##### 



SECURITIES AND EXCHANGE COMMISSION FORM 20-F o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)
OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2004
 OR o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromto
 Commission file number 0-29962 Novogen Limited  Not Applicable
(Translation of Registrants name into English) New South Wales, Australia
(Jurisdiction of incorporation or organization) 140 Wicks Road, North Ryde, New South Wales 2113, Australia
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act. None
Securities registered or to be registered pursuant to Section 12(g) of the Act.Ordinary Shares*
American Depositary Shares, each representing five Ordinary Shares    *
    
    Not for trading, but only in connection with the registration of American Depositary Shares.   Not Applicable
 The number of outstanding Ordinary Shares of the issuer as at June 30, 2004 was 96,723,543. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
    
    þ
    
    No
    
    o
 Indicate bycheck mark which financial statement item the registrant has elected to follow. Item 17
    
    o
    
    Item 18 þ




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##### 



TABLE OF CONTENTS Forward Looking Statements
    
    
    1PART IITEM 1.
    
    Identity of Directors, Senior Management and Advisors
    
    
    2ITEM 2.
    
    Offer Statistics and Expected Timetable
    
    
    2ITEM 3.
    
    Key Information
    
    
    2ITEM 4.
    
    Information on the Company
    
    
    14ITEM 5.
    
    Operating and Financial Review and Prospects
    
    
    31ITEM 6.
    
    Directors, Senior Management and Employees
    
    
    40ITEM 7.
    
    Major Shareholders and Related Party Transactions
    
    
    52ITEM 8.
    
    Financial Information
    
    
    53ITEM 9.
    
    Offer and Listing Details
    
    
    54ITEM 10.
    
    Additional Information
    
    
    56ITEM 11.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    60ITEM 12.
    
    Description of Securities other than Equity Securities
    
    
    61PART IIITEM 13.
    
    Defaults, Dividend Arrearages and Delinquencies
    
    
    62ITEM 14.
    
    Material Modifications to the Rights of Security Holdersand the Use of Proceeds
    
    
    62ITEM 15.
    
    Controls and Procedures
    
    
    62ITEM 16.
    
    Reserved
    
    
    64ITEM 16A.
    
    Audit Committee Financial Expert
    
    
    64ITEM 16B.
    
    Code of Ethics
    
    
    64ITEM 16C.
    
    Principal Accountant Fees and Services
    
    
    64ITEM 16D.
    
    Exemptions from the Listing Standards for Audit Committees
    
    
    66ITEM 16E.
    
    Purchases of Equity Securities by the Issuer and Affiliated Purchases
    
    
    66
 i




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##### 



PART IIIITEM 17.
    
    Financial Statements  Not Applicable
    
    
    67ITEM 18.
    
    Financial Statements
    
    
    67ITEM 19.
    
    Exhibits
    
    
    67
 ii




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##### 



FORWARD-LOOKING STATEMENTS This Annual Report on Form 20-F includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the Security Exchange Act
of 1934, as amended. All statements other than statements of historical facts contained in this
Annual Report, including statements regarding the future financial position, business strategy and
plans and objectives of management for future operations, are forward-looking statements. The words
believe, may, will, estimate, continue, anticipate, intend, should, plan,
expect, and similar expressions, as they relate to the Company, are intended to identify
forward-looking statements. The Company has based these forward-looking statements largely on
current expectations and projections about future events and financial trends that it believes may
affect financial condition, results of operations, business strategy and financial needs. These
forward-looking statements are subject to a number of risks, uncertainties and assumptions,
including, without limitation, those described in Risk Factors and elsewhere in this Form 20-F,
including, among other things:  
    
    our inability to obtain any additional required financing or financing available to us
on acceptable terms;
    
    costs and delays in the development and/or receipt of FDA or other required
governmental approvals, or the failure to obtain such approvals, for our products;
    
    uncertainties in clinical trial results;
    
    competition and competitive factors;
    
    our inability to protect our patents or proprietary rights and obtain necessary rights
to third party patents and intellectual property to operate our business;
    
    our inability to operate our business without infringing the patents and proprietary
rights of others;
    
    general economic conditions;
    
    government regulation generally and the receipt of regulatory approvals;
    
    changes in industry practice; and
    
    one-time events.  These risks are not exhaustive. Other sections of the Annual Report on Form 20-F may include
additional factors which could adversely impact the business and financial performance. Moreover,
the Company operates in a very competitive and rapidly changing environment. New risk factors
emerge from time to time and it is not possible for us to predict all risk factors, nor can the
Company assess the impact of all factors on the business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those contained in any
forward-looking statements.You should not rely upon forward looking statements as predictions of future events. The Company
cannot assure you that the events and circumstances reflected in the forward looking statements
will be achieved or occur. Although the Company believes that the expectations reflected in the
forward looking statements are reasonable, it cannot guarantee future results, levels of activity,
performance or achievements. 1




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##### 



PART I Item 1. Identity of Directors, Senior Management and Advisors Item 1 details are not required to be disclosed as part of the Annual Report. Item 2. Offer Statistics and Expected Timetable Item 2 details are not required to be disclosed as part of the Annual Report. Item 3. Key Information Selected Financial Data The selected financial data at June 2004 and 2003 and for the years ended June 30 2004, 2003 and
2002, have been derived from the Consolidated Financial Statements of Novogen Limited (Company or
Group) included in this Annual Report and should be read in conjunction with and are qualified in
their entirety by reference to those statements and the notes thereto. The selected financial data
at June 30, 2002, 2001 and 2000 and for the years ended June 30, 2001 and 2000 have been derived
from Consolidated Financial Statements of the Company not included in this Annual Report. The
Consolidated Financial Statements in this Annual Report have been prepared in accordance with
accounting principles generally accepted in Australia (Australian GAAP) which varies in certain
respects from accounting principles generally accepted in the United States (US GAAP). A
reconciliation of the major differences between Australian GAAP and U.S. GAAP is included in Note
30 to the Consolidated Financial Statements. The Consolidated Financial Statements have been
audited in accordance with generally accepted auditing standards in the United States by the
Companys independent registered public accountants. The Companys fiscal year ends on June 30. As used throughout this Annual Report, the word
fiscal followed by a year refers to the 12 month period ending on June 30 of that year. For
example, the term fiscal 2004 refers to the 12 months ended June 30, 2004. Except as otherwise
indicated, all dollar amounts referred to in this Annual Report are at the consolidated level and
exclude inter-company amounts. 2




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##### 



Summary of Consolidated Statement of Financial Performance
(Australian GAAP) 2000
    
    2001
    
    2002
    
    2003
    
    2004
    
    2004(A$000)
    
    (A$000)
    
    (A$000)
    
    (A$000)
    
    (A$000)
    
    (US$000)Sales Revenue
    
    
    23,407
    
    
    
    26,663
    
    
    
    19,582
    
    
    
    19,630
    
    
    
    12,720
    
    
    
    8,843Other Revenue
    
    
    3,337
    
    
    
    3,569
    
    
    
    4,706
    
    
    
    4,626
    
    
    
    3,726
    
    
    
    2,590Total Revenue
    
    
    26,744
    
    
    
    30,232
    
    
    
    24,288
    
    
    
    24,256
    
    
    
    16,446
    
    
    
    11,433Net Loss Attributable
to Members of Novogen
    
    
    (13,679
    )
    
    
    (21,764
    )
    
    
    (14,654
    )
    
    
    (10,454
    )
    
    
    (10,935
    )
    
    
    (7,602
    )Net Loss
    
    
    (13,679
    )
    
    
    (21,764
    )
    
    
    (14,673
    )
    
    
    (10,666
    )
    
    
    (12,579
    )
    
    
    (8,745
    )Net Loss from
Operations per share
(Cents per share)
    
    
    (17.1
    )
    
    
    (25.4
    )
    
    
    (15.4
    )
    
    
    (10.9
    )
    
    
    (11.4
    )
    
    
    (7.9
    )Weighted average
number of Ordinary
shares used to calculate
Loss per share
    
    
    79,769,553
    
    
    
    85,646,585
    
    
    
    95,187,449
    
    
    
    95,472,984
    
    
    
    96,107,215Number of outstanding
Ordinary Shares at year
end
    
    
    84,836,262
    
    
    
    95,069,775
    
    
    
    95,412,714
    
    
    
    95,611,785
    
    
    
    96,723,543Adjusted to accord with
US GAAPSales Revenue
    
    
    22,519
    
    
    
    25,415
    
    
    
    17,644
    
    
    
    18,977
    
    
    
    11,774
    
    
    
    8,185Total Revenue
    
    
    25,856
    
    
    
    28,984
    
    
    
    21,107
    
    
    
    22,302
    
    
    
    14,188
    
    
    
    9,863Net (loss)
    
    
    (13,672
    )
    
    
    (21,813
    )
    
    
    (15,149
    )
    
    
    (10,259
    )
    
    
    (11,410
    )
    
    
    (7,932
    )Net (loss) from
operations per share
(Cents per share)
    
    
    (17.1
    )
    
    
    (25.4
    )
    
    
    (15.9
    )
    
    
    (10.7
    )
    
    
    (11.9
    )
    
    
    (8.3
    )
 Note: Sales revenue reported under U.S. GAAP has been adjusted to reflect the impact of
certain promotional expenditures in accordance with EITF Issue 00-14-Accounting for Certain Sales
Incentives. Prior years financial statements have been reclassified where appropriate. Certain
trade promotion expenditures are charged to marketing and selling expenses under Australian GAAP.
These expenses are for co-operative advertising whereby the Company pays for the retailers
promotion of the Companys products. This would typically take the form of instore price
promotions. The payment of co-operative advertising is usually made in the form of an agreed amount
taken off invoice.Under U.S. GAAP these amounts are treated as a discount to sales hence reducing
the reported 3




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##### 



sales figures. See Note 30 to the Consolidated Financial Statements for the
reconciliation to U.S. GAAP. Summary of Consolidated Statement of Financial Position at June 30, 2004
(Australian GAAP) 2000
    
    2001
    
    2002
    
    2003
    
    2004
    
    2004(A$000)
    
    (A$000)
    
    (A$000)
    
    (A$000)
    
    (A$000)
    
    (US$000)Cash and Cash
Equivalents
    
    
    28,820
    
    
    
    31,129
    
    
    
    39,937
    
    
    
    31,026
    
    
    
    58,431
    
    
    
    40,621Total Assets
    
    
    65,081
    
    
    
    61,206
    
    
    
    61,900
    
    
    
    50,812
    
    
    
    77,413
    
    
    
    53,818Net Assets
    
    
    52,724
    
    
    
    51,906
    
    
    
    54,045
    
    
    
    42,397
    
    
    
    69,211
    
    
    
    48,115Capital Stock
    
    
    100,276
    
    
    
    121,222
    
    
    
    137,249
    
    
    
    138,206
    
    
    
    170,276
    
    
    
    118,376Adjusted to accord with
US GAAPTotal Assets
    
    
    64,728
    
    
    
    60,949
    
    
    
    61,676
    
    
    
    50,812
    
    
    
    77,413
    
    
    
    53,818Shareholders Equity
    
    
    52,408
    
    
    
    50,974
    
    
    
    51,852
    
    
    
    41,069
    
    
    
    65,759
    
    
    
    45,716
 No dividends have been declared by the Company in the fiscal years included in this Annual
Report. The Company publishes its Consolidated Financial Statements expressed in Australian dollars. In
this Annual Report, references to US dollars or US$ are to the currency of the United States of
America (US) and references to Australian dollars or A$ are to the currency of Australia.
For the convenience of the reader, this Annual Report contains translations of certain Australian
dollar amounts into U.S. dollars at specified rates. These translations should not be construed as
representations that the Australian dollar amounts actually represent such U.S. dollar amounts or
could be converted into U.S. dollars at the rate indicated. Unless otherwise stated, the
translations of Australian dollars into U.S. dollars have been made at the rate of US$0.6952 =
A$1.00, the noon market buying rate in New York City for cable transfers in Australian Dollars as
certified for customs purposes by the Federal Reserve Bank of New York (the noon buying rate) on
June 30, 2004. The noon buying rate on
December 31, 2004 was US$0.7805 = A$1.00 4




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##### 



Exchange Rates for the six months to December 2004A$ versus US$ Month
    
    High
    
    LowJuly
    
    $
    0.7334
    
    
    $
    0.6980August
    
    $
    0.7245
    
    
    $
    0.7001September
    
    $
    0.7244
    
    
    $
    0.6800October
    
    $
    0.7478
    
    
    $
    0.7207November
    
    $
    0.7903
    
    
    $
    0.7447December
    
    $
    0.7805
    
    
    $
    0.7495
 Exchange Rates for the Last Five Years A$ versus US$ Fiscal Year
    
    AverageEnded June 30
    
    Rate2000
    
    $
    0.62372001
    
    $
    0.53202002
    
    $
    0.52362003
    
    $
    0.58362004
    
    $
    0.7109
 5




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##### 



Risk factors The following risk factors, in addition to the other information and financial data contained
in this Annual Report, should be considered carefully in evaluating the Company and its business.
The risks described below and elsewhere in this Annual Report are not intended to be an exhaustive
list of the general or specific risks involved, but merely identify certain risks that are now
foreseen by the Company. It must be recognized that other risks, not now foreseen, might become
significant in the future and that the risks which are now foreseen might affect the Company to a
greater extent than is now foreseen or in a manner not now contemplated. Unproven Phenolic Technology The Companys phenloic technology is relatively new and evolving. The successful development and
market acceptance of the Companys proposed products are subject to inherent developmental risks.
These include ineffectiveness or lack of safety, unreliability, failure to receive necessary
regulatory clearances or approvals, high commercial cost and preclusion or obsolescence resulting
from third parties proprietary rights or superior or equivalent products, as well as general
economic conditions affecting purchasing patterns. There can be no assurance that the Company and its marketing partners will be able to commercialize
successfully or achieve market acceptance of any of the Companys technologies or products, or that
the Companys competitors will not develop competing technologies that are less expensive or
otherwise superior to those of the Company. The failure to develop and market successfully new
products would have a material adverse effect on the Companys business, financial condition and
results of operations. Failure of Phenolic Drug Development Phenolic drug development is an entirely novel and unproven field of pharmaceutical drug
development and there is limited scientific understanding of phenolic technology on which the
Companys drug program is based. There can be no assurance that any of the compounds under
development by the Company will prove to be sufficiently efficacious, or sufficiently safe, or
sufficiently cost-effective to be commercially viable. The commercialization process of the
products currently undergoing clinical trials including the anti cancer drug candidate phenoxodiol
(NV-06) being developed by Marshall Edwards, Inc., a subsidiary of Novogen whose shares are
traded on the Nasdaq National Market, NV-04, the Companys cardiovascular drug candidate and
NV-07a the Companys anti inflammatory drug candidate, may be delayed if the U.S. Food and
Drug Administration (FDA) or another regulatory authority requires the expansion in the size and
scope of any clinical trial. It may take many years to complete the testing and failure can occur
at any stage in the process. Negative or inconclusive results or adverse medical events during a
clinical trial could cause Novogen to delay or terminate development efforts. Clinical trials also have a high risk of failure. A number of companies have suffered significant
setbacks in advanced clinical trials even after achieving promising results in earlier trials. If
the Company experiences delays in the testing or approval process or if
further clinical trials or
clinical trials involving a larger number of patients are required the commercial prospects of the
drugs under development could be impaired. 6




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Review of Product Registration FDA and other governmental approvals that may be granted to the Company will be subject to
continual review, and later discovery of previously unknown problems may result in withdrawal of
products from the market. For example, the Company has been notified by the Therapeutic Goods
Administration (TGA) that it is reviewing the current listing status of its dietary supplements
products in Australia. These products are currently listed as AUSTL listed complementary
medicine, under regulations of the TGA. Following the completion of this review, these products
could retain this status or be de-listed in
Australia. The Company believes that its products qualify for their current listing status as
AUSTL listed complementary medicine. However, no assurance can be given that the TGA will
ultimately reach this conclusion. In the event of an adverse determination by the TGA, the Company
will consider what further options are available to it. Moreover, if and when any FDA or other
governmental approval is obtained, the marketing and manufacture of the Companys products would
remain subject to extensive regulatory requirements administered by the FDA and other regulatory
bodies. Failure to comply with these regulatory requirements could, among other things, result in
fines, suspensions or withdrawal of regulatory approvals, operating restrictions and criminal
prosecution. Future Capital Needs and Uncertainty of Additional Financing The Companys capital requirements have been and will continue to be significant. The Company
anticipates that its existing resources will be adequate to fund the Companys capital and
operating requirements through at least the next 12 months based upon the Companys current
business plan. The Companys capital and operating requirements may vary materially from those now
planned due to a number of factors, including the level of expenditure required to expand its
production facilities and the Companys ability to produce its products in a cost-effective manner,
the rate at which the Company can introduce its products into new markets, the market acceptance
and competitive position of the Companys products, the success of the Companys research and
development efforts and the ability of the Company to satisfy applicable regulatory requirements.
The Company may need to raise additional capital to fund its future operations. There can be no
assurance that additional financing will be available when needed on terms acceptable to the
Company, or at all. If additional funds are raised by issuing equity securities, further dilution
to existing stockholders will result and future investors may be granted rights superior to those
of existing stockholders. Insufficient funds may prevent the Company from implementing its
business strategy or may require the Company to limit its operations significantly. Supply of Raw Material An important risk concerns the supply of raw material (red clover) used to produce the companys
consumer products. Numerous environmental factors (drought, disease, storms) can affect crop
quality and quantity. Although the Company has attempted to address this risk by sourcing clover
from regions of geographic diversity within Australia, and from areas of historically reliable
water supply, there can be no assurance of a continual supply of sufficient quantity and quality of
red clover. Interruptions in supply or
material increases in the cost of supply could have a
material adverse effect on the Companys business, financial condition and results of operations. 7




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The Company currently depends upon a number of sources within Australia to grow and to harvest the
raw materials required for the clover-based isoflavone products it produces. While the Company has
entered into supply contracts with many of these sources and maintains a close supervision of the
clover growing, there can be no assurance that the Company will be able to obtain increased
quantities of this material, if and when the Company requires. There can also be no assurance that
the crops of clover required by the Company will grow at all and not be subject to certain acts of
nature or other problems associated with farming a naturally produced plant. Such events would
have a material adverse effect on the Companys business, financial condition and results of
operations. The current stocks of clover, however, are adequate to cover the requirements of the Company for at
least the next 12 months. Dependence on Patents, Trade Secrets and Proprietary Rights The Companys success is dependent to a significant degree on whether it can obtain patents,
maintain trade secret protection and operate without infringing on the proprietary rights of third
parties. If the Company were determined to be infringing any third party patent, the Company could
be required to pay damages, alter its products or processes, obtain licenses or to cease certain
operations. If the Company is required to obtain any licenses, there can be no assurance that the
Company will be able to do so on
commercially favorable terms, if at all. The Companys failure to obtain a license for any
technology that it may require to commercialize its products could have a material adverse effect
on the Companys business, financial condition and results of operations. Litigation, which could result in substantial costs to and diversion of effort by the Company, may
also be necessary to enforce any patents issued or licensed to the Company or to determine the
scope and validity of third party proprietary rights. If competitors of the Company that claim
technology also claimed by the Company prepare and file patent applications in the U.S., the
Company may have to participate in interference proceedings declared by the U.S. Patent and
Trademark office to determine priority of invention, which could result in substantial cost to and
diversion of effort by the Company, even if the eventual outcome is favorable to the Company. Any
such litigation or interference proceedings, regardless of outcome, could be expensive and time
consuming. Litigation could subject the Company to significant liabilities to third parties,
requiring disputed rights to be licensed from third parties or require the Company to cease using
certain technologies and, consequently, could have a material adverse effect on the Companys
business, financial condition and results of operations. In addition to patent protection, the Company relies on un-patented trade secrets and proprietary
technological expertise. There can be no assurance that others will not independently develop or
otherwise acquire substantially equivalent technologies, or otherwise gain access to the Companys
trade secrets or technological expertise or disclose such trade secrets, or that the Company can
ultimately protect its right to such un-patented trade secrets and technological expertise.
The Company relies, in part, on confidentiality agreements with its marketing partners, employees,
advisors, vendors and consultants to protect its trade secrets and proprietary technological
expertise. 8




---



##### 



There can be no assurance that these agreements will not be breached, that the Company
will have adequate remedies for any breach or that the Companys un-patented trade secrets and
proprietary technological expertise will not otherwise become known or independently discovered by
competitors. Potential Adverse Effect of Competition and Technological Change In developing its technology and products, the Company competes with many domestic and foreign
competitors in various rapidly evolving and technologically advanced fields, including
pharmaceutical, biotechnology and biopharmaceutical companies. Many of the Companys competitors and potential competitors have substantially greater financial,
technological, R&D, marketing and personnel resources than the Company. There can be no assurance
that the Companys competitors will not succeed in developing alternate technologies and products
that are more effective, easier to use or more economical than those which have been developed by
the Company or that would render the Companys technologies and products obsolete and
non-competitive in these fields. These competitors may also have greater experience in developing
products, conducting clinical trials, obtaining regulatory approvals or clearances, and
manufacturing and marketing such products or technologies. Certain of these competitors may obtain
patent protection, approval or clearance earlier than the Company, which could adversely affect the
Companys business, financial condition and results of operations. Furthermore, the Company will
also be competing with respect to manufacturing efficiency and marketing capabilities, areas in
which it currently has limited experience. The companys commercial opportunities will be reduced or eliminated if competitors develop and
market products that are more effective, have fewer side effects or are less expensive. Effects of International Sales The Company and its marketing partners intend to market the Companys current and future products
in most major world pharmaceutical markets. A number of risks are inherent in international
transactions. In order for the Company to market its products in the U.S., Europe, Australia,
Canada, Japan and certain other foreign jurisdictions, the Company must obtain required regulatory
approvals or clearances and otherwise comply with extensive regulations regarding safety,
manufacturing processes and quality. There can be no assurance that the Company will be able to obtain or maintain regulatory approvals
or clearances in such countries or that it will not be required to incur significant costs in
obtaining or maintaining its foreign regulatory approvals or clearances. Fluctuations in currency exchange rates may adversely affect the demand for the Companys products
by increasing the price of the Companys products in the currency of the countries in which the
products are sold. The Companys consolidated financial statements are presented in Australian dollars. In fiscal
2004, the Companys revenue was generated approximately 36% in U.S. dollars and approximately 32%
in Australian dollars with the balance of revenue in Pounds Sterling, Euros and Canadian dollars.
Fluctuations in the rates of exchange between U.S. dollar and other foreign currencies may
negatively impact the Companys financial 9




---



##### 



condition and results of operations. As the Company
expands its presence into the U.S. and other international markets, the Company expects the
percentage of both its revenues and expenditures denominated in non-Australian dollars to increase,
with particular emphasis on U.S. dollars. For the foreseeable future, the Company expects its
expenditures to be predominantly denominated in Australian dollars, resulting primarily from the
Companys R & D and manufacturing activities in Australia, and expects capital expenditures to be
denominated in Australian dollars. Dependence Upon Key Personnel The Company is highly dependent upon the principal members of its management and scientific staff.
In addition, the Company believes that its future success in developing marketable products and
achieving a competitive position will depend to a significant extent on whether it can attract and
retain additional qualified management and scientific personnel. Competition for such personnel is
intense, and there can be no assurance that the Company will be able to continue to attract and
retain such personnel. The loss of the services of one or more of the management or scientific
staff, or the inability to attract and retain additional personnel and develop expertise as needed,
could have a material adverse effect on the Companys results of operations and financial
condition. The Company maintains key person life insurance for Dr. Kelly, Mr. Naughton and
Professor Husband, currently set at A$2,226,000 each. The proceeds of such policies are payable to
the Company. Limited Manufacturing Experience The Company currently relies on its own extraction facility to produce commercial quantities of
isoflavones used in the manufacture of dietary supplement products. The facility is expected to be
sufficient to meet anticipated demand during fiscal 2005 and beyond. To the extent the Company
relies on others, the Company will lose a degree of control over the manufacturing process and will
be dependent on such third parties to satisfy performance and quality standards and dedicate
sufficient production capacity to meet demand and delivery times. There can be no assurance that
third party manufacturers will devote the resources necessary to meet demand for the Companys
products. Failure or delay in supplying isoflavones would adversely affect the Companys ability to
deliver products on a timely and competitive basis. In addition, the manufacture of the Companys products is subject to periodic inspection by
regulatory authorities and certain marketing partners, and the Companys manufacture of its
products for human use is subject to regulation and inspection by regulatory authorities for
compliance with Current Good Manufacturing Practice (cGMP). There can be no assurance that these
authorities will not, during the course of an inspection of existing or future facilities, identify
what they consider to be deficiencies in cGMP or other requirements and request, or seek, remedial
action. Failure to comply with such regulations or delay in attaining compliance may adversely
affect the Companys manufacturing activities and could result in, among other actions, warning
letters, injunctions, civil penalties, refusal to grant approvals or clearances of future or
pending product submissions, fines, recalls or seizure of products, total or partial suspensions of
production and criminal prosecution. 10




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Limited Marketing Capacity; Dependence on Others The Company relies on its own marketing staff for the marketing and sale of its current and
proposed products in Australia, Canada, the U.S., the UK and the Netherlands. The Company presently
has limited marketing and sales staff. Achieving market acceptance for the Companys products will
require extensive and substantial efforts by experienced personnel as well as expenditure of
significant funds. There can be no assurance that the Company will be able to establish sufficient
marketing, distribution and sales capabilities necessary to achieve market penetration in these
geographical areas. In other markets, the Company intends to appoint licensees and/or marketing partners who will be
responsible in large part for sales, marketing and distribution. While the Company will endeavor
to appoint licensees and/or marketing partners with proven abilities in these areas, the amount and
timing of resources, which may be devoted to the performance of their contractual responsibilities
by these partners, are not within the control of the Company. There can be no assurance that such
marketing partners will perform their obligations as expected, pay any additional option or license
fees to the Company or market any products under any agreement, or that the Company will derive any
revenue from such arrangements. Moreover, the other contracting parties may have rights of
termination under certain of the agreements. Exercise of such termination rights by such other
parties may have an adverse effect on the Companys business, financial condition and results of
operations. There can be no assurance that the interests of the Company will continue to coincide
with those of its partners or that such partners will not develop independently or with third
parties products or technologies which could compete with the Companys products, or that
disagreements over rights or technologies or other proprietary interests will not occur. To the
extent that the Company chooses not to or is unable to enter into future agreements, it would
experience increased capital requirements to undertake the marketing or sale of its current or
future products. There can be no assurance that the Company will be able to market or sell its
technology, current or future products independently in the absence of such agreements. Effect of Government Regulation Pharmaceutical products, including pharmaceuticals such as the Companys phenolic hormone drug
candidates, are significantly regulated by a number of governmental entities, especially by the FDA
in the U.S. and by comparable authorities in other countries, including Australia. These agencies
regulate, among other things, research and development activities and the testing, manufacture,
safety, effectiveness, labeling, storage, record keeping, approval, advertising, promotion,
distribution and sale of such products. Product development and approval within this regulatory
framework takes a number of years and involves the expenditure of substantial resources. Many
products, that initially appear promising, ultimately do not reach the market because they are
found to be unsafe or do not demonstrate efficacy during the testing required by the regulatory
process. The Company currently has no products approved by the FDA. No assurance can be made that the
Company will be able to file any New Drug Application (NDA) or that any such filings will result in
FDA approval. Furthermore, the Company cannot predict with any degree of certainty when it might
be in a position to file any NDA or the length of time involved between the filing of an NDA and
obtaining FDA approval, if at all. The 11




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cost to the Company of conducting human clinical trials for
any potential product can vary dramatically based on a number of factors, including the order and
timing of clinical indications pursued and the extent of development and financial support, if any,
from corporate partners. The Company may have difficulty obtaining sufficient patient populations,
clinicians or support to conduct its clinical trials as planned and may have to expend substantial
additional funds to obtain access to such resources, or delay or modify its plans significantly. There can be no assurance that FDA or other regulatory authority approval for any product developed
by the Company will be granted on a timely basis or at all. Any delay in obtaining or any failure
to obtain such approvals would materially and adversely affect the marketing of the Companys
products and the Companys business, financial condition and results of operations. In addition,
legislation may be
enacted in the future, which might adversely affect the Companys ability to develop, manufacture
or market its products. Product Failure The Companys dietary supplement products are based on a hypothetical concept of the biological
importance of estrogenic isoflavones to human health. However, there is no certainty that this
hypothesis will prove to be the case for any or all intended applications. Failure to provide any
significant health benefit could be expected to have a significant adverse effect on the Companys
ability to market these products. The Company also has taken considerable care to ensure safety and lack of adverse side effects.
However, there is no assurance that extended use of the products in the wider community will not
result in the occurrence of undesirable side-effects including intolerance reactions that could be
expected to impede the successful marketing of the products. Product Liability Exposure and Potential Unavailability of Insurance The testing, manufacturing, marketing and sale of the products being developed by the Company
involves inherent risk that product liability claims will be asserted against the Company, its
marketing partners or licensees. There can be no assurance that the Companys current clinical
trial and commercial product liability insurance is adequate or will continue to be available. The
Company currently maintains worldwide product liability coverage of up to A$20 million. Enforceability of Civil Liabilities under the Federal Securities Laws The Company is a public company limited by shares and is registered and operates under the
Australian Corporations Act 2001. All of the Companys directors and officers named in this Annual
Report reside outside the US. Substantially all or a substantial portion of the assets of those
persons are located outside the US. As a result, it may not be possible to effect service on such
persons in the U.S. or to enforce, in foreign courts, judgments against such persons obtained in
U.S. courts and predicated on the civil liability provisions of the federal securities laws of the
US. Furthermore, substantially all of the directly owned assets of the Company are outside the
U.S., and, as such, any judgment obtained in the U.S. against the Company may not be collectible
within the US. There is doubt as to the enforceability in the Commonwealth of Australia, in
original 12




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actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities
predicated solely upon federal or state securities laws of the U.S., especially in the case of
enforcement of judgments of U.S. courts where the defendant has not been properly served in
Australia. The trading price of the shares of the Companys common stock and ADRs could decline in value if
the trading price of the shares of common stock of its listed subsidiary company, Marshall Edwards,
Inc., declines. Novogen currently owns 86.9% of its subsidiary Marshall Edwards, Inc., whose shares are traded on
the Nasdaq National Market and on the AIM market in London. If the trading price of Marshall
Edwards shares declines or its business does not achieve its objectives or its product development
program is delayed, it could have an adverse affect on Novogens share price. The trading price of the shares of the Companys common stock and ADRs is highly volatile, your
investment could decline in value and the Company may incur significant costs from class action
litigation. The trading price of the Companys common stock and ADRs is highly volatile in response to various
factors, many of which are beyond the Companys control including:  
    
    Announcements of technological innovations by the Company and its competitors;
    
    New products introduced of announced by the Company or its competitors;
    
    Changes in financial estimates by securities analysts;
    
    Actual or anticipated variations in operating results;
    
    Expiration or termination of licenses, research contracts or other collaboration agreements;
    
    Conditions or trends in the regulatory climate in the biotechnology, pharmaceutical and
genomics industries;
    
    Changes in the market values of similar companies;
    
    The liquidity of any market for the Companys securities;
    
    Additional sales by the Company of its shares. In addition, equity markets in general and the market for biotechnology and life sciences companies
in particular, have experienced substantial price and volume fluctuations that have often been
unrelated or disproportionate to the operating performance of the companies traded in those
markets. In addition, changes in economic conditions in Australia, the United States, Europe, or
globally, could impact on the Companys ability to grow profitably. Adverse economic changes are
outside the Companys control and may result in material adverse impacts on its business or its
results of operations. These broad market and industry factors may materially affect the market
price of the Companys shares and ADRs regardless of its development and operating performance. In
the past, following periods of volatility in the market price of a companys securities, securities
class action litigation has often been instituted against that company. Such litigation, if
instituted against the Company could cause it to incur substantial costs and divert managements
attention and resources. 13




