of sales
Gross profit
Other revenue
Marketing expenses
Research expenses
Regulatory expenses
Clinical expenses
Medical expenses
Administration expenses
Impairment expense
Foreign exchange losses
Profit before income tax expense
4
Income tax expense
Profit attributable to members of the parent entity
Other comprehensive income
Items that may be reclassified subsequently to
profit or loss
Exchange differences on translating foreign operations
Total comprehensive income attributable to members
of the parent entity
Earnings per share
Basic earnings per share
5(a)
Diluted earnings per share
5(b)

Consolidated
31 Dec 2017
31 Dec 2016
$’000
$’000
109,396
112,786
(17,726)
(18,795)
91,670
93,991
1,100
2,627
(36,275)
(42,422)
(1,863)
(4,982)
(857)
(1,219)
(2,880)
(5,012)
(4,907)
(3,531)
(10,302)
(10,897)
(405)
(1,336)
(2,112)
–
33,169
27,219
(9,616)
(6,409)
23,553
20,810
1,404
(410)
24,957
20,400
Cents
Cents
42.0
36.1
41.7
35.8

The financial statements should be read in conjunction with the accompanying notes

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2017

Note CURRENT ASSETS Cash and cash equivalents Other short-term deposits Trade and other receivables Inventories Financial assets Other current assets Total - CURRENT ASSETS NON-CURRENT ASSETS Property, plant and equipment Intangible assets 2 Other non-current assets Deferred tax assets Total - NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables 3 Current tax liabilities Other short-term provisions Total - CURRENT LIABILITIES NON-CURRENT LIABILITIES Long-term provisions Deferred tax liabilities Total - NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 6 Reserves Retained earnings TOTAL EQUITY	Consolidated 31 Dec 17 30 Jun 17 $’000 $’000 42,808 50,349 50,000 68,000 34,932 36,976 2,382 1,993 1,780 1,575 2,775 3,583 134,677 162,476 11,104 12,045 9,147 9,436 521 – 9,416 10,165 30,188 31,646 164,865 194,122 16,418 26,433 6,383 8,412 9,192 7,972 31,993 42,817 1,062 919 663 919 1,725 1,838 33,718 44,655 131,147 149,467 7,847 34,792 5,056 3,257 118,244 111,418 131,147 149,467	Consolidated 31 Dec 17 30 Jun 17 $’000 $’000 42,808 50,349 50,000 68,000 34,932 36,976 2,382 1,993 1,780 1,575 2,775 3,583 134,677 162,476 11,104 12,045 9,147 9,436 521 – 9,416 10,165 30,188 31,646 164,865 194,122 16,418 26,433 6,383 8,412 9,192 7,972 31,993 42,817 1,062 919 663 919 1,725 1,838 33,718 44,655 131,147 149,467 7,847 34,792 5,056 3,257 118,244 111,418 131,147 149,467
		162,476
		12,045 9,436 – 10,165
		31,646
		194,122
		26,433 8,412 7,972
		42,817
		919 919
		1,838
		44,655
		149,467
		34,792 3,257 111,418
		149,467

The financial statements should be read in conjunction with the accompanying notes

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE HALF-YEAR ENDED 31 DECEMBER 2017

Note Balance at 1 July 2016 Foreign currency translation reserve Profit attributable to members of parent entity Total comprehensive income for the period Ordinary shares issued Deferred tax on performance rights Contribution to performance rights reserve Dividends paid or provided for 7 Total transactions with owners Balance at 31 December 2016 Balance at 1 July 2017 Foreign currency translation reserve Profit attributable to members of parent entity Total comprehensive income for the period Share buy back Ordinary shares issued Exercise of Non-Executive Directors’ rights Purchase of Non-Executive Directors’ shares on market Contribution to performance rights reserve Dividends paid or provided for 7 Total transactions with owners Balance at 31 December 2017	Ordinary Shares $’000 32,684 – – – 3,390 2,005 – – 5,395 38,079 34,792 – – – (27,127) 160 109 (87) – – (26,945) 7,847	Share rights Reserve $’000 4,652 – – – (3,390) – 2,417 – (973) 3,679 1,966 – – – – (160) (109) – 664 – 395 2,361	Foreign Currency Translation Reserve $’000 2,004 (410) – (410) – – – – – 1,594 1,291 1,404 – 1,404 – – – – – – – 2,695	Retained Earnings $’000 154,164 – 20,810 20,810 – – – (17,306) (17,306) 157,668 111,418 – 23,553 23,553 – – – – – (16,727) (16,727) 118,244	Total $’000 193,504
					(410) 20,810 20,400

					– 2,005 2,417 (17,306)
					(12,884)

					201,020

					149,467
					1,404 23,553 24,957

					(27,127) – – (87) 664 (16,727) (43,277)

					131,147

The financial statements should be read in conjunction with the accompanying notes

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CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE HALF-YEAR ENDED 31 DECEMBER 2017

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Net income tax paid
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in short-term deposits
Purchase of plant and equipment
Purchase of intangible assets
Purchase of internally generated intangible assets
Net cash provided by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Share buy back
Payment of dividends
Net cash used in financing activities
(Decrease)/increase in cash held
Cash at beginning of the financial period
Exchange differences on cash and cash equivalents
Cash at end of the financial period

Consolidated
31 Dec 2017
31 Dec 2016
$’000
$’000
110,813
114,599
(80,002)
(90,693)
1,177
1,378
(11,155)
(3,860)
20,833
21,424
18,000
18,000
(220)
(764)
(385)
(3,191)
–
(7,650)
17,395
6,395
(27,127)
–
(16,727)
(17,306)
(43,854)
(17,306)
(5,626)
10,513
50,349
21,025
(1,915)
(584)
42,808
30,954

The financial statements should be read in conjunction with the accompanying notes

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APPENDIX II

NOTES TO THE FINANCIAL STATEMENTS

for the half-year ended 31 December 2017

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of operations

Sirtex Medical Limited and its controlled entities (the “Group”) form a medical device group whose primary activity is to manufacture and to distribute effective liver cancer treatments utilising small particle technology to approved markets in AsiaPacific, Europe, Middle East and Africa, North and South America.

