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© CLINUVEL PHARMACEUTICALS LTD 2016
CLINUVEL PHARMACEUTICALS
ANNUAL REPORT 2016
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contents
Chair’s Letter
Managing DireCtor’s Letter
DireCtors’ report
reMuneration report
stateMent of profit or Loss anD other CoMprehensive inCoMe
stateMent of finanCiaL position
stateMent of Cash fLows
stateMent of Changes in equity
notes to anD forMing part of the finanCiaL stateMents
DireCtors’ DeCLaration
inDepenDent auDitor’s report
auDitor’s inDepenDenCe DeCLaration
sharehoLDer inforMation
Market perforManCe
gLossary
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3
5
10
19
20
21
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23
43
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47
48
51
52
1
chair’s letter
Dear Shareholders,
scenesse® (afamelanotide
16mg) – european roll out
Following the approval of SCENESSE® in Europe the Group has
adapted and grown its team to facilitate distribution across Europe.
New skill sets have been added during this period, with a focus on
pharmacovigilance, quality assurance, compliance, and analytical
sciences. The evolving team responds to the needs of the business as
CLINUVEL expands the availability of SCENESSE® to serve patients
diagnosed with erythropoietic protoporphyria (EPP).
Being a new molecular entity and the first to ever address the unmet
need in the rare disease EPP, the regulatory authorities expect
CLINUVEL to closely manage the product’s life cycle. The European
approval was accompanied by a comprehensive Risk Management
Plan, strict parameters by which CLINUVEL should make the drug
available. The Company’s focus is on monitoring the ongoing safety of
the product (pharmacovigilance), as well as on collecting additional
data on the product under conditions of use. We have restricted the
product’s availability only to those expert centres who have worked
with EPP patients and are prepared to undergo the training and
accreditation necessary to comply with the demands of the national
and European authorities. Two non-interventional post-authorisation
studies have been initiated, one of which incorporates the first ever
international EPP patient registry, a long-term project designed
with experts in the field. While these measures place a burden on
physicians and patients to access treatment as well as on CLINUVEL,
we are all expected to add significantly to the overall understanding
of EPP and patient care in the future.
The first patients were treated under this programme in June 2016,
and the team has since received positive feedback from the clinics
regarding the impact of treatment and the ongoing need for access
to therapy. A larger product roll out is planned for 2017 as we work
towards making SCENESSE® available to all known EPP populations
in Europe.
us regulatory pathway
The clinical demand for SCENESSE® in the US has remained strong
since the conclusion of our trial program in 2013. In parallel to the
launch of the product in Europe, discussions have continued with
the Food and Drug Administration (FDA) to determine the pathway
forward for SCENESSE® in the US. Early into the new financial year we
saw positive developments for the US EPP program, with recognition
from the FDA in the form of Fast Track designation, a regulatory
mechanism to expedite the product’s regulatory review. Subsequently
2
the FDA accepted the existing clinical package for SCENESSE® as
sufficient for filing a New Drug Application (NDA) for EPP.
Discussions are ongoing with the agency as to the timing of a NDA
filing, however we realistically expect the first submissions to be
made in the 2016/17 financial year.
expanding the clinuVel group
CLINUVEL holds a unique position in the pharmaceutical space.
Few companies succeed in developing a novel drug, even fewer
when the target indication has never before been addressed by
medicine. Having succeeded along this journey thus far, the Group
must now look to capitalise on its position as a leader in the field of
melanocortins, and our expertise in the interaction of light and skin.
For some time now, both the Board and the management team have
held ambitions to grow CLINUVEL beyond a single product in a single
disorder, drawing on our team’s experience in R&D, regulatory affairs
and commercialisation. The first steps have already been taken,
with the development of SCENESSE® in the pigmentary disorder
vitiligo and the establishment of our Singaporean joint venture
VALLAURIX PTE LTD. At logical points our investors will be kept up to
date of progress, keeping in mind our need to protect our first-mover
advantage.
The year has been demanding of our teams, and yet they continue to
perform within a complex global environment. I thank them for their
diligence and continued commitment to the patients we aim to help.
I also extend the Board’s gratitude and appreciation to all who have
made the year a success – investors, shareholders, physicians, and
patients.
Stan McLiesh
Chairman
managing director’s letter
Dear Shareholders,
annual reView and Vision
It is with tribute to our patients, the medical communities who are
involved with CLINUVEL, and to our teams that I write to you at a time
when CLINUVEL is in a position to contemplate further expansion of
its operations. Establishing the first steps in European distribution
of SCENESSE® (afamelanotide 16mg) is an achievement of which we
are proud. In this review, and for those who recently became familiar
with the CLINUVEL story, I provide some historical context for the
future outlook of the CLINUVEL Group.
regulatory agencies and
pharmacoVigilance
For more than a decade CLINUVEL has executed a comprehensive
program which – from the outset – appeared complex due to a myriad
of unique issues. Owing to the novelty of the drug, its pharmacology,
mode of action, targeted rare disease and lack of available scientific
instruments to measure the impact of the disease on patients’ lives,
and overall therapy, our teams have faced numerous challenges
throughout the journey.
While drawing minimal attention we have worked for 12 years towards
obtaining European and US approval for the first melanocortin. Our
teams strive for achievement and setting realistic expectations as
they have shown long term commitment to the Company. As a first-in-
class drug for a rare disease which is not well defined by the medical
literature, we could not draw upon analogies within our industry. At
the very least, CLINUVEL’s numerous antecedents had shown us how
not to develop SCENESSE® and the plan was executed accordingly.
In a changing environment of increasing regulatory scrutiny within
the post-authorisation phase, our teams are required to constantly
adapt and change course. New guidelines, changing personnel,
differing views, and governmental pressures are just a few of the
factors that urge us to remain flexible.
I see contemporary drug development as a rigorous exercise to
demonstrate ongoing safety of a product not only during the testing
phase but also throughout compassionate use programs, special
access schemes, and after marketing authorisation. The burden of
instituting a pharmacovigilance system in each European country,
establishing the European EPP Disease Registry, committing
to monitor each EPP expert centre, and ensuring the proper
management of the drug’s distribution are just some of the many
measures required, and they come at a substantial financial cost.
The societal cost of pharmacovigilance is enormous and collectively,
the Company, expert centres, patients, and health care systems and
3
insurers are all in a conundrum and left with no choice but to share
the burden. Yet despite the load a benefit to the Company has arisen:
pharmacovigilance measures provide a competitive advantage over
any other company wishing to emulate our programs.
innoVation
In discussions with investors and the general public we often
encounter a misunderstanding of what constitutes pharmaceutical
innovation. Innovation should not be seen to be limited to the product
and its pharmacological activity in humans. Behind a novel product
which had not previously been developed – such as SCENESSE® –
is a new way of writing a dossier, new nomenclature, novel coding,
new scientific tools, presenting previously unknown instruments
and methodology, novel assays to measure and validation tools, a
new pool of expert physicians, and new treatment protocols where no
other templates can be used.
Put differently, introducing the concept of protecting light intolerant
and chronically ill patients with a pharmaceutically innovative
therapy had never been executed before. We needed to introduce this
concept to the medical community and convince it of its validity.
Often it was the medical community who convinced us how effective
the treatment actually was for their stigmatised patients. In vitiligo
we will face similar tasks of introducing the concept of repigmenting
patients, demonstrating the impact of vitiligo on one’s self-esteem
and sense of identity, and demonstrating the impact of regaining
one’s colour. Measuring pigmentation and repigmentation is relatively
novel in the field of drug development. We are determined to be the
first company to address vitiligo systemically with a pandermal
therapy.
marKet access and pricing
We have now received the first orders from the Netherlands, Austria,
and Italy. The novel therapy introduced a new set of challenges for
national insurers. Along the same vein, insurers needed to be made
aware of the new therapy, anticipating that each insurer would
resist the pricing of the proposed treatment. One could deliberate on
health economic arguments and the value of providing treatment to
EPP patients who have lived a life deprived of light, sun and outdoor
existence. However, the conclusion most insurers and advisory bodies
will arrive at is that EPP is not well characterised and understood by
most clinical experts, and that the lack of available alternative therapy
has made patients desperate for an effective treatment. CLINUVEL is
required to inform these payors in a relatively short time for them to
develop a deep level of understanding on the chronic disorder EPP.
Managing Director's Letter
corporate goVernance
CLINUVEL PHARMACEUTICALS LTD and its Board are committed
to establishing and achieving the highest standards of corporate
governance. The Company’s Corporate Governance statement for
the year ending 30 June 2016, based on the Australian Securities
Exchange Corporate Governance Council’s (ASXCGC) Corporate
Governance Principles and Recommendations, 3rd Edition, can
be found on our website at http://www.clinuvel.com/en/investors/
corporate-governance
We are cognisant of having a head start on insurers and advisory
bodies.Most importantly, for a long time we have understood that
SCENESSE® provides patients with the clinical freedom to lead a life
they never could conceive or would have experienced. EPP patients
are deprived and starved of light and live in a world of anxiety, not
taken seriously by their surroundings.
It was telling that in many ways the experience of patients no longer
using SCENESSE® after clinical trials were completed was worse
than not knowing that an effective treatment had existed. The abrupt
withdrawal of SCENESSE® becomes a concern at the time of writing,
since an increasing number of patients refuse to return to their
handicapped lives. Our teams have carefully listened to the endless
patients’ petitions and continued the development and distribution
of the drug.
We will use the same approach in our further developments over the
next few years for other products and for SCENESSE® in vitiligo. The
patients’ voice is paramount in CLINUVEL’s decision making process.
At the end of the day it is patients and expert physicians who hold the
fate of a drug in their hands, certainly in orphan diseases.
expansion
An economist from my Columbia business school days focused his life
on deciphering value investment on global exchanges. He passed on to
me the memorable lesson of selecting business domains: “successful
businesses are always sober in their presentation and from the
outside boring, invest in the boring”. Although it is counterintuitive to
deliberately pursue a boring business, the message sticks along the
thoughts of Graham-Dodd’s approach.
I tend to agree that sustainable success hinges on execution,
flexibility and persistence. Although these attributes are generally
less attended to in conventional business literature it goes a long way
to explain the delivery of corporate milestones by CLINUVEL’s teams.
Our financial team led by our CFO Darren Keamy and overseen by
the Audit & Risk Committee is focused on keeping an eye for detailed
management of expenditures and on realistic forecasting. They
execute without frills.
With the current foundation, one can expect that CLINUVEL will
seek to expand through organic growth and the identification of new
opportunities to allow the entire development program of SCENESSE®
and its paediatric version to come to fruition. Our VALLAURIX PTE
LTD laboratory team is growing in both number and quality and is
working towards the development of complementary products.
I see risks in pharmaceutical development as disproportionate
to the ultimate reward of launching a novel product to patients.
However, market analyses illustrate that market authorisation of a
pharmaceutical in itself creates value due to the relative lack of new
products. Here the risk over the product cycle is asymmetrically
distributed. By managing these risks over the years we have tailored
our attention and resources towards a simpler business model.
Whilst we are all proud of our recent successes, we are in no way
complacent about the next sets of challenges of continued European
reimbursement, entry in the US, and expanding the Company.
I thank you for your ongoing support and look forward to sharing
CLINUVEL’s success with you.
Philippe Wolgen
Managing Director, CLINUVEL Group
4
directors’ report
The Directors of the Board present their report on the Company and
its controlled entities for the financial year ended 30 June 2016 and
the Auditor’s Independence Declaration thereon.
SCENESSE® is the first melanocortin drug to have completed a clinical
trial program and obtain marketing authorisation in a major market.
directors
The names of Directors in office during or since the end of the year
are set out below.
Dr Wolgen has been instrumental in rebuilding a share register of
long term sophisticated and institutional investors. His international
contacts and network contribute to the support CLINUVEL enjoys
globally.
• Mr. S.R. McLiesh (Non-Executive Chair)
• Dr. P.J. Wolgen (Managing Director, Chief Executive Officer)
• Mrs. B.M. Shanahan (Non-Executive)
• Mr E. Ishag (Non-Executive)
• Mr. W. A. Blijdorp (Non-Executive)
Directors have been in office since the start of the financial year to the
date of this report unless otherwise stated.
information on directors
Mr. Stanley r. MclieSh (joined Board 2002)
non-executive chair
Member of the Remuneration Committee (Chair since 28 July 2014),
Member of the Audit and Risk Committee
Qualifications: BEd
Shares in CLINUVEL: 191,000
Conditional Performance Rights over shares in CLINUVEL: 85,000
Mr McLiesh has an extensive background in the commercialisation
of pharmaceutical products. He was closely involved in the transition
of CSL Limited (ASX: CSL) from government ownership through
corporatisation to a highly successful listed company as General
Manager. During this time he helped CSL expand its international
reach, brokering numerous
in-licensing agreements, M&A
transactions and partnerships with multinational firms.
Mr McLiesh is Vice President of the Board of Ivanhoe Girls Grammar
School in Melbourne and was previously a Non-Executive Director
of Unilife Medical Solutions Ltd (formerly ASX: UNS). The Chair of
CLINUVEL since 2008, Mr McLiesh has been involved in formulating
the successful European commercial strategy for SCENESSE®
(afamelanotide 16mg) .
dr. PhiliPPe j. Wolgen (joined Board 2005)
Chief Executive Officer, Managing Director
Non-voting member of the Audit and Risk Committee
and the Remuneration Committee
Qualifications: MBA, MD
Shares in CLINUVEL: 2,079,832
Conditional Performance Rights over shares in CLINUVEL: 1,424,864
Dr Wolgen was appointed as Managing Director of CLINUVEL in
November 2005 to lead the corporate turnaround of the company.
Under his leadership CLINUVEL reformulated the lead product
SCENESSE® (afamelanotide 16mg), identified its medical application
and ultimately obtained European marketing authorisation.
He helped CLINUVEL attract approximately AUD100 million in direct
funding to develop and launch SCENESSE®. Dr Wolgen is now leading
the CLINUVEL Group’s expansion, with an immediate focus on the
US and the further development of the company’s product pipeline.
His focus has been to establish a professional management team to
persist in the corporate objectives set.
Dr Wolgen holds an MBA from Columbia University NY and the London
Business School. Trained as a craniofacial surgeon, Dr Wolgen holds
an MD from the University of Utrecht, the Netherlands.
MrS. Brenda M. Shanahan (joined Board 2007)
non-executive director
Chair of the Audit and Risk Committee (since September 1, 2010)
Qualifications: BComm, FAICD, ASIA
Shares in CLINUVEL: 133,969
Conditional Performance Rights over shares in CLINUVEL: 70,000
Mrs Shanahan is an established member of the Australian finance
community who has also spent more than two decades working and
investing in medical R&D and commercialisation. She is currently
a non-executive director of DMP Asset Management, Challenger
Limited (ASX: CGF, since 2011) and Bell Financial Group (ASX: BFG,
since 2012), a director of the Kimberly Foundation of Australia Ltd,
and Chair of both the St Vincent’s Medical Research Institute and the
Aikenhead Centre for Medical Discovery in Melbourne.
Previously Mrs Shanahan was a member of the Australian Stock
Exchange and an executive director of a stockbroking firm, a fund
management company and an actuarial company. She was also
Chair of Challenger Listed Investments Ltd, the reporting entity for
four ASX listed firms (CKT, CIF, CDI and CWT).
Mrs Shanahan joined CLINUVEL in 2007, and was Non-Executive
Chair of the Board from late 2007 until July 2010. Her depth of
experience across global markets and medical research provides
significant value to the current Board and Company.
Mr. elie iShag (joined Board 2011)
non-executive director
Member of the Remuneration Committee
Shares in CLINUVEL: 148,195
Conditional Performance Rights over shares in CLINUVEL: 56,500
Mr Ishag is a London based entrepreneur with 50 years of commercial
experience, active in European asset management, real estate
development and IT. He is an Honorary Life Fellow of the UK Institute
of Directors (FIoD). With a background in pharmaceutical chemistry,
Mr Ishag is currently the Chairman of European Investments &
Developments Ltd, a privately held company with an investment
mandate in defined asset classes, property development and cross-
5
Directors' report
border commercial real estate. Mr Ishag has been extensively involved
in the commercial evolution and backing of various successful
ventures including IT company Espotting Media.
Since joining CLINUVEL in 2014, Mr Blijdorp has been actively involved
in the Company’s long-term strategy for product commercialisation,
growth, and development.