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Item 4  Information on the Company History and development of the Company. Novogen Limited, a company limited by shares, was incorporated in March 1994 under the jurisdiction
of the laws of New South Wales, Australia. Novogen has its registered office at 140 Wicks Rd, North
Ryde, New South Wales 2113. Its telephone number and other contact details are: Phone
61-2-9878-0088; Fax 61-2-9878-0055; and web site, www.novogen.com (the information contained in the
web site does not form part of the Annual Report). The Companys Ordinary Shares are listed on the
Australian Stock Exchange (ASX) under the symbol NRT and its American Depositary Receipts
(ADRs), each representing five ordinary shares, trade on the Nasdaq Stock Market under the symbol
NVGN. Nature of the Business The Company is a pharmaceutical company involved in the discovery, development, manufacture and
marketing of products based on the emerging field of phenolic technology. The Companys product
development program embraces both a novel range of pharmaceuticals based on a range of phenolic
hormones in humans and dietary supplements based on plant phenolic compounds known as isoflavones.
A key element of the Companys strategy is to leverage revenue generated from sales of the
Companys dietary supplements in an effort to develop novel proprietary pharmaceuticals based on
phenolic hormones. Recent Financing Activities Since its inception, the Company has been financed principally by equity financing, license fees
and product sales. The Company did not recognize any significant revenue from the sale of product
until fiscal 1998. In June 2000, the Company raised A$17.9 million from the issue of 5.018 million Ordinary Shares at
A$3.5819 per share. The proceeds have been used to finance clinical trials for Novogens
anti-cancer drug candidate phenoxodiol (NV-06) which is currently being developed and
commercialized by the Companys subsidiary, Marshall Edwards, Inc, and is in Phase I/II clinical
trials in the U.S. and Australia, and to augment Novogens cash flow from the international sales
of its over-the-counter products. During May 2001, 10.195 million Ordinary Shares with a value of A$20.9 million were issued to a
number of international institutions at the price of A$2.05 per share, the closing price on the ASX
on May 23, 2001. The equity receipts were used to fund the ongoing clinical trials of phenoxodiol
(NV-06) and to augment the cash flow from the international sales of the over-the-counter dietary
supplement business. Marshall Edwards, Inc. Marshall Edwards, Inc. (MEI), a U.S. subsidiary of Novogen, was established to provide a commercial
vehicle for Novogens anti-cancer drug candidates, the first of which is 14




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phenoxodiol (NV-06).
Novogen has licensed phenoxodiol to MEIs Australian subsidiary Marshall Edwards Pty Limited (MEPL)
which will be responsible for the continued development of phenoxodiol (NV-06) and its ultimate
commercialisation under the terms of the license. Novogen provides services, clinical trial
management and drug supplies to MEI and MEPL. During May 2002, MEI, raised US$10.1 million in a private placement to European, American and
Australian investors and institutions at US$4.00 each with an attaching warrant exercisable prior
to November 30, 2003 at US$4.00 per share. Shares of MEI are listed on the London Stock Exchanges
Alternative Investment Market (AIM). During June 2003, MEI received an aggregate of US$36,000 (A$53,000) following the exercise of 9,000
warrants, at US$4.00 per share, which were issued as part of the AIM listing in May 2002. In November 2003, MEI received an aggregate of US$10,056,000 (A$14,035,000) following the exercise
of 2,514,000 warrants, at US$4.00 per share, which were issued as part of the AIM listing in May
2002. In December 2003, MEI completed an initial public offering in the United States of 2,392,000 common
stock units at an initial public offering price of US$7.50 per unit. Each common stock unit
consists of:  
    
    one share of common stock; and
    
    one warrant to purchase a share of common stock at an exercise price equal to US$9.00. The net proceeds to the company from the offering totalled approximately US$15,522,000
(A$20,815,000). As a result of the above two transactions Novogen retains an 86.9% ownership interest in Marshall
Edwards, Inc. During April 2003, Glycotex, Inc., a U.S. subsidiary of Novogen Inc., established to provide a
commercial vehicle for Novogens glucan technology, raised A$500,000 in an initial private
placement of 50,000 shares from Australian and international investors and institutions. Novogen
now owns 97.6% of Glycotex Inc. The shares were issued at A$10.00 each with attaching warrants to purchase a further two shares at
an exercise price of A$10.00 per share. The attaching warrants are exercisable prior to November 5,
2004. Novogen also issued to these investors a convertible security enabling investors to convert
each share of Glycotex Inc. common stock to two Novogen shares at an equivalent Novogen share price
of A$5.00 per share. If 50% of the holders exercise the conversion feature, then Novogen can
require that the other Glycotex shareholders convert their shares to Novogen shares. On November 5, 2004 Glycotex Inc received a total of A$900,000 following the exercise of 90,000
warrants at an exercise price of A$10.00 per share which were issued as part of the initial private
placement. Also, Novogen will issue 10,000 of its shares following
the conversion of 5,000
Glycotex shares under the terms of the Novogen convertible security. 15




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Following the exercise of the warrants and the convertible security Novogen retains 93.4% ownership
in Glycotex, Inc. Capital expenditures The Company made no major investments of a capital nature during fiscal 2004. Future facilities
will be developed as demand increases, however, current plant capacity both at the isoflavones
extraction plant at Wyong NSW and at the pilot plant at North Ryde NSW are sufficient to meet
demand for the short to medium term. Business overview The Company launched its first product, Promensil (Promensil), in September 1997 in Australia.
Subsequently, the product was launched in New Zealand in February 1998, in the U.S. in April 1998,
in The Netherlands in April 1999, and in Canada in January 2000. The Companys second product,
Trinovin (Trinovin) was launched in Australia in June 1998 and is currently sold in Australia,
New Zealand, the U.S. and Canada. In June 2000, Novogen launched Rimostil in Australia and Canada.
Rimostil is a new product for post-menopausal women. Rimostil is the first isoflavone supplement
for the
maintenance of bone and cholesterol health in women after menopause. During the fiscal year 2001
the Company launched Rimostil in the U.S. and the Netherlands and launched Trinovin in the UK and
the Netherlands. The Company also entered into agency agreements in Singapore and South Africa. Promensil, Trinovin and Rimostil are dietary supplements that deliver standardized levels of all
four isoflavones  daidzein, genistein, formononetin and biochanin. Promensil, Trinovin and
Rimostil are listed with the appropriate regulatory bodies in the countries in which they are sold.
Currently Promensil and Trinovins regulatory status is under review by the TGA in Australia refer
to Risk Factors for further details. In fiscal 2004, the Company earned total revenues of A$16.4 million versus A$24.3 million in fiscal
year 2003, a decrease of 32%. Total revenues decreased due to lower sales of dietary supplement
products and lower royalty receipts under the license agreement with Solae. Included in total
revenues were sales of consumer health products totaling A$12.7 million for the fiscal year ended
June 30, 2004 a reduction of A$6.9 million from the previous fiscal year. Sales in Australasia for
the year ended June 30, 2004 were down A$2.2 million to A$4.0 million from A$6.2 million for the
previous year. Sales in North America decreased by A$4.3 million to A$6.4 million for the year down
from A$10.7 million for the previous year. Sales in Europe of A$2.3 million for the year were down
slightly by A$0.4 million. Sales revenues were affected by the increased value of the Australian
Dollar versus the currencies of the Companys major trading partners, particularly those trading in
USD. The adverse currency movements reduced reported sales by approximately A$1.3 million for the
year. Sales were also negatively impacted by the conflicting publicity and conflicting professional
opinions about the safety and efficacy of HRT and natural menopause products and the mass recall of
many products in the Australian market produced by an unrelated company under investigation for
unsatisfactory quality standards. The market for menopause products is expected to continue to be
affected by the safety and efficacy of hormone replacement 16




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therapy (HRT) and natural alternatives
debate. Also it will take some time for confidence to return to the Australian market. The Company
will continue to position its products as the most clinically tested natural alternatives in the
menopause market. Clinical Development The Companys product emphasis is toward the development and marketing of human therapeutics, with
a particular focus on therapeutics based on phenolic drug technology. While the Companys initial
sales revenue has been generated from dietary supplements, the Company has devoted, and expects to
continue to devote, significant R&D resources to the development of novel pharmaceuticals based on
phenolic hormones. Major advances were made during the year on the Groups clinical development program. Phenoxodiol The Groups lead anti-cancer drug, phenoxodiol, continued its clinical development program through
its 86.9% owned subsidiary company Marshall Edwards, Inc. Phenoxodiol is currently being evaluated
in phase II clinical trials for the treatment of prostate cancer, ovarian cancer, squamous cell
carcinomas (SCC) of the cervix, vagina and vulva and renal cancer. During 2004, Marshall Edwards, Inc. made significant progress in the clinical development of
phenoxodiol including:  
    
    The release by Yale researchers of preliminary results of a dose-finding study in women
with recurrent ovarian cancer that has become unresponsive to standard chemotherapy, who
received intravenous phenoxodiol. The data reflected outcomes of the first 20 of 40
measurable subjects and showed that 13 patients were able to finish a three month treatment
cycle, and 5 patients were considered to have had disease stabilization. All patients
ultimately showed disease
progression. This trial is now complete and Marshall Edwards, Inc. is awaiting final
analysis of the trial data;  
    
    Commencing a clinical trial in cervical cancer at Yale New Haven Hospital. The study is
the first to be conducted in the U.S. using the oral dosage form of phenoxodiol and will be
used in patients who have a primary diagnosis of cancer for a period of four weeks.
Following treatment with phenoxodiol, patients will be scheduled for either surgical
resection or radiotherapy. The study will evaluate the safety and ability of phenoxodiol to
act as an effective anti-cancer drug when it is given as a monotherapy in early stage
cancer;  
    
    Commencing a renal cancer study of phenoxodiol in combination therapy at St George
Hospital in Sydney, Australia. The study will involve patients with late stage cancers that
are no longer responding to standard chemotherapies. In this study, phenoxodiol will be
administered orally;  
    
    Commencing a new multi-center trial to evaluate phenoxodiol as a chemo-sensitizing agent
in patients with chemo-resistant ovarian cancer. The first site 17




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involves up to 40 patients
at Yale New Haven Hospital. The two main objectives of the study are to investigate the
degree to which phenoxodiol reverses chemo-resistance, and to compare the relative
efficacies of paclitaxel and cisplatin, each in combination with phenoxodiol;  
    
    Establishing a second trial site for the multi-center ovarian cancer study at the Royal
Womens Hospital in Melbourne Australia; and
    
    Announcing preliminary data from the late-stage prostate cancer trial being conducted at
multiple sites in Australia. The data showed that phenoxodiol is biologically active by
reducing or stabilizing Prostate Specific Antigen (PSA) levels in 8 of 12 patients
receiving the study drug.
    
    In November 2004, Marshall Edwards, Inc. announced that the U.S. Food and Drug
Administration (FDA) has granted phenoxodiol Fast Track status for its intend use as a
chemo-sensitizing agent in patients with recurrent late stage ovarian cancer. Under the FDA
Modernization Act of 1997, designation as a Fast Track product means that phenoxodiol is
eligible for certain accelerated marketing approval programs. NV-18 NV-18, an anti cancer drug developed to treat melanoma and cholangiocarcinoma (gall bladder cancer)
entered its clinical development stage. NV-18 has been approved for a Phase I study at St George
Hospital in Sydney. The study will determine the drugs bio-availability, pharmacokinetic profile
and acute safety. The drug will be delivered in three different ways including orally, by bolus injection and by slow
intravenous infusion to 6 patients with solid tumours over a period of 8 weeks. The Company has granted to a subsidiary of Marshall Edwards, Inc., under a licence option deed an
exclusive right to accept and exclusive last right to match any proposed dealings by the Company
with its intellectual property rights with a third party relating to certain pharmaceutical
compounds (other than phenoxodiol) developed by the Company. The licence option deed would cover
any proposed dealing with respect to NV-18. NV-04 In July 2004, the Company announced that trans-NV-04, the Companys leading cardiovascular drug,
had begun clinical trials. Trans-NV-04 is an advanced version of NV-04. Trans-NV-04 will be tested
in human subjects who are at risk of cardiovascular disease, but are otherwise healthy. The trial will
be conducted at the Baker Heart Research Institute and will initially evaluate safety and
tolerability in a dose ranging study. This will be followed by a randomised, cross-over, placebo
controlled and double blind study in subjects receiving either trans-NV-04 or placebo. Source and Availability of Raw Materials 18




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Isoflavones Two major manufacturing considerations are supply of raw material (red clover) and isoflavone
extraction capacity. Red clover is grown under contract by farmers experienced in red clover growing. As part of a risk
reduction strategy, red clover is grown in a number of areas of geographical and climatic diversity
in three Australian states (New South Wales, Victoria, and South Australia). For cost reasons, red
clover is no longer grown in the South Island of New Zealand. The current growing capacity is
judged to exceed projected demand for the foreseeable future. The existing isoflavone extraction facility at Wyong NSW is currently meeting existing demand for
product. The Company has moved its manufacturing facility from New Zealand to the Wyong site.
The Company anticipates being able to increase output from the Wyong facility through continuing
improvements in yield efficiencies, refinements in the extraction process and the use of higher
isoflavone-yielding clover varieties. The Company currently uses contract formulators and packers
in both Australia and the U.S. to tablet and to pack the final product. All products sold in the
U.S. are produced by a contract formulator and packer in the U.S. who has represented to the
Company that its facilities are certified by the FDA as being in accordance with cGMP. Phenolic Compounds The synthetic phenolic compounds used in the Companys pre-clinical and clinical trials are
currently being manufactured at the pilot facility located at North Ryde. The facility manufactures
phenoxodiol (NV-06), NV-04 program compounds and NV-07a and will provide sufficient product
for pre-clinical and initial clinical trial purposes. If, in the future, clinical trials prove
successful and applicable regulatory approvals are obtained, the Company intends to construct its
own manufacturing facility necessary for commercial production of these compounds. Marketing Channels The Company is currently marketing the products  Promensil, Trinovin and Rimostil. All three
products are classified as dietary supplements for people whose intake of isoflavones is
inadequate. The marketing strategy is for the Company to continue to be responsible for the direct marketing of
its current and proposed dietary supplement products in Australia, New Zealand, North America (US
and Canada) and selected European countries. The Company will rely on distributors and other third
parties for the sale of the Companys dietary supplements in other countries and regions. The
company has entered into agency distribution agreements in Singapore, South Africa , Austria and
Ireland. The Company has pursued a deliberate policy of not seeking strategic alliances in the
development of its line of pharmaceutical products. The Company believes that it has the expertise
and will have the resources necessary to take its lead candidate pharmaceutical agents up to Phase
II clinical trials. In this way, the potential value of the assets will be maximized prior to any
alliance being sought. 19




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Patent Protection The first and most important area of the intellectual property (IP) of the Company is the
understanding that an important function of isoflavones in the diet is to act as pro-hormones,
leading to the formation of a previously undiscovered class of hormones known as phenolic
hormones. The Companys discovery that these isoflavonoid-derived phenolic compounds have
biological activity is the basis of the Companys drug discovery and development program. A number
of these phenolic compounds have been identified by the Company as offering significant commercial
potential as new pharmaceuticals and these are currently under development. The Company has PCT
patent applications pending relating to these compounds and a wide range of therapeutic
applications. The second area of IP is the proprietary technology that allows the method of extraction of all
four principal estrogenic isoflavones found in the human diet. This technology has allowed the
development of Promensil and Trinovin, which are supplement products that deliver standardized
levels of all four isoflavones  daidzein, genistein, formononetin and biochanin. The third important area of IP is an understanding of the distinctive biological functions of each
of the four estrogenic isoflavones. The Company has found that while the four estrogenic
isoflavones share functions in common, each has a distinctive biological profile with some even
having unique functions. This is the basis of development of dietary supplements with customized
isoflavone ratios in order to meet specific health needs. The Company pursues an aggressive patent prosecution strategy, based on PCT patent applications in
major global territories. All current patent applications are filed in the name of either Novogen
Inc., Novogens wholly-owned U.S. subsidiary, or Novogen Research Pty Ltd, one of Novogens
wholly-owned Australian subsidiaries. Intellectual Property Development During fiscal 2004, the following 10 patents were granted in various countries over the Companys
intellectual property bringing the number of patents granted to 35. The areas with expanding patent
cover include synthetic drug compounds and their use, isoflavone formulation and uses, glucan
preparation and uses, and a novel food product. USA
Patent # 6642212. Health Supplements containing Phytoestrogens
Patent # 6649648. Therapeutic Methods and Compositions  Metabolites
Patent # 6599536. Therapy of Estrogen Associated Disorders Canada
Patent # 2136233. Health Supplements containing Phytoestrogens Europe
Patent # 0815144. Process for Glucan Preparation and Therapeutic Uses of Glucan 20




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Australia
Patent # 753005. Therapy of Estrogen Associated Disorders
Patent # 761047. Cardiovascular and Bone Treatment using Isoflavones South Africa
Patent # 2002/5147. Food Product and Process New Zealand
Patent # 506701. Therapy of Estrogen Related Disorders
Patent # 513328. Cardiovascular and Bone Treatment Using Isoflavones. The following is a list of all patents and patent applications held by the Company. 21




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PCT= Patent Cooperation Treaty
(1) = Novogen Research Pty Ltd
(2) = Novogen Inc Title
    
    Applicant
    
    Country1
    
    HEALTH SUPPLEMENTS CONTAINING PHYTO-
OESTROGENS, ANALOGUES OR METABOLITES
THEREOF
    
    
    (1
    )
    
    All PCT countries
including the USA2
    
    PROCESS FOR GLUCAN PREPARATION
THERAPEUTIC USES OF GLUCAN
    
    
    (1
    )
    
    All PCT countries
including the USA3
    
    THERAPEUTIC METHODS AND COMPOSITIONS
INVOLVING ISOFLAVONES
    
    
    (1) +
    (2)
    
    All PCT countries
including the USA4
    
    PREPARATION OF ISOFLAVONES FROM LEGUMES
    
    
    (1) +
    (2)
    
    All PCT countries
including the USA5
    
    TREATMENT OR PREVENTION OF MENOPAUSAL
SYMPTOMS AND OSTEOPOROSIS
    
    
    (1) +
    (2)
    
    All PCT countries
including the USA6
    
    COMPOSITIONS AND METHOD FOR PROTECTING
SKIN FROM UV INDUCED IMMUNOSUPPRESSION
AND SKIN DAMAGE
    
    
    (1
    )
    
    All PCT countries
including the USA7
    
    THERAPY OF ESTROGEN-ASSOCIATED DISORDERS
    
    
    (1
    )
    
    All PCT countries
including the USA8
    
    PRODUCTION OF ISOFLAVONE DERIVATIVES
    
    
    (1
    )
    
    All PCT countries
including the USA9
    
    CARDIOVASCULAR AND BONE TREATMENT USING
ISOFLAVONES
    
    
    (1
    )
    
    All PCT countries
including the USA10
    
    COMPOSITIONS AND THERAPEUTIC METHODS
INVOLVING ISOFLAVONES AND ANALOGUES
THEREOF
    
    
    (1
    )
    
    All PCT countries
including the USA11
    
    FOOD PRODUCT AND PROCESS
    
    
    (1
    )
    
    All PCT countries
including the USA12
    
    REGULATION OF LIPIDS AND/OR BONE DENSITY
AND COMPOSITIONS THEREFORE
    
    
    (1
    )
    
    All PCT countries
including the USA13
    
    DIMERIC ISOFLAVONES
    
    
    (1
    )
    
    All PCT countries
including the USA14
    
    TREATMENT OF RESTENOSIS
    
    
    (1
    )
    
    All PCT countries
including the USA15
    
    6-HYDROXY ISOFLAVONES, DERIVATIVES AND
MEDICAMENTS INVOLVING THE SAME
    
    
    (1
    )
    
    All PCT countries
including the USA16
    
    THERAPEUTIC METHODS AND COMPOSITIONS
INVOLVING COMPOUNDS BASED ON AN ISOFLAV-3-
ENE AND ISOFLAVAN STRUCTURE
    
    
    (1
    )
    
    All PCT countries
including the USA17
    
    REPAIR OF DNA MUTAGENIC DAMAGE
    
    
    (1
    )
    
    All PCT countries
including the USA18
    
    SKIN PHOTOAGEING AND ACTINIC DAMAGE
TREATMENT
    
    
    (1
    )
    
    All PCT countries
including the USA19
    
    COMBINATION CHEMOTHERAPY COMPOSITIONS
AND METHODS
    
    
    (1
    )
    
    All PCT countries
including the USA20
    
    AMINATED ISOFLAVONOID DERIVATIVES AND USES
THEREOF
    
    
    (1
    )
    
    All PCT countries
including the USA
 22




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##### 



Licensing Arrangements In 1997 the Company granted an exclusive license for the use of soy under three Novogen patent
applications to Dupont Protein Technologies, Inc. (PTI) and its subsequent joint venture with
Bunge now called Solae LLC. Under the license agreement, PTI paid to the Company a license fee of
approximately A$9 million and agreed to pay the Company royalties from the sales made by PTI of
products derived under the license. In fiscal year ended June 30, 2002, PTI paid A$1.9 million in
royalties to the Company. In fiscal year ended 2003 the Company received a further A$2.3 million in
royalty payments under this license agreement, and in fiscal 2004 the Company received A$1.0 See
Item 5. Operating and Financial Review and Prospects  Operating Results  Fiscal 2004 v. Fiscal
2003. Contemporaneous with the license agreement, PTIs then parent Ralston-Purina Inc. invested
A$6.7 million into the Companys Ordinary Shares which was followed in December 1998 by an
additional investment of A$3.6 million. Trademark Protection The Company also seeks IP protection through trademark registration of product names and corporate
logos. The Company has an active program of registering all product trademarks in significant
markets. Australian Government The activities of the Company are subject to numerous Australian laws and regulations, including
those described below. The Australian Corporations Law is the main body of law governing companies incorporated in
Australia, such as Novogen and its Australian subsidiaries. The Australian Securities and
Investments Commission (ASIC) is an Australian Government organisation that administratively
enforces legislation covering matters such as directors duties and responsibilities, preparation
of accounts, auditor control, issue and transfer of shares, control of shareholders meetings,
rights of minority interests, amendments to capital structure, preparation and filing of public
documents such as annual reports, changes in directors and changes to capital. The Australian Stock Exchange (ASX) imposes listing rules on all listed companies, such as Novogen.
The rules cover issues such as continuous and immediate disclosure to the market of relevant
information, periodic financial reporting and the prior approval of reports to shareholders. The Company believes that it materially complies with the foregoing Australian laws and regulations
pertaining to public and private companies. The Companys products and manufacturing facilities also are regulated by various Australian
federal and state instrumentalities. The Companys manufacturing facilities hold the appropriate
licenses concerning hazardous chemical use and the manufacture of health products. 23




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##### 



The Therapeutic Goods Act 1989,or 1989 Act, sets out the legal requirements for the import,
export, manufacture and supply of pharmaceutical products in Australia. The 1989 Act requires that
all pharmaceutical products to be imported into, supplied in, or exported from Australia be
included in the Australian Register of Therapeutic Goods, or ARTG, unless specifically exempted
under the Act. In order to ensure that a product can be included in the ARTG, a sponsoring company must make an
application to the Therapeutic Goods Administration, or TGA. The application usually consists of a
form accompanied by data (based on the European Union requirements) to support the quality, safety
and efficacy of the drug. In the case of drugs for important medical conditions the TGA will accept
either European or American dossier format in an attempt to expedite the registration process. The first phase of evaluation, known as the Application Entry Process, is usually a short period
during which an application is assessed on an administrative level to ensure that it complies with
the basic guidelines. The TGA must decide within 40 working days whether it will accept the
application for evaluation. Once an application is accepted for evaluation, aspects of the data provided are allocated to
evaluators, who prepare evaluation reports. Following this evaluation, the chemistry and quality
control aspects of a product may be referred to a sub-committee of the Australian Drug and
Evaluation Committee, or ADEC to review the evaluation reports. The evaluation reports are then
sent to the sponsoring company who then has the opportunity to comment on the views expressed
within the evaluation report and to submit supplementary data to address any issues raised in the
evaluation reports. Once the evaluations are complete, the TGA prepares a summary document on the key issues on which
advice will be sought from the ADEC. This summary is sent to the sponsoring company which is able
to submit a response to the ADEC dealing with issues raised in the summary and those not previously
addressed in the evaluation report. The ADEC provides advice on the quality, risk-benefit,
effectiveness and access of the drug and conduct medical and, scientific evaluations of the
application. The ADECs resolutions are provided to the sponsoring company after 5 working days. The TGA takes into account the advice of the ADEC in reaching a decision to approve or reject a
product. Any approval for registration on the ARTG may have conditions associated with it. From the time that the TGA accepts the initial application for evaluation, the TGA must complete
the evaluation and make a decision on the registration of the product within 255 working days. The
TGA also has a system of priority evaluation for products that meet certain criteria, including
where the product is a new chemical entity that it is not otherwise available on the market as an
approved product, and is for the treatment of a serious, life-threatening illness for which other
therapies are either ineffective or not available. US Government Regulations The U.S. Food and Drug Administration, or FDA, and comparable regulatory agencies in foreign
countries regulate and impose substantial requirements upon the research, 24




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##### 



development, pre-clinical and clinical testing, labeling, manufacture, quality control, storage,
approval, advertising, promotion, marketing, distribution and export of pharmaceutical products
including biologics, as well as significant reporting and record-keeping obligations. State
governments may also impose obligations in these areas. In the United States pharmaceutical products are regulated by the FDA under the Federal Food Drug
and Cosmetic Act or FDCA and other laws including in the case of biologics, the Public Health
Service Act. The Company believes but cannot be certain that its products will be regulated as
drugs by the FDA. The process required by the FDA before drugs may be marketed in the United States
generally involves the following:  
    
    pre-clinical laboratory evaluations including formulation and stability testing, and
animal tests performed under the FDAs Good Laboratory Practices regulations to assess
potential safety and effectiveness;
    
    submission and approval of an Investigational New Drug (IND), including results of
pre-clinical tests and protocols for clinical tests, which must become effective before
clinical trials may begin in the United States;
    
    obtaining approval of Institutional Review Boards to administer the products to human
subjects in clinical trials;
    
    adequate and well-controlled human clinical trials to establish the safety and efficacy
of the product for the products intended use;
    
    development of manufacturing processes which conform to FDA current Good Manufacturing
Practices, or cGMPs, as confirmed by FDA inspection;
    
    submission of pre-clinical and clinical test results, and chemistry, manufacture and
control information on the product to the FDA in a New Drug Approval Application, or NDA;
and
    
    FDA review and approval of an NDA, prior to any commercial sale or shipment of a
product. The testing and approval process requires substantial time, effort, and financial resources, and
the Company cannot be certain that any approval will be granted on a timely basis, if at all. The results of the pre-clinical tests, together with initial specified manufacturing information,
the proposed clinical trial protocol, and information about the participating investigators are
submitted to the FDA as part of an IND, which must become effective before the Company may begin
human clinical trials. Additionally, an independent Institutional Review Board at each clinical
trial site proposing to conduct the clinical trials must review and approve each study protocol and
oversee conduct of the trial. An IND becomes effective 30 days after receipt by the FDA, unless the
FDA, within the 30-day period, raises concerns or questions about the conduct of the trials as
outlined in the IND and imposes a clinical hold. If the FDA imposes a clinical hold, the IND
sponsor must resolve the FDAs concerns before clinical trials can begin. Pre-clinical tests and 25




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##### 



studies can take several years to complete, and there is no guarantee that an IND .submitted based
on such tests and studies will become effective within any specific time period, if at all. Human clinical trials are typically conducted in three sequential phases that may overlap. Phase I:The drug is initially introduced into healthy human subjects or patients and tested for
safety and dosage tolerance. Absorption, metabolism, distribution, and excretion testing is
generally performed at this stage. Phase II:The drug is studied in controlled, exploratory therapeutic trials in a
limited number of subjects with the disease or medical condition for which the new drug is intended
to be used in order to identify possible adverse effects and safety risks, to determine the
preliminary or potential efficacy of the product for specific targeted diseases or medical
conditions, and to determine dosage tolerance and the optimal effective dose. Phase III:When Phase II studies demonstrate that a specific dosage range of the drug is likely
to be effective and the drug has an acceptable safety profile controlled, large-scale therapeutic
Phase III trials are undertaken at multiple study sites to demonstrate clinical efficacy and to
further test for safety in expanded patient population. The Company cannot be certain in that it will successfully complete Phase I, Phase II, or Phase III
testing of its products within any specific time period if at all. Furthermore the FDA, the
Institutional Review Board or the Company may suspend or terminate clinical trials at any time on
various grounds, including a finding that the subjects or patients are being exposed to an
unacceptable health risk. Results of pre-clinical studies and clinical trials, as well as detailed information about the
manufacturing process, quality control methods, and product composition, among other things, are
submitted to the FDA as part of an NDA seeking approval to market and commercially distribute the
product on the basis of a determination that the product is safe and effective for its intended
use. Before approving an NDA, the FDA will inspect the facilities at which the product is
manufactured and will not approve the product unless cGMP compliance is satisfactory. If applicable
regulatory criteria are not satisfied, the FDA may deny the NDA or require additional testing or
information. As a condition of approval, the FDA also may require post-marketing testing or
surveillance to monitor the products safety or efficacy. Even after an NDA is approved, the FDA
may impose additional obligations or restrictions (such as labeling changes), or even suspend or
withdraw a product approval on the basis of data that arise after the product reaches the market,
or if compliance with regulatory standards is not maintained. The Company cannot be certain that
any NDA it submits will be approved by the FDA on a timely basis, if at all. Also, any such
approval may limit the indicated uses for which the product may be marketed. Any refusal to
approve, delay in approval, suspension or withdrawal of approval, or restrictions on indicated uses
could have a material adverse impact on the Companys business prospects. Each NDA must be accompanied by a user fee, pursuant to the requirements of the Prescription Drug
User Fee Act, or PDUFA, and its amendments. According to the FDAs fee schedule, effective on
October 1, 2003 for the fiscal year 2004, the user fee 26




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##### 



for an application requiring clinical data, such as an NDA, is $573,500. The FDA adjusts the PDUFA
user fees on an annual basis. PDUFA also imposes an annual product fee for prescription drugs and
biologics ($36,080), and an annual establishment fee ($226,800) on facilities used to manufacture
prescription drugs and biologics. A written request can be submitted for a waiver for the
application fee for the first human drug application that is filed by a small business, but there
are no waivers for product or establishment fees. The Company is not at the stage of development
of its products where it is subject to these fees, but they are significant expenditures that will
be incurred in the future and must be paid at the time of application submissions to FDA. Satisfaction of FDA requirements typically takes several years. The actual time required varies
substantially, based upon the type, complexity, and novelty of the pharmaceutical product, among
other things. Government regulation imposes costly and time-consuming requirements and restrictions
throughout the product life cycle and may delay product marketing for a considerable period of
time, limit product marketing, or prevent marketing altogether. Success in pre-clinical or early
stage clinical trials does not assure success in later stage clinical trials. Data obtained from
pre-clinical and clinical activities is not always conclusive and may be susceptible to varying
interpretations that could delay, limit, or prevent marketing approval. Even if a product receives
marketing approval, the approval is limited to specific clinical indications. Further, even after
marketing approval is obtained, the discovery of previously unknown problems with a product may
result in restrictions on the product or even complete withdrawal of the product from the market. After product approval, there are continuing significant regulatory requirements imposed by the
FDA, including record-keeping requirements, obligations to report adverse experiences, and
restrictions on advertising and promotional activities. Quality control and manufacturing
procedures must continue to conform to cGMPs, and the FDA periodically inspects facilities to
assess cGMP compliance. Additionally, post-approval changes in ingredient composition,
manufacturing processes or facilities, product labeling, or other areas may require submission of
an NDA Supplement to the FDA for review and approval. New indications will require submission of an
NDA Supplement. Failure to comply with FDA regulatory requirements may result in an enforcement
action by the FDA, including Warning Letters, product recalls, suspension or revocation of product
approval, seizure of product to prevent distribution, impositions of injunctions prohibiting
product manufacture or distribution, and civil and criminal penalties. Maintaining compliance is
costly and time-consuming. The Company cannot be certain that it, or its present or future
suppliers or third-party manufacturers, will be able to comply with all FDA regulatory
requirements, and potential consequences of noncompliance could have a material adverse impact on
its business prospects. The FDAs policies may change, and additional governmental regulations may be enacted that could
delay, limit, or prevent regulatory approval of the Companys products or affect its ability to
manufacture, market, or distribute its products after approval. Moreover, increased attention to
the containment of healthcare costs in the United States and in foreign markets could result in new
government regulations that could have a material adverse effect on its business. The Companys
failure to obtain coverage, an adequate level of reimbursement, or acceptable prices for its future
products could diminish any revenues it may be able to generate. The Companys ability to
commercialize future products will depend in part on the extent to which coverage and reimbursement
for the products will be available from government and health 27