Basis of preparation

These general purpose financial statements for the interim half-year reporting period ended 31 December 2017 have been prepared in accordance with requirements of the Corporations Act 2001 and Australian Accounting Standards including AASB 134: Interim Financial Reporting, and are presented in Australian dollar ($), which is the functional currency of the parent company.

This interim financial report is intended to provide users with an update on the latest annual financial statements of Sirtex Medical Limited and its Controlled Entities (the “Group”). They do not include all of the information required in annual financial statements in accordance with Australian Accounting Standards, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 June 2017 and any public announcements made by the Group during the half-year in accordance with continuous disclosure requirements arising under the Australian Securities Exchange Listing Rules and the Corporations Act 2001.

These financial statements were authorised for issue by the Board of Directors on 21 February 2018.

Significant accounting policies

The interim financial statements have been prepared in accordance with the same accounting policies adopted in the Group’s last annual financial statements for the year ended 30 June 2017.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these interim financial statements.

Estimates

When preparing the interim financial statements, management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by management. The judgements, estimates and assumptions made during the period ended 31 December 2017 were the same as those applied in the Group’s last financial statements for the year ended 30 June 2017.

Management has assessed that the events outlined in Note 10 represent non-adjusting post balance date events, accordingly no adjustments have been made to the half-year results to reflect the announcement.

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APPENDIX II

NOTE 2: INTANGIBLE ASSETS

Total intangible assets
At cost
Accumulated amortisation
Accumulated impairment loss
Net carrying amount
Movements in carrying amounts
Total intangible assets
Carrying amount at beginning
Additions
Amortisation expense
Impairment loss
Carrying amount at end
NOTE 3: TRADE AND OTHER PAYABLES
Trade payables
Withholding tax payable
Other payables
Annual leave entitlements
Long service leave entitlements
Short-term incentives
Other employee benefit liabilities

Consolidated
31 Dec 17
30 Jun 17
$’000
$’000
113,341
112,956
(13,653)
(12,979)
(90,541)
(90,541)
9,147
9,436
9,436
82,821
385
21,701
(674)
(4,545)
–
(90,541)
9,147
9,436
Consolidated
31 Dec 17
30 Jun 17
$’000
$’000
4,928
11,281
1,900
1,720
919
161
2,680
3,099
173
389
3,598
6,231
2,220
3,552
16,418
26,433

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APPENDIX II

NOTE 4: PROFIT FOR THE PERIOD

	Consolidated	Consolidated
	31 Dec 17	31	Dec 16
	$’000		$’000
Profit before income tax includes the following items of income/(expenses):
Cost of sales	(17,726)		(18,795)
Bad and doubtful debts expense	(405)		(1,336)
Depreciation and amortisation of
plant and equipment	(1,080)		(1,112)
intangible assets*	(674)		(2,201)
Operating lease expenses minimum lease payments	(1,461)		(1,316)
Foreign exchange (losses)/gains	(2,112)		1,199

includes internally generated intangible assets and purchased intangible assets

Reclassification of Quality Assurance expenses

Management have assessed Quality Assurance expenses to be an indirect cost of production. The expense is included within cost of sales. Comparative figures have been adjusted to conform to changes in presentation for the current and prior financial periods. There is no impact on prior period profit before income tax expenses. The categories affected by this reclassification are as follows:

31 Dec 17
$’000
Cost of sales
(17,726)
Gross profit
91,670
Quality assurance expenses
–
NOTE 5: EARNINGS PER SHARE
(a)
Basic earnings per share
Profit from continuing operations attributable to equity holders
Weighted average number of shares used in the calculation of
basic earnings per share
Add to number of shares used in the calculation of diluted earnings per share:
Effect of potential conversion to ordinary shares from the Executive
Performance, Sirtex Equity Plan and the Non-Executive Directors’
Rights Plan

31 Dec 16
31 Dec 16
(restated)
(previously
reported)
$’000
$’000
(18,795)
(17,790)
93,991
94,996
–
(1,005)
Consolidated
31 Dec 17
31 Dec 16
$
$
23,552,779
20,810,290
56,068,522
57,622,450
435,405
567,057
56,503,927
58,189,507

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(b) Diluted earnings per share

	Consolidated	Consolidated
	31 Dec 17	31 Dec 16
	$	$
Profit from continuing operations attributable to equity holders	23,552,779	20,810,290
Weighted average number of shares used in the calculation of
diluted earnings per share	56,503,927	58,189,507

NOTE 6: SHARE CAPITAL

During the period ended 31 December 2017, a total of 19,937 shares were issued as a result of the exercise of performance rights vested. The weighted average share price at the date of issue was $16.02 during the first six months (2016: $31.66). Each share has the same right to receive dividends and the repayment of capital and represents one vote at the shareholders’ meeting. Shares issued and authorised are summarised as follows:

Shares issued and fully paid: Beginning of the period Issued under share-based payment plans Share buy-back Shares issued and fully paid Total shares authorised at the end of the period	Consolidated 6 months to 31 Dec 17 Year to 30 Jun 17 No. No. 57,465,062 57,273,893 19,937 422,548 (1,711,954) (231,379) 55,773,045 57,465,062 55,773,045 57,465,062	Consolidated 6 months to 31 Dec 17 Year to 30 Jun 17 No. No. 57,465,062 57,273,893 19,937 422,548 (1,711,954) (231,379) 55,773,045 57,465,062 55,773,045 57,465,062
		57,465,062

NOTE 7: DIVIDENDS

	Consolidated	Consolidated
	31 Dec 17	31	Dec 16
	$’000		$’000
Distributions paid/provided for
Unfranked ordinary dividend paid on 18 October 2017 of 30 cents
(2016: 30 cents partially franked) per share	16,726		17,306

NOTE 8: OPERATING SEGMENT

Identification of reportable segments

The Group is managed primarily on the basis of regional markets which have different structures and performance as assessment criteria. Operating segments are therefore determined on the same basis. The three regional markets currently serviced by the group are Asia Pacific (APAC), North and South America (Americas) and Europe, Middle East and Africa (EMEA).

