CSL Limited

Transcription

CSL Limited

CSL Limited
Annual Report 1998 - 1999
CSL Limited
ACN 051 588 348
Contents
1
CSL’s Year at a Glance
2
Financial Highlights
3
The Year in Review
8
Pharmaceutical Business
10
New Product Development
12
Bioplasma Business
14
Veterinary Business
16
Biosciences Business
18
Our People
18
Mission Statement
20
The CSL Group Chart
20
Controlled Entities
21
Organisation Chart
22
Directors’ Profiles
24
Corporate Governance
27
Corporate Citizenship
28
Finance Report
29
Five Year Summary
29
CSL Monthly Share Price
30
Share Information
31
Shareholder Information
32
CSL Business Offices
Front Cover photographs:
CSL’s new facility for the manufacture of
novel biopharmaceuticals. CSL’s clinical trial
programs will now be underpinned by a
capacity to produce genetically engineered
candidate vaccines and other biologicals.
CSL Limited develops, manufactures and
markets pharmaceutical products of
biological origin.
Our business is health care:
•Life-saving products derived from human
plasma;
•Pharmaceuticals and diagnostics essential
to community health;
•Veterinary vaccines and diagnostics to
protect livestock and companion animals.
Annual General Meeting
Thursday 14 October 1999 at 10:00am
Function Centre, National Tennis Centre
Melbourne Park, Batman Avenue
Melbourne 3000
Financial Calendar
27
1
14
14
31
1999
September
October
October
October
December
Shares traded ex-dividend
Record date for final dividend
Final dividend paid
Half year ends
9
6
12
26
30
15
22
28
12
12
31
2000
February
April
April
April
June
August
September
September
October
October
December
Half year profit and interim dividend announcement
Record date for interim dividend
Interim dividend paid
Year ends
Annual profit and final dividend announcement
Record date for final dividend
Final dividend paid
Half year ends
Group revenues of $424.9m from CSL’s businesses in 1998-99 (up 16%)
have produced an after tax profit of $47.4m - an increase of 16% on the
previous year’s comparable figure.
Bioplasma Division
($129.8m sales revenue)
Pharmaceutical Division
Bioplasma Division delivered revenue growth of 10% through
processing higher volumes of plasma and introducing new
products. The Division entered into an agreement with the
American Red Cross to manufacture products on their behalf
(from plasma they supply) and to co-develop an important
new fibrin bandage product.
Pharmaceutical Division again achieved excellent growth in
sales revenue by continuing to develop domestic business
for vaccines and in-licensed products, building international
markets and introducing important new products.
Sales increased in all key areas of business.
Veterinary Division
The Biosciences Group
Veterinary Division had a very good year with substantial
sales growth in Australia. In its first year under CSL
ownership, Biocor Animal Health, Inc, our new subsidiary in
the USA, performed well to achieve its sales revenue targets.
In support of a strong product pipeline, the Division continued
to expand investment in new product development.
($75m sales revenue)
Following a major business review, the Biosciences Group now
includes CSL’s American, European and Australian-based
operations under one umbrella. JRH Biosciences’ strong growth
in cell culture business delivered sales revenue of $61.8m - an
increase of 26% on the previous year. Australian sales revenue
($13.2m) was similar to last year’s result ($13.5m). Australian
operations have been restructured to eliminate low margin
agency products and to significantly reduce operating costs.
During the year, all of CSL’s businesses introduced new
products into the marketplace. Our major collaborations for
key research and development projects proceeded according
to plan. Construction of CSL’s new facility for the
manufacture of novel biopharmaceuticals was completed
on time and under budget.
1
Financial Highlights Year ended 30 June
1998-1999
1997-1998
% change
Total revenue
424.9
366.7
16.0
Sales revenue
413.5
353.5
17.0
Research and development
40.8
39.1
4.3
Operating profit before interest and income tax
68.7
58.5
17.6
Operating profit after tax before abnormal item
47.4
40.9
15.8
All figures in $A million unless otherwise stated.
Abnormal income tax credit
3.9
Profit after tax and abnormals
47.4
44.8
Capital investment
39.0
21.3
83.1
Total assets at 30 June
561.5
523.8
7.2
Shareholders’ funds at 30 June
414.9
390.3
6.3
Net tangible assets per share at 30 June ($)
3.15
2.97
6.1
Weighted average number of shares (million)
131.4
131.1
0.2
Earnings per share (cents)
36.1
34.2
5.6
Dividend per share (cents)
21.0
18.0
16.7
There is a five year statistical summary on page 29.
Dividends to Shareholders
An interim dividend on ordinary shares of 7 cents per share
(franked at 36%) was paid on 28 April 1999. A final dividend
on ordinary shares of 14 cents per share (franked at 36%) will
be paid on 14 October 1999. The total dividend for the year of
$27.6m (21 cents per share) represents a payout ratio of 58%
of net profit.
2
The Year in Review
In a year of sustained growth, our Group revenues rose 16% to
$424.9m, producing a net profit after tax of $47.4m, an increase
of 16% on the previous year’s comparable figure. All businesses
contributed to this growth in profit
Corporate Objectives for 1998-99
Our corporate objectives for the year as stated to
shareholders in the last Annual Report were to continue
to focus on building domestic financial strength and global
competitiveness for plasma and veterinary products, while
maintaining competitive returns.
We are pleased to report that our objectives have been
attained and financial performance continues to improve.
Outcomes
Our international growth has been particularly encouraging,
sales having risen 42% to $97.5m comprising 24% of
total sales.
It has also been a strong year for the introduction of new
and innovative products, derived from our R&D programs
and in-licensing. These products provide a platform for
future growth.
During the year, we continued to implement strategies for
international growth in our plasma products, veterinary
and cell culture businesses.
The Bioplasma Division reached a major milestone with
the signing of an agreement with the American Red Cross
covering contract fractionation and co-development of
new products. CSL is required to achieve US FDA approval
for its products and the Broadmeadows plant.
This is a significant collaboration for the Company and
has the potential to increase our plasma products
business substantially.
Other international successes this year have included the
integration of our new subsidiary in the USA, Biocor
Animal Health Inc, under operational control of the
Veterinary Division. Biocor has contributed strongly to our
offshore growth in its first full year of CSL ownership.
CSL Chairman, Colin Harper (left), Vice Chairman, Peter Wade (centre) and Chief Executive and Managing Director,
Dr Brian McNamee, outside CSL’s new facility for the production of components for new vaccines and other biologicals.
The Year in Review
3
CSL Total Revenue
CSL Profit Before Interest & Tax
($ millions)
($ millions)
424.9
450
400
58.5
366.7
350
68.7
70
60
318.1
48.1
50
290.6
300
41.6
256.8
250
40
200
30
33.2
150
20
100
10
50
94-95
95-96
96-97
97-98
98-99
JRH Biosciences Inc, the backbone of our cell culture
business, has expanded its activities in its US domestic
market and internationally, particularly in Europe where
additional technical and distribution capabilities are under
development in the United Kingdom (UK).
Domestically, competition has continued to intensify,
conforming to the global trend. Subsidiaries of
multinational enterprises (mainly based in the USA and
UK) provide approximately 90% of the value of prescription
sales, the majority of which are subsidised by the Federal
Government through the pricing control and access
system of the Pharmaceutical Benefit Scheme (PBS).
Against this background, the Pharmaceutical Division
continued its strong growth pattern, with revenue
increasing by 14% over the prior year to $166.5m.
The Division has achieved this by continuing to develop its
domestic business for vaccines and in-licensed products,
developing new international markets, and introducing new
products.
In the domestic vaccine market, the most significant
product launch was Tripacel*, a diphtheria, tetanus and
acellular pertussis (whooping cough) vaccine for childhood
immunisation.
Pentavax*, a polyvalent vaccine co-developed by CSL and
Merck & Co Inc, designed to protect children against
diphtheria, tetanus, pertussis, hepatitis B and haemophilus
influenzae B, has been recommended for marketing
approval. A component in CSL’s strategy for children’s
vaccines, Pentavax* will be available later this year.
Two in-licensed products which received PBS listing are
Avonex* and Daivonex*. Avonex* slows the progression
of disability in people with multiple sclerosis, and
Daivonex* is a treatment for psoriasis.
* See inside back cover
4
The Year in Review
94-95
95-96
96-97
97-98
98-99
Sales of Fluvax® influenza vaccine, our leading product,
continue to grow, which has required us to increase
production capacity accordingly.
Bioplasma Division
The Bioplasma Division achieved an increase of 10% in
sales revenue, to reach $129.8m.
The Australian Red Cross has continued to collect greater
volumes of Australian plasma which has enabled us to
continue to increase the supply of plasma products.
The most significant development for the Division is a
major collaboration with the American Red Cross. Plasma
products, manufactured for the American Red Cross from
plasma which it will supply, will first, however, require
registration in the USA. This in itself will be a substantial
task for the Division’s clinical and regulatory specialists.
The Division has also committed a small team of engineers
and process specialists to work with LFO in Poland on the
design and construction of the plant and equipment to
fractionate Polish plasma. The building that will house the
plant has been completed.
Some of the Division’s product development activities
which came to fruition during the year were the
registration and launch of MonoFIX® - VF (purified factor
IX) and Thrombotrol® - VF (antithrombin III) in Australia.
Intragam® P, an immunoglobulin developed by CSL for
treatment of severe infections, has also received product
registration from the Australian Therapeutic Goods
Administration (TGA).