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##### 



administration authorities, private health insurers, and other third-party payers. European Union
and U.S. government and other third-party payers increasingly are attempting to contain healthcare
costs by consideration of new laws and regulations limiting both coverage and the level of
reimbursement for new drugs. The Company cannot predict the likelihood, nature or extent of adverse
governmental regulation that might arise from future legislative or administrative action, either
in the United States or abroad. The Companys activities also may be subject to state laws and regulations that affect its ability
to develop and sell its products. The Company are also subject to numerous federal, state, and
local laws relating to such matters as safe working conditions, clinical, laboratory, and
manufacturing practices, environmental protection, fire hazard control, and disposal of hazardous
or potentially hazardous substances. The Company may incur significant costs to comply with such
laws and regulations now or in the future, and the failure to comply may have a material adverse
impact on its business prospects. The FDCA includes provisions designed to facilitate and expedite the development and review of
drugs and biological products intended for treatment of serious or life-threatening conditions that
demonstrate the potential to address unmet medical needs for such conditions. These provisions set
forth a procedure for designation of a drug as a fast track product. The fast track designation
applies to the combination of the product and specific indication for which it is being studied. A
product designated as fast track is ordinarily eligible for additional programs for expediting
development and review, but products that are not in fast track drug development programs may also
be able to take advantage of these programs. These programs include priority review of NDAs, and
accelerated approval. Drug approval under the accelerated regulations may be based on evidence of
clinical effect on a surrogate endpoint that is reasonably likely to predict clinical benefit. A
post-marketing clinical study will be required to verify clinical benefit, and other restrictions
to assure safe use may be imposed. Under the Drug Price Competition and Patent Term Restoration Act of 1984 (the Patent Act), a
sponsor may obtain marketing exclusivity for a period of time following FDA approval of certain
drug applications, regardless of patent status, if the drug is a new chemical entity or if new
clinical studies were required to support the marketing application for the drug. This marketing
exclusivity prevents a third party from obtaining FDA approval for an identical or nearly identical
drug under an Abbreviated New Drug Application (ANDA) or a 505(b)(2) New Drug Application. The
statute also allows a patent owner to obtain an extension of applicable patent terms for a period
equal to one-half the period of time elapsed between the filing of an IND and the filing of the
corresponding NDA plus the period of time between the filing of the NDA and FDA approval, with a
five year maximum patent extension. The Company cannot be certain that it will be able to take
advantage of either the patent term extension or marketing exclusivity provisions of these laws. The Companys products, Promensil, Trinovin and Rimostil are classified as dietary supplements.
Dietary supplements, although subject to the FD&C Act, are treated differently than
pharmaceuticals and are the subject of recent legislation known as the Dietary Supplement Health
and Education Act 1994 (the Dietary Supplement Act). The Dietary Supplement Act defines dietary
supplements, creates a safety system for dietary supplements and their ingredients, regulates
claims and labeling of dietary supplements and provides for cGMP for dietary supplements. The
Company believes that Promensil, Trinovin and Rimostil, the products of the Company currently sold
in the U.S., comply 28




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##### 



with the claims, labeling and other rules relating to dietary supplements, and are produced in
accordance with applicable FDA cGMP. The products are formulated and packed by a contract
manufacturer in the U.S. who has informed the Company that it is cGMP-certified by the FDA. The
active bulk ingredients for Promensil, Trinovin and Rimostil are produced by the Company at its
production facility which is certified by the TGA as adhering to cGMP for Australia. The FDA does
not require that the bulk ingredients used in dietary supplements sold in the U.S. be manufactured
according to the FDAs cGMP standards. The discussion below generally relates to pharmaceutical
products and not products characterized as dietary supplements. Manufacturing Regulations The FDA mandates that drugs be manufactured in conformity with cGMP regulations. In complying with
cGMP regulations, manufacturers must continue to expend time, money and effort in production,
record keeping and quality control to ensure that the product meets applicable specifications and
other requirements. The FDA periodically inspects manufacturing facilities to ensure compliance
with applicable cGMP requirements. Failure to comply subjects the manufacturer to possible FDA
action, such as suspension of manufacturing, seizure of the product, voluntary recall of a product,
fines, injunctions, failure to approve a product, or withdrawal of approval of a product. All
products sold in the U.S. are produced by a contract formulator and packer who has informed the
Company that its facilities are certified by the FDA as being in accordance with cGMP. 29




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Organizational Structure Corporate Structure Novogen Limited is a company limited by shares and is incorporated and domiciled in Australia.
Novogen Limited and its controlled entities Novogen or Group has prepared a consolidated
financial report incorporating the entities that it controlled during the financial year, which
included the following controlled entities: Name of Entity
    
    Country of Incorporation
    
    Ownership %Novogen Laboratories Pty Ltd
    
    Australia
    
    100Novogen Research Pty Ltd
    
    Australia
    
    100Central Coast Properties Pty Ltd
    
    Australia
    
    100Phytosearch Pty Ltd
    
    Australia
    
    100Phytogen Pty Ltd
    
    Australia
    
    100Glycotex Pty Ltd
    
    Australia
    
    100Norvogen Pty Ltd
    
    Australia
    
    100Novogen Inc
    
    USA
    
    100Glycotex Inc
    
    USA
    
    97.6Novogen Limited (UK)
    
    UK
    
    100Promensil Limited
    
    UK
    
    100Novogen BV
    
    Netherlands
    
    100Novogen New Zealand Limited
    
    New Zealand
    
    100Novogen Canada Limited
    
    Canada
    
    100Marshall Edwards Inc
    
    USA
    
    86.9Marshall Edwards Pty Limited*
    
    Australia
    
    86.9
   *
    
    Indirect ownership through Marshall Edwards, Inc. Property, Plants and Equipment The Companys major isoflavone extraction manufacturing plant is located in Wyong in New South
Wales. This plant is used to manufacture the active raw material used in the Companys three
dietary supplement products, Promensil, Trinovin and Rimostil.
The Company owns the land and buildings at Wyong and the site covers an area of approximately 3.37
hectares. The equipment used in the extraction process, pilot plant and laboratories under lease
has an amortized lease value of A$1.3 million. The equipment owned by the Company and used in the
manufacturing and other processes has a written down book value of A$2.4 million. The manufacturing
capacity is adequate to produce the forecast isoflavone extract requirements for at least the next
two years. Assets under lease are pledged as security for the lease liability. In addition the
company has entered into a Deed of Set-off where it has agreed to hold a deposited sum with the
bank of at least A$3.0 million at all times as additional security for the lease facility. The book value of assets pledged as security at June 30, 2004 was A$1.3 million. The pilot plant used for the manufacture of the phenoxodiol clinical trial material is located in
leased premises at North Ryde in Sydney. These premises are also used as Novogens
corporate head office. 30




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##### 



Item 5. Operating and Financial Review and Prospects Application of Critical Accounting Policies The summary of significant accounting policies are described in Note 1 to the Consolidated
Financial Statements under Item 18 of this Annual Report. A reconciliation of operating results to
U.S. generally accepted accounting principles (US GAAP) is included in Note 30 to the
Consolidated Financial Statements under Item 18 of this Annual
Report. Revenue Recognition Revenues from product sales and manufacturing revenue are recognized at the time of shipment and a
provision is made at that time for estimated future credits, chargebacks, sales discounts, and
returns. These sales provision accruals are presented as a reduction of the accounts receivable
balances. The Company continually monitors the adequacy of the accruals by comparing the actual
payments to the estimates used in establishing the accruals. The Company ships product to customers
primarily FOB and utilizes the following criteria to determine appropriate revenue recognition:
pervasive evidence of an arrangement exists, delivery has occurred, selling price is fixed and
determinable and collection is reasonably assured. Sales terms are generally 30 days. Royalties under license agreements with third parties are recognized when earned through the sale
of the product by the licensor net of any estimated future credits, chargebacks, sales discounts
and refunds. Allowance for doubtful debts The Company maintains an accounts receivable allowance for an estimated amount of losses that may
result from the customers inability to pay for the product purchased as well as for anticipated
sales returns. If the financial condition of customers were to deteriorate resulting in an
impairment of their ability to make payments, additional allowances may be required. Inventory Adjustments Inventories are measured at the lower of cost or net realizable value. The Company reviews the
components of inventory on a regular basis for excess, obsolete and impaired inventory based on
estimated future usage and sales. The likelihood of any material inventory write-downs is dependent
on rapid changes in customer demand or new product introductions by competitors. The following table is an analysis of revenue from sales and other sources during the past three
fiscal years by categories of activity and by geographical market. Other revenue consists
principally of interest income, grants received and royalty receipts. See Note 2 to the
Consolidated Financial Statements. 31




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##### 



Category of Activity Dietary Supplements Year Ended June 302002
    
    2003
    
    2004(A$000)
    
    (A$000)
    
    (A$000)Sales Revenue
    
    
    19,582
    
    
    
    19,630
    
    
    
    12,720Other Revenue
    
    
    4,706
    
    
    
    4,626
    
    
    
    3,726Total Revenue
    
    
    24,288
    
    
    
    24,256
    
    
    
    16,446
 Geographical Markets 2002
    
    2003
    
    2004(A$000)
    
    (A$000)
    
    (A$000)Sales RevenueAustralia/NZ
    
    
    5,224
    
    
    
    6,228
    
    
    
    4,022UK & Europe
    
    
    2,274
    
    
    
    2,744
    
    
    
    2,341US & Canada
    
    
    12,084
    
    
    
    10,658
    
    
    
    6,35719,582
    
    
    
    19,630
    
    
    
    12,720Other RevenueAustralia/NZ
    
    
    4,669
    
    
    
    4,436
    
    
    
    3,321UK & Europe
    
    
    26
    
    
    
    1
    
    
    
    4US & Canada
    
    
    11
    
    
    
    189
    
    
    
    401Total Revenue
    
    
    24,288
    
    
    
    24,256
    
    
    
    16,446
 Operating Results  Fiscal 2004 v Fiscal 2003 Revenue Total revenue decreased by A$7.8 million or 32% to A$16.4 million in fiscal 2004 from A$24.3
million in fiscal 2003. The reduction was primarily due to the reduction in sales
revenue from sales of the Companys consumer health care products and the phasing of royalty
receipts in line with the license agreement with Solae LLC. 32




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##### 



Total revenue, adjusted for
U.S. GAAP, reduced by A$8.1 million from A$22.3 million in fiscal 2003
to A$14.2 million in 2004. Revenue under U.S. GAAP is reduced by certain trade promotions which are
treated as discounts to Sales Revenue. These trade promotion expenditures are treated as a
marketing expense under Australian GAAP. Other Revenue under U.S. GAAP is also reduced by interest
revenue being recognized in Other Income whereas under Australian GAAP interest income is
recognized in Other Operating Revenue. See Note 30 Differences between Australian GAAP and U.S.
GAAP for detailed U.S. GAAP formatted Statement of Financial Performance. The consumer products sales decreased by A$6.9 million to A$12.7 million in fiscal 2004 from A$19.6
in fiscal 2003. Sales in Australia and New Zealand for the year ended June 30, 2004 were down A$2.2
million in fiscal 2004 to A$4.0 million from A$6.2 million for fiscal 2003. Sales in North America
decreased by A$4.3 million to A$6.4 million in fiscal 2004 down from A$10.7 million for fiscal
2003. Sales in Europe of A$2.3 million for fiscal 2004 were down slightly by A$0.4 million. Sales
revenues were affected by the increased value of the Australian Dollar versus the currencies of
major trading partners, particularly those trading in USD. The adverse currency movements reduced
reported sales by A$1.3 million for the year. Sales were also negatively impacted by the
conflicting publicity and conflicting professional opinions about the safety and efficacy of HRT
and natural menopause products and the mass recall of many products in the Australian market
produced by an unrelated company under investigation for unsatisfactory quality standards. The
Company expects the market for menopause products to continue to be affected by the safety and
efficacy of HRT and natural alternatives debate. Also it will take some time for confidence to
return to the Australian market. The Company will continue to position its products as the most
clinically tested natural alternatives in the menopause market. Other Revenue Other Revenue includes revenue received from non-operating activities, such as, research grants
received from the Australian government, royalties received under the Companys license agreement
with PTI (Solae) and proceeds from the sale of Company assets. The Companys other revenue decreased by A$0.9 million to A$3.7 million in fiscal 2004 from A$4.6
million in fiscal 2003. There was a reduction in royalties as per the licence agreement with Solae
LLC during the year of A$1.3 million offset partially by increased receipts of funds from
government start grants of A$0.4 million. Costs and Expenses The Companys Costs and Expenses is comprised of Cost of Goods Sold, Research and Development,
Selling and Promotions, Shipping and Handling, General and Administrative Expenses and Currency
Gains and Losses. The Companys Total Costs and Expenses (including interest expense) decreased
A$5.9 million, or 17% in fiscal 2004 to A$29.0 million from A$34.9 million in fiscal 2003,
primarily due to the decrease 33




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##### 



in cost of goods sold in line with lower sales volumes. Cost of Goods Sold decreased by A$2.4
million to A$4.8 million in fiscal 2004 from A$7.2 million in fiscal 2003. The cost of Selling
and Promotional expenses reduced by approximately A$2.9 million to A$9.8 million in fiscal 2004
from A$12.7 million in fiscal 2003. The reduction was due to the Companys continued strategy of
conserving cash by pursuing a more targeted promotional program. These savings were partially
offset by an inventory write-down provision of A$0.7 million for Rimostil following its withdrawal
from the Australian market. General and Administrative expenses decreased by A$0.4 million in
fiscal 2004 to A$5.7 million from A$6.1 million in fiscal 2003. This reduction was due to favorable
currency movements. Net Loss The Companys Net Loss increased by approximately A$0.4 million, or 4% in fiscal 2004 to A$10.9
million from A$10.5 million in fiscal 2003. Operating Results  Fiscal 2003 v Fiscal 2002 Revenue The Companys total revenue was A$24.3 million in fiscal 2003 and A$24.3 million in fiscal 2002. The Companys sales of consumer healthcare products, including Promensil, Trinovin and Rimostil,
increased marginally to A$19.6 million in fiscal 2003 from A$19.5 million in fiscal 2002. Sales
were maintained in fiscal 2003 at the same level as fiscal 2002 despite the reduction in amounts
spent on advertising and marketing, the confusion left in the market for menopause products
(especially in the United States) following the negative publicity surrounding the long term use of
HRT and the impact of exchange rates. In fiscal 2003, sales showed strong growth in all markets
except the U.S. and the Netherlands, which were 17% and 16% respectively below the corresponding
period in fiscal 2002. Sales grew strongly in fiscal 2003 in Australia, the UK and Canada and were
19%, 45% and 27%, respectively, above the same corresponding period in fiscal 2002. As sales revenues are denominated in Australian dollars, the Companys sales revenue is affected by
fluctuations in the value of the Australian dollar relative to the currencies of other countries in
which the Company sells its products, primarily the U.S. dollar and the UK pound. In fiscal 2003,
the value of the Australian dollar increased in value relative to the U.S. dollar (see Item 3. Key
Information  Selected Financial Data  Exchange Rates). The strengthening of the Australian
dollar versus major trading partners negatively impacted sales levels by 6% compared to fiscal
2002. Other Revenue Other Revenue includes revenue received from non-operating activities, such as, research grants
received from the Australian government, royalties received under the Companys license agreement
with PTI (Solae) and proceeds from the sale of Company assets. The Companys other revenue
decreased by A$0.1 million from A$4.7 million in fiscal 2002 to A$4.6 million in fiscal 2003,
primarily as a result of increase of A$0.5 million in royalties received from PTI pursuant to a
license agreement between the 34




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##### 



Company and PTI. See
Item 4. Information on the Company  Business
Overview  License Agreements.
These gains were offset by a reduction of A$0.7 million in research grants received from the
Australian Government following the completion of one grant project. In fiscal 2003, the Companys
Other Revenue amounted to 19% of the Companys Total Revenue, which was the same as in fiscal 2002. Costs and Expenses The Companys Costs and Expenses is comprised of Cost of Goods Sold, Research and Development,
Selling and Promotions, and General and Administrative Expenses. The Companys Total Costs and
Expenses (including interest expense) decreased approximately A$4.0 million, or 10% in fiscal 2003
to A$34.9 million from A$38.9 million in fiscal 2002, primarily due to the decrease in the
Companys Selling and Promotions Expenses and general and administrative expenses. The Companys
Selling and Promotions Expenses decreased approximately A$2.5 million, or 16% in fiscal 2003 to
A$12.7 million from A$15.2 million in fiscal 2002, primarily as a result of the Companys efforts
to conserve cash resources. Of this A$2.5 million decrease in Selling and Promotions Expenses,
A$1.8 million represents a decrease in spending on advertising and promotions. Cost of goods sold
decreased as a percentage of sales from 39% in fiscal 2002 to 37% in fiscal 2003 due to the larger
production volumes being produced. General and Administrative Expenses decreased by A$1.3 million or 18% in fiscal 2003 to A$6.1
million from A$7.4 million in fiscal 2002. The reduction was due to the Company making provisions
for the reduction in inventory value of A$1.7 million relating to the Companys stock of
unprocessed red clover in fiscal 2002 which were in excess of the Companys needs, and which were
not repeated in 2003. Net Loss The Companys Net Loss decreased by A$4.1 million, or 28%, in fiscal 2003 to A$10.5 million from
A$14.6 million in fiscal 2002, as a result of the Companys continuing strategy of conserving cash
by managing expenses and improving margins. 35




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##### 



Liquidity and capital resources The Company has continued to finance its operations from equity capital and cash flow from its
over-the-counter dietary supplements business. At the end of fiscal 2004 the Company had cash resources of A$58.4 million versus A$31 million at
the end of fiscal 2003. During November, 2003, 2,514,000 outstanding warrants to purchase shares of common stock of
Marshall Edwards, Inc., a subsidiary of the Company, were exercised at an exercise price of US$4.00
per share prior to their expiration on November 30, 2003. These warrants were issued in connection
with the listing of Marshall Edwards, Incs. common stock on the AIM stock market in London. Net
proceeds from the exercise of the warrants amounted to US$10,056,000 (A$ 14,035,000) to Marshall
Edwards Inc. During December, 2003, Marshall Edwards, Inc. completed an offering of 2,392,000 common stock units
at an initial public offering price of US$7.50 per unit. Each common stock unit consisted of:  
    
    one share of Marshall Edwards, Inc. common stock; and
    
    one warrant to purchase a share of Marshall Edwards, Inc. common stock at an
exercise price equal to US$9.00. In connection with the December offering, Marshall Edwards, Inc. shares of common stock and
warrants commenced trading separately on the Nasdaq National Market. The net proceeds of the offering amounted to approximately US$15,521,000 (A$20,815,000). As a
result of the above two transactions, Novogen retains an 86.9% ownership interest of Marshall
Edwards, Inc. The Company invests its cash and cash equivalents in interest bearing facilities with various
maturity dates. At the end of fiscal 2004, deposits amounting to A$18.5 million had a weighted
average interest rate of 5.22% and cash deposits of A$39.9 million had a weighted average interest
rate of 1.07%. At the end of fiscal 2004, the Company had outstanding interest bearing liabilities in the form of
lease liabilities of A$1.6 million. These leases have an average lease term of 4 years. The average
interest rate implicit in the leases is 8.42% (2003: 8.42%). The Company has arranged finance lease facilities with the St George Bank of Australia of A$4.0
million of which, A$1.6 million was unused at the end of fiscal 2004. The Company does not hedge its foreign exchange exposures. The Company however, continues to
minimise foreign exchange risk by having international sales and marketing expenses being
denominated in local currencies. See Item 11 Quantitative and Qualitative Disclosures About Market
Risk  Foreign Currency Risk. During fiscal 2004, the Company had net cash outflows from operating activities of A$10.5 million.
Included in this amount are cash receipts of A$1.2 million of interest received from invested cash
balances, A$1.0 million from the proceeds of Government grants being primarily the START Grants for
research and development and A$1.0 36




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##### 



million royalty received from PTI pursuant to a license agreement between the Company and PTI. See
Item 4. Information on the Company  Business Overview  Clinical Developments  License
Agreements. It is the opinion of the Company that the current level of working capital is sufficient to meet
present requirements. There are no commitments for capital expenditure outstanding at the end of the financial year. Table of Contractual Obligations  Payments due by periodIn $000's
    
    Total
    
    Less than 1 year
    
    1-3 years
    
    4-5 years
    
    After 5 yearsOperating Leases
    
    
    408
    
    
    
    375
    
    
    
    33
    
    
    
    
    
    
    
    Finance Leases
    
    
    1,681
    
    
    
    899
    
    
    
    782
    
    
    
    
    
    
    
    Other Expenditure Committments
    
    
    7,112
    
    
    
    6,200
    
    
    
    912
    
    
    
    
    
    
    
    Total Contractual Cash Obligations
    
    
    9,201
    
    
    
    7,474
    
    
    
    1,727
    
    
    
    
    
    
    
    
 Off-Balance Sheet Arrangements The Company does not have any off-balance sheet arrangements. Research and Development Major advances were made during the year on the Groups clinical development program. Phenoxodiol The Groups lead anti-cancer drug, phenoxodiol, continued its clinical development program through
Marshall Edwards, Inc., the Companys 86.9% owned subsidiary company. Phenoxodiol is currently
being evaluated in phase II clinical trials for the treatment of prostate cancer, ovarian cancer,
squamous cell carcinomas (SCC) of the cervix, vagina and vulva and renal cancer. During 2004, Marshall Edwards, Inc made significant progress in the clinical development of
phenoxodiol including:  
    
    The release by Yale researchers of preliminary results of a dose-finding study in women
with recurrent ovarian cancer that has become unresponsive to standard chemotherapy, who
received intravenous phenoxodiol. The data reflected outcomes of the first 20 of 40
measurable subjects and showed that 13 patients 37




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##### 



were able to finish a three month treatment cycle, and 5 patients were considered to have
had disease stabilization. All patients ultimately showed disease progression. This trial
is now complete and the Company is awaiting final analysis of the trial data;  
    
    Commencing a clinical trial in cervical cancer at Yale New Haven Hospital. The study is
the first to be conducted in the U.S. using the oral dosage form of phenoxodiol and will
be used in patients who have a primary diagnosis of cancer for a period of four weeks.
Following treatment with phenoxodiol, patients will be scheduled for either surgical
resection or radiotherapy. The study will evaluate the safety and ability of phenoxodiol
to act as an effective anti-cancer drug when it is given as a monotherapy in early stage
cancer;
    
    Commencing a renal cancer study of phenoxodiol in combination therapy at St George
Hospital in Sydney, Australia. The study will involve patients with late stage cancers
that are no longer responding to standard chemotherapies. In this study, phenoxodiol will
be administered orally;
    
    Commencing a new multi-center trial to evaluate phenoxodiol as a chemo-sensitizing
agent in patients with chemo-resistant ovarian cancer. The first site involves up to 40
patients at Yale New Haven Hospital. The two main objectives of the study are to
investigate the degree to which phenoxodiol reverses chemo-resistance, and to compare the
relative efficacies of paclitaxel and cisplatin, each in combination with phenoxodiol;
    
    Establishing a second trial site for the multi-center ovarian cancer study at the Royal
Womens Hospital in Melbourne Australia; and
    
    Announcing preliminary data from the late-stage prostate cancer trial being conducted
at multiple sites in Australia. The data showed that phenoxodiol is biologically active by
reducing or stabilizing Prostate Specific Antigen (PSA) levels in 8 of 12 patients
receiving the study drug.
    
    In November 2004, Marshall Edwards, Inc. announced that the
U.S. Food and Drug Administration (FDA) has granted phenoxodiol Fast
Track status for its intend use as a chemo-sensitizing agent in
patients with recurrent late stage ovarian cancer. Under the FDA
Modernization Act of 1997, designation as a Fast Track product means
that phenoxodiol is eligible for certain accelerated marketing
approval programs. NV-18 NV-18, an anti-cancer drug developed to treat melanoma and cholangiocarcinoma (gall bladder cancer)
entered its clinical development stage. NV-18 has been approved for a Phase I study at St George
Hospital in Sydney. The study will determine the drugs bio-availability, pharmacokinetic profile
and acute safety. The drug will be delivered in three different ways including orally, by bolus injection and by slow
intravenous infusion to 6 patients with solid tumours over a period of 8 weeks. The Company has granted to a subsidiary of Marshall Edwards, Inc., under a licence option deed an
exclusive right to accept and exclusive last right to match any proposed dealings by the Company
with its intellectual property rights with a third party relating to certain pharmaceutical
compounds (other than phenoxodiol) developed by the Company. The licence option deed would cover
any proposed dealing with respect to NV-18. 38




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##### 



NV-04 In July 2004, the Company announced that trans-NV-04, the Companys leading cardiovascular drug,
had begun clinical trials. Trans-NV-04 is an advanced version of NV-04. Trans-NV-04 will be tested
in human subjects who are at risk of cardiovascular disease, but are otherwise healthy. The trial
will be conducted at the Baker Heart Research Institute and will initially evaluate safety and
tolerability in a dose ranging study. This will be followed by a randomised, cross-over, placebo
controlled and double blind study in subjects receiving either trans-NV-04 or placebo. The Company spent A$8.3 million on gross R&D expenditure during fiscal 2004. The Company spent
A$8.3 million on gross R&D expenditure in fiscal 2003. The Company spent A$7.9 million on gross R&D
expenditure in fiscal 2002. Due to the nature and uncertainty of the R&D projects being undertaken by the Company, it is not
possible to reasonably estimate the cost and timing of project completion. The costs of R&D
projects are not estimated on a project by project basis and to analyse costs between projects
could only be performed on an arbitrary and subjective basis. The progress on research and development projects and expenses is monitored and controlled in a
number of ways. All third party research and development including the conduct of clinical trials are carried out
under contract. The contract details include project milestones and expenditure budgets. Senior
Novogen research and development staff monitor the projects to ensure that milestones are achieved
in a timely manner. In-house research and development is managed by the Research and Development Director and senior
research and development staff. Budgets are prepared annually and agreed by the Novogen Board.
Expenses are monitored monthly, actual versus budget by expense line and in total. Trend Information Sales of the Companys dietary supplements decreased in fiscal 2004 compared to fiscal 2003. The
sales reduction was due mainly to the increased value of the Australian Dollar versus the
currencies of the Companys major trading partners, particularly those trading in USD. This had a
negative impact on reported sales. Movements in the value of major trading currencies will continue
to affect the reported sales values. Sales were also negatively impacted by the conflicting publicity and conflicting professional
opinions about the safety and efficacy of HRT and natural menopause products and the mass recall of
many products in the Australian market produced by an unrelated company under investigation for
unsatisfactory quality standards. The Company expects the market for menopause products to continue
to be affected by the safety and efficacy of HRT and natural alternatives debate. Also it will take
some time for confidence to return to the Australian market. The Company will continue to position
its products as the most clinically tested natural alternatives in the menopause market. 39




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##### 



The Company expects to continue its expenditure on research and development and the impact on cash
resources and results from operations of this expenditure will vary with the extent and timing of
the future clinical trial program. It is not possible to make accurate predictions of future
operating results. Item 6. Directors, Senior Management and Employees. The names of the Companys Directors during the fiscal year and up to the date of this report are
as follows: Mr. P. A. Johnston (Non-executive Chairman)
Mr. C. Naughton (Managing Director)
Professor G. E. Kelly (Executive Director)
Mr. P. B. Simpson
Professor P. J. Nestel AO
Dr. L. C. Read (appointed September 11, 2003) All Directors were in office from the beginning of the financial year until the date of this
report, unless otherwise stated. Information on Directors Philip A. JohnstonNon- Executive Chairman
Dip Eng (Production) Non-Executive Director since 1997, Mr. Johnston was elected chairman of the Novogen Group with
effect from 1January 2001. Mr. Johnston has extensive experience in the pharmaceutical
industry including 9 years as an Executive Director of Wellcome Australia Limited. He was
previously a Director of two subsidiary companies of GlaxoWellcome. He has had responsibility for
production, distribution, quality assurance and consumer product development and has been directly
involved in the establishment of strategic alliances and joint ventures. He has completed a number
of executive development programs including the University of NSW and the London Business School.
Mr. Johnston is also a Director of Lipa Pharmaceuticals Limited. Christopher NaughtonManaging Director
BEc, LLB Managing Director since March 1997, Mr. Naughton joined Novogen in 1996 as Commercial Director.
Mr. Naughton has degrees in Economics from the ANU and in Law from the UNSW. He has completed the
Program for Management Development at the Harvard Business School, and is an Attorney in New South
Wales. After working in merchant banking, he has spent the last 19 years in the pharmaceutical
industry, including appointments as a Director of Wellcome Australia Limited and in worldwide
business development with The Wellcome Foundation Limited in the UK. 40




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##### 



Professor Graham E. KellyExecutive Director
BSc(Vet), BVSc, PhD Executive Director since 1994, Professor Kelly is founder and was the first Managing Director of
Novogen Limited. Professor Kelly was Chairman of the Novogen Group until 31 December 2000, a
position he had held since March 1997; he is also Chairman of the NASDAQ and AIM listed subsidiary
company Marshall Edwards, Inc. He has spent nearly 30 years in medical research involving drug
development, immunology, surgery and cancer. Professor Kelly was Senior Research Fellow in
Experimental Surgery in the Faculty of Medicine at the University of Sydney. He developed the ß-1,
3-Glucan and Isoflavone intellectual property now owned by the Novogen Group. Peter B. SimpsonNon-Executive Director
MPharm, PhC, MPS Non-Executive Director since 1994, Mr. Simpson has extensive experience in the development of
pharmaceutical products for international markets. He was Research and Development Manager with
David Bull Laboratories for 8 years prior to being appointed Chief Executive Officer of Biota
Holdings Limited in 1987. At Biota he oversaw the research and development of an effective cure
for influenza and the licensing of that discovery to Glaxo Limited. Mr Simpson is currently
associated with a wide range of biotechnology and pharmaceutical interests predominantly associated
with the conduct of late stage clinical studies and the commercialisation of Australian biomedical
discoveries. Professor Paul J. NestelNon-Executive Director
AO MD, FTSE, FRACP, FAHA. Professor Nestel is currently a Senior Principal Research Fellow and Head of the Cardiovascular
Nutrition Laboratory at the Baker Medical Research Institute, Victoria. Professor Nestel is also a
Consultant Physician at the Alfred Hospital, Melbourne. He is president of the International Life
Sciences Institute (Australasia) and is a member of the board of directors of ILSI South East Asia.
He was formally Clinical Professor in Medicine, The Flinders University of South Australia.
Professor Nestel has been and remains a member of many national and international committees for
research and policy on cardiovascular disease. He has published over 370 scientific and medical
papers and is a Fellow of the Australian Academy of Technological Sciences and Engineering and
Fellow of the American Heart Association. Professor Nestel is an Officer of the Order of Australia. Dr. Leanna C. ReadNon-Executive Director BAgSc(Hons), PhD, FTSE
Dr. Read was appointed Non-Executive Director in September 2003. Dr. Read is founder and Managing
Director of TGR BioSciences Pty Ltd, an early-stage biotech company that discovers novel bioactives
by high-throughput screening. She has 15 years of experience in leading and managing
commercially-related research organisations, 41




---



##### 



including the CRC for Tissue Growth and Repair, and
the Child Health Research Institute. Dr. Read holds a professorial appointment at Flinders
University and has published over 90 scientific papers. Board appointments currently include the
Prime Ministers Science and Engineering Council and the Australian Proteome Analysis Facility Inc.
Dr. Read was a member of the Industry Research and Development Board for six years until 2002 and
chaired its Biological Committee. She is a Fellow of the Australian Academy of Technological
Sciences and Engineering and has been awarded the inaugural Biotechnology Industry Service Award. Executive Officers profiles Alan James Husband  Research Director
BScAgr, PhD, DSc, FASM Professor Husband is recognized internationally for his research in the areas of immunology and
pathology in veterinary and medical sciences. Professor Husband has published several books and
over 200 scientific articles and is a member of the editorial boards of several international
scientific journals. Professor Husband has been with the Company since October 1996. David Ross Seaton  Chief Financial Officer
B Bus KCAE, M Com UNSW, CPA Mr. Seaton is a graduate in Business Studies as well as holding a Master of Commerce degree from
the University of NSW. He has completed Management Development programs at Northwestern University
in Chicago as well as at Duke University and the London Business School. He has had 16 years
experience in the pharmaceutical industry and prior to joining Novogen in 1999 was the Finance
Director of GlaxoWellcome Australia Ltd. Mr. Seaton was also Finance Director of Wellcome Australia
Limited prior to its merger with Glaxo in 1995. Warren Lancaster  Vice President Commercial and Corporate Development
BSc, MBA A graduate in physics as well as holding an MBA from the Australian Graduate School of Management
(Sydney), Mr. Lancaster worked as a business strategy and management consultant with an Australian
consulting firm before joining the Company in March 1997, specifically to assume the role of Vice
President- North America. Bryan Palmer  Operations General Manager Mr. Palmer joined Novogen in 1993. Since that time he has held a number of senior management
positions within the Company. He completed the Program for Management Development at the Harvard
Business School in 2001. 42