Mr. WilleM a. BlijdorP (joined Board 2015)
non-executive director
Shares in CLINUVEL: 383,145
Conditional Performance Rights over shares in CLINUVEL: 0
information on company secretary
Mr. darren M. KeaMy
Company Secretary, Chief Financial Officer
Qualifications: BComm, CPA
Mr Blijdorp is an international entrepreneur who has helped build
privately owned B&S International NV, one of the largest global
trading houses, over the past three decades. Mr Blijdorp has led
B&S’s growth, with the Dutch group – focused on the wholesale and
international trading of luxury and fast moving consumer goods
and pharmaceutical products – achieving a compounded annual
growth rate of 10% for the last decade. Formerly B&S’s CEO, Mr
Blijdorp now focuses on the company’s development and expansion
strategy as majority shareholder and supervisory director. In 2014
he was recognised for his expertise in merger and acquisitions and
leadership as the Ernst & Young Entrepreneur of the Year in the
Netherlands.
Mr Keamy, a Certified Practicing Accountant, joined CLINUVEL
PHARMACEUTICALS LTD in November 2005 and became Chief
Financial Officer of the Company in 2006. He has previously worked
in key management accounting and commercial roles in Amcor
Limited over a period of nine years and has experience working in
Europe in financial regulation and control within the banking and
retail pharmaceutical industries.
meeting of directors
The following table summarises the number of and attendance at all meetings of Directors during the financial year.
direCtor
Board
audit & risk Committee
remuneration & nomination
Committee
Mrs. B.M. Shanahan
Mr. S.R. McLiesh
Dr. P.J. Wolgen
Mr. e. ishag
Mr. W. Blijdorp
a
6
6
6
6
6
B
6
6
6
5
6
a
3
3
3
-
-
B
3
3
1
-
-
a
-
2
2
2
-
B
-
2
2
2
-
Column A indicates the number of meetings held during the period the Director was a member of the Board
and/or Board Committee.
Column B indicates the number of meetings attended during the period the Director was a member of the Board
and/or Board Committee.
principal actiVities
The principal activities of the consolidated entity during the
financial year were to develop its leading drug candidate SCENESSE®
(afamelanotide 16mg) for the treatment of a range of severe skin
disorders. CLINUVEL’s pioneering work aims at preventing the
symptoms of skin diseases related to the exposure to harmful
UV radiation and at repigmentation of the skin due to a number of
depigmentation disorders. There was no significant change in the
nature of activities during the financial year.
diVidends paid or recommended
No dividends were paid or declared during the financial year or after
reporting date.
reView of operations
The consolidated entity’s main strategic focus throughout the year,
consequent to the European Medicine Agency’s (EMA’s) granting
of marketing authorisation for SCENESSE® (afamelanotide 16mg)
in erythropoietic protoporphyria (EPP), was continuing to establish
a post-authorisation program to monitor ongoing patient safety
and effectiveness. A post authorisation safety study (PASS) was
established along with a disease registry, hospital sites were trained
and accredited in the collection of data and use of SCENESSE® and
a strict pharmacovigilance system to monitor long term patients’
safety during the commercial phase of the product was implemented.
A final reimbursement pricing structure is being established in key
European countries and submissions made to various payors in select
European regions for agreement, culminating in the first European
commercial launch of SCENESSE® in the 2016 northern hemisphere
summer. The R&D program in vitiligo and further melanocortin
development has continued throughout the year.
6
%
97%
70%
70%
71%
A summary of CLINUVEL’s financial result is presented in the
following table:
Consolidated entity
2016
$
2015
Change
$
Revenues
6,419,707
3,259,962
Net Loss before income tax
expense
(3,153,718)
(10,414,376)
Loss after income tax expense
(3,153,718)
(10,414,376)
Basic earnings per share -
cents per share
Net tangible assets backing
per ordinary share
Dividends
Note: CLiNuveL does not operate individual segments.
(7.0)
(24.0)
$0.38
Nil
$0.25
Nil
(52%)
Nil %
Monthly operating average cash spend was 17% greater than the
previous year, being $0.782 million for 2015/16 compared to $0.667
million for the 2014/15 year. The increase in average monthly spend is
primarily due to a year-on-year increase in head count combined with
an increase in manufacturing-related expenditures from producing
implants available for supply. The group’s balance sheet has $17.835
million in net assets at 30 June 2016 compared to $11.205 million at
30 June 2015. Current liabilities decreased 6% to $2.288 million. The
Directors' report
group result for the year ending 30 June 2016 was a $3.154 million
loss, compared to a $10.414 million loss for the prior financial year,
a decrease in the loss of 70%. Non-cash items within the general
operations result along with first-time commercial revenues (see
following) were the key drivers for the difference.
The current year was the first full year of expenditures incurred by
VALLAURIX PTE LTD that is consolidated in the group result. Staffing,
non-clinical development work, travel and patent costs totalling
$180,655 were the key expenditure items affecting the group result for
2015/16 (2014/15: $90,797).
The distribution of SCENESSE® continued in Italy and Switzerland
with the ongoing subsidised supply of the drug to provide a
preventative treatment for adult erythropoietic protoporphyria (EPP)
patients under full-cost compensation Special Access Schemes.
These revenues increased 24% to $3.614 million for the 2015/16 year
compared to $2.912 million for the 2014/15 year. The increase in the
compensation price for the subsidised supply under these schemes
to maintain uniformity of the price of SCENESSE® sold in Europe
under the marketing authorisation more than offset the reduction
in the number of implants supplied into Italy and Switzerland as a
result of either delaying placing orders through the price negotiation
phase or from payors not willing to accept the revised price. The first
commercial sales of SCENESSE® occurred in 2015/16 which resulted
in $2.598million in sales revenues (2014/15: $ Nil.)
Revenues from ordinary activities include interest received from
surplus funds held in bank accounts and term deposits, moving
from $0.348 million to $0.208 million, a 40% decrease. The decrease
reflects a combination of lower average cash balances held year-
on-year in interest-bearing deposits, higher cash balances held in
non-Australian currencies which return negligible interest and
lower average interest rate yields on funds held year-on-year due to
government monetary policy lowering interest rates on deposits held.
Excluding the Australian government research and development
(R&D) refundable tax
incentives, R&D and commercialisation
expenditures accounted for 37% of the group’s total expense
result for 2015/16, compared to 18% for the 2014/15 year. R&D and
commercialisation costs, comprising clinical study costs, drug
delivery research manufacture and distribution, toxicity studies,
regulatory fees and research, development and commercialisation-
specific overheads such as personnel, were $3.735 million in 2016
compared to $2.603 million in 2015.
The Australian government refundable tax incentive of $0.609
million is a 50% increase to the refundable tax incentive recorded
for the 2014/15 year. The increase reflects the expected increase
in qualifying expenditures from local activities in connection to
the pre-clinical model demonstrating the safety of SCENESSE® in
combination with narrowband ultraviolet light therapy. This activity
is a regulatory requirement to support the introduction of new
combination therapies as the standard of care.
Clinical study costs decreased 42% from $0.232 million in 2015 to
$0.133 million in 2016. The continuing reduction in expenditures
on clinical development costs reflects the Company’s focus during
2015/16 on limiting its clinical efforts to completing the Singaporean
Phase II clinical study in vitiligo whilst it concentrated its resources
on the commercialisation activities in Europe and its regulatory
activities in the US.
Expenses toward the drug delivery manufacturing and distribution
program increased by 127%, from $0.450 million in 2014/15 to $1.022
million in 2015/16. An increase in implant production costs to meet
clinical, commercial and special access scheme requirements, along
with distribution set up costs to facilitate implant release within the
European Union were the primary reasons for the increase.
The average head count in 2015/16 of Research, Development &
Commercial personnel employed to oversee and monitor the clinical,
regulatory, manufacturing programs and post-marketing programs
was more than the head count over the course of 2014/15, resulting
in a 28% increase in Research, Development & Commercial overhead
costs (from $1.259 million in 2014/15 to $1.606 million in 2015/16).
Regulatory affairs related fees for both pre- and post-marketing
activities along with non-clinical development costs increased
47%, from $0.662 million in 2014/15 to $0.973 million in 2015/16. The
increase was largely due to the completion of the pre-clinical chronic
toxicology study which commenced in the latter part of the previous
financial year as part of its USA vitiligo development program.
Establishing the regulatory infrastructure to support the market
access of SCENESSE® into Europe and meet is post-authorisation
commitments with the EMA, particularly the pharmacovigilance and
safety reporting systems, were also a key driver to the 47% increase.
Marketing expenditures in the Company decreased marginally by 3%
to $0.778 million in 2015/16 from $0.802 million in 2014/15. Savings
from reduced conference and meeting sponsorships and share listing
costs were offset by increased marketing staff costs.
Patent fees increased 15%, from $0.232 million in 2014/15 to $0.266
million in 2015/16. The increase was related to further payments to
validate the European EPP patents after the marketing authorisation
was obtained, translating the patents to local language and increasing
renewal fees resulting from aging patents.
The result from general operations was $5.591 million in 2015/16
compared to $10.508 million in 2014/15, a 47% improvement. The
major contributor to the decrease in general operations was the
expensing of the accounting valuation of share-based payments
(Performance Rights) of $5.676 million in 2014/15 to $1.670 million in
2015/16. Performance Rights are valued at grant date and expensed
over their expected life, whether or not a benefit is received from these
amounts, either in the current or future reporting periods. Two of the
four performance conditions attached to the 2,789,810 Performance
Rights to Directors as approved by shareholders at the November
2014 Annual General Meeting were achieved and subsequently fully
expensed in the 2014/15 year.
General operations comprised 55% of the group’s total expense result
for 2015/16 compared to 75% in 2014/15. Other factors contributing to
the 47% decrease in general operations year-on-year are the reduction
in legal and corporate advisory fees incurred by the Company in
the previous financial year mostly in the Company responding to
the unsolicited bid proposal received from Retrophin Inc to acquire
all the issued ordinary shares in the Company, reduced travel costs
and realised gains from exchange rate movements in transactions
conducted in non-Australian currencies.
For the 2015/16 year the group started with $10.572 million in cash and
financial assets and finished with $13.845 million. In March 2016 the
group raised $8.335 million additional capital. For the reporting date
of 30 June 2016, due to movements in the Australian dollar compared
to other currencies used to meet working capital requirements, the
consolidated entity reported a gain of $0.187 million from holding
foreign currencies and in holding trade creditors in non-Australian
currencies (a $0.064 million gain for the same period last year).
At 30 June 2016 basic earnings per share were -$0.07 on 47,080,637
issued ordinary shares. This is compared to basic earnings per share
of -$0.24 as at 30 June 2015 on 44,554,787 issued ordinary shares.
CLINUVEL PHARMACEUTICALS LTD (ASX: CUV; XETRA-DAX: UR9;
ADR: CLVLY) is a global biopharmaceutical company focused on
developing drugs for the treatment of a range of severe skin disorders.
With its unique expertise in understanding the interaction of light
and human skin, the Company has identified patients with a clinical
need for photoprotection and another population with a need for
repigmentation. These various patient groups range from 5,000 to
45 million. CLINUVEL’s lead compound, SCENESSE® (afamelanotide
16mg), was approved by the European Commission in 2014 for the
prevention of phototoxicity (anaphylactoid reactions and burns) in adult
patients with erythropoietic protoporphyria (EPP). Headquartered
in Melbourne, Australia, CLINUVEL PHARMACEUTICALS LTD has
operations in Europe, the US and Singapore.
There were a number of significant events in 2015/16. These events
include:
a) On 2 July 2015, the Company announced that results from
7
Directors' report
its pivotal Phase III studies of SCENESSE® in the orphan
genetic disorder erythropoietic protoporphyria (EPP) had been
published in the New England Journal of Medicine, one of the
world’s most prestigious medical periodicals.
b) An announcement on 27 August 2015 confirmed the Company
would meet with the US Food and Drug Administration (FDA)
to discuss the overall development of SCENESSE® and the
filing requirements for a New Drug Application (NDA) for the
treatment of EPP (Type C meeting). A follow-on announcement
was made on 5 October 2015 confirming the Type C meeting
had been held whereby regulatory pathways were discussed
and the FDA requested to review photoprovocation and quality
of life data.
c) The Company reached agreement with the European Medicines
Agency’s
(EMA’s) Pharmacovigilance Risk Assessment
Committee (PRAC) treatment protocol as part of the agreed
risk management plan. This agreement allowed SCENESSE®
to be released for commercial supply and made available to
patients once pricing reimbursement structures were reviewed
and agreed with insurers and competent authorities. This
announcement occurred 21 September 2015. On 15 March 2016,
further to the agreed risk management plan with the EMA,
it was announced the first of the European expert porphyria
centres to treat EPP patients with SCENESSE® had undertaken
site training and accreditation to ensure compliance with the
treatment protocol as part of the PASS. On 22 June 2016 the
Company announced the first commercial sale of SCENESSE®
in Europe under European marketing authorisation. Patients
with EPP in the Netherlands commenced treatment following
this delivery.
d) The announcement on 3 December 2015 of positive preliminary
results from the Company’s Singaporean Phase II trial (CUV103),
evaluating SCENESSE® as a repigmentation therapy in patients
with vitiligo. The results were consistent with earlier findings
from the US Phase II trial (CUV102). In both studies SCENESSE®
was well tolerated and increased repigmentation in patients
with darker skin complexions, for whom vitiligo has an intense
psychological and significant social impact.
established Sponsored Level 1 American Depository Receipt
(ADR) programs, on 2 June 2016.
significant changes in the
state of affairs
The Directors are not aware of any matter or circumstance not
otherwise dealt with in this report that has significantly or may
significantly affect the operations of the consolidated entity.
significant eVents after
the reporting date
There has not been any matter, other than reference to the financial
statements that has arisen since the end of the financial year that
has affected or could significantly affect the operations of the
consolidated entity.
liKely deVelopments and expected results
The consolidated entity’s strategy is to focus on developing and
commercialising SCENESSE® as a medicinal photoprotective solution
for patients with EPP and who are most severely affected by exposure
to ambient and UV light. Further, the consolidated entity’s strategy is
to develop and commercialise SCENESSE® as a combination therapy
with narrowband ultraviolet B phototherapy for patients with vitiligo
in order to promote repigmentation of areas of the skin affected by
vitiligo.
In the previous year, the consolidated entity was successful in gaining
European regulatory approval for SCENESSE® in EPP in the form of a
historical first marketing authorisation. Consequent to the granting
of marketing authorisation, the consolidated entity has committed
itself to establishing a number of significant post-authorisation
commitments which have been agreed with the EMA under a long-
term risk management plan for SCENESSE®. The consolidated entity
will continue to work with a number of commissioned third parties to
support a European EPP Disease Registry to monitor long-term safety
and it will continue to invest in existing and new personnel with the
necessary skills and expertise to maintain the ongoing requirements
of the post-authorisation program in Europe. The consolidated entity
intends to increase its sales-focused workforce in Europe to promote
initial revenues once pricing agreements per country are established
with payors.
e) On 12 February 2016 the Company announced that SCENESSE®
received an additional orphan drug designation (ODD) from the
US FDA for the treatment of cutaneous variants of porphyria.
The ODD recognises the potential of SCENESSE® to treat
or prevent symptoms in rare forms of porphyria and offers
incentives to CLINUVEL to develop the drug for these patients.
Underpinned by the regulatory approval in Europe, along with the
information generated from its post-marketing commitments in
Europe, the consolidated entity is working towards gaining regulatory
approval for SCENESSE® in EPP in other important markets where
EPP is prevalent, including North America, in order to increase its
ability to commercialise SCENESSE®.
f) A capital raise of A$8.3million via a private placement to
existing and new institutional and professional investors,
announced on
15 March 2016. The Company stated
that the funds were earmarked to pursue the European
commercialisation program for SCENESSE® for patients with
EPP. The private placement was made at a price of A$3.30 per
share, representing an issue price equal to the closing price on
10 March 2016 (the date which the trading in Company’s shares
were placed into a trading halt) and a 2.9% discount to the 10
March 2016 10-day volume weighted average price.
g) On 24 March 2016 it was announced that the UK National
Institute for Health and Care Excellence (NICE) had held a
public workshop to scope the benefits and costs of SCENESSE®
in the treatment of adult patients with EPP. The workshop is
one of the last steps prior to national commissioning of the
treatment by the National Health Service (NHS) of England.