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As the group manufactures and distributes only one product, identical for each of the three regional markets, no further segmentation across products or services is made.

Basis of accounting for purposes of reporting by operating segments

Accounting policies adopted

Inter-segment transactions

Segment assets

Segment liabilities

Segment performance

Segment revenue

For 6 months to 31 Dec 17 and 31 Dec 16 External Sales Inter-segment(s) 2017 2016 2017 2016 $’000 $’000 $’000 $’000 Asia Pacific 4,649 4,438 5,212 4,603 Americas 86,169 90,099 12,058 6,902 EMEA 18,578 18,248 78,677 78,631 Total of all segments Interest Eliminations Other Consolidated	Total 2017 2016 $’000 $’000 9,861 9,041 98,227 97,001 97,255 96,879 205,343 202,921 842 1,360 (95,948) (90,135) 259 1,267 110,496 115,413

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APPENDIX II

Segment net profit before tax

For 6 months to 31 Dec 17 and 31 Dec 16	2017	2016
	$’000	$’000
Asia Pacific	22,423	13,541
Americas	4,027	2,609
EMEA	6,719	23,769
Total of all segments	33,169	27,219
Eliminations	–	–
Profit before income tax expense	33,169	27,219
Income tax expense	(9,616)	(6,409)
Profit after income tax expense	23,553	20,810

Segment assets and liabilities

			Liabilities	Liabilities
	31 Dec 17	30 Jun 17	31 Dec 17	30 Jun 17
	$’000	$’000	$’000	$’000
Asia Pacific	184,264	207,797	67,436	66,860
Americas	55,414	50,804	28,179	27,718
EMEA	52,346	58,772	29,736	37,961
Total of all segments	292,024	317,373	125,351	132,539
Eliminations	(127,159)	(123,251)	(91,633)	(87,884)
Consolidated	164,865	194,122	33,718	44,655
*Other segment information*

For 6 months to	Asia	Pacific	North	America
31 Dec 17 and 31 Dec 16	2017	2016	2017	2016	2017	2016
	$’000	$’000	$’000	$’000	$’000	$’000
Acquisition of segment assets
– Plant and equipment	124	317	13	148	83	299
– Intangibles	–	10,867	385	–	–	–
	124	11,184	398	148	83	299
Depreciation and amortisation of
segment assets
– Plant and equipment	309	380	382	417	389	315
– Intangibles	663	2,201	8	–	2	–
	972	2,581	390	417	391	315

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NOTE 9: CONTINGENT LIABILITIES

Two class actions have been filed against the Company:

The first class action was filed in the Federal Court of Australia on 13 February 2017 by a representative applicant. The claim is said to concern all persons who or which acquired ordinary shares in the Company on or after 24 August 2016 and who were holders of any of those shares at the commencement of trading on 9 December 2016. It includes allegations of contraventions of the Corporations Act by the Company in relation to misleading and deceptive conduct and breach of continuous disclosure obligations. The Company filed a defence on 21 July 2017. Discovery has been provided and the matter has been set down for trial commencing in late October 2018. There have not been any major developments in this action since discovery was provided; and
The second class action was filed in the Federal Court of Australia on 19 December 2017 by a representative applicant. The claim is said to concern all persons who or which acquired an interest in the Company’s securities during the period from 24 August 2016 to 16 December 2016. It includes allegations of contraventions of the Corporations Act by the Company in relation to misleading and deceptive conduct and breach of continuous disclosure obligations. As yet, no timetable has been set for the conduct of this action.

The Company intends to continue to vigorously defend these actions.

Having regard to the status of the two proceedings, the current pleadings and the other information available, the Directors of the Company believe that any liability potentially arising out of the class actions cannot be reliably assessed or estimated at this point in time. Accordingly, no contingent asset or liability has been recorded in the 31 December 2017 interim financial statements.

NOTE 10: EVENTS AFTER REPORTING DATE

On 30 January 2018, the Company announced that it has entered into a binding Scheme Implementation Deed with Varian Medical Systems, Inc under which it is proposed that Varian will acquire 100% of the shares in Sirtex by way of a Scheme of Arrangement (the Scheme) for A$28.00 per share in cash. Under the terms of the Scheme, Sirtex shareholders will be entitled to receive A$28.00 in cash per Sirtex share, subject to all applicable conditions being satisfied or waived and the Scheme being implemented.

In accordance with the Scheme, and at the discretion of the Board, it is intended that an outstanding total of 825,954 performance rights is likely to vest, subject to the event that the implementation of the Scheme is successful, and that the relevant resultant shares will be issued before the record date under the arrangement at A$28.00 per share.

The offer will be made pursuant to a scheme of arrangement and Sirtex shareholders will have the opportunity to vote on the Scheme at a meeting to be held in May 2018.

The Scheme remains subject to other conditions including:

the Independent Expert concluding that the Scheme is in the best interests of Sirtex shareholders and not withdrawing or qualifying that conclusion;
certain regulatory approvals, including Foreign Investment Review Board and competition authorities in certain limited jurisdictions being obtained, and no injunctions or orders imposing any legal restraint on the Scheme being imposed by certain courts and government agencies;
no “Material Adverse Change” or “Prescribed Occurrences”; and
Court approval.

No other matter or circumstance has arisen since the end of the financial half year, that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.

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APPENDIX II

D2. DIRECTORS’ REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2017

The Directors of Sirtex Medical Limited present their Report together with the financial statements of the Consolidated Entity, being Sirtex Medical Limited (“the Company”) and its Controlled Entities (“the Group”) for the half-year ended 31 December 2017.

