Annual Report for Fiscal Year Ending June 30, 2026 (Form 20-F)

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this annual report.

This discussion and analysis and other parts of this annual report include both historical information and forward-looking information based upon current expectations that involve a series of risks, uncertainties and assumptions. Our actual results may differ materially from management's expectations as a result of various factors, including, but not limited to, those discussed in "Item 3. Key Information - D. Risk Factors" and elsewhere in this annual report.

You should carefully read the "Risk Factors" section of this annual report to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. The accompanying audited consolidated financial statements of the consolidated group for the fiscal years ended June 30, 2026, 2025, and 2024 are presented in U.S. Dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC").

The critical accounting policies adopted in the preparation of this financial report are presented below and have been consistently applied unless otherwise stated.

Business Overview

Headquartered in Melbourne, Australia, and with global operations across Europe, Singapore and the U.S., Clinuvel is a specialty pharmaceutical group focused on developing and commercializing treatments for patients with genetic, metabolic, systemic, and life-threatening, acute disorders, as well as healthcare solutions for specialized populations.

As pioneers in photomedicine and the development of melanocortin technology, Clinuvel's research and development has led to innovative treatments for patient populations with a clinical need for systemic photoprotection, DNA repair and repigmentation, all of whom currently lack therapeutic alternatives.

The business objectives are to establish an integrated pharmaceutical company specializing in numerous melanocortin drugs, including various formulations and delivery methods.

Clinuvel's lead therapy, SCENESSE®, is approved for commercial distribution in Europe, the U.S., Israel, Canada and Australia as the world's first, and currently only, systemic photoprotective drug for the prevention of phototoxicity (anaphylactoid reactions and burns) in adult patients with EPP, a rare metabolic disorder which causes severe anaphylactoid reactions to light and affects an estimated 5,000-10,000 individuals worldwide. By increasing the skin's eumelanin density and acting as an antioxidant, SCENESSE® can help EPP patients reduce phototoxicity affecting the skin following exposure to sunlight and artificial UV light sources.

We plan to enact our business plan as described in "Item 4. Information on the Company -A. History and Development of the Company"

A.

Operating Results

The following discussion relates to our consolidated results of operations, financial condition and capital resources. You should read this discussion in conjunction with our consolidated financial statements and the notes thereto incorporated by reference in this annual report.

Results of Operations for the Years Ended June 30, 2026, 2025 and 2024

The following table sets forth a summary of our audited consolidated statement of comprehensive income or loss for the periods presented.

Years ended June 30,
		2026				2025				2024
Revenue		$	64,315,354			$	61,120,888			$	57,911,843
Total costs of revenues			(10,978,777	)			(11,513,474	)			(10,741,863	)
Gross margin			53,336,577				49,607,414				47,169,980
Operating expenses:
Research and development			(12,229,811	)			(13,216,521	)			(9,994,900	)
General and administrative			(7,384,954	)			(6,677,524	)			(6,814,920	)
Communications and marketing			(5,800,219	)			(3,193,312	)			(1,831,820	)
Total operating expenses			(25,414,984	)			(23,087,357	)			(18,641,640	)
Income from operations			27,921,593				26,520,057				28,528,340
Non-operating income (expense):
Interest income			7,087,314				6,119,535				4,812,098
Other income (expense), net			456,914				(138,096	)			367,521
Foreign exchange gain (loss)			(2,750,486	)			591,407				(487,076	)
Income before income tax expense			32,715,335				33,092,903				33,220,883

The following discussion is based on our historical results of operations and may not be indicative of our future operating performance.

Revenue

Revenue is recorded as it is earned. These revenues are from the global commercial sales, including special access scheme reimbursement revenues, of its pharmaceutical implant product SCENESSE® for the treatment of EPP.

Commercial sales, including special access scheme reimbursement revenues, increased by $3.2 million from $57.9 million in fiscal year 2024 to $61.1 million in fiscal year 2025, then increased again by $3.2 million to $64.3 million in fiscal year 2026. This steady increase in SCENESSE® sales is driven by increased patient numbers, more frequent dosing, and the expansion of trained and accredited centers. We are well into the expansion of the number of trained and accredited treatment centers across North America, which currently represents over 120 centers, supported by over 100 insurers.