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##### 



Craig Kearney  General Manager Consumer Business
BMS Waikato. Craig Kearney joined Novogen in December 2001 as the General Manager of the Consumer Business. He
has a Bachelor of Management Studies from Waikato University in New Zealand and has subsequently
completed managerial development programmes at London School of Business and Duke University in the
US. He has worked 18 years in the Over The Counter (OTC) consumer pharmaceutical category including
10 years for Wellcome New Zealand and Wellcome Australia, 6 years for Parke Davis/Warner Lambert
Australia and prior to Novogen he worked for Pfizer Australia. He held senior sales, marketing and
business management roles for all three companies. 43




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##### 



Compensation The Remuneration Committee of the Board of Directors is responsible for determining and reviewing
compensation arrangements for the Directors, the Managing Director and the executive team. The
Remuneration Committee assesses the appropriateness of the nature and amount of emoluments of such
officers on a periodic basis by reference to relevant employment market conditions with the overall
objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and
executive team. Such officers are given the opportunity to receive their base emolument in a
variety of forms including cash and fringe benefits such as the use of motor vehicles. It is
intended that the manner of payment chosen will be optimal for the recipient without creating undue
cost for the Company. Details of the nature and amount of each element of the emolument of each Director of Novogen
Limited and the five Executive Officers included in the Companys senior management are as
follows: Compensation of Directors of Novogen Limited July 1, 2003  June 30, 2004 Annual Emoluments
    
    Long term Emoluments
    
    TotalBase Fee
    
    Committee Fee
    
    Other
    
    Termination &
    
    Options Granted
    
    Super-Similar Payments
    
    
    
    annuationAmortised Cost
    
    RemunerationA$
    
    A$
    
    A$
    
    A$
    
    Number
    
    A$
    
    %
    
    A$
    
    A$PA Johnston
    
    
    56,182
    
    
    
    14,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    668
    
    
    
    0.87
    %
    
    
    6,318
    
    
    
    77,168C Naughton
    
    
    419,016
    
    
    
    
    
    
    
    91,138
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,711
    
    
    
    547,865GE Kelly
    
    
    306,234
    
    
    
    
    
    
    
    45,523
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,561
    
    
    
    379,318PJ Nestel
    
    
    32,500
    
    
    
    12,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,500LC Read
    
    
    21,688
    
    
    
    4,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,312
    
    
    
    28,000PB Simpson
    
    
    28,494
    
    
    
    16,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    668
    
    
    
    1.36
    %
    
    
    4,006
    
    
    
    49,168864,114
    
    
    
    46,000
    
    
    
    136,661
    
    
    
    
    
    
    
    
    
    
    
    1,336
    
    
    
    
    
    
    
    77,908
    
    
    
    1,126,019
 Novogens Constitution provides that the directors who are not executive officers shall be
paid an ordinary remuneration which may not exceed the maximum amount fixed by the shareholders of
the Company in general meetings from time to time. Directors fees are higher for the role of
Company Chairman. No Director has received or become entitled to receive, during or since the end of the fiscal year,
a benefit because of a contract made by Novogen Limited, a controlled entity, or a related body
corporate with a Director, a firm of which a Director is a member or an entity in which a Director
has a substantial financial interest. 44




---



##### 



Compensation of the Executive Officers of the Company and the consolidated entity July 1, 2003 
June 30, 2004. Annual Emoluments
    
    Long term Emoluments
    
    TotalBase Fee
    
    Other
    
    Termination
    
    Options Granted
    
    Super-& Similar
    
    
    
    annuationPaymentsAmortised CostA$
    
    A$
    
    A$
    
    Number
    
    A$
    
    A$
    
    A$AJ Husband
    
    
    234,371
    
    
    
    87,644
    
    
    
    
    
    
    
    14,892
    
    
    
    40,579
    
    
    
    20,605
    
    
    
    383,199DR Seaton
    
    
    257,203
    
    
    
    28,314
    
    
    
    
    
    
    
    14,892
    
    
    
    37,795
    
    
    
    23,148
    
    
    
    346,460WJ Lancaster (USA)
    
    
    209,225
    
    
    
    6,295
    
    
    
    
    
    
    
    7,848
    
    
    
    22,851
    
    
    
    18,531
    
    
    
    256,902B Palmer
    
    
    131,976
    
    
    
    56,273
    
    
    
    
    
    
    
    8,244
    
    
    
    24,114
    
    
    
    11,877
    
    
    
    224,240CD Kearney
    
    
    152,880
    
    
    
    37,576
    
    
    
    
    
    
    
    8,192
    
    
    
    17,210
    
    
    
    13,759
    
    
    
    221,425985,655
    
    
    
    216,102
    
    
    
    
    
    
    
    54,068
    
    
    
    142,549
    
    
    
    87,920
    
    
    
    1,432,226
 The terms Director and Officer have been treated as mutually exclusive for the purposes of
this disclosure. Executive Officers are those directly accountable and responsible for the
operational management and strategic direction of the Company. Arrangements and Relationships There are no arrangements (other than standard employment remuneration arrangements) by which any
Director or Executive Officer was appointed to his position. There are no family relationships
between any of the Directors or Executive Officers. Pension Benefits The Company has paid A$518,000 during fiscal 2004 for employee superannuation benefits and pension
benefits. 45




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##### 



Board Practices Novogen Board of Directors Name
    
    Position Held
    
    Year First
    
    Current TermAppointed
    
    ExpiresP A Johnston
    
    Chairman
    
    
    1997
    
    
    October-2006C Naughton
    
    Managing Director
    
    
    1997
    
    
    
    G E Kelly
    
    Executive Director
    
    
    1994
    
    
    October-2005P B Simpson
    
    Director
    
    
    1994
    
    
    October-2006P J Nestel
    
    Director
    
    
    2001
    
    
    October-2006L C Read
    
    Director
    
    
    2003
    
    
    October-2006
 Term of Directors The term for each director (excluding the Managing Director) is three years at which time that
director retires from office and offers himself/herself for re-election at the next annual general
meeting. For more information about the term and details of the Managing Directors term refer to
the Employment contract attached. (Exhibit 4.1) Dr. Leanna Read was appointed to the board on September 11, 2003. The Board has the power to appoint any person to be a director either to fill a casual vacancy or
as an additional director (up to a maximum of 10). Any director so appointed may hold office only
until the next annual general meeting when he or she shall be eligible for election. Board of Directors The Novogen Limited Board of Directors is elected by and accountable to shareholders. It monitors
and directs the business and is responsible for the corporate governance of the Company.
Responsibility for managing the development of the Company consistent with the objective of
enhancing long term shareholder value is with the Managing Director, who is accountable to the
Board. The Board comprises six Directors of whom four are non-executive Directors. The two executive
Directors are the Managing Director, Mr. Christopher Naughton and Professor Graham Kelly. In
addition the Board has established the following Committees  Audit, Remuneration, and Capital
Works Committees. There is also the International Scientific Advisory Board whose membership includes the Executive
Directors and which advises the Board on clinical and scientific strategy and direction. 46




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##### 



Audit Committee The Board has established an audit committee, which operates under a charter approved by the board.
It is the Boards responsibility to ensure that an effective internal control framework exists
within the Company. This includes internal controls to deal with both the effectiveness and
efficiency of significant business processes, the safeguarding of assets, the maintenance of proper
accounting records and the reliability of financial information as well as non-financial
considerations such as bench marking of operational key performance indicators. The Board has
delegated the responsibility for the establishment and maintenance of a framework of internal
control and ethical standards for the management of the consolidated entity to the Audit Committee. The committee also provides the board with additional assurance regarding the reliability of
financial information for inclusion in the financial reports. All members of the audit committee
are independent non-executive directors. The members of the audit committee during the year were
Peter Simpson (Chairman), Paul Nestel AO, Philip Johnston and Leanna Read. Remuneration Committee The Remuneration Committee has been formed in order to review the remuneration of the Executive
Directors and key executives by reference to independent data, external professional advice and the
requirements to retain high quality management. The committee comprises the Non-Executive Directors Peter Simpson (Chairman), Paul Nestel AO and
Philip Johnston. Capital Works Committee The Capital Works Committee reviews capital investment proposals, assesses the project tenders and
reviews progress against timetables and cost estimates. The Committee comprises Philip Johnston
(Chairman), Peter Simpson, Paul Nestel AO and Christopher Naughton. Executive Directors Employment Contracts Each of Professor Graham Kelly and Mr. Christopher Naughton have entered into employment agreements
with the Company. The agreements, each dated June 25, 2003, are similar in terms, other than as to the description of
the position held (Executive Director in the case of Professor Graham Kelly and Managing Director
in the case of Mr. Christopher Naughton), the responsibilities attached to that position,
remuneration and the term of the agreement. Professor Kellys agreement provides for an initial term of appointment of three years. Mr.
Naughtons agreement provides for an initial term of five years. After the expiration of the term
either party may give to the other not less than six months notice of termination. 47




---



##### 



The agreements may be terminated by the Company immediately in the event of matters such as serious
breach of faith, serious neglect or default of duties, fundamental breach of agreement, or
commission of criminal offence or dishonesty. The agreements are terminated automatically on the
death or total or permanent disability of the employee. The employment agreements require that the employee must carry out his employment in the manner and
at the time that the Company reasonably determines. He must comply with and carry out the proper
and reasonable directions, orders and instructions of, and is directly responsible to, the Board. There are provisions in each agreement as to annual leave, sick leave and long service leave. Provisions dealing with confidentiality and the obligation to assist the Company in securing the
Companys ownership of all intellectual property developed by the employee are contained in the
agreement. In addition, each employee is restrained from competing with the Company during the
term of the agreement, with a non-solicitation limitation for a period of five years after such
term expires. Under each agreement, the Company must indemnify the employee, within the limits set in the
Corporations Law and the Constitution of the Company, against any liability: (a) incurred in
connection with the performance of his position, unless the liability arises out of conduct
involving a lack of good faith; (b) incurred in defending any proceedings in connection with the
performance of his duties, whether civil or criminal and in which judgment is given in his favor or
in which he is acquitted; or (c) in connection with any application in relation to any proceedings
in which relief under the Corporations Law is granted. The Company also agrees to pay insurance premiums for policies covering liabilities incurred by the
employee in connection with the performance of his duties, excluding liabilities arising out of
conduct involving a willful breach of duty or a contravention of certain provisions of the
Corporations Law relating to an improper use of position or improper use of information acquired by
virtue of his position. 48




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Employees The Company employed 67 people at June 30, 2004 as follows (June 30, 2003 : 61 people). Category of Activity
    
    Number of People2004
    
    2003Research and Development
    
    
    19
    
    
    
    18Production
    
    
    21
    
    
    
    14Sales and Marketing
    
    
    13
    
    
    
    17Finance and Administration
    
    
    14
    
    
    
    12Total
    
    
    67
    
    
    
    61
 49




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##### 



Share Ownership Directors holdings of shares and options in the Company The table below shows the number of ordinary shares and options to purchase ordinary shares held
directly or indirectly by the Directors of the Company as of
December 31, 2004. Ordinary
    
    %
    
    OptionsShares Fully
    
    Total SharesPaid
    
    on IssueNumber
    
    Exercise
    
    ExpiryOutstanding
    
    Price
    
    DateG E Kelly
    
    
    8,362,652
    
    
    
    8.6
    
    
    
    
    
    
    
    
    
    
    
    C Naughton
    
    
    738,511
    
    
    
    0.8
    
    
    
    
    
    
    
    
    
    
    
    P A Johnston
    
    
    43,594
    
    
    
    
    
    
    
    3,128
    
    
    
    4.01
    
    
    Oct 27 2005P B Simpson
    
    
    500
    
    
    
    
    
    
    
    3,128
    
    
    
    4.01
    
    
    Oct 27 2005P J Nestel
    
    
    12,000
    
    
    
    
    
    
    
    20,000
    
    
    
    3.58
    
    
    July 20 2005L C Read
    
    
    2000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 The named Executive Officers own shares in the Company, and have options issued under the Novogen
Limited Share Option Plan. Employee Share Option Plan The Employee Share Option Plan provides for the issue of options to eligible employees being either
an employee or Director of the Company or an associated company. Each option entitles its holder
to acquire one fully paid ordinary share and is exercisable at a price equal to the average price
of such shares at the close of trading on the Australian Stock Exchange for the five days prior to
the date of issue. Options are not transferable. The option lapses if the employee ceases to be
an employee during the vesting period. There are currently 45 employees eligible for this scheme. Exemptions from Certain Nasdaq Corporate Governance Rules Exemptions from the Nasdaq corporate governance standards are available to foreign private issuers
such as Novogen when those standards are contrary to a law, rule or regulation of any public
authority exercising jurisdiction over such issuer or contrary to generally accepted business
practices in the issuers county of domicile. In connection with Novogens National Market Listing
Application, Nasdaq granted Novogen exemptions from certain corporate governance standards that
were contrary to the laws, rules, regulations or generally accepted business practices of
Australia. These exemptions and the practices followed by Novogen are described below:  
    
    Novogen is exempt from Nasdaqs quorum requirements applicable to
meetings of ordinary shareholders. In keeping with the law of
Australia and generally accepted business practices in Australia,
Novogens Constitution (formerly known as the Memorandum of
Association and Articles of Association) requires a quorum of
three shareholders for a shareholders meeting. 50




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
    
    Novogen is exempt from Nasdaqs requirement that each Nasdaq
issuer shall require shareholder approval of a plan or arrangement
in connection with the acquisition of the stock or assets of
another company if any director, officer or substantial
shareholder of the issuer has a 5 percent or greater interest (or
such persons collectively have a 10 percent or greater interest),
directly or indirectly, in the company or assets to be acquired or
in the consideration to be paid in the transaction or series of
related transactions and the present or potential issuance of
common stock, or securities convertible into or exercisable for
common stock, could result in an increase in outstanding common
 shares or voting power of 5 percent or more.Novogen is listed on the Australian Stock Exchange (ASX) and subject to chapter 10 of the
ASX Listing rules which require shareholder approval for an acquisition from or disposal to
a related party (including a director) or substantial shareholder (who is entitled to
at least 10% of the voting securities) of substantial assets. The Australian
Corporations Act to which Novogen is also subject generally requires shareholder approval
for a transaction with a director or director-controlled entity unless on arms length
terms. 51




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Item 7. Major Shareholders and Related Party Transactions Major Shareholders The names of the major shareholders known to the Company are as follows at December 31, 2004: Bende Holdings Pty Ltd  holding 6,485,538 Ordinary Shares representing 6.7% of the outstanding
Ordinary Shares. Bende Holdings Pty Ltd is a company controlled by G E Kelly. Oppenheimer Funds Inc  holding 13,462,783 Ordinary Shares representing 13.9% of the outstanding
Ordinary Shares. The major shareholders do not have any different voting rights than other shareholders of the
Company. There has been no significant changes to the shareholding of the known major shareholders
over the last three years. At December 31, 2004 there were 7,113,866ADRs outstanding, representing 35,569,330 Ordinary Shares
(or 36.8% of the then outstanding Ordinary Shares). At
December 31, 2004 there were 42 registered
holders of Novogen ADRs. 52




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##### 



Item 8. Financial Information Consolidated financial
statements are included in Item 18  Financial
Statements on pages 69
through 129. Export Sales Export sales to third parties from Australia are not a significant portion of total sales. The
details of sales by geographic region are contained in Item 5  Operating and Financial Review and
Prospects. Legal Proceedings There are no pending legal proceedings which either individually or in the aggregate, will have a
significant effect on the Companys financial position or profitability, nor have any such
proceedings had any such effect in the recent past. Dividends The Company has incurred losses since its inception and as a result has not declared any dividends.
Any dividends declared in the future will be paid in Australian dollars. Significant Changes No significant change has occurred since the date of the consolidated financial statements included
in this Annual Report. 53




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##### 



Item 9. Offer and Listing Details Trading Markets The principal listing of Novogen and quotation of its Ordinary Shares and listed options to
purchase Ordinary Shares is on the Australian Stock Exchange (ASX). As of January 7, 1999, the
Companys American Depositary Receipts (ADRs) each representing five ordinary shares began trading
on the Nasdaq Small Cap Market. On May 12, 2000 Novogens ADRs began trading on the Nasdaq
National Market. The trading symbol on Nasdaq is NVGN. The trading symbol on ASX is NRT. American Depositary Receipts Novogens Ordinary Shares trade in the U.S. in the form of ADRs. Novogen has entered into a
Deposit Agreement with the Bank of New York under which the Bank of New York, acting as depositary,
issues the ADRs. The following table sets forth, for the calendar periods indicated, the high and low market
quotations for Novogens Ordinary Shares, as quoted on the ASX, and Novogens ADRs, as quoted on
the Nasdaq. 54




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##### 



NOVOGEN LIMITED SHARE PRICE HISTORY Period
    
    Per Ordinary Share (A$)
    
    Per ADR (US$)Year Ended
    
    High
    
    Low
    
    High
    
    LowJune 2000
    
    
    5.00
    
    
    
    2.42
    
    
    
    18.00
    
    
    
    8.00June 2001
    
    
    4.62
    
    
    
    2.02
    
    
    
    14.25
    
    
    
    5.35June 2002
    
    
    3.34
    
    
    
    0.83
    
    
    
    10.50
    
    
    
    1.98June 2003
    
    
    5.59
    
    
    
    1.18
    
    
    
    19.59
    
    
    
    3.15June 2004
    
    
    8.80
    
    
    
    4.00
    
    
    
    31.90
    
    
    
    12.30Quarter EndedSeptember 2002
    
    
    2.18
    
    
    
    1.18
    
    
    
    6.34
    
    
    
    4.25December 2002
    
    
    3.36
    
    
    
    1.76
    
    
    
    9.77
    
    
    
    4.83March 2003
    
    
    3.89
    
    
    
    2.48
    
    
    
    11.55
    
    
    
    7.23June 2003
    
    
    5.59
    
    
    
    3.05
    
    
    
    19.59
    
    
    
    9.36September 2003
    
    
    5.53
    
    
    
    4.00
    
    
    
    19.10
    
    
    
    12.30December 2003
    
    
    8.80
    
    
    
    5.33
    
    
    
    31.90
    
    
    
    17.63March 2004
    
    
    7.65
    
    
    
    4.58
    
    
    
    29.49
    
    
    
    17.40June 2004
    
    
    6.80
    
    
    
    4.93
    
    
    
    26.00
    
    
    
    17.25September 2004
    
    
    5.60
    
    
    
    4.15
    
    
    
    20.00
    
    
    
    14.85December 2004
    
    
    6.25
    
    
    
    4.54
    
    
    
    24.35
    
    
    
    17.44Month EndedJune 2004
    
    
    5.48
    
    
    
    5.00
    
    
    
    19.38
    
    
    
    17.25July 2004
    
    
    5.60
    
    
    
    4.70
    
    
    
    20.00
    
    
    
    16.56August 2004
    
    
    4.81
    
    
    
    4.15
    
    
    
    16.97
    
    
    
    14.85September 2004
    
    
    5.25
    
    
    
    4.60
    
    
    
    18.23
    
    
    
    16.00October 2004
    
    
    5.08
    
    
    
    4.54
    
    
    
    18.85
    
    
    
    17.44November 2004
    
    
    6.25
    
    
    
    4.80
    
    
    
    24.35
    
    
    
    17.75December 2004
    
    
    6.24
    
    
    
    5.40
    
    
    
    23.57
    
    
    
    20.99
 55




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##### 



Item 10. Additional Information Memorandum and Articles of Association The Companys Memorandum and Articles of Association are incorporated by reference to the
Registration Statement on Form 20-F filed with the Securities and Exchange Commission on December
24, 1998 (File No. 0-29962). Material Contracts There have been no material contracts entered into in the last two years by the Company or any of
its subsidiaries other than in the normal course of business. Exchange Controls Australia has largely abolished exchange controls on investment transactions. The Australian
dollar is freely convertible into U.S. dollars. In addition, (other than as specified under
taxation below and certain restrictions imposed under Australian law in relation to dealings with
the assets of and transactions with, designated countries, entities and persons specified by the
Reserve Bank of Australia from time to time, including, persons connected with terrorism) there are
currently no specific rules or limitations regarding the export from Australia of profits,
dividends, capital, or similar funds belonging to foreign investors, except that certain payments
to non-residents must be reported to the Australian Cash Transaction Reports Agency, which monitors
such transactions. However, as mentioned above, the Reserve Bank of Australia does retain
discretion to prevent foreign exchange dealings in certain circumstances under the Australian
Banking (Foreign Exchange) Regulations 1959. Under Australian law, foreign persons are prohibited from acquiring more than a limited percentage
of the shares in an Australian company without approval from the Australian Treasurer or in certain
other limited circumstances. These limitations are set forth in the Australian Foreign
Acquisitions and Takeovers Act (the Foreign Takeovers Act). Under the Foreign Takeovers Act, as currently in effect, any foreign person, together with
associates, is prohibited from acquiring 15% or more of the outstanding shares of Novogen (or else
the Treasurer may make an order requiring the acquirer to dispose of those shares within a
specified period of time). In addition, if a foreign person acquires shares in Novogen and as a
result the total holdings of all foreign persons and their associates exceeds 40% in aggregate
without the approval of the Australian Treasurer, then the Treasurer may make an order requiring
the acquirer to dispose of those shares within a specified time. The same rule applies if the
total holdings of all foreign persons and their associates already exceeds 40% and a foreign person
(or its associate) acquires any further shares, including in the course of trading in the secondary
market of the ADRs. Under the current Australian foreign investment policy, it is unlikely that the Treasurer would
make such an order in relation to an acquisition that contravenes the Foreign Takeovers Act where
the level of foreign ownership exceeds 40% in the ordinary course of trading, unless the Treasurer
is satisfied that the acquisition is contrary to the national interest. The Foreign Takeovers Act
allows foreign persons to seek prior approval of
acquisitions of Novogen shares which could
otherwise result in the Treasurer making an order requiring the foreign person to dispose of the
shares. 56




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If a foreign person holds more than 15% of the shares of Novogen or if the level of aggregate
foreign ownership of Novogen exceeds 40% at any time, Novogen would be considered a foreign person
under the Foreign Takeovers Act. In such event, Novogen would be required to obtain the approval
of the Treasurer for Novogen, together with its associates, to acquire: (i) more than 15% of an
Australian company or business with assets totaling over A$50 million; or (ii) any direct or
indirect ownership interest in Australian urban land. The percentage of foreign ownership of Novogen would also be included in determining the foreign
ownership of any Australian company or business in which it may choose to invest. Novogen has no
current plans for any such acquisitions and the Company only owns commercial property which falls
within the exceptions to the prohibition on acquiring Australian urban land. The Companys
Constitution does not contain any additional limitations on a non-residents right to hold or vote
the Companys securities. Taxation The following discussion is a summary of the Australian taxes generally applicable to U.S. Holders
of ADRs. For the purposes of this discussion, US Holder means a beneficial owner of ADRs who: (a) for U.S. federal income tax purposes is a U.S. resident, a U.S. citizen, a domestic
corporation, a domestic partnership, or a non-foreign estate or trust; and (b) has not owned, at any time directly, indirectly or constructively, 10% or more of the voting
stock of the Company. Prospective investors are urged to consult their own tax advisers regarding the U.S. and Australian
tax consequences of owning and disposing of Ordinary Shares and ADRs. Further, prospective
investors who are residents of jurisdictions other than the U.S. should consult their tax advisers
as to the tax consequences of investing in the ADRs or shares under the laws of their jurisdictions
of residence. This taxation discussion is intended only as a descriptive summary and does not purport to be a
complete technical analysis or listing of all potential tax effects to U.S. Holders, and does not
address the Australian taxes applicable to special classes of U.S. Holders. Except as otherwise
noted, the statements of Australian tax laws set out below are based on the laws as of the date of
this Annual Report, including the bilateral taxation convention between Australia and the U.S. (the
Treaty) and are subject to any changes in law occurring after that date. Distributions Under Australian law non-residents may be subject to withholding tax in respect of dividends
received on shares in Australian companies. In accordance with the Treaty, dividends derived by a non-resident of Australia who is a resident
of the U.S. for the purposes of Treaty may be taxed on those dividends in 57




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Australia, but such
withholding tax is limited to 15% of the gross amount of dividends unless the dividend is derived
by a non-resident who has or is deemed to have a permanent establishment in Australia. In which
case, a 30% rate may apply. In some instances withholding tax may not apply. Under the Australian dividend imputation system,
to the extent that dividends are paid out of income on which Australian income tax has been levied,
such dividends are considered as franked dividends to that same extent. Non-resident
shareholders are exempt from dividend withholding tax in respect of the franked portions of the
dividends received. Under the Foreign Dividend Account system, the unfranked portion of a dividend paid to a
non-resident of Australia is not subject to withholding tax if the unfranked amount is sourced from
certain foreign source income earned by the Australian company on which foreign tax has been paid. Dispositions Upon disposal of shares or ADRs, a capital gain or a capital loss may be made. A capital gain is
calculated as the difference between the disposal proceeds and the cost base of the shares or ADRs.
Broadly, the cost base is the total of the amount paid for the shares or ADRs plus acquisition
and/or disposal costs (such as brokerage or stamp duty). Non-residents of Australia who do not hold and have not at any time in the five years preceding the
date of disposal held (for their own account or together or together with associates) 10% or more
of the issued share capital of a listed public Australian company are not liable for Australian
capital gains tax CGT on the disposal of shares or ADRs of such a company as such assets will not
have the necessary connection with Australia. However, shares or ADRs will have the necessary connection with Australia and the disposal of such
shares or ADRs will be subject to capital gains tax if they have at any time been used by a
taxpayer in carrying on a business through a permanent establishment in Australia. If the shares or ADRs were acquired before 11:45 am on 21 September 1999 the cost base may be
indexed for inflation up to 30 September 1999. For a Holder to whom the CGT discount applies (see
below), indexation will only apply if the Holder elects to use indexation instead of the discount.
Indexation will not be available if the shares or ADRs were acquired after 11:45 am on 21 September
1999 and will effectively only be relevant if the shares were acquired before 1 July 1999. Holders who are individuals or who hold shares or ADRs directly through trusts may be eligible to
have their capital gain (after applying any capital losses against it) discounted if they have held
their shares or ADRs for at least 12 months. The CGT discount is 50%. If the shares or ADRs were
acquired before 11:45 am on 21 September 1999, such Holders may choose whether to calculate their
capital gain using indexation frozen at 30 September 1999 or by applying the CGT discount without
indexation. If the shares or ADRs were acquired after 11:45 am on 21 September 1999, it will not
be possible to elect to apply indexation and such Holders will be entitled to the CGT discount if
they 58




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have held the shares or ADRs for at least 12 months. Companies are not entitled to the CGT
discount. A capital loss will be made if the disposal proceeds are less than the reduced cost base. Broadly,
the reduced cost base will be calculated in a similar way to the cost base, however, the reduced
cost base is calculated without indexation. Capital losses can only be offset against capital
gains realised in the same year or in later years. Non-residents of Australia who are subject to Australian tax on capital gains made on the disposal
of shares or ADRs are required to file an Australian income tax return for the year in which the
disposal occurs. Non-residents who are securities dealers or in whose hands a profit on disposal of ADRs or shares
is regarded as ordinary income and not as a capital gain (such ADRs and shares are referred to as
revenue assets) will be subject to Australian income tax on Australian source profits arising on
the disposal of the ADRs or shares, without indexation or discount, unless such profits are exempt
from Australian tax under the Treaty. The profits will not be subject to tax in Australia unless
the profits are attributable to the carrying on of a business through a permanent establishment of
the non-resident in Australia. Prospective investors should consult their own tax advisers as to
whether the ADRs or shares are revenue assets as such a conclusion depends on the particular facts
and circumstances of the individual investor concerned. Non-residents with no taxable capital gains or income from sources in Australia other than
dividends with respect to the shares or ADRs are not required to file an Australian income tax
return. Estate and Gift Tax Australia does not impose any estate, inheritance or gift taxes. Therefore, no Australian estate
tax, inheritance tax or gift tax will be imposed on the death of, or upon a lifetime gift by, a
U.S. shareholder. However, the transfer by a U.S. resident of ordinary shares or ADRs by way of
gift or upon death may have Australian income tax and stamp duty implications. Documents on Display The Company is subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended (the Exchange Act) that are applicable to a foreign private issuer. Under the Exchange
Act, the Company is required to file periodic reports and other information with the Securities and
Exchange Commission (the Commission). These materials, including this Annual Report and the
exhibits thereto, may be inspected without charge and copied at established rates at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C.,
20549, and at the Commissions regional offices located at Suite 1400, Northwest Atrium Center, 500
West Madison Street, Chicago, Illinois, 60661-2551 and 233 Broadway, New York, New York 10279. For
more information on the public reference rooms, call the Commission at 1-800-SEC-0330. 59




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Item 11. Quantitative and Qualitative Disclosures About Market Risk. Interest Rate Risk The Company has cash reserves and places funds on deposit with financial institutions for periods
not exceeding three months. The Company does not use derivative financial instruments. The Company places its deposits with
high credit quality financial institutions, and, by policy, limits the amount of credit exposure to
any single counter-party. The Company is averse to principal loss and ensures the safety and
preservation of its invested funds by limiting default risk, market risk, and reinvestment risk. The Company mitigates default risk by depositing funds with only the safest and highest credit
quality financial institutions and by constantly positioning its portfolio to respond appropriately
to a significant reduction in a credit rating of any financial institution. The Company has no interest rate exposure due to rate changes for long-term debt obligations
because all of the Companys long-term borrowings relate to lease agreements that contain fixed
rates of interest. The Company primarily enters into debt obligations to support general corporate
purposes including capital expenditures and working capital needs. The Company does not consider the effects of interest rate movements to be a material risk to its
financial condition. Foreign Currency Risk The Company conducts a portion of its business in various foreign currencies, primarily in the U.S.
and the UK. As of June 30, 2004, the Company had not established a foreign currency hedging
program. The Company has mitigated and will continue to mitigate a portion of its currency
exposure through international sales, marketing and support operations in which all costs are local
currency based. Net foreign currency losses in fiscal year 2004 were A$137,000 compared with net
foreign currency losses of A$525,000 in fiscal year 2003. The Company does not consider the effects of foreign currency movements to be a material risk to
its financial condition. Equity Price Risk During May 2003, Novogens wholly owned U.S. subsidiary company, Glycotex, Inc. raised A$500,000 in
an initial private placement from Australian and international investors and institutions.
Following the placement Novogen now owns 97.6% of Glycotex, Inc. The shares were issued at A$10.00 each with attaching warrants to purchase a further two shares at
an exercise price of A$10.00 per share. The attaching options are exercisable prior to 5 November,
2004. Novogen also issued to these investors a
convertible security enabling investors to convert their investment in Glycotex, Inc. to Novogen
shares at an equivalent Novogen share price of A$5.00 per share. 60




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On November 5, 2004 Glycotex Inc received a total of A$900,000 following the exercise of
90,000 warrants at an exercise price of A$10.00 per share which were issued as part of the initial
private placement. Also, Novogen will issue 10,000 of its shares following the conversion of 5,000
Glycotex share under the terms of the Novogen convertible security. Following the exercise of the warrants and the convertible security Novogen retains 93.4% ownership
in Glycotex, Inc. Item 12. Description of Securities Other than Equity Securities Item 12 details are not required to be disclosed as part of the Annual Report. 61




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PART II Item 13. Defaults, Dividend Arrearages and Delinquencies This item is not applicable. Item 14. Material Modifications to the Rights of Security Holders and the Use of Proceeds This item is not applicable. Item 15. Controls and Procedures Evaluation of Disclosure Controls and Procedures The Companys management, with the participation of the Companys Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of the Companys disclosure controls and procedures
as of the end of the period covered by this report. Based on that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures
as of the end of the period covered by this report were not designed nor were functioning
effectively to provide reasonable assurance that the information required to be disclosed by the
Company in reports filed under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the SECs rules and forms. This
conclusion is based on the identified weakness in internal control over financial reporting and in
the disclosure controls that is described below under the heading Change in Internal Control over
Financial Reporting. Change in Internal Control over Financial Reporting In connection with the audit of the fiscal year ended June 30, 2004, Ernst & Young, the Companys
independent public accountants, informed the Board of Directors that they believe that the
personnel and management of the Company who perform the accounting and financial reporting
functions are not sufficiently expert in U.S. GAAP and the requirements of the SEC and the Public
Company Accounting Oversight Board and that this lack of expertise represents a material weakness
in the operation of the Companys internal control over financial reporting. Ernst & Young also noted
that the Companys system of financial reporting was not designed to
prepare financial statements in accordance with U.S. GAAP and that the system of internal control,
in particular the processes to review and analyze elements of the financial statement close process
and prepare consolidated financial statements in 62




