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CONTENTS
OUR VALUES
CLINUVEL IN THE MEDIA
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
2
3
4
5
7
13
25
26
27
28
29
51
52
55
56
59
60
1
Our Values
The CLINUVEL GROUP
pledges to adhere to the following principal values,
which re�lect how we operate and expand our business.
People &
Environment
We work for physicians, consumers and
our stakeholders. We are selective and
invest time in the talent we employ. We
aspire to create an environment where
professionals are able to develop and
grow. We aim to present skilled talent with
early opportunities, responsibilities and
accountability as part of training the next
generation. We strive to build international
teams and operate on the basis of gender
and ethnic equality. We wish to set an
example of excellence in our industry.
Technology
We create, develop, and advance products
which are driven by medical need, consumer
demand or lack of available solutions.
Our technologies aim to add value beyond
existing offerings.
We acknowledge that new technologies
require regulatory environments to
be primed and markets to be prepared
for achieving widespread acceptance
and adoption.
Approach
We aim to be innovative in our approach
and �ind solutions for unique, complex
and previously neglected healthcare
problems. We are determined to remain
leaders in our �ield of expertise, and be
creative and diligent in all our endeavours.
We admit errors, recognise our shortfalls,
evaluate, analyse and learn to implement
new �indings. In improving ourselves we
strive to enhance the lives and quality
of life of those we serve. We are vigilant
not to become complacent and recognise
that success can only come from the
identi�ication and mastering of obstacles.
Our staff are optimistic and focused.
Respect &
Appreciation
We are conscious of the privilege to be
productive during our professional lives. We
appreciate the signi�icance of being able to
function in good health and we value this
gift every day. We aim to be sincere in our
approach and represent data and facts.
We act respectfully and do not harm others.
We value our colleagues and co-workers
and cherish diversity, equality, respect
and harmony. We are passionate towards
our objectives and share empathy and
compassion for all those we work to serve.
Knowledge
Building &
Sharing
We are experts in optical physics, the
interaction of light and human biology,
and pro�icient in our understanding of rare
disorders and skin care. We advance our
ideas and concepts and translate them
into effective and practical solutions.
We aim to grow our knowhow
continuously and establish a learned
community. Collaboratively we seek to
excel in a multifaceted �ield to arrive at
scienti�ic breakthroughs.
2
Magic Page
3
CHAIR’S LETTER
Dear Shareholders,
rationality from authorities in the long run. Unfortunately, these processes to
come to this realisation need time.
Over again the financial year 2017/18 was one
of significance in the continuing development
of CLINUVEL as an emerging pharmaceutical
company, one of growing
recognition and
increased awareness among the pharma industry.
Consistent with the work on the ‘CLINUVEL 2020’
development plan, which was discussed at length
at the 2017 Annual General Meeting by the Chief
Executive Officer Dr Wolgen, CLINUVEL is grinding
away step by step to expand the Group organically,
exploring all opportunities that are consistent with our forward strategies
and with our core technological knowledge in relevant areas, such as rare and
neglected diseases.
In chairing a public Board of Directors, I echo the capacious views we all share
on the CLINUVEL business and what it will need to look like by 2021 and
beyond. Part of the adroitness expected is our ability to oversee and instruct
a management team to execute against these set objectives on the premise
that environmental factors do not change too much to hamper our progress.
I fully recognise this directive process from my days as General Manager at
Australia’s largest pharmaceutical company and see very little difference
between the approach we adopt at CLINUVEL. In my view, we outline the
contours of the Company how we wish to see it in years to come and work
progressively and diligently to meet these objectives at minimal cost. We must
also bear in mind that these ambitions are set against a changing political and
economic background, affecting public markets. During this year’s AGM the
silhouette of the comprehensive CLINUVEL will be shown for our management
to explain the milestones and rationale for the chosen direction.
Befitting our desire to control our assets, during the 2017/18 financial year
CLINUVEL took 100% ownership of the Singaporean entity VALLAURIX. This
has allowed us to put in place a simplified economic structure which will
be more effective in setting and achieving new formulatory development of
topical and ancillary preparations. We are all excited by the work undertaken
in Singapore and patiently await our complementary products, which if
successful will need to enhance CLINUVEL’s value proposition. The activities
of the CLINUVEL Group are now fully consolidated and reported upwards for
integration in all other businesses going forward.
CLINUVEL continues to expand its European market activities with consistent
sales being recorded in main European countries and Switzerland. Other
countries have also facilitated access to the product, and we expect this to
expand with a number of health economic discussions ongoing. In entering the
labyrinth of technology assessments made by each individual nation within
the European Economic Area, CLINUVEL’s strategy has played out well thus
far. I predict that our teams will approach the remaining discussions on pricing
and reimbursement with the same vigour and passion in aiming to provide
treatment for a group of patients who had never previously received medical
attention. Being associated with this medico-social course is one of the best
experiences I have had as an active member of the business community. The
gratitude we hear from patients receiving the product is beyond our wildest
wishes and initial objectives.
I deeply regret the stance the British Government, represented by NICE
(National Institute for Health and Care Excellence), has taken thus far denying
equitable access to SCENESSE® (afamelanotide 16mg) for English patients. The
decision has now been successfully appealed and the approach taken to date
may become more and more difficult to defend for their decision makers. I am
still hopeful that the few people at the helm of NICE will adjust their position
and reach out to erythropoietic protoporphyria (EPP) patients and CLINUVEL,
given our position has been deemed more than reasonable and open for
discussion in other countries and with larger insurance groups. However,
I am totally convinced in time that SCENESSE® will be made available to
British patients, as logic and reasoning always prevail and overpower lack of
The impact of SCENESSE® in the treatment of EPP patients has been endorsed
by the eye-opening percentage of those who have chosen to continue drug
treatment, and the consistent increase of the new patients seeking the therapy.
Formal analysis of the post-authorisation safety study (PASS) was released
at the vastly attended European EPP meeting held in March 2018. In Vienna,
specialised porphyria physicians and medical staff from twelve European
countries presented data and confirmed that the safety profile of SCENESSE®
had remained unchanged with a minimal level of side effects.
Classic thinking on development and marketing of pharmaceutical and
biopharmaceutical products focusses on the three global areas of Europe,
North America and Rest of World (RoW). We are advancing in European
development and marketing, whereby we have submitted our FDA filing in
June 2018 while further data around product characteristics were requested by
the FDA. The other markets will need addressing as soon as the FDA pathway
comes to a close.
Recently, we have seen a new wave of shareholder interest for the Company
attracting a much wider audience. Naturally, the share base is changing
as CLINUVEL grows, with more funds and institutions taking notice of our
progress. The material interest has extended beyond the formal period of this
report. Several factors contribute to the Company’s appeal, and a few are worth
highlighting. First the consistency, relatively low profile and persistence to
keep our promise to patients is being hailed in our sector as an approach with
which very few have actually succeeded, and which needs to be credited to our
management team and personnel. Second, the financials speak volumes as
CLINUVEL has executed against internal goals in an uninterrupted strategy.
Third, the cost base has remained unusually low, which has stood out to
professional investors. Orderly control of financial management is a rare virtue
for pharmaceuticals. Fourth, the prospect of continuing this monotonous but
effective strategy offers more than hope for those in the know. Finally, we have
delivered a second year of profitable trading and declared the Company’s first
dividend. It should, however, be emphasised that while we are active in the
narrow orphan designation of EPP there will remain a seasonality to quarterly
cash flows.
Against all the euphoria, my daily work continues, and a few pressing issues
have remained on my agenda for 2018 as stated in my Letter to Shareholders
in January. This Board and major investors have expressed the wish to see
continuity at this stage of the Company and we want to see the employment
agreements of CEO and CFO renewed for another term to ensure consistency
and security for all who have invested in this leadership team composition.
Together with the Chair of the Remuneration Committee I will need to
convince both key personnel to remain and devote the same energy, passion
and knowledge to the Company to achieve its ambitious and realistic near-
term goals.
In conjunction with fellow Directors and management, I have decided to hand
over my responsibilities as Chairman of this Board upon FDA’s granting of
marketing authorisation for the use of SCENESSE® in the US. I firmly regard
this final objective and indisputable highlight as the ultimate achievement of
this current team and would not see a better time to step down from the umpire
chair than the very moment of CLINUVEL’s game, set and match.
In summary, the 2017-2018 financial year has been one of strong performance
and immense satisfaction for both the Company and its shareholders.
Stan McLiesh
Chairman
4
MANAGING DIRECTOR’S LETTER
Dear Shareholders,
The past year has been marked by a number
of corporate, regulatory and financial events
dominating CLINUVEL’s news flow. Since the
last AGM, the Company has seen a number of
new institutional shareholders and a reduction of
existing substantial shareholders. In addition, in
July we welcomed the generous support lent by
Non-Executive Director Mr Blijdorp who went on
to purchase CUV shares worth more than A$13
million in one transaction. Clearly, the continued
belief in the work of our teams loads – as I have stated before – extra weight
on our shoulders. With a market appreciation from A$6.69 early October 2017
to A$22.07 exactly 12 months later, we recorded a 229.9% increase in share
price, and CUV broke through the imaginary A$1 billion threshold. In the
2007 Annual Report I had expressed the ambition for the management team
to achieve this numerical milestone, and although it has happened later than
desired, the barrier illustrates to me that a focussed team in life sciences
may achieve great heights. Against all the euphoria, we also need to heed the
“Trump effect” on US markets and strong performance by the ASX300 which
recently saw the inclusion of CUV. The current rally of equity markets is great
for our shareholders. Yet in my career in financial services I have witnessed
quite a number of corrections and bear runs; a global market correction and
its possible impact on CUV’s share price is, to our teams, not a barometer of
the Company’s health by any means. There is no time to sit back and rejoice
CUV’s current value, the same approach is required to progress the Company
and grow.
It has always been the Board’s intention to express gratitude to the loyal
followers and members of the Company once we had achieved our own
financial targets. Rather than ploughing all funds back into the Company,
I believe we owed it to some of the shareholders – specifically those who
traded into CLINUVEL as early as 2005 – to hand back some currency for their
patience. In August we showed our business confidence and declared our first
unfranked dividend of A$0.02. This decision was received with a great many
reactions from long-term holders who truly appreciated the prospect of first
cash returns. In addition, as our Chairman Mr McLiesh often states, achieving
a sustainable higher share price offers for some the time to trade out of CUV
securities, while others who believe in our further growth have the opportunity
to enter the register and remain.
In terms of significant events, the disclosure of our corporate values in February
provided a framework both internally and externally, since it was known that
a variety of stakeholders take note of our public announcements, direction,
and objectives. Aligning our corporate values, expressing our inexhaustible
objectives, and communicating these consistently over the years are tools to
communicate to decision makers precisely what CLINUVEL would do, but also
what it would not engage in. The publicly revealed values, mission and vision
have assisted us the past year in a number of countries supplying SCENESSE®
(afamelanotide 16mg) to healthcare providers and patients, who appreciate our
course and clinical objectives.
As the European supply of SCENESSE® unfolded during the second full
year, we were most anxious to learn whether the same patients would seek
treatment as compared to 2017 or whether new patients would attend specialist
hospitals while the existing ones would discontinue. Midway through the
year it became apparent from monitoring the hospitals that the same patient
codes emerged from the European EPP Disease Registry and that the rate of
continuation exceeded 95%. While exact percentages for patients remaining
on melanocortin treatment are lacking in comparison to other hormonal
therapies in the medical literature, we can faintly infer from and compare
the example of estrogen studies, where 43% of first-time users continue
the treatment. The unusually high percentage of EPP patients requesting
treatment for a second year is, in the case of SCENESSE®, a true measure of
effectiveness. The clinical burden of attending the clinics, forgone income by
requesting sick leave on the days of treatments, and vast distances travelled to
the expert centres illustrate not just the motivation of EPP patients to seek new
therapy but certainly their willingness to remain on treatment. These clinical
data are revealing trends and behavioural patterns that assist us in planning
for the following year. The analyses are part of the mandatory annual reports
to the European Medicines Agency (EMA), and also form the basis for our
projected post-marketing program for the US Food and Drug Administration
(FDA). As said in our periodic News Communiqués, the European distribution
model serves as a template for the US post-marketing infrastructure we are
now establishing for 2019-2020.
As we wade through the national pricing and reimbursement systems the
confidence in the effectiveness of the treatment grows. This is supported by
patient advocacy groups representing EPP patients who remain on treatment,
but also stems from the percentage of prescriptions filled by the number of
European porphyrinologists. I believe that real-life clinical effectiveness is a
stand-alone phenomenon which should be expressed by healthcare workers
and patients without the intervention or active promotion of a pharmaceutical
company, hence our decision not to actively market or promote SCENESSE®.
CLINUVEL’s sole task is to raise awareness for the novel therapy being
available. By contrast the classical model of calls and visits to physicians is no
longer a modern and compatible approach to specialist clinical care.
The high rate of continuation of patients and percentage of new ones seeking
hormonal photoprotection was reflected in our quarterly figures throughout the
year. We started the first quarter of 2017/18 with an increase of A$2,470,000
in operating cash flow, followed by increases of A$1,553,000, A$230,000 and
A$7,440,000 in the subsequent three quarters. In closing our financial year 2018
with a profit of A$13,224,185 we are able to continue the formulation development
for paediatric EPP patients. Ongoing development to serve the juvenile EPP
community is paradoxically a requirement of the EMA and expected by the
FDA. Both regulators have expressed their wish to see a paediatric treatment
in the near future, irrespective of how the Company finds the funding for these
research and development projects. In many ways the adult EPP patients pave
the way and financially facilitate the treatment for children.
To my chagrin, pharmaceutical pricing and reimbursement received once
again bad headlines in the US and Europe as a number of companies increased
the prices of medicinal products without providing rationale or justification.
With the bad sentiment already tainting our sector, companies drawing the
attention to a politically hot topic of drug prices have not done the industry
and CLINUVEL any service. However, in the midst of these global headlines,
we managed to gain new territories for SCENESSE® while we strictly adhered
to the ruling of the GKV-SV (German National Association of Statutory
Health Insurance Funds) Arbitration Court made in April 2017. As to the
formal process to make the treatment available to British patients, in July we
successfully appealed the decision of the National Institute for Health and
Care Excellence (NICE), which has an advisory function to the National Health
Service in England. During the appeal it became apparent to the Appeal Panel
that the Highly Specialised Technology Committee of NICE had not followed
the appropriate processes, and that their assessment of SCENESSE® and its
impact on patients had been flawed at best. We are currently preparing the
next legal steps, since the NICE Appeal Panel has upheld six grounds. Despite
the time, energy and resources that this case requires of our team, we remain
steadfast in our pursuit of access to treatment for British EPP patients in the
same manner we have fought in other countries.
The research at VALLAURIX in Singapore is progressing steadily, and at the
time of print some news would likely have come out on the expansion of the
VALLAURIX laboratory. Our aim has long been to integrate the analytical
methods in-house, since innovation of novel molecules and follow-on products
requires concomitant development of assays and validated analytical
methods. Hence, we set out to integrate all these activities under one roof to
better control the future of our pharmaceutical products. Along these lines
we took total ownership of VALLAURIX by purchasing 18% of the stake of our
5
Singaporean partners, making the financial management and reporting of the
Group, including VALLAURIX, more efficient.
speaks volumes, and every morning I keep in mind that it is a true privilege to
lead young and more matured staff in their careers.
Managing DirectOr's letter
This year we have seen our staff presenting more at international conferences,
giving more interviews and seeking a broader audience for the CLINUVEL
story. I predict the activities surrounding media and communication will
increase in 2019 as the interest in the Company grows. Our communications
and investor relations team is expanding for the wide variety of stakeholders
to obtain first-hand communication from the Company.
Most recently, we learned that Stan McLiesh decided to stay on as Chairman
until the final FDA outcome. An American marketing authorisation for
SCENESSE® would be a seemly moment to hand over his duties. Mr McLiesh’s
wish to see the drug reach past the much-awaited FDA finish line may
provide our team an additional stimulus to fulfil an ambition many scientists,
commercial managers and other companies have held for 30 years. Stan’s
career would be crowned with an event which is quite rare globally, and more
so in Australia.
I share the view that CLINUVEL has had a good year, but I am also conscious
that in this industry one is only as good as the last set of results, and one
aberrant event can make the owners lose sight of the progress booked
previously. Therefore, we all remain focussed on working towards a favourable
outcome from the FDA which needs to benefit the US EPP patients, who have
pleaded for release of the product in every imaginable way for the last 11 years.
There is still a long road to travel in this Company, and our teams will keep
working diligently as they have done the past decades with a view to growing
CLINUVEL.
