SKIN ELEMENTS LIMITED
A B N 9 0 6 0 8 0 4 7 7 9 4
and its controlled entities
ANNUAL REPORT
30 June 2024
COVER TO BE SUPPLIED
Annual Report
2024
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | i
Corporate directory
Current Directors
Peter Malone
Executive Chairman
Filippo (Phil) Giglia
Non-Executive Director
Stuart Usher
Non-Executive Director
Company Secretary
Stuart Usher
Registered Office
Share Registry
Street:
1242 Hay Street
Link Market Services Limited
West Perth WA 6005
Street:
Level 12, QV1 Building, 250 St Georges Terrace
Postal:
1242 Hay Street
Perth WA 6000
WEST PERTH WA 6005
Telephone:
1300 554 474 (within Australia)
Telephone:
+61 (0)8 6311 1900
+61 1300 554 474 (International)
Facsimile:
+61 (0)8 6311 1999
Facsimile:
+61 (0)8 6370 4203
Email:
info@skinelements.com
Email:
registrars@linkmarketservices.com.au
Website:
www.skinelementslimited.com
Website:
www.linkmarketservices.com.au
Auditors
Securities Exchange
BDO Audit Pty Ltd
Australian Securities Exchange
Street:
Mia Yellagonga Tower 2
Street:
Level 40, Central Park, 152-158 St Georges Terrace
5 Spring Street
Perth WA 6000
Perth WA 6000
Telephone:
131 ASX (131 279) (within Australia)
Telephone:
+61 (0)8 6382 4600
Telephone:
+61 (0)2 9338 0000
Facsimile:
+61 (0)8 6382 4601
Facsimile:
+61 (0)2 9227 0885
Website:
www.bdo.com.au
Website:
www.asx.com.au
ASX Code:
SKN
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | ii
Contents
Directors’ report ........................................................................................................................................................................ 1
Remuneration report ................................................................................................................................................................. 8
Auditor’s declaration of independence ................................................................................................................................... 15
Consolidated statement of profit or loss and other comprehensive income .......................................................................... 16
Consolidated statement of financial position ......................................................................................................................... 17
Consolidated statement of changes in equity ......................................................................................................................... 18
Consolidated statement of cash flows .................................................................................................................................... 19
Notes to the consolidated financial statements ...................................................................................................................... 20
Consolidated Entity Disclosure Statement .............................................................................................................................. 54
Directors’ declaration .............................................................................................................................................................. 55
Independent auditor’s report .................................................................................................................................................. 56
Corporate governance statement ........................................................................................................................................... 60
Additional Information for Listed Public Companies ............................................................................................................... 61
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 1
Directors’ report
Your directors present their report on the Group, consisting of Skin Elements Limited (Skin Elements or the Company) and its
controlled entities (collectively the Group), for the financial year ended 30 June 2024 (FY2024).
Skin Elements is listed on the Australian Securities Exchange (ASX: SKN).
1.
Directors
The names of Directors in office at any time during or since the end of the year are:
Peter Malone
Executive Chairman and Chief Executive Officer
Filippo (Phil) Giglia
Independent Non-Executive Director
Stuart Usher
Independent Non-Executive Director (the Directors or the Board)
Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. For additional
information on Directors including details of the qualifications of Directors please refer to paragraph 6 Information relating to the
Directors of this Directors Report.
2.
Company secretary
The following persons held the position of Company Secretary at the end of the financial year:
Stuart Usher
Please refer to paragraph 6 Information relating to the Directors of this Directors Report.
3.
Dividends paid or recommended
There were no dividends paid or recommended during the financial year ended 30 June 2024 (2023: $nil).
4.
Significant changes in the state of affairs
4.1.
Issue of equity instruments
During the year, Skin Elements Limited had the following changes in its capital structure:
4.1.1. Shares
01.11.2023 A placement of 20 million shares were issued at $0.01, raising $200,000.
4.1.2. Options
01.11.2023 In respect to the 20 million share placement 20 million free attaching options were issued. The options
are exercisable at $0.02 on or before 31 May 2026.
15.03.2024 LDA options, total 26 million options, expired.
There have been no other significant changes in the state of affairs of the Group during FY2024 other than disclosed
elsewhere in this Annual Report.
5.
Operating and financial review
5.1.