The workshop included a review of the specific burden of EPP
on patients’ lives, the number of treatment centres in the UK,
on patients eligible for treatment and the lack of a standard of
care. Company representatives attended the workshop along
with representatives of the EPP patient community, clinical
experts and scientists.
h) The Company joined Nasdaq’s International Designation, a
new visibility offering by Nasdaq for non-US companies with
The consolidated entity continues to conduct clinical studies to
evaluate the ability of SCENESSE® to activate melanocytes within
vitiliginous lesions and achieve repigmentation in combination with
NB-UVB in patients with vitiligo. Data from the soon-to-be-completed
Phase II study and the pre-clinical model demonstrating the safety
of SCENESSE® in combination with narrowband light therapy should
result in the consolidated entity moving towards later stage clinical
trials.
The consolidated entity has also focused on its manufacturing
requirements by working with its contract manufacturer to meet
clinical and commercial product supply in line with its timing
expectations. The consolidated entity,
recently
established VALLAURIX PTE LTD entity, will also expand its research
and development programs into its follow-on portfolio technologies to
SCENESSE®, CUV9900 and VLRX001. These melanocortin analogues
will be evaluated as an adjuvant maintenance therapy in vitiligo,
with the intention of developing both medicinal and non-prescriptive
formulations to be administered topically.
through
its
The consolidated entity is currently a loss-making enterprise
which has only recently reached the commercialisation phase
of drug development, 11 years since the start of its program. The
long-term financial success of the consolidated entity will be
ultimately measured on the basis of achieving a sustainable profit.
Key to becoming profitable is not only the successful research
and development of its portfolio of assets but also their successful
8
Directors' report
commercialisation, manufacturing and distribution, and the ability
to attract funding to support these activities should the need arise.
The following specific risks are reviewed continually by the Board
and management as they have the potential to affect the consolidated
entity’s achievement of the business goals detailed above. This list is
not exhaustive.
rounding of amounts
The Company is a type of Company referred to in ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument 2016/191 and
therefore the amounts contained in this report and in the financial
report have been rounded to the nearest $1,000, or in certain cases, to
the nearest dollar.
• Technology – there is a risk that despite obtaining marketing
approvals, those products may ultimately prove not to be safe
and/or of clinical benefit.
• Supply – there is a risk that the manufacturing process may
not result in product batches meeting minimum specification
levels, that raw material components could not be sourced
to specification, and of non-controllable disruptions to the
products’ contract manufacturers.
• Clinical & Regulatory – there is a risk that clinical trials will not
yield the expected and desired results for the investigational
medicinal product(s) to obtain further regulatory approvals.
• Intellectual Property (IP) and market entry– future sales could
be impacted to the extent that there is not sufficiently robust
patent protection across the consolidated entity’s product
portfolio that will prevent competitors from entering the
marketplace to compete with the consolidated entity’s approved
products. Also, competitors
infringing the consolidated
entity’s IP rights may adversely impact the consolidated
entity’s ability to maximise the value to be made from product
commercialisation.
• Funding – cash outflows from its operations may be higher
than cash inflows. Therefore the ability of the consolidated
entity to successfully bring its products to market and achieve
a state of positive cash flow is dependent on its ability to access
sources of funding while containing its expenditures.
• Management – the consolidated entity’s corporate strategy
could be impacted adversely if the consolidated entity was not
able to retain its key management, members of staff and Board.
enVironmental regulation
and performance
regulated by
The consolidated entity’s operations are not
any significant environmental regulation under a law of the
Commonwealth, or of a State or Territory, or of any other jurisdiction.
indemnification and insurance
of directors and officers
During or since the end of the financial year the Company has given
an indemnity or entered an agreement to indemnify, or paid or agreed
to pay insurance premiums as follows.
The Company has paid premiums to insure each of the Directors
against liabilities for costs and expenses incurred by them in
defending any legal proceedings arising of their conduct while
acting in the capacity of Director of the Company, other than conduct
involving wilful breach of duty in relation to the Company. The cost
of the aforementioned insurance premium for 12 months was $24,700
(2015: $29,763).
directors’ Benefits and
interest in contracts
Since the end of the previous financial year no Director has received
or become entitled to receive a benefit (other than a benefit included
in the total amount of emoluments received or due and receivable by
Directors shown in the financial statements and the remuneration
report), because of a contract that the Director or a firm of which
the Director is a member, or an entity in which the Director has a
substantial interest has made with a controlled entity.
Further information on these contracts is included in Note 19 to the
financial statements.
9
remuneration report
principal oBjectiVe
The Board’s strategic objective that underpins its remuneration
policy is to retain the Company’s unique industry knowledge in
relation to the development of SCENESSE® at a critical stage of
the Company’s evolution. The Board is aware that any disruption
to the professional talent input would have a detrimental effect
to the Company’s ability to progress from an entirely research
and development-focused organisation to a commercial revenue-
generating enterprise. The Board has strived to secure staff and
management of the only pharmaceutical company active in
photoprotection and repigmentation and who are critical to the
development and commercialisation of an approved, first-in-class
medicinal photoprotective drug.
principles used to determine the
nature and amount of remuneration
This Remuneration Policy has been adopted by the Board of the
Company, to ensure that:
• The Company’s remuneration policies and systems comply
with the Corporations Act and ASX Listing Rules and support
the Company’s objectives as set by the Board from time to time.
• Remuneration of the Company’s key management personnel is
aligned with the interests of the Company and its shareholders
within an appropriate control framework.
• The relationship between performance and remuneration of
key management personnel is clear and transparent.
• The role of the Company’s Remuneration Committee in the
remuneration processes of the Company is clearly defined.
For the purpose of this Policy, “key management personnel” has
the meaning given in the Australian Corporations Act (which
adopts the definition in Accounting Standard AASB 124 Related
Party Disclosure). The definition captures those persons having
authority and responsibility for planning, directing and controlling
the activities of the Company, directly or indirectly, including any
Director (whether executive or otherwise) of the Company.
The policy has been adopted to cover the overall structure of
remuneration for:
• The Managing Director and other executive Directors (if any);
• Non-Executive Directors, including the Company Chair; and
• Senior management.
This Policy does not cover people employed through another company
such as third party contractors and secondees.
remuneration policy
The objectives of the Company’s Remuneration Policy are to ensure
that:
a) Remuneration is structured to align with the Company’s
interests, taking account of the Company’s strategies and risks.
b) The level and composition of remuneration is reasonable,
sufficient and provides competitive rewards that attract, retain
and motivate people of high calibre to work towards the long-
term growth and success of the Company.
c) The role that total fixed remuneration and short and long-term
incentives play is clearly defined.
d) The levels and structure of remuneration are benchmarked
against relevant peers.
e) There is a clear relationship between Company and individual
performance and remuneration of key management personnel.
f) The principles underlying the Company’s remuneration
structure are openly communicated and understood.
g) The Company complies with applicable legal requirements and
appropriate standards of governance.
h) Remuneration policies and practices are evaluated over time,
taking account of pay outcomes and the relationship between
pay and performance, and the results of any evaluations or
review processes.
i) Remuneration is consistent regardless of gender.
The total remuneration for each Executive is aimed to be market
competitive in which the executive is placed, and to reflect
performance and specific competencies.
The Company’s reward framework provides a mix of fixed and
variable pay, structured to incentivise both short-term and long-term:
• Short-term (generally cash payment in the form of performance-
based incentives at a fixed amount or as a percentage of base
salary).
• Long-term (generally based upon the issue of Performance
Rights to acquire shares in the Company, along with other fixed
amount cash incentives). Prior to the 2015/16 year, Performance
Rights were issued under the Company’s Conditional Rights
Plan, most recently approved by shareholders 12 November
2013 and also the more recent Company’s Performance Rights
Plan, approved by shareholders at the 2014 Annual General
Meeting (AGM). The vesting conditions can be either time and/
or performance milestone-based.
remuneration committee
The Board has provided a mandate to the Remu neration Committee
to provide advice on salaries and fees, short and long-term incentives
and employment terms and conditions for Directors, Executives and
10
reMuneration report
key management. The Remuneration Committee obtains independent
data to assess the appropriateness of remuneration packages,
given trends in comparative companies, industry or related field of
expertise. The Remuneration Committee may consult with specialist
remuneration consultants with experience in the healthcare industry
as part of making and reviewing remuneration recommendations.
For the year ended 30 June 2016, no remuneration recommendations
were received from specialist remuneration consultants.
The Corporate Governance Statement provides further information
on the role of the Remuneration Committee.
non-executiVe remuneration
Under the Company’s Constitution, the maximum aggregate
remuneration available for division among the Non-Executive
Directors is to be determined by the shareholders in a General
Meeting. At the 2015 Annual General Meeting, shareholders approved
an increase to the maximum aggregate remuneration payable from
$400,000 to $550,000. This amount (or some part of it) is to be divided
among the Non-Executive Directors as determined by the Board.
As from 1 September 2014, Non-Executive Directors’ base fees are
presently $65,000 per annum inclusive of superannuation (previously
$50,000 per annum). The Chair receives $110,000 per annum inclusive
of superannuation (previously $90,000 per annum) when in a Non-
Executive capacity. The Chair’s role is for a 12 month term, whereby
the Company reserves the right to extend the term for another 12
month period. The Heads of the Audit and Risk and the Remuneration
Committees receive an additional $15,000 per annum inclusive of
superannuation when in a Non-Executive capacity, and members
of the Audit and Risk and the Remuneration Committees who are
not the Committee Chair receive an additional $5,000 inclusive
of superannuation. Directors’ fees were increased in the previous
financial year to a level considered appropriate given their skills,
qualifications and experience comparative to the external market. It
was the first increase to Non-Executive Director fees since 2001.
Subject to shareholder approval, Non-Executive Directors can be
issued Performance Rights under the Company’s Performance Rights
Plan. Non-Executive Directors can be issued Performance Rights to
align their interests with those of shareholders and to reflect their
greater role in the management of the Company comparative to
peer companies (and reflected in a smaller management team). The
number of Performance Rights and nature of vesting is determined
after the Director’s appointment.
There are no further retirement benefits, other than statutory
superannuation entitlements, offered to Non-Executive Directors.
executiVe remuneration
Remuneration packages for Executives may include:
• Base pay and benefits (including statutory benefits);
• Short-term incentive payments through the achievement of
pre-specified performance-based targets;
• Longer-term business generation incentive payments through
the achievement of pre-specified performance-based targets;
• Discretionary payments
for exceptional performance,
innovation and/or expansion; and
• Long-term equity participation in the Company’s Performance
Rights Plans.
Base pay, including superannuation, is reviewed annually by
the Remuneration Committee to ensure the Executive’s pay is
competitive in international markets, industry and related fields of
expertise. Some key managerial contracts contain guaranteed base
pay increases linked to CPI data. Health insurance, accommodation
benefits and living away from home allowances are offered to key
management and Executives under specific circumstances.
The Managing Director has individual short-term and longer-term
incentive components to his Executive remuneration. Longer-term
11
incentive components include business generation incentives,
discretionary payments and equity participation through the
Company’s Performance Rights Plan. Appropriate targets are set by
the Remuneration Committee. The targets can relate to either the
clinical, regulatory development program or to corporate, commercial
and associated activities and are generally, but not always, evaluated
for achievement, reviewed and reset (if required) annually. Generally,
but not always, the quantifying of achievement of the Managing
Director’s short-term incentives for payment is assessed and made in
the year following the year of achievement.
For the 2015/16 financial year the Remuneration Committee evaluated
the performance of the Managing Director and awarded a short-term
incentive of 50% to base salary, compared to a short–term incentive
of 65% to base salary in the preceding year. However, for 2015/16 the
Managing Director received 16.24% less in base salary and short-term
employment benefits in comparison to the 2014/15 financial year.
In the 2014/15 year, the Managing Director elected to have paid out 50
days unused and accrued annual leave in lieu of taking such leave in
the current and previous years, as permitted by law, totalling $146,801.
In the most recent Annual General Meeting (AGM), the Company
obtained 84.4% of the proxy votes (including votes at the Board’s
discretion) in favour of adopting the 2014/15 remuneration report, and
this resolution was passed by poll. The Company did not receive any
further feedback at the AGM on its remuneration practices.
The methods used by the Remuneration Committee to assess Board
performance is disclosed in the Corporate Governance Protocol. The
remaining Executives receive discretionary short-term incentives,
generally evaluated annually against targets set at each performance
review.
The long-term equity remuneration is provided to Directors and
certain employees via the Company's Performance Rights Plan. See
below for further information.
company performance and executiVe
director remuneration
Due to the inherent and specific risk in pharmaceutical development
whereby the risks are exacerbated by the Company focusing on a
novel, first-in-class drug, the Board has adopted a business model
where most operational tasks are being retained in-house, where
possible, and most management responsibilities concentrated
between the Managing Director (acting in a dual capacity as Chief
Executive Officer and Chief Medical Officer) and the Acting Chief
Scientific Officer. The Managing Director has the responsibility of
guiding and overseeing the execution of the global corporate strategy
and has global responsibility for the safety aspects of the drug and
pharmacovigilance. The Acting Chief Scientific Officer is responsible
for pre-clinical programs and toxicology, the manufacturing of the
drug delivery program, clinical program and setting the regulatory
strategies in close coordination with the Board of Directors.
The Managing Director serves on the Commercial Management
Committee, set up to oversee the best commercial options for
SCENESSE®. As the business evolves and progresses through its
development path, it is expected this centralised management model
will also evolve and key management responsibilities will be shared
across new and existing senior management.
The current Managing Director Remuneration structure is designed
to maximise the motivation, retention and incentivisation of the
Managing Director to advance the Company’s program from its current
stage of development, taking into account the risk and complexity of
the current development and business model. It is also designed to
reflect the expertise, qualifications, seniority and achievements to
date of the Managing Director since joining the Company in 2005.
serVice agreements
On appointment to the Board, all Non-Executive Directors enter
into a service agreement with the Company in the form of a letter
of appointment. The letter summarises the Board’s policies, the
Director’s responsibilities and compensation for holding office.
reMuneration report
Remuneration and other terms of employment for the Managing
Director is formalised by a service agreement determined by the
Remuneration Committee. The agreement provides for base salary,
short and long-term incentives, other benefits and participation, when
eligible, in the Company's Performance Rights Plan. The Managing
Director, in consultation with the Remuneration Committee, oversees
the service agreements entered into with Company Executives,
providing for base salary, incentives, other benefits and participation,
when eligible, in the Company's Performance Rights Plan.
The details of the service agreements to the Managing Director and
key management personnel are:
• Dr Wolgen’s (Managing Director and Chief Executive Officer)
term of employment is 3 years from 15 March 2016, his base
salary inclusive of retirement benefits for the year to 30 June
2016 is $807,109 and his service agreement is with the wholly-
owned Singaporean subsidiary entity. Termination payment is
set at 12 months of base salary provided the termination is not
for a material breach of the agreement. The base salary is CPI
indexed. Dr Wolgen is required to provide 12 month’s notice.
• Dr Wright’s term of employment is on-going and his base
salary inclusive of superannuation for the year to 30 June 2016
is $252,012. Termination payments are set at 3 months of base
salary provided the termination is not for a material breach
of the agreement. Dr Wright is required to provide 3 month’s
notice.
• Mr Keamy’s term of employment is on-going and his base
salary inclusive of superannuation for the year to 30 June 2016
is $237,458. Termination payments are set at 3 months of base
salary provided the termination is not for a material breach
of the agreement. Mr Keamy is required to provide 3 month’s
notice.
share-Based remuneration
The consolidated entity has an ownership based scheme for Directors,
key management personnel and select consultants of the Company
and is designed to provide long-term incentives for Directors and
Executives to deliver long-term shareholder value.
PErFOrManCE rightS:
All Performance Rights issued fall under two Performance Rights
Plans:
a) the Company's Conditional Performance Rights Plan (2009);
and
b) Performance rights Plan (2014)
The Performance Rights Plan (2014) is available to eligible persons
of the Company. Any issue of Rights to Executive Directors requires
shareholder approval in accordance with ASX Listing Rules. All
Rights convert to one ordinary share of the consolidated entity and
are issued for nil consideration, have no voting rights, are not listed
on the ASX and are non-tradeable (other than with prior written Board
consent). They can be converted to ordinary shares at any time once
the vesting conditions attached to the Rights have been achieved,
whereby, at the discretion of the Board, they will be held by a Scheme
Trustee on behalf of the eligible person.
The eligible person cannot trade the shares held by the Scheme Trust
without prior written Board consent until the earlier of 7 years from
grant date of Performance Rights, when the eligible person ceases
employment or when all transfer restrictions are satisfied or waived
by the Board in its discretion. Performance Rights under this Plan
lapse after 7 years from grant date.