DIRECTORS

The names of Directors who held office during or since the end of the half-year:

R Hill (Non-Executive Director, Chairman) – retired 28 October 2017 Dr J Eady (Non-Executive Director, Deputy Chairman) G Boyce (Non-Executive Director) Dr K Woodthorpe AO (Non-Executive Director) N Mitchell (Non-Executive Director) H Kurincic (Non-Executive Director) – appointed 13 September 2017 A McLean (Executive Director, Chief Executive Officer)

PRINCIPAL ACTIVITIES

Sirtex Medical Limited and its controlled entities (the “Group”) form a medical device group whose primary activity is to manufacture and to distribute effective liver cancer treatments utilising small particle technology to approved markets in Asia-Pacific, Europe, Middle East and Africa, North and South America.

REVIEW OF OPERATIONS AND FINANCIAL RESULTS

The Group’s main product SIR-Spheres microspheres is a targeted radioactive treatment for liver cancer. The treatment is called Selective Internal Radiation Therapy (SIRT) and consists of a minimally invasive surgical procedure performed by an interventional radiologist. The SIR-Spheres microspheres lodge in the small blood vessels of the tumour where they destroy it from the inside over a short period while sparing the surrounding healthy tissue. During the half-year, the Group sold 6,023 doses worldwide, representing a decrease of 0.4% over the same period last financial year.

The Group recorded sales revenue of $109.4m for the half-year ended 31 December 2017. This represents a decrease of 3.0% over the corresponding period last financial year ($112.8m). The lower sales revenue growth compared to volume growth is a result of changes in geographic revenue mix with stronger growth in the APAC region, and of negative foreign currency fluctuations, as the Australian Dollar appreciated against the US dollar during the period when compared to the prior corresponding period.

Gross profit margin increased to 83.8% for the half-year ended 31 December 2017, compared to 83.3% for the corresponding period last financial year.

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FINANCIAL INFORMATION OF SIRTEX

APPENDIX II

Profit before tax has increased 21.9% to $33.2m for the half-year ended 31 December 2017 (31 December 2016: $27.2m), and profit after tax has increased by 13.2% to $23.6m (31 December 2016: $20.8m).

Earnings per share for the half-year ended 31 December 2017 has increased to $0.42 (2016: $0.36). During the half-year ended 31 December 2017, a final dividend has been paid in respect of the previous financial year. The unfranked full year dividend was $0.30 per share, which is on par with the previous dividend paid.

The Group bought back $27.1m of its own shares, as part of the $30m on-market share buy-back, which was completed in early September 2017.

EVENTS AFTER REPORTING DATE

On 30 January 2018, the Company announced that it entered into a binding Scheme Implementation Deed with Varian Medical Systems, Inc under which it is proposed that Varian will acquire 100% of the shares in Sirtex by way of a Scheme of Arrangement (the Scheme) for A$28.00 per share in cash. Under the terms of the Scheme, Sirtex shareholders will be entitled to receive A$28.00 in cash per Sirtex share, subject to all applicable conditions being satisfied or waived and the Scheme being implemented.

The offer will be made pursuant to a scheme of arrangement and Sirtex shareholders will have the opportunity to vote on the Scheme at a meeting to be held in May 2018.

The Scheme remains subject to other conditions including:

the Independent Expert concluding that the Scheme is in the best interests of Sirtex shareholders;
certain regulatory approvals, including Foreign Investment Review Board and competition authorities in certain limited jurisdictions;
no “Material Adverse Change” or “Prescribed Occurrences”; and
Court approval.

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FINANCIAL INFORMATION OF SIRTEX

APPENDIX II

AUDITOR’S INDEPENDENCE DECLARATION

The Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page 4 of this financial report and forms part of this Directors’ Report.

ROUNDING OF AMOUNTS

Sirtex Medical Limited is a type of Company referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and therefore the amounts contained in this report and in the financial report have been rounded to the nearest $1,000, or in certain cases, to the nearest dollar.

This report is signed in accordance with a resolution of the Board of Directors.

Andrew McLean Director

21 February 2018

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX III

A. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

The following are the illustrative unaudited pro forma consolidated statement of assets and liabilities of the Group (collectively, the “ Unaudited Pro Forma Financial Information ”), which have been prepared by the Directors prepared based on the audited consolidated statement of financial position of the Group as at 31 December 2017 extracted from the 2017 annual report of the Group after giving effect to the pro forma adjustments described in the accompanying notes and is prepared in accordance with Rules 4.29 and 14.68(2)(a)(ii) of the Listing Rules.

The Unaudited Pro Forma Financial Information has been prepared to illustrate the effects of the Acquisition as if the acquisition had taken place on 31 December 2017 for the Unaudited Pro Forma Financial Information.

The Unaudited Pro Forma Financial Information has been prepared by the Directors for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the financial position of the Group had the Acquisition been completed on 31 December 2017, or any future dates.

III-1

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX III

1. Unaudited Pro Forma Financial Information

	The Group							The Group
	as at							as at
	31 December							31 December
	2017		Pro	forma adjustment				2017
	HK$’000	HK$’000	HK$’000	HK$’000		HK$’000	HK$’000	HK$’000
	(Audited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)		(Unaudited)	(Unaudited)
	(Note 1)	(Note 2)	(Note 3)	(Note 4(a))		(Note 4(b))	(Note 5)
Non-current assets
Property, plant and equipment	2,891,785							2,891,785
Investment properties	64,773							64,773
Prepaid lease payments	287,803							287,803
Interest in associates	273,522			2,786,864		45,642		3,106,028
Available-for-sale financial
assets	100,898							100,898
Deposits for acquisition of
non-current assets	41,653							41,653
Goodwill	511,539							511,539
Intangible assets	875,718							875,718
Deferred tax assets	1,243							1,243
Prepayments	66,426							66,426
	5,115,360							7,947,866
Current assets
Financial assets at fair value
through profit or loss	18,011							18,011
Inventories	762,933							762,933
Trade and other receivables	1,485,925							1,485,925
Amounts due from related
companies	5,400							5,400
Prepaid lease payments	8,771							8,771
Pledged bank deposits	25,549							25,549
Cash and cash equivalents	640,842	2,879,117	(2,000)	(2,786,864)		(45,642)	(40,926)	644,527
	2,947,431							2,951,116
Current liabilities
Trade and other payables	1,665,838							1,665,838
Bank and other borrowings	2,165,957							2,165,957
Obligation under finance leases	56,090							56,090
Amounts due to related
companies	18,173							18,173
Amount due to immediate
holding companies	23,368							23,368
Income tax payable	77,339							77,339
	4,006,765							4,006,765
Net current (liabilities)/assets	(1,059,334)							(1,055,649)
Total assets less current
liabilities	4,056,026							6,892,217