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##### 



accordance with U.S. GAAP, has not reduced to a relatively low level the risk that errors in
amounts that would be material in relation to those financial statements may occur and may not be
detected within a timely period by management in the normal course of business. In this regard, Ernst & Young have recommended that Novogen engage personnel with expertise or
train existing personnel in the following areas:  
    
    U.S. GAAP;  
    
    financial reporting in accordance with the SEC regulations;  
    
    requirements of the Public Company Accounting Oversight Board; and  
    
    application of technical accounting pronouncements. The Company has developed a plan that is designed to ensure that the preparation of the
consolidated financial statements, including the processes to review and analyze elements of the
financial statement close process, is in accordance with U.S. GAAP and that relevant information
about U.S. GAAP, SEC financial reporting requirements, and the requirements of the Public Company
Accounting Oversight Board is available to those persons involved in the process by which the
financial statements are prepared. Specifically the plan provides for additional resources and
further training of the Novogen accounting team including:  1)
    
    the employment of additional accounting staff on the Novogen accounting team which
will enable senior finance staff responsible for the preparation of U.S. GAAP financial
reports to spend more time dealing with U.S. GAAP reporting issues;  2)
    
    increasing the level of attendance at targeted U.S. GAAP and SEC reporting courses
by senior Novogen finance staff responsible for the preparation of U.S. GAAP financial
reports and SEC disclosure; and  3)
    
    subscribing to additional information networks that provide publications and updates
of SEC and U.S. GAAP releases and rule changes and of information about the requirements
of the Public Company Accounting Oversight Board. The Company has already recruited one additional degree qualified accountant. Additionally, the
Companys senior finance staff has already committed to taking a number of training courses during
the next six months, including the SEC Institutes SEC Reporting Conference and the SEC Institutes
SEC Reporting Skills Workshop, and will continue to evaluate the merits of additional courses as
they become available. The Company has already begun to receive additional publications and
updates of SEC, U.S. GAAP and Public Company Accounting Oversight Board requirements and will
review the adequacy of this additional information within the next four months to determine whether
additional resources are required. Until the Company is satisfied that it has addressed the need for sufficient expertise in preparing
financial statements required in filings under the securities law it will seek to mitigate this
weakness by conferring with its outside accounting advisors with respect to the technical
requirements applicable to the financial statements. The implementation of the initiatives described above are among the Companys highest 63




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priorities. The Companys Board of Directors, in coordination with the Audit Committee, will
continually assess the progress and sufficiency of these initiatives and make adjustments as and
when necessary. As of the date of this report, the Company believes that the plans outlined above,
when completed, will eliminate the weakness in internal accounting control as described above.
Nonetheless, a control system, no matter how well designed and operated, cannot provide absolute
assurance that the objectives of the control system are met, and no evaluation of controls can
provide absolute assurance that all control issues have been detected. Item 16. Reserved Item 16A. Audit Committee Financial Expert The Board of Directors has determined that the Company does not currently have an audit committee
financial expert as that term is defined under current SEC regulations serving on the Audit
Committee. Under Australian Stock Exchange rules the Company is required to have an audit
committee financial expert before the end of the fiscal year ending June 30, 2005. The Company
believes that the combined knowledge, skills and experience of the current members of the Audit
Committee enables them, as a group, to act effectively in the fulfilment of their tasks and
responsibilities, including those under the Sarbanes-Oxley Act of 2002. The Company is presently
looking to appoint an individual who qualifies as an audit committee financial expert to serve as
a member of the Audit Committee. Item 16B. Code of Ethics The company has adopted a code of ethics that applies to all its employees, officers and directors,
including its principle executive officer, its principle financial officer and persons performing
similar functions. A copy of the code of ethics is posted in the About Novogen  Corporate
Governance section of the Novogen Limited website, and may be viewed at http://www.novogen.com. If
the Company makes any substantive amendment, to the Code of Ethics or grant any waiver, including
an implicit waiver, from a provision of the Code of Ethics to directors or executive officers, it
will disclose the nature of such amendment or waiver on the Companys website. Item 16C. Principle Accounting Fees and Services Ernst and Young has audited the Companys annual financial statements acting as the independent
registered public accountant for the fiscal years ended June 30, 2004 and 2003. The chart below sets forth the total fees for services performed by Ernst & Young in 2004 and 2003
and breaks down these amounts by the category of service. 64




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##### 



2003
    
    2004A$000
    
    A$000Audit fees
    
    
    129.5
    
    
    
    431.2Audit related fees
    
    
    21.3
    
    
    
    106.6Tax fees
    
    
    67.7
    
    
    
    33.3Total fees
    
    
    218.5
    
    
    
    571.1
 Audit fees The audit fees include the aggregate fees billed in each of 2004 and 2003 for professional services
rendered for the audit of the Companys annual financial statements and for related services that
are reasonably related to the performance of the audit or services that are normally provided by
the auditor in connection with regulatory filings of engagements for those financial years
(including review of the 20-F, consents and other services related to SEC matters). Audit Related Services Audit related services include audit services provided in respect of the requirements of the
provisions of government grant agreements under which the Company receives reimbursement of certain
expenses incurred in research and development including START grants. Audit related services also
include audit services provided for the audit of the Companys Workers Compensation Insurance. Tax Fees Tax fees were for the preparation of tax returns. All Other Fees Other fees incurred by the Company in fiscal year 2004 relate to the costs associated with the
filing of Form S-1 and the subsequent listing of Marshall Edwards, Inc. on the Nasdaq National
Market in December 2003. Pre-approval Policies and Procedures The Audit Committee Charter sets forth the Companys policy regarding the appointment of
independent auditors, requiring the Audit Committee to review and approve in advance the
appointment of the independent auditors for the performance of all audit and, after taking into
account the opinion of management, lawfully permitted non audit services. The Audit Committee may
delegate authority to one or more members of the Audit Committee where appropriate, but no such
delegation is permitted if the authority is required by law, regulation or listing standard to be
exercised by the audit committee as a whole. 65




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##### 



Item 16D. Exemptions from the Listing Standards for Audit Committees. This item is not applicable. Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers. This item is not applicable. 66




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##### 



PART III Item 17. Financial Statements Not Applicable Item 18. Financial Statements The financial statements
filed as part of this Annual Report are included on pages 69 through
129
hereof. Item 19. Exhibits (a) Exhibits Exhibit No.
    
    Exhibit Description1.1
    
    Constitution of Novogen Limited (formerly known as the
Memorandum of Association and Articles of Association). (1)2.1
    
    Deposit Agreement, dated as of February 23, 1998, among
Novogen Limited, the Bank of New York, as Depositary, and
owners and holders from time to time of ADRs issued
thereunder. (2)4.1
    
    Employment Contract between the Company and Mr. C. Naughton
dated June 25, 2003.4.2
    
    Employment Contract between the Company and Professor Alan
Husband dated April 30, 2003.4.3
    
    Employment Contract between the Company and Dr G. E. Kelly
dated June 25, 2003.4.4
    
    Lease between Kendall Glen Pty Limited (Lessor) and Novogen
Laboratories Pty Ltd for the Companys corporate headquarters
at 140 Wicks Road, North Ryde, New South Wales. (3)4.5
    
    Employment Contract between the Company and Bryan Palmer dated
April 24, 2003.
 67




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##### 



4.6
    
    Employment Contract between the Company and Craig Kearney
dated April 30, 2003.4.7
    
    Employment Contract between the Company and David Seaton dated
April 30, 2003.4.8
    
    Employment Contract between the Company and Ronald Erratt
dated April 30, 2003.8.1
    
    Company Subsidiaries.12.1
    
    Certifications of Chief Executive Officer and Chief Financial
Officer pursuant to Rule 13a  14(a) of the Securities
Exchange Act of 1934, as amended.13.1
    
    Certification by the Chief Executive Officer and Chief
Financial Officer pursuant to 18 U.S.C. Section 1350 as added
by Section 906 of the Sarbanes  Oxley Act of 2002.
  (1)
    
    Incorporated by reference to the
Registration Statement on Form 20-F filed with the Securities and
Exchange Commission on December 24, 1998 (File No. 0-29962).  (2)
    
    Incorporated by reference to the
Registration Statement on Form F-6 filed with the Securities and
Exchange Commission on February 12, 1998 (File No. 333-8346).  (3)
    
    Incorporated by reference to the
Annual Report on Form20-F filed with the Securities and Exchange
Commission on November 27, 2000 (File No. 0-29962) 68




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##### 



Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders of Novogen Limited We have audited the accompanying consolidated statements of financial position of Novogen Limited
as of June 30, 2004 and 2003, and the related consolidated statements of financial performance,
changes in contributed equity and cash flows for each of the three years in the period ended June
30, 2004. These financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting policies used and significant
estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Novogen Limited at June 30, 2004 and 2003, and the
consolidated results of its operations and its cash flows for each of the three years in the period
ended June 30, 2004 in conformity with accounting principles generally accepted in Australia. Accounting principles generally accepted in Australia vary in certain significant respects from
U.S. generally accepted accounting principles. Information relating to the nature and effect of
such differences is presented in Note 30 to the consolidated financial statements. /s/ Ernst & Young Sydney, Australia December 20, 2004 69




---



##### 



Directors Declaration In accordance with a resolution of the Directors of Novogen Limited, I state that: 1. In the opinion of the Directors:  a)
    
    the financial statements and notes of the Company and of the consolidated entity are
in accordance with the Corporations Act 2001, including:  i)
    
    giving a true and fair view of the Companys and consolidated entitys
financial position as at 30 June, 2004 and of their performance for the year ended on
that date; andii)
    
    complying with Accounting Standards and Corporations Regulations 2001; and  b)
    
    there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable.  2.
    
    In the opinion of the Directors, as at the date of this declaration, there are reasonable
grounds to believe that the members of the Closed Group identified in Note 10, will be able to
meet any obligations or liabilities to which they are or may become subject to, by virtue of
the Deed of Cross Guarantee. On behalf of the Board, Christopher Naughton
Managing Director Sydney, 11 January, 2005 70




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##### 



Novogen Limited, Consolidated Financial Statements STATEMENT OF FINANCIAL PERFORMANCE Year ended June 30, 2004
    
    Notes
    
    2004
    
    2003
    
    2002
    
    2004A$000
    
    A$000
    
    A$000
    
    US$000RevenueSales Revenue
    
    
    
    
    
    
    12,720
    
    
    
    19,630
    
    
    
    19,582
    
    
    
    8,843Other Revenue
    
    
    2
    
    
    
    3,726
    
    
    
    4,626
    
    
    
    4,706
    
    
    
    2,590Total Revenue
    
    
    
    
    
    
    16,446
    
    
    
    24,256
    
    
    
    24,288
    
    
    
    11,433Costs and ExpensesCost of Goods Sold
    
    
    
    
    
    
    (4,753
    )
    
    
    (7,191
    )
    
    
    (7,583
    )
    
    
    (3,304
    )Research & Development
    
    
    
    
    
    
    (8,261
    )
    
    
    (8,274
    )
    
    
    (7,853
    )
    
    
    (5,743
    )Selling and Promotions
    
    
    
    
    
    
    (9,762
    )
    
    
    (12,713
    )
    
    
    (15,209
    )
    
    
    (6,787
    )Shipping and Handling
    
    
    
    
    
    
    (382
    )
    
    
    (468
    )
    
    
    (480
    )
    
    
    (266
    )General and Administrative
    
    
    
    
    
    
    (5,747
    )
    
    
    (6,151
    )
    
    
    (7,446
    )
    
    
    (3,995
    )Total Costs and Expenses
    
    
    
    
    
    
    (28,905
    )
    
    
    (34,797
    )
    
    
    (38,571
    )
    
    
    (20,095
    )Interest Expense
    
    
    
    
    
    
    (120
    )
    
    
    (132
    )
    
    
    (345
    )
    
    
    (83
    )Operating Loss Before Abnormal Items
and Income Tax
    
    
    2
    
    
    
    (12,579
    )
    
    
    (10,673
    )
    
    
    (14,628
    )
    
    
    (8,745
    )Income Tax Expense
    
    
    3
    
    
    
    
    
    
    
    7
    
    
    
    (45
    )
    
    
    Net Loss
    
    
    
    
    
    
    (12,579
    )
    
    
    (10,666
    )
    
    
    (14,673
    )
    
    
    (8,745
    )Net Loss Attributable to Outside Equity Interests
    
    
    
    
    
    
    (1,644
    )
    
    
    (212
    )
    
    
    (19
    )
    
    
    (1,143
    )Net Loss Attributable to Members of Novogen
    
    
    
    
    
    
    (10,935
    )
    
    
    (10,454
    )
    
    
    (14,654
    )
    
    
    (7,602
    )Basic Loss per share (cents per share)
    
    
    
    
    
    
    (11.4
    )
    
    
    (10.9
    )
    
    
    (15.4
    )
    
    
    (7.9
    )
 71




---



##### 



STATEMENT OF FINANCIAL POSITION
As at 30 June, 2004 Notes2004
    
    2003
    
    2004A$000
    
    A$000
    
    US$000CURRENT ASSETSCash
    
    
    4
    
    
    
    58,431
    
    
    
    31,026
    
    
    
    40,621Receivables
    
    
    5
    
    
    
    2,936
    
    
    
    4,438
    
    
    
    2,041Inventories
    
    
    6
    
    
    
    7,828
    
    
    
    6,399
    
    
    
    5,442Other
    
    
    7
    
    
    
    865
    
    
    
    588
    
    
    
    601Total current assets
    
    
    
    
    
    
    70,060
    
    
    
    42,451
    
    
    
    48,705NON-CURRENT ASSETSInventories
    
    
    6
    
    
    
    625
    
    
    
    78
    
    
    
    435Property, plant and equipment
    
    
    8
    
    
    
    6,728
    
    
    
    8,283
    
    
    
    4,677Total non-current assets
    
    
    
    
    
    
    7,353
    
    
    
    8,361
    
    
    
    5,112TOTAL ASSETS
    
    
    
    
    
    
    77,413
    
    
    
    50,812
    
    
    
    53,817CURRENT LIABILITIESPayables
    
    
    11
    
    
    
    5,963
    
    
    
    5,656
    
    
    
    4,145Interest bearing liabilities
    
    
    12
    
    
    
    843
    
    
    
    679
    
    
    
    586Provisions
    
    
    13
    
    
    
    361
    
    
    
    271
    
    
    
    251Total current liabilities
    
    
    
    
    
    
    7,167
    
    
    
    6,606
    
    
    
    4,982NON-CURRENT LIABILITIESInterest bearing liabilities
    
    
    12
    
    
    
    765
    
    
    
    1,608
    
    
    
    532Provisions
    
    
    13
    
    
    
    270
    
    
    
    201
    
    
    
    188Total non-current liabilities
    
    
    
    
    
    
    1,035
    
    
    
    1,809
    
    
    
    720TOTAL LIABILITIES
    
    
    
    
    
    
    8,202
    
    
    
    8,415
    
    
    
    5,702NET ASSETS
    
    
    
    
    
    
    69,211
    
    
    
    42,397
    
    
    
    48,115EQUITYParent equity interestContributed equity
    
    
    15
    
    
    
    170,276
    
    
    
    138,206
    
    
    
    118,376Reserves
    
    
    16
    
    
    
    (449
    )
    
    
    (1,956
    )
    
    
    (312
    )Retained profits/(accumulated losses)
    
    
    16
    
    
    
    (104,972
    )
    
    
    (94,424
    )
    
    
    (72,977
    )Total parent equity interest in equity
    
    
    
    
    
    
    64,855
    
    
    
    41,826
    
    
    
    45,087Total outside equity interest
    
    
    17
    
    
    
    4,356
    
    
    
    571
    
    
    
    3,028TOTAL EQUITY
    
    
    
    
    
    
    69,211
    
    
    
    42,397
    
    
    
    48,115
 72




---



##### 



STATEMENT OF CHANGES IN CONTRIBUTED EQUITY Issued Share Capital
    
    Number of Fully
    
    AmountPaid Ordinary Shares
    
    A$000Balance June 30, 1999
    
    
    79,685,518
    
    
    
    82,148Options converted into shares
    
    
    132,744
    
    
    
    154Share issue
 June 30, 2000
    
    
    5,018,000
    
    
    
    17,974Balance June 30, 2000
    
    
    84,836,262
    
    
    
    100,276Options converted into shares
    
    
    38,513
    
    
    
    46Share issue  May 23,2001
    
    
    10,195,000
    
    
    
    20,900Balance June 30, 2001
    
    
    95,069,775
    
    
    
    121,222Options converted into shares
    
    
    342,939
    
    
    
    617Subsidiary share issue  May 22, 2002
    
    
    n/a
    
    
    
    16,195less outside equity interest
    
    
    
    
    
    
    (785
    )Balance June 30, 2002
    
    
    95,412,714
    
    
    
    137,249Options converted into shares
    
    
    199,071
    
    
    
    421Subsidiary share issue  May 5, 2003
    
    
    n/a
    
    
    
    553less outside equity interest
    
    
    
    
    
    
    (17
    )Balance June 30, 2003
    
    
    95,611,785
    
    
    
    138,206Options converted into shares
    
    
    1,111,758
    
    
    
    3,104Subsidiary share issue November 30, 2003
    
    
    n/a
    
    
    
    14,035Subsidiary share issue December 18, 2003
    
    
    n/a
    
    
    
    20,815less outside equity interest
    
    
    
    
    
    
    (5,884
    )Balance June 30, 2004
    
    
    96,723,543
    
    
    
    170,276
 73




---



##### 



Statement of Cash Flows
for the year ended 30 June, 2004 Notes2004
    
    2003
    
    2002
    
    2004A$000
    
    A$000
    
    A$000
    
    US$000Cash flows from operating activitiesReceipts from customers
    
    
    
    
    
    
    14,051
    
    
    
    19,324
    
    
    
    18,350
    
    
    
    9,768Payments to suppliers and employees
    
    
    
    
    
    
    (27,566
    )
    
    
    (29,313
    )
    
    
    (28,811
    )
    
    
    (19,164
    )Interest received
    
    
    
    
    
    
    1,186
    
    
    
    1,177
    
    
    
    1,114
    
    
    
    825Interest paid
    
    
    
    
    
    
    (120
    )
    
    
    (132
    )
    
    
    (345
    )
    
    
    (83
    )Grants received
    
    
    
    
    
    
    1,011
    
    
    
    632
    
    
    
    1,295
    
    
    
    703Income tax paid
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    (45
    )
    
    
    Royalty received
    
    
    
    
    
    
    978
    
    
    
    2,362
    
    
    
    1,878
    
    
    
    680Goods and services tax refunded/(paid) by/(to) tax authorities
    
    
    
    
    
    
    (79
    )
    
    
    96
    
    
    
    (115
    )
    
    
    (55
    )Net cash flows used in operating activities
    
    
    22
    
    
    
    (10,539
    )
    
    
    (5,847
    )
    
    
    (6,679
    )
    
    
    (7,326
    )Cash flows from investing activitiesAcquisition of property, plant and equipment
    
    
    
    
    
    
    (714
    )
    
    
    (758
    )
    
    
    (144
    )
    
    
    (496
    )Proceeds from sale of plant and equipment
    
    
    
    
    
    
    80
    
    
    
    35
    
    
    
    40
    
    
    
    56Loans to controlled entities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net cash flows used in investing activities
    
    
    
    
    
    
    (634
    )
    
    
    (723
    )
    
    
    (104
    )
    
    
    (440
    )Cash flows from financing activitiesProceeds from the issue of ordinary shares
    
    
    
    
    
    
    3,104
    
    
    
    421
    
    
    
    121
    
    
    
    2,158Proceeds from the issue of subsidiary shares
    
    
    
    
    
    
    38,197
    
    
    
    554
    
    
    
    18,624
    
    
    
    26,555Payment of share issue costs
    
    
    
    
    
    
    (3,347
    )
    
    
    
    
    
    
    (1,932
    )
    
    
    (2,327
    )Proceeds from borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,417
    
    
    
    Repayment of borrowings
    
    
    
    
    
    
    (679
    )
    
    
    (845
    )
    
    
    (3,157
    )
    
    
    (472
    )Net cash flows from financing activities
    
    
    
    
    
    
    37,275
    
    
    
    130
    
    
    
    16,073
    
    
    
    25,914Net increase/(decrease) in cash held
    
    
    
    
    
    
    26,102
    
    
    
    (6,440
    )
    
    
    9,290
    
    
    
    18,148Add opening cash brought forward
    
    
    
    
    
    
    28,526
    
    
    
    37,437
    
    
    
    28,629
    
    
    
    19,831Effect of exchange rate changes on opening cash
    
    
    
    
    
    
    1,303
    
    
    
    (2,471
    )
    
    
    (482
    )
    
    
    906Movements in secured facility
    
    
    
    
    
    
    (500
    )
    
    
    
    
    
    
    
    
    
    
    (348
    )Closing cash carried forward
    
    
    4
    
    
    
    55,431
    
    
    
    28,526
    
    
    
    37,437
    
    
    
    38,537
 74




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##### 



NOVOGEN LIMITEDNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of accounting These consolidated financial
statements have been prepared to fulfil the companys financial
reporting requirements in the United States of America. These consolidated financial statements have been prepared in accordance with the requirements of
applicable Australian Accounting Standards with the exception of presentation of Parent Company
financial statements. Other mandatory professional reporting requirements in Australia (Urgent
Issues Group Consensus Views) have also been complied with. Changes in accounting policy The accounting policies adopted are consistent with those of the previous year. Principles of consolidation The consolidated financial statements are those of the consolidated entity, comprising Novogen
Limited and all entities controlled by Novogen Limited from time to time during the year and at
balance date. Novogen Limited and its controlled entities together are referred to in these
financial statements as the Company, economic entity or Group. The effects of all transactions
between entities in the economic entity are eliminated in full. The financial statements of controlled entities are prepared for the same reporting period as
Novogen Limited, using consistent accounting policies. Where a subsidiary makes a new issue of capital subscribed by outside equity interests any gain or
loss made by the parent entity due to dilution of outside equity interests on subscription is
reflected as capital in the Statement of Financial Position. Foreign currency Foreign currency transactions
Foreign currency transactions are converted into Australian currency at the rate of exchange at the
date of the transaction. At balance date, amounts payable and receivable in foreign currencies are
remeasured to Australian currency at rates of exchange current at balance date. Resulting exchange
differences are brought to account in determining the profit or loss for the financial year. Translation of financial reports of overseas operations
All foreign controlled entities, with the exception of Marshall Edwards, Inc., are deemed to be
fully integrated with the Company as they are not financially or operationally independent of
Novogen Limited. The financial reports of overseas operations are, therefore, translated using the
temporal method, with resulting losses or gains taken to the profit and loss account. Marshall Edwards, Inc., is deemed to be self sustaining as it is financially and operationally
independent of Novogen Limited. The financial report of Marshall Edwards, Inc., is translated
using the current rate method, and any exchange differences
are taken directly to the foreign currency translation reserve. 75




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##### 



Cash and cash equivalents Cash on hand and in banks and short term deposits are stated at the nominal amount. For the
purposes of the statement of cash flows, cash includes deposits at call readily convertible into
cash within two working days and which are used in the cash management function on a day-to-day
basis, net of outstanding bank overdrafts. Receivables Receivables are recognised and carried at original invoice value less a provision for any
uncollectible debts. Debts, which are known to be uncollectible, are written off. A provision for
doubtful debts is recognised when collection of the full nominal amount is no longer probable. Receivables from related parties are recognised and carried at the nominal amount due. Inventories Inventories are measured at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition are accounted for as
follows:  
    
    Raw materials purchase cost on a first-in-first-out basis; and
    
    Finished goods and work-in-progress cost of direct material, direct labour and a
proportion of manufacturing overheads based on normal operating capacity. Recoverable amount of non-current assets Non-current assets are measured at cost, provided that their carrying value does not exceed their
recoverable amount. Where the carrying amount of an individual non-current asset is greater than
its recoverable amount, the asset is written down to its recoverable amount. In determining
recoverable amounts of non-current assets the expected net cash flows have not been discounted to
their present values. Property, plant & equipment Cost and valuation
All property, plant and equipment are brought to account at cost. Depreciation
Depreciation is calculated on a straight-line basis to write off the depreciable amount of each
item of property, plant and equipment (excluding land) over its expected useful life to the
economic entity. Major depreciation periods are:Buildings
    
    20 yearsPlant and equipment
    
    2.5-10 yearsLeasehold improvements
    
    the lease term
 76




---



##### 



Leases Leases are classified at their inception as either operating or finance leases based on the
economic substance of the agreement so as to reflect the risks and benefits incidental to
ownership. Operating leases
The minimum lease payments of operating leases, where the lessor effectively retains substantially
all of the risks and benefits of ownership of the leased item, are recognised as an expense on a
straight line basis. Finance leases
Leases which effectively transfer substantially all of the risks and benefits incidental to
ownership of the leased item to the group are capitalised at the present value of the minimum lease
payments and disclosed as property, plant and equipment under lease. A lease liability of equal
value is also recognised. Capitalised lease assets are depreciated over the estimated useful life of the assets. Minimum lease payments are allocated between interest expense and reduction of the lease liability
with the interest expense calculated using the interest rate implicit in the lease and charged
directly to the Statement of Financial Performance. The cost of improvements to or on leasehold property is capitalised, disclosed as leasehold
improvements, and amortised over the unexpired period of the lease or the estimated useful lives of
the improvements, whichever is the shorter. Intangible assets Patents and Trademarks
Costs incurred in respect of patents and trademarks are expensed as incurred unless future
recoverability is assured beyond a reasonable doubt. Research and development Costs incurred on research and development projects are expensed as incurred, unless future
recoverability is assured beyond a reasonable doubt, to exceed those costs. Where research and
development costs are deferred such costs are amortised over future periods on a basis related to
expected benefits. Unamortised costs are reviewed at each reporting date to determine the amount
(if any) that is no longer recoverable and any amount identified is written off. Payables Liabilities for trade creditors and other amounts are carried at cost which is the fair value of
the consideration to be paid in the future for goods and services received, whether or not billed
to the consolidated entity. Payables to related parties are carried at the principal amount. 77




---



##### 



Borrowings Finance lease liability is determined in accordance with requirements of AASB 1008  Leases. Provisions Provisions are recognised when the economic entity has a legal, equitable or constructive
obligation to make a future sacrifice of economic benefits to other entities as a result of past
transactions or other past events, it is probable that a future sacrifice of economic benefits will
be required and a reliable estimate can be made of the amount of the obligation. Contributed equity Ordinary share capital is recognised at the fair value of consideration received by the Company.
Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as
a reduction in the share proceeds received. Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the
Group and the revenue can be reliably measured. In determining the economic benefits, provisions
are made for certain trade discounts and returned goods. The following specific recognition
criteria must also be met: Sale of goods
Goods have been dispatched to a customer pursuant to a sales order and invoice and the associated
risks have passed to the carrier or customer. Interest
Control of a right to receive consideration for the investment in assets has been attained. Grant income
Control of a right to receive grant funds has been attained, evidenced by confirmation from the
relevant government or other body. Royalties
Royalty revenue is recognised on an accrual basis in accordance with the substance of the relevant
agreement. Taxes Income Tax Tax effect accounting is applied using the liability method whereby income tax is regarded as an
expense and is calculated on the accounting profit after allowing for 78




---



##### 



permanent differences. To the extent timing differences occur between the time items are recognised
in the financial statements and when items are taken into account in determining taxable income,
the net related tax benefit or liability, calculated at current rates, is disclosed as a future
income tax benefit or a provision for deferred income tax. The future income tax benefit relating to tax losses and timing differences is not carried forward
as an asset unless the benefit is virtually certain of being realised. Goods and Services Tax (GST) and overseas equivalents Revenues, expenses and assets are recognised net of the amount of GST except:  
    
    where the GST incurred on a purchase of goods and services is not recoverable
from the taxation authority, in which case the GST is recognised as part of the cost of
acquisition of the asset or as part of the expense item as applicable; and
    
    receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part
of receivables or payables in the Statement of Financial Position. Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of
cash flows arising from investing and financing activities which is recoverable from or payable to
the taxation authority is classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable
to the taxation authority. Employee benefits Wages and salaries, annual leave
Liabilities for wages, salaries and annual leave are recognised, and are measured as the amount
unpaid at the reporting date at expected future pay rates in respect of employees services up to
that date. Long service leave
The amounts expected to be paid to employees for their pro rata entitlement to long service leave,
including on-costs, are accrued annually at expected future pay rates having regard to experience
of employee departures and period of service. These entitlements are measured at the present value
of the estimated future cash outflow to be made in respect of services provided by employees up to
the reporting date. In determining the present value of future cash out flows, the interest rates
attaching to Government guaranteed securities, which have terms to maturity approximating the terms
of the related liability, are used. Share option plans
The value of share option plans described in Note 15 is not charged as an employee entitlement
expense. 79




---



##### 



Earnings per share (EPS) Basic EPS is calculated as net profit/(loss) attributable to members adjusted to exclude costs of
servicing equity (other than dividends) and preference share dividends, if any, divided by the
weighted average number of ordinary shares, adjusted for any bonus element. Diluted EPS is calculated as net profit attributable to members, adjusted for:  
    
    costs of servicing equity (other than dividends) and preference share dividends
(if any);
    
    the after tax effect of dividends and interest associated with dilutive potential
ordinary shares that have been recognised as expenses; and
    
    other non-discretionary changes in revenues or expenses during the period that
would result from the dilution of potential ordinary shares, divided by the weighted average number of ordinary shares and dilutive potential ordinary shares
adjusted for any bonus element. Comparatives Where necessary, comparatives have been reclassified and repositioned for consistency with current
year disclosures. Adoption of Australian equivalents to International Financial Reporting Standards Australia in conjunction with the Australian Accounting Standards Board (AASB) is currently
preparing for the introduction of International Financial Reporting Standards (IFRS) effective for
the Companys financial year commencing 1 July, 2005. This requires the production of accounting
data for future comparative purposes at the beginning of the next financial year. The economic entitys management, along with its auditors, are assessing the significance of these
changes and preparing for their implementation. The Directors are of the opinion that the key differences in the economic entitys accounting
policies which will arise from the adoption of IFRS are: Research and development expenditure Pending standard AASB 138: Intangible Assets requires that costs associated with research be
expensed in the period in which they are incurred. In terms of current policy, research costs,
including patent costs, are expensed as incurred, unless future recoverability is assured beyond a
reasonable doubt, to exceed those costs The pending standard would not allow any research costs to
be capitalised. This is unlikely to have a profit impact as all research costs have been expensed
to date. 80




---



##### 



Impairment of assets The economic entity currently determines the recoverable amount of an asset on the basis of
undiscounted net cash flows that will be received from the assets use and subsequent disposal. In
terms of pending AASB 136: Impairment of Assets, the recoverable amount of an asset will be
determined as the higher of fair value less costs to sell and value in use. It is likely that this
change in accounting policy will lead to impairments being recognised more often than under the
existing policy. Income tax Currently, the economic entity adopts the liability method of tax-effect accounting whereby the
income tax expense is based on the accounting profit adjusted for any permanent differences. Timing
differences are currently brought to account as either a provision for deferred income tax or
future income tax benefit. Under the Australian equivalent to International Accounting Standard
(lAS) 12 the economic entity will be required to adopt a balance sheet approach under which
temporary differences are identified for each asset and liability rather than the effects of the
timing and permanent differences between taxable income and accounting profit. This is unlikely to
have a significant profit impact. Share based payments Under AASB 2: Share based Payments, the Company will be required to determine the fair value of
options issued to employees as remuneration and recognise an expense in the Statement of Financial
Performance over the vesting period. It applies to all share-based payments issued after 7
November, 2002 which have not vested as at 1 January, 2005. The recognition of the expense will
decrease the opening retained earnings on initial adoption of AASB 2 and increase share capital by
the same amount. The impact of adoption AASB2 is likely to have a similar impact to that of FAS123
as disclosed in Note 30. Government grants AASB 120: Accounting for Government Grants and Disclosure of Government Assistance requires grants
received to be recognised as income on a systematic basis over the periods necessary to match them
with the related costs which they are intended to compensate, but only where there is reasonable
assurance that the consolidated entity will comply with the conditions attaching to them and the
grants will be received. This may result in the later recognition of the grants as revenue. 81




---



##### 



2.
    