Performance Rights are valued for financial reporting purposes using
a binomial valuation model and are represented as accounting values
only in the financial statements. Holders of Performance Rights may
or may not receive a benefit from these amounts, either in the current
or future reporting periods. The value of all Performance Rights
granted, exercised and lapsed during the financial year is detailed in
the tables within the Remuneration Report.
In the 28 November 2014 Annual General Meeting, shareholders
approved the grant of Performance Rights to Directors under the
Performance Rights Plan (2014). Of the proxy votes received, between
87.4% to 89.1% (including votes at the Board’s discretion) were in favour
of granting Performance Rights to Directors.
details of remuneration
Key management personnel include all Directors (including Non-
Executive) and other key management personnel who together
have the authority and responsibility for planning, directing and
controlling the activities of the Group:
• Mr. S.R. McLiesh (Non-executive Chairman)
• Dr. P.J. Wolgen (Managing Director & Chief Executive Officer)
• Mrs. B.M. Shanahan (Non-Executive Director)
• Mr. E. Ishag (Non-Executive Director)
• Mr. W. Blijdorp (Non-Executive Director)
b) the Company's Performance Rights Plan (2014).
• Dr. D.J. Wright (Acting Chief Scientific Officer)
• Mr. D.M. Keamy (Chief Financial Officer and Company
Secretary)
All key management personnel have been appointed to the positions
detailed above for the past two years unless specified otherwise.
a) Conditional Performance rights Plan (2009)
The Conditional Performance Rights Plan (2009) is available to eligible
employees of the Company. Any issue of Rights to Executive Directors
requires shareholder approval in accordance with ASX Listing Rules.
All Rights convert to one ordinary share of the consolidated entity
and are issued for nil consideration, have no voting rights, are non-
transferable and are not listed on the ASX. They can be converted to
ordinary shares at any time once the vesting conditions attached to
the Rights have been achieved, whereby they will be held by a Scheme
Trustee on behalf of the eligible employee for up to 7 years.
The eligible employee can request for shares to be transferred from
the Scheme Trust after 7 years or at an earlier date if the eligible
employee is no longer employed by the Company or all transfer
restrictions are satisfied or waived by the Board in its discretion.
the Conditional Performance Rights Plan
Since
(2009) was
implemented, 872,985 (or 25.1%) of the Performance Rights issued
under this Plan have lapsed or have been forfeited.
The Company does not intend to make future issues of Performance
Rights under this 2009 Plan.
12
key ManageMent personneL reMuneration of the CoMpany for the years enDing 30 June 2016 & 30 June
2015
reMuneration report
short-term employment Benefits
gross salary
short term
inCentive
annual leave
Paid Out⁴
year
$
$
DireCtors
Dr. P.J. Wolgen
Mr. S.R. McLiesh
Mrs. B.M. Shanahan
Mr. L.J. Wood
Mr. e. ishag
Mr. W.A. Blijdorp
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
807,109
765,506
100,457
95,946
73,059
70,822
-
5,417
70,000
66,667
65,000
29,083
other key ManageMent personneL
Dr. D.J. Wright
Mr. D.M. Keamy
total
2016
2015
2016
2015
2016
2015
232,704
229,265
218,150
200,784
1,566,479
1,463,490
373,969
462,056
-
-
-
-
-
-
-
-
-
-
4,000
11,463
11,315
10,500
389,284
484,019
$
-
146,801
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
146,801
other¹
$
20,455
60,168
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,455
60,168
long-term
employment
Benefits
share-Based
payments
(aCCounting
Charge only)²
super-annuation /
pension fund
performanCe
rights
total
$
-
2,071
9,543
9,115
6,941
6,728
-
-
-
-
-
-
19,308
18,783
19,308
18,516
55,100
55,213
$
$
1,130,261 ³
2,331,794
4,862,453 ³
6,299,055
44,805
154,805
245,445
350,506
44,805
124,805
193,605
271,155
-
-
-
5,417
31,363
101,363
135,523
202,190
-
-
65,000
29,083
38,575
294,587
29,154
288,665
120,470
369,243
67,778
297,578
1,410,279
3,441,597
5,533,958
7,743,649
1 ‘Other’ includes health insurance, housing, relocation to Singapore and other allowances that may be subject to fringe benefits tax.
2 As these values are accounting values the key management personnel may or may not actually receive any benefit from these amounts, either in the current or future reporting periods. The value of all Performance Rights and
share options granted, exercised and lapsed during the financial year is detailed in the following tables within the Remuneration Report. Performance Rights were priced using a binomial pricing model.
3 $1,119,935 of the 2016 value (2015: $4,839,827) relates to the issue of 2,499,810 Performance Rights to Dr. Wolgen which was approved by shareholders of the consolidated entity at the 28 November 2014 Annual General
Meeting. Performance Rights are subject to milestones being achieved before they can be exercised.
4 unused and accrued annual leave was paid out in lieu of taking such leave during the year, as permitted by law.
the reLative proportions of reMuneration between fixeD anD baseD on perforManCe for the years
enDing 30 June 2016 anD 30 June 2015
fixed remuneration
performanCe Based
fixed remuneration
performanCe Based
2016
2015
Dr. P.J. Wolgen
Dr. D.J. Wright
Mr. D.M. Keamy
35%
86%
64%
65%
14%
36%
15%
86%
74%
85%
14%
26%
13
terMs anD ConDitions of eaCh grant of rights affeCting reMuneration in the Current or future
reporting perioDs
reMuneration report
entity
CLiNuveL
CLiNuveL
CLiNuveL
CLiNuveL
CLiNuveL
CLiNuveL
CLiNuveL
CLiNuveL
CLiNuveL
CLiNuveL
numBer of rights
value per right on
grant date
91,667
91,667
116,667
75,000
553,890
692,475
90,700
158,725
90,700
113,375
$1.04
$1.04
$1.04
$1.19
$2.59
$2.59
$2.16
$2.16
$2.16
$2.16
Class
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
grant date
vesting date for retention in
sCheme trust
25/11/2010
25/11/2010
25/11/2010
14/01/2013
28/11/2014
28/11/2014
17/03/2015
17/03/2015
17/03/2015
17/03/2015
-
-
-
-
-
-
-
-
-
-
shares proVided upon exercise of rights
DEtailS OF SharES iSSuED During thE FinanCial yEar aS a rESult OF ExErCiSE OF rightS
Nil shares were issued as a result of exercise of options.
aDDitiOnal inFOrMatiOn On rightS iSSuED tO kEy ManagEMEnt PErSOnnEl
* For Retention in the Scheme Trust - Transfer Restrictions Apply
reMuneration ConDitionaL perforManCe rights hoLDings of key ManageMent personneL – 2016
BalanCe at
start of year
granted as
Compensation
exerCised
lapsed and
expired
BalanCe at
end of year
vested and
exerCisaBle
unvested
DireCtors
Mr. e. ishag
Mr. S.R. McLiesh
Mrs. B.M. Shanahan
Dr. P.J. Wolgen
Mr. W.A. Blijdorp
exeCutives
Dr. D.J. Wright
Mr. D.M. Keamy
56,500
85,000
70,000
1,424,864
-
128,125
238,760
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56,500
85,000
70,000
14,000
20,000
20,000
42,500
65,000
50,000
1,424,864
499,890
924,974
-
-
-
128,125
238,760
8,000
26,000
120,125
212,760
14
reMuneration report
additional information - remuneration
For each cash bonus and right granted, the percentage of the available grant or bonus that was paid or vested in the financial year, and the
percentage forfeited due to unmet milestones (including service length), is set out below. Bonuses are paid in the year following the period of
performance.
reMuneration DetaiLs of Cash inCentives anD rights
inCentives
paid
50%
forfeited
50%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Dr. P.J.
Wolgen
Mr. S.R.
McLiesh
Mrs. B.M.
Shanahan
Mr. e. ishag
Mr. W.A.
Blijdorp
Dr. D.J.
Wright
Mr. D.M.
Keamy
year
granted
type
vested
forfeited
latest year
for vesting
minimum
grant value
yet to vest ($)
maximum
grant value
yet to vest ($)
performanCe rights
2010/11
Rights
2014/15
Rights
0%
20%
2011/12
Rights
0%
2014/15
Rights
16.7%
2011/12
Rights
2014/15
Rights
2011/12
Rights
2014/15
Rights
2011/12
Rights
2012/13
Rights
2014/15
Rights
2011/12
Rights
2012/13
Rights
2014/15
Rights
0%
20%
0%
20%
0%
0%
20%
0%
0%
20%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
No limitation
2021/22
No limitation
2021/22
No limitation
2021/22
No limitation
2021/22
No limitation
No limitation
2021/22
No limitation
No limitation
2021/22
-
-
-
-
-
-
-
-
-
-
-
-
-
-
300,001
1,619,935
26,690
64,800
16,682
64,800
16,682
45,360
42,819
29,700
69,120
58,334
29,700
224,640
The exercise price for those Rights granted between 2009/10 and 2014/15 was $Nil. Excluding the CEO Short Term Incentive, cash bonuses paid to Executives were discretionary.
15
shares held By Key management personnel
The number of ordinary shares in the Company during the 2016 reporting period held by each of the Group’s Key Management Personnel,
including their related parties, is set out below:
reMuneration report
year ending 30 June 2016
personnel
Mr. e. ishag
Mr. S.R. McLiesh
Mrs. B.M. Shanahan
Dr. P.J. Wolgen
Mr. W.A. Blijdorp
Dr. D.J. Wright
Mr. D.M. Keamy
BalanCe at start
of year
granted as
remuneration
reCeived on
exerCise
other Changes
held at the end of
reporting period
148,195
191,000
133,969
2,079,832
383,145
236,874
166,400
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
148,195
191,000
133,969
2,079,832
383,145
236,874
166,400
shares unDer option
details of unissued shares or interests under options or rights
entity
numBer of shares
under options
numBer of shares
under rights
exerCise
priCe
Class
ClINuvEl PhARmACEuTICAlS lTd
-
2,556,250
$Nil
Ordinary
loans to directors and executiVes
No loans were granted to Directors or Executives for the years ending 30 June 2016 and 30 June 2015.
expiry date
upon achievement of specific performance
and time-based milestones
16
reMuneration report
performance of clinuVel p harmaceuticals ltd and controlled entities
The consolidated entity is solely dedicated to the research, development and commercialisation of its unique and medically beneficial
technology. It is anticipated the consolidated entity will not derive profit and pay a dividend until commercialisation of the drug under research
and development has occurred and sales reach a level which exceeds the cost base of the consolidated entity. With very few peer competitors
developing drugs in the field of photoprotection and repigmentation, shareholder interest is promoted through the Company successfully
completing clinical trials, achieving regulatory milestones and pursuing potential new and larger markets. The table below shows the progress
made in moving through the clinical pathway and into the commercialisation pathway, reflecting the performance of the Executive team,
whilst also comparing the progress in moving through these pathways against the movement in the Company’s market capitalisation.
The remuneration and incentive framework, which has been put in place by the Board, has ensured the Executives are focussed on both
maximising short-term operating performance and long-term strategic growth. This has been an important factor in the consolidated entity
moving into the commercialisation phase of its drug which has been subject to sustained research and development.
2010
2011
2012
2013
2014
2015
2016
year ending 30 June
regulatory/CliniCal milestone
Phase ii AK Study – europe/Australia
Ph II/III EPP Study – Europe/Australia – Trial 1
Phase iii PLe Study – europe/Australia
Phase ii Solar urticaria Study – europe
Phase II PdT Study – Europe
Phase ii ePP Study – uSA
Ph III EPP Study – Europe Trial 2
Ph iii PLe Study – europe
Ph iii ePP Study – uSA
Ph ii vitiligo Studies – europe/uSA
Ph ii vitiligo Study - Singapore
Orphan Drug Designation ePP – Australia
Ph ii HHD Study – italy
Orphan Drug Designation HHD– eu & uSA
Application for marketing authorisation submitted with eMA
vAllAuRIx PTE lTd – formulation & melanocortin development
Post-marketing authorisation commitments
First commercial sales
Market capitalisation (A$ million)
70
50
55
69
72
127
203
17
reMuneration report
non-audit serVices
For the year ended 30 June 2016, Grant Thornton Australia provided audit services to the Company. Grant Thornton Australia also provided
non-audit services, specifically general tax advice concerning the Australian R&D tax incentive regime. Details of amounts paid or payable to
the auditor for non-audit services provided during the year by the auditor are outlined in Note 18 to the financial statements.
For the year ending 30 June 2016 Grant Thornton Australia only provided audit services to the Company.
The Directors are satisfied that the provision of non-audit services, during the year, by the auditor is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The Directors are of the opinion that the services as disclosed in note 18 to
the financial statements do not compromise the external auditor’s independence, based on advice received from the Audit Committee, for the
following reasons:
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 ‘Code of Ethics for
Professional Accountants’ issued by the Accounting Professional & Ethical Standards Board, including reviewing or auditing the
auditor’s own work, acting in a management or decision-making capacity for the Company, acting as advocate for the Company or
jointly sharing economic risks and rewards.
auditor's independence declaration
The auditor’s independence declaration as required by s.307C of the Corporations Act 2001 is included and forms part of this Directors’ Report.
proceedings on Behalf of the company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company
is party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.
The Company was not party to any such proceedings during the year.
Signed in accordance with a resolution of the Board of Directors pursuant to s.298(2) of The Corporations Act 2001.
Dr. Philippe Wolgen, MBA MD
Director
Dated this 24th day of August, 2016
18
statement of profit or loss
and other comprehensiVe
income for the year
ended 30 june 2016
Total revenues
Other income
Total expenses
Loss before income tax expense
Income tax expense/(benefit)
Loss after income tax expense
net profit/(loss) for the year
other CoMprehensive inCoMe
Items that may be re-classified subsequently to profit or loss
exchange differences of foreign exchange translation of foreign operations
Income tax (expense)/benefit on items of other comprehensive income
Other comprehensive loss for the period, net of income tax
note
2
2
2
3
Consolidated entity
2016
$
2015
$
6,419,707
3,259,962
796,531
470,273
(10,369,956)
(14,144,611)
(3,153,718)
(10,414,376)
-
-
(3,153,718)
(10,414,376)
(3,153,718)
(10,414,376)
273,786
-
273,786
(268,143)
-
(268,143)
total Comprehensive inCome/(loss) for the period
(2,879,932)
(10,682,519)
profit/(Loss) for the year attributabLe to:
Non-controlling interest
Owners of the parent
totaL CoMprehensive inCoMe/(Loss) attributabLe to:
Non-controlling interest
Owners of the parent
(32,518)
(16,343)
(3,121,200)
(10,398,033)
(3,153,718)
(10,414,376)
(32,518)
(16,343)
(2,847,414)
(10,666,176)
(2,879,932)
(10,682,519)
Basic and diluted earnings per share - cents per share
15
(7.0)
(24.0)
The accompanying notes form part of these financial statements.
19
statement of financial
position as at 30 june 2016
Current assets
Cash and cash equivalents
Trade and other receivables
inventory
Other assets
total Current assets
non-Current assets
Property, plant and equipment
total non-Current assets
total assets
Current LiabiLities
Trade and other payables
Provisions
total Current liaBilities
non-Current LiabiLities
Provisions
total non-Current liaBilities
total liaBilities
net assets
equity
equity attributabLe to owners of the parent:
Contributed equity
Reserves
Accumulated losses
equity attriButaBle to the owners of the parent
equity attriButaBle to non-Controlling (minority equity) interest
total equity
The accompanying notes form part of these financial statements.