With reasonable pride I look at my staff who keep grinding away at each
individual task, sometimes against all odds, and combating decisions taken
by authorities which have proven less familiar with the technology. At the
same time, I look over my shoulder to a functional and harmonious Board of
Directors who question complex decisions and reach consensus on strategies,
but most of all who have been supportive through all seasons. Thank you all for
persevering and your support.
I look forward to meeting the new shareholders at the AGM on 21 November in
Melbourne.
Philippe Wolgen
Managing Director, CLINUVEL Group
We all share the excitement about the potential clinical – and therefore
commercial – value we could create from these follow-on prescriptive and
complementary OTC products coming out of Singapore. We carefully position
these chronologically so as to make sure that each pharmaceutical product
addresses an unmet clinical need or a genuine demand for non-prescriptive
products. Although regulatory requirements are less stringent for over the
counter (OTC) products, we are working towards market launch once our teams
have fulfilled all legal, regulatory and commercial requirements. These OTC
product lines will need to provide more prominence to the CLINUVEL brand,
and position us further as specialists in photomedicine while we enter defined
channels to distribute our non-prescriptive products.
As to the potential of SCENESSE® beyond EPP, much has been speculated,
but the avenues to develop the drug for other patient populations in need are
relatively clear and dictated by many parameters, both clinical and commercial.
We are awaiting the FDA’s progress on the EPP dossier before we continue the
vitiligo development in North America, since the same Division and scientific
reviewers will turn their attention to the use of SCENESSE® in vitiligo. Like
our Chair, I am a stickler for focus, and our teams ought to finish one significant
task first before delving into the next large one. Gaining approval for the first
injectable repigmentation therapy agent in patients of darker skin complexions
who have lost their pigmentary identity will be an immense undertaking, but
will make CLINUVEL the first Company to focus on patients of colour, a socially
rewarding endeavour.
Further, we announced our agreement with two centres to evaluate
SCENESSE® in variegate porphyria, one further variant of the porphyrias.
Equally, these patients are handicapped in their life since the fragility of their
skin makes normal functioning impossible.
A third indication will be announced after the print of this Annual Report,
pending ethics, regulatory and clinical agreements with the study centre.
This new indication has been prepared for more than five years and we are in
the final stages of starting to evaluate SCENESSE® in patients with a genetic
affliction.
Switching the topic from products and indications to personnel is easy. I am
currently content with the quality of personnel we employ, a good mix of
super specialists and some generalists. Most of all I am delighted with the
growth of the management team, nine managers of whom seven have been
with the Company longer than nine years. Their growth – both professional
and personal – has been one of the highlights of my CLINUVEL tenure, and
seeing staff evolve over time is truly a reflection of CLINUVEL’s progress and
position. I see much potential in our staff and – no doubt – they will execute the
new set of corporate goals. This year two managers have started a structured
program, the CLINUVEL Continuous Development Program (CCDP). We have
established the start of what I hope will be a CLINUVEL academy of advanced
professional learning with an aim to grow inhouse the next batch of senior
executives. In addition, Dr Emilie Rodenburger began the CLINUVEL Executive
Faculty Program (CEFP) which needs to lead to her assuming the role of Chief
Scientific Officer in years to come. I believe that structured corporate programs
offered to staff are the key to organisational sustainability, and I expect that
our people continue studying and maturing within the Company. A further
example is where our CFO has initiated a two-year Master’s program last year
with the objective of gaining wider exposure and growing further within the
organisation. Within the Group we periodically rotate staff and managers to
provide them with exposure to different work environments and cultures, and
the opportunity to spend time outside their domicile. Above all, the rotational
program serves to integrate staff faster within the Group and to align our
values across the four continents. In summary, the strength of a team is, in
my view, a direct result of the opportunities one is willing to give to staff and
the time spent with each member individually; input and output are directly
related. Once again, the high rate of retention of personnel within the Company
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 2018, 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 https://www.clinuvel.com/clinuvel/company-
overview/corporate-governance
6
DIRECTORS’ REPORT
The Directors of the Board present their report on the Company and
its controlled entities (‘Group’) for the financial year ended 30 June
2018 and the Auditor’s Independence Declaration thereon.
DIRECTORS
The names of Directors in office during or since the end of the year
are set out below:
• 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 – ceased Directorship 28 November
2017)
• Mr. W. A. Blijdorp (Non-Executive)
• Dr. K. E. Agersborg (Non-Executive – joined 29 January 2018)
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 until 28 November
2017)
Member of the Audit and Risk Committee
Member of the Nomination Committee
Qualifications: BEd
Shares in CLINUVEL: 162,774
Conditional Performance Rights over shares in CLINUVEL: 65,000
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, becoming
the most successful Australian life-sciences company.
Mr McLiesh has served in public roles and is currently Vice President
of the Board of Ivanhoe Girls Grammar School in Melbourne, and has
previously served non-executive roles in the medical device field.
The Chair of CLINUVEL since 2010, Mr McLiesh has been involved
in formulating the successful European commercial strategy for
SCENESSE® (afamelanotide 16mg) and overseeing the continuity and
stability of the CLINUVEL Group.
DR. PHILIPPE J. WOLGEN (JOINED BOARD 2005)
Chief Executive Officer, Managing Director
Non-voting member of the Audit and Risk Committee
Non-voting member of the Remuneration Committee
Qualifications: MBA, MD
Shares in CLINUVEL: 2,579,722
Conditional Performance Rights over shares in CLINUVEL: 924,974
Dr Wolgen was appointed as Managing Director of CLINUVEL in
November 2005 to lead the corporate turnaround of the Group.
Under his leadership a long-term strategy for CLINUVEL was
devised and the lead product SCENESSE® (afamelanotide 16mg)
reformulated, its medical application identified, and European
marketing authorisation ultimately obtained. SCENESSE® is the first
melanocortin drug to have completed a clinical trial program and
obtain marketing authorisation in a major market.
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 strategic support CLINUVEL
enjoys globally.
He led CLINUVEL to attract more than AUD$95 million in direct
funding to develop and launch SCENESSE® and succeeded in guiding
the Group through a complex pharmaceutical development program.
Dr Wolgen is now leading the Group’s expansion, with an immediate
focus on the US and the further development of the Group’s product
pipeline in various market segments. His focus has been to establish
a professional management team to execute the corporate objectives
set and to prepare the next generation of managers.
Dr Wolgen’s long track record shows a strongly focussed, competitive
and ethical professional who perseveres in meeting business
objectives. He holds an MBA from Columbia University NY and the
London Business School. Trained as a craniofacial surgeon, Dr Wolgen
obtained his 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 01 September, 2010)
Member of the Nomination Committee
Qualifications: BComm, FAICD, ASIA
Shares in CLINUVEL: 153,969
Conditional Performance Rights over shares in CLINUVEL: 50,000
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 listed companies Phoslock Water Solutions
Ltd (ASX: PHK, since 2017) and Bell Financial Group (ASX: BFG, since
2012), Mrs Shanahan is also a non-executive director of DMP Asset
Management, a director of the Kimberly Foundation of Australia
Ltd, and Chair of 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. Until 2017, she
was Chair of St Vincent’s Medical Research Institute and also a non-
executive director of Challenger Limited (ASX: CGF). Mrs Shanahan
was also formerly 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
7
DirectOrs' r ePOrt
experience across global markets and medical research provides
significant value to the current Board and Group.
Since joining CLINUVEL in 2014, Mr Blijdorp has been actively involved
in the Group’s long-term strategy for product commercialisation,
growth, and development.
MR. ELIE ISHAG (JOINED BOARD 2011 – CEASED
DIRECTORSHIP 28 NOVEMBER 2017)
Non-Executive Director
Member of the Remuneration Committee
Member of the Nomination Committee
Shares in CLINUVEL: 162,195
Conditional Performance Rights over shares in CLINUVEL: 42,500
Mr Ishag is a London based entrepreneur with 50 years of commercial
experience. With a background in pharmaceutical chemistry,
Mr Ishag is active in European asset management, real estate
development and IT. 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-border commercial real estate. Mr Ishag has been
extensively involved in the commercial evolution and backing of
various successful ventures. He is an Honorary Life Fellow of the UK
Institute of Directors (FIoD) and has been a member of the IoD since
1964.
MR. WILLEM A. BLIJDORP (JOINED BOARD 2015)
Non-Executive Director
Member and Chair of the Remuneration Committee (Chair since 28
November 2017)
Member and Chair of the Nomination Committee (since 27 November
2016)
Shares in CLINUVEL: 1,743,118
Conditional Performance Rights over shares in CLINUVEL: 0
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 focussed on the wholesale and
international trading of luxury and fast moving consumer goods
and pharmaceutical products. Formerly B&S’s CEO, Mr Blijdorp now
focusses on the group’s development and expansion strategy as
majority shareholder and supervisory director, overseeing the group’s
initial public offering on Euronext Amsterdam in March 2018.
DR. KAREN A. AGERSBORG (JOINED BOARD 2018)
Non-Executive Director
Shares in CLINUVEL: 2,900
Conditional Performance Rights over shares in CLINUVEL: 0
Dr Agersborg is a Board-Certified Endocrinologist in Pennsylvania,
USA, currently serving as Clinical Endocrinologist at Reading
Hospital, specialising in Endocrinology, Diabetes & Metabolism. Dr
Agersborg had previously worked at Suburban Hospital, Norristown
and served as Chief, Endocrinology, Diabetes, Metabolism at Chestnut
Hill Hospital.
Prior to obtaining a Doctorate of Oesteopathic Medicine at the
Philadelphia College of Osteopathic Medicine where she volunteers
as Clinical Instructor and prior to completing her Fellowship
at Temple University Hospital, Dr Agersborg had an extensive
career in managing commercial sales and distribution at Wyeth
Pharmaceuticals (formerly Ayerst Laboratories).
Dr Agersborg is a member of the American Osteopathic Association,
Fellow of the American Association of Clinical Endocrinologists, and
Fellow of the American College of Osteopathic Internists.
INFORMATION ON COMPANY SECRETARY
MR. DARREN M. KEAMY
Company Secretary, Chief Financial Officer
Qualifications: BComm, CPA
Mr Keamy, a Certified Practicing Accountant, joined CLINUVEL in
November 2005 and became Chief Financial Officer of the Group 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. He has
overseen the financial management of the Group since 2005, played
a role in raising AUD$95 million in capital, and steered the Group
throughout the Global Financial Crisis. The Group’s first profitability
was achieved under his tenure.
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 is currently completing a Graduate Diploma in Applied
Corporate Governance with the Governance Institute of Australia.
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 COMMITTEE
NOMINATION COMMITTEE
Mrs. B.M. Shanahan
Mr. S.R. McLiesh
Dr. P.J. Wolgen
Mr. E. Ishag
Mr. W. Blijdorp
Dr. K. A. Agersborg
A
8
8
8
4
8
3
B
8
8
8
3
7
3
A
3
3
3
-
-
-
B
3
3
2
-
-
-
A
-
2
2
-
2
-
B
-
2
2
-
2
-
A
2
2
-
-
2
1
B
2
2
-
-
2
1
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 Group during the financial year were
to develop and commercialise 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 light and
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.
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DIVIDENDS PAID OR RECOMMENDED
No dividends were paid or declared during the financial year. On 29
August 2018, the Board of Directors declared an unfranked dividend
of $0.02 per ordinary share in relation to the full year ended 30 June
2018.
REVIEW OF OPERATIONS
The Group’s main strategic focus throughout the year, consequent
to the European Medicine Agency’s (EMA’s) granting of marketing
authorisation for SCENESSE® (afamelanotide 16mg) for the prevention
of phototoxicity in adult patients diagnosed with erythropoietic
protoporphyria (EPP), was to establish a uniform reimbursement
structure for SCENESSE® in key European countries to facilitate
post-authorisation supply. Pricing dossiers have been prepared at the
country level for assessment and negotiations have been instituted
with European payors and further progress to the commercial
rollout of SCENESSE® in Europe has occurred. The Group has set
its own objectives to surveil the safety aspect of SCENESSE® as a
first-in-class therapy, congruent to the objective of fulfilling the
ongoing pharmacovigilance and risk minimisation measures that
were agreed with the EMA upon authorisation and which deserved
much attention during the year. Periodic safety update reports were
submitted to the EMA, demonstrating no changes to the benefit-risk
profile of the product and strong ongoing compliance to the risk
minimisation measures.
A significant long-term objective of the Group was to arrive at a point
where the scientific dossier could be filed with the US FDA given
the lack of success by previous management. The Group therefore
focussed on preparing a New Drug Application (NDA) submission
under a rolling review basis as part of the US regulatory pathway
for SCENESSE®. The rolling review enabled the Group to make its
NDA submission in parts. The final module submitted in June 2018
included data and analyses from five clinical trials in EPP, data from
Compassionate Use and Special Access Schemes, and data from the
real-world experience of EPP patients receiving treatment in Europe.
The R&D program in vitiligo remains on hold until the FDA would be
able to review the scientific dossier of SCENESSE® in EPP.
The scientific focus of its Singaporean operations continued to
be the development of complementary non-prescriptive products
as well as follow-on prescriptive products, including a product for
paediatric EPP patients, to address unmet medical needs in severe
and genetic disorders. With an aim to simplify the business structure
of the VALLAURIX PTE LTD joint venture and to have full operational
control over the Group’s global activities, during the year the Group
purchased the shares held by the minority-owned joint venture
partner, Biotech Labs Singapore Pte Ltd.
A summary of CLINUVEL’s financial result is presented in the
following table:
CONSOLIDATED ENTITY
2018
$
2017
CHANGE
$
%
52%
Revenues
25,750,125
16,984,536
Net Profit/(Loss) before income
tax expense
Profit/(Loss) after income tax
expense
Basic earnings per share - cents
per share
Net tangible assets backing per
ordinary share
Dividends
12,942,406
7,114,286
82%
13,224,185
7,114,286
86%
27.7
14.9
86%
$0.820
$0.533
Nil
Nil
54%
Nil
Note: CLINUVEL does not operate individual segments.
RESULT OF THE CONSOLIDATED ENTITY
(‘GROUP’) AND BALANCE SHEET
The Group result for the year ending 30 June 2018 was $12.942 million
profit before tax, compared to a $7.114 million profit before tax for
the prior financial year, an 82% increase. This is the highest before
tax profit result in the Group’s history and the first time the Group
has achieved consecutive profits. The result reinforces the Group’s
primary strategic focus during the year to progress the commercial
rollout of SCENESSE® in Europe and to charge a uniform price point
to facilitate fair and equitable supply. Consistent to 2016/17 which
experienced a 326% improvement in before tax profit, the growth in
commercial revenues from the roll out of SCENESSE® within Europe
was the primary reason for the improvement in profit for the current
reporting period.
In striving to increase its net asset position, the balance sheet of the
Group strengthened 55% during the reporting period, from $25.444
million at 1 July 2017 to $39.416 million at 30 June 2018. Current
liabilities increased 10% to $3.470 million whereas trade and other
receivables increased 57% to $5.090 million. The increase in net assets
is largely due to the increase in revenues from commercial sales in
Europe which saw the Group start with $23.752 million in cash and
financial assets held, and finish with $36.198 million at 30 June 2018,
a 52% increase. Due to the increase in cash reserves generated from
operations, there was no debt or equity capital raised in 2017/18 or in
2016/17.
REVENUES
Commercial sales of SCENESSE® in Europe totalled $21.359 million for
2017/18, compared to $11.886 million for 2016/17. Unit sales increased
82% year on year, demonstrating the strong demand for the drug in
Europe from the EPP patient population who have no other proven
and effective therapy available to them. A significant component
of this increase when compared to 2016/17 was the recognition of
the first full 12 months of supply of SCENESSE® in Germany. Price
remained constant in 2017/18, in line with CLINUVEL’s policy to
charge a uniform price for SCENESSE® across all European countries,
including Switzerland. Whilst the increase in revenues was driven
by volume upon a consistent and stable uniform price, almost 10%
of the increase related to favourable exchange rate movements as a
result of a weaker Australian dollar. However this balanced out 83%
of the negative price impact to sales from a reduction to the uniform
price of SCENESSE® which occurred late in the prior financial year,
consequent to the agreement reached with the German National
Association of Statutory Health Funds, announced April 2017.