    PROFIT/(LOSS) FROM ORDINARY ACTIVITIES Consolidated2004
    
    2003
    
    2002$000
    
    $000
    
    $000(a) Revenues from operating activitiesRevenue from the sale of goods
    
    
    12,720
    
    
    
    19,630
    
    
    
    19,58212,720
    
    
    
    19,630
    
    
    
    19,582(b) Revenues from non-operating activitiesInterest  other persons/corporations
    
    
    1,232
    
    
    
    1,266
    
    
    
    1,203Grants received
    
    
    1,011
    
    
    
    632
    
    
    
    1,295Royalties received
    
    
    978
    
    
    
    2,362
    
    
    
    1,879Revenue from the sale of assets
    
    
    80
    
    
    
    35
    
    
    
    40Revenue from the sale of raw materials
    
    
    73
    
    
    
    215
    
    
    
    193Import duty refund
    
    
    160
    
    
    
    
    
    
    
    Other revenue
    
    
    192
    
    
    
    116
    
    
    
    963,726
    
    
    
    4,626
    
    
    
    4,706Total revenues from ordinary activities
    
    
    16,446
    
    
    
    24,256
    
    
    
    24,288(c) ExpensesDepreciation of non-current assetsPlant and equipment
    
    
    965
    
    
    
    861
    
    
    
    659Buildings
    
    
    291
    
    
    
    290
    
    
    
    290Leasehold improvements
    
    
    51
    
    
    
    66
    
    
    
    96Amortisation of non-current assetsPlant and equipment under lease
    
    
    414
    
    
    
    447
    
    
    
    775Goodwill
    
    
    
    
    
    
    224
    
    
    
    33Total depreciation and amortisation expenses
    
    
    1,721
    
    
    
    1,888
    
    
    
    1,853Bad and doubtful debts  trade
    
    
    99
    
    
    
    52
    
    
    
    661 related parties
    
    
    
    
    
    
    
    
    
    
    Inventory write offs
    
    
    979
    
    
    
    617
    
    
    
    801Provision for employee entitlements
    
    
    154
    
    
    
    44
    
    
    
    26Rental expense relating to operating leases
    
    
    683
    
    
    
    677
    
    
    
    693Borrowing
costs expensedInterest expense on finance leases
    
    
    120
    
    
    
    132
    
    
    
    345Total borrowing costs expensed
    
    
    120
    
    
    
    132
    
    
    
    345
 82




---



##### 



PROFIT FROM ORDINARY ACTIVITIES
    
    Consolidated(Continued)
    
    2004
    
    2003
    
    2002$000
    
    $000
    
    $000(d) Losses/(Gains)Net loss/(gain) on disposal of
property, plant and equipment
    
    
    467
    
    
    
    (12
    )
    
    
    494Net loss/(gain) on foreign currency
    
    
    137
    
    
    
    525
    
    
    
    482(e) Significant ItemsProvision expense/(income) for
non-recovery  intercompany
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  3.
    
    INCOME TAX 2004
    
    2003
    
    2002$000
    
    $000
    
    $000(a) The prima facie tax, using tax rates
applicable in the country of operation, on
profit differs from the income tax provided in
the financial statements as follows:Prima facie tax (credit) on profit/(loss) from
ordinary activities
    
    
    (3,774
    )
    
    
    (3,202
    )
    
    
    (4,388
    )Tax effect of permanent differences:Non deductible depreciation and
amortisation
    
    
    
    
    
    
    67
    
    
    
    10Non deductible expenses
    
    
    118
    
    
    
    67
    
    
    
    213Research and development allowance
    
    
    (271
    )
    
    
    (261
    )
    
    
    207Sundry items
    
    
    21
    
    
    
    89
    
    
    
    62Income tax adjusted for permanent
differences
    
    
    (3,906
    )
    
    
    (3,240
    )
    
    
    (3,896
    )Australian income taxes
    
    
    
    
    
    
    
    
    
    
    1United States state income taxes
    
    
    
    
    
    
    
    
    
    
    3New Zealand income tax
    
    
    
    
    
    
    (7
    )
    
    
    41Current year tax losses not brought to account
    
    
    3,906
    
    
    
    3,240
    
    
    
    3,896Income tax expense attributable to operating loss
    
    
    
    
    
    
    (7
    )
    
    
    45
 83




---



##### 



Consolidated2004
    
    2003
    
    2002$000
    
    $000
    
    $000(b) Future income tax benefit not
brought to account at balance date as
realisation of the benefit is not
regarded as virtually certain arising
from:(i) tax losses carried forward
    
    
    27,439
    
    
    
    21,371
    
    
    
    19,106(ii) timing differences
    
    
    2,274
    
    
    
    4,326
    
    
    
    3,78429,713
    
    
    
    25,697
    
    
    
    22,890
 This future income tax benefit will only be obtained if: (i) the relevant companies derive future assessable income of a nature and of an amount
sufficient to enable the benefit from the deductions for the losses to be realised; (ii) the relevant companies continue to comply with the conditions for deductibility
imposed by tax legislation; and (iii) no changes in tax legislation adversely affect the relevant companies in realising
the benefit from the deductions for the losses. (c) The balance of the franking account at the end of the financial year for the economic entity
and the parent entity is $nil (2003: $nil; 2002: $nil). Tax consolidation Novogen Limited and its 100% owned subsidiaries elected to form a tax consolidation group for
income tax purposes with effect from 1 July 2003. The Australian Tax Office has not been at this
time been formally notified of this decision. Novogen Limited as the head entity discloses all of
the deferred tax asset and liabilities of the tax consolidated group (after elimination of
inter-group transactions). As the tax consolidated group continues to generate tax losses there
have been no reason for the company to enter a tax funding agreement with the members of the tax
consolidation group. There has been no material effect on the deferred tax balances as a result of
the revised tax legislation.  4.
    
    CASH Consolidated2004
    
    2003$000
    
    $000Cash at bank and on hand
    
    
    39,977
    
    
    
    12,387Deposits at call
    
    
    15,454
    
    
    
    16,139Cash at Call
    
    
    55,431
    
    
    
    28,526Secured Cash (Refer Note 14)
    
    
    3,000
    
    
    
    2,500Total Cash
    
    
    58,431
    
    
    
    31,026
 Short term deposits have an average maturity of 30 days and have a fixed or floating
interest rate for the term of the deposit. 84




---



##### 



5.
    
    RECEIVABLES Consolidated2004
    
    2003$000
    
    $000CurrentTrade debtors
    
    
    3,274
    
    
    
    4,517Provision for doubtful debts
    
    
    (438
    )
    
    
    (350
    )2,836
    
    
    
    4,167Other debtors
    
    
    100
    
    
    
    2712,936
    
    
    
    4,438
 Consolidated2004
    
    2003
    
    2002$000
    
    $000
    
    $000Provision for doubtful accounts:Beginning Balance
    
    
    (350
    )
    
    
    (783
    )
    
    
    (204
    )Provisions charged to income
    
    
    (88
    )
    
    
    
    
    
    
    (579
    )Amounts charged net of recovery
    
    
    
    
    
    
    433
    
    
    
    Ending Balance
    
    
    (438
    )
    
    
    (350
    )
    
    
    (783
    )
 Terms and conditions: (i) trade debtors are non interest bearing and generally on 30 day terms; (ii) details of the terms and conditions of the related party receivables are set out in Note 20; (iii) other debtors are non-interest bearing and have repayment terms between 7 and 30 days. 85




---



##### 



6.
    
    INVENTORIES Consolidated2004
    
    2003$000
    
    $000CurrentRaw materials  at cost
    
    
    649
    
    
    
    479Work in progress  at cost
    
    
    6,392
    
    
    
    3,652Finished goods  at cost
    
    
    1,406
    
    
    
    2,228Provision for diminution in value of finished goods
    
    
    (659
    )
    
    
    7,788
    
    
    
    6,359Other inventory  at cost
    
    
    40
    
    
    
    407,828
    
    
    
    6,399Non-currentOther inventory  at cost
    
    
    254
    
    
    
    53Raw materials  at cost
    
    
    371
    
    
    
    979Provision for diminution in value of raw materials
    
    
    
    
    
    
    (954
    )625
    
    
    
    78
 Consolidated2004
    
    2003
    
    2002$000
    
    $000
    
    $000Provision for diminution in valueBeginning balance
    
    
    (954
    )
    
    
    (1,680
    )
    
    
    (878
    )Increase in provision for diminution
    
    
    (672
    )
    
    
    (8
    )
    
    
    (1,603
    )Utilisation of provision
    
    
    968
    
    
    
    734
    
    
    
    801Ending balance
    
    
    (658
    )
    
    
    (954
    )
    
    
    (1,680
    )
  7.
    
    OTHER CURRENT ASSETS Consolidated2004
    
    2003$000
    
    $000Prepayments
    
    
    865
    
    
    
    588
 86




---



##### 



8.
    
    PROPERTY, PLANT AND EQUIPMENT Consolidated2004
    
    2003$000
    
    $000Land at cost
    
    
    1,572
    
    
    
    1,545Buildings at cost
    
    
    3,459
    
    
    
    3,459Accumulated depreciation
    
    
    (2,005
    )
    
    
    (1,714
    )1,454
    
    
    
    1,745Total land and buildings (property)
    
    
    3,026
    
    
    
    3,290Plant and equipment under lease  at cost
    
    
    3,035
    
    
    
    3,199Accumulated amortisation
    
    
    (1,738
    )
    
    
    (1,453
    )1,297
    
    
    
    1,746Plant and equipment  at cost
    
    
    8,591
    
    
    
    8,814Accumulated depreciation
    
    
    (6,225
    )
    
    
    (5,619
    )2,366
    
    
    
    3,195Leasehold improvements  at cost
    
    
    382
    
    
    
    343Accumulated depreciation
    
    
    (343
    )
    
    
    (291
    )39
    
    
    
    52Total property, plant and equipment  at cost
    
    
    17,039
    
    
    
    17,360Accumulated amortisation and depreciation
    
    
    (10,311
    )
    
    
    (9,077
    )Total property, plant and equipment
    
    
    6,728
    
    
    
    8,283
 An independent valuation of the land and buildings was undertaken by Nicholas Warden
A.A.P.I. (Certified Practising Valuer, B.Bus (Land Economy) Registered Valuer No. 3445). Based
on market value for the existing use as at 30 June, 2003, the total value of the valuation
amounted to $5.85 million which exceeded the net carrying value
in the accounts. 87




---



##### 



a) Assets pledged as security Assets under lease are pledged as security for the associated lease liabilities. The book value of assets pledged as security are: Consolidated2004
    
    2003$000
    
    $000Plant and equipment under lease
    
    
    1,297
    
    
    
    1,746
 b) Reconciliations Reconciliations of the carrying amounts of plant, property and equipment at the
beginning and end of the current and previous financial year. Consolidated2004
    
    2003$000
    
    $000Freehold landCarrying amount at beginning
    
    
    1,545
    
    
    
    1,545Additions
    
    
    27
    
    
    
    1,572
    
    
    
    1,545Buildings on freehold landCarrying amount at beginning
    
    
    1,745
    
    
    
    2,035Additions
    
    
    
    
    
    
    Depreciation expense
    
    
    (291
    )
    
    
    (290
    )1,454
    
    
    
    1,745Plant and equipment under leaseCarrying amount at beginning
    
    
    1,746
    
    
    
    2,998Additions
    
    
    
    
    
    
    Disposals
    
    
    (35
    )
    
    
    (805
    )Amortisation expense
    
    
    (414
    )
    
    
    (447
    )1,297
    
    
    
    1,746Plant and equipmentCarrying amount at beginning
    
    
    3,195
    
    
    
    2,531Additions
    
    
    649
    
    
    
    1,548Disposals
    
    
    (513
    )
    
    
    (23
    )Depreciation expense
    
    
    (965
    )
    
    
    (861
    )2,366
    
    
    
    3,195Leasehold improvementsCarrying amount at beginning
    
    
    52
    
    
    
    104Additions
    
    
    38
    
    
    
    14Depreciation expense
    
    
    (51
    )
    
    
    (66
    )39
    
    
    
    52
 88




---



##### 



9.
    
    OTHER FINANCIAL ASSETS Consolidated2004
    
    2003$000
    
    $000Shares in controlled entities  at cost
(all intercompany investments have been
eliminated on consolidation)
    
    
    
    
    
    
    
 The carrying value of the parent entitys investment in controlled entities exceeds the net
assets of the relevant controlled entities as at 30 June, 2004. A provision for diminution in
value of the parent entitys investment in controlled entities has not been recorded by the
parent entity, as the Directors believe that the value of future cash flows will support the
current carrying value.  10.
    
    INTERESTS IN CONTROLLED ENTITIES Equity
    
    Cost of Novogen Limited'sHolding
    
    InvestmentCountry of
    
    Class of
    
    2004
    
    2003
    
    2004
    
    2003Name of Entity
    
    Incorporation
    
    Shares
    
    %
    
    %
    
    $000
    
    $000Novogen Laboratories Pty Ltd (i)
    
    Australia
    
    Ordinary
    
    
    100
    
    
    
    100
    
    
    
    400
    
    
    
    400Novogen Research Pty Ltd (i)
    
    Australia
    
    Ordinary
    
    
    100
    
    
    
    100
    
    
    
    7,000
    
    
    
    7,000Phytosearch Pty Ltd
    
    Australia
    
    Ordinary
    
    
    100
    
    
    
    100
    
    
    
    
    
    
    
    Phytogen Pty Ltd
    
    Australia
    
    Ordinary
    
    
    100
    
    
    
    100
    
    
    
    20
    
    
    
    20Glycotex Pty Ltd
    
    Australia
    
    Ordinary
    
    
    100
    
    
    
    100
    
    
    
    
    
    
    
    Norvogen Pty Ltd
    
    Australia
    
    Ordinary
    
    
    100
    
    
    
    100
    
    
    
    
    
    
    
    Central Coast Properties Pty Ltd (i)
    
    Australia
    
    Ordinary
    
    
    100
    
    
    
    100
    
    
    
    
    
    
    
    Novogen Inc.
    
    USA
    
    Ordinary
    
    
    100
    
    
    
    100
    
    
    
    
    
    
    
    Glycotex, Inc.
    
    USA
    
    Ordinary
    
    
    97.6
    
    
    
    97.6
    
    
    
    
    
    
    
    Novogen Limited (UK)
    
    UK
    
    Ordinary
    
    
    100
    
    
    
    100
    
    
    
    
    
    
    
    Promensil Limited
    
    UK
    
    Ordinary
    
    
    100
    
    
    
    100
    
    
    
    
    
    
    
    Novogen BV
    
    Netherlands
    
    Ordinary
    
    
    100
    
    
    
    100
    
    
    
    
    
    
    
    Novogen New Zealand Limited
    
    NZ
    
    Ordinary
    
    
    100
    
    
    
    100
    
    
    
    
    
    
    
    Novogen Canada Limited
    
    Canada
    
    Ordinary
    
    
    100
    
    
    
    100
    
    
    
    
    
    
    
    Marshall Edwards, Inc.
    
    USA
    
    Ordinary
    
    
    86.9
    
    
    
    95.1
    
    
    
    
    
    
    
    Marshall Edwards Pty Limited
    
    Australia
    
    Ordinary
    
    
    86.9
    
    
    
    95.1
    
    
    
    
    
    
    
    7,420
    
    
    
    7,420
 (i) Entities subject to class order relief Pursuant to Class Order 98/1418, relief has been granted to these companies from the
Corporations Act 2001 requirements for preparation, audit and
lodgement of their financial reports. As a condition of the Class Order, Novogen Limited and the controlled entities
subject to
the Class Order (Closed Group), entered into a Deed of Cross Guarantee on 28 May, 1999.
The effect of the deed is that Novogen Limited has guaranteed to pay any deficiency in the
event of winding up of the controlled entities. The controlled entities have also given a
similar guarantee in the event that Novogen Limited is wound up. 89




---



##### 



The consolidated statement of financial performance and statement of financial position of the
entities which are members of the Closed Group are as follows: Statement of Financial Performance
    
    2004
    
    2003Year ended 30 June, 2004
    
    $000
    
    $000Operating profit/(loss) before income tax
    
    
    2,667
    
    
    
    (7,868
    )Income tax attributable to operating (loss)/profit
    
    
    
    
    
    
    Operating profit/(loss) after income tax
    
    
    2,667
    
    
    
    (7,868
    )Retained profits/(accumulated losses) at the
beginning of the financial year
    
    
    (53,115
    )
    
    
    (45,247
    )Retained profits/(accumulated losses) at the end
of the financial year
    
    
    (50,448
    )
    
    
    (53,115
    )
 Statement of Financial Position
    
    2004
    
    2003Year ended 30 June, 2004
    
    $000
    
    $000CURRENT ASSETSCash
    
    
    21,552
    
    
    
    19,120Receivables
    
    
    3,348
    
    
    
    2,386Inventories
    
    
    4,527
    
    
    
    3,604Total current assets
    
    
    29,427
    
    
    
    25,110NON-CURRENT ASSETSReceivables
    
    
    43,750
    
    
    
    41,553Inventories
    
    
    625
    
    
    
    121Property, plant and equipment
    
    
    6,660
    
    
    
    8,200Total non-current assets
    
    
    51,035
    
    
    
    49,874TOTAL ASSETS
    
    
    80,462
    
    
    
    74,984CURRENT LIABILITIESPayables
    
    
    3,333
    
    
    
    3,102Interest bearing liabilities
    
    
    843
    
    
    
    679Provisions
    
    
    334
    
    
    
    249Total current liabilities
    
    
    4,510
    
    
    
    4,030NON-CURRENT LIABILITIESInterest bearing liabilities
    
    
    765
    
    
    
    1,608Provisions
    
    
    270
    
    
    
    201Total non-current liabilities
    
    
    1,035
    
    
    
    1,809TOTAL LIABILITIES
    
    
    5,545
    
    
    
    5,839NET ASSETS
    
    
    74,917
    
    
    
    69,145EQUITYContributed equity
    
    
    125,365
    
    
    
    122,260Retained profits/(accumulated losses)
    
    
    (50,448
    )
    
    
    (53,115
    )TOTAL EQUITY
    
    
    74,917
    
    
    
    69,145
 90




---



##### 



11.
    
    PAYABLES Consolidated2004
    
    2003$000
    
    $000CurrentTrade creditors
    
    
    2,986
    
    
    
    2,571Accrued trade creditors
    
    
    2,213
    
    
    
    1,842Accrued clinical trial payments
    
    
    764
    
    
    
    1,2435,963
    
    
    
    5,656
 Terms and conditions relating to the above payables: - trade creditors are non interest bearing and normally settled on 30 day terms; and - other creditors are non-interest bearing and normally settled on 30 day terms; and - clinical trial creditors are non-interest bearing and normally settled on 30 day terms.  12.
    
    INTEREST BEARING LIABILITIES Consolidated2004
    
    2003$000
    
    $000CurrentLease liabilities (secured) (Note 25b)
    
    
    843
    
    
    
    679843
    
    
    
    679Non-currentLease liabilities (secured) (Note 25b)
    
    
    765
    
    
    
    1,608765
    
    
    
    1,608Secured lease liability  finance leases
    
    
    1,608
    
    
    
    2,287
 Terms and Conditions relating to the above financial instruments: - finance leases have an average lease term of 4 years with the option to
purchase the asset at the completion of the lease term for the residual value.
The average interest rate implicit in the leases is 8.42% (2003: 8.42%). Assets
under lease are pledged as security for the associated lease liability. 91




---



##### 



13.
    
    PROVISIONS Consolidated2004
    
    2003$000
    
    $000CurrentEmployee benefits
    
    
    361
    
    
    
    271Non-currentEmployee benefits
    
    
    270
    
    
    
    201631
    
    
    
    472
  14.
    
    FINANCING ARRANGEMENTS Consolidated2004
    
    2003$000
    
    $000(a) Financing arrangementsUnrestricted access was available at balance date
to the following lines of creditTotal facilitiesLease facilities
    
    
    4,000
    
    
    
    4,0004,000
    
    
    
    4,000Used at balance dateLease facilities
    
    
    2,353
    
    
    
    3,1552,353
    
    
    
    3,155Unused at balance date
    
    
    1,647
    
    
    
    845Lease facilities
    
    
    1,647
    
    
    
    845
 (b) Assets under lease are pledged as security for the associated lease liabilities. (c) Novogen Limited has entered into a Deed of Set-off where it has agreed to hold a deposited sum
with the bank of at least three million dollars at all times as additional security for the lease
facility. 92




---



##### 



15.
    
    CONTRIBUTED EQUITY (a) Issued and paid up capital Consolidated2004
    
    2003$000
    
    $000Novogen Limited
96,723,523 (2003: 95,611,785) ordinary shares
    
    
    125,364
    
    
    
    122,260Marshall Edwards, Inc.
56,938,000 (2003: 52,032,000) ordinary shares
    
    
    44,424
    
    
    
    15,458Glycotex, Inc
2,050,000 (2003: 2,050,000) ordinary shares
    
    
    488
    
    
    
    488170,276
    
    
    
    138,206
 Terms and conditions of contributed equity: Novogen Limited Ordinary shares have the right to receive dividends as declared and, in the event of winding up
the Company, to participate in the proceeds from the sale of all surplus assets in proportion to
the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of
the Company. Movements in issued and paid up ordinary share capital of Novogen Limited are as follows: Number of
    
    Issueshares
    
    price $
    
    $000On issue 1 July, 2003
    
    
    95,611,785
    
    
    
    
    
    
    
    122,260Options converted to shares
    
    
    101,080
    
    
    
    1.53
    
    
    
    155Options converted to shares
    
    
    35,699
    
    
    
    2.10
    
    
    
    75Options converted to shares
    
    
    85,000
    
    
    
    2.77
    
    
    
    235Options converted to shares
    
    
    118,008
    
    
    
    2.84
    
    
    
    335Options converted to shares
    
    
    700,000
    
    
    
    2.91
    
    
    
    2,037Options converted to shares
    
    
    20,000
    
    
    
    2.95
    
    
    
    59Options converted to shares
    
    
    51,971
    
    
    
    4.00
    
    
    
    208Total options exercised during the period
    
    
    1,111,758
    
    
    
    
    
    
    
    3,104On issue 30 June, 2004
    
    
    96,723,543
    
    
    
    
    
    
    
    125,364
 93




---



##### 



Marshall Edwards, Inc. Shares of common stock have the right to receive dividends as declared and, in the
event of winding up the Company, to participate in the proceeds from the sale of all surplus
assets in proportion to the number of and amounts paid up on shares held. Shares of common stock entitle their holder to one vote, either in person or by proxy, at a
meeting of the Company. During November, 2003, 2,514,000 outstanding warrants to purchase shares of Marshall Edwards,
Inc., were exercised at an exercise price of US$4.00 per share prior to their expiration on 30
November, 2003. These warrants were issued in connection with the listing of Marshall Edwards
common stock on the AIM stock market in London. Net proceeds from the exercise of the warrants
amounted to US$10,056,000 ($A 14,035,000) to Marshall Edwards. During December, 2003, Marshall Edwards, Inc., completed an offering of 2,392,000 common stock
units at an initial public offering price of US$7.50 per unit.
Each common stock unit consisted of:  
    
    one share of Marshall Edwards, Inc., common stock; and
    
    one warrant to purchase a share of Marshall Edwards Inc
common stock at an exercise price equal to US$9.00. These warrants were immediately exercisable from the date of issue
and expire 3 years from their date of issue. In connection with the December offering, Marshall Edwards, Inc., shares of common stock and
warrants commenced trading separately on the Nasdaq National Market. The net proceeds of the offering amounted to approximately US$15,521,000 (A$20,815,000). As a
result of the above two transactions, Novogen Limited retains an 86.9% ownership interest in
Marshall Edwards, Inc. Movements in issued and paid up ordinary share capital of Marshall Edwards, Inc., are as follows: Number of
    
    Issueshares
    
    price $
    
    $'000On issue 1 July, 2003
    
    
    52,032,000
    
    
    
    
    
    
    
    15,458Warrants converted to shares
    
    
    2,514,000
    
    
    
    5.58
    
    
    
    14,035New shares issued
    
    
    2,392,000
    
    
    
    8.70
    
    
    
    20,815less Outside Equity Interest
    
    
    
    
    
    
    
    
    
    
    (5,884
    )Total warrants exercised during the period
    
    
    4,906,000
    
    
    
    
    
    
    
    28,966On issue 30 June, 2004
    
    
    56,938,000
    
    
    
    
    
    
    
    44,424
 94




---



##### 



Glycotex, Inc. Shares of common stock have the right to receive dividends as declared and, in the
event of winding up the Company, to participate in the proceeds from the sale of all surplus
assets in proportion to the number of and amounts paid up on shares held. Shares of common stock entitle their holder to one vote, either in person or by proxy, at a
meeting of the Company. During April 2003, Glycotex, Inc. raised $500,000 in an initial private placement from Australian
and international investors and institutions. Novogen now owns 97.6% of Glycotex, Inc. The shares were issued at $10.00 each with attaching warrants to purchase a further two shares at
an exercise price of $10.00 per share. The attaching options are exercisable prior to 5 November,
2004. Novogen also issued to these investors a convertible security enabling investors to convert
their investment in Glycotex, Inc. to Novogen shares at an equivalent Novogen share price of
A$5.00 per share. These ordinary shares have the right to receive dividends as declared and, in
the event of winding up Glycotex, Inc., to participate in the proceeds from the sale of all
surplus assets in proportion to the number of and amounts paid up on shares held. Movements in issued and paid up ordinary share capital of Glycotex, Inc., are as follows: Number ofshares
    
    $'000On issue 1 July, 2003
    
    
    2,050,000
    
    
    
    488On issue 30 June, 2004
    
    
    2,050,000
    
    
    
    488
 95




---



##### 



(b) Particulars of options issued by Novogen Limited are as follows: OptionsOn issue
    
    Issued
    
    Converted
    
    forfeited
    
    On issue
    
    ExercisableExercise
    
    Expiry
    
    Original
    
    1 July,
    
    during the
    
    to fully
    
    during
    
    30 June,
    
    30 June,Grant Date
    
    
    
    
    
    Price
    
    Date
    
    issue
    
    2003
    
    year
    
    paid shares
    
    the year
    
    2004
    
    200424/09/98
    
    (iii)
    
    $
    2.91
    
    
    
    24/09/03
    
    
    
    700,000
    
    
    
    700,000
    
    
    
    
    
    
    
    700,000
    
    
    
    
    
    
    
    
    
    
    
    26/03/99
    
    
    (i
    )
    
    $
    2.84
    
    
    
    26/03/04
    
    
    
    217,000
    
    
    
    79,436
    
    
    
    
    
    
    
    79,436
    
    
    
    
    
    
    
    
    
    
    
    26/03/99
    
    (ii)
    
    $
    2.84
    
    
    
    26/03/04
    
    
    
    38,572
    
    
    
    38,572
    
    
    
    
    
    
    
    38,572
    
    
    
    
    
    
    
    
    
    
    
    23/06/99
    
    
    (v
    )
    
    $
    2.9460
    
    
    
    23/06/04
    
    
    
    20,000
    
    
    
    20,000
    
    
    
    
    
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    23/06/99
    
    
    (v
    )
    
    $
    2.7725
    
    
    
    23/06/04
    
    
    
    85,000
    
    
    
    85,000
    
    
    
    
    
    
    
    85,000
    
    
    
    
    
    
    
    
    
    
    
    13/03/00
    
    
    (i
    )
    
    $
    4.00
    
    
    
    13/03/05
    
    
    
    221,028
    
    
    
    125,480
    
    
    
    
    
    
    
    23,575
    
    
    
    2,129
    
    
    
    99,776
    
    
    
    99,77613/03/00
    
    (ii)
    
    $
    4.00
    
    
    
    13/03/05
    
    
    
    27,360
    
    
    
    27,360
    
    
    
    
    
    
    
    5,520
    
    
    
    
    
    
    
    21,840
    
    
    
    21,84020/07/00
    
    
    (v
    )
    
    $
    3.5819
    
    
    
    20/07/05
    
    
    
    50,180
    
    
    
    50,180
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,180
    
    
    
    50,18030/11/00
    
    
    (i
    )
    
    $
    4.00
    
    
    
    30/11/05
    
    
    
    238,220
    
    
    
    159,548
    
    
    
    
    
    
    
    19,252
    
    
    
    5,403
    
    
    
    134,893
    
    
    
    101,17030/11/00
    
    (ii)
    
    $
    4.00
    
    
    
    30/11/05
    
    
    
    7,248
    
    
    
    7,248
    
    
    
    
    
    
    
    3,624
    
    
    
    
    
    
    
    3,624
    
    
    
    2,71827/10/00
    
    (iv)
    
    $
    4.01
    
    
    
    27/10/05
    
    
    
    9,384
    
    
    
    6,256
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,256
    
    
    
    4,69210/08/01
    
    
    (i
    )
    
    $
    1.53
    
    
    
    10/08/06
    
    
    
    695,528
    
    
    
    499,805
    
    
    
    
    
    
    
    101,080
    
    
    
    44,528
    
    
    
    354,197
    
    
    
    177,09913/07/01
    
    
    (v
    )
    
    $
    2.05
    
    
    
    13/07/06
    
    
    
    101,950
    
    
    
    101,950
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101,950
    
    
    
    101,95030/11/02
    
    
    (i
    )
    
    $
    2.10
    
    
    
    30/11/07
    
    
    
    526,332
    
    
    
    503,916
    
    
    
    
    
    
    
    35,699
    
    
    
    64,961
    
    
    
    403,256
    
    
    
    100,81430/11/02
    
    (ii)
    
    $
    2.10
    
    
    
    30/11/07
    
    
    
    37,200
    
    
    
    37,200
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,200
    
    
    
    9,30027/02/04
    
    
    (i
    )
    
    $
    6.76
    
    
    
    27/02/09
    
    
    
    189,536
    
    
    
    
    
    
    
    189,536
    
    
    
    
    
    
    
    15,472
    
    
    
    174,064
    
    
    
    27/02/04
    
    (ii)
    
    $
    6.76
    
    
    
    27/02/09
    
    
    
    6,660
    
    
    
    
    
    
    
    6,660
    
    
    
    
    
    
    
    
    
    
    
    6,660
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,171,198
    
    
    
    2,441,951
    
    
    
    196,196
    
    
    
    1,111,758
    
    
    
    132,493
    
    
    
    1,393,896
    
    
    
    669,539
 96




---



##### 



OptionsIssued
    
    Converted
    
    forfeited
    
    On issue
    
    ExercisableGrant
    
    
    
    
    
    Exercise
    
    Expiry
    
    Original
    
    On issue
    
    during the
    
    to fully
    
    during
    
    30 June
    
    30 June,Date
    
    
    
    
    
    Price
    
    Date
    
    issue
    
    1 July 2002
    
    year
    
    paid shares
    
    the year
    
    2003
    
    200325/03/98
    
    
    (i
    )
    
    $
    2.23
    
    
    
    25/03/03
    
    
    
    180,728
    
    
    
    94,723
    
    
    
    
    
    
    
    85,911
    
    
    
    8,812
    
    
    
    
    
    
    
    25/03/98
    
    (ii)
    
    $
    2.23
    
    
    
    25/03/03
    
    
    
    15,684
    
    
    
    15,684
    
    
    
    
    
    
    
    15,684
    
    
    
    
    
    
    
    
    
    
    
    24/09/98
    
    (iii)
    
    $
    2.91
    
    
    
    24/09/03
    
    
    
    700,000
    
    
    
    700,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    700,000
    
    
    
    22/12/98
    
    (ii)
    
    $
    2.00
    
    
    
    22/12/03
    
    
    
    104,734
    
    
    
    51,734
    
    
    
    
    
    
    
    51,734
    
    
    
    
    
    
    
    
    
    
    
    26/03/99
    
    
    (i
    )
    
    $
    2.84
    
    
    
    26/03/04
    
    
    
    217,000
    
    
    
    99,508
    
    
    
    
    
    
    
    15,716
    
    
    
    4,356
    
    
    
    79,436
    
    
    
    79,43626/03/99
    
    (ii)
    
    $
    2.84
    
    
    
    26/03/04
    
    
    
    38,572
    
    
    
    38,572
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,572
    
    
    
    38,57223/06/99
    
    
    (v
    )
    
    $
    2.9460
    
    
    
    23/06/04
    
    
    
    20,000
    
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,000
    
    
    
    20,00023/06/99
    
    
    (v
    )
    
    $
    2.7725
    
    
    
    23/06/04
    
    
    
    85,000
    
    
    
    85,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85,000
    
    
    
    85,00013/03/00
    
    
    (i
    )
    
    $
    4.00
    
    
    
    13/03/05
    
    
    
    221,028
    
    
    
    137,364
    
    
    
    
    
    
    
    
    
    
    
    11,884
    
    
    
    125,480
    
    
    
    94,11013/03/00
    
    (ii)
    
    $
    4.00
    
    
    
    13/03/05
    
    
    
    27,360
    
    
    
    27,360
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,360
    
    
    
    20,52020/07/00
    
    
    (v
    )
    
    $
    3.5819
    
    
    
    20/07/05
    
    
    
    50,180
    
    
    
    50,180
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,180
    
    
    
    50,18030/11/00
    
    
    (i
    )
    
    $
    4.00
    
    
    
    30/11/05
    
    
    
    238,220
    
    
    
    175,636
    
    
    
    
    
    
    
    
    
    
    
    16,088
    
    
    
    159,548
    
    
    
    79,77430/11/00
    
    (ii)
    
    $
    4.00
    
    
    
    30/11/05
    
    
    
    7,248
    
    
    
    7,248
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,248
    
    
    
    3,62427/10/00
    
    (iv)
    
    $
    4.01
    
    
    
    27/10/05
    
    
    
    9,384
    
    
    
    6,256
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,256
    
    
    
    3,12810/08/01
    
    
    (i
    )
    
    $
    1.53
    
    
    
    10/08/06
    
    
    
    695,528
    
    
    
    596,448
    
    
    
    
    
    
    
    30,026
    
    
    
    66,617
    
    
    
    499,805
    
    
    
    124,95113/07/01
    
    
    (v
    )
    
    $
    2.05
    
    
    
    13/07/06
    
    
    
    101,950
    
    
    
    101,950
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101,950
    
    
    
    101,95030/11/02
    
    
    (i
    )
    
    $
    2.10
    
    
    
    30/11/07
    
    
    
    526,332
    
    
    
    
    
    
    
    526,332
    
    
    
    
    
    
    
    22,416
    
    
    
    503,916
    
    
    
    30/11/02
    
    (ii)
    
    $
    2.10
    
    
    
    30/11/07
    
    
    
    37,200
    
    
    
    
    
    
    
    37,200
    
    
    
    
    
    
    
    
    
    
    
    37,200
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,276,148
    
    
    
    2,207,663
    
    
    
    563,532
    
    
    
    199,071
    
    
    
    130,173
    
    
    
    2,441,951
    
    
    
    701,245
  (i)
    
    Options issued under the Employee Share Option Plan. Options vest in four equal
annual instalments over the vesting period.(ii)
    
    Options issued to consultants. Options vest in four equal annual instalments
over the vesting period.(iii)
    
    Options issued to the Managing Director by resolution of shareholders on 24
September, 1998.(iv)
    
    Option issued to Non-executive Directors by resolution of shareholders on 27
October, 2000. Options vest in four equal annual instalments over the vesting period.(v)
    
    Options issued to consultants Options vest twelve months after grant date. The last trade of Novogen Limited shares on the Australian Stock Exchange on 30 June, 2004
was $5.30. Share option plans Employee share option plan The employee share option plan provides for the issue of options to eligible employees
being an employee or Director of the Company or related company. Each option entitles its
holder to acquire one fully paid ordinary share and is exercisable at a price equal to the
weighted average price of such shares at the close of trading on the Australian Stock
Exchange Limited for the five days prior to the date of issue. Options are not
transferable. The option lapses if the
employee ceases to be an employee during the vesting
period. There are currently 45 employees eligible for this scheme. 97




---



##### 



Consultant options The Company has also granted options by way of compensation to consultants who perform
services for Novogen and its controlled entities.  16.
    