Veterinary Division
The Veterinary Division had a very strong year with sales
of $42.2m, an increase of 57.5% over the prior year.
Record sales were achieved in the domestic market for
sheep vaccines, enhanced by the introduction of new
Glanvac® Vitamin B12 products.
CSL Post Tax Profit Before Abnormal
CSL R&D Investment
($ millions)
($ millions)
47.4
50
45
39.1
45
40
40.9
40
40.8
36.6
35
35.2
30.2
35
30
29.0
27.1
30
24.5
25
25
20
20
15
15
10
10
5
5
94-95
95-96
96-97
97-98
98-99
Longrange™ botulinum vaccine and Leptoshield® bovine
leptospirosis vaccine supported growth in the cattle
vaccine market. A new Canvac® C5 multi-component
canine vaccine was successfully launched, and uptake has
been good.
New and differentiated products resulting from our R&D
programs continue to position the Division as a successful
specialist animal health business.
A major undertaking for the Division has been integration
into the CSL Group of our US bacterial and viral vaccine
manufacturing and marketing operation, Biocor Animal
Health Inc. Biocor is based in Omaha, Nebraska.
The General Manager of the Division has relocated to the
USA, as have certain other senior personnel, and key
appointments in R&D, business development, regulatory
affairs, sales and marketing have been made. The USA is
the world’s largest market for veterinary vaccines.
Biosciences Group
Following a business review, the Biosciences Group now
encompasses both the international operations of JRH
Biosciences Inc and CSL’s Australian-based operations.
The combined revenue for the Group was $75m, an
increase of 20%, with another record performance by JRH.
Major upgrades were undertaken at JRH’s serum
processing facility at Lenexa, Kansas, USA, to streamline
processes. This follows enhancement and expansion of the
JRH plant at Denver, Pennsylvania, where we have
consolidated media manufacturing, as announced last
year. Filtron Pty Ltd at Brooklyn, Victoria, has also had its
serum products manufacturing capability expanded to
meet increasing demands.
New cell culture and related products are being developed
which include the incorporation of recombinant proteins to
improve performance. Recombinant growth factors are
being in-licensed. Ex-Cell™ 525 media has recently been
launched for growth and production of certain cells used
in gene therapy applications.
94-95
95-96
96-97
97-98
98-99
The Biosciences product range has been further
rationalised to remove some agency products.
The central Research and Development Division continues
to provide two key roles within the Group. These are to
develop innovative biopharmaceutical products and to
provide support for manufactured and in-licensed
pharmaceutical products.
The current major R&D programs are proceeding according
to plan. These are projects to develop vaccines to prevent
human papillomavirus infection, to treat peptic ulcers, and
to develop our ISCOM™ adjuvant technology, designed to
stimulate the immune response to vaccines. Progress is
outlined more fully in the “New Product Development”
section of this Annual Report.
A new facility for pilot-scale production of vaccines and
other biologicals for use in clinical trials of new products in
man (pictured on the front cover of this Annual Report) has
been completed on time and within its budget of $14m.
Validation of the plant is now in progress.
CSL continues to fund certain early stage research projects
in universities and research institutes and is an active
participant in the government-funded Co-operative
Research Centre for Vaccine Technology.
Industry and Government
Globally, the pharmaceutical industry faces a number of
challenges arising from the complex policy environment in
which it operates. Growing regulatory requirements have
increased the time it takes to release new products, and
this has led to some erosion of patent life.
A considerable, and growing, amount of R&D is conducted
with external groups, with extensive alliances being put in
place between industry and academic partners.
The Year in Review
5
CSL Divisional Sales 1998-99
CSL Divisional Sales 1997-98
Pharmaceutical $146 million
Pharmaceutical $166.5 million
Bioplasma $129.8 million
Bioplasma $118.2 million
Biosciences Group $62.5 million
Biosciences Group $75 million
Veterinary $26.8 million
Veterinary $42.2 million
Total Sales Revenue 1998-99 $413.5 million
The Federal Governments’ Factor (f) scheme, which has
enabled the Company to expand its R&D program for the
past several years, terminated on 30 June 1999, and was
replaced by the Pharmaceutical Industry Investment
Program (PIIP). CSL was successful in obtaining the
maximum possible PIIP allocation of $60m over five years.
As with Factor (f), the PIIP aims to provide only partial
compensation to pharmaceutical manufacturers for the
effects of low prices for products purchased by
Government under the PBS and other programs.
This funding will continue to be used by CSL to support its
R&D programs, together with funds derived from
operational income.
6
The Year in Review
Total Sales Revenue 1997-98 $353.5 million
The Board
In accordance with the Constitution of the Company, the
Chairman will retire from the Board at the conclusion of
the Annual General Meeting.
Mr Peter Wade has been appointed Deputy Chairman by
the Board and will become the next Chairman. He was
elected to the Board for his present term in 1994.
Previously, from 1985 to 1993, Mr Wade served CSL as
both a Commissioner and a Director, including an extended
period as the Acting Chairman during 1988.
CSL’s Chairman to
retire in October
CSL’s Chairman, Mr Colin Harper, will retire from the Board
at the conclusion of the Annual General Meeting in
October this year.
Mr Harper was appointed to the Commonwealth Serum
Laboratories Commission as its Chairman in 1988.
During his eleven years as Chairman, Mr Harper has been
closely involved in CSL’s transition to an unlisted public
company (1991), our privatisation and sale by public float
in 1994, and the development and international expansion
of our businesses.
The CSL Board wishes to express its great appreciation
of his leadership and his many contributions during a
time of significant change, growth and development for
the Company.
CSL Chairman, Colin Harper.
The Year Ahead
Thanks to Management and Staff
The Company’s objectives for the year ahead may be summarised
as follows:
Once again, we are pleased to report such a successful year for
the Company. We are proud and appreciative of the contributions
made by management and staff, and on behalf of the Board and
shareholders we give them our thanks.
• We will continue to improve returns as a growing
international company;
• We will further entrench our domestic market position
by building on competitive strengths;
• We will develop our international plasma products, veterinary
vaccines and cell culture businesses, and evaluate the
international potential for other niche biological products.
• We will position the Pharmaceutical Division and Biosciences
Group for sustainable growth and profitability, and we will foster
innovation, new product development and leadership in a high
performance work environment.
Colin Harper
Chairman
Brian McNamee
Chief Executive
The Year in Review
7
The Pharmaceutical Division develops, manufactures and markets
vaccines for human use, and markets vaccines, antibiotics and
pharmaceutical products supplied by other manufacturers.
1998-99 Business Report
Pharmaceutical Sales
$166.5 million
Major pharmaceutical products
marketed in Australia by CSL
Vaccines
For prevention of:
Fluvax®
Pneumovax*
Triple Antigen™
ADT®
Tet-Tox®
H-B-VAX II*
PedvaxHIB*
Typh-Vax® (Oral)
Typhim VI*
Vaqta*
Influenza
Pneumococcal infection
Diphtheria, tetanus and whooping cough
Diphtheria and tetanus
Tetanus
Hepatitis B infection
HIB disease
Typhoid
Typhoid
Hepatitis A infection
Anti-infectives
For treatment of:
Flopen®
Moxacin®
Clavulin*
Fucidin*
Severe staphylococcal infections
Bacterial infections
Other products
For treatment of:
Antivenoms
Lonavar*
Envenomation
Delayed puberty (males)
Turners Syndrome (females)
Psoriasis
Inflammatory dermatoses
Multiple sclerosis
Daivonex*
Advantan*
Avonex*
* See inside back cover for trade marks
8
The Pharmaceutical Division continued its strong growth
pattern again this year recording a 14% increase in sales
revenue with improvement in all key areas of business.
Supported by the launches of important new
pharmaceuticals, established lines such as Fluvax®,
Pneumovax* 23 (Merck & Co Inc) and the
measles/mumps/rubella product M-M-R II* (Merck & Co
Inc) recorded particularly strong performances.
Travel vaccine sales have grown substantially over the
past three years as a result of an increasing awareness by
Australians of the need to seek medical advice before
travelling overseas. Travellers are taking up vaccination
against influenza, hepatitis A and B, typhoid, cholera and
Japanese Encephalitis.
New Products
A major product launch during the year was Tripacel*
(Connaught Laboratories Limited), a diphtheria, tetanus
and five-component acellular pertussis combination
vaccine. Several other vaccines are now well advanced in
the registration process including Comvax* (Merck & Co
Inc), Varivax* (Merck & Co Inc) and Orochol* (Swiss
Serum and Vaccine Institute Berne). Comvax* is a
combination of hepatitis B and haemophilus influenzae B,
both important in Australia’s National Childhood
Immunisation programs. We anticipate marketing approval
Pharmaceutical sales representative, Sonia Tsoukas, introducing CSL’s new ten-pack box of Fluvax® influenza vaccine.
Fluvax®, CSL’s leading product, now comes in tamper evident syringe packaging.
before the end of 1999 for Varivax*, a varicella (chicken
pox) vaccine, and Orochol*, an oral cholera vaccine.
Pentavax* (Merck & Co Inc) was recommended for
marketing approval during the year and joins Tripacel*
and Comvax* as a key component in CSL’s strategy for
children’s vaccines. Pentavax* is designed to protect
children against diphtheria, tetanus, whooping cough,
hepatitis B and haemophilus influenzae B.