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX III

	The Group							The Group
	as at							as at
	31 December							31 December
	2017		Pro	forma adjustment				2017
	HK$’000	HK$’000	HK$’000	HK$’000		HK$’000	HK$’000	HK$’000
	(Audited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)		(Unaudited)	(Unaudited)
	(Note 1)	(Note 2)	(Note 3)	(Note 4(a))		(Note 4(b))	(Note 5)
Liabilities
Non-current liabilities
Bank and other borrowings	278,212							278,212
Convertible bonds	293,958							293,958
Deferred tax liabilities	119,474							119,474
Amount due to immediate
holding company	195,582							195,582
Deferred income	632,253							632,253
Obligation under finance leases	76,946							79,946
	1,596,425							1,596,425
Net assets	2,459,601							5,295,792

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX III

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION

1 The balance is extracted from the audited consolidated statement of financial position of the Group as at 31 December 2017 as set out in the published annual report of the Group for the year ended 31 December 2017.
On 4 July 2018, the Company announced that the Board proposed to raise fund by issuing to the qualifying shareholders on the basis of six rights shares for every twenty-five shares held by the qualifying shareholders on the record date. According to the proposed rights issue, up to 553,676,287 rights shares at the subscription price of HK$5.20 per rights share will be issued. The estimated gross proceeds of the right issues will be up to approximately HK$2,879,117,000. The proceeds from the rights issue will be used for paying the Company’s funding contribution in relation to the Acquisition in full, and also paying the transaction costs associated with the Acquisition. Given (1) the proceeds from the rights issue are solely used in relation to the Acquisition; (2) the plans for the rights issue have been announced before the date of this Unaudited Pro Forma Financial Information; and (3) the rights issue is not subject to the approval from the shareholders of the Company, it is considered to be justifiable to include the adjustment in relation to the effect of the rights issue. If the rights issue does not proceed, the Company will seek the other fund sources in order to complete the Acquisition, such as financing by the financial institution, internal resources and/or other financial resources.
The pro forma adjustment represents the estimated professional fees and expenses directly attributable to the rights issue amounting to approximately HK$2,000,000.
(a) The pro forma adjustment represents the acquisition of Sirtex. Upon completion of the Acquisition, the Company will indirectly acquire 49% equity interest in Sirtex. The scheme consideration of the Acquisition to be paid by the Company is determined at A$473,766,816 (equivalent to HK$2,786,863,624).
(b) On 14 June 2018, Sirtex announced on the ASX that the competing offer from the Company and CDH Genetech was superior to the proposed scheme of arrangement with Varian. According to clause 10.2(b) of the scheme implementation deed signed between Sirtex and Varian on 30 January 2018, Sirtex is obliged to pay the reimbursement fee to Varian under that clause with the sum of A$15,835,036 (equivalent to HK$93,147,271). The Company and CDH agreed to indemnify Sirtex for the reimbursement fee according to the respective investment percentage in Sirtex. Therefore, the Company shall be responsible for 49% of the reimbursement fee of approximately A$7,759,168 (equivalent to HK$45,642,165). The payment of the reimbursement fee will be treated as part of the investment cost in the associated company.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX III

The pro forma adjustment represents the estimated professional fees and expenses directly attributable to the Acquisition (excluding the reimbursement fee mentioned in note 4(b) above) amounting to approximately HK$40,926,000.
Since 31 December 2017, the Group has entered into the following material transactions:
(a) On 24 May 2018, the Company, GL Saino Investment Limited (“ GL Saino ”), and Taiwan Tung Yang International Company Limited (台灣東洋國際股份有限公司) (“ Taiwan Tung Yang ”) entered into an acquisition agreement, pursuant to which GL Saino conditionally agreed to sell and the Company conditionally agreed to acquire 100% of the issued shares of Taiwan Tung Yang at the aggregate consideration of RMB1,540 million, among which 40% of such consideration at approximately RMB616 million will be settled by the allotment and issue of 181,069,959 new Shares to GL Saino at HK$4.20 per share. The Company also entered into a subscription agreement with Shanghai China Grand Asset Finance Investment Management Co., Limited (上海遠大產融投資管理有限公司) (“ Shanghai Finance ”) on 24 May 2018 for the allotment and issue of 228,148,148 new Shares to Shanghai Finance at HK$5.00 per share. The proceeds from the said subscription will be used for the settlement of the remaining consideration for the acquisition of Taiwan Tung Yang. For the detail, please refer to the Company’s announcement dated 24 May 2018).
(b) On 31 May 2018, the Company, Winguide Far East Limited (“ Winguide Far East ”) and Shanghai Winguide Huangpu Pharmaceutical Company Limited (上海運佳黃浦制藥有限公司) (“ Shanghai Winguide ”) entered into an acquisition agreement, pursuant to which Winguide Far East conditionally agreed to sell and the Company conditionally agreed to acquire 100% equity interests in Shanghai Winguide at the aggregate consideration of approximately RMB1,551.3 million. The Company also entered into a subscription agreement with Shanghai Finance on 31 May 2018 for the allotment and issue of 237,416,904 new Shares to Shanghai Finance at HK$5.20 per share. The proceeds from the said subscription will be used for the settlement of the consideration for the Acquisition of Shanghai Winguide. For the detail, please refer to (see the Company’s announcement dated 1 June 2018).

Given the completions of these transactions are subject to the approval from the shareholders of the Company, it is considered not appropriate to include the effect of these transactions into the adjustments above.

Saved as aforesaid, no other adjustments have been made to reflect any trading results or other transactions of the Group entered into subsequent to 31 December 2017. Unless otherwise stated, the adjustments above are not expected to have a continuing effect on the Group.