20
note
16(a)
4
5
6
7
9
10
10
11
12
13
Consolidated entity
2015
$
10,572,295
1,960,453
837,135
204,623
2016
$
13,844,703
4,823,770
1,082,163
222,961
19,973,597
13,574,506
164,670
164,670
69,369
69,369
20,138,267
13,643,875
1,573,361
715,017
2,288,378
15,369
15,369
2,303,747
17,834,520
1,860,636
574,640
2,435,276
3,308
3,308
2,438,584
11,205,291
146,764,500
138,465,335
4,094,977
2,698,338
(133,063,239)
(129,942,039)
17,796,238
38,282
17,834,520
11,221,634
(16,343)
11,205,291
statement of cash flows for
the year ended 30 june 2016
Cash fLows froM operating aCtivities
GST and vAT refunds
Receipts from customers
interest received
Payments to suppliers and employees
note
Consolidated entity
2016
$
2015
$
534,297
581,114
3,648,388
2,545,080
167,559
353,960
(9,387,177)
(8,009,966)
net Cash provided By (used in) operating aCtivities
16(B)
(5,036,933)
(4,529,812)
Cash fLows froM investing aCtivities
Payments for property, plant and equipment
Proceeds received for property, plant and equipment
net Cash provided By (used in) investing aCtivities
Cash fLows froM finanCing aCtivities
Proceeds from issue of ordinary shares
Equity contribution by subsidiary non-controlling interest
Payment of share issue costs
net Cash provided By (used in) finanCing aCtivities
net inCrease/(deCrease) in Cash held
Cash and Cash equivalents at Beginning of the year
effects of exchange rate changes on foreign currency held
(98,051)
-
(98,051)
(12,097)
1,400
(10,697)
8,335,305
250,000
89,118
(36,059)
8,388,364
-
(27,300)
222,700
3,253,380
(4,317,809)
10,572,295
14,625,583
19,028
264,521
Cash and Cash equivalents at end of the year
16(a)
13,844,703
10,572,295
The accompanying notes form part of these financial statements.
21
statement of changes
in equity for the year
ended 30 june 2016
share
Capital
performanCe
rights
reserve
foreign
CurrenCy
translation
reserve
total
attriButaBle
to owners of
parent
non-
Controlling
interest
retained
earnings
$
$
$
$
$
BalanCe at 30 June 2014
133,567,056
1,321,529
116,517
(119,577,370)
15,427,732
issue of Share Capital under private
placement
250,000
-
issue of Share Capital under share-based
payment
4,650,579
(4,650,579)
employee share-based payment options
-
5,642,728
Capital raising costs
(2,300)
-
-
-
-
-
-
-
250,000
-
33,364
5,676,092
-
(2,300)
transaCtions with owners
138,465,335
2,313,678
116,517
(119,544,006)
21,351,524
$
-
-
-
-
-
-
total
equity
$
15,427,732
250,000
-
5,676,092
(2,300)
21,351,524
loss for the year
other CoMprehensive inCoMe:
exchange differences of foreign exchange
translation of foreign operations
-
-
-
-
-
(10,398,033)
(10,398,033)
(16,343)
(10,414,376)
268,143
-
268,143
-
268,143
BalanCe at 30 June 2015
138,465,335
2,313,678
384,660
(129,942,039)
11,221,634
(16,343)
11,205,291
Equity contribution by subsidiary non-
controlling interest
issue of Share Capital under private
placement
issue of Share Capital under share-based
payment
employee share-based payment options
-
8,335,305
-
-
-
-
-
1,670,425
Capital raising costs
(36,140)
-
-
-
-
-
-
-
-
-
-
-
-
87,143
87,143
8,335,305
-
1,670,425
(36,140)
-
-
-
8,335,305
-
1,670,425
(36,140)
transaCtions with owners
146,764,500
3,984,103
384,660
(129,942,039)
21,191,224
70,800
21,262,024
loss for the year
other CoMprehensive inCoMe:
exchange differences of foreign exchange
translation of foreign operations
-
-
-
-
-
(3,121,200)
(3,121,200)
(32,518)
(3,153,718)
(273,786)
-
(273,786)
-
(273,786)
BalanCe at 30 June 2016
146,764,500
3,984,103
110,874
(133,063,239)
17,796,238
38,282
17,834,520
22
notes to and forming part of
the financial statements for
the year ended 30 june 2016
1. Basis of preparation
The financial report is a general purpose financial report that has
been prepared in accordance with Australian Accounting Standards,
other authoritative pronouncements of the Australian Accounting
Standards Board and the Corporations Act 2001. Compliance
with Australian Accounting Standards ensures the consolidated
financial statements and notes of the consolidated entity with
International Financial Reporting Standards (‘IFRS’). CLINUVEL
PHARMACEUTICALS LTD is a for-profit entity for the purposes of
reporting under Australian Accounting Standards.
The financial report has been prepared on an accruals basis and is
based on historical costs and does not take into account changing
money values or, except where stated, current valuations of financial
assets. Cost is based on the fair values of the consideration given in
exchange for assets. The accounting policies have been consistently
applied, unless otherwise stated.
Both the functional and presentation currency of the group and its
Australian controlled entities is Australian dollars. The functional
currency of certain non Australian controlled entities is not
Australian dollars. As a result, the results of these entities are
translated to Australian dollars for presentation in the CLINUVEL
PHARMACEUTICALS LTD financial report.
In applying Australian Accounting Standards management must
make judgment regarding carrying values of assets and liabilities
that are not readily apparent from other sources. Assumptions and
estimates are based on historical experience and any other factor
that are believed reasonable in light of the relevant circumstances.
These estimates are reviewed on an ongoing basis and revised in
those periods to which the revision directly affects.
All accounting policies are chosen to ensure the resulting financial
information satisfies the concepts of relevance and reliability.
The financial statements of the consolidated entity have been prepared
on a going concern basis. The consolidated entity’s operations
are subject to major risks due primarily to the nature of research
development and the commercialisation to be undertaken. The risk
factors set out may materially impact the financial performance and
position of the consolidated entity.
The going concern basis assumes that, if required, future capital
raisings will be available to enable the consolidated entity to
undertake the research, development and commercialisation of its
projects and that the subsequent commercialisation of products
will be successful. The financial statements take no account
of the consequences, if any, of the inability of the consolidated
entity to obtain adequate funding or of the effects of unsuccessful
research, development and commercialisation of the consolidated
entity's projects. The consolidated entity has successfully raised
additional working capital in past years. Should cash flows from its
commercialisation activities not provide adequate funding to sustain
its research, development and commercialisation projects in the
coming financial year, the Directors would consider the need to bring
in additional funds from various funding sources.
a) PrinCiPlES OF COnSOliDatiOn
The consolidated financial statements are prepared by combining the
financial statements of all the entities that comprise the consolidated
entity, being the Company (the parent entity) and its subsidiaries
as defined in Accounting Standard AASB 10 Consolidated Financial
Statements. Consistent accounting policies are employed in the
preparation and presentation of the consolidated financial statements.
The consolidated financial statements include the information and
results of each subsidiary from the date on which the Company
obtains control and until such time as the Company ceases to control
such entity. In preparing the consolidated financial statements, all
intercompany balances and transactions, and unrealised profits
arising within the consolidated entity are eliminated in full.
Non-controlling interests, presented as part of equity, represent the
portion of a subsidiary’s profit or loss and net assets that is not held
by the Group. The Group attributes total comprehensive income or
loss of subsidiaries between the owners of the parent and the non-
controlling interests based on their respective ownership interests.
A list of controlled entities is found in Note 8 of the Financial
Statements.
b) inCOME tax
At present it is uncertain that tax losses can be utilised. Once a
position becomes known, tax losses will be brought to account.
current tax
Current tax is calculated by reference to the amount of income tax
payable or recoverable in respect of the taxable profit or loss for the
period. It is calculated using tax rates and tax laws that have been
enacted or substantially enacted by reporting date. Current tax for
current and prior periods is recognised as a liability (or asset) to the
extent it is unpaid (or refundable).
deferred tax
Deferred tax is accounted for using the comprehensive balance sheet
liability method in respect of temporary differences arising from
differences between the carrying amount of assets and liabilities in
the financial statements and corresponding tax base of those items.
In principle, deferred tax liabilities are recognised on all taxable
differences. Deferred tax assets are recognised for deductible
temporary differences and unused tax losses to the extent that it
is probable that sufficient unused tax losses and tax offsets can be
utilised by future taxable profits. However, deferred tax assets and
liabilities are not recognised if the temporary differences given rise
to them arise from the initial recognition of assets and liabilities
(other than as a result of a business combination) which affect neither
taxable income nor accounting profit. Furthermore, a deferred tax
liability is not recognised in relation to taxable temporary differences
arising from goodwill.
Deferred tax
liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, except where the
consolidated entity is able to control the reversal of the temporary
differences and it is probable that the temporary differences will not
reverse in the foreseeable future. Deferred tax assets arising from
23
notes t o the Financia L stateMents
deductible temporary differences associated with these investments
and interests are only recognised to the extent that it is probable
that there will be sufficient taxable profits against which to utilise
the benefits of the temporary differences and they are expected to
reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that
are expected to apply to the period(s) when the asset and liability
giving rise to them are realised or settled, based on tax rates (and tax
laws) that have been enacted or substantially enacted by reporting
date. The measurement of deferred tax liabilities and assets reflects
the tax consequences that would follow from the manner in which
the consolidated entity expects, at the reporting date, to recover or
settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when they relate
to income taxes levied by the same taxation authority and the
Company/consolidated entity intends to settle its current tax assets
and liabilities on a net basis.
tax Consolidation
The Company and its wholly-owned Australian entities are part of
a tax-consolidation group under Australian Taxation law. CLINUVEL
PHARMACEUTICALS LTD is the head entity of the tax-consolidation
group.
Current and Deferred tax For the Period
Current and deferred tax is recognised as an expense or income in the
Statement of Profit or Loss and Other Comprehensive Income, except
when it relates to items credited or debited directly to equity, in which
case the deferred tax is also recognised directly in equity, or where
it arises from the initial accounting for a business combination, in
which case it is taken into account in the determination of goodwill
or discount on acquisition.
C) CaSh anD CaSh EquivalEntS
Cash and cash equivalents comprise of cash on hand, at call deposits
with banks or financial institutions, bank bills and investments in
money market instruments where it is easily convertible to a known
amount of cash and subject to an insignificant risk of change in value.
D) PrOPErty, Plant anD EquiPMEnt
Plant and equipment are stated at cost less accumulated depreciation
and impairment. Cost includes expenditure that is directly attributable
to the acquisition of the item. In the event that settlement of all or
part of the purchase consideration is deferred, cost is determined by
discounting the amounts payable in the future to their present value
as at the date of acquisition.
Depreciation is calculated on diminishing value so as to write off the
net cost of each asset over its expected useful life to its estimated
residual value. The estimated useful lives, residual values and
depreciation method are reviewed at the end of each annual reporting
period and adjusted if appropriate. An asset’s carrying amount
is written off immediately to its recoverable amount if the assets
carrying amount is greater than its estimated recoverable amount.
The following diminishing value percentages are used in the
calculation of depreciation:
• Computers and software 40%
• All other assets 7.5% to 33.3%
Gains and losses on disposal of assets are determined by comparing
proceeds upon disposal with the asset’s carrying amount. These are
included in the Statement of Profit or Loss and Other Comprehensive
Income.
E) invEStMEntS anD OthEr FinanCial aSSEtS
The consolidated entity classifies its financial assets into financial
assets at fair value through profit and loss and loans and receivables.
Financial assets at fair value through profit and loss are held for
trading if the entity does not have a positive intention to hold its
investment in the financial asset until maturity (if a fixed maturity)
or if it intends to hold the financial asset for an undefined period.
Loans and receivables are non-derivate financial assets with fixed
payments that are not quoted in an active market. They are included
in current assets, except those loans and receivables that are due
more than 12 months from reporting date.
F) invEntOry
Raw, materials, work in progress and finished goods are stated at the
lower of cost or net realisable value. Cost comprises, direct material
and labour. Costs are assigned to individual items of inventory on the
basis of weighted average costs. Net realisable value is the estimated
selling price in the ordinary course of business less the estimated
costs of completion and the estimated costs necessary to make the
sale.
g) rESEarCh anD DEvElOPMEnt ExPEnDiturE
Expenditure on research activities is recognised as an expense in
the period in which it is incurred. Where no internally-generated
intangible asset can be recognised, development expenditure is
recognised as an expense in the period as incurred. An intangible
asset arising from development (or from the development phase of
an internal project) is recognised if, and only if, all of the following is
demonstrated:
• the technical feasibility of completing the intangible asset so
that it will be available for use or sale;
• the intention to complete the intangible asset and use or sell it;
• the ability to use or sell the intangible asset;
• how the intangible asset will generate probably future
economic benefits;
• the availability of adequate technical, financial and other
resources to complete the development and to use or sell the
intangible asset; and
• the ability to measure reliably the expenditure attributable to
the intangible asset during its development.
The consolidated entity uses its critical judgment in continually
assessing whether development expenditures meet the recognition
criteria of an intangible asset.
Whilst at the end of the financial year the consolidated entity had
received European regulatory approval and launched a European
product the above criteria have not been fully satfisfied to support
the recognition and generation of an internally generated intangible
asset.
h) intangiblE aSSEtS - traDEMarkS,
PatEntS anD Sub- liCEnCE
Trademarks, patents and licences have a finite useful life and are
recorded at cost less accumulated amortisation and impairment
losses. Amortisation is charged on a straight line basis over the
shorter of the relevant agreement or useful life. The estimated useful
life and amortisation method is reviewed at the end of each annual
reporting period.
Sub-licence
The sub-licences to develop and commercialise SCENESSE® have
expired and the consolidated entity no longer holds the sub-licences.
The sub-licences have been fully amortised on a straight line basis
over 10 years.
i) PayaBleS
Trade payables and other accounts payable are recognised when
the consolidated entity becomes obliged to make future payments
resulting from the purchase of goods and services, incurred prior to
the end of the financial year.
j) EMPlOyEE bEnEFitS
Provision is made for benefits accruing to employees in respect of
wages and salaries, annual leave and long service leave when it is
probable that settlement will be required and they are capable of
being measured reliably.
24
notes t o the Financia L stateMents
Provisions made in respect of employee benefits expected to be
settled within 12 months, are measured at their nominal values using
the remuneration rate expected to apply at the time of settlement.
• where the amount of GST incurred is not recoverable from
the taxation authority, it is recognised as part of the costs of
acquisition of an asset or as part of an item of expense; or
Provisions made in respect of employee benefits which are not
expected to be settled within 12 months are measured as the present
value of the estimated future cash outflows to be made by the
consolidated entity in respect of services provided by employees up
to reporting date. The discount rate used to estimate future cash flows
is per the Australian corporate bond rates as commissioned by the
Group of 100 and published by Milliman Australia at reporting date.
k) DirECtOrS’ rEMunEratiOn –
Share-BaSed PayMent S
Under AASB 2 Share-based Payments, the consolidated entity must
determine the fair value of options and Performance Rights issued
to employees as remuneration and recognise an expense in the
Statement of Profit or Loss and Other Comprehensive Income. This
standard is not limited to options and to Performance Rights. It also
extends to other forms of equity based remuneration. The fair value
of options is measured by the use of the binominal options pricing
model. The fair value of Performance Rights is measured by either
a binomial or a trinomial model. It is determined at grant date and
expensed on a straight- line basis over the vesting period. The fair
value of options and Performance Rights is shown as an expense in
profit or loss.
l) rEvEnuE anD OthEr inCOME
interest
Interest revenue is recognised on a proportional basis that takes into
account the effective yield on the financial asset.
Sale reimbursements under Special access
Schemes & Commercial Sales
Revenue from reimbursement of implant sales from insurance
companies is recognised when the consolidated entity has transferred
to the buyer the significant risks and rewards of ownership of the
goods.
government r&D tax incentive
Other income from the government R&D tax incentive program is
recognised when it has been established that the conditions of the
tax incentive have been met and that the expected amount of tax
incentive can be reliably measured.
M) Share caPital
Ordinary share capital is recognised at the fair value of the
consideration received by the Company.
Any transaction costs arising on the issue of ordinary shares are
recognised directly in equity as a reduction of the shares proceeds
received.
n) earningS Per Share
basic Earnings Per Share
Basic earnings per share is determined by dividing net profit after
income tax attributable to members of the Company, excluding any
costs of servicing equity other than ordinary shares, by the weighted
average number of ordinary shares outstanding during the financial
year, adjusted for bonus elements in ordinary shares issued during
the year.
Diluted Earnings Per Share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated
with dilutive potential ordinary shares and the weighted average
number of shares assumed to have been issued for no consideration
in relation to dilutive potential ordinary shares.
O) gOODS anD SErviCES tax/
valuE aDDED tax (gSt)
Revenues, expenses and assets are recognised net of the amount of
‘goods and services tax’ or ‘valued added tax‘ as it is known in certain
jurisdictions (GST), except:
• for receivables and payables which are recognised inclusive of
GST.
The net amount of GST recoverable from, or payable to, the taxation
authority is included as part of receivables or payables. Cash flows
are included in the Statement of Cash Flow on a gross basis. 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.
P) iMPairMEnt OF aSSEtS
At each reporting date, the consolidated entity reviews the carrying
amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the impairment
loss (if any). Where the asset does not generate cash flows that are
independent from other assets, the consolidated entity estimates the
recoverable amount of the cash-generating unit to which the asset
belongs.