CSL’s production of influenza vaccine increased again this
year to cater for the growing demand for influenza vaccine
in both our domestic and international markets. Sales to
Europe and South Africa improved and we established new
markets in South America. As we increase vaccine
production capacity, we also enhance CSL’s ability to meet
the needs of the Australian community in the event of an
influenza pandemic.
Two important pharmaceutical products being marketed in
Australia by CSL, Avonex* (Biogen Inc) and Daivonex* (Leo
Pharmaceutical Products Ltd AS) achieved listing under the
Pharmaceutical Benefits Scheme in February this year.
Avonex* slows the progression of disability in people with
multiple sclerosis and has had a good uptake since its
listing. Daivonex* ointment, a breakthrough treatment for
psoriasis, has also been far more widely prescribed since
being listed under the Pharmaceutical Benefits Scheme.
Omnic*, a new product shown to be effective in relieving
the symptoms of benign prostatic hyperplasia, has been
granted marketing approval by the Australian Drug
Evaluation Committee this year. CSL gained access to
Omnic* as a result of our developing commercial
relationship with Yamanouchi Europe BV.
One of the core competencies CSL has developed over the
past several years is the capacity to store and transport
pharmaceuticals under strict temperature control
conditions. This capacity led to our being appointed
distributor on behalf of the Victorian Government for the
vaccines they use in immunisation programs. We have
now also successfully tendered for cold chain vaccine
distribution for the New South Wales Government.
* See inside back cover
9
CSL scientists Andreas
Meister (left) and Dallas
Hartman analyse an antigen
sample in our new protein
chemistry laboratory at
Parkville.
Inside the purification suite of
CSL’s new facility for manufacture
of novel biopharmaceuticals,
scientist Heidi Elmer isolates
genetically engineered
recombinant proteins.
10
Australia’s largest investor in pharmaceutical research and
development, CSL directs its activities towards biological products
designed to act on or through the immune system.
Vaccine to Prevent HPV Infection
New Facility
Our collaboration with Merck & Co. Inc (USA) and the
University of Queensland to develop a virus-like particle
(VLP) vaccine to protect against the four major
papillomaviruses responsible for venereal warts and
carcinoma of the cervix continues to make good progress.
Two of the strains have been studied in healthy volunteers
and shown to be safe and immunogenic. The project has
now moved into early Phase II clinical studies in the United
States.
We have completed construction of a new facility for the
manufacture of novel biopharmaceuticals. Our clinical trial
programs will now be underpinned by a capacity to
produce genetically-engineered, candidate vaccines and
other biologicals in line with international standards of
Good Manufacturing Practice.
Peptic Ulcer Treatment
CSL’s collaboration with Astra Zeneca and the University of
New South Wales is also progressing well. Several
antigens have been expressed and purified, and novel
delivery systems are being investigated. The aim of this
project is to develop a vaccine to treat Helicobacter pylori
infections, known to be associated with the development
of peptic ulcers and gastric cancer.
ISCOM™ Technology
CSL’s licensed Immune Stimulating Complex (ISCOM™)
technology is being evaluated in primates and man, using
several antigens of clinical importance. This work is being
carried out in conjunction with major pharmaceutical
companies and research institutes, such as the Ludwig
Institute for Cancer Research (New York).
The ISCOM™ technology developed by Iscotec AB
(Sweden) has been shown to stimulate cellular and
humoral immune responses in laboratory animals.
Completed on time and under budget, the new
manufacturing facility will be used initially to produce
recombinant antigens for the eradication of chronic
Helicobacter pylori infections.
As part of a continuing program to upgrade facilities, our
protein chemistry group has been relocated to a modern,
purpose built laboratory.
New Projects
Two earlier stage projects, which are currently not
partnered, are under way. The first is to develop a vaccine
for treatment of women who are chronically infected with
HPV and have developed signs of carcinoma of the cervix.
Initial clinical studies with a recombinant antigen
formulated with ISCOMATRIX™ are planned in the coming
year. The second project, which arose from a collaboration
with the Dental School at the University of Melbourne,
aims to develop a vaccine for the prevention or treatment
of periodontal disease.
CSL continues to fund early stage research projects in
universities and research institutes, including Australia’s
Co-operative Research Centre for Vaccine Technology: the
Federal Government has recently renewed funding for this
Centre for a further seven years. We also maintain
collaborative projects with a number of major international
organisations.
CSL’s strategy for research and development is to
identify, secure and add value to intellectual property
as the basis for the development of innovative
biopharmaceutical products.
11
Bioplasma Business
CSL’s Bioplasma Division is the exclusive manufacturer in Australia
of products derived from human plasma. CSL also processes plasma
supplied by other countries into a range of products.
The Bioplasma Division has recorded a 10% growth in
revenue this year, from $118.2m to $129.8m, with
increased sales coming from the higher volumes of
plasma being processed and from the introduction
of new products.
Bioplasma Sales
$129.8 million
Major plasma products
Clotting Factors
For treatment of:
Factors VIII and IX
Bleeding disorders such as haemophilia
Immunoglobulins
For treatment of:
Intragam®
Infections and a range of autoimmune
diseases
Plasma volume
expanders
Albumex®
American Red Cross Biomedical Services
Acute blood loss (in emergency
trauma situations) and severe burns
Intragam® is an intravenous immunoglobulin used to treat people
with congenital or acquired deficiencies which make them
susceptible to recurrent infections. Intragam® can allow these
people to live healthier lives as active members of the community.
Bioplasma Business
The Australian Red Cross Blood Service again increased
its supplies of plasma to CSL to help meet the continuing
strong domestic demand for plasma products. CSL’s
MonoFIX® - VF (a high purity Factor IX) and
Thrombotrol® - VF (antithrombin III), both recently
introduced into the Australian market, have been well
received by haematologists. Growing demand in Asian
markets for our plasma fractionation services resulted in
a 22% increase in international revenue and included
our first business with the Republic of China (Taiwan)
and India.
For treatment of:
People born deficient in Factor VIII and Factor IX experience severe
bleeding into their joints and muscles which causes extreme pain
as well as long periods of impaired mobility. Treatment with
clotting factors minimises bleeding episodes and allows people to
lead active lives.
12
The Australian Red Cross Blood Service
CSL has entered into an agreement with American Red
Cross Biomedical Services to develop and manufacture
plasma products. The largest provider of blood, plasma
and tissue products in the USA, the American Red Cross
provides almost half of America’s blood supply.
A substantial task for CSL will be to obtain US FDA
approval of our facilities and registration of our products.
CSL will manufacture plasma products from a given
CSL continues to work closely with the Australian Red Cross Blood Service (ARCBS) to improve the quality and
availability of plasma products.
Shown here (left to right) are ARCBS Chief Financial Officer and Company Secretary, Gavin Wigginton, ARCBS
Chief Executive Officer, Dr Robert Hetzel, CSL Managing Director, Dr Brian McNamee, and the General Manager
of CSL’s Bioplasma Division, Peter Turner.
volume of blood plasma provided by the American Red
Cross, and co-develop a fibrin bandage product. Because
of its ability to stem major arterial bleeding, fibrin bandage
has the potential to revolutionise treatment of
haemorrhage caused by trauma and surgery.
Laboratorium Frakcjonowania Osocza Sp. z.o.o. (LFO)
The building that will house LFO’s new plasma
fractionation plant at Mielec in Poland has been completed
and work on the design and construction of the plant and
equipment is now under way.
The Bioplasma Division has a small team of engineers and
process specialists working in Europe on this project. CSL
will receive royalties on the sale of plasma products
processed at the new facility in return for the
manufacturing technology we have licensed to LFO.
CSL has obtained Australian market approval for
Intragam® P (a high purity, pasteurised intravenous
immunoglobulin), and for an improved range of
intramuscular immunoglobulins. Clinical trials for
Biostate® (high purity, double virus inactivated Factor VIII)
have been completed and we anticipate marketing
approval in 2000.
Customer Relations
The Bioplasma Division works closely with the Australian
Red Cross Blood Service and similar international blood
transfusion services to improve the quality and availability
of plasma products.
Plasma collected by the Australian Red Cross from
Australian volunteer donors is supplied to CSL for
manufacture of plasma-derived products which are
returned to the Red Cross for distribution to Australia’s
health care community. Funding provided by the Federal
Government ensures that plasma products manufactured
by CSL on behalf of the Australian Red Cross are provided
to all Australians free of charge.
Products manufactured on behalf of other countries, using
plasma they supply, are returned to their country of origin.
In addition, plasma from sources outside Australia,
approved by the Australian Therapeutic Goods
Administration, is fractionated on behalf of additional
international customers who cannot supply plasma for
fractionation at CSL.
Bioplasma Business
13
Veterinary Business
The Veterinary Division develops, manufactures and markets
vaccines for the prevention of disease in farm livestock (sheep,
cattle and pigs) and companion animals (horses, dogs and cats).
In an excellent result for the Veterinary Division,
substantial sales growth in Australia combined with
revenue generated by CSL’s new subsidiary, Biocor Animal
Health, Inc, delivered sales revenue of $42.2m - an
increase of 57.5% on the previous year.