Nature of Operations and Principal Activities
Skin Elements is a researcher and developer of the innovative proprietary SE FormulaTM biotechnology. This plant-based
and organic sourced SE FormulaTM is used as a base in the Company’s proprietary flagship products including the SuprCuvr
TGA-registered hospital-grade plant-based disinfectant, ECO-Nurture plant bio-stimulant, Invisi Shield alcohol free natural
sanitiser, Soléo Organics natural and organic sunscreen, PapayaActivs natural therapeutics skincare and Elizabeth Jane
Natural Cosmetics brand.
5.2.
Operations Review
5.2.1. Development of SE FormulaTM
The SE FormulaTM has been developed by Skin Elements over the last 15 years and is the core of every natural product
developed by Skin Elements. Products with the SE FormulaTM have scientifically proven as high performance while using
only natural and plant-based ingredients.
Skin Elements has a three-phase development process leading into commercial scale production and sales:
Phase 1 Pure research and development to undertake investigations into natural organic ingredients and processes
to prepare prototype formulations.
Phase 2 Produce test batches and undertake product trials, test marketing and regulatory certifications.
Phase 3 Negotiate distribution agreements and commence scale up production and launch into commercialisation.
5.2.2. Development of ECO-Nurture Plant Bio-Stimulant
ECO-Nurture is a sustainable, horticultural-specific plant bio stimulant product developed from the plant-based SE
Formula biotechnology research and development program as an effective alternative to chemical-based agricultural
sprays currently used in crop disease protection globally.
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 2
Directors’ report
Following extensive successful evaluation of ECO-Nurture in a live agricultural setting, including a full-season spray-
program evaluation of ECO-Nurture on 10 kiwifruit farms in New Zealand, ECO Nurture has demonstrated that it is
effective against bacteria which has negatively impacted kiwifruit industry in addition to supporting high fruit quality,
yield quantity, and cosmetic look of the fruit with zero residual toxicity.
During the last quarter, over 2,500 litres of ECO Nurture concentrate have been delivered to kiwifruit orchard managers
in New Zealand with a further 1,500 litres delivered in July. For the third year of the farm evaluations commencing
presently over 120 orchards out of the 200 kiwifruit owners have all agreed to immediately move over to ECO Nurture
spray application program instead of using chemicals – an immediate 60% take-up.
This evaluation was conducted under Zespri Crop Protection Standards Justified Approval protocols with ECO-Nurture
now on the official list Zespri approved spray list. Headquartered in New Zealand, Zespri is the world’s largest marketer
of kiwifruit with over $4.5 billion in sales annually.
With the initial success of its evaluation in the kiwifruit sector, the Company is assessing opportunities in other
horticulture sectors, including testing on grapes and other fruit and vegetable crops.
5.2.3. SuprCuvr - Development Phase 2 Market Testing
SuprCuvr is a TGA registered hospital-grade disinfectant made from the Company’s proprietary 100% plant-based SE
formula. It combines the world’s highest level of efficacy against viral and bacterial infection with a 100% plant-based
organic input certified formula to present a significant market opportunity for a chemical-free disinfectant in large-scale
settings such as food manufacturing, hospitality retailing businesses, public transport, educational facilities, hospitals and
health services.
Skin Elements has continued to focus on test market assessment and qualification of SuprCuvr in transport and
educational sectors. These represent large-scale, commercial opportunities for SuprCuvr to be utilised as a disinfectant,
replacing widely used chemical-based products.
The Company is currently delivering early sales of SuprCuvr 3 in 1 formulae for disinfectant cleaning, across all government
high schools and urban train carriages and stations in Melbourne, Australia.
5.2.4. Soleo Organics
Soléo Organics is an award-winning, natural and organic sunscreen formulation, providing a highly effective, high-
performance chemical-free sunscreen. It was the first application borne out of Skin Elements’ SE Formula research and
development program.
Negotiations continue to progress during the quarter with a leading health retail group in the United Kingdom for
distribution of the Soléo Organics sunscreen formulation under white label.
As part of this process, independent laboratory testing designed to confirm key performance specifications for the UK
market is in progress. This includes testing the Soléo Organics sunscreen formulation and final product development
testing for both an SPF50 and 5-Star UVA rating which has previously been unheard of for a natural organic sunscreen
formulation.