Over 22,000 SCENESSE® implants have been administered to EPP patients globally, demonstrating the sustained success and safety of the program, which commercially has achieved a compound annual growth rate ("CAGR") of 35% since fiscal year 2016.

Cost of Revenue

Costs of revenue are expensed as incurred. Cost of revenue primarily consists of costs related to the production and distribution of SCENESSE® implants. These costs include raw materials and components used in manufacturing, direct labor and related employee benefits, primary packaging and logistics expenses, and inventory write-downs for excess or obsolete stock, if any. Cost of revenue is recognized in the period in which the related product sales occur.

In line with the increase in revenue over the past three years, cost of revenue has also increased over the same period, by $0.8 million from $10.7 million in fiscal year 2024 to $11.5 million in fiscal year 2025, primarily the direct result of our higher SCENESSE® sales volumes throughout our distribution chain as well as the increased cost of logistical supply chains globally. Throughout the past year, we investigated and implemented operational efficiencies across our global supply and distribution chains, particularly in light of ever-changing geopolitical conditions, and lightened our distribution footprint in both Europe and the U.S. These efforts have contributed to the decrease in cost of revenue by $0.5 million to $11 million in fiscal year 2026.

Research and development

Research and development costs are expensed as incurred. These costs include salaries, benefits, share-based compensation, materials, and other costs related to the Company's research and development activities.

In line with our anticipations, our research and development expenses have decreased in fiscal year 2026 compared to the increase over the past two fiscal years. In fiscal year 2025, our research and development expenses increased by $3.2 million from $10.0 million in fiscal year 2024 to $13.2 million, then decreased by $1 million to $12.2 million in fiscal year 2026. These changes are intrinsically linked to the advancement of our core programs, most notably our advanced Phase III CUV105 clinical study for the treatment of vitiligo which was fully recruited in May 2025, and then began to wind down to closure over the ensuing 6-9 months.

The decrease in expenditure in fiscal year 2026 reflects lower costs associated with the CUV105 Phase III clinical study program as the program winds down from full recruitment to closure and finalisation before the commencement of the second Phase III clinical program CUV107 for the same indication that is due to commence in mid fiscal year 2027.

Formulation and manufacturing development work also continued across our PhotoCosmetics M-lines, "Preserve" and "Bronze" product ranges. In the meantime, we are running market efforts to provoke interest and provide visibility to us.

The Company does not disaggregate research and development expenditure by individual program. This reflects the integrated nature of our R&D model, where a substantial proportion of activities are supported by shared internal clinical infrastructure, personnel, and capabilities. As a result, resources are deployed flexibly across multiple programs with significant overlap in staffing, expertise, and supporting functions.

In contrast to many life sciences organizations that rely extensively on external clinical research organizations, the Company performs a majority of its clinical development activities in-house. Consequently, R&D expenditure primarily comprises personnel costs, internally managed resources, and the direct costs associated with administering clinical trials at investigator sites.

		Years ended June 30,
		2026				2025				2024
Employee-related costs		$	6,210,314			$	6,874,050			$	5,440,271
External clinical related expenses			664,626				53,854				20,853
Share-based payment expense			891,354				725,241				2,281,403
Direct R&D clinical site and program costs			4,130,016				4,864,975				1,506,838
Other costs			333,501				698,401				745,535
Total research and development expenses			12,229,811				13,216,521				9,994,900

General and administrative

General and administrative costs are expensed as incurred. General and administrative expenses consist of compensation, share-based compensation, benefits and other employee-related expenses for personnel in the Company's administrative, depreciation and amortization, finance, legal, information technology, business development and human resource functions. Other costs include general and administrative related facility costs, insurance costs and professional fees for accounting and legal services.

General and administrative expenses were contained in fiscal year 2026 with $7.4 million of total expenditure, an increase of $0.7 million from fiscal year 2025, primarily attributed to employee-related expenses. In fiscal year 2025 our general and administrative expenses decreased by $0.1 million from $6.8 million in fiscal year 2024 to $6.7 million as we sought to right-size the business operations to support its commercial and research goals.

These costs remained tightly controlled despite growing business activity. This fiscal control is the result of a series of operational, administrative and financial process cost reviews as well as system optimisation and advancements.

Communications and marketing

Communications and marketing costs are expensed as incurred. Communications and marketing expenses include advertising, print and social media initiatives, investor relations, branding, conferences, salaries, benefits, share-based compensation and other costs related to the Company's communications and marketing activities.