Veterinary Sales
$42.2 million
Major veterinary products
Vaccines
For prevention of:
Glanvac®
Cheesy gland and clostridial diseases,
selenium deficiency and vitamin B12
deficiency in sheep
Clostridial diseases in cattle and sheep
Scabby mouth in sheep
Viral and bacterial diseases in dogs
Viral diseases in cats
Bacterial diseases in horses
Botulism in cattle
Leptospirosis and clostridial diseases
in cattle
Ultravac® 5 in 1
Scabigard®
Canvac®
Fevac®
Equivac®
Longrange®
Ultravac® 7 in 1
14
Diagnostic Products
For diagnosis of:
Bovigam®
Parachek®
Bovine tuberculosis
Johne’s disease in cattle
Veterinary Business
In Australia, we achieved significant growth in revenue
across our entire product range despite declining livestock
numbers and static dog and cat populations.
We achieved record sales in the highly competitive
domestic market for sheep vaccines, supported by new
additions to our Glanvac® vitamin B12 range and the
launch of our new Scabigard® vaccine applicator.
The launches of our Longrange™ botulinum vaccine and
Leptoshield® bovine leptospirosis vaccine helped to
provide growth in cattle product sales. Revenue growth
from equine vaccines was also encouraging.
In a very successful year for small animal vaccines, our
new Canvac® C5 multi-component canine vaccine gained
a substantial market share. Against aggressive
competition, our sales of small animal vaccines also
increased significantly in New Zealand.
West Australian merino stud breeder, Murray Groves, uses Glanvac 6S B12 vaccine to protect his sheep from
cheesy gland and clostridial diseases, selenium deficiency and vitamin B12 deficiency.
Biocor Animal Health, Inc
International Market Growth
CSL subsidiary, Biocor Animal Health, Inc, manufactures
and markets a range of small animal vaccines and carries
out contract manufacturing of vaccines for livestock.
Acquired by CSL in June 1998, Biocor’s manufacturing
plant is located in Omaha, Nebraska.
Sales growth in Europe and the Middle East has been very
encouraging, particularly in sheep vaccines. We expect the
demand to increase for Parachek™ and our products
against clostridial diseases in sheep.
In the world’s largest market for veterinary vaccines,
our new American operation has achieved its vaccine
sales targets in this first year under CSL ownership.
Our stronger focus on marketing small animal vaccines,
new and improved packaging, and close attention to
developing customer service, have all helped to boost
sales substantially.
CSL’s diagnostic kit (Parachek™) for detecting Johne’s
disease in cattle has been submitted to the US Department
of Agriculture for registration and further applications will
be made in the coming year. Biocor’s strong growth
potential is supported by the pipeline of new products
we plan to introduce into the American market.
In Europe and the United States, the product registration
process is under way for Improvac™, a vaccine to improve
the meat quality in male pigs. Improvac™ has been
submitted to the European Medicines Evaluation Agency
for registration in European Union countries. In the USA,
the initial application has been made to the Food and
Drug Administration.
The Veterinary Division continues to expand investment in
new product development in support of our strong product
pipeline. We will further consolidate our leading position in
Australia by building new market segments and by
maintaining a strong focus on developing customer
relationships. Internationally, an increasing focus on the
US market through Biocor is expected to continue the
strong sales performance achieved this year.
The Biocor team has been significantly strengthened
during the year with key appointments in research and
development, business development, regulatory affairs,
sales and marketing.
Veterinary Business
15
The Biosciences Group develops, manufactures and markets cell
culture reagents, blood grouping reagents and human diagnostics.
Our cell culture reagents include dry powder media, liquid media
and sera, used in the manufacture of vaccines, biopharmaceuticals
and gene therapy products.
JRH Biosciences has achieved another record
performance with strong growth in cell culture media
business delivering sales revenue of $61.8m, an increase
of 26% on last year’s $49m.
Biosciences Sales
$75 million
Major Biosciences Group products
Biotechnology products
used in cell culture
Sera
Media
Growth Factors
For use in:
The production of vaccines,
monoclonal antibodies and
recombinant proteins. Sera,
media and growth factors are
also extensively used in research
and diagnostic laboratories.
In cell culture, sera are used to grow cells in vitro (in the laboratory):
media are combined with sera or growth factors to grow cells in vitro.
Growth factors are a synthetic source of protein used to stimulate
cell growth.
Product Customisation
The Biosciences Group offers expertise in media development,
large volume batches of product, media customisation and media
handling systems to satisfy the specialised cell culture needs of the
health industry.
Disease diagnostic systems
For detection of:
QuantiFERON® diagnostics
A range of disease states
Blood grouping reagents
For determination of:
Blood groups
Blood group antibodies
For use in:
Pharmaceutical manufacture
Research laboratories
16
Following a major business review, the Biosciences Group
now includes CSL’s American (JRH), European (JRH) and
Australian-based operations under one umbrella. Sales
revenue from our Australian operations was $13.2m,
similar to the result for the previous year ($13.5m). Total
revenue for the new Biosciences Group was $75m.
The strong growth in revenue from JRH’s media products
has been driven by the successful pharmaceutical industry
commercialisation of new biotechnology-derived products.
Profitability also increased significantly due to improved
margins and cost savings resulting from consolidation of
all media manufacturing activities at our Denver,
Pennsylvania plant last year.
A major upgrade of our serum processing facilities at
Lenexa, Kansas has been undertaken during the year.
This facilities upgrade will enable us to manufacture 2000
litre batches of serum and will include clean-in-place and
steam-in-place systems, as well as automatic dispensing
capabilities. The new plant is scheduled to be fully
operational by the end of 1999.
At the American Society of Gene Therapy meeting held in Washington DC in June this year, Matt Caffrey (right),
one of JRH Biosciences’ Technical Support Specialists, talks to Julian Hanak of Cobra Therapeutics about the
benefits of EX-CELL™ 525.
Successfully launched during the year, EX-CELL™ 525 is the preferred media for the growth and production of
PerC6 cells used in gene therapy applications.
During the year, our Australian-based serum operation,
Filtron Pty Ltd, successfully completed an upgrade to
enable the manufacture of serum products in 2000 litre
batches. Filtron’s ability to manufacture larger batches of
serum will deliver our customers significant savings in
their pre-acceptance testing costs.
Our new product development focus remains on safe,
regulatory-friendly media formulations. The use of
recombinant proteins continues to be a key to the success
of our media formulations, from both performance and
regulatory perspectives. EX-CELL™ 525 media for PerC6
cells was successfully launched during the year and is the
preferred media for the growth and production of PerC6
cells used by our customers in gene therapy applications.
JRH continues to focus its resources and capabilities
on partnering with commercial companies that use
mammalian, insect cell culture and gene therapy
techniques to develop and manufacture therapeutics
and vaccines. Given an expected increase in the
successful commercialisation of new biopharmaceutical
products by our customers, JRH remains well positioned
for future growth.
Biosciences Business Review
As stated earlier in this report, the revenue from our
Australian-based Biosciences operations was similar to
the previous year. Following a review of Australian
operations, a major business restructure has been
undertaken including the rationalisation of low margin
agency products and a significant reduction in
operating costs. The future direction of Australian
operations will be underpinned by a much sharper focus
on profitable products.
Key objectives for Biosciences’ Australian business will
be to entrench our domestic market position in blood
bank diagnostics and cell culture reagents and to
successfully commercialise our novel QuantiFERON®
diagnostic technology in key international markets,
particularly North America.
As well as providing the basis for the tuberculosis
diagnostic test that we now market in Australia and
are trialling in the United States and Japan, CSL’s
QuantiFERON® technology has potential for other
diseases that were previously difficult to diagnose.
17
Our People
The focus of CSL’s human resources activities is to develop a flexible,
committed and skilled workforce that is rewarded for excellence and
innovation.
Our Mission
Leadership and Management Training
Our mission is to be a growing
Australian public company
specialising in biological
products benefiting Australian
and international health care.
Throughout the year, CSL has continued to focus on
developing the skills and leadership capabilities of its
employees, and on building a quality work environment.
To enhance shareholder wealth, we will:
• Meet customers’ expectations with quality
products and excellent service;
• Invest in the development of new products and
the introduction of those products into Australian
and international markets;
• Pursue collaborations which build on our
scientific, manufacturing and marketing expertise;
• Develop a flexible, committed and skilled
workforce rewarded for excellence and innovation;
• Ensure our workplace is healthy for employees
and the community;
• Strive for continuous improvement in all areas
of our business.
18
Our People
Our senior leadership development program, "Leading for
Competitive Advantage" continues to provide our
leadership group opportunities for involvement in CSL’s
cultural and strategic development. During the next year,
this program will move into its third phase which will
specifically focus on developing individual skills.
We have continued to develop the "Frontline Management
Initiative" we began last year. This program is being
carried out in collaboration with the Royal Melbourne
Institute of Technology (RMIT) and is expanding the skills
and leadership capacity of our middle management group.
Both our senior leadership and middle management
programs are leading edge initiatives through which CSL
leaders benefit from exposure to the latest management
and leadership thinking.
Staff Opinion Survey
In what has become a bi-annual event, all CSL employees
were invited to participate in our 1999 opinion survey.
Survey results were distributed to employees, and each
division gave presentations about divisional results.
The Australian Employees Survey Group of 226 Australian
private and public organisations provides benchmarks
against which we are able to check our results. In ten
of the twelve categories that we included in our 1999
survey, CSL achieved equal or better results than those
recognised benchmarks.
Corporate Human Resources Course Coordinator (standing left), Helen Politis and the Course Facilitator,
Catherine Smithson (right) introduce a module of CSL’s leadership development program.
CSL’s opinion surveys have also enabled us to identify
areas of progress since 1994 when the Company was
privatised. Since that time, we have recorded significant
increases in positive responses to more than 25% of our
survey questions.