Skin Elements participated in an exclusive Rolls Royce Strive for Perfection: Celebrating 20 years of Goodwood event held
in London, on 6 October 2023. Skin Elements was delighted to be a partner at the event and to promote its natural and
organic Soléo Organics to a high net-worth audience with a focus on high-end, innovative and sustainable products.
5.2.5. PapayaActivs Phase 2 Completion
The fourth SE formulation, PapayaActivs combines a high concentration of natural pawpaw extract with other active
natural ingredients to help relieve the symptoms of skin conditions, like psoriasis, rashes, eczema, assist in healing of
minor burns and wounds, and relieve mild muscle, joint and arthritic pain. PapayaActivs is listed on the TGAs Australian
Register of Therapeutic Goods.
Skin Elements has completed the Phase 2 product formulation improvements with products expected to go into Phase 3
test market launch in FY2025.
5.2.6. Research and development (R&D) tax incentive grant income
During the period, Skin Elements received R&D Rebate of $1.13 million in relation to the eligible research and
development spend in FY2023 and an advance of $717K under a R&D Rebate advance facility provided by Radium Capital
in relation to the FY2024 eligible R&D expenditure.
The Company’s commitment to the continued research and development of its natural SE Formula Biotechnology sees it
eligible for the Federal Government’s R&D tax incentive for the FY2024 with R&D Rebate calculation of $1.19 million as
at 30 June 2024.
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 3
Directors’ report
5.2.7. Placement raises $200,000
The Company announced on 23 October 2023 that it had undertaken a private placement to sophisticated investors
raising $200,000 (before costs). The Company issued 20,000,000 SKN fully paid ordinary shares (under the Company’s
ASX LR7.1A placement capacity) at $0.01 each with one attaching SKNOD option exercisable at $0.025 on or before
31 May 2026 (under the Company’s ASX LR7.1 capacity) for each new share issued.
5.3.
Financial Review
5.3.1. Key profit and loss measures
Movement
(increased/
decreased)
Movement
$
2024
$
2023
$
Revenues from ordinary activities
increased
222,071
416,202
194,131
Loss from ordinary activities after tax
decreased
9,254,885
(2,161,283)
(11,416,168)
EBITDA Loss
decreased
277,143
(1,818,883)
(2,096,026)
5.3.2. Key net asset measures
Movement
(increased/
decreased)
Movement
$
2024
$
2023
$
Cash and cash equivalents
decreased
243,361
115,071
358,432
Working capital deficit (excluding prepayments)
increased
2,203,019
1,669,883
533,136
Net tangible liabilities
decreased
2,237,641
(1,632,838)
604,803
Net liabilities
decreased
2,237,641
(1,632,838)
604,803
The financial statements have been prepared on a going concern basis, which contemplates the continuity of normal
business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business.
The Group incurred a loss for the year of $2,161,283 (2023: $11,416,168 loss) and a net cash out-flow from operating
activities of $279,377 (2023: $1,835,931 out-flow). As at 30 June 2024, the Group a working capital deficit of $1,669,883
(2023: $533,136 working capital), as disclosed in note 8 of the Capital Management note.
The ability of the Group to continue as a going concern is dependent on the Group securing additional debt and/or equity
funding and/or generating profits from its normal course of business.
These conditions indicate the existence of a material uncertainty that may cast a significant doubt about the Group's ability
to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the
normal course of business. The Directors are confident that there will be sufficient funds for the Group to meet its obligations
and liabilities and believe it is appropriate to prepare these accounts on a going concern basis for the following reasons. Since
30 June 2023, the Group has:
Skin Elements is eligible for R&D Rebate tax incentive grant and has received $1.13 million during the period in relation
to eligible FY2023 R&D expenditure and accrued $1.19 million as at 30 June 2024 in relation to eligible R&D
expenditure for FY2024.
Received $796K under a R&D advance facility with Radium Capital.
The Board intends, subject to shareholder approval, to issue equity securities in satisfaction of amounts owed to
Directors and Key Management of approximately $500K.
The Directors’ have confirmed they will not call upon balances owed until such time where the Company has the financial
capacity to repay the amounts without impacting the Company’s ability to continue as a going concern and pay its other
liabilities as and when they fall due for payment.
The Company has a successful track record of raising working capital when required through the issue of equity
securities, through an entitlement issue or placement.