The distribution of SCENESSE® under the Special Access Scheme
continued to provide a preventative treatment for adult EPP patients in
Switzerland. These reimbursement revenues decreased 15% to $4.126
million for the 2017/18 year compared to $4.834 million for the 2016/17
year. This was considered a good result for the Group, as 2017/18 saw
the number of units supplied to Switzerland increase by 29% year-
on-year. The decrease in reimbursement revenues when compared to
the prior year was largely due to the supply of SCENESSE® to Italy for
the first two months of 2016/17, a time of year where there is higher
demand for SCENESSE®, recorded as special access supply under the
Law 648/96 scheme. Since 31 August 2016 all supply of SCENESSE®
to EPP expert centres in Italy is now recorded as commercial
sales. SCENESSE® was also supplied in two other countries under
special access arrangements whereby CLINUVEL received full cost
compensation, linked to the uniform price of SCENESSE® sold in
Europe under the marketing authorisation.
Included in revenues from ordinary activities is interest received
from funds held in bank accounts and term deposits. For 2017/18,
interest received was $0.264 million, equivalent to 2016/17 (also $0.264
million). The Group held on average 14% more cash in higher-yielding
Australian dollar fixed rate term deposits compared to the prior year,
but the average interest rate earned on these funds was on average 35
basis points lower year-on-year, reflecting the impact of Australian
government monetary policy on term deposit rates on offer. The
Group’s policy to maintain lower-yielding foreign currencies to cover
working capital requirements is reflected in this result. Funds held
in non-Australian dollar currency providing a natural hedge against
downward movement on the Australian dollar in 2017/18 was on
average 67% higher than in 2016/17. This contributed to the Group
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DirectOrs' r ePOrt
reporting a gain of $0.424 million from holding non-Australian
dollar currencies and in holding trade creditors in non-Australian
currencies (a $0.089 million loss for the same period last year) at 30
June 2018.
There is no Australian government refundable tax incentive for the
2017/18 year ($0.045 million recorded for 2016/17). The absence of a
refundable tax offset to be received reflects the Group’s current focus
on its commercialisation activities in Europe and its regulatory
activities in the USA which do not permit qualifying expenditures on
local or overseas expenditures to be captured under the Australian
R&D Tax incentive regime.
EXPENDITURES
The Group maintained its focus on its expenditure mix as it has
done throughout the SCENESSE® development program. Overall,
total R&D and commercialisation expenditures accounted for 45% of
the Group’s total expense result for 2017/18, compared to 40% for the
2016/17 year. R&D and commercialisation costs, comprising clinical
study costs, drug formulation research, manufacture and distribution,
regulatory fees and research, development and commercialisation-
specific overheads such as personnel, were $4.053 million in 2016/17,
increasing 48% to $5.985 million in 2017/18. The increase in these
overall expenditures reflects the Group’s focus throughout the year
to further invest in its commercial rollout to secure revenues and
to prepare an NDA regulatory submission that meets the FDA’s
expectations.
Since the granting of market authorisation by the EMA, the Group
has focussed on its commercialisation activities in Europe and in its
regulatory activities in the USA ahead of advancing its clinical trial
program. In 2017/18 the Group concentrated its clinical study efforts
on data management and analysis of the Singaporean Phase II clinical
study in 18 vitiligo patients evaluating the use of SCENESSE® in a
diverse patient group of differing skin types. This is reflected in the
reduction in clinical study expenditures of 59% when compared to the
prior year, from $0.130 million in 2016/17 to $0.054 million in 2017/18.
This expense category also included some product development
testing work in its VALLAURIX PTE LTD operations.
As set in the Group’s objectives, ongoing investment in R&D continued
in 2017/18. Expenses toward the drug formulation R&D, manufacture
and distribution program increased by 102%, from $0.857 million in
2016/17 to $1.733 million in 2017/18. This increase is resultant of a
combination of activities necessary to underpin the growth in sales
volumes as part of the commercial rollout in Europe during 2017/18
and into future years, and also to support work to complete modules
submitted to the FDA in parts under a rolling review. Major expense
items included the expensing of inventoriable costs from increased
sales units under the commercial distribution program and costs
incurred with CLINUVEL’s contract implant manufacturer, Evonik
Industries, to maintain and optimise the existing manufacturing
processes which
included work to prepare and finalise key
components for the NDA dossier. The increase in the cost of storing,
special handling, packing and freighting SCENESSE® in Europe by
contracted parties as a result of the increase in the number of sales
units also impacted this result.
As part of CLINUVEL’s longer term objectives, increasing the
Research, Development & Commercial (‘R,D&C’) personnel headcount
is considered an essential investment to drive the new product
development program in the fully owned subsidiary VALLAURIX
PTE LTD and to support the growth in the commercial distribution
program in Europe during 2017/18. An increased headcount in
the Melbourne, UK and VALLAURIX offices of R,D&C personnel
responsible for oversight and monitoring of various clinical,
regulatory, manufacturing and post-marketing programs was a key
driver behind the 25% increase in R,D&C overheads (from $2.061
million in 2016/17 to $2.576 million in 2017/18). Also in this expense
group was an 81% year-on-year increase in royalty expenses paid to
the implant contract manufacturer. Royalty fees are a function of
sales volume and correlate to the movement in commercial sales.
minimisation commitments with the EMA and to finalise all modules
forming the NDA submission in the US. These costs increased 61%,
from $1.005 million in 2016/17 to $1.623 million in 2017/18. There
were continuing costs attached to establishing and building on
the regulatory infrastructure to support EPP patient access to
SCENESSE® in Europe, in particular the use of third party experts to
conduct detailed statistical analysis of the post-authorisation safety
study (PASS) as part of CLINUVEL’s regular reporting requirements to
the EMA and the increased costs related to the PASS commitments.
Additionally, when compared to 2016/17 there was a significant
increase in costs associated with expert engagement for the Group
to finalise its NDA submission, notably in the completion of datasets
covering the real-world experience included in the final clinical
module of the NDA.
Increases in a range of digital, online marketing and re-branding
initiatives during 2017/18, along with an increase in expert meeting
and conference sponsorships were the key reasons for the 30%
increase in marketing and listing expenditures in the Group, from
$0.811 million in 2016/17 to $1.051 million in 2017/18. The Group
unveiled a new re-brand and identity to reflect both the Group’s
values and evolution as its focus on research and development pivots
towards complementary product lines that will deliver innovative
pharmaceutical solutions for complex problems.
The product development of the complementary and follow-on
products within the VALLAURIX business required a significant
increase to the Group fortifying its intellectual property position
in relation to these advancements. This was a major reason for an
increase to patent fees from $0.220 million in 2016/17 to $0.522 million
in 2017/18, a 138% increase. Also contributing to this result were a
number of established patents progressing through their relevant
validation and their renewal phases, incurring higher national phase
fees year-on-year. The Group considers the increase in patent fees
to be an essential element to the business to build and to fortify its
intellectual property position, supporting its ability to protect future
potential revenue streams.
The result from general operations was $5.735 million in 2017/18
compared to $4.882 million in 2016/17, a 17% increase. General
operations comprised 43% of the Group’s total expense result for
2017/18 compared to 49% in 2016/17. Legal fees in connection to
matters related to the marketing authorisation and in responding
to negotiations with various payors in Europe contributed to the 18%
increase in general operations year-on-year. The legal fees directly
relate to the maintaining of an established reference price for
SCENESSE® as part of its uniform pricing strategy. Included in this
expense result was a one-off achievement of a €500,000 long term
business generation cash incentive as part of the Managing Director’s
employment agreement and paid out during 2017/18. The business
generation incentive has been a long-standing incentive within the
Managing Director’s employment agreement, aiming to reward the
Managing Director for achieving exceptional business outcomes
that contribute to creating corporate value and to motivate retention.
The expensing of the accounting valuation of share-based payments
(performance rights) was $0.428 million in 2017/18, marginally higher
than the 2016/17 result of $0.395 million.
Consequent to the purchase by CLINUVEL of the shares held by the
non-controlling interest in the VALLAURIX entity, the profit result
for VALLAURIX is included in its entirety in the financial result of
the Group. (2016/17: $0.370 million loss whereby the non-controlling
interest had a $0.067 million share of the loss).
The Group has brought to account a deferred tax asset (“DTA”) relating
to previously unrecognised prior period tax losses, resulting in a
credit to income tax expense of $0.282 million.
CASH FLOW
Cash inflows in 2017/18 increased 52% compared to the first full year
of commercial sales in 2016/17.
Fees related to regulatory affairs for both pre- and post-marketing
activities are directly related to the Group’s strategic focus in the
current year which is to meet its ongoing pharmacovigilance and risk
From a cash flow perspective, cash inflows from sales, reimbursements
and interest received significantly outweighed the 40% increase in
monthly operating average cash spend year-on-year, from $0.736
million for 2016/17 to $1.030 million for 2017/18. The increase in
10
DirectOrs' r ePOrt
average monthly spend is due to a number of factors but primarily
through an increase in product manufacturing process optimisation,
the recruitment of additional personnel and specialist third-party
costs associated with the preparation, finalisation of the NDA
submission to the US FDA and remuneration-related expenditures.
EARNINGS PER SHARE
Growth in earnings per share is a goal of the Group and was achieved
in 2017/18. At 30 June 2018 basic earnings per share were $0.277 on
47,824,427 issued ordinary shares. This is compared to basic earnings
per share of $0.149 as at 30 June 2017 on 47,735,227 issued ordinary
shares.
CLINUVEL PHARMACEUTICALS LTD (ASX: CUV; XETRA-DAX: UR9;
ADR: CLVLY) is a global biopharmaceutical company focussed on
developing and delivering treatments for patients with a range of
severe genetic and skin disorders. As pioneers in understanding the
interaction of light and human biology, CLINUVEL’s research and
development has led to innovative treatments for patient populations
with a clinical need for photoprotection and repigmentation. These
patient groups range in size from 5,000 to 45 million worldwide. Based
in Melbourne, Australia, CLINUVEL has operations in Europe, the
USA and Singapore, with the UK acting as the EU distribution centre.
There were a number of significant events in 2017/18. These events
included:
a) An announcement to the ASX on 21 December 2017 that the
first draft assessment from England’s National Institute for
Health and Care Excellence (NICE) had been published, with
SCENESSE® (afamelanotide 16mg) not recommended for
reimbursement for the ultra-orphan disorder erythropoietic
protoporphyria (EPP). NICE reviews novel medical technologies
and makes recommendations for their use by the English
National Health Service (NHS). NICE’s review of SCENESSE® is
by their Highly Specialised Technology (HST) Committee who
provide recommendation on the use of new highly specialised
medicines and treatments within the NHS in England. This
announcement was subsequently followed up on 23 May 2018,
whereby NICE published its draft Final Evaluation Document
with the HST Committee maintaining its assessment that
SCENESSE® did not meet its health-economic criteria for
reimbursement under the English NHS for the treatment of
EPP. CLINUVEL is currently appealing the decision taken by
NICE.
b) On 29 January 2018 Dr Karen A Agersborg joined the Board
of Directors of CLINUVEL. Dr Agersborg, a Board-Certified
Endocrinologist in Pennsylvania, USA, currently serving as
Clinical Endocrinologist at Reading Hospital, specialising in
Endocrinology, Diabetes & Metabolism, followed the retirement
of Mr Elie Ishag at the 2017 Annual General Meeting. Mr
Ishag had served on the Board of CLINUVEL since February
2011. Dr Agersborg brings added scientific depth to the Board,
complementing the existing skill set of the CLINUVEL Board.
c) On 16 March 2018 CLINUVEL conducted an expert meeting
in Vienna, Austria with delegates from 12 countries and 21
expert centres, discussing the ongoing treatment of adult
EPP patients with SCENESSE®. The first data on the ongoing
safety and use of SCENESSE® in adult patients participating in
the European EPP Disease Registry, conducted as part of the
post-authorisation safety study (PASS) agreed by CLINUVEL
with the European Medicines Agency (EMA), was presented
and discussed. The safety profile of SCENESSE® remained
unchanged, supported by data in two annual reports and in
the periodic safety update reports submitted to the EMA, 61% of
patients receiving SCENESSE® had been treatment naïve prior
to participating in the PASS. 16% of patients sought treatment in
the autumn and winter months. Overall, the expert treatment
centres confirmed the monitoring and analysing of the safety
profile of SCENESSE® comes with a high administrative burden.
d) On 25 June 2018 CLINUVEL announced that it had completed
(NDA) for
the submission of a New Drug Application
SCENESSE® as the first proposed therapy for patients with EPP
in the United States. The submission undergoes a rigorous
60-day validation period before a decision is determined as
to whether all aspects of the NDA are covered and the review
clock commences. An approved NDA will allow CLINUVEL to
make SCENESSE® available to adult EPP patients in the US as
a first-line therapy. As part of the final NDA dossier, CLINUVEL
submitted data and analyses from five clinical trials in EPP,
data from Compassionate Use and Special Access Schemes,
and data from the real-world experience of EPP patients
receiving treatment in Europe. The data set consisted of nearly
6,700 doses in more than 800 patients. The data on the real-
world experience, broadly incorporating the first 13 months
from launch date of data provided by CLINUVEL to the EMA
in its annual reporting under its marketing authorisation, had
shown over 98% of patients on treatment request the drug for a
second treatment year.
e) Further product development has occurred in the Singaporean
operations of VALLAURIX PTE LTD. The innovation hub to
the consolidated entity and an integral part of the longer-
term growth plans of the Group, VALLAURIX has focussed on
developing SCENESSE® ENFANCE, a formulation for paediatric
EPP patients, along with non-prescriptive and prescriptive
topical product lines considered complementary to SCENESSE®.
For some of these formulations, final presentations and
registrations are currently in process. On 1 May 2018 it was
announced that CLINUVEL entered into an agreement to
acquire the outstanding shares of VALLAURIX PTE LTD held by
the minority shareholder, Biotech Lab Singapore Pte Ltd (BLS),
for 33,559 CLINUVEL shares.
f) With CLINUVEL focussing its research and development on
new product lines, on 20 February 2018 it unveiled an updated
website and Group Values statement as part of a new corporate
positioning.
g) Steady progress has been made in the vitiligo development
program. Statistical analysis of the CUV103 exploratory
study in Singapore continues, where 18 patients of four
ethnicities suffering from generalised vitiligo were treated.
The finalisation of this study will determine the preferred
path forward in designing and proceeding with a larger
clinical study in North America to treat generalised vitiligo
with SCENESSE® as a combination therapy with narrowband
ultraviolet B phototherapy. CLINUVEL maintains its existing
strategy to move into conducting large scale clinical studies in
vitiligo only when the US FDA approves the use of SCENESSE®
in EPP.
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 Group.
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 Group,
other than:
• On 29 August 2018, the Board of Directors declared an unfranked
dividend of $0.02 per ordinary share.
LIKELY DEVELOPMENTS AND
EXPECTED RESULTS
The Group’s strategy is to focus on developing and commercialising
SCENESSE® as a solution to offer medicinal photoprotection for
patients with EPP and who are most severely affected by exposure
to ambient and UV light. Further, the Group’s strategy is to develop
and commercialise SCENESSE® as a combination therapy with
narrowband ultraviolet B (NB-UVB) phototherapy for patients with
vitiligo in order to promote repigmentation of areas of the skin affected
by vitiligo, and to pursue innovation in developing new and follow-on
products by leveraging the Group’s knowledge in photoprotection and
repigmentation.
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DirectOrs' r ePOrt
In June 2016 the Group launched SCENESSE® in Europe. As part of
the conditions attached to the granting of marketing authorisation,
the Group has been committed to establishing and maintaining a
number of significant post-authorisation commitments which have
been agreed with and under supervision by the EMA under a long-
term risk management plan for SCENESSE®. The Group has been
using a number of third parties to support the European EPP Disease
Registry to monitor long-term safety and it will continue to invest in
existing and new personnel with the appropriate skills and expertise
to maintain the ongoing requirements of the post-authorisation
program in Europe. The Group has established a reference price for
SCENESSE® as part of its uniform pricing strategy and has entered
into pricing agreements with several European countries, state and
private insurance groups. The Group has increased its distribution-
focussed workforce in Europe to support the increase in product
volumes and will continue to increase staff numbers as more pricing
agreements per country are established with payors, and as the
required pharmacovigilance activities continue to expand.
Underpinned by the regulatory approval in Europe, along with the
information generated from its post-marketing commitments in
Europe, the Group continues to work towards gaining regulatory
approval for SCENESSE® for EPP patients in other important markets
where EPP is prevalent, including North America, in order to increase
its ability to provide EPP patients with access to SCENESSE®.
The Group continues to pursue a clinical program to evaluate the
ability of SCENESSE® to activate and repopulate melanocytes within
vitiliginous lesions and achieve repigmentation in combination with
NB-UVB in patients with vitiligo. Data from the clinical and pre-
clinical studies evaluating efficacy and/or safety of SCENESSE® in
combination with NB-UVB should result in the Group moving towards
later stage clinical trials. The focus on progressing the development
of SCENESSE® in vitiligo in the US is dependent upon the US regulator
approving the use of SCENESSE® in EPP.