Feedback from our surveys has also enabled us to review
areas requiring improvement and introduce new strategies
where they have been needed.
A Quality Work Environment
Further initiatives to develop a quality work environment
are being developed as part of CSL’s latest Enterprise
Agreement, currently being negotiated with CSL employee
representatives and unions.
The 1999 Enterprise Agreement will deliver greater
workplace flexibility, as well as new pay for
performance provisions. These and other positive
outcomes are being achieved as the result of CSL’s
consultative and cooperative approach to the development
of a quality workplace.
Initiatives have been put in place as part of our "preferred
employer" strategy to enable CSL to maintain a quality
work environment.
The range of incentives include an extensive
communication and training program against harassment
in the workplace, the further development of our equal
employment opportunities, and new remuneration
packaging arrangements. These and other initiatives
enhance our recognised position as a progressive and
"family-friendly" organisation.
Our People
19
Controlled Entities
The CSL Group
CSL Limited
ACN 051 588 348
Coselco Insurance
Pty Ltd
Filtron Pty Ltd
CSL International
Pty Ltd
CSL (New Zealand)
Limited
Iscotec AB
Cervax Pty Ltd
ACN 006 691 925
ACN 051 958 377
ACN 066 194 938
Incorporated in NZ
Incorporated in Sweden
ACN 079 857 177
100 %
100 %
100 %
Filtron Pty Ltd is
operationally part of the
Biosciences Group.
CSL UK Limited
Incorporated in the
United Kingdom
100 %
100 %
74 %
CSL (New Zealand) Limited is
operationally part of the CSL
Pharmaceutical, Bioplasma
and Veterinary Divisions and
the Biosciences Group.
100 %
CSL US Inc
JRH Europe Limited
Incorporated in the USA
Incorporated in the
United Kingdom
100 %
JRH Biosciences Inc
JRH Biosciences
Inc is operationally
part of the
Biosciences Group.
100 %
Biocor Animal
Health Inc
100 %
100 %
CSL Limited, based in Melbourne, is a public company listed on
the Australian Stock Exchange and the parent company of the
CSL Group. All subsidiary companies in the Group are wholly
owned by the parent company except Cervax Pty Ltd, a
company in which CSL has a majority shareholding.
Coselco Insurance Pty Ltd, registered in Melbourne, provides a
range of insurances for CSL.
Filtron Pty Ltd, based in Melbourne, is operationally part of CSL’s
Biosciences Group. Filtron manufactures quality Australian serum
used to produce cell culture media.
CSL (New Zealand) Limited, based in Auckland, is the New
Zealand marketing arm for CSL’s Pharmaceutical, Bioplasma and
Veterinary Divisions and the Biosciences Group. The company
also manufactures a range of veterinary viral vaccines at a
dedicated plant in Upper Hutt, near Wellington.
Iscotec AB, a Swedish company, is a wholly owned subsidiary
of CSL. Iscotec has technology that enhances the immune
response to vaccines.
Cervax Pty Ltd, 74% owned by CSL Limited, is a
company formed to undertake a specific research and
development project.
CSL International Pty Ltd, located in Melbourne, is a holding
company for the international operations of the CSL Group.
20
Controlled Entities
Biocor Animal
Health Inc is
operationally part
of the Veterinary
Division.
CSL Bioplasma Inc
100 %
CSL UK Limited, based in London, is a subsidiary of CSL
International Pty Ltd. CSL US Inc, and JRH Europe Limited are
subsidiaries of CSL UK Limited.
JRH Europe Limited, based in London, is a subsidiary of CSL
UK Limited and is the European sales and marketing agent for
JRH Biosciences Inc.
CSL US Inc is a wholly owned subsidiary of CSL UK Limited.
JRH Biosciences Inc, Biocor Animal Health Inc and CSL
Bioplasma Inc are subsidiaries of CSL US Inc.
JRH Biosciences Inc is a subsidiary of CSL US Inc. Based in
Kansas in the United States, JRH is one of the largest
manufacturers of specialised cell culture media in the world.
Operationally part of CSL’s Biosciences Group, JRH has
manufacturing sites in Kansas and Pennsylvania.
Biocor Animal Health Inc, is a wholly owned
subsidiary of CSL US Inc. Based in Omaha, Nebraska,
in the United States, Biocor manufactures and markets
veterinary vaccines.
CSL Bioplasma Inc, is a wholly owned subsidiary of
CSL US Inc. CSL Bioplasma Inc has been established to
undertake clinical trial programs related to registration of CSL’s
portfolio of plasma products in the United States.
Organisation Chart
Managing Director
Dr Brian McNamee
Company Secretary & General Counsel
Peter Turvey
Research and Development
Corporate Projects
Professor Ian Gust, AO - Director
Stan McLiesh - General Manager
Bob Moses - Vice President
Finance
Tony Cipa - General Manager
Business Services
David Doherty - General Manager
Each member of CSL’s Executive
Management Group reports
directly to the Managing Director.
Bioplasma Division
Peter Turner - General Manager
Human Resources
Kelvin Milroy - Corporate Manager
Veterinary Division
Dr Hugh Middleton - General Manager
Biosciences Group
Paul Bordonaro - President
Organisation Chart
21
Colin J Harper, CA (Scots), FAICD - Chairman (age 68)
- Corporate Governance, Finance (resident in Victoria).
Colin J Harper
Brian A McNamee
Mr Harper was appointed Chairman of the Commonwealth
Serum Laboratories Commission in November 1988. He
was formerly General Manager and Chief Executive of the
merchant bank Australian United Corporation Ltd. Since
1976, Mr Harper has been a professional non-executive
director and has gained experience by serving at various
times on the Boards of more than twenty companies.
Mr Harper is currently a Director of Australia and New
Zealand Banking Group Limited, from which he will retire
on 30 September 1999.
Brian A McNamee, MB, BS - Managing Director (age 42)
- Pharmaceutical Industry, Medicine (resident in Victoria).
Peter H Wade
Elizabeth A Alexander
Dr McNamee is the Chief Executive and Managing
Director of CSL. Dr McNamee completed Bachelor of
Medicine and Bachelor of Surgery Degrees at the
University of Melbourne in 1979. Before taking up his
present position in 1990, Dr McNamee was Managing
Director and Chief Executive of Pacific Biotechnology
Limited in Sydney, NSW (1988-89), General Manager,
Faulding Product Divisions, F H Faulding & Co Limited,
Adelaide, South Australia (1984-87), and International
Product Manager, Dr Madaus & Co, based in Cologne,
West Germany (1982-84). He is a Director of the Royal
Botanic Gardens Board.
Peter H Wade, FCPA, FAICD - Deputy Chairman (age 65)
- Finance, Management (resident in Victoria).
22
C Ian R McDonald
Ian A Renard
Kenneth J Roberts
Arthur C Webster
Mr Wade was elected to the Board in 1994. He had
previously served CSL as a Commissioner and Director
from 1985 to 1993 including a period as Acting Chairman
during 1988. Mr Wade is Chairman of Acacia Resources
Limited, a Director of Tabcorp Holdings Limited, former
Managing Director, North Limited and former Chairman,
Energy Resources of Australia Limited, and Gunns
Kilndried Timber Industries Limited.
Elizabeth A Alexander, AM. BCom, FCPA, FAIM, FCA,
FAICD (age 56) - Accounting (resident in Victoria).
Miss Alexander was appointed to the CSL Board in July
1991. She is a Partner of PricewaterhouseCoopers, and a
Director of Amcor Limited and Boral Limited. She is
National Vice President of the Australian Institute of
Company Directors, a Member of the Corporations and
Securities Panel of the Australian Securities and
Investments Commission, past National President of the
Australian Society of Certified Practising Accountants, a
Member of the Council of the Australian Defence Force
Academy and a Member of the Deputy Prime Minister’s
Trade Policy and Advisory Committee. She was a Member
of the National Commission of Audit. Miss Alexander is
Chairman of the Audit and Risk Management Committee.
C Ian R McDonald, BSc (Hons) (age 66)
- International Pharmaceutical Industry (resident in NSW).
Mr McDonald was appointed a Director of CSL in October
1992. Mr McDonald was formerly Group Vice President,
Pharmaceuticals, of Syntex Corporation, President of
Syntex Pharmaceuticals International Limited, Vice
President Asia Pacific of G D Searle & Co and a former
Director of Agen Limited Group. He is a past Managing
Director of Searle Australia Pty Limited and Mead Johnson
Pty Limited, and is a Director of Rothschild Bioscience
Managers Limited. Mr McDonald is a Member of the Audit
and Risk Management Committee.
Kenneth J Roberts, AM, BEc, FCPA, FAIM, FAICD
(age 61) - International Pharmaceutical Industry,
Management, Marketing (resident in NSW).
Mr Roberts was appointed to the Board in February 1996.
He was formerly Chairman and Managing Director of
Wellcome Australasia and Director of Marketing
Development for the Wellcome worldwide group. He is
Managing Director of the Australian Technology Group
Limited, Chairman of the Royal Australasian College of
Physicians Research and Education Foundation and a
Member of the Boards of the Australian Genome Research
Facility and the University of Queensland Centre for Drug
Design and Development.
Arthur C Webster, BVSc, DipBact (Lond) (age 55)
- Animal Health Industry, Commerce (resident in NSW).
Dr Webster was appointed to the CSL Board in March
1998. He was formerly Technical Director then Managing
Director of the animal health company Cyanamid Webster
Pty Ltd and a Member of the Board of Governors,
University of Western Sydney.