The Directors have prepared a cash flow forecast, which indicates that the Group will have sufficient cash flows to meet all
commitments and working capital requirements for the 12-month period from the date of signing this financial report.
Based on the cash flow forecasts and other factors referred to above, the Directors are satisfied that the going concern basis
of preparation is appropriate. Given the Group’s history of raising capital to date the Directors are confident of the Group’s
ability to raise additional funds as and when they are required.
Should the Group be unable to continue as a going concern it may be required to realise its assets and extinguish its liabilities
other than in the normal course of business and at amounts different to those stated in the financial statements.
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 4
Directors’ report
The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying
amounts or to the amount and classification of liabilities that might result should the Group be unable to continue as a going
concern and meet its debts as and when they fall due.
5.3.3. Adjustments made subsequent to the lodgement of the ASX Appendix 4E
Subsequent to the lodgement of the ASX Appendix 4E:
Loss after tax increased due to following material changes:
⚫
Share-based payment expense decrease of $235,226 due to the derecognition of rights as described in note
18.2.2d of the financial statement
⚫
Research and development costs increase of $799,063 due to a reassessment of payables.
Net assets and total equity decreased due to following material changes:
⚫
Cash and cash equivalents decrease of $27,257 and increase in trade and other payables of $771,805 due to the
above research and development costs increase.
5.4.
Key Business Risks
The Group is subject to various risk factors, some specific to its business activities while others are of a more general nature.
Individually, or in combination, these risk factors may affect the future operating and financial performance of the Group.
5.4.1. Reputation and brand
The strength of Skin Elements' brand and its portfolio is key to business success. Managing the reputation of brands, and
mitigating events that may damage brands (e.g. inaccurate media coverage, product quality issues, counterfeit product, third
party supplier negligence or incidents, unsatisfactory supplier performance, etc.) is critical to the Group’s ongoing success.
5.4.2. Laws, regulations and geopolitical landscape
Skin Elements operates in a highly regulated industry in all markets in which goods are manufactured and sold. Changing
geopolitical landscapes and regulations in each of these jurisdictions may impact many aspects of our operations, including
tax assessment and dividend payments to the Group and all aspects of the supply chain (access to raw materials, production,
manufacturing, pricing, marketing, advertising, labour, distribution, and product sales). Remaining compliant with, abreast
of, and responsive to changes (some of which can significantly impact the nature of operations in these markets) requires
diligent monitoring and responsiveness by the business.
5.4.3. Cybersecurity and data management
Data and information security is essential to protect critical intellectual property and data privacy. Continuing advances in
technology, systems, and communication channels mean increasing amounts of private and confidential data are now stored
electronically. This, together with increasing cybercrime, heightens the need for robust data security measures.
5.4.4. Key partnerships
Skin Elements relies on select key markets and customers (distributors and retailers) to support sales and delivery of strategic
initiatives. Suboptimal performance of these markets or key customers, and/or detrimental shifts in market power, could
have a significant impact on Skin Elements’ ability to deliver against strategic initiatives.
5.4.5. People and culture
Skin Elements’ ability to deliver on strategic targets is reliant on retaining and attracting experienced, skilled, and motivated
talent. It also requires strong, resilient, and effective leaders as the business grows at pace.
5.4.6. Safety, health and wellbeing
Skin Elements cares about the physical and psychological safety, health and wellbeing of our customers, team members and
business partners, including employees of our suppliers. We are committed to creating a safe and supportive environment
for everyone working with, using, and impacted by our products and brand. Throughout the COVID-19 pandemic and in the
last two years in particular, Skin Elements has ensured that measures were in place to protect our team members and
business partners as a matter of priority.
5.4.7. Consumer and marketplace
Unanticipated changes in consumer preferences and demand, or competitive pressures that significantly alter the market
landscape (e.g. COVID-19, online channel growth, acquisitions, aggressive price wars) can have adverse effects on the
business’ ability to capture growth opportunities or effectively manage inventory and supply.
5.4.8. Significant business interruption
The Group’s scope of operations could expose it to a range of business disruption risks, such as environmental catastrophes,
pandemics (such as COVID-19), natural and manmade hazards and incidents, or politically motivated violence or actions.
Significant business disruption could result in Skin Elements’ sites or employees being harmed or threatened, loss of key
infrastructure, impacts to supply chain, manufacturing and inventory shortages or loss, financial and reputation impacts.
