Letter from the Chair

Dear Shareholders

Charting the Course

At times that the Company is performing, one can only be proud to Chair the CLINUVEL Group as it continues to navigate a pre-planned strategic course with full commitment from all teams.

A difficult operating environment continued to challenge most life science companies during the past year, and it is possible that we will face more ‘stormy conditions’. Inflation remained higher than the range targeted by monetary authorities, seeing interest rates increase with a consequent impact on the pace of economic growth around the world. Ongoing global tensions contributed to uncertainty in the markets, as securing timely supply remained challenging.

Expansion Strategy Achieving Results

CLINUVEL entered a phase of expansion – growing the distribution of SCENESSE^® for EPP patients, expanding a melanocortin product portfolio, expanding a clinical program, and carefully treading the field of PhotoCosmetics. By doing so, we launched a rare initiative amongst pharmaceutical companies. We are transforming the business to a diverse pharmaceutical with multiple products for a range of patient and general population needs. This strategy is an exciting one and it is unfolding in front of us.

The year has been marked by advances in the development of new products, particularly PRÉNUMBRA^® Instant, which is first being evaluated in the second clinical study in arterial ischaemic stroke, and the pilot launch in March 2023 of CYACÊLLE, the Group’s first PhotoCosmetic product. Given the relevance of the DNA Repair program to people with a deficiency in their natural skin repair processes, I was pleased to see the initial results in xeroderma pigmentosum, showing a reduction in key markers of photodamage; these were presented by expert opinion leaders at the 2023 American Academy of Dermatology Meeting.

The financial result for the year is excellent, with continued growth of revenues, net cash flow, and profit. The diligence and work by Mr Keamy and the finance team in the management and support of controlled fiscal operations should be acknowledged and received with appreciation. It is also my pleasure as Chair of the Board to declare the sixth consecutive annual dividend providing returns to shareholders. In parallel, we continue to increase our financial position, enabling us to pursue long-term plans for the business while shielding the Company from short-term tumult.

Governance of the Board

The Board governs the adherence of the Group to its defined strategy and, as intimated above, we are very satisfied with progress. The Board is also accountable to ensure CLINUVEL exhibits responsible and ethical conduct in the pursuit of its wide ranging activities. As Chair, I provide keen support to CLINUVEL’s Environmental, Social and Governance (ESG) agenda and can report that we maintained positive metrics and advanced key initiatives in this area during the year. Whilst this is detailed in a feature on this report, I can highlight:

• the ongoing safety profile of our products remains positive;
• no breaches of the Group’s code of conduct or whistleblower reports;
• maintenance of peer leadership on multiple measures of diversity; and
• initiation of a new process to assess the adherence of key suppliers to responsible ESG conduct.

Management

CLINUVEL distinguishes itself by an executive management team that has developed together over a long period. It is testament to Dr Wolgen’s leadership that the core team of executives has been kept in place for more than a decade and a half, while he has overseen the executive expansion to nine, with more to come. Each executive manager is allocated specific responsibilities which collectively embrace all activities of the Group. I regard the benefit of the growing tenure of the members of the Board in a similar way. The Directors’ intimate knowledge of the Group’s activities and joint view on building the Group for the future gives us the backbone of success.

Despite intense competition for talent, we have been able to build out our team across several global offices in the UK, Europe, USA, Singapore, and Australia. We offer a balanced mix of remuneration and workforce conditions to prevailing candidates. We have found that talented people are interested in playing a role in the fulfilment of CLINUVEL’s mission and developing their careers in ways not readily available in other larger organisations. I witness a focused, motivated, and well co-ordinated team, notwithstanding the fast growth.

Executive Remuneration

I specifically want to mention that the Board is acutely aware that executive agreements with Mr Keamy and Dr Wolgen expire on 30 June 2024 and 2025, respectively. The executive remuneration outlined in this report is designed to hold and incentivise executives to this term.

With regard to retaining all executives, a new performance rights plan is due at the end of a four-year cycle and seen as essential. The Board is conscious of the need to search globally to secure a new CEO post 30 June 2025 and wishes to assure shareholders that we and Dr Wolgen are committed to an orderly and thorough transition to a new CEO in the 2026 financial year, such that no disruption will take place.

Our view is that it would be a real loss to the business if both executives would leave before the Group would have achieved its diversification plan of multiple products, markets, and communication strategies; therefore, I am spending much time seeking wider consultation on what is best for CLINUVEL to take away any uncertainty our existing and new shareholders may have on succession.

Outlook

Comment is due first on the operating environment and then on the Group’s initiatives. We look at markets exhibiting increasingly positive sentiments as the rate of inflation and interest rates abate, and the pace of economic growth starts to improve. The improved conditions will benefit CLINUVEL’s continued advance of key initiatives underway. The positive plans for 2024 and beyond are outlined in this report and contribute collectively to the ongoing transformation of the Group. The effective and wider communication of CLINUVEL’s story and trajectory is the mission of the Communications, Branding & Marketing team, as well as Investor Relations.

Appreciation

I am conscious of the support from fellow shareholders. I hope the dividend you will receive in September 2023 is welcomed in this spirit. As a shareholder, I take encouragement from the rise of 20% in the Company’s share price over the year, and over 60% in the five years, to 30 June 2023. I remain optimistic that the foundations of incremental value will ultimately be reflected in the share price.

I wish to also thank all stakeholders for their support. I especially want to comment on our patients: your response to our treatments is the sole reason we continue to operate, while your support is a driving motivation for the CLINUVEL team. The past year, we demonstrated that our commitment to ensure uninterrupted treatment is firm and unwavering.

Finally, I thank members of the Board for their support during the year, and the management and entire CLINUVEL team for their diligence and achievements.

I wish you all well as we continue navigate towards 2024 and beyond to achieve our objectives.

Willem Blijdorp

Chair
CLINUVEL Group