Company Secretary and General Counsel
Peter R Turvey, BA/LLB
Ian A Renard, BA, LLM, FAICD (age 53)
- Law (resident in Victoria).
Mr Renard was appointed to the CSL Board in August
1998. He is a Partner of Arthur Robinson & Hedderwicks,
solicitors, practising in company and commercial law. He
is a Director of AMP Limited, Newcrest Mining Limited,
Ericsson Australia Pty Ltd and Hillview Quarries Pty Ltd,
and was formerly a Director of North Limited. Mr Renard is
also President of the Library Board of Victoria, a Member
of the Council of the University of Melbourne and a
Member of the Board of Governors of Melbourne
University Private Limited.
23
This statement outlines the Company’s main Corporate
Governance practices, all of which were in place
throughout the financial year.
Shareholders
The Board of Directors seeks to ensure that the
shareholders are informed of all major developments
affecting the economic entity’s state of affairs.
The participation of shareholders at the Annual General
Meeting is appreciated.
The Board of Directors and its Committees
The Board is responsible for the corporate governance of
the Company including strategic direction, establishing
operational criteria and monitoring the achievement of
objectives and conduct of operations. The Board delegates
responsibility for executive management of the Company to
the Managing Director who has regard to matters reserved
for the Board, and who is accountable to the Board. The
Board reports to the shareholders.
The Board is responsible for the internal control framework
and has developed a set of policies, procedures, practices
and various committees which set criteria and enable the
Board to monitor compliance with statutory, legal,
stakeholder and best practice requirements. This
framework is regularly reviewed.
The Board delegates certain powers to Committees which
assist it by examining various issues and making
recommendations to the Board. Committees of the Board
are the Audit and Risk Management Committee,
Remuneration Committee, Securities Committee and
Nomination Committee. The Board also delegates specific
responsibilities to ad hoc committees of directors from time
to time.
Composition of the Board
Profiles of the directors of the Company, including details of
their qualifications, age and experience, are set out on
pages 22 and 23 of this Annual Report.
The Managing Director is CSL’s only executive director. The
Chairman and all of the other directors are non-executive
and are independent. No director acts as a nominee or
representative of any particular shareholder.
Nomination Committee
The Nomination Committee is responsible for reviewing the
Board’s membership and making recommendations on new
appointments.
The Nomination Committee is comprised of the full Board.
In the event of the Nomination Committee inviting a person
to become a Director, that person will be subject to election
by the shareholders at the next general meeting in
accordance with Corporations Law.
The composition of the Board is determined based on the
following principles:
• Non-executive directors should be independent of the
Company and its management;
• The Chairman should not be a current or past executive
of the Company;
• The majority of the Board should comprise directors
who are independent and non-executive; and
• The Board should comprise directors who represent a
broad range of expertise, qualifications, experience
and age.
Criteria for selection of non-executive directors include
ability, experience and specific skills such as strengths in
the pharmaceutical industry, financial, legal, marketing or
other areas, including international experience. When a
vacancy is foreseen or where it is considered that the
Board would benefit from the services of a new director
with particular expertise, unless an obvious candidate
exists, a panel of candidates with appropriate skills and
experience is considered. Appointees should desirably be
able to serve for at least eight years before retiring from the
Board no later than the AGM following their 68th birthday.
Membership and performance of the Board is reviewed
annually, six months before the Annual General Meeting.
The composition of the Board is reviewed in relation to the
appropriate mix of skills and experience.
Directors have adopted guidelines which, in addition to the
above, relate to the size of the Board and maximum length
of service on the Board (15 years). Procedures to bring
about the retirement or removal of a director should there
be less than adequate contribution to the Board are
included in the guidelines. These guidelines also contain a
policy regulating the dealings by directors in securities of
the Company.
Independent professional advice may be sought by
directors, at the Company's expense, to allow directors to
carry out their duties. Prior approval of the Chairman is
required. The director should give reasons for the request,
nominate the person from whom advice is to be sought and
obtain a quote. Independent professional advice obtained
this way will be made available to the whole Board.
The composition, powers and authority of the Boards of
controlled entities are subject to the approval of the
parent Board.
24
Audit and Risk Management Committee
The Audit and Risk Management Committee is comprised
of three to five non-executive directors appointed for terms
of three years. Membership is confirmed annually. The
names of current Committee members are included in
the directors’ profiles. The internal and external auditors,
Managing Director, General Manager Finance, General
Manager Business Services, and the Manager - Internal
Audit, attend all Audit and Risk Management
Committee meetings.
The Board has policies in place which require regular
reports from the insurance subsidiary, Coselco Insurance
Pty Ltd, and an executive committee responsible for
managing areas of risk within the Company. This
committee, which reports to the Audit and Risk
Management Committee, is responsible for maintaining
oversight of risk assessment and management practices as
they apply to systems, the environment, health, safety,
product liability, physical assets, security, disaster recovery,
risk financing and compliance. Borrowings, guarantees and
capital expenditure programs beyond minor levels require
Board approval.
Procedures are in place to ensure immediate reporting to
the Board of any significant occurrences.
Responsibilities of the Audit and Risk Management
Committee
The primary objective of the Audit and Risk Management
Committee is to assist the Board to discharge effectively its
fiduciary responsibilities with regard to accounting, control
and reporting practices of the Group, which comprises the
internal control environment and management of
stewardship over corporate assets.
In addition, the Audit and Risk Management
Committee will:
• Enable non-executive directors to maintain oversight
of the Company’s finances and confidence in the
financial reports;
• Enhance the credibility and objectivity of financial reports
with other interested parties including shareholders,
regulators and creditors;
• Provide an independent communication forum for
directors, management and auditors in relation to the
financial affairs of the Company, and thus maintain the
independence of a strong audit function;
• Review and recommend the adoption of the annual
and half-yearly accounts;
• Review risk management and report to the Board on its
effectiveness in safeguarding the Company’s assets.
The appointment of Arthur Andersen as Auditor took
effect on 28 June 1994, following a competitive tendering
process. The performance of the auditor is reviewed by
the Audit and Risk Management Committee.
Remuneration Committee
The Remuneration Committee is comprised of all nonexecutive directors. The Committee meets at the
commencement of each financial year in relation to the
remuneration of the Managing Director and General
Managers, and from time to time as required on other
business within its responsibility.
The responsibilities of the Remuneration Committee are:
• Deciding the remuneration of non-executive directors in
accordance with Rule 88 of the Company’s Constitution
and the remuneration of directors for extra services in
accordance with Rules 89 and 90;
• Deciding the remuneration of the Managing Director in
accordance with Rule 100;
• Considering and recommending to the Board the terms
of the service contract of the Managing Director;
• Endorsing remuneration proposals of the Managing
Director in relation to General Managers;
• Overseeing of the Company’s Senior Executive
Share Ownership and General Employee Share
Ownership Plans.
Executives are remunerated on the basis of a salary
competitive with market rates and a performance-based
incentive related to individual, divisional and corporate
performance during the past financial year, on the
recommendation of the Managing Director. A Senior
Executive Share Ownership Plan ("SESOP") was approved
by shareholders in general meeting. The SESOP was
modified at a subsequent general meeting ("SESOP II").
All General Managers and certain key executives
participate. The Board maintains a direct interest in
succession planning for senior managerial positions.
Remuneration of Directors
Non-executive directors’ fees of an amount not exceeding
$400,000 in total are provided for in the Company’s
Constitution. This sum can only be increased by the
Company at a general meeting. Non-executive directors’
fees for 1998-99 are contained in the notes to the
accounts. Remuneration for any extra services by individual
directors may be approved under Rules 89 and 90 from
time to time.
Continued on page 26
25
CSL’s volunteer Emergency Response Group team includes (left to right) Peter Schoofs, Steve Gwyer and Ian Liddle.
All members of the team have been trained to manage any hazardous workplace situations.
Continued from page 25
A non-executive directors’ retirement benefit plan was
approved by shareholders in general meeting of the
Company as a result of which directors have agreements
with the Company which conform to the Constitution of the
Company in respect of entitlements.
The Managing Director has a contract of employment with
the Company which contains, inter alia, the arrangements
regarding payment of remuneration in the form of salary
and incentive awards. Shareholders at general meetings
have approved the issue to the Managing Director of a total
900,000 options, with matching interest free loans, under
the terms of the SESOPs. A proportion of these options has
been exercised.
Securities Committee
A Securities Committee, comprising any two directors, is
responsible for the allotment, registration and transfer of
securities, approving releases to the Australian Stock
Exchange and associated media, which are made in
accordance with the Corporations Law and Listing Rules,
matters relating to the location of the Share Register and
any other formalities which may be required in relation to
matters affecting the share capital.
Year 2000 Exposure
The Company has made two statements concerning its
potential exposure to the Year 2000 problem to the
Australian Stock Exchange on 26 June 1998 and 26 March
1999. Copies of these statements are available on request
from the Company Secretary.
A multi-disciplinary corporate project team coordinates all
Year 2000 activities, the objective of which is to ensure that
the Company’s business operations will not be interrupted
as a consequence of century dating problems with systems
and/or equipment, and to put in place contingency plans
which will allow the Company’s business operations to
continue uninterrupted as a consequence of century dating
problems with systems and/or equipment.
The tasks being undertaken to complete the project are at
various stages of completion.