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 5
Directors’ report
5.4.9. Climate and sustainability
Skin Elements’ high quality and sustainability standards together with limited availability of natural ingredients, puts pressure
on the continuous supply of some key products. Skin Elements’ ability to effectively respond to and manage the impacts of
climate related change and changing markets is key to the company’s values, commitments and growth initiatives.
5.4.10. Financial and treasury
Major events in financial markets (e.g. fluctuations to currency, interest rates, FX, cost of capital, banking/commercial credit,
etc.), economic, political, social and/ or major business event (e.g., product recall, pandemics like COVID-19 etc.) can
significantly impact the business’ profitability, cash flow and results. The ability to hold sufficient liquidity to ensure the
fulfilment of all payment obligations, and the management of capital and availability of funding, are important requirements
to support business operations and growth.
5.5.
Events Subsequent to Reporting Date
5.5.1. Receipt of R&D Rebate Advance Facility
In September 2024, the Company received a Research and development tax incentive rebate of $1,193,629.
There are no other significant after balance date events that are not covered in this Directors' Report or within the
financial statements as disclosed in note 12 Events subsequent to reporting date.
5.6.
Future Developments, Prospects, and Business Strategies
Likely developments in the operations, business strategies and prospects of the Group include:
The Company will undertake future capital raising through either equity placement facility, private placement or
entitlement issue, and the consideration of other equity and debt proposals
The Company will continue to focus on development and commercialisation of its natural anti-microbial technology
as set out in its review of operations.
Other likely developments, future prospects and business strategies of the operations of the Group and the expected
results of those operations have not been included in this report particularly given the early stage of the Company’s
commercial operations with its new expanded range of natural and organic products. The Directors believe that the
inclusion of such information would be likely to be unreasonably prejudicial to the Group.
5.7.
Environmental Regulations
The Group's operations are not subject to significant environmental regulations in the jurisdictions it operates in, namely
Australia.
The Directors have considered the enacted National Greenhouse and Energy Reporting Act 2007 (the NGER Act) which
introduced a single national reporting framework for the reporting and dissemination of information about the
greenhouse gas emissions, greenhouse gas projects, and energy use and production of corporations. At the current stage
of development, the Directors have determined that the NGER Act has no effect on the Company for the current, nor
subsequent, financial year. The Directors will reassess this position as and when the need arises.
6.
Information relating to the Directors
Peter Malone
Executive Chairman and Chief Executive Officer (Appointed 4 September 2015)
Non-independent
Qualifications
B.Arch. MBA
Experience
Mr Malone has over 30 years’ experience in global financial markets and has been responsible
for raising AUD$100m+ for technology development companies. He has a proven track record in
developing and managing technology development programs, from idea stage to reality. Previous
CEO to listed companies, he has a master’s degree from UWA and has taught and consulted in
Australia, USA, Europe and Asia in business and management. Mr Malone is responsible for the
strategic direction of the Group and is Managing Director and CEO of the Company.
Interest in equity
31,743,116
Ordinary Shares
5,290,520
Options
50,000,000
Performance rights
Directorships held in other
listed entities during the
prior three years
None
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 6
Directors’ report
Filippo (Phil) Giglia
Non-Executive Director (Appointed 22 November 2017)
Chairman of the Audit Committee, Remuneration Committee and Nomination Committee
Non-Independent
Qualifications
B.Bus, CA, Registered Company Auditor, Registered Tax Agent
Experience
Mr Giglia joined the Skin Elements’ Board in November 2017. Mr Giglia is a Chartered Accountant
with more than 25 years’ experience in senior roles, with a strong depth of expertise in the small
to medium enterprise sector. Mr Giglia worked for leading global accountancy firm Price
Waterhouse Coopers from 1985 to 1991. He is the founder and principal of Perth accountancy
practice, Giglia & Associates, and is also a director of Global Marine Enclosures Pty Ltd. Mr Giglia
has a Bachelor of Business (with Distinction) from Curtain University, and is a Member of the
Institute of Chartered Accountants in Australia and New Zealand.