Communications and marketing expenses have increased three-fold over the past three years as expected, as we invested in global brand visibility to attract a wider audience. In fiscal year 2025 communications and marketing expenses increased by $1.4 million from $1.8 million in fiscal year 2024 to $3.2 million, then increased again by $2.6 million to $5.8 million in fiscal year 2026.

We have invested in our market presence to distinguish ourselves from a traditional pharmaceutical company in translating our core pharmaceutical technology in melanocortins to PhotoCosmetics, creating synergistic revenue opportunities.

Our increased presence across numerous platforms, including online and print media, complemented by our physical presence at key industry events, has been a primary focus over the past 24 months. We have also sponsored and supported numerous key industry and global community events hosted by vitiligo, porphyria and other rare disease foundations, as well as supported organizations that perform research in these areas to support those affected by rare disorders. Our major investment in the communications and marketing area was in March 2026 with our custom-built 4,800 sq ft Pavilion of Photomedicine at the prestigious American Academy of Dermatology Annual Meeting in Denver, Colorado. This five-day event was attended by more than 20,000 physicians, clinicians, academics and industry representatives who were all captivated and enthralled by our presence and impact at the event.

Interest income

We have significantly strengthened our cash reserves, which are a culmination of cash and cash equivalents and short-term investments in the form of term deposits, over the past three fiscal years. This has led to increasing interest income being earned over this time.

In fiscal year 2025, our interest income increased by $1.3 million from $4.8 million in fiscal year 2024 to $6.1 million, then increased again by $1 million to $7.1 million in fiscal year 2026. In anticipation of the potential decline of interest rate yields during 2026, we have elected to extend the average maturity length of our short-term investments (term deposits) to ensure sustained returns from our cash reserves, which, as of June 30, 2026, amounted to $174 million.

B.

Liquidity and Capital Resources

The liquidity and capital resources discussion that follows contains certain estimates as of the date of this annual report of our estimated future sources and uses of liquidity (including estimated future capital resources and capital expenditures) and future financial and operating results. These estimates reflect numerous assumptions made by us with respect to general business, economic, regulatory, market and financial conditions, industry conditions and other future events, and matters specific to our businesses, all of which are difficult or impossible to predict and many of which are beyond our control. Please carefully read the risks discussed in "Item 3. Key Information - D. Risk Factors" elsewhere in this annual report that describe significant risks and uncertainties that may affect us and our financial conditions.

Sources and Uses of Liquidity

Our significant cash reserves enable us to self-finance our current operations and expansion initiatives, whilst absorbing any adverse fluctuations in the operating environment, without having to rely upon or resort to seeking external debt or dilutive capital raisings. We have not raised any funds from the issuance of new securities since 2016 and have remained debt-free for the past 20 years. The returns from prudent liquidity management directly support operational expenditures as well as the extensive commercial, clinical, and pharmaceutical programs into new revenue streams whilst maintaining a financially sound balance sheet, which remains of strategic importance to us.

Our operations, future liquidity and capital resources will depend on product revenue from the successful continued commercialization of SCENESSE®, revenue from any future products for which we obtain regulatory approval, revenue from possible acquisitions and the R&D costs and other expenditure necessary to support these initiatives and future products or programs.

Our strong balance sheet helps us achieve and carry out our strategic product development and clinical programs; it also allows us to continue exploring strategic mergers and acquisition opportunities. Not needing to rely on external funding to support operations protects and preserves long-term shareholder value and avoids shareholder dilution. We are actively pursuing several strategic acquisitions and investments that align with growth and diversification objectives, although no formal or definitive agreements have been executed as of the date hereof.

Our consistent financial growth reflects our disciplined strategy towards year-on-year improvement, supported by the continued advancement of our clinical pipeline, providing a strong financial foundation to sustain, build and expand future revenue streams. The SCENESSE® program continues to scale, reaching more patients globally through an increased number of qualified and trained treatment centers supported by increased outreach and marketing initiatives to amplify our patient support, market presence and sales.

We continue to reinvest in our key strategic assets, namely our people, clinical programs, and infrastructure to build a diversified and sustainable business. In the context of ongoing geopolitical uncertainty, we remain prudent in the deployment of our capital to protect shareholder value while ensuring sufficient resources are delivered to current projects without reliance on external capital or dilutionary events.