Ethical Standards
All directors, executives, managers and employees are
expected to act with integrity and objectivity and maintain
appropriate ethical standards which are articulated in the
Company’s Code of Ethical Practices.
The Company abides by the Code of Conduct of the
Australian Pharmaceutical Manufacturers Association, the
Code of Good Manufacturing Practice, the Code of Good
Laboratory Practice and similar standards applicable to the
pharmaceutical and veterinary industries.
26
Our continuing aim is to ensure that CSL’s business operations
are carried out in workplaces that are safe and healthy for our
employees, for the community and for the environment.
Occupational Health and Safety
The Environment
It is CSL’s policy to comply with relevant health and safety
laws and regulations in all the jurisdictions in which we
are located and to ensure our facilities continue to operate
to the satisfaction of the regulatory authorities concerned.
Each CSL site is involved in activities aimed at minimising
the impact of our operations on the community and
the environment.
Our employees are encouraged to participate in a wide
range of activities through which we maintain and develop
safe and healthy workplaces, supported by policies,
guidelines and standard operating procedures.
This includes the Health, Safety and Environment Advisory
Committee, and related networks throughout the Company
in which employees are actively encouraged to participate
and which have appropriate union representation.
During the year, CSL’s Bioplasma Division joined the select
group of organisations to achieve advanced level
SafetyMAP accreditation from the Victorian WorkCover
Authority (VWA). Established to provide a benchmark
for assessing and improving health and safety
management processes, this award is given only to
organisations that can demonstrate an effective system
for the management and delivery of occupational health
and safety in the workplace.
CSL administers rehabilitation programs which assist
employees injured in the workplace to return to work in
the shortest possible time. Our lost time injury frequency
rates (LTIFRs) and medical treatment injury frequency
rates have continued to fall. For instance, our LTIFR fell
from 26 per million hours worked in 1996, to 14 in 1997
and 9 in 1998.
CSL maintains a number of agreements for the proper
disposal of solid and liquid wastes. At each location, we
have agreements for the discharge of liquid waste to the
sewer, and with licensed operators for the safe disposal of
biohazardous and other forms of solid waste.
We regularly review waste management practices looking
for new ways of waste minimisation, recycling and
material re-use.
The Australian National Pollutant Inventory, coordinated by
the Federal Government, requires all major manufacturing
operations to report on atmospheric emissions for certain
specified chemicals. In this regard, CSL’s only requirement
is to report on combustion products from our natural
gas boilers.
The Company has also been pro-active at reviewing its
use of electricity, gas, water and other inputs to ensure
their efficient use and to reduce operational costs. As an
example, our veterinary plant in Upper Hutt, New Zealand
has managed to reduce monthly water consumption by
more than 30%.
Workers compensation costs (and current outstanding
liabilities) have fallen by more than 50% since 1994 and
are expected to fall again this year. This improvement in
performance has been reflected in a reduction in our
payment for workers compensation insurance.
27
Finance Report
Strong growth in revenues and profitability was sustained during
the 1998-99 year. Revenues increased by 16% to $424.9m with all
business units recording growth over the previous year.
Of particular note is the contribution to the Group from international
revenues which increased 41.6% during the year to $97.5m. Nearly
one quarter of Group revenue is now generated from sales to
customers located outside Australia.
Operating Profit
Dividend
Operating profit before interest and tax increased by 17.6%
to $68.7m.
The directors have declared a final dividend of $18.4m (14
cents per share) fully franked. The total dividend for the
year of $27.6m represents a payout of 58% of net profit
after tax consistent with prior years.
This is consistent with the Group's stated objective of
continued growth in profitability. Profit after tax of $47.4m
was an increase of 15.8% over the profit after tax and
before abnormals recorded last year. Group investment in
research and development grew by 4.3% to $40.8m.
Earnings Per Share
Earnings per share of 36.1 cents represents an increase of
16% over the prior year figure (excluding the abnormal
item) of 31.2 cents.
Shareholders Funds
Shareholders funds increased by 6.3% to $414.9m. Total
assets of $561.5m were 7.2% higher than last year. This
reflects the revaluation of land and buildings at 30 June
1999 which contributed $8.4m of the increase. Net
tangible assets per share have increased by 6.1% to $3.15.
28
Finance Report
Cash Flow
Working capital management continues to be a priority in
all CSL Group companies. The increase in inventory
reflects the need for the Group to continue to invest in
future growth through adequate stocks of new products.
Capital investment during the year was $39.0m. Another
strong year generated cash flow from operations of
$72.4m. Net cash on hand (cash and investments less
borrowings) increased by $9.2m to $36.6m ensuring that
the Company continues to be well placed to take
advantage of investment opportunities that may arise.
Five Year Summary
1998-99
1997-98
1996-97
1995-96
1994-95
Total revenue
424.9
366.7
318.1
290.6
256.8
Sales revenue
413.5
353.5
305.0
281.1
250.4
Research and development
40.8
39.1
36.6
30.2
27.1
Operating profit before interest and income tax
68.7
58.5
48.1
41.6
33.2
Operating profit after tax before abnormal item
47.4
40.9
35.2
29.0
24.5
All figures are in $A million unless otherwise stated.
Abnormal income tax credit
3.9
Profit after tax and abnormals
47.4
44.8
Capital investment
39.0
21.3
16.6
16.2
31.4
Total assets at 30 June
561.5
523.8
511.1
474.7
472.3
Shareholders’ funds at 30 June
414.9
390.3
363.0
341.6
331.2
Net tangible assets per share at 30 June ($)
3.15
2.97
2.79
2.62
2.53
Weighted average number of shares (million)
131.4
131.1
130.0
130.0
130.0
Earnings per share (cents)
36.1
34.2
27.0
22.3
18.9
Dividend per share (cents)
21.0
18.0
15.5
13.0
12.0
CSL Monthly Share Price: June 1994 to June 1999
$15.00
June 1999
$14.00
$13.00
$12.00
June 1998
$11.00
$10.00
June 1997
$9.00
$8.00
$7.00
June 1996
$6.00
$5.00
June 1995
$4.00
June 1994
$3.00
$2.00
J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J
Five Year Summary
29
Share Information
CSL Limited
Substantial Shareholders
Issued Capital:
See page 31 of this Annual Report.
Ordinary shares: 131,652,084
Voting Rights
Details of Incorporation
At a general meeting, subject to restrictions imposed on
significant foreign shareholders and some other minor
exceptions, on a show of hands each shareholder present
has one vote. On a poll each shareholder present has one
vote for each fully paid share held.
CSL’s activities were carried on within the Commonwealth
Department of Health until the Commonwealth Serum
Laboratories Commission was formed as a statutory
corporation under the Commonwealth Serum Laboratories
Act 1961 (Cth) [the CSL Act] on 2 November 1961. On 1
April 1991, the Corporation was converted to a public
company limited by shares under the Corporations Law of
the Australian Capital Territory: it was renamed
Commonwealth Serum Laboratories Limited. These
changes were brought into effect by the Commonwealth
Serum Laboratories (Conversion into Public Company) Act
1990 (Cth). On 7 October 1991, the name of the Company
was changed to CSL Limited. The Commonwealth
divested all of its shares by public float on 3 June 1994.
The CSL Sale Act 1993 (Cth) amends the CSL Act to
impose certain restrictions on the voting rights of persons
having significant foreign shareholdings, and certain
restrictions on the Company itself.
In accordance with the CSL Act, CSL’s Constitution
provides that the votes attaching to significant foreign
shareholdings are not to be counted when they pertain to
the appointment, removal or replacement of more than
one-third of the directors of CSL who hold office at any
particular time. A significant foreign shareholding is one
where a foreign person has a relevant interest in 5% or
more of CSL’s voting shares.
Significant Foreign Shareholdings
There are no significant foreign shareholdings as at
30 June 1999.
CSL ordinary shares have been traded on the Australian
Stock Exchange since 30 May 1994. Melbourne is the
Home Exchange.
Distribution of Shareholdings as at 30 June 1999
Range
Holders
Shares
% Total Shares
1 - 1000
14,220
11,443,935
8.70
1001 - 5000
12,198
29,553,000
22.45
5001 - 10000
999
7,465,633
5.67
10001 - 100000
415
10,478,116
7.95
100001 and over
89
72,711,400
55.23
27,921
131,652,084
100.00
34
216
Total Shareholders
Number of shareholders with
less than a marketable parcel of 38 shares
(based on the share price at 30 June 1999).
30
Share Information
Share Registry
Computershare Registry Services Pty Ltd
Level 12, 565 Bourke Street
Melbourne Victoria 3000
Telephone: 03 9611 5711
Facsimile: 03 9611 5710
GPO Box 2975EE
Melbourne Victoria 3001
1800 646 882 outside Melbourne
Shareholders with inquiries should telephone or write
to the Share Registry at the above address.
Separate shareholdings may be consolidated by
advising the Share Registry in writing.
Change of address should be notified to the Share
Registry in writing without delay. Shareholders who are
Broker sponsored on the CHESS sub-register must notify
their sponsoring Broker of a change of address.
Direct payment of dividends into a nominated account
may be arranged with the Share Registry.
The Annual Report is produced for your information.
However, should you receive more than one or wish to be
removed from the mailing list for the Annual Report, please
advise the Share Registry. You will continue to receive
Notices of Meetings and Proxy.
The Annual Meeting will be held at the Function Centre,
National Tennis Centre, Melbourne Park, Batman Avenue,
Melbourne at 10:00am on Thursday 14 October 1999.