Interest in equity
5,069,277
Ordinary Shares
844,880
Options
10,000,000
Performance rights
Directorships held in other
listed entities during the
prior three years
None
Stuart Usher
Non-Executive Director (Appointed on 17 January 2023)
Company Secretary (Appointed on 17 January 2023)
Independent
Qualifications
B.Bus, CPA, Grad Dip CSP, MBA, AGIA, FCIS
Experience
Mr Usher is a CPA and Chartered Company Secretary with 25 years of extensive experience in the
management and corporate affairs of public listed companies. He holds an MBA from the
University of Western Australia and has extensive experience across many industries focusing on
Corporate & Financial Management, Strategy & Planning, Mergers & Acquisitions, and Investor
Relations & Corporate Governance.
Interest in equity
Nil
Directorships held in other
listed entities during the
prior three years
Story-I Limited
Tian Poh Resources Limited
7.
Meetings of directors and committees
During the financial year, eight meetings of Directors (including committees of Directors) were held.
DIRECTORS
MEETINGS
REMUNERATION AND
NOMINATION COMMITTEE
AUDIT AND RISK
COMMITTEE
FINANCE AND OPERATIONS
COMMITTEE
Number eligible
to attend
Number
Attended
Number
eligible to
attend
Number
Attended
Number
eligible to
attend
Number
Attended
Number
eligible to
attend
Number
Attended
Peter Malone
5
5
1
1
2
2
The Finance and Operations Committee comprise
the full Board. The Board believes the Company is
not currently of a size nor are its affairs of such
complexity as to warrant the establishment of a
separate committee. Accordingly, all matters
capable of delegation to such committees are
considered by the full Board.
Filippo (Phil) Giglia
5
5
1
1
2
2
Stuart Usher
5
5
-
-
-
-
7.1.
Risk management
The Board takes a pro-active approach to risk management. The Board is ultimately responsible for ensuring that risks
and opportunities are identified on a timely basis and the Group’s objectives and activities are aligned with the risks and
opportunities identified by the Board.
The Board has established an Audit and Risk Committee that operates under a charter approved by the Board. The
purpose of the Audit and Risk Committee is to assist the Board in fulfilling its corporate governance, oversight, risk
management and compliance practices responsibilities.
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 7
Directors’ report
8.
Indemnifying officers or auditor
8.1.
Indemnification
During the financial year the Company paid a premium in respect of a contract insuring the Directors and officers of the
Company against a liability incurred by such directors and officers to the extent permitted by the Corporations Act 2001.
The Company has not otherwise during or since the end of the year, indemnified, or agreed to indemnify an officer or an
auditor of the Company, or of any related body corporate, against a liability incurred by such an officer or auditor.
8.2.
Insurance premiums
During the year, the Company paid insurance premiums to insure directors and officers against certain liabilities arising
out of their conduct while acting as an officer of the Group. In accordance with the policy, the amount of premium cannot
be disclosed.
9.
Options
9.1.
Unissued shares under option
At the date of this report, the unissued ordinary shares of the Company under option (listed and unlisted) are as follows:
ASX Security
Code
Grant
Date(s)
Date of
Expiry
Exercise Price
$
Number under
Option
SKNOD
05.2023, 06.2023
& 11.2023
31.05.2026
0.025
133,351,198
SKNAS
11.2022 & 02.2023
31.10.2025
0.050
58,000,000
191,351,198
No person entitled to exercise the option has or has any right by virtue of the option to participate in any share issue of
the Company or any other body corporate.
9.2.
Shares issued on exercise of options
At the date of this report, no ordinary shares have been issued by the Company during the financial year due to the
exercise of options (2023: nil).
10.
Auditor's independence and non-audit services
10.1.
Auditor independence
The Company’s auditor’s, BDO Audit (WA) Pty Ltd’s (BDO), independence declaration under section 307C of the
Corporations Act 2001 (Cth) for the year ended 30 June 2024 has been received and can be found on page 15 and forms
part of this Directors’ report for the year ended 30 June 2024.
10.2.
Non-audit services
During the year, BDO Corporate Tax (WA) Pty Ltd provided professional advisory services to assist the Group with the
preparation of Research & Development Tax rebate registration. Fees for this service amounted to $38,628 (2023:
$30,385).
Details of remuneration paid to the auditor can be found within the financial statements at note 16 Auditor's
Remuneration on page 45.