III-5

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

The following is the text of a report, prepared for inclusion in this circular, received from the independent reporting accountants, HLB Hodgson Impey Cheng Limited, Certified Public Accountants, Hong Kong.

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國衛會計師事務所有限公司

Hodgson Impey Cheng Limited

31/F, Gloucester Tower The Landmark 11 Pedder Street Central Hong Kong

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

To the Directors of China Grand Pharmaceutical and Healthcare Holdings Limited

Dear Sir,

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of China Grand Pharmaceutical and Healthcare Holdings Limited (the “ Company ”) and its subsidiaries (collectively the “ Group ”) by the directors of the Company (the “ Directors ”) for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma consolidated statement of assets and liabilities as at 31 December 2017 (the “ Statement ”) and related notes as set out in Appendix III of the circular issued by the Company dated 26 July 2018 (the “ Circular ”) in connection with the acquisition by the Group with CDH Genetech Limited of 100% of the equity interest in Sirtex Medical Limited (the “ Acquisition ”). After the Acquisition, the Group and CDH Genetech Limited will indirectly hold 49% and 51% equity interests of Sirtex Medical Limited respectively. The applicable criteria on the basis of which the Directors have compiled the Statement are described in Appendix III of the Circular.

The Statement has been compiled by the Directors to illustrate the impact of the Acquisition on the Group’s financial position as at 31 December 2017 as if the Acquisition had taken place at 31 December 2017 for the unaudited pro forma consolidated statement of financial position. As part of this process, information about the Group’s consolidated financial position has been extracted by the Directors from the Group’s audited consolidated financial statements for the year ended 31 December 2017 as set out in the published annual report for the year ended 31 December 2017.

Directors’ Responsibility for the Unaudited Pro Forma Financial Information

The Directors are responsible for compiling the unaudited pro forma financial information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Listing Rules ”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” (“ AG 7 ”) issued by the Hong Kong Institute of Certified Public Accountants (“ HKICPA ”).

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX III

Our Independence and Quality Control

We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

Our firm applies Hong Kong Standard on Quality Control 1 “Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements” and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting Accountants’ Responsibilities

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the unaudited pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 “Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus” issued by the HKICPA. This standard requires that the reporting accountants comply with ethical requirements and plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled the unaudited pro forma financial information in accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the unaudited pro forma financial information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the unaudited pro forma financial information.

The purpose of unaudited pro forma financial information included in the Circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Group as if the Acquisition had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the Acquisition at 31 December 2017 would have been as presented.

A reasonable assurance engagement to report on whether the unaudited pro forma financial information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the Directors in the compilation of the unaudited pro forma financial information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

III-7

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

The related unaudited pro forma adjustments give appropriate effect to those criteria; and
The unaudited pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants’ judgement, having regard to the reporting accountants’ understanding of the nature of the Group, the event or transaction in respect of which the unaudited pro forma financial information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the unaudited pro forma financial information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion:

(a) the unaudited pro forma financial information has been properly compiled by the Directors on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Yours faithfully

HLB Hodgson Impey Cheng Limited Certified Public Accountants Shek Lui

Practising Certificate Number: P05895 Hong Kong

III-8

GENERAL INFORMATION

APPENDIX IV

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

Directors’ and chief executive’s interests and short positions in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the interests or short positions of the Directors and the chief executives of the Company in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required (i) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provision of the SFO); or (ii) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, were as follows:

					Approximate
					percentage or
		Name of the company			attributable
		in which the shares	Number of	Nature of	percentage of
Name	of Director	was held	the shares held	interests	shareholding
					(%)
Shao Yan (Note)		The Company	4,790,000 (L)	Interest in spouse	0.21
(L)	denotes long position

Note: Dr Shao Yan is the spouse of Ms Tian Wen Hong who is the holder of the above Shares. By virtue of the SFO, Dr Shao Yan is deemed to be interested in such 4,790,000 Shares.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required (i) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules.

IV-1

GENERAL INFORMATION

APPENDIX IV

Directors’ positions in other companies

As at the Latest Practicable Date, save for Mr Liu Chengwei (who is a director of China Grand Enterprises) and Dr Shao Yan (who is a director of Outwit, a controlling shareholder of the Company), none of the Directors was also a director or employee of a company which had an interest or short position in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company pursuant to the provisions of Division 2 and 3 of Part XV of SFO.

3. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).

4. INTERESTS IN ASSETS, CONTRACTS OR ARRANGEMENT

As at the Latest Practicable Date, none of the Directors, proposed directors and HLB Hodgson Impey Cheng Limited has, or had had, any direct or indirect interest in any assets which had been or are proposed to be acquired, disposed of by or leased to, any member of the Group since 31 December 2017, the date to which the latest published audited financial statements of the Company were made up.

None of the Directors was materially interested in any contract or arrangement subsisting at the Latest Practicable Date which was significant in relation to the business of the Group.

5. EXPERT AND CONSENT

The following is the qualification of the expert who has given opinions or advice which are contained in this circular:

Name Qualification HLB Hodgson Impey Cheng Limited Certified Public Accountants

The above expert has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its report and references to its name in the form and context in which it appears.

As at the Latest Practicable Date, the above expert did not have any shareholding, direct or indirect, in any member of the Group or any right or option, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group or any interest, either direct or indirect, in any assets which have been, since 31 December 2017, the date to which the latest published audited consolidated financial statements of the Group were made up, acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

IV-2

GENERAL INFORMATION

APPENDIX IV

6. MATERIAL CONTRACTS

The following contracts (not being contracts in the ordinary course of business) have been entered into by the Group within the two years immediately preceding the date of this circular and are or may be material:

(a) The acquisition agreement dated 9 October 2017 and entered into between the Company, Mr Huang Xiaohua (黃小華) (“ Mr Huang ”) and Xian Beilin Pharmaceutical Company Limited (西安碑林藥業股份有限公司) (“ Xian Beilin ”), pursuant to which the Company agreed to acquire approximately 22.8% of the share capital in Xian Beilin for a consideration of RMB131,512,000.
(b) The subscription agreement dated 9 October 2017 entered into between the Company and Mr Huang, pursuant to which Mr Huang conditionally agreed to subscribe for 47,750,000 Shares at the subscription price of HK$2.24 per Share.
(c) The joint venture agreement dated 13 November 2017 entered into between the Company and East Ocean Capital (Hong Kong) Capital Limited, pursuant to which they agreed to establish a joint venture in Hong Kong with a total investment of approximately US$15 million, with the Company contributing not more than approximately US$7.485 million and obtaining not more than 49.9% equity interests in the joint venture.
(d) The acquisition agreement dated 24 May 2018 entered into between the Company, GL Saino Investment Limited (“ GL Saino ”) and Taiwan Tung Yang International Company Limited (“ Taiwan Tung Yang ”), pursuant to which GL Saino conditionally agreed to sell and the Company conditionally agreed to acquire 100% of the issued shares of Taiwan Tung Yang at the aggregate consideration of RMB1,540 million.
(e) The subscription agreement dated 24 May 2018 entered into between the Company and Shanghai China Grand Asset Finance Investment Management Co., Limited (上海遠大產融投資管理有限公司) (“ Shanghai Finance ”) pursuant to which Shanghai Finance conditionally agreed to subscribe for, and the Company conditionally agreed to allot and issue, 228,148,148 Shares at the subscription price of HK$5.00 per Share.
(f) The acquisition agreement dated 31 May 2018 entered into between, among others, Grand Pharmaceutical (China) Company Limited (遠大醫藥(中國)有限公司) (an indirect non-wholly owned subsidiary of the Company), Winguide Far East Limited (“ Winguide Far East ”) and Shanghai Winguide Huangpu Pharmaceutical Company Limted (上海運佳黃浦制藥有限公司) (“ Shanghai Winguide ”), pursuant to which Winguide Far East conditionally agreed to sell and the Company conditionally agreed to acquire 100% equity interests in Shanghai Winguide at the aggregate consideration of approximately RMB1,551.3 million.
(g) The subscription agreement dated 31 May 2018 entered into between the Company and Shanghai Finance pursuant to which Shanghai Finance conditionally agreed to subscribe for, and the Company conditionally agreed to allot and issue, 237,416,904 Shares at the subscription price of HK$5.20 per Share.

IV-3

GENERAL INFORMATION

APPENDIX IV

(h) The Scheme Implementation Deed.

7. COMPETING INTERESTS

As at the Latest Practicable Date, despite the fact that Mr Liu Chengwei, the chairman of the Board and an executive Director, is a director of China Grand Enterprises and a supervisor of Huadong Medicine Company Limited (“ Huadong Medicine ”), which is a company listed on the Shenzhen Stock Exchange (stock code: 000963), and Dr Niu Zhanqi, an executive Director, is a director of Huadong Medicine, taking into account the difference in products, target customers and principal activities engaged by the Group, Huadong Medicine and China Grand Enterprises, the management of the Company consider that there is no competition among the business of the Group, Huadong Medicine and China Grand Enterprises. As such, so far as the Directors are aware of, no Directors or their close associates had any interest in a business which competes or is likely to compete, either directly or indirectly, with the business of the Group.

8. LITIGATION

As at the Latest Practicable Date, none of the companies in the Group was involved in any litigation or arbitration of material importance and no litigation or claim of material importance known to the Directors to be pending or threatened against any company in the Group.

9. GENERAL

(a) The registered office of the Company is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.
(b) The head office and principal place of business of the Company in Hong Kong is located at Units 3302, The Center, 99 Queen’s Road Central, Hong Kong.
(c) As at the date of this circular, the Board comprises of four executive Directors, namely, Mr Liu Chengwei, Mr Hu Bo, Dr Shao Yan and Dr Niu Zhanqi, and two independent non-executive Directors, namely, Ms So Tosi Wan, Winnie and Dr Pei Geng.
(d) The company secretary of the Company is Mr Foo Tin Chung, Victor, who is a member of the Australia Society of Certified Practising Accountants and an associate member of the Hong Kong Institute of Certified Public Accountants.
(e) The branch share registrar and transfer office of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong.
(f) The English text of this circular and the accompanying form of proxy shall prevail over their respective texts in case of inconsistency.

IV-4

GENERAL INFORMATION

APPENDIX IV

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours at the Company’s principal office in Hong Kong during the normal business hours on business days from the date of this circular up to 10 August 2018:

(a) the Memorandum of Association and Bye-laws of the Company;
(b) the material contracts referred to in paragraph 6 headed “Material contracts” in this appendix;
(c) the annual reports of the Company for each of the financial years ended 31 December 2015, 31 December 2016 and 31 December 2017;
(d) the annual reports of Sirtex for each of the three financial years ended 31 December 2017;
(e) the half-yearly report of Sirtex for the six months ended 31 December 2017;
(f) the report from HLB Hodgson Impey Cheng Limited on the unaudited pro forma financial information of the Group, the text of which is set out in Appendix III to this circular; and
(g) this circular and a copy of each circular issued pursuant to the requirements set out in Chapters 14 of the Listing Rules which has been issued since the date of the latest published audited accounts.

IV-5

NOTICE OF SGM

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**China Grand Pharmaceutical and Healthcare Holdings Limited 遠大醫藥健康控股有限公司[*]**

(Incorporated in Bermuda with limited liability) (Stock Code: 00512)

NOTICE OF SGM

NOTICE IS HEREBY GIVEN that the Special General Meeting (the “ SGM ”) of China Grand Pharmaceutical and Healthcare Holdings Limited (the “ Company ”) will be held at Unit 3302, The Center, 99 Queen’s Road Central, Hong Kong on Friday, 17 August 2018 at 11:00 a.m. for the purposes of considering and, if thought fit, passing the following resolution with or without amendments as ordinary resolution of the Company:

ORDINARY RESOLUTION

“THAT

(a) the execution and delivery of the scheme implementation deed dated 14 June 2018 entered into between Sirtex Medical Limited (“ Sirtex ”), CDH Genetech Limited (“ CDH Genetech ”) and the Company in respect of the joint acquisition of 100% of the issued share capital of Sirtex by CDH Genetech and the Company (a copy of which has been produced to this meeting marked “A” and initialed by the chairman of this meeting for the purpose of identification) (the “ Scheme Implementation Deed ”) be and are hereby approved, confirmed and ratified and the Company’s participation in the transactions contemplated thereunder (the “ Acquisition ”) be and is hereby approved, confirmed, and ratified; and
(b) any one of the directors of the Company (the “ Directors ”) be and is hereby authorised to execute all documents and to do all such things and take all such other steps which, in his/ her opinion, may be necessary, appropriate, desirable or expedient to implement and/or give effect to the terms of, or the transactions contemplated in and for completion of the Acquisition, and to agree to such variation, amendment or waiver in relation thereto which are, in the opinion of the Directors, in the interest of the Company and its shareholders as a whole.”

