CHAIR’S LETTER
CHAIR'S LETTER
Dear Shareholders,
Which expert in business could have predicted the year 2020? The question is, were we caught by surprise and could we have managed ourselves better? The year 2020, my first complete year as Chairman of CLINUVEL, has been overshadowed by the impact of COVID-19, and has therefore seen my main tasks change, helping navigate CLINUVEL during these uncertain times.
The financial year was one of two halves. In the first half, CLINUVEL’s goal was to provide continued growth in Europe and to progress our product development pipeline. We concluded the year on a high, with a unique milestone on 8 October 2019, which was the approval by the US Food and Drug Administration (FDA) to make SCENESSE® (afamelanotide 16mg) available in the USA to adult EPP patients. We shared our celebration at the 2019 Annual General Meeting (AGM).
With much optimism, we looked forward to expanding the business into the USA, progressing our product development pipeline as we started the second half of the 2020 financial year. In January 2020, our IR Manager, Malcolm Bull, came back with considerable optimism from the JP Morgan Global Healthcare Conference in San Francisco. Then suddenly, a dramatic turn of events which turned the world upside down. In this new world, making sure that all checks and balances were crossed, my priorities became threefold: to oversee the governance and leadership, to optimise the financial management, and to make sure unique people with great knowledge would continue with this Company.
Governance and Leadership
I was asked how I identify executive managers to run my portfolio of companies. In my own publicly listed company BSGR, I have recently appointed a new CEO who is stress-resistant and fully understands the art of managing people to maximise their skillsets. Captains of industries are truly identified when they face changing environments and are forced to act. Therefore, this past year was particularly important to closely watch how CLINUVEL’s senior managers would handle the crises and take the most suitable measures. Entrepreneurship is much more than running successful companies when all things are going well. I expect senior management to find creative solutions, come up with ideas on how to progress a company and, above all, dare to take unpopular measures to retain value. In the past year I have again seen proof of CLINUVEL’s leadership, who managed the complex world of pharmaceuticals when maneuvering was really needed. At a time when the world went in lockdown and hospitals decided to put COVID first and other healthcare services second, our team managed to maintain supply and maintain SCENESSE® treatment.
In CLINUVEL, we have passed more than a decade of independent audits without remarkable findings.
With respect to governance, the Board sets clear goals. We have split the role of the CEO and Chairman. We did not just delegate all the responsibilities to one person, helping the Managing Director get on with his daily job of running the Company and leave the supervisory matters to myself, as well as the coordination of Board matters. In many listed companies the roles are still combined, but I think it is not a wise way of running companies.
I see success in business as a simple formula which has always worked for my companies and most successful colleagues. First, always make sure you spend less than you receive. Second, formulate a clear vision and work consistently towards this goal. Third, treat the people working around you with respect and they will do the same through putting in maximum effort. With our current CEO, we see all three.
Effective leadership is not just one person, but it is a culture created where collaboration takes place across all managers on the floor and business partners without issues or friction. In this interplay, the CEO then needs to integrate a mix of long term and new employees, guarantee diversity, possess a depth of skills and experience and report progress to go through all bottlenecks. In the last 12 months, we have expanded our workforce considerably and are all working to achieve a list of our key objectives.
Financial Leadership
What is financial leadership and why does it matter? The worst business one can arrive in is a business where processes are lacking, expenditures are varying, and little financial control exists due to high commitments of forced spending. The financial books of a company are the reflection of managers’ ability to make daily decisions. CLINUVEL’s books are not coincidental, they follow our managers’ vision.
It is clear CLINUVEL’s financial management has been very successful, both our CFO and CEO protect our financial position to a maximum.
I always wish to see clean financial processes in the companies in which I am involved. In CLINUVEL, we have passed more than a decade of independent audits without remarkable findings. This helps us concentrate on our operations. The CFO Darren Keamy has built a strong team over the years and oversees the finances of all the activities in the subsidiaries and tax. His team is managing the expansion of VALLAURIX in Singapore, and the currencies across the Company. As part of the team’s task this year, there was a need to avoid negative interest rates on the Euro and secure our working capital.
It is clear CLINUVEL’s financial management has been very successful, both our CFO and CEO protect our financial position to a maximum. We need lean companies in this industry, and the way our management is managing this globally is the modern way to do it. We shareholders benefit long-term, since no money is leaking, and no new capital needs to be raised from the markets. I have seen many investment banks offering to raise money for CLINUVEL at high discount percentages and praise ourselves that we do not need to do it.
Cash is always king in crises and this year I have seen established companies going out of business. Many tragedies are affecting breadwinners and families. With CLINUVEL, we expand and provide people strong job security, helping our employees feel safe and motivated. The way our financial team is going about the business is the right one and as a major shareholder in the Company, I am grateful that we are rock-steady in management without unexpected or dramatic events.
For the six months to December 31 we recorded a good profit. At the end of our audited financial year, we posted a A$16.6 million profit, whereby our cash reserves have substantially grown. As a Chairman, I cannot ask more from a team during such a global financial crisis and am very happy to be involved in such a Company.
In our senior management team, we have 57% women and 43% men, a great balance based on our CEO’s aim to lead in this field.
CONTINUATION OF SPECIAL KNOWLEDGE
CLINUVEL stands out with a special team of Directors, each of whom brings special expertise, and an exact gender balance. CLINUVEL leads many other companies in this balance, showing our different approach to business. In our senior management team, we have 57% women and 43% men, a great balance based on our CEO’s aim to lead in this field.
I am a general entrepreneur without special knowledge about pharmaceutical development, but the same business principles apply to every one of my ventures. I want to see CLINUVEL keep its key people and educate new talent for the years to come. In CLINUVEL, we have become an institution whereby new graduates have started to apply for jobs since the universities have taken the CLINUVEL example of running a company in their business cases. I want to see long-term continuation in an environment where competitors are trying to emulate our approach. A strong top and talented below within our levels of hierarchy is the only way to build a company for generations to come. Looking back at the progress this year, we are well on course.
In CLINUVEL, we need special knowledge to grow, and in Singapore we are increasing our investments each year. This year we built modern facilities which are featured in subsequent pages of this report. The Singapore government started to recognise our investments in the country and our hiring of people to lead the research of new products.
In March, I shared my vision of the Company’s strategy and in October our CEO gave a detailed breakdown of how CLINUVEL will be growing. Philippe has made it clear that he has very little time to waste to perform with his team, since he wants all objectives of the Group to be met before he retires from this role. I understand his ambition is to see the name CLINUVEL strive during his time with the Company, which translates well for us shareholders. I share his frustration in a COVID-19 world, but I have confidence in him and the management team to keep surprising and impressing us, with their dedication to the Company.
I want to thank the CLINUVEL Board for the great support and guidance this year, especially during such a peculiar year, but nonetheless with great highlights.
During these difficult and uncertain times, we sympathise with all those affected by COVID-19 and hope all our stakeholders remain safe and well.
IN CONCLUSION
During these difficult and uncertain times, we sympathise with all those affected by COVID-19 and hope all our stakeholders remain safe and well. We appreciate the loyalty of our long-term shareholders and the new shareholders who have joined CUV during the past year for the ongoing journey. Despite the current adversity, CLINUVEL’s future is full of optimism and we will continue to focus without relaxing on the strategic path we have laid out. This path will lead us to adding value, pride, and satisfaction to all our stakeholders.
Willem Blijdorp
Chairman
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 2020, 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.