Intangible assets with indefinite useful lives and intangible assets not
yet available for use are tested for impairment annually and whenever
there is an indication that the asset may be impaired. Recoverable
amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and
the risk specified to the asset for which the estimates of future cash
flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is
estimated to be less than its carrying amount, the carrying amount of
the asset (cash-generating unit) is reduced to its recoverable amount.
An impairment loss is recognised in the Statement of Profit or Loss
and Other Comprehensive Income immediately.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but only to the extent
that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss
been recognised for the asset (cash-generating unit) in prior years.
A reversal of an impairment loss is recognised in the Statement of
Profit or Loss and Other Comprehensive Income immediately.
q) leaSeS
Lease payments for operating leases, where substantially all the risks
and benefits remain with the lessors, are charged as expenses in the
periods in which they are incurred.
r) COMParativES
Where necessary, comparatives have been reclassified and
repositioned for consistency with current year disclosure.
S) PrOviSiOnS
Provisions are recognised when a present obligation to the future
sacrifice of economic benefits becomes probable, and the amount of
the provision can be measured reliably.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at reporting
date, taking into account the risks and uncertainties surrounding
the obligation. Where a provision is measured using the cash flows
estimated to settle the present obligation, its carrying amount is the
present value of those cash flows.
When some or all of the economic benefits required to settle a provision
are expected to be recovered from a third party, the receivable is
recognised as an asset if it is virtually certain that recovery will be
received and the amount of the receivable can be measured reliably.
25
notes t o the Financia L stateMents
t) FOrEign CurrEnCy tranSaCtiOnS
and BalanceS
All foreign currency transactions during the financial year are
brought to account using the exchange rate in effect at the date of
the transaction. Foreign currency monetary items at reporting
date are translated at the exchange rate existing at reporting date.
Non- monetary assets and liabilities carried at fair value that
are denominated in foreign currencies are translated at the rates
prevailing at the date when the fair value was determined. Exchange
differences are recognised in profit or loss in the period in which
they arise as defined in AASB 121: The Effects of Changes in Foreign
Exchange Rates.
Foreign subsidiaries that have a functional currency different from
the presentation currency are translated into the presentation
currency as follows:
• At the spot rate at reporting date for assets and liabilities; and
• At average monthly exchange rates for income and expenses.
Resulting differences are recognised within equity in a foreign
currency translation reserve.
u) OthEr CurrEnt aSSEtS
Other current assets comprise prepayments of drug peptide yet to
be used in CLINUVEL PHARMACEUTICALS LTD's trial program
and prepayments for certain insurances yet to expire, along with
other general prepayments. The expenditures represent an unused
expense and therefore a decrease in future economic benefit has yet
to be incurred.
v) SharE-baSED PayMEnt tranSaCtiOnS
Benefits are provided to employees of the Group in the form of
share-based payment transactions, whereby employees render
services in exchange for shares or rights over shares (‘equity-settled
transactions’).
The cost of these equity-settled transactions with employees is
measured by reference to the fair value at the date at which they
are granted. The fair value is determined using either a binomial
or a trinomial options pricing model. In valuing equity-settled
transactions, no account is taken of any performance conditions,
other than conditions linked to the price of the shares of CLINUVEL
PHARMACEUTICALS LTD (‘market conditions’).
w) CritiCal aCCOunting
EStiMatES anD juDgMEnt
The Directors evaluate estimates and judgments incorporated into
the financial report based on historical knowledge and best available
current information. Estimates assume a reasonable expectation of
future events and are based on current trends and economic data,
obtained both externally and within the Group.
key estimates – share-based payments transactions
The Group measures the cost of equity-settled transactions with
employees by reference to the fair value of the equity instruments
at the date at which they are granted. The fair value is determined
using either a Black-Scholes, a binomial or a trinomial model, using
the assumptions detailed in Note 22.
key judgements – tax losses
Given the Company’s and each individual entities’ history of recent
losses, the Group has not recognised a deferred tax asset with regard
to unused tax losses and other temporary differences, as it has not
been determined whether the Company or its subsidiaries will
generate sufficient taxable income against which the unused tax
losses and other temporary differences can be utilised. The value of
tax losses not recognised is included in Note 3.
x) nEw aCCOunting StanDarDS
and interPretationS
In the current year, the Group has adopted all of the new and revised
Standards and Interpretations issued by the Australian Accounting
Standards Board that are relevant to its operations and effective for
the current annual reporting period. The adoption of the new and
revised standards had minimum or no impact to the Group’s financial
statements.
y) nEw auStralian aCCOunting StanDarDS
iSSuED but nOt yEt EFFECtivE
Certain new accounting standards and interpretations have been
published that are not mandatory for 30 June 2016 reporting periods,
and have not yet been adopted by the Group. The Group’s assessment
of the impact of these new standards and interpretations is set out
below:
aaSb 9 Financial instruments (December 2014)
AASB 9 introduces new requirements for the classification and
measurement of financial assets and liabilities and includes a forward-
looking ‘expected loss’ impairment model and a substantially-
changed approach to hedge accounting.
The cost of equity-settled transactions is recognised, together with
a corresponding increase in equity, over the period in which the
performance conditions are fulfilled, ending on the date on which the
relevant employees become fully entitled to the award (‘vesting date’).
These requirements
improve and simplify the approach for
classification and measurement of financial assets compared with
the requirements of AASB 139. The main changes are:
The cumulative expense recognised for equity-settled transactions
at each reporting date until vesting date reflects (i) the extent to
which the vesting period has expired and (ii) the number of awards
that, in the opinion of the Directors of the Group, will ultimately
vest. This opinion is formed based on the best available information
at reporting date. No adjustment is made for the likelihood of market
performance conditions being met as the effect of these conditions is
included in the determination of fair value at grant date.
Where the terms of an equity-settled award are modified, as a
minimum an expense is recognised as if the terms had not been
modified. In addition, an expense is recognised for any increase in the
value of the transaction as a result of the modification, as measured at
the date of modification. Where an equity-settled award is cancelled,
it is treated as if it had vested on the date of cancellation, and any
expense not yet recognised for the award is recognised immediately.
However, if a new award is substituted for the cancelled award, and
designated as a replacement award on the date that it is granted, the
cancelled and new award are treated as if they were a modification of
the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as
additional share dilution in the computation of earnings per share.
• Financial assets that are debt instruments will be classified
based on: (i) the objective of the entity’s business model for
managing the financial assets; and (ii) the characteristics of
the contractual cash flows.
• Allows an irrevocable election on initial recognition to present
gains and losses on investments in equity instruments that are
not held for trading in other comprehensive income (instead
of in profit or loss). Dividends in respect of these investments
that are a return on investment can be recognised in profit or
loss and there is no impairment or recycling on disposal of the
instrument.
• Introduces a ‘fair value through other comprehensive income’
measurement category for particular simple debt instruments.
• Financial assets can be designated and measured at fair
value through profit or loss at initial recognition if doing
so eliminates or significantly reduces a measurement or
recognition inconsistency that would arise from measuring
assets or liabilities, or recognising the gains and losses on
them, on different bases.
• Where the fair value option is used for financial liabilities the
change in fair value is to be accounted for as follows:
26
notes t o the Financia L stateMents
z) SegMent rePorting
A segment is a component of the consolidated entity that earns
revenues or incurs expenses whose results are regularly reviewed by
the chief operating decision makers and for which discrete financial
information is prepared. The consolidated entity has no operating
segments within the definition of AASB 8 Operating Segments.
It has established entities in more than one geographical area.
Revenues from reimbursement revenue are 100% earned from entities
within Europe, which is consistent with the comparative period. The
non-current assets that are not held within Australia are immaterial
to the Group.
100% of the revenue from sales reimbursements under special access
schemes is generated from seven end users (2015: six end users). 100%
of the revenue from commercial sales is from one end user (2015: nil).
aa) rOunDing OF aMOuntS
The entity has applied the relief available to it under ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument 2016/191 and
accordingly, amounts in the financial statements and directors’
report have been rounded off to the nearest $1,000, or in certain cases,
the nearest dollar.
◦ the change attributable to changes in credit risk are
presented in Other Comprehensive Income (‘OCI’)
◦ the remaining change is presented in profit or loss
If this approach creates or enlarges an accounting mismatch in
the profit or loss, the effect of the changes in credit risk are also
presented in profit or loss. Otherwise, the following requirements
have generally been carried forward unchanged from AASB 139
into AASB 9:
◦ classification and measurement of financial liabilities; and
◦ derecognition requirements
for financial assets and
liabilities.
AASB 9 requirements regarding hedge accounting represent a
substantial overhaul of hedge accounting that enable entities to better
reflect their risk management activities in the financial statements.
Furthermore, AASB 9 introduces a new impairment model based
on expected credit losses. This model makes use of more forward-
looking information and applies to all financial instruments that are
subject to impairment accounting.
The entity is yet to undertake a detailed assessment of the impact
of AASB 9. However, based on the entity’s preliminary assessment,
the Standard is not expected to have a material impact on the
transactions and balances recognised in the financial statements
when it is first adopted for the year ending 30 June 2019.
aaSb 15 revenue from Contracts with Customers
AASB 15:
• replaces AASB 15 Revenue and some revenue-related
Interpretations:
◦ establishes a new control-based revenue recognition model;
◦ changes the basis for deciding whether revenue is to be
recognised over time or at a point in time;
◦ provides new and more detailed guidance on specific topics
(e.g., multiple element arrangements, variable pricing,
rights of return, warranties and licensing); and
◦ expands and improves disclosures about revenue.
The entity is yet to undertake a detailed assessment of the impact
of AASB 15. However, based on the entity’s preliminary assessment,
the Standard is not expected to have a material impact on the
transactions and balances recognised in the financial statements
when it is first adopted for the year ending 30 June 2019.
aaSb 16 leases
AASB 16:
• replaces AASB 117 Leases and some lease-related Interpretations
• requires all leases to be accounted for ‘on-balance sheet’ by
lessees, other than short-term and low value asset leases
• provides new guidance on the application of the definition of
lease and on sale and lease back accounting
• largely retains the existing lessor accounting requirements in
AASB 117
• requires new and different disclosures about leases
The entity is yet to undertake a detailed assessment of the impact
of AASB 16. However, based on the entity’s preliminary assessment,
the Standard is not expected to have a material impact on the
transactions and balances recognised in the financial statements
when it is first adopted for the year ending 30 June 2020.
27
2. profit/(Loss) froM Continuing operations
notes t o the Financia L stateMents
(a)
revenues
interest revenue – other persons
Sales reimbursements
Commercial sales
Consolidated entity
2016
$
208,368
3,613,764
2,597,575
2015
$
348,409
2,911,553
-
total revenues
6,419,707
3,259,962
(b)
other inCoMe
Government R&D tax incentive
Gain/(loss) on restating foreign currency creditors and currencies held
total other inCome
(C)
expenses
Clinical development costs
Drug formulation R&D, manufacture & distribution
Regulatory (Pre & Post Marketing) & Non-clinical
Clinical, Regulatory & Commercial overheads
Business marketing & listing
Licenses patents and trademarks
General operations (incl Board)
total expenses
(D)
profit/(Loss) before inCoMe tax inCLuDes the foLLowing speCifiC expenses
Employee benefits expense
depreciation on property, plant & equipment
loss on sale of property, plant and equipment
Share-based payments
Operating lease expense – minimum lease payments
609,059
187,472
796,531
133,461
1,022,082
973,221
406,126
64,147
470,273
231,963
450,090
662,069
1,606,026
1,258,823
777,725
266,072
801,556
232,150
5,591,369
10,507,960
10,369,956
14,144,611
4,360,203
3,900,848
25,526
-
1,670,425
356,842
26,539
29,875
5,676,092
339,744
28
3. inCoMe tax expense
notes t o the Financia L stateMents
(a)
the priMa faCie tax on profit (Loss) is reConCiLeD to the inCoMe tax expense (benefit) as foLLows:
Prima facie tax payable on profit (loss) from ordinary activities before income tax at 30% (2015: 30%):
(946,115)
(3,124,313)
Consolidated entity
2016
$
2015
$
Add:
Tax effect of
(b)
Tax losses
Non deductible entertainment
Share-based payments
Research and development deduction
(Over)/under provision of income tax in previous years
Refundable tax offset
Other
939
501,128
396,702
235,582
(182,718)
4,318
1,928
1,702,828
280,087
(424,901)
(121,838)
23
Total deferred tax assets not brought to account
9,836
(1,686,186)
DeferreD tax assets arising froM unConfirMeD tax Losses anD net tiMing DifferenCes not brought to aCCount at reporting Date
as reaLisation of the benefit is not regarDeD as probabLe. the benefits wiLL onLy be obtaineD if the ConDitions set out in note
1(b) oCCur:
Net temporary differences
total
The tax rate used in this report is the corporate tax rate of 30%. There has been no change in the corporate tax rate when compared with the previous reporting period.
4. traDe anD other reCeivabLes
Current
Trade debtors
Accrued income
Sundry debtors
total
38,852,707
40,540,810
(94,113)
(1,772,380)
38,758,594
38,768,430
Consolidated entity
2015
$
1,478,310
32,731
449,412
1,960,453
2016
$
2,759,012
1,320,996
743,762
4,823,770
The carrying amount of receivables is a reasonable approximation of fair value. All of the Group’s trade and other receivables have been reviewed for indicators of impairment. All receivables are non-interest bearing.
ageing anD iMpairMent Losses
The ageing of the trade receivables for the Group at reporting date was:
Not past due
Past due 61-90 days
Past due >90 days
total
amount impaired
amount not impaired
total
amount impaired
amount not impaired
total
2016
2015
-
-
-
-
2,759,012
2,759,012
-
-
-
-
2,759,012
2,759,012
29
-
-
-
-
969,462
969,462
195,711
195,711
313,137
313,137
1,478,310
1,478,310
notes t o the Financia L stateMents
5. inventory
Current inventory
Raw materials – at cost
Finished goods – at cost
total
6. other assets
Current prepayMents
Prepaid peptide
Other
total
7. property, pLant anD equipMent
pLant anD equipMent
At cost
Less: accumulated depreciation
suB-total
furniture anD fittings
At cost
Less: accumulated depreciation
suB-total
total property, plant and equipment
Consolidated entity
2015
$
391,156
445,979
837,135
Consolidated entity
2015
$
134,722
69,901
204,623
Consolidated entity
2015
$
364,171
(299,015)
65,156
17,182
(12,969)
4,213
69,369
2016
$
364,879
717,284
1,082,163
2016
$
138,080
84,881
222,961
2016
$
405,484
(319,167)
86,317
96,044
(17,691)
78,353
164,670
30
notes t o the Financia L stateMents
MoveMents in Carrying aMounts - property, pLant anD equipMent
movements in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the financial year.
plant and equipment
furniture and fittings
total
Consolidated entity
Carrying amount at 30 June 2014
Additions
Disposals
Depreciation written back on disposal
Depreciations expense
exchange differences
Carrying amount at 30 June 2015
Additions
Disposals
Depreciation written back on disposal
Depreciations expense
Make-good
exchange differences
Carrying amount at 30 June 2016
8. interests in subsiDiaries
name of entity
Country of inCorporation
$
87,614
12,096
(105,327)
96,257
(23,328)
(2,156)
65,156
42,496
(1,184)
944
(20,804)
-
(291)
86,317
$
$
26,847
114,461
-
12,096
(62,472)
(167,799)
43,735
(3,211)
(686)
4,213
139,992
(26,539)
(2,842)
69,369
64,157
106,653
-
-
(4,722)
14,705
-
(1,184)
944
(25,526)
14,705
(291)
78,353
164,670
ownership interest
2016
2015
parent entity
ClINuvEl PhARmACEuTICAlS lTd
Australia
-
-
ControLLeD entities
A.C.N. 108 768 896 Pty Ltd
ClINuvEl (uK) lTd
CLiNuveL, iNC.
CLiNuveL AG
ClINuvEl SINGAPORE PTE lTd
vAllAuRIx PTE lTd
Australia
united Kingdom
united States
Switzerland
Singapore
Singapore
100%
100%
100%
100%
100%
82%
100%
100%
100%
100%
100%
82%
31
9. traDe anD other payabLes
notes t o the Financia L stateMents
Current
total
unsecured trade creditors
Sundry creditors and accrued expenses
(a)
aggregate aMounts payabLe to:
Directors and Director-related entities
Consolidated entity
2015
$
260,600
1,600,036
1,860,636
2016
$
231,016
1,342,345
1,573,361
373,712
476,516
(b)
austraLian DoLLar equivaLents of aMounts payabLe in foreign CurrenCies not effeCtiveLy heDgeD anD inCLuDeD in traDe anD
sunDry CreDitors:
uS Dollars
British Pounds
Swiss Franc
Singapore Dollars
Other
total
For an analysis of the sensitivity of trade and other payables to foreign currency risk refer to Note 21.