By order of the Board

China Grand Pharmaceutical and Healthcare Holdings Limited Liu Chengwei

Chairman

Hong Kong, 26 July 2018

SGM-1

NOTICE OF SGM

Registered office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Principal place of business in Hong Kong: Unit 3302, The Center 99 Queen’s Road Central Hong Kong

Notes:

Any member entitled to attend and vote at the above meeting is entitled to appoint a proxy to attend and vote instead of him. A proxy need not be a member of the Company.
The register of members will be closed from Tuesday, 14 August 2018 to Friday, 17 August 2018, both days inclusive, during which no transfer of shares can be registered. In order to qualify to attend the SGM, all properly completed transfer forms accompanied by the relevant share certificates must be lodged with the branch share registrar and transfer office of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong no later than 4:30 p.m. on Monday, 13 August 2018.
To be valid, the form of proxy and the power of attorney or other authority (if any) under which it is signed or a certified copy of that power of attorney or authority must be deposited at the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.
Where there are joint holders of a share of the Company, any one of such holders may vote at the meeting either personally or by proxy in respect of such share as if he were solely entitled thereto, but if more than one of such holders be present at the meeting personally or by proxy, that one of such holders so presents whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.
Delivery of an instrument appointing a proxy shall not preclude a member from attending and voting in person at the SGM and in such event, the instrument appointing a proxy shall be deemed to be revoked.
The ordinary resolution set out in this notice will be taken by poll.

As at the date of this notice, the Board comprises four executive Directors, namely Mr Liu Chengwei, Mr Hu Bo, Dr Shao Yan and Dr Niu Zhanqi; and two independent non-executive Directors, namely Ms So Tosi Wan, Winnie and Dr Pei Geng.

For identification purpose only

SGM-2

AI assistant

Grand Pharmaceutical Group Limited — Proxy Solicitation & Information Statement 2018

49262_rns_2018-07-25_c9741f45-8a34-442f-b97d-f2b81dc02a65.pdf

China Grand Pharmaceutical and Healthcare Holdings Limited 遠大醫藥健康控股有限公司[*]

MAJOR TRANSACTION

THE ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF SIRTEX MEDICAL LIMITED

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

China Grand Pharmaceutical and Healthcare Holdings Limited 遠大醫藥健康控股有限公司[*]

MAJOR TRANSACTION THE ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF SIRTEX MEDICAL LIMITED

INTRODUCTION

SCHEME IMPLEMENTATION DEED

Outline of the Scheme

Formation of the Bidders’ Nominee

Implementation of the Scheme

Pre-conditions to the Scheme

If a condition precedent is not fulfilled or waived

CFIUS Approval

Termination

Break fee, reimbursement fee and other indemnities

Exclusive China commercialisation rights

LETTER FROM THE BOARD

Irrevocable Undertakings

Completion

FUNDING CONTRIBUTIONS OF THE ACQUISITION

Contributions

REASONS AND BENEFITS OF THE ACQUISITION FOR THE COMPANY

LETTER FROM THE BOARD

INFORMATION ON THE COMPANY

INFORMATION ON CDH GENETECH

INFORMATION ON SIRTEX

LISTING RULES IMPLICATIONS

SGM

RECOMMENDATION

WAIVER FROM STRICT COMPLIANCE WITH RULE 14.67(6)(a)(i) OF THE LISTING RULES

(1) Sirtex will not become a subsidiary of the Company

(3) Strict compliance with the requirements of accountants’ report is impractical and unduly burdensome

(4) Alternative disclosures provide relevant, meaningful and reliable information on Sirtex’s financial position

ADDITIONAL INFORMATION

1. SUMMARY OF FINANCIAL INFORMATION OF THE GROUP

2. STATEMENT OF INDEBTEDNESS

Disclaimers

3. WORKING CAPITAL

4. MATERIAL ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

5. MATERIAL ADVERSE CHANGE

6. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

APPENDIX I

APPENDIX I

7. EFFECT OF THE ACQUISITION

A1. FINANCIAL REPORT OF SIRTEX FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015

DIRECTORS

Experience and Expertise

Directorships held in other listed entities during the last three years

Special Responsibilities

Interest in Shares and Options

APPENDIX II

Experience and Expertise

Directorships held in other listed entities during the last three years Nil

Special Responsibilities

Interest in Shares and Options

Directorships held in other listed entities during the last three

years

Special Responsibilities

Interest in Shares and Options

Experience and Expertise

Directorships held in other listed entities during the last three years

Interest in Shares and Options

COMPANY SECRETARY

Experience and Expertise

Interest in Shares and Options

DIRECTORS’ MEETINGS

PRINCIPAL ACTIVITIES

REVIEW OF OPERATIONS AND FINANCIAL RESULTS

DIVIDENDS

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

LIKELY DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES

ENVIRONMENTAL REGULATIONS

UNISSUED SHARES

Grand Pharmaceutical Group Limited Proxy Solicitation & Information Statement 2018

**China Grand Pharmaceutical and Healthcare Holdings Limited 遠大醫藥健康控股有限公司[*]**

**China Grand Pharmaceutical and Healthcare Holdings Limited 遠大醫藥健康控股有限公司[*]**