Funding Requirements

We believe that our existing cash reserves, together with the cash inflows that we expect to generate from sales of SCENESSE®, will be sufficient to fund at least four years of our current operational expenditures and capital expenditure requirements within our currently projected operations. Our expectations regarding our short-term and medium-term funding requirements are based on assumptions that may prove to be wrong, and additional capital resources may be required to fund our operations, fund specific capital expenditure, or enable the execution of targeted merger or acquisition aspirations.

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the commercialization of SCENESSE® and any other product for which we receive regulatory approval and continue clinical development of our therapeutic product candidates. Further, since the listing of our ADSs on Nasdaq, we have incurred, and expect to continue to incur, additional costs associated with operating as a public company in the U.S.

Our present and future funding requirements will depend on many factors, including, among other things:

	●	the amount of revenue received from commercial sales of SCENESSE® and any of our product candidates for which we may receive marketing approval;
	●	the initiation, progress, timing, costs and results of our clinical trials for our product candidates;

	●	the costs associated with in-licensing or acquiring assets to expand our pipeline, acquiring businesses or assets to vertically integrate our supply chain and manufacturing and acquiring complementary business;
	●	the amount of milestones and royalties that we may be required to pay under existing acquisition and licensing agreements;
	●	costs associated with expanding our organization;
	●	the costs involved in filing patent applications and maintaining and enforcing patents or defending against claims of infringement raised by third parties;
	●	the time and costs involved in obtaining regulatory approval for our product candidates and any delays we may encounter as a result of evolving regulatory requirements or adverse results with respect to any of these product candidates; and
	●	the costs of operating as a public company in both Australia and the U.S.

For more information as to the risks associated with our future funding needs, see "Risk Factors."

Cash Flows

The following table summarizes our sources and uses of cash for the fiscal years ended June 30, 2024, 2025, and 2026:

		For the fiscal years ended June 30,
		2026				2025				2024
Net cash provided by (used in):
Operating activities		$	12,906,429			$	27,295,554			$	23,750,072
Investing activities			(25,636,672	)			(30,617,959	)			(19,251,353	)
Financing activities			(1,669,075	)			(1,867,844	)			(2,088,191	)
Effect of exchange rate fluctuations on cash and cash equivalents			10,251,061				(45,802	)			(152,001	)
Net increase (decrease) in cash			(4,148,257	)			(5,236,051				2,258,527	)

Operating Activities

For fiscal year 2024, net cash provided by operating activities was $23.8 million, for fiscal year 2025, net cash provided by operating activities was $27.3 million, and for fiscal year 2026, net cash provided by operating activities was $12.9 million.

Our net cash provided by operating activities represents the receipt of funds from customers and interest paid and received, with any variance year-to-year occurring as part of the normal course of business operations. During the 2026 fiscal year, there was significant shift in the cash rate of USD$ in comparisons to other currencies in which we operate at balance date resulting in a $9.2 million unrealised foreign currency measurement loss through the accounting process of bringing all foreign currency balances back to USD$ equivalent balances for reporting date. Importantly, this is not a real financial loss, merely a balance date adjustment.

During the fiscal year 2026, on top of having paid its fiscal year 2025 income tax payment, the company was also required by the Australian Taxation Office (ATO) to shift to paying a minimum of 85% of its estimated fiscal year 2026 income tax payment during fiscal year 2026 instead of subsequent to the year end in order to avoid the ATO's General Interest Charge of between 10.61% to 11.51% on outstanding balances. The upfront income tax payments during the fiscal year 2026 amounted to $5.3 million.

Investing Activities

For fiscal year 2024, our net cash used in investing activities was $19.3 million, for fiscal year 2025, our net cash used in investing activities was $30.6 million, and for fiscal year 2026, our net cash used in investing activities was $25.6 million.

Our net cash used in investing activities represents property, plant and equipment, the purchase of a property in Egham, the UK, to be used as our office, and the purchase of short-term investments (term deposits). Outside of the areas specifically listed above, any other variance from year-to-year occurred as part of the normal course of business operations.

Financing Activities

For fiscal year 2024, net cash used in financing activities was $2.1 million, for fiscal year 2025, net cash used in financing activities was $1.9 million, and for fiscal year 2026, net cash used in financing activities was $1.7 million.