The Group has also focussed on its manufacturing requirements by
working with its sole contract manufacturer to meet commercial
product supply in line with its timing expectations and to pursue
ongoing process improvement initiatives to support future increases
in supply. The contract manufacturer bears the responsibility for
manufacturing the commercial drug product.
The Group, through its 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
these analogues along with other technologies for both medicinal
and non-prescriptive formulations to be administered topically.
Until the prior reporting period, the Group has been a loss-making
enterprise dependent on equity funding after only recently reaching
the commercialisation phase of drug development, 11 years since
the start of its EPP program and 17 years since it joined the ASX. The
long-term financial objectives of the Group is to achieve and maintain
a sustainable profit. Key to longer term profitability is not only
continuing the successful research and development of its portfolio
of assets but also their successful commercialisation, manufacturing
and distribution, and the ability to attract funding to support these
activities should the need arise. The following specific business risks
are reviewed continually by the Board and management as they have
the potential to affect the Group’s achievement of the business goals
detailed above. This list is not exhaustive.
• Technology – there is a risk that despite obtaining marketing
authorisations, 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, that the manufacturing process may encounter
process issues not previously identified and controlled, and of
non-controllable disruptions to the operations of the products’
contract manufacturers.
12
• 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.
• Drug pricing – there is a risk that third party payors will not
provide coverage or will not be willing to accept the prices
agreed with other third-party payors, adversely affecting
revenues and profitability. Furthermore,
in
government insurance programs may result in lower prices for
our products and could materially adversely affect our ability
to operate profitably.
reductions
• Intellectual Property (IP) and market entry – future sales
could be impacted to the extent that there is not sufficiently
robust patent protection across the Group’s product portfolio
that will prevent competitors from entering the marketplace to
compete with the Group’s approved products. Also, competitors
infringing the Group’s IP rights may adversely impact the
Group’s ability to maximise the value to be made from product
commercialisation.
• Funding – cash outflows from its operations may be higher
than cash inflows over the long term. Therefore the ability
of the Group to successfully bring its products to market and
achieve a state of consistent positive cash flow is dependent on
its ability to maintain a revenue stream and to access sources
of funding while containing its expenditures.
• Management – the Group’s corporate strategy could be impacted
adversely if the Group was not able to retain its specialised
knowledge and areas of expertise, key management, members
of staff and or Board.
ENVIRONMENTAL REGULATION
AND PERFORMANCE
The Group's operations are not regulated by any significant
environmental regulation under a law of the Commonwealth, or of a
State or Territory, or of any other jurisdiction.
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 most other cases,
to the nearest dollar.
INDEMNIFICATION AND INSURANCE
OF DIRECTORS AND OFFICERS
During or since the end of the financial year the Company has given or
agreed to indemnify, or paid or agreed to pay insurance premiums to
insure each of the Directors against liabilities for costs and expenses
incurred by them in defending any legal proceedings arising from
their conduct while acting in the capacity of Director of the Group,
other than conduct involving wilful breach of duty in relation to
the Group. Details of the amount of the premium paid in respect of
insurance policies are not disclosed as such disclosure is prohibited
under the terms of the contract.
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 20 to the
financial statements.
REMUNERATION REPORT
The Remuneration Report, which forms part of the Directors’ Report,
provides information about the remuneration of the Directors of
CLINUVEL PHARMACEUTICALS LTD and Other Key Management
Personnel for the year ended 30 June 2018.
The remuneration report is set out under the following main headings:
a) Introduction by the Chair of the Remuneration Committee
b) Principles used to determine the nature and amount of
Key Management Personnel has the meaning given in the Australian
Corporations Act and includes all Directors (including Non-Executive)
who held their positions throughout the past two financial years and
other Key Management Personnel who together have the authority
and responsibility for planning, directing and controlling the
activities of the Group, being:
remuneration
c) Details of remuneration
d) Service agreements
• Dr. D.J. Wright (Acting Chief Scientific Officer)
e) Share based compensation
f) Additional information – Remuneration
• Mr. D.M. Keamy (Chief Financial Officer and Company
Secretary)
g) Additional disclosure – Company Performance
A) INTRODUCTION BY THE CHAIR OF THE
REMUNERATION COMMITTEE
Chairman of the Remuneration
Committee: Mr Willem Blijdorp
“I regard my duties as Chairman of the
Remuneration Committee as paramount
to the wellbeing and longevity of the
CLINUVEL Group. From the current position
of the Company it is imperative for me and
my fellow Board members to look ahead and
plan for the next few years for the Company
to grow and thrive further.
In providing the objectives of the Remuneration Committee and its
approach to executive remuneration, I briefly share my professional
background and outlook which has taken me to where I am
professionally today.
As Chair of the Dutch-publicly listed B&S International, a global leader
in trading and logistics, I am used to operating in markets which are
often tested by changing legislation, new tariffs and where pressure
on pricing is experienced. To navigate these challenges, I have always
chosen the most successful leadership teams based on a set of fixed
criteria. In my opinion, company executives need to demonstrate
strong leadership skills, have an ability to roll up their sleeves, and be
able to articulate to the Board of Directors periodically their realistic
vision for the company for the years ahead.
Above all, I regard the success of a company as a direct reflection of
the intelligence, insistence and integrity of the management teams.
In this sense, the Key Management Personnel and the company
executives can make or break a company, seldom its services or
products, and it is the daily quality of the managerial decisions made
by the top people at the helm which matter, nothing less in my books.
In addition, I want to see in the executive management in all companies
with which I involve myself to have a sizable ownership by executive
management – in cases up to 20% – to make sure that their objectives
are aligned with the 80% owned by other shareholders. This approach
13
has provided me and my shareholders the success I enjoy today, and
as Chairman of the Remuneration Committee I am supporting the
same criterion when it comes to CLINUVEL’s leadership team.
In line with the objectives set by CLINUVEL’s Board of Directors, the
task of the Remuneration Committee, as explained in greater detail in
this Remuneration Report is to:
1. secure the services of excelling management;
2. align the key performance indicators of executive management
with those objectives set for the group of companies;
3. evaluate the performance of executive management against:
a) internal performance criterion;
b) international benchmarks in context of this sector;
4. strive for business continuation and sustainability through
retention of staff.
I use this very approach also to assess the attitude and performance
of the CLINUVEL Key Management Personnel and its company
executives with an eye to grow the Group in the coming period.
In July 2018, I invested significant sums of my own capital in
CLINUVEL, I have a clear interest to continue the success story of this
biotechnology venture.
In all the conglomerate of business enterprises I lead, my motto has
remained simple: “people work for people”, and this holds true for Dr
Wolgen and the team around him. In order to succeed in markets
where great challenges are expected and met, you need in business
execution what I call “eccentric leadership”. In Dr Wolgen we have
this and it needs to continue for another three years, through to 2021,
re Muner atiOn re POrt
to meet all CLINUVEL’s objectives. While I am certain others could
do the job, in my position as Head of the Remuneration Committee,
I wish to see continuity for the next term, focus to be sustained,
meaning zero distraction from the end game.
What is said about the CEO also goes for the steady and reliable
financial management by the CFO in overseeing the Group of six
companies globally and containing the Company’s management of
costs. The profitability of CLINUVEL is largely owed to the work of Mr
Keamy, hence our strong wish to prolong the CFO-CEO axis.
headed by our CEO and CFO who are responsible for the financial
discipline which has led to today’s profitability.
The Company’s mid-term vision is found back in its “2020 CUV
Strategy” explained in the 2017 AGM presentation and it provides
this Committee with a framework for the corporate objectives for the
foreseeable future. Accordingly, these objectives are reflected in the
remuneration packages of the Managing Director, CFO, Acting CSO
and in the future of other executive Key Management Personnel to
be recruited.
In arriving at the executive remuneration packages, we strive to
provide overall incentives that secure continuation and no disruption
of the business at this critical stage of CLINUVEL. The Committee
assesses the criticality of CLINUVEL’s business operations based on
the following corporate milestones:
1. US regulatory clearance for SCENESSE®
2. US market entry & distribution of SCENESSE®
3. Continuing successful distribution of SCENESSE® throughout
the Europe Union
4. Establishing a European business unit by March 2019 (post-
Brexit)
5. New product development of:
a) VLRX001, CUV9900
b) Complementary OTC
6. Expansion of the CLINUVEL Group.
As the Chair of the Board of Directors Mr McLiesh stated earlier this
year in his ‘Chair Letter’, our immediate task is to finalise a new
employment agreement with the Managing Director. I hope to be able
to report on these agreements by the end of this calendar year.
Herewith, I recommend CLINUVEL’s shareholders the remuneration
incentives offered to the Key Management Personnel.”
Lastly, we have agreed that the Acting CSO, Dr Wright, will remain as
Key Management Personnel while training and providing a basis for
succession planning of the next generation of scientific management.
Overall, as Chair of the Remuneration Committee I make a periodic
assessment of the operations of the Group. In this sense, I do wish
to see continuation and no disruption to the CLINUVEL business to
maintain enterprise value at a time where the US market beckons,
European distribution grows, new products advance, and the growth
of managerial talent is taking place under the leadership of the
Managing Director.
Since initially attending a CLINUVEL shareholder meeting in
Melbourne in early 2006 I have witnessed – first from distance, and
since 2015 as a Board member – how this Company has plotted and
manoeuvred around buoys along its voyage.
At multiple cross-roads the Board of Directors has had the choice to
intervene or take a more passive attitude towards top management
when it came to decisions such as opting to license out the lead
technology, sell it off early, or retain it to develop it to today’s success.
Other key decisions involved, for example, the financial management
of the Group, whether to make larger investments in R&D, pursue
multiple indications at the same time with one or several technologies,
and raise more capital. As a Non-Executive Board member I have an
advisory role but am personally more in favour of steadily building
the Company and staying in control of our own destiny. While I try
to share my strategic vision with current management of CLINUVEL
I stay away from imposing too strong views, however I am extremely
content with the way we perform.
The quality of CLINUVEL’s decisions rested on the depth of analyses
of the executive management teams giving me and my fellow Board
members the confidence that CLINUVEL would navigate and sail
around obstacles to make the Company profitable and sustainable.
This is the place where we are today.
As Chair of the Remuneration Committee I focus on corporate results
and the Company’s ability to meet the short- and mid-term objectives
that are within management’s reach.
The short-term objectives are found in the key performance indicators
(KPIs) set for all personnel, and in more specific terms in those of
the other executive Key Management Personnel including the CEO.
Several of these KPIs are commercially confidential in nature in an
attempt to stay ahead of possible competitors, other indicators are
more tailored to general business objectives. The mid-term objectives
are directly related to the Group’s objectives to achieve profitability and
sustainability, and are captured in Business Generation Incentives.
In my view, the current successes of CLINUVEL are assigned to the
vision, leadership and execution of the current management team
14
B) PRINCIPLES USED TO DETERMINE THE
NATURE AND AMOUNT OF REMUNERATION
The principles and objectives underlying the Board’s remuneration
policy in relation to its Key Management Personnel are to ensure that:
REMUNERATION RECOMMENDATIONS
For the year ended 30 June 2018, no remuneration recommendations
were received from specialist remuneration consultants for the
purpose of section 9B to the Corporations Act 2001.
re Muner atiOn re POrt
a) Remuneration of the Company’s Key Management Personnel is
aligned with the interests of the Company and its shareholders
within an appropriate control framework, taking into account
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 with unique
industry knowledge in photoprotection, repigmentation and
melanocortins 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 Company complies with applicable legal requirements and
appropriate standards of governance.
The Company’s reward framework provides a mix of fixed and
variable pay, the variable pay structured to incentivise both short-
term and long-term:
• Short-term
(generally cash payments
form of
performance-based incentives awarded at a fixed amount or as
a percentage of base salary).
the
in
• Long-term (generally based upon the issue of performance
rights to acquire shares in the Company, and in relation to the
Managing Director, other fixed amount cash incentives).
REMUNERATION COMMITTEE
The Board has provided a mandate to the Remuneration Committee
to evaluate its remuneration policies and practices over time, taking
into account pay outcomes and the relationship between pay and
performance, and the results of any evaluations or review processes.
The Board has also provided a mandate to the Remuneration
Committee to provide advice on salaries and fees, short- and long-
term incentives and employment terms and conditions for Directors,
Key Management Personnel and Executives.
The Remuneration Committee specifically reviews and makes
recommendations to the Board on the total remuneration package
for the Managing Director, including short-term and long-term
incentives for the Managing Director. It also reviews and makes
recommendations to the Board on the total level of remuneration of
Non-Executive Directors and for individual fees for Non-Executive
Directors and the Chair, including any additional fees payable for
membership of Board committees. The Remuneration Committee
also reviews and approves recommendations from the Managing
Director on total levels of remuneration for senior executives reporting
to the Managing Director, including their participation in short- and
long-term incentive schemes.
The Remuneration Committee takes regard of industry benchmarks,
global employment market conditions and the requirements of
corporate governance best practice in Australia. It may commission
independent research and obtain 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 specific
experience in the healthcare industry as part of making and
reviewing remuneration recommendations.
VOTING AND FEEDBACK AT THE COMPANY’S
LAST ANNUAL GENERAL MEETING
In the 2017 Annual General Meeting (AGM), the Company obtained
98.44% of the proxy votes (including votes at the Board’s discretion) in
favour of adopting the 2016/17 remuneration report, and this resolution
was passed by poll. The Company did not receive any further specific
feedback at the AGM on its remuneration practices.
NON-EXECUTIVE REMUNERATION
The Board seeks an appropriate mix of skill, diversity, experience
and expertise and the Remuneration Committee recommends
to the Board individual Non-Executive Director fee levels, having
regard to global employment market conditions and consultation
with specialist remuneration consultants with experience in the
healthcare and biotechnology industries.
DIRECTOR FEES
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. The most recent determination was at the 2015 Annual
General Meeting, shareholders approved an aggregate remuneration
payable of $550,000. This amount (or some part of it) is to be divided
among the Non-Executive Directors as determined by the Board. The
aggregate amount paid to Non-Executive Directors for the year ended
30 June 2018 was $320,750.
Non-Executive Director fees consist of base fees and committee fees.
The fees are outlined in the table below:
ANNUAL NON-EXECUTIVE DIRECTOR FEES
(INCLUSIVE OF SUPERANNUATION):
BOARD FEES
Base – Chair *
Base – Non-chair
Committee Fees
Audit & Risk
Chair
Member
Remuneration
Chair
Nomination
Member
Chair
Member
$
110,000
65,000
15,000
5,000 *
15,000 *
5,000
-
-
* The Chair of the Board is a member of all Committees but does not receive any additional committee
fees in addition to his base fee.
There are no further retirement benefits, other than statutory superannuation entitlements, offered to
Non-Executive Directors.
LONG-TERM INCENTIVE
The long-term equity remuneration is provided to Directors and
certain employees via the CLINUVEL Conditional Rights Plan. See
section “E – Share-Based Remuneration” in this Remuneration Report
for further information.
EXECUTIVE REMUNERATION
MANAGING DIRECTOR
The Managing Director’s remuneration structure is reviewed every
three years to ensure:
The methods used by the Remuneration Committee to assess Board
performance is disclosed in the Corporate Governance Protocol.
• A maximum level of motivation and incentivisation to lead
and advance the Company’s program from its current stages
15
re Muner atiOn re POrt
of development and commercial growth, taking into account
the risk and complexity within this particular business model;
• It is competitive in international markets, industry and related
fields of expertise; and
• Leadership and operational management is incentivised to
serve the long-term interests of the Company.
It includes:
• Base pay and health insurance, accommodation, relocation,
travel and superannuation 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 (only in the event of exceptional
performance, innovation and/or expansion and which do not
form part of short-term incentives or longer-term business
generation incentives); and
• Long-term equity participation in CLINUVEL’S Performance
Rights Plan.
The inherent risk of failure within pharmaceutical development is
high and this risk is magnified for the Company due to its specialised
and narrow focus on developing and commercialising a novel, first-
in-class drug and first-in-line therapies in diseases where there is
an unmet clinical need. To mitigate the risk and to provide a strong
platform to achieve success, the Board has adopted a business model
where most operational tasks are being retained in-house, where
possible, and most management responsibilities are 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 overall corporate
strategy, has global responsibility for the safety aspects of the drug
(including pharmacovigilance) and is responsible for commercial
drug pricing and reimbursement negotiations. The Acting Chief
Scientific Officer is responsible for pre-clinical programs, 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 internal
Commercial Management Committee, set up to oversee the best
commercial options for the Company. As the business evolves
and progresses through its development path, it is expected that
this centralised management model will also evolve, and key
management responsibilities will be shared across new and existing
senior management throughout the Group.