    RESERVES, RETAINED PROFITS/(ACCUMULATED LOSSES) (a) Retained Profit/(Accumulated Losses)
    
    Consolidated2004
    
    2003$000
    
    $000Balance at the beginning of the year
    
    
    (94,424
    )
    
    
    (83,970
    )Adjustment to opening retained earnings
attributed to outside equity interest holders
    
    
    387
    
    
    
    Current year profit/(losses)
    
    
    (10,935
    )
    
    
    (10,454
    )Balance at the end of the year
    
    
    (104,972
    )
    
    
    (94,424
    )
 Consolidated2004
    
    2003(b) Foreign currency translation
    
    $000
    
    $000(i) Nature and purpose of reserveThe foreign currency translation reserve is
used to record exchange differences arising
from the translation of the financial
statements of self-sustaining foreign
operations(ii) Movements in reserveBalance at beginning of year
    
    
    (1,956
    )
    
    
    Gain (loss) on translation of overseas
controlled entities
    
    
    1,507
    
    
    
    (1,956
    )Balance at end of year
    
    
    (449
    )
    
    
    (1,956
    )
 98




---



##### 



17.
    
    OUTSIDE EQUITY INTEREST Consolidated2004
    
    2003$000
    
    $000Reconciliation of outside equity interest in controlled entitiesOpening balance
    
    
    571
    
    
    
    766Additions to outside equity interest by way of share issue- Marshall Edwards, Inc.
    
    
    5,429
    
    
    
    5- Glycotex, Inc.
    
    
    
    
    
    
    12Add Share of operating losses of controlled entities- Marshall Edwards, Inc.
    
    
    (1,639
    )
    
    
    (211
    )- Glycotex, Inc.
    
    
    (5
    )
    
    
    (1
    )Closing balance
    
    
    4,356
    
    
    
    571
  18.
    
    SEGMENT INFORMATION Segment accounting policies The Group generally accounts for intercompany sales and transfers as if the sales or
transfers were to third parties at current market prices. Revenues are attributed to geographic
areas based on the location of the assets producing the revenues. Segment accounting policies are the same as the consolidated entitys policies described in Note 1.
During the financial year there were no changes in the segment accounting policies that had a
material effect on the segment information. 99




---



##### 



PRIMARY SEGMENT Australia/NZ
    
    North America
    
    Europe
    
    Elimination
    
    Consolidated2004
    
    2003
    
    2002
    
    2004
    
    2003
    
    2002
    
    2004
    
    2003
    
    2002
    
    2004
    
    2003
    
    2002
    
    2004
    
    2003
    
    2002$'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000Geographical segmentsRevenueSales to customers outside the
consolidated entity
    
    
    4,022
    
    
    
    6,228
    
    
    
    5,224
    
    
    
    6,357
    
    
    
    10,658
    
    
    
    12,084
    
    
    
    2,341
    
    
    
    2,744
    
    
    
    2,274
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,720
    
    
    
    19,630
    
    
    
    19,582Other revenues from customers outside the
consolidated entity
    
    
    2,327
    
    
    
    3,360
    
    
    
    3,498
    
    
    
    166
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    (21
    )
    
    
    2,494
    
    
    
    3,360
    
    
    
    3,503Intersegment Revenues
    
    
    4,043
    
    
    
    6,457
    
    
    
    4,571
    
    
    
    43
    
    
    
    71
    
    
    
    258
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,086
    )
    
    
    (6,528
    )
    
    
    (4,829
    )
    
    
    
    
    
    
    
    
    
    
    Total segment revenue
    
    
    10,392
    
    
    
    16,045
    
    
    
    13,293
    
    
    
    6,566
    
    
    
    10,729
    
    
    
    12,342
    
    
    
    2,342
    
    
    
    2,744
    
    
    
    2,300
    
    
    
    (4,086
    )
    
    
    (6,528
    )
    
    
    (4,850
    )
    
    
    15,214
    
    
    
    22,990
    
    
    
    23,085Unallocated revenue  interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,232
    
    
    
    1,266
    
    
    
    1,203Total consolidated revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,446
    
    
    
    24,256
    
    
    
    24,288ResultsSegment net gain/(loss) on foreign currency
    
    
    (405
    )
    
    
    (9,230
    )
    
    
    (5,496
    )
    
    
    859
    
    
    
    7,990
    
    
    
    5,011
    
    
    
    (591
    )
    
    
    715
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (137
    )
    
    
    (525
    )
    
    
    (482
    )Segment result (loss)
    
    
    (6,268
    )
    
    
    (89,654
    )
    
    
    (11,946
    )
    
    
    (2,502
    )
    
    
    3,146
    
    
    
    (3,431
    )
    
    
    (1,252
    )
    
    
    (376
    )
    
    
    (1,269
    )
    
    
    (2,437
    )
    
    
    76,343
    
    
    
    2,363
    
    
    
    (12,459
    )
    
    
    (10,541
    )
    
    
    (14,283
    )Unallocated expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (120
    )
    
    
    (132
    )
    
    
    (345
    )Consolidated entity profit/(loss) from ordinary activities before income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,579
    )
    
    
    (10,673
    )
    
    
    (14,628
    )Income tax credit/(expense)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    (45
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,579
    )
    
    
    (10,666
    )
    
    
    (14,673
    )
 100




---



##### 



SEGMENT INFORMATION  PRIMARY SEGMENT (Contd) Australia/NZ
    
    North America
    
    Europe
    
    Elimination
    
    Consolidated2004
    
    2003
    
    2004
    
    2003
    
    2004
    
    2003
    
    2004
    
    2003
    
    2004
    
    2003$'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000Geographical segmentsAssetsSegment assets
    
    
    17,552
    
    
    
    9,635
    
    
    
    56,178
    
    
    
    20,342
    
    
    
    1,364
    
    
    
    1,947
    
    
    
    2,319
    
    
    
    18,888
    
    
    
    77,413
    
    
    
    50,812LiabilitiesSegment liabilities
    
    
    11,908
    
    
    
    12,025
    
    
    
    50,179
    
    
    
    48,411
    
    
    
    10,735
    
    
    
    10,067
    
    
    
    (64,620
    )
    
    
    (62,088
    )
    
    
    8,202
    
    
    
    8,415Other segment informationAcquisition of
property plant and
equipment,
intangible assets
and other non
current assets
    
    
    671
    
    
    
    1,502
    
    
    
    43
    
    
    
    54
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    714
    
    
    
    1,562Depreciation
    
    
    1,249
    
    
    
    1,156
    
    
    
    49
    
    
    
    49
    
    
    
    9
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    1,307
    
    
    
    1,217Amortisation
    
    
    414
    
    
    
    447
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    224
    
    
    
    414
    
    
    
    671Non cash expenses
other than
depreciation and
amortisation
    
    
    (1,448
    )
    
    
    75,093
    
    
    
    357
    
    
    
    757
    
    
    
    54
    
    
    
    99
    
    
    
    2,289
    
    
    
    (75,273
    )
    
    
    1,252
    
    
    
    676Long Lived Assets
    
    
    6,660
    
    
    
    8,200
    
    
    
    64
    
    
    
    70
    
    
    
    5
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    6,728
    
    
    
    8,283
 The Novogen Group operates subsidiary companies in 3 major geographical areas being
Australia/New Zealand, North America, including the USA and Canada, and Europe, including the UK
and the Netherlands. The subsidiaries are involved in the selling and marketing of Novogens
dietary supplements including Promensil, Trinovin and Rimostil. The U.S. company is also
responsible for manufacturing and packaging products for the domestic U.S. market. The other
countries products are supplied from Australia in fully finished form. All of the Groups sales revenues are sales of Novogens dietary supplements. For the purposes of
this primary segment information, the Novogen Group operates in one business segment being to
manufacture, market and sell dietary supplements. 101




---



##### 



SEGMENT INFORMATION  SECONDARY SEGMENT PharmaceuticalDietary
    
    research andsupplements
    
    development
    
    Elimination
    
    Consolidated2004
    
    2003
    
    2004
    
    2003
    
    2004
    
    2003
    
    2004
    
    2003$'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000
    
    $'000Segment revenue
    
    
    14,189
    
    
    
    20,985
    
    
    
    2,257
    
    
    
    3,271
    
    
    
    
    
    
    
    
    
    
    
    16,446
    
    
    
    24,256Segment assets
    
    
    20,527
    
    
    
    15,613
    
    
    
    53,619
    
    
    
    15,406
    
    
    
    3,267
    
    
    
    19,793
    
    
    
    77,413
    
    
    
    50,812Acquistion of
property plant and
equipment,
intangible assets
and other non
current assets
    
    
    401
    
    
    
    1,280
    
    
    
    313
    
    
    
    282
    
    
    
    
    
    
    
    
    
    
    
    714
    
    
    
    1,562
  19.
    
    DIRECTOR AND EXECUTIVE DISCLOSURES a) Details of specified Directors and specified Executives (i) Specified DirectorsPA Johnston
    
    Chairman (Non-executive)C Naughton
    
    CEOGE Kelly
    
    Executive DirectorPJ Nestel AO
    
    Director (Non-executive)PB Simpson
    
    Director (Non-executive)LC Read
    
    Director (Non-executive) appointed 11th September 2003(ii) Specified ExecutivesAJ Husband
    
    Research DirectorDR Seaton
    
    Chief Financial OfficerWJ Lancaster
    
    VP Commercial and Corporate DevelopmentBM Palmer
    
    General Manager OperationsCD Kearney
    
    General Manager Consumer BusinessRL Erratt
    
    Company Secretary
 b) Remuneration of specified Directors and specified Executives (i) Remuneration policy The Remuneration Committee of the Board of Directors is responsible for determining and reviewing
compensation arrangements for the Directors, the Managing Director, Executive Director and senior
Executives. The Remuneration Committee assesses the appropriateness of the nature and amount of
emoluments of such officers on a periodic basis by reference to relevant employment market
conditions with the overall objective of 102




---



##### 



ensuring maximum stakeholder
benefit from the retention of a high quality executive team. Such officers are given the opportunity to receive their base emolument in a variety of forms
including cash and fringe benefits such as the use of motor vehicles. It is intended that the
manner of payment chosen will be optimal for the recipient without creating undue cost for the
Group. All Executive Directors and Executives have the opportunity to qualify for participation in the
Employee Share Option Plan after achieving a qualifying service period. The performance criteria against which Directors and Executives are assessed is aligned with the
financial and non-financial objectives of Novogen Limited. It is the Remuneration Committee policy that employment agreements are entered into with the Chief
Executive Officer, the Executive Director, and each of the specified Executives except for the VP
Commercial and Corporate Development. The contract term for the CEO is five years with a six months
notice period for any termination after the contract term. The contracts for service between the
Company and Executive Director and the specified Executives are employed for terms of three years
with a notice period of six months for any termination after the initial contract term. In the
event of the Company terminating the employment under the terms of the contract the Company shall
pay the pro-rata balance of the unexpired contract term plus an additional amount of one and one
half times the then current annual remuneration of the employee. (ii) Remuneration of specified Directors and specified Executives 103




---



##### 



Primary
    
    
    
    
    
    Post employment
    
    
    Equity
    
    
    Other
    
    TotalNon-monetarySalary & fees
    
    benefits
    
    Superannuation
    
    Options
    
    BonusesSpecified DirectorsPA Johnston2004
    
    
    
    70,182
    
    
    
    
    
    
    
    6,318
    
    
    
    668
    
    
    
    
    
    
    
    77,1682003
    
    
    
    69,724
    
    
    
    
    
    
    
    6,276
    
    
    
    891
    
    
    
    
    
    
    
    76,891C Naughton2004
    
    
    
    419,016
    
    
    
    91,138
    
    
    
    37,711
    
    
    
    
    
    
    
    
    
    
    
    547,8652003
    
    
    
    400,621
    
    
    
    42,513
    
    
    
    36,056
    
    
    
    31,749
    
    
    
    
    
    
    
    510,939GE Kelly2004
    
    
    
    306,234
    
    
    
    45,523
    
    
    
    27,561
    
    
    
    
    
    
    
    
    
    
    
    379,3182003
    
    
    
    278,952
    
    
    
    63,010
    
    
    
    25,106
    
    
    
    
    
    
    
    
    
    
    
    367,068PJ Nestel AO2004
    
    
    
    44,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,5002003
    
    
    
    42,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,000PB Simpson2004
    
    
    
    44,494
    
    
    
    
    
    
    
    4,006
    
    
    
    668
    
    
    
    
    
    
    
    49,1682003
    
    
    
    40,364
    
    
    
    
    
    
    
    3,634
    
    
    
    891
    
    
    
    
    
    
    
    44,889LC Read2004
    
    
    
    25,688
    
    
    
    
    
    
    
    2,312
    
    
    
    
    
    
    
    
    
    
    
    28,0002003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Remuneration: Specified Directors2004
    
    
    
    910,114
    
    
    
    136,661
    
    
    
    77,908
    
    
    
    1,336
    
    
    
    
    
    
    
    1,126,0192003
    
    
    
    831,661
    
    
    
    105,523
    
    
    
    71,072
    
    
    
    33,531
    
    
    
    
    
    
    
    1,041,787Specified ExecutivesAJ Husband2004
    
    
    
    234,371
    
    
    
    87,644
    
    
    
    20,605
    
    
    
    40,579
    
    
    
    
    
    
    
    383,1992003
    
    
    
    211,388
    
    
    
    50,813
    
    
    
    19,025
    
    
    
    21,180
    
    
    
    
    
    
    
    302,406DR Seaton2004
    
    
    
    257,203
    
    
    
    28,314
    
    
    
    23,148
    
    
    
    37,795
    
    
    
    
    
    
    
    346,4602003
    
    
    
    222,372
    
    
    
    27,173
    
    
    
    20,013
    
    
    
    13,847
    
    
    
    
    
    
    
    283,405WJ Lancaster (USA)2004
    
    
    
    209,225
    
    
    
    6,295
    
    
    
    18,531
    
    
    
    22,851
    
    
    
    
    
    
    
    256,9022003
    
    
    
    229,866
    
    
    
    6,167
    
    
    
    23,824
    
    
    
    14,164
    
    
    
    
    
    
    
    274,021BM Palmer2004
    
    
    
    131,976
    
    
    
    56,273
    
    
    
    11,877
    
    
    
    24,114
    
    
    
    
    
    
    
    224,2402003
    
    
    
    128,815
    
    
    
    44,928
    
    
    
    11,593
    
    
    
    15,130
    
    
    
    
    
    
    
    200,466CD Kearney2004
    
    
    
    152,880
    
    
    
    37,576
    
    
    
    13,759
    
    
    
    17,210
    
    
    
    
    
    
    
    221,4252003
    
    
    
    141,234
    
    
    
    32,279
    
    
    
    12,711
    
    
    
    2,697
    
    
    
    
    
    
    
    188,921RL Erratt2004
    
    
    
    142,664
    
    
    
    38,860
    
    
    
    12,839
    
    
    
    25,165
    
    
    
    
    
    
    
    219,5282003
    
    
    
    137,471
    
    
    
    35,708
    
    
    
    12,372
    
    
    
    14,462
    
    
    
    
    
    
    
    200,013Total remuneration: specified Executives2004
    
    
    
    1,128,319
    
    
    
    254,962
    
    
    
    100,759
    
    
    
    167,714
    
    
    
    
    
    
    
    1,651,7542003
    
    
    
    1,071,146
    
    
    
    197,068
    
    
    
    99,538
    
    
    
    81,480
    
    
    
    
    
    
    
    1,449,232
 104




---



##### 



c) Remuneration options: Granted and vested during the year During the financial year options were granted as equity compensation benefits to certain specified
Directors and specified Executives as disclosed below. The options were issued free of charge. Each
option entitles the holder to subscribe for one fully paid ordinary share in the entity at an
exercise price of $6.76. The options expire five years after grant date and vest annually in four
equal instalments commencing one year after grant date. Terms and conditions for each grantValue per
    
    ExerciseVested
    
    Granted
    
    
    
    
    
    option at
    
    price per
    
    First
    
    Lastnumber
    
    number
    
    Grant date
    
    grant date
    
    share
    
    exercise date
    
    exercise date($)
    
    ($)Specified DirectorsPA Johnston
    
    
    782
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    PB Simpson
    
    
    782
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Specified ExecutivesAJ Husband
    
    
    30,571
    
    
    
    14,892
    
    
    
    27/02/2004
    
    
    
    3.23
    
    
    
    6.76
    
    
    
    27/02/2005
    
    
    
    27/02/2009DR Seaton
    
    
    24,247
    
    
    
    14,892
    
    
    
    27/02/2004
    
    
    
    3.23
    
    
    
    6.76
    
    
    
    27/02/2005
    
    
    
    27/02/2009WJ Lancaster (USA)
    
    
    17,444
    
    
    
    7,848
    
    
    
    27/02/2004
    
    
    
    3.23
    
    
    
    6.76
    
    
    
    27/02/2005
    
    
    
    27/02/2009BM Palmer
    
    
    17,852
    
    
    
    8,244
    
    
    
    27/02/2004
    
    
    
    3.23
    
    
    
    6.76
    
    
    
    27/02/2005
    
    
    
    27/02/2009CD Kearney
    
    
    5,953
    
    
    
    8,192
    
    
    
    27/02/2004
    
    
    
    3.23
    
    
    
    6.76
    
    
    
    27/02/2005
    
    
    
    27/02/2009RL Erratt
    
    
    19,090
    
    
    
    8,156
    
    
    
    27/02/2004
    
    
    
    3.23
    
    
    
    6.76
    
    
    
    27/02/2005
    
    
    
    27/02/2009Total
    
    
    116,721
    
    
    
    62,224
 105




---



##### 



d) Shares issued on exercise of remuneration options Shares issued
    
    Paid
    
    Unpaidnumber
    
    $ per share
    
    $ per shareSpecified DirectorsC Naughton
    
    
    700,000
    
    
    
    2.91
    
    
    
    Specified ExecutivesAJ Husband
    
    
    28,188
    
    
    
    2.84
    
    
    
    DR Seaton
    
    
    21,142
    
    
    
    1.53
    
    
    
    WJ Lancaster (USA)
    
    
    20,420
    
    
    
    2.84
    
    
    
    BM Palmer
    
    
    10,004
    
    
    
    2.84
    
    
    
    RL Erratt
    
    
    14,576
    
    
    
    2.84
    
    
    
    Total
    
    
    794,330
 106




---



##### 



e) Option holding of specified Directors and specified Executives Balance at
    
    Granted as
    
    Options
    
    Balance at
    
    Vested atbeginning of
    
    remuneration
    
    exercised
    
    end of period
    
    30 June,period
    
    
    
    
    
    
    
    2004
    
    Not
    
    Exercisable1 July, 2003
    
    
    
    
    
    30 June, 2004
    
    Total
    
    exercisableSpecified DirectorsPA Johnston
    
    
    3,128
    
    
    
    
    
    
    
    
    
    
    
    3,128
    
    
    
    2,346
    
    
    
    
    
    
    
    2,346C Naughton
    
    
    700,000
    
    
    
    
    
    
    
    (700,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    PJ Nestel AO
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    20,000
    
    
    
    20,000
    
    
    
    
    
    
    
    20,000PB Simpson
    
    
    3,128
    
    
    
    
    
    
    
    
    
    
    
    3,128
    
    
    
    2,346
    
    
    
    
    
    
    
    2,346Specified ExecutivesAJ Husband
    
    
    150,472
    
    
    
    14,892
    
    
    
    (28,188
    )
    
    
    137,176
    
    
    
    68,706
    
    
    
    
    
    
    
    68,706DR Seaton
    
    
    96,988
    
    
    
    14,892
    
    
    
    (21,142
    )
    
    
    90,738
    
    
    
    21,794
    
    
    
    
    
    
    
    21,794WJ Lancaster (USA)
    
    
    90,196
    
    
    
    7,848
    
    
    
    (20,420
    )
    
    
    77,624
    
    
    
    36,783
    
    
    
    
    
    
    
    36,783BM Palmer
    
    
    81,412
    
    
    
    8,244
    
    
    
    (10,004
    )
    
    
    79,652
    
    
    
    39,365
    
    
    
    
    
    
    
    39,365CD Kearney
    
    
    23,812
    
    
    
    8,192
    
    
    
    
    
    
    
    32,004
    
    
    
    5,953
    
    
    
    
    
    
    
    5,953RL Erratt
    
    
    90,936
    
    
    
    8,156
    
    
    
    (14,576
    )
    
    
    84,516
    
    
    
    40,087
    
    
    
    
    
    
    
    40,087Total
    
    
    1,260,072
    
    
    
    62,224
    
    
    
    (794,330
    )
    
    
    527,966
    
    
    
    237,380
    
    
    
    
    
    
    
    237,380
 107




---



##### 



f) Shareholdings of specified Directors and their related parties and specified Executives
and their related parties Balance
    
    Granted as
    
    On exercise
    
    Net change
    
    Balance1 July, 2003
    
    remuneration
    
    of options
    
    other
    
    30 June, 2004Ord
    
    Ord
    
    Ord
    
    Ord
    
    OrdSpecified DirectorsPA Johnston
    
    
    43,594
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,594C Naughton
    
    
    318,511
    
    
    
    
    
    
    
    700,000
    
    
    
    (280,000
    )
    
    
    738,511GE Kelly
    
    
    8,736,519
    
    
    
    
    
    
    
    
    
    
    
    (232,967
    )
    
    
    8,503,552PJ Nestel AO
    
    
    14,000
    
    
    
    
    
    
    
    
    
    
    
    (2,000
    )
    
    
    12,000PB Simpson
    
    
    500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    500LC Read
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,000
    
    
    
    2,000Specified ExecutivesAJ Husband
    
    
    74,204
    
    
    
    
    
    
    
    28,188
    
    
    
    (43,500
    )
    
    
    58,892DR Seaton
    
    
    6,500
    
    
    
    
    
    
    
    21,142
    
    
    
    (27,642
    )
    
    
    WJ Lancaster (USA)
    
    
    24,000
    
    
    
    
    
    
    
    20,420
    
    
    
    
    
    
    
    44,420BM Palmer
    
    
    147,882
    
    
    
    
    
    
    
    10,004
    
    
    
    (5,000
    )
    
    
    152,886CD Kearney
    
    
    7,200
    
    
    
    
    
    
    
    
    
    
    
    650
    
    
    
    7,850RL Erratt
    
    
    103,956
    
    
    
    
    
    
    
    14,576
    
    
    
    (15,000
    )
    
    
    103,532Total
    
    
    9,476,866
    
    
    
    
    
    
    
    794,330
    
    
    
    (603,459
    )
    
    
    9,667,737
 All equity transactions with specified directors and specified executives other than those
arising from the exercise of remuneration options have been entered into under terms and conditions
no more favourable than those the entity would have adopted if dealing at arms length. 108




---



##### 



20. RELATED PARTY DISCLOSURES Ultimate parent Novogen Limited is the ultimate parent entity. Transactions with related parties in the whollyowned group (all of the following
transactions and balances are eliminated on consolidation) Novogen Limited2004
    
    2003$
    
    $(a) Intercompany balances between
Novogen Limited and its wholly owned
controlled entities with no fixed term for
repayment
    
    
    90,266,133.
    
    
    
    92,652,572.Provision for non-recovery
    
    
    (90,266,133
    )
    
    
    (92,652,572
    )(b) Intercompany balances made by wholly
owned controlled entities to Novogen
Limited with no fixed term for repayment
    
    
    
    
    
    
    2,586,835
 No interest is charged on the intercompany balances between wholly owned controlled
entities. 109




---



##### 



21. REMUNERATION OF AUDITORS Consolidated2004
    
    2003$
    
    $Amounts received or due and receivable by
Ernst & Young Australia for:(a) an audit or review of the financial report of the
entity and any other entity in the consolidated
entity;
    
    
    220,619
    
    
    
    129,500(b) other services in relation to the entity and any
other entity in the consolidated entity.
    
    
    154,953
    
    
    
    58,027Amounts received or due and receivable by
    
    
    375,572
    
    
    
    187,527related practice of Ernst & Young Australia for:audit services in relation to any entity in the
economic group.
    
    
    195,555
    
    
    
    30,970Amounts received or due and receivable by auditors
of other subsidiaries in the economic entity for
an audit/review, which are not already disclosed.
    