(C)
terMs anD ConDitions:
Trade and sundry creditors are non-interest bearing and normally settled on 30 day terms.
10. provisions
Current
Employee benefits
total
non-Current
Employee benefits
Other provisions
total
-
-
-
201,860
164
202,024
108,683
204,287
-
389,607
-
702,577
Consolidated entity
2016
$
715,017
715,017
627
14,742
15,369
2015
$
574,640
574,640
3,308
-
3,308
32
notes t o the Financia L stateMents
MoveMents in Carrying aMounts - provisions
The carrying amounts and movements in other provisions account are as follows:
Carrying amount at 30 June 2015
Provisions made during the year
unwind of discount
Carrying amount at 30 June 2016
11. ContributeD equity
(a) issueD anD paiD up CapitaL
Consolidated entity
make-good
total
$
-
14,704
38
14,742
2016
$
$
-
14,704
38
14,742
Consolidated entity
2015
$
47,080,637 fully paid ordinary shares (2015: 44,554,787)
146,764,500
138,465,335
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. The Company does not have a limited amount of authorised capital and issued shares do not have a par
value.
(b) MoveMents in orDinary share CapitaL
2016
$
no.
Consolidated entity
2015
$
no.
at the Beginning of the finanCial year
44,554,787
138,465,335
42,391,435
133,567,056
issued during the year
2,525,850
8,335,305
59,810
250,000
Conditional Rights issued and transferred from Conditional Rights reserve
Less: transaction costs
-
-
-
2,103,542
4,650,579
(36,140)
-
(2,300)
BalanCe at the end of the finanCial year
47,080,637
146,764,500
44,554,787
138,465,335
(C) ConDitionaL perforManCe rights
During the year there were no Conditional Performance Rights issued or exercised.
As at 30 June 2016 the following Conditional Performance Rights existed which if exercised, would result in the issue of fully paid ordinary shares:
expiry Date
exerCise priCe
nuMber of ConDitionaL rights
upon achievement of various performance milestones
Nil$
2,556,250
33
12. reserves
notes t o the Financia L stateMents
ConDitionaL perforManCe rights reserve:
BalanCe at the Beginning of period
Share-based payment
Transfer to share capital
Lapsed, forfeited Rights
Consolidated entity
2016
$
2,313,678
1,670,425
-
-
2015
$
1,321,529
5,676,092
(4,650,579)
(33,364)
BalanCe at the end of period
3,984,103
2,313,678
The Conditional Performance Rights reserve arises on the grant of Conditional Performance Rights to eligible employees under the Conditional Performance Rights Plan. Amounts are transferred out of the reserve and into
issued capital when the Rights are exercised and to retained earnings when Rights lapse.
foreign CurrenCy transLation reserve:
BalanCe at the Beginning of period
Translating foreign subsidiary to current rate at reporting date
BalanCe at the end of period
total reserves
13. aCCuMuLateD Losses
384,660
(273,786)
110,874
116,517
268,143
384,660
4,094,977
2,698,338
Consolidated entity
non-Controlling interest
2016
$
2015
$
2016
$
Accumulated losses at the beginning of the year
(129,942,039)
(119,577,370)
(16,343)
Transfer from Performance Rights reserve of lapsed & expired Rights
-
33,364
Net loss attributable to the members of ClINuvEl PhARmACEuTICAlS lTd
(3,121,200)
(10,398,033)
aCCumulated losses at the end of the finanCial year
(133,063,239)
(129,942,039)
-
(32,518)
(48,861)
2015
$
-
-
(16,343)
(16,343)
14. Lease CoMMitMents
operating Lease CoMMitMents
Non-cancellable operating leases contracted for but not capitalised in the accounts
Payable:
total
not later than 1 year
later than 1 year but not later than 5 years
Consolidated entity
2016
$
2015
$
155,189
91,934
247,123
172,795
33,355
206,150
Operating leases comprises commitments for office premises, accommodation for relocated employees and miscellaneous equipment.
No contingent rental clauses exist in lease agreements. Lease agreements range from 3 months to 34 months as from the reporting date and contain renewal options. Fixed increases are factored into some of the agreements.
34
notes t o the Financia L stateMents
15. earnings per share (eps)
(a) Basic earnings per share (cents per share)
Consolidated entity
2016
$
(7.0)
2015
$
(24.0)
(b) The Weighted Average Number of Ordinary Shares (WANOS) used in the calculation of basic earnings per share
45,286,317
43,373,683
(c) The numerator used in the calculation of basic earnings per share ($)
(3,153,718)
(10,414,376)
As at 30 June 2016 the Company had on issue unlisted Performance Rights over unissued capital. These Rights are not considered dilutive as they do not increase the net loss per share.
Between the reporting date and the date of the completion of this financial report, 644,590 unlisted Performance Rights became exercisable and were issued into ordinary shares. Otherwise there have been no other
transactions involving ordinary shares or potential ordinary shares that would significantly change the number of ordinary shares outstanding between the reporting date and the date of the completion of this financial report.
As the group is in a loss situation all Rights are considered anti dilutive and have been excluded from the calculation of diluted earnings per share. Therefore basic and diluted earnings per share are the same. The number of
Performance Rights that could potentially dilute earnings per share in the future, as at the date of this report is 1,911,660 (2015: 2,556,250).
16. Cash fLow inforMation
(a) reConCiLiation of Cash
Cash at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the balance sheet as follows:
2016
$
Cash at bank
Cash on hand
Deposits on call
Term deposits
Security bonds
total Cash
3,936,720
555
79,147
9,750,000
78,281
13,844,703
Consolidated entity
2015
$
2,840,536
618
344,469
7,300,000
86,672
10,572,295
(b) reConCiLiation of Cash fLows froM operating aCtivities with operating profit (Loss)
operating profit (loss) after inCome tax
(3,153,718)
(10,414,376)
Non cash flows in operating (loss):
depreciation expense on property, plant & equipment
exchange rate effect on foreign currencies held
executive share option expense
Loss on sale of non-current assets
unrealised loss on foreign exchange translation
Changes in assets and liabilities:
(increase)/decrease in receivables
(increase)/decrease in inventories
(increase)/decrease in prepayments
increase/(decrease) in payables
increase/(decrease) in provisions
25,526
(19,028)
1,670,425
-
(273,786)
(2,863,317)
(245,028)
(18,338)
(297,403)
137,734
26,539
(264,521)
5,676,092
29,251
268,143
(356,822)
(837,135)
623,446
762,304
(42,733)
net Cash used in operating aCtivities
(5,036,933)
(4,529,812)
Cash at bank earns floating rates based on daily bank deposit rates. The carrying amounts of cash and cash equivalents represent fair value.
The effective interest rate on short-term deposits was 3.01% (2015: 3.48%). These deposits have an average maturity date of 165 days (2015: 115 days).
35
notes t o the Financia L stateMents
17. key ManageMent personneL DisCLosures
the DireCtors of CLinuveL pharMaCeutiCaLs LtD During the year were:
Mr. S.R. McLiesh (Non-executive Chair)
Mrs. B.M. Shanahan (Non-executive Director)
Dr. P.J. Wolgen (Managing Director)
Mr. e. ishag (Non-executive Director)
Mr. W.A. Blijdorp (Non-executive Director)
the other key ManageMent personneL of CLinuveL pharMaCeutiCaLs LtD During the year were:
dr. d. J. Wright (Acting Chief Scientific Officer)
mr. d. m. Keamy (Chief Financial Officer, Company Secretary)
Please see the Remuneration Report from page 14 for further information.
key ManageMent personneL CoMpensation
short-terM eMpLoyee benefits:
Post-employment benefits
Long-terM benefits:
Termination benefits
Share-based payments
total
No loans or other transactions existed with key management personnel.
18. auDitor's reMuneration
Amounts received or due and receivable by Grant Thornton for:
audit services and review
other services
total
Consolidated entity
2015
$
2,154,478
55,213
-
-
5,533,958
7,743,649
2016
$
1,976,218
55,100
-
-
1,410,279
3,441,597
Consolidated entity
2016
$
67,500
27,500
95,000
2015
$
66,500
-
66,500
36
notes t o the Financia L stateMents
19. related party disclosures
directorS
The Directors of CLINUVEL PHARMACEUTICALS LTD during the
financial year were:
21. financial instruments
CLINUVEL PHARMACEUTICALS LTD and consolidated entities have
exposure to the following risks from its use in financial instruments:
S.R. McLiesh, P.J. Wolgen, B.M. Shanahan, E. Ishag, W.A. Blijdorp.
whOlly-OwnED grOuP tranSaCtiOnS
loans
The loan receivable by CLINUVEL PHARMACEUTICALS LTD from
A.C.N. 108 768 896 Pty Ltd is non-interest bearing. A provision
for non-recovery has been raised in the accounts of CLINUVEL
PHARMACEUTICALS LTD to the extent that a deficiency in net assets
exists in A.C.N. 108 768 896 Pty Ltd. The loan to A.C.N. 108 768 896 Pty
Ltd as at 30 June 2016 is $4,370,640 (2015: $4,370,640).
a) Market Risk
b) Credit Risk
c) Liquidity Risk
The Board of Directors oversees and reviews the effectiveness of
the risk management systems implemented by management. The
Board has assigned responsibility to the Audit and Risk committee to
review and report back to the Board in relation to the Company’s risk
management systems.
The loan receivable by CLINUVEL PHARMACEUTICALS LTD from
CLINUVEL, INC. is non-interest bearing. Repayment of the loan will
commence upon commercialisation of the Company’s drug candidate.
A provision for non-recovery has been raised in the accounts of
CLINUVEL PHARMACEUTICALS LTD to the extent that a deficiency
in net assets exists in CLINUVEL, INC. The loan to CLINUVEL, INC. as
at 30 June 2016 is $10,640,482 (2015: $10,338,331).
a) MarKet riSK
Market risk is the risk of changes to market prices of foreign
exchange purchases, interest rates and/or equity prices resulting in a
change in value of the financial instruments held by the consolidated
entity. The objective to manage market risk is to ensure exposures
are contained within acceptable parameters, to minimise costs and
to stabilise existing assets.
Foreign Currency risk
The consolidated entity is exposed to foreign currency risk on future
commercial transactions and recognised assets and liabilities that
are denominated in a currency other than the functional currency of
each of the group’s entities, primarily US dollars (USD), Euros (EUR),
Swiss francs (CHF), Singapore dollars (SGD) and Great British pounds
(GBP). The parent entity is exposed to the risk of its cash flows being
adversely affected by movements in exchange rates that will increase
the Australian dollar value of foreign currency payables.
The consolidated entity’s policy of managing foreign currency risk
is to purchase foreign currencies equivalent to the cash outflow
projected over minimum 30 days by the placement of market orders
or forward exchange contracts to achieve a target rate of exchange,
with protection floors in the event of a depreciating Australian dollar
exchange rate, to run for the time between recognising the exposure
and the time of payment. In the event of an appreciating Australian
dollar, the amount of foreign currency held is minimised at a level
to only meet short term obligations in order to maximise gains in
an appreciating Australian currency. CLINUVEL does not engage in
speculative transactions in its management of foreign currency risk.
No forward exchange contracts had been entered into as at 30 June
2016 and as at 30 June 2015.
The loan receivable by CLINUVEL PHARMACEUTICALS LTD from
CLINUVEL AG is non-interest bearing. Repayment of the loan will
commence upon commercialisation of the Company’s drug candidate.
A provision for non-recovery has been raised in the accounts of
CLINUVEL PHARMACEUTICALS LTD to the extent that a deficiency
in net assets exists in CLINUVEL AG. The loan to CLINUVEL AG as at
30 June 2016 is $18,293,460 (2015: $19,042,355).
The loan receivable by CLINUVEL PHARMACEUTICALS LTD from
CLINUVEL SINGAPORE PTE LTD is non-interest bearing. Repayment
of the loan will commence upon commercialisation of the Company’s
drug candidate. A provision for non-recovery has been raised in the
accounts of CLINUVEL PHARMACEUTICALS LTD to the extent that
a deficiency in net assets exists in CLINUVEL SINGAPORE PTE LTD.
The loan to CLINUVEL SINGAPORE PTE LTD as at 30 June 2016 is
$215,774 (2015: $63,026).
The loan receivable by CLINUVEL PHARMACEUTICALS LTD from
CLINUVEL (UK) LTD is non-interest bearing. Repayment of the loan
will commence upon commercialisation of the Company’s drug
candidate. A provision for non-recovery has been raised in the
accounts of CLINUVEL PHARMACEUTICALS LTD to the extent that
a deficiency in net assets exists in CLINUVEL (UK) LTD. The loan to
CLINUVEL (UK) LTD as at 30 June 2016 is $3,248,740 (2015: $198,933).
Director related and key management
personnel transactions and entities
There are no transactions and relationships in existence as at 30 June
2016 between Directors and the Company and its related entities.
20. segment information
A segment is a component of the consolidated entity that earns
revenues or incurs expenses whose results are regularly reviewed by
the chief operating decision makers and for which discrete financial
information is prepared. The consolidated entity has no operating
segments within the definition of AASB 8 Operating Segments.
It has established entities in more than one geographical area.
Revenues from reimbursement revenue are 100% earned from entities
within Europe, which is consistent with the comparative period. The
non-current assets that are not held within Australia are immaterial
to the group.
100% of the revenue from sales reimbursements under special access
schemes is generated from seven end users (2015: six end users). 100%
of the revenue from commercial sales is from one end user (2015: nil).
37
notes t o the Financia L stateMents
the ConsoLiDateD entity's exposure to foreign CurrenCy risk at 30 June 2016
Cash & Cash
equivalents
trade
deBtors &
other assets
trade, other
payaBles &
provisions
Consolidated entity
2016
total
Cash & Cash
equivalents
trade
deBtors &
other assets
trade, other
payaBles &
provisions
2015
total
uSD
euR
CHF
GBP
SGD
Other
897,509
717,433
500,344
137,621
550,442
-
1,915
(467,104)
432,320
2,433,538
(42,150)
3,108,821
409,378
(129,709)
780,013
51,624
5,225
-
(61,149)
128,096
(752,847)
(197,180)
(834)
(834)
451,661
497,192
477,211
12,875
335,961
-
-
(535,129)
(83,468)
931,000
219,519
3,454
2,730
-
(35,108)
1,393,084
(130,332)
566,398
(112,669)
(96,340)
(738,815)
(400,124)
-
-
Sensitivity analysis of Foreign Currency risk
During the financial year the Company had a principal foreign
currency transaction risk exposure to the Singapore dollar. Assuming
all other variables remain constant, an appreciation in the Australian
dollar is advantageous to the consolidated entity as foreign currencies
are required to be purchased from Australian dollars to pay for a key
component of the clinical development program.
For the consolidated entity, a 5% appreciation of the Australian dollar
against the Singapore currency would have increased profit and loss
and equity by $81,241 for the year ended 30 June 2016 (2015: $71,646),
on the basis that all other variables remain constant. 5% is considered
representative of the market volatility in the Australian/Singapore
dollar rate for the period.
For the consolidated entity, a depreciation of the Australian dollar
against the Singapore currency would have an equal but opposite
effect to the above, on the basis that all other variables remain
constant.
The Group’s exposure to other foreign currency movements is not
considered as material.
B) credit riSK
Credit risk arises from the potential failure of counterparties to meet
their contractual obligations, resulting in a loss to the consolidated
entity.
Credit risk in relation to the consolidated entity is the cash and
cash equivalents deposited with banks, trade and other receivables.
Exposure to credit risk in trade debtors is limited to eight government
funded counterparties across Italian, Swiss and Dutch medical
institutions.
The maximum credit exposure is the carrying value of the cash and
cash equivalents deposited with banks, trade and other debtors and
foreign, wholly-owned subsidiaries.
C) liquiDity riSk
Liquidity risk is the risk the consolidated entity will not be able to
meets its financial obligations when they fall due. It is the policy of
the consolidated entity to ensure there is sufficient liquidity to meet
is liabilities when due without incurring unnecessary loss or damage.