The current Remuneration structure is designed to maximise the
motivation, retention and incentivisation of the Managing Director
to lead and advance the Company’s program from its current stage
of development, to navigate the Company through the early stages
of commercial distribution and to establish a Company which
develops new products and markets, taking into account the risk and
complexity of the current 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.
For the 2017/18 year, the Managing Director’s base salary was $818,348,
an increase of 4% to the 2016/17 year ($786,717). Of the 4% increase, 1.1%
is attributable to exchange rate movements.
Base pay is reviewed annually and generally adjusted to consider
changes in CPI. Base salary for the Managing Director was adjusted
2.9% on 1 July 2017. Due to domicile, the Managing Director’s salary
is paid in Singapore dollars by the consolidated group’s Singapore
subsidiary company and is subject to exchange rate movements
when reported in Australian dollars.
SHORT-TERM INCENTIVE
The Managing Director has individual short-term incentives which
are evaluated over the 2017/18 base salary amount.
Individual and overall corporate performance targets are set at
the start of each financial year by the Remuneration Committee.
The performance-based targets are typical of a global life sciences
company at its stage of development and early commercial product
distribution. The focus on growth in corporate value has been
centred on achievement of regulatory, development, commercial and
operational outcomes, where financial metrics are not necessarily an
appropriate measure of executive performance as may be commonly
expected in other market segments and industries.
The Board considers specific 2016/17 performance-based targets to be
commercially sensitive, therefore specific targets are not disclosed.
The targets are centred on:
• Commercial distribution rollout of SCENESSE® in Europe;
• Progress in regulatory filings, with an emphasis on the US;
• Financial management and corporate affairs; and
• Research & development of follow-on products.
Generally, quantifying the 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 2017/18 financial year
the Remuneration Committee evaluated the performance of the
Managing Director and the Board approved a short-term incentive
of 56.7% to base salary. This compares to a short–term incentive of
64.5% to base salary in the preceding year.
In arriving at this assessment, the Remuneration Committee
considered the following links to an increase in corporate value:
• the consolidation of a uniform distribution structure for
SCENESSE® across key European reference countries at
reasonable and satisfactory terms, maintaining a consistent
and uniform pricing policy, underpinning greater access to EPP
patients and resulting in a material increase in commercial
revenue; and
• the first ever filing of a New Drug Application submission to the
US FDA under a rolling review basis as part of the US regulatory
pathway for SCENESSE®.
LONG-TERM INCENTIVE – BUSINESS
GENERATION INCENTIVE
The Managing Director has individual longer-term cash incentive
components, referred to as business generation incentives, to his
Executive remuneration, along with equity participation through
CLINUVEL’S Performance Rights Plan.
The business generation incentives have been aimed at rewarding
the Managing Director for achieving exceptional business outcomes
that contribute to creating corporate value and to act as a key
retention tool. The business generation incentives comprise of key
performance milestones and remain for the duration of the Managing
Director’s service agreement.
The business generation incentives have formed part of the Managing
Director’s service agreements since 2010. The current business
generation incentives are triggered either upon the Company signing
license agreements in key geographical areas or if an accumulated
financial benefit in excess of €10,000,000 has been received by the
Company if the Company has elected to self-distribute SCENESSE®
upon commercialisation. The largest of the business generation
incentives that is tied to license agreements or financial benefits
from self-distribution is €500,000. They remain current within the
term of the Managing Director’s employment agreement or within six
months from cessation or termination.
The Board reviews the business generation incentives each time
the Company and the Managing Director enters into a new service
16
re Muner atiOn re POrt
agreement to ensure these incentives are linked to the Company’s
longer-term strategies it considers most likely to achieve the best
possible outcomes for the Company and its shareholders.
For 2017/18, it was determined the following percentage of base salary
as the appropriate quantum for the short-term incentives for each
Other Executive Key Management Personnel to be evaluated against:
The Managing Director achieved a business generation incentive
in 2017/18. He received €500,000 upon the Company receiving an
accumulated financial benefit in excess of €10,000,000 from self-
distribution.
• Acting Chief Scientific Officer: 9%
• Chief Financial Officer: 14%
LONG-TERM INCENTIVE – SHARE-
BASED REMUNERATION
The Managing Director
long-term equity
remuneration via the CLINUVEL Conditional Rights Plan. See section
“E – Share-Based Remuneration” in this Remuneration Report for
further information.
is provided with
OTHER EXECUTIVE KEY
MANAGEMENT PERSONNEL
Remuneration packages for Other Executive Key Management
Personnel may include:
• Base pay (including statutory benefits);
• Short-term incentive payments that can be awarded through
the achievement of pre-specified performance-based and
time-based targets;
• Longer-term business generation incentive payments through
the achievement of pre-specified performance-based targets;
and
• Long-term equity participation in CLINUVEL’S Performance
Rights Plan.
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.
Base pay is reviewed annually by the Managing Director who makes
recommendations to the Remuneration Committee who subsequently
reviews these recommendations. Base pay is generally adjusted
annually to consider changes in CPI and to ensure the Executive’s
pay is commensurate with the responsibilities and contribution of
the Executive. The Other Executive Key Management Personnel all
received increases to base salary from 1 July 2017.
SHORT-TERM INCENTIVE
Short-term incentives are individually set by the Managing Director at
the start of each financial year and these incentives are recommended
to the Remuneration Committee for their review and approval.
The short-term incentives are a blend of individual performance-
based incentives and can have a component for time served to
encourage staff retention. Each performance-based target is based
on specific individual responsibilities and objectives typical for these
roles in a global life sciences company at its stage of development and
early commercial product launch. The performance-based incentives
covered revenue generation, regulatory progress, manufacturing,
research and development and corporate affairs.
For 2017/18, the Managing Director assessed overall performance
incentives and recommended to the
against the short-term
following
Remuneration Committee and who approved
assessments against the maximum short-term incentives:
the
• Acting Chief Scientific Officer: 75%
• Chief Financial Officer: 87%
LONG-TERM INCENTIVE – BUSINESS
GENERATION INCENTIVE
During 2017/18, business generation incentives were introduced to
the remuneration package for the Chief Financial Officer. These
longer-term incentives must be achieved before 30 June 2019 and
are linked to the Company achieving exceptional business outcomes
that contribute to creating corporate value and to act as a key
retention tool. The business generation incentives are $60,000 for
each incentive and are linked to successful listing of the Company
on an overseas exchange and expansion of the Company through
acquisition with demonstrated positive cash flows of the acquired
entity post-acquisition.
LONG-TERM INCENTIVE – SHARE-
BASED REMUNERATION
The Other Executive Key Management Personnel are provided
with long-term equity remuneration via the CLINUVEL Conditional
Rights Plan. See section “E – Share-Based Remuneration” in this
Remuneration Report for further information.
17
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C) DETAILS OF REMUNERATION
KEY MANAGEMENT PERSONNEL REMUNERATION OF THE COMPANY FOR THE YEARS ENDING 30 JUNE 2018 &
30 JUNE 2017
POST-EMPLOYMENT BENEFITS
SHARE-BASED
PAYMENTS
(ACCOUNTING
CHARGE ONLY)²
GROSS
SALARY
SHORT-TERM
INCENTIVE
BUSINESS
GENERATION
INCENTIVE
OTHER¹
SUPER-ANNUATION /
PENSION FUND
PERFORMANCE
RIGHTS
TOTAL
YEAR
$
$
$
$
DIRECTORS
Dr. P.J. Wolgen
Mr. S.R. McLiesh
Mrs. B.M. Shanahan
Mr. E. Ishag
Mr. W.A. Blijdorp
Dr. K.A. Agersborg
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
818,348
786,717
100,457
100,457
73,059
73,059
29,166
70,000
73,750
65,000
27,833
-
464,033
508,058
-
-
-
-
-
-
-
-
-
-
OTHER KEY MANAGEMENT PERSONNEL
Dr. D.J. Wright
Mr. D.M. Keamy
TOTAL
2018
2017
2018
2017
2018
2017
244,959
238,056
246,922
229,694
16,535
5,952
30,124
22,570
762,394
36,405
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26,205
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
9,543
9,543
6,941
6,941
-
-
-
-
-
-
20,049
19,616
20,049
19,616
56,582
55,716
$
$
207,097
2,288,277
265,103
1,586,083
8,041
118,041
10,229
120,229
8,041
88,041
10,229
90,229
2,816
31,982
7,161
77,161
-
-
-
-
73,750
65,000
27,833
-
16,664
298,207
10,120
273,744
53,086
350,181
30,384
302,264
295,745
3,276,312
333,226
2,514,710
1,614,494
510,692
762,394
36,405
1,562,983
536,580
-
26,205
1 ‘Other’ includes health insurance, housing 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.
THE RELATIVE PROPORTIONS OF REMUNERATION BETWEEN FIXED AND BASED ON PERFORMANCE FOR THE
YEARS ENDING 30 JUNE 2018 AND 30 JUNE 2017
FIXED REMUNERATION
PERFORMANCE BASED
FIXED REMUNERATION
PERFORMANCE BASED
2018
2017
Dr. P.J. Wolgen
Dr. D.J. Wright
Mr. D.M. Keamy
37%
89%
76%
63%
11%
24%
51%
94%
82%
49%
6%
18%
18
re Muner atiOn re POrt
D) 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 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 CLINUVEL Performance Rights Plan.
The Managing Director, in consultation with the Remuneration
Committee, oversees the service agreements entered into with other
Executive Key Management Personnel, providing for base salary,
incentives, other benefits and participation, when eligible, in the
CLINUVEL Conditional Rights Plan.
become involved in steering management and engage in certain
operational matters that would not commonly be expected of those
in a non-executive capacity. Furthermore, the Company endeavours
to ensure the interests of its Key Management Personnel are aligned
with the interests of the Company and its shareholders within an
appropriate control framework and addressing the preference of
some shareholders to see Non-Executive Directors have relatively
significant shareholdings in the Group.
Subject to shareholder approval, and at the discretion of the Board,
Non-Executive Directors can be issued performance rights under
the Company’s Performance Rights Plan (2014). All future issues of
performance rights will be made under the 2014 Plan.
PERFORMANCE RIGHTS
All performance rights that have been issued fall under two
performance rights plans:
The details of the service agreements to the Managing Director and
Executive Key Management Personnel are:
a) the CLINUVEL Conditional Performance Rights Plan (2009);
and
NAME
DR PHILIPPE
WOLGEN
DR DENNIS
WRIGHT
MR DARREN
KEAMY
DURATION OF CONTRACT
3 years
No fixed term No fixed term
815,987 performance rights issued under the 2009 Plan remain
unvested as at 30 June 2018 and 934,573 performance rights issued
under the 2014 Plan remain unvested at 30 June 2018.
b) the CLINUVEL Performance Rights Plan (2014).
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 Directors
requires shareholder approval in accordance with ASX Listing Rules.
All rights convert to one ordinary share of the Group 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 seven years.
The eligible employee can request for shares to be transferred from
the Scheme Trust after seven 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 rights to Directors requires shareholder
approval in accordance with ASX Listing Rules. All rights convert to
one ordinary share of the Group 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 seven
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 seven 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.
NOTICE PERIOD (FROM
COMPANY)
NOTICE PERIOD
(FROM EXECUTIVE
KEY MANAGEMENT
PERSONNEL)
TERMINATION PAYMENT
WITHOUT CAUSE
TERMINATION PAYMENT
WITH CAUSE
12 months
3 months
3 months
12 months
3 months
3 months
12 months
3 months
3 months
None
None
None
E) SHARE-BASED REMUNERATION
The Group has an ownership based scheme for Directors, Other
Executive Key Management Personnel, employees and select
consultants of the Company which is designed to provide long-term
incentives to deliver long-term value.
LONG-TERM INCENTIVE – MANAGING DIRECTOR &
OTHER EXECUTIVE KEY MANAGEMENT PERSONNEL
The Group’s remuneration strategy for the Managing Director and
Other Executive Key Management Personnel is to attract, retain and
motivate people of high calibre with unique industry knowledge in
photoprotection, repigmentation, melanocortins and diseases of
unmet medical need to work towards the long-term growth and
success of the Company.
The mix of longer-term incentive remuneration with short-term (12
months or less) remuneration is aimed to encourage retention and
to maintain performance over multiple years as appropriate for the
Company’s lifecycle.
Performance rights are not granted to the Managing Director and
Other Executive Key Management Personnel annually. To date, by
virtue of the nature of the Company being primarily focussed on
research and development, the performance conditions have been
based on non-financial strategic goals linked to shareholder value
which has uncertain, longer-term anticipated milestone dates.
LONG-TERM INCENTIVE – NON-
EXECUTIVE DIRECTORS
In structuring its Non-Executive Director Remuneration policy, the
Board considers the number of employees across the Group, which
averaged less than 25 in total during the course of 2016/17 and 27 for
the course of 2017/18, and the small management team comparative
to peer companies, to oversee the Company’s initiatives. The Board
considers that from time to time its Non-Executive Directors must
19
Further details of the Company’s share-based remuneration are tabled below:
re Muner atiOn re POrt
NUMBER OF PERFORMANCE RIGHTS THAT
ARE DETERMINED
EXECUTIVE KEY MANAGEMENT PERSONNEL
The Remuneration Committee assesses and recommends to the Board the quantum of performance rights
amounts based on:
•
length of time served prior to issue of performance rights
• weighted average share price levels at time of issue
• responsibility levels within the Group
• current base pay including variable short-term incentive levels
•
industry trends
•
impact on share dilution
• nature of vesting (performance) conditions attached to the issue of performance rights
DIRECTORS
The Remuneration Committee assesses and recommends to the Board for shareholders to approve the quantum of
performance rights amounts based on:
• tenure of the Director at time of issue of performance rights
• weighted average share price levels at time of issue
• Chair and Committee representation
•
involvement in steering management
•
industry trends
•
impact on share dilution
• nature of vesting (performance) conditions attached to the issue of performance rights
SELECTION OF PERFORMANCE
CONDITIONS AFFECTING UNVESTED
PERFORMANCE RIGHTS IN THE CURRENT
AND FUTURE REPORTING PERIOD
The performance conditions attached to those performance rights issued to Non-Executive Directors in 2014 and
unvested at any time during 2017/18 relate to long-term (multi-year) strategic, non-financial objectives and they
were chosen because they are considered to be significant for long term sustainability of the Group and longer-term
value creating in nature.
NATURE OF PERFORMANCE CONDITIONS
AFFECTING UNVESTED PERFORMANCE
RIGHTS IN THE CURRENT AND FUTURE
REPORTING PERIOD
A. Upon submission of a dossier to the US FDA applying for market approval of SCENESSE®
B. Granting market approval for SCENESSE® by the US FDA (not attached to Non-Executive Directors)
C. Securing sufficient funding to secure 5 performance conditions (including the performance condition ‘Granting
market approval for SCENESSE® by the US FDA’) (not attached to Non-Executive Directors)
D. Announcement of commercial partnership to distribute SCENESSE® (or derivative of) (not attached to Managing
Director)
E. The earlier of: (a) second molecule in new formulation, or (b) paediatric formulation for afamelanotide (Other
Executive Key Management Personnel and staff only)
F. Upon European revenues under the EMA market authorisation achieving €10,000,000 in a 12 month period
(Other Executive Key Management Personnel and staff only, this performance condition was achieved in
2017/18)
ASSESSING PERFORMANCE CONDITIONS
The achievement of the performance condition is assessed and approved by the Board when it is considered
satisfied or the condition has otherwise been waived by the Board.
UPON VESTING OF PERFORMANCE RIGHTS
The performance rights are exercised into new Shares and are acquired by a Plan Trustee and then, from time
to time, transferred to the Non-Executive Director, but generally only when the Non-Executive ceases their
Directorship. The Company may determine and conclude agreements with the Plan Trustee, and enforce or
prosecute any rights and obligations under such agreements, without reference or recourse to a participant under
the Plan.
No new performance rights were granted to Non-Executive Directors for the years ended 30 June 2018 and 30 June 2017.
No new performance rights were granted to Executive Directors or Other Executive Key Management Personnel for the years ended 30 June
2018 and 30 June 2017.