Our net cash used in financing activities included payment of dividends to shareholders in fiscal year 2025 and 2026, and the on-market purchases of our Clinuvel Shares as part of our share buy-back program during fiscal year 2024 and 2025.

Off-balance sheet arrangements

During fiscal years 2024, 2025 and 2026, we did not have any off-balance sheet arrangements.

C.

Research and Development, Patents and Licenses

We have created a portfolio of patents and trademarks across various jurisdictions and have utilized regulatory laws enabling market exclusivity, which has enabled relatively strong IP protection. We have worked closely with experienced specialists and advisors internationally over many years and we continue to fortify our portfolio by applying for new patents arising from new knowledge gained during our research and development.

We adhere to risk-adjusted capital allocation:

	●	halted non-core programs: suspended xeroderma pigmentosum and stroke research to focus on high-probability programs (vitiligo, ACTH).
	●	countercyclical stewardship: maintained R&D cash buffers to absorb regulatory turnaround, delays and inability to meet or achieve clinical trial results - a rarity in a cash-burning sector.
	●	concentric expansion: all pipeline candidates (SCENESSE®, NEURACTHEL®, PhotoCosmetics) leverage our core peptide/polymer expertise, de-risking development.

As pioneers in photomedicine and the development of melanocortin technology, our research and development have led to innovative treatments for patient populations with a clinical need for systemic photoprotection, DNA repair, repigmentation and CNS conditions which lack alternatives.

The following diagram demonstrates Clinuvel's current clinical and pre-clinical pipeline.

Clinuvel has completed over twenty clinical trials of afamelanotide in healthy volunteers and patients, including seven in EPP patients and four in vitiligo patients. The clinical program has focused on establishing the benefit-risk profile of SCENESSE® in various patient populations, as well as the pharmacokinetic profile of the drug in healthy adult volunteers and adults and adolescent EPP patients. No further clinical studies are planned in EPP, with post-authorization data captured in Europe through a disease registry study, while Clinuvel intends to submit data from the CUV052 study to seek an expansion of the marketing authorization for the use of SCENESSE® in adolescent EPP patients. Clinuvel has never received a regulatory rejection for marketing authorization applications for SCENESSE®.

Preclinical studies have focused on establishing the safety profile of afamelanotide and SCENESSE® in both single dose and repeat dose models, including dose escalation studies, as well as determining the pharmacokinetic profile of the controlled-release implant formulation.

Clinuvel currently focuses on evaluating SCENESSE® as a repigmentary agent in vitiligo as well as a photoprotective agent for a wider group of porphyria patients (chiefly adolescent EPP patients and adult and adolescent variegate porphyria patients). Over the last three years, Clinuvel has planned, conducted and/or completed the following clinical trials of SCENESSE® in these programs:

	○	CUV104, a single-arm open label Phase II pilot study evaluating SCENESSE® as a monotherapy repigmentation agent in vitiligo patients. This study enrolled three adult vitiligo patients, at one clinical trial site in the U.S., who received up to six SCENESSE® implants administered at 14-day intervals. Results failed to demonstrate repigmentation in the patients as measured by the VASI tool, while the drug was well tolerated. No further studies are planned to evaluate afamelanotide as monotherapy for vitiligo patients.
	○	CUV105, an ongoing double-arm open label Phase III study evaluating SCENESSE® with adjunct NB-UVB as a repigmentation agent in adult and adolescent vitiligo patients. The study has enrolled 210 adult and adolescent vitiligo patients at clinical trial sites across the U.S., UK, France and Kenya. Patients receive up to seven SCENESSE® implants and up to 40 NB-UVB treatments or 40 NB-UVB treatments as monotherapy over 20 weeks. The primary endpoint is the evaluation of repigmentation using the T-VASI tool. CUV105 is not a pivotal (registration) study. Top-line results are expected to be announced in December 2026, with a full analysis of the data expected to be completed in April 2027.
	○	CUV107, a planned double-arm open label Phase III study evaluating SCENESSE® with adjunct NB-UVB as a repigmentation agent in adult and adolescent vitiligo patients. Clinuvel is finalizing the CUV107 protocol and, subject to confirmation, anticipates enrolling 300 vitiligo patients with darker skin types (Fitzpatrick IV-VI) and commencing the study in November 2026; commencement remains subject to ongoing discussions with regulatory bodies. Clinuvel plans to conduct CUV107 in sites worldwide. The timing and completion of CUV107 is dependent upon the results of CUV105 and therefore may not be completed in the time set forth above, or at all.
	○	CUV052, a post-authorization open label study evaluating the pharmacokinetic and safety profile of SCENESSE® in adult and adolescent EPP patients. CUV052 was the first study in adolescent patients evaluating SCENESSE®. A total of 28 EPP patients (14 adults and 14 adolescents) were assessed across sites in Belgium, the Netherlands and Switzerland following administration of a single SCENESSE® implant. The study sought to analyze the pharmacology of SCENESSE®, comparing adolescents of 12 to 17 years of age with adults. SCENESSE® was well tolerated by all study participants. All treatment-related adverse events were mild in severity and resolved during the study, with no treatment-related serious adverse events reported. Preliminary biochemical analyses showed consistent readings among both adults and adolescents.
	○	CUV040, a single-arm open label Phase II study evaluating SCENESSE® as a systemic photoprotective drug in adult patients with variegate porphyria. Six adult patients were enrolled at clinical trial sites in the Netherlands and Switzerland and administered up to six SCENESSE® implants over six months. The Clinical Global Impression of Change (CGIC) tool was used as the primary endpoint to assess changes in disease severity compared to baseline. All six patients experienced a positive change - improvement up to three times baseline scores - in disease severity after treatment. The average CGIC change was rated as "much improved", first changes observed as early as four weeks after the first treatment. SCENESSE® was well tolerated.

A single ongoing study is evaluating the pharmacokinetic profiles of multiple dose formats of Clinuvel's VLRX-L liquid injectable controlled-release drug platform in a preclinical model in the U.S. Subjects are administered a single dose of the VLRX-L formulations with safety monitoring alongside pharmacokinetic sampling. The preclinical study, focused on safety and kinetics, seeks to evaluate the controlled-release profile of VLRX-L candidates and determine the reproducibility of drug release using in-vitro models. Based on results reported in August 2026, Clinuvel has identified flexible liquid dose formulations which have demonstrated the greatest potential for further development. Optimisation is now ongoing at the Company's Singaporean Research, Development and Innovation (RD&I) Centre, VALLAURIX. Pending final results, further pre-clinical studies are scheduled for early Q1 2027, with manufacturing scaleup now being scoped.

All of Clinuvel's clinical and preclinical studies have received appropriate local, national and/or supranational regulatory and ethics permissions for patient treatment before commencing clinical/preclinical studies.

Over the past twelve months we focused on the areas of:

	●	manufacture and commercially distribute our prescription pharmaceutical SCENESSE® in Europe, Israel and the U.S. for the treatment of the rare and genetic metabolic disorder, EPP;
	●	research and develop SCENESSE® as medicinal therapies to treat severe disorders, including vitiligo and variegate porphyria;
	●	develop and manufacture NEURACTHEL® (adrenocorticotropic hormone; ACTH) in different formulations, to target neurological, endocrinological, and degenerative disorders;
	●	research, develop, manufacture and pre-launch non-prescription, PhotoCosmetic products for individuals and populations at highest risk of exposure to ultraviolet (UV) and high energy visible (HEV) light, and in need of assistance in DNA repair and melanogenesis of the skin; and
	●	develop and investigate new pharmaceutical formulations melanocortin technology for the treatment of a range of disorders.

For a discussion of our research and development activities, see "- A. Operating Results" and "Item 4. Information on the Company - B. Business Overview."

D.

Trend Information

Our growth strategy and trends affecting our performance are detailed in "- A. Operating Results" and "Item 4. Information on the Company - B. Business Overview." For a discussion of uncertainties and certain factors that could materially affect our business, see "Item 3. Key Information - D. Risk Factors."

E.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Our significant accounting estimates relate to the recoverability of property, plant and equipment, right-of-use assets, intangible assets, valuation allowance for deferred tax assets, share-based arrangements, allowance for credit losses on accounts receivable, and net realizable value of inventories.

We make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the future fiscal years. Management bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances. Actual results may differ from those estimates, and such differences may be material to the consolidated financial statements.

Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognized in the financial statements is outlined in Note 11 of our audited consolidated financial statements included in this annual report.