    
    21,657
    
    
    
    28,308592,784
    
    
    
    246,805
 110




---



##### 



22. STATEMENT OF CASH FLOWS Consolidated2004
    
    2003$000
    
    $000(a) RECONCILIATION OF OPERATING LOSS AFTER INCOME TAX
TO NET CASHFLOWS FROM OPERATIONSOperating loss after income tax
    
    
    (12,579
    )
    
    
    (10,666
    )Depreciation and amortisation
    
    
    1,721
    
    
    
    1,888Net (gain)/loss on disposal of property,
plant and equipment
    
    
    467
    
    
    
    (12
    )Changes in assets and liabilities
(increase)/decrease in trade debtors
    
    
    1,243
    
    
    
    127(increase)/decrease in prepayments
    
    
    (277
    )
    
    
    (71
    )(increase)/decrease in other debtors
    
    
    171
    
    
    
    373(increase)/decrease in inventories
    
    
    (1,976
    )
    
    
    1,027increase/(decrease) in accounts payable
    
    
    307
    
    
    
    1,376increase/(decrease) in provisions
    
    
    247
    
    
    
    (404
    )exchange rate change on opening cash
    
    
    137
    
    
    
    515Net cash outflow from operating activities
    
    
    (10,539
    )
    
    
    (5,847
    )
 b) FINANCE LEASES No plant and equipment was acquired during the year by means of finance leases (2003: $nil). 111




---



##### 



23. EARNINGS PER SHARE Consolidated2004
    
    2003$000
    
    $000The following reflects the income and share
data used in calculating basic and diluted
earnings per shareNet loss
    
    
    (12,579
    )
    
    
    (10,666
    )Adjustments:Net loss attributable to outside equity interests
    
    
    (1,644
    )
    
    
    (212
    )Earnings used in calculating basic and diluted
earnings per share
    
    
    (10,935
    )
    
    
    (10,454
    )
 Number of
    
    Number ofshares
    
    sharesWeighted average number of ordinary shares used
in calculating basic and diluted earnings per
share
    
    
    96,107,215
    
    
    
    95,472,984Basic and diluted loss per share  (cents)
    
    
    (11.4
    )
    
    
    (10.9
    )
 Diluted earnings per share: The notional issue of potential ordinary shares resulting from the exercise of options detailed in
Note 15(a) does not result in diluted earnings per share that shows a different view of the
earnings performance of the Company, therefore the information has not been disclosed. Potential ordinary shares (non-dilutive) and not included in determining earnings per share
1,393,896 (refer Note 15(b)). Conversions, call subscriptions or issues after 30 June, 2004 There have been 45,359 conversions to, calls of, or subscriptions for ordinary shares or issues of
potential ordinary shares since the reporting date and before the completion of this financial
report. 112




---



##### 



24. FINANCIAL INSTRUMENTS  (a)
    
    Interest rate risk exposuresThe economic entitys exposure to interest rate risk and the effective weighted
average interest rate for each class of financial assets and liabilities is set out
below. Floating
    
    Fixed
    
    Fixed
    
    Non-interest
    
    Total
    
    WeightedInterest Rate
    
    1 year or less
    
    Over 1 to 5 years
    
    bearing
    
    
    
    Average Rateof InterestNote
    
    2004
    
    2003
    
    2004
    
    2003
    
    2004
    
    2003
    
    2004
    
    2003
    
    2004
    
    2003
    
    2004
    
    2003$000
    
    $000
    
    $000
    
    $000
    
    $000
    
    $000
    
    $000
    
    $000
    
    $000
    
    $000Financial assetsCash
    
    
    4
    
    
    
    38,777
    
    
    
    11,246
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,200
    
    
    
    1,141
    
    
    
    39,977
    
    
    
    12,387
    
    
    
    1.07
    %
    
    
    1.38
    %Deposits
    
    
    4
    
    
    
    3,011
    
    
    
    1,245
    
    
    
    15,443
    
    
    
    17,394
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,454
    
    
    
    18,639
    
    
    
    5.22
    %
    
    
    4.67
    %Receivables
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,936
    
    
    
    4,438
    
    
    
    2,936
    
    
    
    4,438
    
    
    
    N/A
    
    
    
    N/A41,788
    
    
    
    12,491
    
    
    
    15,443
    
    
    
    17,394
    
    
    
    
    
    
    
    
    
    
    
    4,136
    
    
    
    5,579
    
    
    
    61,367
    
    
    
    35,464Financial liabilitiesPayables
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,963
    
    
    
    5,656
    
    
    
    5,963
    
    
    
    5,656
    
    
    
    N/A
    
    
    
    N/AInterest bearing liabilities
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    843
    
    
    
    679
    
    
    
    765
    
    
    
    1,608
    
    
    
    
    
    
    
    
    
    
    
    1,608
    
    
    
    2,287
    
    
    
    8.42
    %
    
    
    8.42
    %
    
    
    
    
    
    
    
    843
    
    
    
    679
    
    
    
    765
    
    
    
    1,608
    
    
    
    5,963
    
    
    
    5,656
    
    
    
    7,571
    
    
    
    7,943Net financial assets/(liabilities)
    
    
    
    
    
    
    41,788
    
    
    
    12,491
    
    
    
    14,600
    
    
    
    16,715
    
    
    
    (765
    )
    
    
    (1,608
    )
    
    
    (1,827
    )
    
    
    (77
    )
    
    
    53,796
    
    
    
    27,521
  (b)
    
    Net fair value of financial assets and liabilitiesThe net fair value of financial assets and liabilities approximates their carrying
value in the Statement of Financial Position, because they are short term and at
market rates of interest.(c)
    
    Credit risk exposuresThe consolidated entities maximum exposures to credit risk at balance date in
relation to each class of recognised financial assets is the carrying amount of
those assets as indicated in the Statement of Financial Position.Concentration of credit riskThe Company minimises concentration of credit risk in relation to trade receivables
by undertaking transactions with a large number of customers.Credit risk is managed in the following way:  (i)
    
    payment terms are 30 days except for some customers
who have 60 day terms; and(ii)
    
    a risk assessment process is used for all customers. 113




---



##### 



25. EXPENDITURE COMMITMENTS Consolidated2004
    
    2003$000
    
    $000(a) Lease commitments *Commitments in relation to operating leases
contracted for at the reporting date but not
recognised as liabilities payable:Not later than 1 year
    
    
    375
    
    
    
    432Later than 1 year but not later than 2 years
    
    
    32
    
    
    
    354Later than 2 years but not later than 3 years
    
    
    1
    
    
    
    24Later than 3 years but not later than 4 years
    
    
    
    
    
    
    Later than 4 years but not later than 5 years
    
    
    
    
    
    
    408
    
    
    
    810(b) Finance leases **Commitments in relation to finance leases
are payable as follows:Not later than 1 year
    
    
    899
    
    
    
    776Later than 1 year but not later than 2 years
    
    
    767
    
    
    
    899Later than 2 years but not later than 3 years
    
    
    15
    
    
    
    767Later than 3 years but not later than 4 years
    
    
    
    
    
    
    15Later than 4 years but not later than 5 years
    
    
    
    
    
    
    Minimum lease payments
    
    
    1,681
    
    
    
    2,457Less: Future finance charges
    
    
    (73
    )
    
    
    (170
    )1,608
    
    
    
    2,287Representing lease liabilities:Current  (Note 12)
    
    
    843
    
    
    
    679Non-current  (Note 12)
    
    
    765
    
    
    
    1,6081,608
    
    
    
    2,287(c) Other expenditure commitmentsResearch and development contracts for
service to be rendered:Not later than 1 year
    
    
    6,200
    
    
    
    2,373Later than 1 year but not later than 2 years
    
    
    912
    
    
    
    146Later than 2 years but not later than 3 years
    
    
    
    
    
    
    Later than 3 years but not later than 4 years
    
    
    
    
    
    
    Later than 4 years but not later than 5 years
    
    
    
    
    
    
    7,112
    
    
    
    2,519
   *
    
    Operating leases represent payments for property and equipment rental. Leases for
property include an annual review for Consumer Price Index (CPI) increases.**
    
    Finance lease commitments have an average term of 4 years with an average interest rate of
8.42%. Assets which are subject to finance leases include building, plant and equipment.There are no commitments for capital expenditure outstanding at the end of the financial year. 114




---



##### 



26. CONTINGENT LIABILITIES Parent entity guarantees  (a)
    
    The parent company has unconditionally guaranteed financial support for Novogen Limited (UK)
should it be unable to meet its financial obligations.  (b)
    
    The parent company has guaranteed in a deed dated 16 May, 2002 the performance of the Novogen
subsidiaries arising in connection with the License Agreement and the Manufacturing and Supply
Agreement with Marshall Edwards Pty Limited.  (c)
    
    As a condition of the Class Order, Novogen Limited and the controlled entities subject to the
Class Order, entered into a Deed of Cross Guarantee on 28 May, 1999. The effect of the deed
is that Novogen Limited has guaranteed to pay any deficiency in the event of winding up of the
controlled entities. The controlled entities have also given a similar guarantee in the event
that Novogen Limited is wound up. 27. SUBSEQUENT EVENTS There have been no significant events occurring after balance date which have had a material impact
on the business. 115




---



##### 



28. PENSION PLANS The company and employees contribute various percentages of gross income to defined
contribution pension plans nominated by employees for the provision of benefits to employees on
retirement, death or disability. Benefits provided under the plans are based on contributions for
each employee. The pension plans comply with Australian regulatory provisions set by the Insurance and
Superannuation Commission. The company has complied with the provisions of the Superannuation
Guarantee Charge Act. Contributions expensed by the company for each of the periods were as follows: 2002
    
    2003
    
    2004A$000
    
    A$000
    
    A$000Contribution expense
    
    
    325
    
    
    
    604
    
    
    
    518
 29. DIVIDENDS The company has incurred losses since its inception and, as a result, has not declared any
dividends. Any dividends in future periods will be declared in Australian dollars. 116




---



##### 



30. DIFFERENCES BETWEEN AUSTRALIAN GAAP AND U.S. GAAP Australian GAAP varies in certain respects from accounting principles generally accepted in the
United States (US GAAP). The differences relate principally to the following items and the
adjustments necessary to reconcile the consolidated net loss for the years ended June 30, 2002,
2003 and 2004 and equity at June 30, 2003 and 2004 in accordance with U.S. GAAP are shown below. The U.S. GAAP statements of operations for the years ended June 30, 2002, 2003 and 2004 are as
follows: 117




---



##### 



US GAAP2002
    
    2003
    
    2004
    
    2004A$000
    
    A$000
    
    A$000
    
    US$000Operating RevenueSales Revenue
    
    
    17,644
    
    
    
    18,977
    
    
    
    11,774
    
    
    
    8,185Other Operating Revenue
    
    
    3,463
    
    
    
    3,325
    
    
    
    2,414
    
    
    
    1,678Total Operating Revenue
    
    
    21,107
    
    
    
    22,302
    
    
    
    14,188
    
    
    
    9,863Costs and ExpensesCost of Goods Sold
    
    
    (7,583
    )
    
    
    (7,191
    )
    
    
    (4,753
    )
    
    
    (3,304
    )Research & Development
    
    
    (7,853
    )
    
    
    (8,274
    )
    
    
    (8,261
    )
    
    
    (5,743
    )Selling and Promotions
    
    
    (13,744
    )
    
    
    (11,585
    )
    
    
    (8,816
    )
    
    
    (6,129
    )Shipping and Handling
    
    
    (480
    )
    
    
    (468
    )
    
    
    (382
    )
    
    
    (266
    )Bad & Doubtful Debts Expense
    
    
    (661
    )
    
    
    (52
    )
    
    
    (99
    )
    
    
    (69
    )General and Administrative
    
    
    (5,791
    )
    
    
    (5,831
    )
    
    
    (4,971
    )
    
    
    (3,456
    )Total Costs and Expenses
    
    
    (36,112
    )
    
    
    (33,401
    )
    
    
    (27,282
    )
    
    
    (18,967
    )Loss from operations
    
    
    (15,005
    )
    
    
    (11,099
    )
    
    
    (13,094
    )
    
    
    (9,104
    )Other Income (Expense)Interest Expense
    
    
    (345
    )
    
    
    (132
    )
    
    
    (120
    )
    
    
    (83
    )Exchange Gains/(Losses)
    
    
    (482
    )
    
    
    (525
    )
    
    
    (137
    )
    
    
    (95
    )Other
    
    
    709
    
    
    
    1,278
    
    
    
    765
    
    
    
    532Total Other Income (Expense)
    
    
    (118
    )
    
    
    621
    
    
    
    508
    
    
    
    354Loss Before Income Tax
    
    
    (15,123
    )
    
    
    (10,478
    )
    
    
    (12,586
    )
    
    
    (8,750
    )Income Tax Expense/(Benefit)
    
    
    (45
    )
    
    
    7
    
    
    
    0
    
    
    
    0Minority Interest
    
    
    19
    
    
    
    212
    
    
    
    1,176
    
    
    
    818Net loss
    
    
    (15,149
    )
    
    
    (10,259
    )
    
    
    (11,410
    )
    
    
    (7,932
    )Loss per

share  basic and diluted (cents)
    
    
    (15.9
    )
    
    
    (10.7
    )
    
    
    (11.9
    )
    
    
    (8.3
    )
 118




---



##### 



Year ended 30 June2002
    
    2003
    
    2004A$000
    
    A$000
    
    A$000Consolidated Net LossNet loss
reported under Australian GAAP
    
    
    
    
    (14,673
    )
    
    
    (10,666
    )
    
    
    (12,579
    )Adjustments required to accord with
U.S. GAAP:Amortization of goodwill
    
    (i)
    
    
    33
    
    
    
    
    
    
    
    Goodwill written off
    
    (i)
    
    
    
    
    
    
    224
    
    
    
    Stock based compensation cost
    
    (ii)
    
    
    (53
    )
    
    
    (504
    )
    
    
    (7
    )Minority interest in net losses of
subsidiaries
    
    (vi)
    
    
    19
    
    
    
    212
    
    
    
    1,176Adjustment for sales returns
    
    (v)
    
    
    (475
    )
    
    
    475
    
    
    
    Net loss under U.S. GAAP
    
    
    
    
    (15,149
    )
    
    
    (10,259
    )
    
    
    (11,410
    )Basic and diluted (loss) per share
according to U.S. GAAP
    
    
    
    
    (0.16
    )
    
    
    (0.11
    )
    
    
    (0.12
    )Weighted average number of ordinary
shares outstanding during the year
used in calculation of basic and
diluted (loss) per share
    
    
    
    
    95,187,449
    
    
    
    95,472,984
    
    
    
    96,107,215Comprehensive IncomeNet loss according to U.S. GAAP
    
    
    
    
    (15,149
    )
    
    
    (10,259
    )
    
    
    (11,410
    )Other comprehensive income resulting
from foreign currency translation
    
    (vii)
    
    
    
    
    
    
    (1,956
    )
    
    
    (556
    )Total comprehensive income
    
    
    
    
    (15,149
    )
    
    
    (12,215
    )
    
    
    (11,966
    )
 119




---



##### 



Comprehensive Income Movement 2002
    
    2003
    
    2004A$000
    
    A$000
    
    A$000Balance at
beginning of year
    
    
    
    
    
    
    
    
    
    
    (1,956
    )Foreign
currency translation adjustment
    
    
    
    
    
    
    (1,956
    )
    
    
    1,400Closing Other Comprehensive Income
    
    
    
    
    
    
    (1,956
    )
    
    
    (556
    )
 In 2002, 2003 and 2004, exercise of the options issued by the Company would have been anti-dilutive
and, therefore, was not considered in the computation of diluted earnings per share. Details of
options are set out in note 15. Outstanding options at the end of the financial years are,
2,207,663 in 2002, 2,441,951 in 2003 and 1,393,896 in 2004. The following is a reconciliation of the adjustments necessary to reconcile shareholders equity in
accordance with Australian GAAP to the amounts determined under U.S. GAAP as at June 30, 2003 and
2004: At 30 June2002
    
    2003
    
    2004A$000
    
    A$000
    
    A$000Shareholders EquityShareholders equity reported
using Australian GAAP
    
    
    
    
    54,045
    
    
    
    42,397
    
    
    
    69,211Cumulative adjustments required to
accord with U.S. GAAP:Reversal of recognition of goodwill
    
    (i)
    
    
    (492
    )Amortisation of goodwill
    
    (i)
    
    
    268Stock based compensation cost
    
    (ii)
    
    
    (728
    )
    
    
    (757
    )
    
    
    Adjustment for sales returns
    
    (v)
    
    
    (475
    )Minority interest equity
    
    (vi)
    
    
    (766
    )
    
    
    (571
    )
    
    
    (3,452
    )Shareholders equity according to
U.S. GAAP
    
    
    
    
    51,852
    
    
    
    41,069
    
    
    
    65,759
 120




---



##### 



The following is a reconciliation of the shareholder equity roll forward showing the movement
shareholders equity under U.S. GAAP for the years ended June 30, 2003 and 2004: 2002
    
    2003
    
    2004A$000
    
    A$000
    
    A$000Opening Shareholders equity according to U.S. GAAP
    
    
    50,974
    
    
    
    51,852
    
    
    
    41,069Less: Net loss according to U.S. GAAP
    
    
    (15,149
    )
    
    
    (10,259
    )
    
    
    (11,410
    )Add: New Equity
    
    
    16,812
    
    
    
    1,449
    
    
    
    38,718less: Minority interest in new equity
    
    
    (785
    )
    
    
    (17
    )
    
    
    (5,884
    )Add: movement in other comprehensive income
    
    
    0
    
    
    
    (1,956
    )
    
    
    1,400Closing Shareholders equity according to U.S. GAAP
    
    
    51,852
    
    
    
    41,069
    
    
    
    65,759
 A description of the differences between Australian GAAP, as followed by Novogen, and U.S. GAAP is
provided below: (i) Goodwill, Patents and Trademarks Novogen Limited (Novogen formerly Norvet Limited) was incorporated on March 18, 1994. An
Australian prospectus was issued in August 1994 for a proposed public issue of 13 million shares
and options by Novogen. At that time, Novogen was a cash-less shell that had not carried on any
business except to enter into an underwriting agreement for the offering and agreements to acquire
Norvet Research Pty Ltd. (Research) and Norvet Laboratories Pty Ltd (Laboratories). The
agreements indicated that Novogen would purchase all of the issued shares of Research in exchange
for an issue of new Novogen equity that was valued at A$7.0 million and that Novogen would acquire
all of the issued shares of Laboratories in exchange for a cash payment of A$400,000 from the IPO
proceeds. Novogen successfully completed the public offering and listed on the Australian Stock
Exchange on September 1, 1994. Concurrent with the closing of the IPO, the transfers of Research
and Laboratories into Novogen were completed. For the purposes of Australian GAAP, Novogen accounted for both acquisitions as purchase
transactions with the cost of acquisition being based on a valuation performed before the
acquisition of A$7 million for Research and A$400,000 for Laboratories. For the purposes of U.S.
GAAP, the transfer of Research into Novogen (a shell with no assets) represents a re-capitalization
of Research and, accordingly, no revaluation of Researchs assets is appropriate under U.S. GAAP
and no goodwill was recognised under U.S. GAAP. The purchased fair values of Researchs assets,
principally
intangible assets, have therefore been eliminated in the reconciliation to U.S. GAAP.
No U.S. GAAP adjustment was required, however, in relation to the acquisition of Laboratories. 121




---



##### 



Goodwill has been fully written off in 2003 based on the Directors assessment that no future
benefits were considered probable from this intangible asset. (ii) Stock Based Compensation In accordance with Australian GAAP, no compensation expense has been recognised in respect of
options issued by the company. Particulars of options issued by Novogen are summarised in Note 15. (a) For U.S. GAAP purposes, in respect of the options issued to executive officers and
employees, as permitted by SFAS 123, Novogen follows the provisions of Accounting Principles Board
Opinion No. 25 (APB 25) Accounting for Stock Issued to Employees and related interpretations in
accounting for compensation expense related to the issuance of stock
options. No employee stock-based
compensation cost is included in the determination of net loss, as reported, as none of the options
granted to employees are compensatory as measured under ABP25 and related interpretations. Under
APB 25, compensation cost for stock options is measured as the excess, if any, of the quoted market
price of the Companys stock at the grant date over the exercise price, multiplied by the number of
options issued. The total compensation cost is amortized over the service (vesting) period. Had
compensation cost related to issues of options to executive officers and other employees been
recorded at fair value on the date of grant in accordance with SFAS 123 Accounting for Stock Based
Compensation (SFAS 123), Novogens net loss and loss per share amounts (calculated in accordance
with U.S. GAAP) would have been reduced to the pro forma amounts indicated below: 2002
    
    2003
    
    2004A$000
    
    A$000
    
    A$000Net loss after income tax (US GAAP)- As reported
    
    
    (15,149
    )
    
    
    (10,259
    )
    
    
    (11,410
    )- Stock-based employee
compensation  fair value
method
    
    
    (271
    )
    
    
    (411
    )
    
    
    (350
    )- Pro forma
    
    
    (15,420
    )
    
    
    (10,670
    )
    
    
    (11,760
    )Basic and diluted loss per share (US GAAP)- As reported
    
    
    (0.16
    )
    
    
    (0.11
    )
    
    
    (0.12
    )- Pro forma
    
    
    (0.16
    )
    
    
    (0.11
    )
    
    
    (0.12
    )
 (b) The company has also granted options to consultants, who are not employees of the company, for
services to Novogen and its controlled entities. Under U.S. GAAP, compensation cost for the issue
of these options has been determined based on the methodology of SFAS 123. Under SFAS 123,
compensation cost is determined based upon the fair value at the measurement date of the
consideration received or the fair value of the option issued, whichever is more reliably
measurable. 122




---



##### 



The following table summarises non-employee stock options issued to consultants who perform
services for Novogen: Consultant Options 2002
    
    2003
    
    2004Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedOptions
    
    average
    
    Options
    
    average
    
    Options
    
    averageexercise
    
    
    
    exercise
    
    
    
    exerciseprice A$
    
    
    
    price A$
    
    
    
    price A$Outstanding at the
beginning of the
year
    
    
    348,778
    
    
    
    A$2.28
    
    
    
    397,728
    
    
    
    A$2.69
    
    
    
    367,510
    
    
    
    A$2.75Granted
    
    
    101,950
    
    
    
    A$2.05
    
    
    
    37,200
    
    
    
    A$2.10
    
    
    
    6,660
    
    
    
    A$6.76Exercised
    
    
    53,000
    
    
    
    A$2.00
    
    
    
    67,418
    
    
    
    A$2.05
    
    
    
    152,716
    
    
    
    A$2.88Outstanding at the
end of the year
    
    
    397,728
    
    
    
    A$2.69
    
    
    
    367,510
    
    
    
    A$2.75
    
    
    
    221,454
    
    
    
    A$2.77Exercisable at the
end of the year
    
    
    265,207
    
    
    
    A$2.83
    
    
    
    319,846
    
    
    
    A$2.78
    
    
    
    185,988
    
    
    
    A$2.72Weighted average
fair value of
options granted
during the year
    
    
    A$0.52
    
    
    
    
    
    
    
    A$0.78
    
    
    
    
    
    
    
    A$2.82
 Employee Options 2002
    
    2003
    
    2004Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedOptions
    
    average
    
    Options
    
    average
    
    Options
    
    averageexercise
    
    
    
    exercise
    
    
    
    exerciseprice A$
    
    
    
    price A$
    
    
    
    price A$Outstanding at the
beginning of the
year
    
    
    1,676,298
    
    
    
    A$3.02
    
    
    
    1,809,935
    
    
    
    A$2.61
    
    
    
    2,074,441
    
    
    
    A$2.02Granted
    
    
    695,528
    
    
    
    A$1.53
    
    
    
    526,332
    
    
    
    A$2.10
    
    
    
    189,536
    
    
    
    A$6.76Exercised
    
    
    289,939
    
    
    
    A$1.77
    
    
    
    131,653
    
    
    
    A$2.14
    
    
    
    959,042
    
    
    
    A$2.78Forfeited
    
    
    271,952
    
    
    
    A$2.83
    
    
    
    130,173
    
    
    
    A$2.25
    
    
    
    132,493
    
    
    
    A$2.56Outstanding at the
end of the year
    
    
    1,809,935
    
    
    
    A$2.61
    
    
    
    2,074,441
    
    
    
    A$2.02
    
    
    
    1,172,442
    
    
    
    A$3.01Exercisable at the
end of the year
    
    
    585,321
    
    
    
    A$3.01
    
    
    
    381,399
    
    
    
    A$2.95
    
    
    
    483,551
    
    
    
    A$2.70Weighted average
fair value of
options granted
during the year
    
    
    A$0.39
    
    
    
    
    
    
    
    A$.78
    
    
    
    
    
    
    
    A$2.82
 123




---



##### 



The fair value of these options was estimated at the date of the grant using the Black-Scholes
option pricing model with the following weighted average assumptions for 2002, 2003 and 2004
respectively. Risk free interest rate 5.09% and 5.71% and 5.52%. Dividend yields of 0% in each of
the three years, volatility factors of 0.27 in 2002, 0.36 in 2003 and 0.69 in 2004, and a weighted
average life of 5 years. The combined weighted average remaining contractual life of the
outstanding employee and consultant options is 2.6 years. The number of shares authorised for grant under the various option plans are limited by the share
option plan. At any one time the total number of shares which the Company would have to issue if
all options granted under the plan that are outstanding were exercised, must not exceed 5 per cent
of the number of issued shares at that time. Shares are not reserved for future issuance as there are no restrictions on the issuance of shares,
up the authorised number of shares, subject to ASX Listing Rule 7. This rule allows for the company
to issue up to 15% of the total issued shares in new shares, per annum, without shareholder
approval. The Black-Scholes option valuation model was developed for use in estimating the fair value of
traded options which have no vesting restrictions and are fully transferable. In addition, option
valuation models require the input of highly subjective assumptions including the expected stock
price volatility. Because the Companys employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in the managements opinion, the existing models do not
necessarily provide a reliable single measure of fair value of its employee stock options. (iii) Cash Flow Statement Cash for the purposes of the cash flow statement includes cash held as a minimum deposit by the
lessor (Note 4). Under U.S. GAAP this would be treated as restricted cash and would be removed
from cash and cash equivalents and included in cash flows from investing activities. 2002
    
    2003
    
    2004A$000
    
    A$000
    
    A$000Cash and cash equivalents under
Australian GAAP
    
    
    39,937
    
    
    
    31,026
    
    
    
    58,431Restricted cash (Note 4)
    
    
    (2,500
    )
    
    
    (2,500
    )
    
    
    (3,000
    )Cash and cash equivalents under U.S. GAAP
    
    
    37,437
    
    
    
    28,526
    
    
    
    55,431
 124




---



##### 



(iv) Income Tax The Novogen Group has adopted SFAS No. 109 for U.S. GAAP purposes. SFAS No. 109 requires a
liability approach to accounting for income taxes, which as it applies to the company is very
similar to that adopted under Australian GAAP. Under Australian GAAP, the deferred tax asset in respect of income tax losses carried forward
disclosed in Note 3 is not recognised unless the benefit is virtually certain of realisation.
Under U.S. GAAP, the benefit is not recognised unless realisation is more likely than not. Pretax accounting loss under
Australian GAAP for the year ended June 30, 2004 was taxed in the following jurisdictions: 2002
    
    2003
    
    2004$000
    
    $000
    
    $000Domestic
    
    
    (9,477
    )
    
    
    (14,317
    )
    
    
    (9,016
    )Foreign
    
    
    (5,151
    )
    
    
    3,644
    
    
    
    (3,563
    )(14,628
    )
    
    
    (10,673
    )
    
    
    (12,579
    )
 125




---



##### 



The components of the U.S. GAAP net deferred tax asset at June 30, 2003 and 2004, are as
follows: 2003
    
    2004$000
    
    $000Deferred tax assetsDepreciation
    
    
    771
    
    
    
    816Provisions accruals
    
    
    851
    
    
    
    2,030Exchange gains
    
    
    2,794
    
    
    
    Other
    
    
    189
    
    
    
    126Losses carried forward - Australia
    
    
    5,672
    
    
    
    11,304- USA
    
    
    12,254
    
    
    
    12,786- Other
    
    
    3,445
    
    
    
    3,601Total deferred tax assets
    
    
    25,976
    
    
    
    30,663Deferred tax liabilityExchange losses
    
    
    
    
    
    
    (44
    )Prepayments
    
    
    (1
    )
    
    
    Other
    
    
    (27
    )
    
    
    (447
    )Total deferred tax liability
    
    
    (28
    )
    
    
    (491
    )Net deferred tax asset
    
    
    25,948
    
    
    
    30,172Valuation allowance for deferred tax
assets
    
    
    (25,948
    )
    
    
    (30,172
    )Net recorded deferred taxes
    
    
    
    
    
    
    
 2002

    
    2003
    
    2004$000
    

    %

    
    $000

    
    %

    
    $000
    
    %Tax at Australian statutory rates
    
    
    (4,545
    )
    
    
    30
    %
    
    
    (3,078
    )
    
    
    30
    %
    
    
    (3,423
    )
    
    
    30
    %Foreign Rate Differentials
    
    
    10
    
    
    
    (0
    %)
    
    
    254
    
    
    
    (2
    %)
    
    
    (111
    )
    
    
    1
    %Non deductible expenses
    
    
    155
    
    
    
    (1
    %)
    
    
    63
    
    
    
    (1
    %)
    
    
    118
    
    
    
    (1
    %)Research and development allowance
    
    
    (211
    )
    
    
    2
    %
    
    
    (79
    )
    
    
    1
    %
    
    
    (271
    )
    
    
    2
    %Other
    
    
    274
    
    
    
    (2
    %)
    
    
    25
    
    
    
    (0
    %)
    
    
    (329
    )
    
    
    3
    %Reversal of intercompany profit in stock
elimination
    
    
    (1,217
    )
    
    
    8
    %
    
    
    (251
    )
    
    
    2
    %
    
    
    (208
    )
    
    
    2
    %Change in valuation allowance
    
    
    5,579
    
    
    
    (37
    %)
    
    
    3,059
    
    
    
    (30
    %)
    
    
    4,224
    
    
    
    (37
    %)46
    
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    
 Deferred taxes have not been separated between current and non-current. All deferred taxes are
expected to be non current since there is no current tax liability and no current tax liability is
anticipated for the next financial year. 126




---



##### 



Components of Income Tax Expense/(Benefit) 2002
    
    2003
    
    2004$000
    
    $000
    
    $000Current Expense/(Benefit)
    
    
    45
    
    
    
    (7
    )
    
    
    Deferred Expense/(Benefit)
    
    
    (4,362
    )
    
    
    (2,807
    )
    
    
    (4,016
    )Movement in Valuation Allowance
    
    
    4,362
    
    
    
    2,807
    
    
    
    4,016Income Tax Expense
    
    
    45
    
    
    
    (7
    )
    
    
    
 Tax effected carry forward
losses amounting to $13,402,000 may be carried forward indefinitely and
tax losses of $14,037,000 expire over the period 2007 through 2024. (v) Revenue 2002
    
    2003
    
    2004(A$000)
    
    (A$000)
    
    (A$000)Sales Revenue reported
using Australian GAAP
    
    
    19,582
    
    
    
    19,630
    
    
    
    12,720Trade Promotions
    
    
    (1,463
    )
    
    
    (1,128
    )
    
    
    (946
    )Adjustment for sales returns
    
    
    (475
    )
    
    
    475
    
    
    
    Sales Revenue reported
using US GAAP
    
    
    17,644
    
    
    
    18,977
    
    
    
    11,774
 Trade Promotions EITF Issue 00-14 
Accounting for certain sales incentives requires trade promotion expenditure to
be deducted from sales revenue. Certain trade promotion expenditures are charged to selling and
marketing expenses under Australian GAAP. These expenses are for retail price discounts whereby
Novogen makes a contribution to the retailers promotional costs of Novogens products. Under U.S.
GAAP, these amounts are treated as a discount reducing the reported sales figures. Sales Returns Historically, the company did not sell its products with rights of return, however during 2002 as a
result of disappointing sales of one product the company accepted returns 127




---



##### 



totalling A$2.1 million.
Under U.S. GAAP, SFAS 48, Revenue Recognition When Right of Return Exists, requires that an
allowance be recorded for an implied right of return, regardless of whether that right exists on a
contractual basis. Accordingly, an adjustment for estimated sales returns was recorded under U.S.
GAAP in 2002. The Company has granted rights of return to specific customers in 2004 and 2003.
Consequently A$499,000 (A$369,000 in fiscal 2003), has been included in the Australian accounts to
recognise the estimated amount of sales returns. (vi) Minority interests Under Australian GAAP, equity in consolidated subsidiaries issued outside the economic entity is
referred to as Outside Equity Interests and is included as a component of equity but excluded
from the determination of net loss. Under U.S. GAAP, Outside Equity Interests are referred to as
Minority Interests and are separately classified between the liabilities and equity sections of
the Statement of Financial Position. Net loss, in the statement of operations, is presented net of
the minoritys share of the subsidiarys net loss. According to U.S. GAAP minority interests in profits, losses and reserves are calculated
incrementally as the minority holding changes. Under Australian GAAP minorities are allocated their
share of previous profits, losses and reserves according to the percentage holding at year end.
This creates a gain/loss for the parent entity which under U.S. GAAP is not recognized. In
addition, the allocation of net loss and foreign currency translation adjustments to minority
interest differs between Australian GAAP and U.S. GAAP when there is a change in ownership in a
subsidiary during the period. Reconciliation of outside equity interest in controlled entities: 2003
    
    2004$000
    
$000Opening balance
    
    
    766
    
    
    
    571Additions to outside equity
interest by way of share
issue:Marshall Edwards, Inc.
    
    
    5
    
    
    
    4,018Glycotex, Inc.
    
    
    12
    
    
    
    Add shares of operating
losses of controlled entitiesMarshall Edwards, Inc.
    
    
    (211
    )
    
    
    (1,171
    )Glycotex, Inc.
    
    
    (1
    )
    
    
    (5
    )Add shares of other
comprehensive income
    
    
    
    
    
    
    39Marshall Edwards, Inc.
    
    
    571
    
    
    
    3,452
 (vii) Other Comprehensive Income Under Australian GAAP, other comprehensive income arising on the restatement of foreign
subsidiaries for consolidation purposes is referred to as Foreign Currency
Translation Reserve and is included as a component of equity. Where a portion of other
comprehensive income is attributable to minority interests this is calculated differently under
Australian GAAP and U.S. GAAP as described in Note 30(vi) above. (viii) Summary of Significant Accounting Policies Use of Estimates The preparation of the consolidated financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that effect amounts
reported in the financial statements and accompanying notes. Actual results could differ from those
estimates. Financial Instruments Financial instruments are recognised at fair value as either an asset or liability in the statement
of financial position. The accounting changes for fair value are recognised as earnings in the
period of change. 128




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Advertising Expenses Costs incurred in advertising expenditure are expensed as incurred. The company incurred
A$8,020,000 in fiscal 2002, A$6,100,000 in fiscal 2003 and A$4,134,000 in fiscal 2004. (iix) Payables Under U.S. GAAP amounts that exceed 5% of the total of creditors and accruals are disclosed
separately. The table below details those creditors and accruals that exceed 5% of the total
balance, 2003
    
    2004$000
    
    $000Insurance Premiums
    
    
    73
    
    
    
    433Provision for Sales Returns
    
    
    369
    
    
    
    499Provision for Rebates
    
    
    486
    
    
    
    372
 (ix) Recent Accounting Pronouncements In December 2002, the Financial Accounting Standards Board (the FASB) issued SFAS No. 148,
Accounting for Stock-Based Compensation  Transition and Disclosure. SFAS No. 148 amends SFAS No.
123, Accounting for Stock-Based Compensation, to provide alternative methods of transition to SFAS
No. 123s fair value method of accounting for stock-based employee compensation. SFAS No. 148 also
amends the disclosure provisions in SFAS No. 123 and Accounting Principles Board Opinion No. 28,
Interim Financial Reporting, to require disclosure in the summary of significant accounting
policies of the effects of an entitys accounting policy with respect to stock-based employee
compensation on reported net income and earnings per share in annual and interim financial
statements. The Company adopted the disclosure provisions in 2003. The adoption of SFAS No. 148 did
not have a significant impact on the Companys consolidated results of operations or financial
position. The Company has adopted FASB Interpretation No. 46 revised December 2003 (FIN No. 46),
Consolidation of Variable Interest Entities. FIN No. 46 requires a beneficiary to consolidate a
variable interest entity if it is the primary beneficiary of that entity. The primary beneficiary
is defined as having a variable interest in a variable interest entity that will absorb a majority
of the entitys expected losses, receive a majority of the entitys expected residual returns (if
no party absorbs a majority of the entitys expected looses), or both. The effect of FIN No. 46
will not have a material impact on our consolidated financial position, results of operations and
cash flows. Accounting pronouncement issued by the FASB or other authoritative accounting standards groups with
future effective dates are either not applicable or not significant to the consolidated financial
statements. (x) Segment Information The central operating decision makers review the companys operations based on geography and this
is disclosed as the primary segment information in Note 18. 129




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##### 



SIGNATURES The registrant hereby certifies that it meets all the requirements for filing on Form 20-F and
that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf. NOVOGEN LIMITED   Mr Christopher Naughton
Managing Director Date: 11 January, 2004 130