20
TERMS AND CONDITIONS OF EACH GRANT OF RIGHTS AFFECTING REMUNERATION IN THE CURRENT OR
FUTURE REPORTING PERIODS
re Muner atiOn re POrt
ENTITY
NUMBER OF RIGHTS
VALUE PER RIGHT ON
GRANT DATE
CLINUVEL
CLINUVEL
CLINUVEL
CLINUVEL
CLINUVEL
CLINUVEL
CLINUVEL
CLINUVEL
CLINUVEL
CLINUVEL
91,667
91,667
116,667
75,000
692,475
158,725
90,700
113,375
4,500
5,500
$1.04
$1.04
$1.04
$1.19
$2.59
$2.16
$2.16
$2.16
$4.20
$4.20
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
17/03/2015
17/03/2015
17/03/2015
05/09/2017
05/09/2017
-
-
-
-
-
-
-
-
-
-
REMUNERATION CONDITIONAL PERFORMANCE RIGHTS HOLDINGS OF KEY MANAGEMENT PERSONNEL – 2018
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
Dr. K.A. Agersborg
EXECUTIVES
Dr. D.J. Wright
Mr. D.M. Keamy
42,500
65,000
50,000
924,974
-
-
120,125
212,760
-
-
-
-
-
-
-
-
-
-
-
-
(8,000)
(26,000)
(42,500)
-
-
-
-
-
-
-
65,000
50,000
924,974
-
-
112,125
186,760
-
-
-
-
-
-
-
-
65,000
50,000
924,974
-
-
112,125
186,760
SHARES HELD BY KEY MANAGEMENT PERSONNEL
The number of ordinary shares in the Company during the 2018 reporting period held by each of the Group’s Key Management Personnel,
including their related parties, is set out below:
YEAR ENDING 30 JUNE 2018
PERSONNEL
Mr. E. Ishag
Mr. S.R. McLiesh
Mrs. B.M. Shanahan
Dr. P.J. Wolgen
Mr. W.A. Blijdorp
Dr. K.A. Agersborg
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
162,195
162,774
153,969
2,579,722
383,145
-
244,874
192,400
-
-
-
-
-
-
8,000
26,000
-
-
-
-
-
-
-
21
-
-
-
-
-
2,900
-
-
162,195
162,774
153,969
2,579,722
383,145
2,900
252,874
218,400
F) ADDITIONAL INFORMATION - REMUNERATION
For each cash incentive and right granted, the percentage of the available grant or cash incentive that was paid or vested in the financial year,
and the percentage forfeited due to unmet milestones (including service length), is set out below. Cash incentives are paid in the year following
the period of performance, excepting the Business Generation Incentive which is paid in the year of achievement.
re Muner atiOn re POrt
REMUNERATION DETAILS OF CASH INCENTIVES AND RIGHTS
INCENTIVES
PERFORMANCE RIGHTS
PAID
FORFEITED
YEAR
GRANTED
TYPE
VESTED
FORFEITED
LATEST YEAR
FOR VESTING
MINIMUM
GRANT VALUE
YET TO VEST ($)
MAXIMUM
GRANT VALUE
YET TO VEST ($)
STI
BGI
57%
100%
43%
0%
Dr. P.J.
Wolgen
0%
0%
Mr. S.R. McLiesh
0%
0%
0%
0%
Mrs. B.M.
Shanahan
Mr. E. Ishag
Mr. W.A. Blijdorp
0%
Dr. K.A.
Agersborg
Dr. D.J. Wright
0%
75%
0%
0%
25%
87%
13%
Mr. D.M. Keamy
2010/11
Rights
2014/15
Rights
2011/12
Rights
2014/15
Rights
2011/12
Rights
2014/15
Rights
2011/12
Rights
2014/15
Rights
-
-
-
-
2011/12
Rights
2012/13
Rights
0%
0%
0%
0%
0%
0%
0%
0%
-
-
0%
0%
2014/15
Rights
25%
2011/12
Rights
2012/13
Rights
0%
0%
2014/15
Rights
25%
0%
0%
0%
0%
0%
0%
No limitation
2021/22
No limitation
2021/22
No limitation
2021/22
100%
100%
No limitation
2021/22
-
-
0%
0%
0%
0%
0%
0%
-
-
No limitation
No limitation
2021/22
No limitation
No limitation
2021/22
The exercise price for those rights granted between 2009/10 and 2014/15 was $Nil.
LOANS TO DIRECTORS AND EXECUTIVES
No loans were granted to Directors or Executives for the years ending 30 June 2018 and 30 June 2017.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
312,001
1,619,935
26,690
64,800
16,682
64,800
-
-
-
-
42,819
29,700
51,840
58,334
29,700
168,480
22
re Muner atiOn re POrt
G) ADDITIONAL DISCLOSURE – COMPANY PERFORMANCE OF CLINUVEL
PHARMACEUTICALS LTD AND CONTROLLED ENTITIES
The Group has been solely dedicated to the research, development and commercialisation of its unique and medically beneficial technology.
The remuneration and incentive framework, which has been put in place by the Board, has ensured Executive personnel are focussed on
both maximising short-term operating performance and long-term strategic growth to promote shareholder value. The focus on growth in
shareholder value has been centred on achievement of regulatory, development, commercial and operational outcomes, where financial
metrics are not necessarily an appropriate measure of Executive performance and is commonly expected in other market segments. In recent
years the Board has recognised that non-financial performance measures have been a key link to driving share price performance and this
has been reflected in the performance conditions attached to the long-term equity incentives.
The table below shows the progress made in moving through the clinical pathway and into the commercialisation pathway, reflecting the
performance of Executive management. The table also links to share price performance.
REGULATORY, CLINICAL & COMMERCIAL MILESTONES
2014
2015
2016
2017
2018
YEAR ENDING 30 JUNE
Ph II Vitiligo Study - Singapore
Orphan Drug Designation HHD– EUR&USA
Application for marketing authorisation submitted with EMA
VALLAURIX PTE LTD – formulation & melanocortin development
Post-marketing authorisation commitments
First commercial sales
Application for marketing authorisation submitted with FDA
Market capitalisation (A$ million)
Share Price High ($)
Share Price Low ($)
Closing Share Price ($)
Change in Share Price over 1 Year (%)
Change in Share Price over 3 Years (%)
72
2.00
0.92
1.70
(6)
3
127
5.10
1.30
2.84
67
74
203
5.00
2.50
4.32
57
139
333
9.19
4.10
6.98
62
311
527
13.52
5.91
11.01
58
288
END OF AUDITED REMUNERATION REPORT
23
SHARES PROVIDED UPON EXERCISE OF RIGHTS
re Muner atiOn re POrt
DETAILS OF SHARES ISSUED DURING THE FINANCIAL YEAR AS A RESULT OF EXERCISE OF RIGHTS
ENTITY
CLINUVEL
NUMBER OF SHARES ISSUED¹
ISSUE PRICE FOR SHARES
89,200
Nil$
CLASS
Ordinary
1These shares were issued by the Group during the year after performance conditions attached to the rights were considered met. Those shares issued by the Group to Directors and Employees are held for retention in
the Scheme Trust. Shares issued by the Group to eligible participants were issued directly.
DETAILS OF SHARES TRANSFERRED DURING THE YEAR TO EMPLOYEES FROM THE SCHEME TRUST
ENTITY
CLINUVEL
NUMBER OF SHARES ISSUED¹
ISSUE PRICE FOR SHARES
103,500
Nil$
CLASS
Ordinary
1 These shares were issued by the Scheme Trustee to departing employees who resigned from the Group during the year or to existing employees who had their transfer restrictions waived by the Board in their
discretion.
UNISSUED SHARES UNDER OPTION
ENTITY
NUMBER OF SHARES
UNDER RIGHTS
EXERCISE
PRICE
CLINUVEL PHARMACEUTICALS LTD
CLINUVEL PHARMACEUTICALS LTD
CLINUVEL PHARMACEUTICALS LTD
CLINUVEL PHARMACEUTICALS LTD
840,985
692,475
254,100
5,500
1,750,560
$Nil
$Nil
$Nil
$Nil
-
CLASS
Ordinary
Ordinary
Ordinary
Ordinary
-
Upon achievement of specific performance and time-based
milestones or upon cessation of employment
EXPIRY DATE
28 November 2021
17 March 2022
5 September 2024
-
NON-AUDIT SERVICES
For the years ended 30 June 2018 and 30 June 2017, Grant Thornton
Australia only provided audit services to the Company.
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 29th day of August, 2018
24
STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE
INCOME FOR THE YEAR
ENDED 30 JUNE 2018
Total revenues
Other income
Total expenses
Profit/(loss) before income tax expense
Income tax (expense)/benefit
Profit/(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
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE PERIOD
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
NOTE
2
2
2
CONSOLIDATED ENTITY
2018
$
2017
$
25,750,125
16,984,536
485,838
185,168
(13,293,557)
(10,055,418)
12,942,406
7,114,286
3(a)
281,779
-
13,224,185
7,114,286
13,224,185
7,114,286
(493,287)
(13,854)
-
-
(493,287)
(13,854)
12,730,898
7,100,432
-
13,224,185
(66,541)
7,180,827
13,224,185
7,114,286
-
12,730,898
(66,541)
7,166,973
12,730,898
7,100,432
Basic earnings per share - cents per share
Diluted earnings per share - cents per share
The accompanying notes form part of these financial statements.
16
16
27.7
26.7
14.9
14.3
25
STATEMENT OF FINANCIAL
POSITION AS AT 30 JUNE 2018
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventory
Other assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
Deferred tax assets
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
NOTE
17(a)
4
5
6
7
8
3(c)
10
11
11
12
13
14
CONSOLIDATED ENTITY
2018
$
36,198,451
5,090,271
641,285
339,062
2017
$
23,752,312
3,239,127
1,241,608
236,576
42,269,069
28,469,623
168,739
185,030
281,779
635,548
137,341
-
-
137,341
42,904,617
28,606,964
2,499,915
970,906
3,470,821
17,808
17,808
2,294,228
853,374
3,147,602
15,337
15,337
3,488,629
3,162,939
39,415,988
25,444,025
148,614,908
148,413,095
3,481,916
2,820,212
(112,680,836)
(125,847,024)
39,415,988
25,386,283
EQUITY ATTRIBUTABLE TO NON-CONTROLLING (MINORITY EQUITY) INTEREST
-
57,742
TOTAL EQUITY
The accompanying notes form part of these financial statements.
39,415,988
25,444,025
26
STATEMENT OF CASH
FLOWS FOR THE YEAR
ENDED 30 JUNE 2018
CASH FLOWS FROM OPERATING ACTIVITIES
GST and VAT refunds
Government R&D tax incentive
Receipts from customers
Interest received
Payments to suppliers and employees
NOTE
CONSOLIDATED ENTITY
2018
$
2017
$
183,842
53,069
193,012
588,018
23,705,378
17,924,257
290,566
233,682
(12,539,522)
(9,022,033)
NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES
17(b)
11,693,333
9,916,936
CASH FLOWS FROM INVESTING ACTIVITIES
Payments 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 FINANCING ACTIVITIES
NET INCREASE IN CASH HELD
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
Effects of exchange rate changes on foreign currency held
(75,123)
(67,479)
(75,123)
(67,479)
-
-
-
-
-
85,082
-
85,082
11,618,210
9,934,539
23,752,312
13,844,703
827,929
(26,930)
CASH AND CASH EQUIVALENTS AT END OF THE YEAR
17(a)
36,198,451
23,752,312
The accompanying notes form part of these financial statements.
27
STATEMENT OF CHANGES
IN EQUITY FOR THE YEAR
ENDED 30 JUNE 2018
SHARE
CAPITAL
PERFORMANCE
RIGHTS
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVE
TOTAL
ATTRIBUTABLE
TO OWNERS OF
PARENT
NON-
CONTROLLING
INTEREST
RETAINED
EARNINGS
TOTAL
EQUITY
$
$
$
$
$
$
$
BALANCE AT 30 JUNE 2016
146,764,500
3,984,103
110,874
(133,063,239)
17,796,238
38,282
17,834,520
Equity contribution by subsidiary non-
controlling interest
Issue of Share Capital under private
placement
-
-
-
-
Issue of Share Capital under share-based
payment
1,648,595
(1,648,595)
Employee share-based payment options
Capital raising costs
-
-
359,976
-
-
-
-
-
-
-
-
-
-
-
35,388
395,364
-
-
86,001
86,001
-
-
-
-
-
-
395,364
-
TRANSACTIONS WITH OWNERS
148,413,095
2,695,484
110,874
(133,027,851)
18,191,602
124,283
18,315,885
PROFIT/(LOSS) FOR THE YEAR
OTHER COMPREHENSIVE INCOME:
Exchange differences of foreign exchange
translation of foreign operations
TOTAL OTHER COMPREHENSIVE
INCOME
7,180,827
7,180,827
(66,541)
7,114,286
-
-
-
-
13,854
13,854
-
-
13,854
13,854
-
-
13,854
13,854
BALANCE AT 30 JUNE 2017
148,413,095
2,695,484
124,728
(125,847,024)
25,386,283
57,742 25,444,025
Equity contribution by subsidiary non-
controlling interest
Issue of Share Capital under share-based
payment
Employee share-based payment options
Purchase of shares held in subsidiary from
non-controlling interest
Transfer of Accumulated Loss of
non-controlling interest to owner upon
purchase of minority interest
-
-
201,813
(201,813)
-
-
-
370,230
-
-
-
-
-
-
-
-
-
-
-
57,405
427,635
-
-
-
-
-
427,635
-
-
(173,144)
(173,144)
(115,402)
(115,402)
115,402
-
TRANSACTIONS WITH OWNERS
148,614,908
2,863,901
124,728
(125,905,021)
25,698,516
PROFIT/(LOSS) FOR THE YEAR
OTHER COMPREHENSIVE INCOME:
Exchange differences of foreign exchange
translation of foreign operations
TOTAL OTHER COMPREHENSIVE
INCOME
13,224,185
13,224,185
-
-
-
-
493,287
493,287
-
-
493,287
493,287
BALANCE AT 30 JUNE 2018
148,614,908
2,863,901
618,015
(112,680,836)
39,415,988
-
-
-
-
-
25,698,516
13,224,185
493,287
493,287
39,415,988
28
NOTES TO AND FORMING
PART OF THE FINANCIAL
STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2018
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 judgments 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 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 9 of the Financial
Statements.
B) INCOME TAX
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
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
29
nOtes tO the Financial s tateM ents
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.
The deferred tax asset has been recognised as at 30 June 2018 based
on the following management judgements:
• The consolidated entity has experienced consecutive years of
profitably and revenue growth;
• Current pricing agreements with European payors not expected
to change in the next financial year; and
• Internal targets continue to expect ongoing profitability in the
near term.
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.
E) INVESTMENTS AND OTHER FINANCIAL ASSETS
Financial assets at fair value through profit or loss (FVTPL)
The consolidated entity does not hold financial assets at fair value
through profit and loss (FVTPL) at balance date. FVTPL include
financial assets that are either classified as held for trading or
that meet certain conditions and are designated at FVTPL upon
initial recognition. All derivative financial instruments fall into
this category, except for those designated and effective as hedging
instruments, for which the hedge accounting requirements apply.
Assets in this category are measured at fair value with gains or losses
recognised in profit or loss. The fair values of financial assets in this
category are determined by reference to active market transactions
or using a valuation technique where no active market exists.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. After
initial recognition, these are measured at amortised cost using the
effective interest method, less provision for impairment. Discounting
is omitted where the effect of discounting is immaterial. The Group’s
trade and most other receivables fall into this category of financial
instruments. Individually significant receivables are considered for
impairment when they are past due or when other objective evidence
is received that a specific counterparty will default. Receivables
that are not considered to be individually impaired are reviewed
for impairment in groups, which are determined by reference to the
industry and region of a counterparty and other shared credit risk
characteristics. The impairment loss estimate is then based on
recent historical counterparty default rates for each identified group.
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 probable 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 following diminishing value percentages are used in the
calculation of depreciation:
The consolidated entity uses its critical judgment in continually
assessing whether development expenditures meet the recognition
criteria of an intangible asset.
• 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 Profit or Loss.
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.
30
nOtes tO the Financial s tateM ents
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.
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.
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 high quality corporate bond rates as commissioned
by the Group of 100 and published by Milliman Australia at reporting
date.
K) DIRECTORS’ REMUNERATION –
SHARE-BASED PAYMENTS
Under AASB 2 Share-based Payments, the consolidated entity must
determine the fair value of options and conditional 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 conditional
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 conditional
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 conditional
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. The Group’s R&D tax incentive
program is currently derived from expenditure only.
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:
• 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
• 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
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
31
nOtes tO the Financial s tateM ents
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 immediately.
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’).
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.
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 still in
development stage and yet to be used in the Group’s R&D 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’).
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.
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 payment 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 23.