The consolidated entity holds cash and cash equivalents in liquid
markets. It does not hold financing facilities, overdrafts or borrowings.
interest rate risk
The consolidated entity holds floating interest bearing assets
therefore exposure to interest rate risk exists. It does not hold interest
bearing liabilities.
Fair value Estimation
The fair value of financial assets and financial liabilities must be
estimated for recognition and measurement for disclosure purposes.
The consolidated entity currently finances its operations through
reserves of cash and liquid resources and does not have a borrowing
requirement. In order to be protected from, and to take advantage of,
interest rate movements it is the consolidated entity’s policy to place
cash into deposits and other financial assets at both fixed and variable
(floating) rates. The Board monitors the movements in interest rates
in combination with current cash requirements to ensure the mix
and level of fixed and floating returns is in the best interests of the
consolidated entity.
Sensitivity analysis of interest rate risk
For the consolidated entity, at 30 June 2016, if interest rates had
changed by +/- 50 basis points from the year-end rates (a movement
considered reflective of the level of interest rate movements
throughout the course of the financial year), with effect from the
beginning of the year, profit and equity would be $51,523 higher/
lower (2015: $59,612 higher/ lower). This analysis assumes all other
variables are held constant.
Price risk
CLINUVEL PHARMACEUTICALS LTD and its consolidated entities
was formerly exposed to price risk in its investments in income
securities classified in the Statement of Financial Position as
held for trading. The consolidated entity no longer holds income
securities. Neither the consolidated entity nor the parent is exposed
to commodity price risk.
38
The fair value of financial instruments traded in active markets is
based on quoted market prices at reporting date. The quoted market
price for the consolidated entity is the bid price. For longer term debt
instruments held by the consolidated entity, dealer quotes are used to
determine fair value.
The carrying value of trade payables is assumed to approximate their
fair values due to their short-term nature.
The consolidated entity manages its liquidity needs by carefully
identifying expected operational expenses by month and ensuring
sufficient cash is on hand, across appropriate currencies, in the day-
to-day bank accounts for a minimum 30 day period. When further
liquidity is required the consolidated entity draws down on its cash
under management to service future liquidity needs.
is
limited
Capital risk Management
The consolidated entity’s equity
to shareholder
contributions, supported by the cash inflows received from the full
cost reimbursement programs in Italy and Switzerland for providing
SCENESSE® to EPP patients. Its capital management objectives is
limited to ensuring the equity available to the Company will allow it
to continue as a going concern and to realise adequate shareholder
return by progressing in its developmental research of SCENESSE®
and achieving eventual commercialisation whereby revenues will
exceed expenditures.
ContraCtuaL Maturities of finanCiaL assets as at 30 June 2016
notes t o the Financia L stateMents
Cash anD Cash equivaLents
Carrying amount
6 months or less
Greater than 6 months
total
other finanCiaL assets (inCLuDes traDe anD other reCeivabLes)
Carrying amount
6 months or less
Greater than 6 months
total
ContraCtuaL Maturities of finanCiaL LiabiLities as at 30 June 2016
traDe anD other payabLes
Carrying amount
6 months or less
Greater than 6 months
total
22. eMpLoyee benefits
the aggregate eMpLoyee benefit LiabiLity is CoMpriseD of :
Provision for annual leave
Provision for long service leave
Accrued FBT, payroll, superannuation, pension funds, employee insurances
Consolidated entity
2015
$
10,572,295
10,572,295
-
2016
$
13,844,703
13,844,703
-
13,844,703
10,572,295
4,823,770
4,823,770
-
4,823,770
2016
$
1,573,361
1,551,891
21,470
1,573,361
2016
$
413,281
302,362
500,723
1,960,453
1,803,884
156,569
1,960,453
Consolidated entity
2015
$
1,860,636
1,798,917
61,719
1,860,636
Consolidated entity
2015
$
316,271
261,676
660,624
total
1,216,366
1,238,571
39
notes t o the Financia L stateMents
Share-BaSed PayMent S
The consolidated entity has two Conditional Performance Rights
schemes which are ownership based for key management personnel
and select consultants (including Directors) of the Company.
The number of Rights granted is subject to approval by the
Remuneration Committee. Performance Rights currently have
specific terms and conditions, being the achievement of performance
milestones set by the Directors of the consolidated entity.
a) Conditional Performance rights Plan (2009)
The Conditional Performance Rights Plan (2009) is available to eligible
employees of the Company. Any issue of Performance Rights to
executive Directors requires shareholder approval in accordance with
ASX Listing Rules. All Performance Rights convert to one ordinary
share of the consolidated entity, are issued for nil consideration, have
no voting rights, are non-transferable and are not listed on the ASX.
They can be converted to ordinary shares at any time once the vesting
conditions attached to the Performance Rights have been achieved,
whereby they will be held by a Scheme Trustee on behalf of the
eligible employee for up to 7 years. The eligible employee can request
for shares to be transferred from the Scheme Trust after 7 years or
at an earlier date if the eligible employee is no longer employed by
the Company or all transfer restrictions are satisfied or waived by the
Board in its discretion.
b) Performance rights Plan (2014)
The Performance Rights Plan (2014) is available to eligible persons of
the Company. Any issue of Performance Rights to executive Directors
requires shareholder approval in accordance with ASX Listing
Rules. All Performance Rights convert to one ordinary share of the
consolidated entity, are issued for nil consideration, have no voting
rights, are not listed on the ASX and are non-tradeable (other than
with prior written Board consent). They can be converted to ordinary
shares at any time once the vesting conditions attached to the
Performance Rights have been achieved, whereby, at the discretion
of the Board, they will be held by a Scheme Trustee on behalf of the
eligible person. The eligible person cannot trade in the shares held
by the Scheme Trust without prior written Board consent until the
earlier of 7 years from grant date of Performance Rights, when the
eligible person ceases employment or when all transfer restrictions
are satisfied or waived by the Board in its discretion. Performance
Rights under this Plan lapses after 7 years from grant date.
the foLLowing share-baseD payMent arrangeMents were in existenCe at 30 June 2016
performanCe
rights series
numBer
grant date
expiry date
exerCise
priCe
fair value at
grant date
issued 07/01/2010
10,000
07/01/2010
issued 25/11/2010
299,999
25/11/2010
issued 16/09/2011
381,386
16/09/2011
issued 16/11/2011
90,000
16/11/2011
issued 14/01/2013
75,000
14/01/2013
issued 04/12/2014
1,246,365
28/11/2014
issued 17/03/2015
453,500
17/03/2015
The earlier of achievement of specific performance milestones
and cessation of employment/directorship
The earlier of achievement of specific performance milestones
and cessation of employment/directorship
The earlier of achievement of specific performance milestones
and cessation of employment/directorship
The earlier of achievement of specific performance milestones
and cessation of employment/directorship
The earlier of achievement of specific performance milestones
and cessation of employment/directorship
The earlier of achievement of specific performance milestones
and cessation of employment/directorship
The earlier of achievement of specific performance milestones
and cessation of employment/directorship
$ Nil
$ Nil
$ Nil
$ Nil
$ Nil
$ Nil
$ Nil
$1.70
$1.04
Between $0.55 and
$0.72
$0.67
$1.19
$2.60
$2.16
40
hoLDings of aLL issueD ConDitionaL perforManCe rights – 2016
notes t o the Financia L stateMents
performanCe
rights series
issued 07/01/2010
issued 25/11/2010
issued 16/09/2011
issued 16/11/2011
issued 14/01/2013
BalanCe at
start of
year
10,000
299,999
381,386
90,000
75,000
issued 04/12/2014
1,246,365
issued 17/03/2015
453,500
total
2,556,250
granted as
Compensation
exerCised
expired &
lapsed
BalanCe at end
of year
vested and
exerCisaBle
unvested
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,000
299,999
381,386
90,000
75,000
1,246,365
453,500
2,556,250
10,000
-
-
-
-
553,890
90,700
-
299,999
381,386
90,000
75,000
692,475
362,800
654,590
1,901,660
Weighted average
exercise price
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
Performance Rights were priced using either a binomial or trinomial pricing model. There is no limitation on the life of the right. Expected volatility of each right is based on the historical share price for the approximate length of
time for the expected life of the Rights. it is assumed that the consolidated entity will not pay any dividends during the life of the option, and the risk free rate used in the pricing model is assumed to be the yield on ranging from
1 year to 10 year Government bonds. The exercise conditions are non-marketable and a discount for lack of marketability was applied to the pricing model.
hoLDings of aLL issueD ConDitionaL perforManCe rights – 2015
performanCe
rights series
BalanCe at
start of year
granted as
Compensation
issued 16/10/2009
issued 07/01/2010
issued 25/11/2010
issued 16/09/2011
issued 16/11/2011
issued 14/01/2013
issued 04/12/2014
issued 17/03/2015
104,500
10,000
449,166
447,816
230,000
225,000
-
-
exerCised
(104,500)
-
(149,167)
(66,430)
(90,000)
(150,000)
-
-
-
-
-
-
2,789,810
(1,543,445)
453,500
-
expired &
lapsed
BalanCe at
end of year
vested and
exerCisaBle
unvested
-
-
-
-
(50,000)
-
-
-
-
10,000
299,999
381,386
90,000
75,000
1,246,365
453,500
-
10,000
-
-
-
-
-
-
-
-
299,999
381,386
90,000
75,000
1,246,365
453,500
total
1,466,482
3,243,310
(2,103,542)
(50,000)
2,556,250
10,000
2,546,250
Weighted average
exercise price
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
Performance Rights were priced using either a binomial or trinomial pricing model. There is no limitation on the life of the right. Expected volatility of each right is based on the historical share price for the approximate length
of time for the expected life of the Rights. it is assumed that the consolidated entity will not pay any dividends during the life of the option, and the risk free rate used in the pricing model is assumed to be the yield on 10 year
Government bonds. The exercise conditions are non-marketable and a discount for lack of marketability was applied to the pricing model.
41
23. CLinuveL pharMaCeutiCaLs LtD parent CoMpany inforMation
notes t o the Financia L stateMents
Clinuvel pharmaCeutiCals ltd
2016
$
13,674,405
6,355,032
20,029,437
1,244,389
627
1,245,016
146,764,500
3,984,119
(131,964,198)
18,784,421
(3,036,801)
-
(3,036,801)
2015
$
10,198,964
3,401,189
13,600,153
1,745,213
3,308
1,748,521
138,465,335
2,313,694
(128,927,397)
11,851,632
(9,552,573)
-
(9,552,573)
assets
Current assets
Non-current assets
total assets
LiabiLities
Current liabilities
Non-current liabilities
total liaBilities
equity
Issued equity
Share–based payments reserve
Accumulated losses
total equity
finanCiaL perforManCe
Net profit (loss) for the year
Other comprehensive income
total Comprehensive inCome
24. suBsequent eVents
There have not been any matters financial in nature, other than
reference to the financial statements that has arisen since the end
of the financial year that has affected or could significantly affect the
operations of the consolidated entity.
25. additional company information
CLINUVEL PHARMACEUTICALS LTD is a listed public company
incorporated and operating in Australia.
The Registered office is:
Level 5, 160 Queen St
Melbourne VIC 3000
Ph: (03) 9660 4900
42
directors’ declaration
In the opinion of the Directors:
1. the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including:
a) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2016 and of their performance for the year
ended on that date; and
b) complying with Accounting Standards; and
c) complying with International financial Reporting Standards as disclosed in Note 1
2. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
3. the remuneration disclosures set out in the Annual Report comply with Australian Accounting Standards 124 Related Party Disclosures
and the Corporations Regulations 2001.
This declaration is made in accordance with a resolution of the Board of Directors. The Directors have been given the declarations by the Chief
Executive Officer and Chief Financial Officer required by Section 295A of the Corporations Act 2001.
Dr. Philippe Wolgen, MBA MD
Director
Dated this 28th day of August, 2016
43
auDitor's report
The Rialto, Level 30
525 Collins St
Melbourne Victoria 3000
Correspondence to:
GPO Box 4736
Melbourne Victoria 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of Clinuvel Pharmaceuticals Limited
Report on the financial report
We have audited the accompanying financial report of Clinuvel Pharmaceuticals Limited
(the “Company”), which comprises the consolidated statement of financial position as at 30
June 2016, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for
the year then ended, notes comprising a summary of significant accounting policies and
other explanatory information and the directors’ declaration of the consolidated entity
comprising the Company and the entities it controlled at the year’s end or from time to time
during the financial year.
Directors’ responsibility for the financial report
The Directors of the Company are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001. The Directors’ responsibility also includes such internal control as
the Directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or
error. The Directors also state, in the notes to the financial report, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, the financial
statements comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. Those standards
require us to comply with relevant ethical requirements relating to audit engagements and
plan and perform the audit to obtain reasonable assurance whether the financial report is
free from material misstatement.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
scheme applies.
44
auDitor's report
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the
Company’s preparation of the financial report that gives a true and fair view in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Directors, as well as evaluating the
overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Auditor’s opinion
In our opinion:
a
the financial report of Clinuvel Pharmaceuticals Limited is in accordance with the
Corporations Act 2001, including:
i
ii
giving a true and fair view of the consolidated entity’s financial position as at 30
June 2016 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations
Regulations 2001; and
b
the financial report also complies with International Financial Reporting Standards as
disclosed in the notes to the financial statements.
Report on the remuneration report
We have audited the remuneration report included in pages 10 to 17 of the directors’ report
for the year ended 30 June 2016. The Directors of the Company are responsible for the
preparation and presentation of the remuneration report in accordance with section 300A of
the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration
report, based on our audit conducted in accordance with Australian Auditing Standards.
45
auDitor's report
Auditor’s opinion on the remuneration report
In our opinion, the remuneration report of Clinuvel Pharmaceuticals Limited for the year
ended 30 June 2016, complies with section 300A of the Corporations Act 2001.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
B.A. Mackenzie
Partner - Audit & Assurance
Melbourne, 25 August 2016
46
auDitor's inDepenDance DecLaration
The Rialto, Level 30
525 Collins St
Melbourne Victoria 3000
Correspondence to:
GPO Box 4736
Melbourne Victoria 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Clinuvel Pharmaceuticals Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
auditor for the audit of Clinuvel Pharmaceuticals Limited for the year ended 30 June 2016, I
declare that, to the best of my knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
B. A. Mackenzie
Partner - Audit & Assurance
Melbourne, 25 August 2016
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
scheme applies.
47
shareholder information
as at 30 septemBer 2016
Additional information as at 30 September 2016 required by the ASX and not shown elsewhere in this report is as follows:
1. shareholding
a) Distribution of sharehoLDer nuMbers
Category (size of holding)
total holders
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-999,999,999
total
1,811
698
137
200
27
2,873
b) sharehoLDings heLD in Less than MarketabLe parCeLs
total
minimum parCel size
Minimum $ 500.00 parcel at $ 6.06 per unit
83
units
698,569
1,653,931
1,021,479
5,339,440
39,011,808
47,725,227
holders
256
ordinary fully paid shares
% of issued Capital
1.46
3.47
2.14
11.19
81.74
100.00
units
5,755
C) substantiaL sharehoLDings (aCCorDing to Most reCent substantiaL hoLDer DisCLosures reCeiveD up
to 3 oCtober 2016)
name
Lagoda investment Management, LLC
FiL Limited
A.C.N. 108 768 896 Pty Ltd*
ender 1 LLC
no. ordinary shares & ameriCan depository reCeipts
4,720,236
4,531,171
3,721,898
2,340,824
* Inclusive of the relevant interest of shareholder dr Philippe Jacques Wolgen for 2,474,836 quoted ordinary shares, as disclosed in a further substantial holder disclosure notice dated 10 August 2016.
D) voting rights
The voting rights attaching to each class of equity securities are set out below:
(i) orDinary shares
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
(ii) perforManCe rights
Performance Rights have no voting rights.
48
sharehoLDer in ForMation
e) Largest sharehoLDers
position name
numBer of ordinary
fully paid shares held
% held of issued
ordinary Capital
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
J P mORGAN NOmINEES AuSTRAlIA lImITEd
NATIONAl NOmINEES lImITEd
hSBC CuSTOdY NOmINEES (AuSTRAlIA) lImITEd
ACN 108 768 896 PTY lTd
eNDeR 1 LLC
CITICORP NOmINEES PTY lImITEd
DR MARK eDWiN BADCOCK
hSBC CuSTOdY NOmINEES (AuSTRAlIA) lImITEd - A/C 2
NATIONAl NOmINEES lImITEd
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