CSL’s Twenty Largest Shareholders as at 30 June 1999
Shareholder
Account
Shares
% Total Shares
1
Westpac Custodian Nominees Limited
11,843,122
9.00
2
National Nominees Limited
7,862,189
5.97
3
Chase Manhattan Nominees Limited
4,409,601
3.35
4
AMP Life Limited
3,834,012
2.91
5
Citicorp Nominees Pty Limited
3,180,865
2.42
6
MLC Limited
2,882,572
2.19
7
SAS Trustee Corporation
2,666,068
2.03
8
Perpetual Trustees Nominees Limited
2,388,265
1.81
9
Queensland Investment Corporation
10
BT Custodial Services Pty Limited
1,978,891
1.50
SUB CUS
1,448,731
1.10
11
Perpetual Trustees Australia Limited
1,412,239
1.07
12
Permanent Trustee Australia Limited
FIR0027
1,383,312
1.05
13
FIR0020
1,326,711
1.01
14
FIR0018
1,204,244
0.91
15
ANZ Nominees Limited
16
Tower Life Australia Limited
1,066,192
0.81
994,355
0.76
17
GIO Personal Investment Services Limited
955,339
0.73
18
AMP Nominees Pty Limited
927,093
0.70
19
Perpetual Trustees Victoria Limited
IMPUTA
828,400
0.63
20
Perpetual Trustees Victoria Limited
SUPER
804,750
0.61
In addition, substantial shareholding notices
have been received from the following:
Maple-Brown Abbott Limited
9,626,534
7.31
AMP Limited
8,379,674
6.36
31
CSL Limited
International Offices
Registered Head Office
45 Poplar Road
Parkville
Victoria 3052 Australia
Telephone: + 61 3 9389 1911
Facsimile: + 61 3 9389 1434
CSL (New Zealand) Limited
Bioplasma Division
Biosciences Group
Level 4, Building 10
666 Great South Road
Central Park, Penrose
Auckland 6
New Zealand
Telephone: +64 9 579 8105
Facsimile: +64 9 579 8106
Bioplasma Division
189 Camp Road
Broadmeadows
Victoria 3047
Telephone: + 61 3 9246 5200
Facsimile: + 61 3 9246 5299
State Sales Offices
Victoria and Tasmania
45 Poplar Road
Parkville
Victoria 3052
Telephone:
- Pharmaceutical: + 61 3 9389 1408
- Veterinary:
+ 61 3 9389 1251
- Biosciences:
+ 61 3 9389 1644
Facsimile:
+ 61 3 9389 1727
New South Wales
25-27 Paul Street North
North Ryde
New South Wales 2113
Telephone: (02) 9887 4433
Facsimile: (02) 9887 3171
Queensland
14 Dividend Street
Mansfield
Queensland 4122
Telephone: (07) 3849 6140
Facsimile: (07) 3849 6141
South Australia and Northern Territory
11 Coongie Avenue
Edwardstown
South Australia 5039
Telephone: (08) 8276 3200
Facsimile: (08) 8277 0556
Western Australia
293-297 Fitzgerald Street
Perth
Western Australia 6000
Telephone: (08) 9328 7322
Facsimile: (08) 9227 6196
32
CSL (New Zealand) Limited
Veterinary Division
2-6 Shakespeare Avenue
Upper Hutt
New Zealand
Telephone: +64 4 527 9088
Facsimile: +64 4 527 9332
CSL UK Limited
JRH Europe Limited
1st Floor, The Ice House
Dean Street
Marlow
Buckinghamshire SL7 3AB
England
Telephone: +44 1628 474 739
Facsimile: +44 1628 474 665
JRH Biosciences Inc
13804 W. 107th Street
Lenexa
Kansas 66215 USA
Telephone: +1 913 469 5580
US Toll Free: +1 800 255 6032
Facsimile: +1 913 469 5584
Biocor Animal Health Inc
2720 North 84th Street
Omaha
Nebraska 68134 USA
Telephone: +1 402 393 7440
Facsimile: +1 402 393 4712
Major pharmaceutical products
Major veterinary products
Vaccines
For prevention of:
Vaccines
For prevention of:
Influenza
Pneumococcal infection
Diphtheria, tetanus and whooping cough
Diphtheria and tetanus
Tetanus
Hepatitis B infection
HIB disease
Typhoid
Typhoid
Hepatitis A infection
Glanvac®
Cheesy gland and clostridial diseases,
selenium deficiency and vitamin B12
deficiency in sheep
Clostridial diseases in cattle and sheep
Scabby mouth in sheep
Viral and bacterial diseases in dogs
Viral diseases in cats
Bacterial diseases in horses
Botulism in cattle
Leptospirosis and clostridial diseases
in cattle
Fluvax®
Pneumovax*
Triple Antigen™
ADT®
Tet-Tox®
H-B-VAX II*
PedvaxHIB*
Typh-Vax® (Oral)
Typhim VI*
Vaqta*
Anti-infectives
For treatment of:
Flopen®
Moxacin®
Clavulin*
Fucidin*
Severe staphylococcal infections
Other products
For treatment of:
Antivenoms
Lonavar*
Envenomation
Delayed puberty (males)
Turners Syndrome (females)
Psoriasis
Inflammatory dermatoses
Multiple sclerosis
Daivonex*
Advantan*
Avonex*
Ultravac® 5 in 1
Scabigard®
Canvac®
Fevac®
Equivac®
Longrange®
Ultravac® 7 in 1
Diagnostic Products
For diagnosis of:
Bovigam®
Parachek®
Bovine tuberculosis
Johne’s disease in cattle
Major Biosciences Group products
used in cell culture
Sera
Media
Growth Factors
Major plasma products
Clotting Factors
For treatment of:
Factors VIII and IX
Bleeding disorders such as haemophilia
Immunoglobulins
For treatment of:
Intragam®
Infections and a range of autoimmune
diseases
Plasma volume
expanders
Albumex®
For use in:
The production of vaccines,
monoclonal antibodies and
recombinant proteins. Sera,
media and growth factors are
also extensively used in research
and diagnostic laboratories.
In cell culture, sera are used to grow cells in vitro (in the laboratory):
media are combined with sera or growth factors to grow cells in vitro.
Growth factors are a synthetic source of protein used to stimulate
cell growth.
Product Customisation
For treatment of:
The Biosciences Group offers expertise in media development,
large volume batches of product, media customisation and media handling systems to satisfy the specialised cell culture needs of the health
industry.
Acute blood loss (in emergency
trauma situations) and severe burns
Disease diagnostic systems
For detection of:
QuantiFERON® diagnostics
A range of disease states
Blood grouping reagents
For determination of:
People born deficient in Factor VIII and Factor IX experience severe bleeding into their joints and muscles which causes extreme pain as well as
long periods of impaired mobility. Treatment with clotting factors minimises bleeding episodes and allows people to lead active lives.
Blood groups
Blood group antibodies
For use in:
Pharmaceutical manufacture
Research laboratories
Intragam® is an intravenous immunoglobulin used to treat people with
congenital or acquired deficiencies which make them susceptible to
recurrent infections. Intragam® can allow these people to live healthier
lives as active members of the community.
* See inside back cover flap
Trade Marks
CSL, CSL Biosciences, Bioplasma, and JRH are all
trade marks of CSL Limited.
® Registered trade mark of CSL Limited.
™ Trade mark of CSL Limited.
* Trade marks of companies other than CSL
and referred to in this Annual Report are
listed below:
Biogen, Inc
Avonex
Bio-Technology General Corp.
Lonavar
Connaught Laboratories Limited
Tripacel
Leo Pharmaceutical
Products Limited AS
Daivonex
Fucidin
Merck & Co, Inc
Comvax
H-B-Vax II
M-M-R II
PedvaxHIB
Pentavax
Pneumovax
Vaqta
Varivax
Pasteur Mérieux Serums et Vaccins
Typhim VI
Schering AG
Advantan
SmithKline Beecham
(Australia) Pty Ltd
Clavulin
Swiss Serum and
Vaccine Institute Berne
Orochol
Yamanouchi Europe BV
Omnic
About CSL Limited
CSL Limited is an Australian public company specialising in the
development, manufacture and marketing of biologically based
health care products which benefit the community.
Our products include human and veterinary pharmaceuticals
(notably vaccines), products derived from human plasma,
diagnostics, and cell culture reagents.
Our aim is to continue building CSL in ways which will benefit
our shareholders.
We will accomplish this by:
• Meeting customers’ expectations with quality products and
excellent service;
• Investing in development of new products - and introducing
those products into Australian and international markets;
• Pursuing collaborations which build on our scientific,
manufacturing and marketing expertise;
• Developing a flexible, committed and skilled workforce
rewarded for excellence and innovation;
• Ensuring our workplace is healthy for employees and
the community;
• Striving for continuous improvement in all areas of our business.
CSL is firmly committed to research and development, quality
assurance and the development of international product and
marketing alliances.
The Company is the largest investor in Australian pharmaceutical
research and development, and one of the largest employers in
Australia’s pharmaceutical manufacturing industry.
The Company’s earnings are supported by established brands
with strong domestic market shares. The Company also has a
long-term contract with the Federal Government for the
manufacture of plasma-derived products for the Australian
Red Cross.
Continuing improvements in profitability will be achieved as CSL
expands its business nationally and internationally by actively
marketing products developed both by CSL and in collaboration
with partners.
Internet http://www.csl.com.au

CSL Limited

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