Key judgments – tax losses
Given the Company’s and each individual entities’ history of losses,
the Group has not recognised a deferred tax asset with regard to
unused tax losses and other temporary differences until this year. For
the first time, the Directors have determined the Group will generate
sufficient taxable income against which the unused tax losses and
other temporary differences can be utilised. The value of tax losses
both recognised and 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 2018 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
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.
32
nOtes tO the Financial s tateM ents
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:
• 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.
◦ 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,
when this Standard is first adopted for the year ending 30 June 2019,
there will be no material impact on the transactions and balances
recognised in the financial statements.
AASB 16 Leases
AASB 16:
• replaces AASB
interpretations;
117 Leases and
some
lease-related
• requires all leases to be accounted for ‘on-balance sheet’ by
lessees, other than short-term and low value asset leases;
• Introduces a ‘fair value through other comprehensive income’
measurement category for particular simple debt instruments.
• provides new guidance on the application of the definition of
lease and on sale and lease back accounting;
• 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:
◦ the change attributable to changes in credit risk are
presented in Other Comprehensive Income (‘OCI’); and
◦ 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 118 Revenue, AASB 111 Construction Contracts
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
• largely retains the existing lessor accounting requirements in
AASB 117; and
• requires new and different disclosures about leases.
Based on the entity’s assessment, it is expected that the first-time
adoption of AASB 16 for the year ending 30 June 2019 will have a
material impact on the transactions and balances recognised in the
financial statements, in particular:
• lease assets and financial liabilities on the balance sheet will
increase by $282,449 and $267,744 respectively (based on the
facts at the date of the assessment);
• there will be a reduction in the reported equity as the carrying
amount of lease assets will reduce more quickly than the
carrying amount of lease liabilities; and
• operating cash outflows will be lower and financing cash
flows will be higher in the statement of cash flows as principal
repayments on all lease liabilities will now be included in
financing activities rather than operating activities. Interest
can also be included within financing activities.
AASB 2016-5 Amendments to Australian Accounting
Standards – Classification and Measurement
of Share-based Payment Transactions
This Standard amends AASB 2 Share-based Payment to address:
• the accounting for the effects of vesting and non-vesting
conditions on the measurement of cash-settled share-based
payments;
• the classification of share-based payment transactions with a
net settlement feature for withholding tax obligations; and
• the accounting for a modification to the terms and conditions
of a share-based payment that changes the classification of the
transaction from cash-settled to equity-settled.
The entity is yet to undertake a detailed assessment of the impact of
AASB 2016-5. 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.
Interpretation 22 Foreign Currency Transactions
and Advance Consideration
Interpretation 22 looks at what exchange rate to use for translation
when payments are made or received in advance of the related asset,
expense or income.
Although AASB 121 The Effects of Changes in Foreign Exchange
Rates sets out requirements about which exchange rate to use when
recording a foreign currency transaction on initial recognition in
an entity’s functional currency, the IFRS Interpretations Committee
33
nOtes tO the Financial s tateM ents
had observed diversity in practice in circumstances in which an
entity recognises a non-monetary liability arising from advance
consideration. The diversity resulted from the fact that some entities
were recognising revenue using the spot exchange rate at the date of
the receipt of the advance consideration while others were using the
spot exchange rate at the date that revenue was recognised.
Interpretation 22 addresses this issue by clarifying that the date of
the transaction for the purpose of determining the exchange rate to
use on initial recognition of the related asset, expense or income (or
part of it) is the date on which an entity initially recognises the non-
monetary asset or non-monetary liability arising from the payment
or receipt of advance consideration. If there are multiple payments
or receipts in advance, the entity shall determine a date of the
transaction for each payment or receipt of advance consideration.
The entity is yet to undertake a detailed assessment of the impact
of Interpretation 22. However, based on the entity’s preliminary
assessment, the Interpretation 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 Interpretation 23 Uncertainty Over Income Tax Treatments
AASB
recognition and
measurement requirements of IAS 12 Income Taxes are applied where
there is uncertainty over income tax treatments.
Interpretation 23 clarifies how
the
impact on the transactions and balances recognised in the financial
statements when it is first adopted for the year ending 30 June 2020.
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 and commercial sales are
100% earned from entities within Europe and Switzerland, 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 three end users (2017: eight end users).
100% of the revenue from commercial sales is from nineteen end
users (2017: twelve end users).
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 entity is yet to undertake a detailed assessment of the impact of
AASB Interpretation 23. However, based on the entity’s preliminary
assessment, the Interpretation is not expected to have a material
34
2. PROFIT/(LOSS) FROM CONTINUING OPERATIONS
nOtes tO the Financial s tateM ents
(A)
REVENUES
Interest revenue – other persons
Sales reimbursements
Commercial sales of goods
TOTAL REVENUES
(B)
OTHER INCOME
Government R&D tax incentive
Gain/(loss) on restating foreign currency creditors and currencies held
Realised net currency gain on transactions
TOTAL OTHER INCOME
(C)
EXPENSES
Clinical development
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)
Foreign currency translation losses
TOTAL EXPENSES
(D)
PROFIT/(LOSS) BEFORE INCOME TAX INCLUDES THE FOLLOWING SPECIFIC EXPENSES
Employee benefits expense
Depreciation on property, plant & equipment
Depreciation - make-good
Loss on sale of property, plant and equipment
Share-based payments
Operating lease expense – minimum lease payments
CONSOLIDATED ENTITY
2018
$
2017
$
264,452
264,394
4,126,413
4,833,653
21,359,260
11,886,489
25,750,125
16,984,536
147
45,314
423,562
62,129
485,838
-
139,854
185,168
53,642
1,733,082
129,806
857,204
1,622,829
1,005,223
2,575,752
2,060,701
1,051,125
522,135
811,434
219,714
5,734,992
4,882,282
-
89,054
13,293,557
10,055,418
5,947,097
4,817,187
43,898
53,138
645
-
427,635
310,667
-
33,740
395,364
345,482
35
3. INCOME TAX EXPENSE
nOtes tO the Financial s tateM ents
(A)
INCOME TAX EXPENSE/BENEFIT
Recognition of opening deferred tax assets
Recognition of opening deferred tax liabilities
Deferred tax expense/(benefit)
INCOME TAX EXPENSE/(BENEFIT)
DEFERRED TAX INCLUDED IN INCOME TAX EXPENSE/(BENEFIT) COMPRISES:
(Increase)/decrease in deferred tax assets
Increase/(decrease) in deferred tax liabilities
(B)
NUMERICAL RECONCILIATION OF INCOME TAX BENEFIT AND TAX AT THE STATUTORY RATE
PROFIT/(LOSS) BEFORE INCOME TAX EXPENSE
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Non-deductible entertainment
Share-based payments
Research and development deduction
Fines and Penalties
(Over)/under provision of income tax in previous years
Refundable tax offset
Other
Recognition of temporary differences
Current year temporary differences not recognised
Previously unrecognised tax losses now recognised
Adjustment for overseas subsidiary losses not brought into account
INCOME TAX EXPENSE/(BENEFIT)
TAX LOSSES NOT RECOGNISED
Unused tax losses for which no deferred tax asset has been recognised
POTENTIAL TAX BENEFIT AT 30%
CONSOLIDATED ENTITY
2018
2017
$
-
-
(281,779)
(281,779)
(3,124,408)
2,842,629
(281,779)
$
-
-
-
-
-
-
-
12,942,406
7,114,286
3,882,722
2,134,286
774
128,291
-
96
228,836
(44)
-
1,275
118,609
36,498
-
157,146
(13,594)
-
4,240,675
2,434,220
1,747,139
-
-
375,949
(6,728,893)
(2,810,169)
459,300
(281,779)
-
-
106,945,662
121,081,247
32,083,699
36,324,374
36
3. INCOME TAX EXPENSE - CONTINUED
nOtes tO the Financial s tateM ents
(C)
DEFERRED TAX ASSETS
Deferred tax asset comprises temporary differences attributable to:
CONSOLIDATED ENTITY
2018
$
2017
$
Intangibles
Accrued expenses
Provisions
Carry forward tax losses
Other
MOVEMENTS
Opening balance
Recognition of opening deferred tax assets
Intangibles
Accrued expenses
Provisions
Carry forward tax losses
Other
Deferred tax assets utilised
(C)
DEFERRED TAX LIABILITIES
Deferred tax liability comprises temporary differences attributable to:
Intangibles
Accrued income
Unrealised gains/loss on loans to subsidiaries
MOVEMENTS
Opening balance
Recognition of opening deferred tax liability
Intangibles
Accrued income
Unrealised gains/loss on loans to subsidiaries
441,212
3,116
152,491
2,572,499
(44,910)
3,124,408
-
4,788,520
81,476
96
(116,880)
2,572,500
(44,910)
(4,156,394)
3,124,408
32,412
(20,375)
(2,854,666)
(2,842,629)
-
(2,379,265)
(33,642)
7,839
(437,561)
(2,842,629)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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.
37
4. TRADE AND OTHER RECEIVABLES
nOtes tO the Financial s tateM ents
CURRENT
Trade debtors
Accrued income
Sundry debtors
TOTAL
CONSOLIDATED ENTITY
2018
$
2017
$
4,937,083
2,966,173
67,916
85,272
94,048
178,906
5,090,271
3,239,127
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:
AMOUNT IMPAIRED
AMOUNT NOT IMPAIRED
TOTAL
AMOUNT IMPAIRED AMOUNT NOT IMPAIRED
TOTAL
2018
2017
-
-
-
-
4,667,587
4,667,587
219,634
219,634
49,862
49,862
4,937,083
4,937,083
-
-
-
-
2,756,649
2,756,649
209,524
209,524
-
-
2,966,173
2,966,173
Not past due
Past due 61-90 days
Past due >90 days
TOTAL
5. INVENTORY
CONSOLIDATED ENTITY
2017
$
512,651
(181,675)
466,716
443,916
1,241,608
CONSOLIDATED ENTITY
2017
$
137,444
99,132
236,576
2018
$
454,257
(147,888)
-
334,916
641,285
2018
$
145,190
193,872
339,062
CURRENT
Raw materials – at cost
Provision for obsolescence – raw materials
Work in progress – at cost
Finished goods – at cost
TOTAL
6. OTHER ASSETS
CURRENT
Prepaid peptide
Other prepayments
TOTAL
38
7. PROPERTY, PLANT AND EQUIPMENT
nOtes tO the Financial s tateM ents
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
2018
$
187,032
(81,323)
105,709
125,189
(62,159)
63,030
168,739
2017
$
113,178
(56,258)
56,920
124,123
(43,702)
80,421
137,341
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 2016
Additions
Disposals
Depreciation written back on disposal
Depreciations expense
Make-good
Exchange differences
CARRYING AMOUNT AT 30 JUNE 2017
Additions
Disposals
Depreciation written back on disposal
Depreciations expense
Make-good
Exchange differences
$
86,317
34,212
(326,519)
290,038
(27,128)
-
-
56,920
76,606
(2,750)
626
(25,693)
-
-
$
$
78,353
164,670
28,078
62,290
-
-
(326,519)
290,038
(26,010)
(53,138)
-
-
-
-
80,421
137,341
1,066
77,672
-
-
(2,750)
626
(18,457)
(44,150)
-
-
-
-
CARRYING AMOUNT AT 30 JUNE 2018
105,709
63,030
168,739
39
nOtes tO the Financial s tateM ents
8. GOODWILL
GOODWILL
At cost
Less: impairment
SUB-TOTAL
9. INTERESTS IN SUBSIDIARIES
NAME OF ENTITY
COUNTRY OF INCORPORATION
CONSOLIDATED ENTITY
2018
$
185,030
-
185,030
2017
$
-
-
-
OWNERSHIP INTEREST
2018
2017
PARENT ENTITY
CLINUVEL PHARMACEUTICALS LTD
Australia
-
-
CONTROLLED ENTITIES
A.C.N. 108 768 896 Pty Ltd
Australia
CLINUVEL (UK) LTD
United Kingdom
CLINUVEL, INC.
CLINUVEL AG
CLINUVEL SINGAPORE PTE LTD
VALLAURIX PTE LTD
United States of America
Switzerland
Singapore
Singapore
10. TRADE AND OTHER PAYABLES
CURRENT
TOTAL
Unsecured trade creditors
Sundry creditors and accrued expenses
(A)
AGGREGATE AMOUNTS PAYABLE TO:
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
82%
CONSOLIDATED ENTITY
2018
$
428,562
2,071,353
2,499,915
2017
$
579,466
1,714,762
2,294,228
Directors and Director-related entities
464,770
501,443
(B)
AUSTRALIAN DOLLAR EQUIVALENTS OF AMOUNTS PAYABLE IN FOREIGN CURRENCIES NOT EFFECTIVELY HEDGED AND INCLUDED IN
TRADE AND SUNDRY CREDITORS:
Singapore Dollars
TOTAL
490,277
490,277
-
-
For an analysis of the sensitivity of trade and other payables to foreign currency risk refer to Note 22.
(C)
TERMS AND CONDITIONS:
Trade and sundry creditors are non-interest bearing and normally settled on 30 day terms.
40
nOtes tO the Financial s tateM ents
11. PROVISIONS
CURRENT
Employee benefits
TOTAL
NON-CURRENT
Employee benefits
Other provisions
TOTAL
MOVEMENTS IN CARRYING AMOUNTS - PROVISIONS
The carrying amounts and movements in other provisions account are as follows:
CARRYING AMOUNT AT 30 JUNE
Provisions made during the year
Unwind of discount
CARRYING AMOUNT AT 30 JUNE
12. CONTRIBUTED EQUITY
(A) ISSUED AND PAID UP CAPITAL
CONSOLIDATED ENTITY
2018
$
970,906
970,906
3,197
14,611
17,808
2017
$
853,374
853,374
1,169
14,168
15,337
CONSOLIDATED ENTITY
2018
$
14,168
-
443
14,611
2017
$
14,742
-
(574)
14,168
CONSOLIDATED ENTITY
2018
$
2017
$
47,824,427 fully paid ordinary shares (2017: 47,735,227)
148,614,908
148,413,095
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
CONSOLIDATED ENTITY
2018
$
2017
$
NO.
NO.
AT THE BEGINNING OF THE FINANCIAL YEAR
47,735,227
148,413,095
47,080,637
146,764,500
Issued during the year
-
-
-
-
Conditional rights issued and transferred from conditional rights reserve
89,200
201,813
654,590
1,648,595
Less: transaction costs
-
-
-
-
BALANCE AT THE END OF THE FINANCIAL YEAR
47,824,427
148,614,908
47,735,227
148,413,095
41
nOtes tO the Financial s tateM ents
(C) CONDITIONAL PERFORMANCE RIGHTS
During the year the following Conditional Performance Rights were exercised, resulting in the issue of fully paid ordinary shares:
EXPIRY DATE
EXERCISE PRICE
NUMBER OF CONDITIONAL RIGHTS
Upon achievement of various performance milestones
Nil$
89,200
As at 30 June 2018 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$
1,750,560
13. RESERVES
CONDITIONAL PERFORMANCE RIGHTS RESERVE:
BALANCE AT THE BEGINNING OF PERIOD
Share-based payment
Transfer to share capital
Lapsed, forfeited rights
BALANCE AT THE END OF PERIOD
CONSOLIDATED ENTITY
2018
$
2017
$
2,695,484
3,984,103
427,635
395,364
(201,813)
(1,648,595)
(57,405)
(35,388)
2,863,901
2,695,484
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
14. ACCUMULATED LOSSES
124,728
110,874
493,287
618,015
13,854
124,728
3,481,916
2,820,212
CONSOLIDATED ENTITY
NON-CONTROLLING INTEREST
2018
$
2017
$
2018
$
2017
$
Accumulated losses at the beginning of the year
(125,847,024)
(133,063,239)
(115,402)
(48,861)
Transfer from Performance Rights reserve of lapsed & expired Rights
57,405
35,388
-
Transfer from purchase of non-controlling interest
(115,402)
-
115,402
-
-
Net profit/(loss) attributable to the members of CLINUVEL PHARMACEUTICALS LTD
13,224,185
7,180,827
ACCUMULATED LOSSES AT THE END OF THE FINANCIAL YEAR
(112,680,836)
(125,847,024)
-
-
(66,541)
(115,402)
42
15. LEASE COMMITMENTS
nOtes tO the Financial s tateM ents
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
Operating leases comprises commitments for office premises and miscellaneous equipment.
CONSOLIDATED ENTITY
2018
$
2017
$
315,095
211,095
169,686
125,375
526,190
295,061
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.
16. EARNINGS PER SHARE (EPS)
(a) Basic earnings per share (cents per share)
(a) Diluted earnings per share (cents per share)
CONSOLIDATED ENTITY
2018
$
27.7
26.7
2017
$
14.9
14.3
(b) The Weighted Average Number of Ordinary Shares (WANOS) used in the calculation of basic earnings per share
47,742,803
47,670,194
(b) Weighted average number of performance rights on issue in respect of share based payments during the year
1,847,841
1,956,597
(b) The Weighted Average Number of Ordinary Shares (WANOS) used in the calculation of diluted earnings per share
49,590,644
49,626,791
(c) The numerator used in the calculation of basic earnings per share ($)
13,224,185
7,114,286
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.
43
17. CASH FLOW INFORMATION
nOtes tO the Financial s tateM ents
(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:
CONSOLIDATED ENTITY
2018
$
2017
$
Cash at bank
Cash on hand
Deposits on call
Term deposits
Security bonds
TOTAL CASH
16,628,038
1,411
5,511,118
13,975,000
82,884
36,198,451
14,209,196
1,376
129,048
9,350,000
62,692
23,752,312
(B) RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES WITH OPERATING PROFIT (LOSS)
OPERATING PROFIT (LOSS) AFTER INCOME TAX
13,224,185
7,114,286
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 deferred tax assets
Increase/(decrease) in provisions
NET CASH USED IN OPERATING ACTIVITIES
44,542
(827,929)
427,635
-
493,287
(1,851,144)
600,323
(102,486)
(153,304)
(281,779)
120,003
11,693,333
53,138
26,930
395,364
33,740
13,854
1,584,644
(159,444)
(13,616)
729,715
-
138,325
9,916,936
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 2.45% (2017: 2.80%). These deposits have an average maturity date of 216 days (2017: 208 days).
44
18. KEY MANAGEMENT PERSONNEL
nOtes tO the Financial s tateM ents
CONSOLIDATED ENTITY
2018
$
2017
$
2,923,985
2,125,768
56,582
55,716
-
-
295,745
333,226
3,276,312
2,514,710
CONSOLIDATED ENTITY
2018
$
94,500
-
94,500
2017
$
92,500
-
92,500
candidate. A provision for non-recovery has been raised in the
accounts of CLINUVEL PHARMACEUTICALS LTD where a deficiency
in net assets exists in CLINUVEL (UK) LTD. The loan to CLINUVEL
(UK) LTD as at 30 June 2018 is $10,036,005 (2017: $5,074,245).
The loan receivable by CLINUVEL PHARMACEUTICALS LTD from
VALLAURIX PTE LTD is non-interest bearing. Repayment of the
loan will commence upon commercialisation of VALLAURIX PTE
LTD’s product(s). A provision for non-recovery has been raised in the
accounts of CLINUVEL PHARMACEUTICALS LTD where a deficiency
in net assets exists in VALLAURIX PTE LTD. The loan to VALLAURIX
PTE LTD as at 30 June 2018 is $194,110 (2017: $0).
Director related and Key Management Personnel transactions and
entities:
There are no transactions and relationships in existence as at 30 June
2018 between Directors and the Company and its related entities.
21. 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 and commercial sales are
100% earned from entities within Europe, and Switzerland 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 three end users (2017: eight end users).
100% of the revenue from commercial sales is from nineteen end
users (2017: twelve end users).
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.
19. AUDITOR'S REMUNERATION
Amounts received or due and receivable by Grant Thornton for:
audit services and review
other services
TOTAL
20. RELATED PARTY DISCLOSURES
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 where 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 2018 is $4,370,640 (2017: $4,370,640).
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 where a deficiency
in net assets exists in CLINUVEL, INC. The loan to CLINUVEL, INC. as
at 30 June 2018 is $10,885,890 (2017: $10,411,946).
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 where a deficiency
in net assets exists in CLINUVEL AG. The loan to CLINUVEL AG as at
30 June 2018 is $12,543,948 (2017: $12,310,580).
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 where a deficiency
in net assets exists in CLINUVEL SINGAPORE PTE LTD. The loan to
CLINUVEL SINGAPORE PTE LTD as at 30 June 2018 is $183,473 (2017:
$365,080).
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
45
nOtes tO the Financial s tateM ents
22. FINANCIAL INSTRUMENTS
CLINUVEL PHARMACEUTICALS LTD and consolidated entities have
exposure to the following risks from its use in financial instruments:
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.
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. It is
also exposed to the risk of movements in foreign currency exchange
rates for those currencies which sales and reimbursement receipts
are received.
The consolidated entity’s policy of managing foreign currency risk
is to hold foreign currencies equivalent to the cash outflow projected
over minimum 30 days by the placement of market orders or have in
place 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
2018 and as at 30 June 2017.
THE CONSOLIDATED ENTITY'S EXPOSURE TO FOREIGN CURRENCY RISK AT 30 JUNE 2018
CONSOLIDATED ENTITY
CASH & CASH
EQUIVALENTS
TRADE
DEBTORS &
OTHER ASSETS
TRADE, OTHER
PAYABLES &
PROVISIONS
TOTAL
CASH & CASH
EQUIVALENTS
TRADE
DEBTORS &
OTHER ASSETS
TRADE, OTHER
PAYABLES &
PROVISIONS
2018
2017
TOTAL
USD
EUR
CHF
GBP
SGD
1,338,322
128
(284,361)
1,054,089
1,169,412
-
(517,812)
651,600
6,187,830
2,567,725
(338,398)
8,417,157
5,561,436
1,743,103
(181,161)
7,123,378
2,001,399
418,766
(98,142)
2,322,023
1,493,230
399,610
(141,331)
1,751,509
778,795
883,859
31,119
(227,841)
582,073
624,997
42,624
(293,698)
373,923
12,048
(1,323,892)
(427,985)
1,128,840
12,415
(978,457)
162,798
Sensitivity Analysis of Foreign Currency Risk
During the financial year the Company had a principal foreign
currency transaction risk exposure to the Euro. Assuming all other
variables remain constant, a depreciation in the Australian dollar is
advantageous to the consolidated entity as sales receipts received
in Euro foreign currency allows for conversion to a higher amount of
Australian dollars.
For the consolidated entity, a 5% appreciation of the Australian dollar
against the Euro currency would have decreased profit and loss and
equity by $983,765 for the year ended 30 June 2018 (2017: $293,857), on
the basis that all other variables remain constant. 5% is considered
representative of the market volatility in the Australian dollar/Euro
rate for the period.
For the consolidated entity, an appreciation of the Australian dollar
against the Euro 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.
Interest Rate Risk
The consolidated entity holds fixed interest bearing assets therefore
exposure to interest rate risk exists. It does not hold interest bearing
liabilities.
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 2018, if interest rates had
changed by +/- 25 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 $65,123 higher/
lower (2017: $45,916 higher/ lower). This analysis assumes all other
variables are held constant.
46
nOtes tO the Financial s tateM ents
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.
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.
Fair Value Estimation
The fair value of financial assets and financial liabilities must be
estimated for recognition and measurement for disclosure purposes.
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.
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 approximately
twenty-two counterparties across German, Italian, Swiss, Dutch and
other medical institutions who are reimbursed by government or
private insurance payors.
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.
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 its 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.
is
limited
Capital Risk Management
The consolidated entity’s equity
to shareholder
contributions, supported by the cash inflows received from providing
SCENESSE® to EPP patients under both the full cost special access
reimbursement programs and from commercial sales currently
in Europe and Switzerland. Its capital management objectives are
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®,
to file for successful marketing authorisation in new jurisdictions
and achieving a status whereby revenues will consistently exceed
expenditures.
CONTRACTUAL MATURITIES OF FINANCIAL ASSETS AS AT 30 JUNE 2018
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 2018
TRADE AND OTHER PAYABLES
Carrying amount
6 months or less
Greater than 6 months
TOTAL
47
CONSOLIDATED ENTITY
2018
$
36,198,451
29,748,451
6,450,000
2017
$
23,752,312
23,752,312
-
36,198,451
23,752,312
5,090,271
5,040,409
49,862
3,239,127
3,239,127
-
5,090,271
3,239,127
CONSOLIDATED ENTITY
2018
$
2,499,941
2,479,749
20,192
2017
$
2,294,186
2,265,478
28,750
2,499,941
2,294,228
23. EMPLOYEE BENEFITS
nOtes tO the Financial s tateM ents
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
2018
$
591,833
382,270
686,256
2017
$
527,970
326,573
715,930
TOTAL
1,660,359
1,570,473
SHARE-BASED PAYMENTS
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. 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 rights to Executive Directors
requires shareholder approval in accordance with ASX Listing Rules.
All 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 rights have been achieved, whereby they will be held by a Scheme
Trustee on behalf of the eligible employee for up to seven years. The
eligible employee can request for shares to be transferred from the
Scheme Trust after seven 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 rights to executive Directors requires
shareholder approval in accordance with ASX Listing Rules. All
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 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 seven years from grant date of
performance right, 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 seven
years from grant date.
THE FOLLOWING SHARE-BASED PAYMENT ARRANGEMENTS WERE IN EXISTENCE AT 30 JUNE 2018
PERFORMANCE
RIGHTS SERIES
NUMBER
GRANT DATE
EXPIRY DATE
EXERCISE
PRICE
FAIR VALUE AT
GRANT DATE
Issued 25/11/2010
299,999
25/11/2010
Issued 16/09/2011
375,986
16/09/2011
Issued 16/11/2011
65,000
16/11/2011
Issued 14/01/2013
75,000
14/01/2013
Issued 04/12/2014
674,975
28/11/2014
Issued 17/03/2015
338,800
17/03/2015
Issued 05/09/2017
5,500
5/09/2017
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
7 years from Grant Date
7 years from Grant Date
7 years from Grant Date
$ Nil
$ Nil
$ Nil
$ Nil
$ Nil
$ Nil
$ Nil
$1.04
Between $0.55 and
$0.72
$0.67
$1.19
$2.59
$2.16
$4.20
48
HOLDINGS OF ALL ISSUED CONDITIONAL PERFORMANCE RIGHTS – 2018
nOtes tO the Financial s tateM ents
PERFORMANCE
RIGHTS SERIES
Issued 25/11/2010
Issued 16/09/2011
Issued 16/11/2011
Issued 14/01/2013
BALANCE AT
START OF
YEAR
299,999
375,986
90,000
75,000
Issued 04/12/2014
692,475
Issued 17/03/2015
338,800
GRANTED AS
COMPENSATION
EXERCISED
EXPIRED &
LAPSED
BALANCE AT
END OF YEAR
VESTED AND
EXERCISABLE
UNVESTED
-
-
-
-
-
-
-
-
-
-
-
(84,700)
-
-
(25,000)
-
(17,500)
-
-
299,999
375,986
65,000
75,000
674,975
254,100
5,500
-
-
-
-
-
-
-
299,999
375,986
65,000
75,000
674,975
254,100
5,500
Issued 05/09/2017
-
10,000
(4,500)
TOTAL
1,872,260
10,000
(89,200)
(42,500)
1,750,560
-
1,750,560
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 – 2017
PERFORMANCE
RIGHTS SERIES
BALANCE AT
START OF YEAR
GRANTED AS
COMPENSATION
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
-
-
-
-
-
-
-
-
EXERCISED
(10,000)
-
-
-
-
(553,890)
-
-
-
299,999
(5,400)
375,986
-
-
-
90,000
75,000
692,475
(90,700)
(24,000)
338,800
(654,590)
(29,400)
1,872,260
-
-
-
-
-
-
-
-
-
299,999
375,986
90,000
75,000
692,475
338,800
1,872,260
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
TOTAL
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.
49
24. CLINUVEL PHARMACEUTICALS LTD PARENT COMPANY INFORMATION
nOtes tO the Financial s tateM ents
CLINUVEL PHARMACEUTICALS LTD
2018
$
31,460,940
11,152,447
42,613,387
1,664,993
3,197
1,668,190
148,614,908
2,863,901
(110,533,612)
40,945,197
13,972,344
-
13,972,344
2017
$
21,789,154
6,287,177
28,076,331
1,415,118
1,169
1,416,287
148,413,095
2,695,500
(124,448,551)
26,660,044
7,551,035
-
7,551,035
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
25. 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, other than:
• On 29 August 2018, the Board of Directors declared an unfranked
dividend of $0.02 per ordinary share
26. ADDITIONAL COMPANY INFORMATION
CLINUVEL PHARMACEUTICALS LTD is a listed public company
incorporated and operating in Australia.
The Registered office is:
Level 6, 15 Queen Street
Melbourne VIC 3000
Ph: (03) 9660 4900
50
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 2018 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; and
3. the audited remuneration disclosures set out in pages 13 to 24 of the Directors Report comply with Section 300A of the Corporations Act
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 29th day of August, 2018
51
auDitOr's r ePOrt
Collins Square, Tower 1
727 Collins Street
Docklands VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 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 audit of the financial report
Opinion
We have audited the financial report of Clinuvel Pharmaceuticals Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 30 June 2018, the consolidated statement of profit
or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash
flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its performance for the year
ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘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.
52
Page 54
Collins Square, Tower 1
727 Collins Street
Docklands VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 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 audit of the financial report
Opinion
We have audited the financial report of Clinuvel Pharmaceuticals Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 30 June 2018, the consolidated statement of profit
or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash
flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its performance for the year
ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘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.
auDitOr's r ePOrt
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
Deferred tax asset – Note 3
How our audit addressed the key audit matter
Clinuvel has recognised deferred tax assets of $281,779
(2017: nil) in accordance with AASB 112 “Income Taxes”.
These are primarily attributable to historic losses generated by
the income tax consolidated group. An assessment is required
as to whether sufficient future taxable profits are likely to be
generated to enable the assets to be realised.
Our audit procedures included, amongst others:
• Holding discussions with management to obtain an
understanding of the policy applied for the recognition of
deferred tax and assessment of profitability of the company
in the near future;
• Evaluating management’s forecast of future taxable income
We focused on this area because as deferred tax is
recognised for the first time, there is an increased risk that the
asset may not meet the recognition criteria of the Australian
Accounting Standards.
by assessing the key underlying assumptions such as
future taxable income against historic performance and
market trends;
• Assessing the competence and independence of
This area is a key audit matter due to the degree of judgement
required in assessing management’s estimates of future
taxable profits to enable the assets to be realised.
managements tax expert used, to assist in the preparation
of the valuation of the deferred tax asset;
• Checking the accuracy of input data and evaluating
formulas and assumption used for the computation of the
deferred tax asset;
• Utilising our internal taxation specialists to assist in this
assessment of the determination of the tax bases; and
• Assessing the adequacy of the group’s disclosure in
relation to the carrying value of deferred tax assets.
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2018, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors’ for the financial report
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 and for 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.
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auDitOr's r ePOrt
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in the Directors’ report for the year ended 30 June 2018.
In our opinion, the Remuneration Report of Clinuvel Pharmaceuticals Limited, for the year ended 30 June 2018 complies
with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing Standards.
Grant Thornton Audit Pty Ltd
Chartered Accountants
B A Mackenzie
Partner – Audit & Assurance
Melbourne, 29 August 2018
54
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auDitOr's in DeP enDence Decl ar atiOn
Collins Square, Tower 1
727 Collins Street
Docklands VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 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
I 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 2018, 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, 29 August 2018
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘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.
55
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SHAREHOLDER INFORMATION
AS AT 30 SEPTEMBER 2018
Additional information as at 30 September 2018 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 & Over
TOTAL
2,038
708
123
175
26
3,070
UNITS
772,212
1,633,246
926,229
4,612,756
39,913,543
47,857,986
B) SHAREHOLDINGS HELD IN LESS THAN MARKETABLE PARCELS
TOTAL
MINIMUM PARCEL SIZE
HOLDERS
Minimum $ 500.00 parcel at $ 22.03 per
unit
23
195
ORDINARY FULLY PAID SHARES
% OF ISSUED CAPITAL
1.61
3.41
1.94
9.64
83.40
100.00
UNITS
553
C) SUBSTANTIAL SHAREHOLDINGS (ACCORDING TO MOST RECENT SUBSTANTIAL HOLDER DISCLOSURES
RECEIVED UP TO 12 OCTOBER 2018)
NAME
A.C.N. 108 768 896 Pty Ltd*
Ender 1 LLC
NO. ORDINARY SHARES & AMERICAN DEPOSITORY RECEIPTS
3,666,998
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.
56
sharehOlD er 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
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ACN 108 768 896 PTY LTD
ENDER 1 LLC
CITICORP NOMINEES PTY LIMITED
DR MARK EDWIN BADCOCK
NATIONAL NOMINEES LIMITED
M BADCOCK AND P CHU SUPERANNUATION FUND PTY LTD
BNP PARIBAS NOMS PTY LTD
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