As non-audit services are provided by BDO, the Board followed certain procedures to ensure that the provision of non-
audit services are compatible with, and do not compromise, the auditor independence requirements of the Corporations
Act 2001 (Cth). These procedures include:
non-audit services will be subject to the corporate governance procedures adopted by the Company and will be
reviewed by the Board to ensure they do not impact the integrity and objectivity of the auditor; and
ensuring non-audit services do not involve reviewing or auditing the auditor's own work, acting in a management or
decision-making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.
11.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 (Cth) for leave to bring proceedings on behalf
of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on
behalf of the Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the
Corporations Act 2001 (Cth).
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 8
Directors’ report
12.
Remuneration report (audited)
This report outlines the remuneration arrangements in place for the key management personnel of Skin Elements Limited (the
Company or Group or individually Skin Elements) for the financial year ended 30 June 2024 and comparatives for the year ended
30 June 2023. The information in this remuneration report has been audited as required by s308(3C) of the Corporations Act
2001 (Cth).
12.1.
Key management personnel (KMP) covered in this report
For the purposes of this report KMP of Skin Elements are defined as those persons having authority and responsibility for
planning, directing, and controlling the major activities of the Company, directly or indirectly, including any director
(whether executive or otherwise) of the Company and all KMP. KMP comprise:
Directors
Peter Malone
Executive Chairman and Chief Executive Officer
Filippo (Phil) Giglia Non-Executive Director
Stuart Usher
Non-Executive Director
Other key management personnel
Leo Fung
Chief Technical Advisor
Craig Piercy
Chief Financial Officer
Former KMP included in comparative information
Lee Christensen
Independent Non-Executive Director (Appointed 31 August 2021, Resigned 17 January 2023)
12.1.1. Changes since the end of the reporting period
There have been no other changes since the end of the reporting period.
12.2.
Principles used to determine the nature and amount of remuneration
12.2.1. Remuneration Policy
The Board has established a Nomination and Remuneration Committee. The Committee shall provide assistance to the
Board in fulfilling its corporate governance and oversight responsibilities, however, ultimate responsibility for the
Company's nomination and remuneration practices remains with the Board. The main functions and responsibilities of
the Committee include the following:
assisting the Board in examining the selection and appointment practices of the Company;
ensuring remuneration arrangements are equitable and transparent and enable the Company to attract and retain
executives and directors (executive and non-executive) who will create sustainable value for members and other
stakeholders;
ensuring the Board is of an effective composition, size, and commitment to adequately discharge its responsibilities
and duties;
reviewing Board succession plans and Board renewal;
reviewing the processes for evaluating the performance of the Board, its committees and individual directors and
ensuring that a fair and responsible reward is provided to executives and directors having regard to their performance
evaluation;
reviewing levels of diversity within the Company and Board and reporting on achievements pursuant to any diversity
policy developed by the Board;
reviewing the Company's remuneration, recruitment, retention and termination policies for the Board and senior
executives; and
complying with all relevant legislation and regulations including ASX Listing Rules and Corporations Act 2001 (Cth).
12.2.2. Remuneration structure
The Group’s policy for determining the nature and amount of remuneration of KMP is as follows:
a. Non-Executive Directors – Mr Filippo (Phil) Giglia and Mr Stuart Usher
The remuneration of non-executive Directors will be determined by the Board having regard to the Remuneration
Committee’s recommendations and evaluation of each individual Director’s contribution to the Board.
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 9
Directors’ report
12.
Remuneration report (audited)
The maximum aggregate annual remuneration of non-executive directors is subject to approval by the shareholders in
general meeting in accordance with the Company’s Constitution, the ASX Listing Rules and the Corporations Act 2001
(Cth). The current maximum aggregate remuneration amount to non-executive directors approved by shareholders
under the Constitution is $500,000 per year. The Directors have resolved that fees payable to non-executive directors
(Messrs Giglia and Usher) for Board activities are $60,000 p.a. with an additional fee of $20,000 p.a. payable to the
Chairman of the Audit and Risk Committee and the Nomination and Remuneration Committee (Mr Giglia).
b. Executive Directors and other Senior Executives
The Company’s remuneration policy reflects the Company’s obligation to align executive remuneration with
shareholders’ interests and to engage appropriately qualified executive talent for the benefit of the Company. In
particular, reward should reflect the competitive global market in which the Company operates, individual reward should
be linked to performance criteria and should reward both financial and non-financial performance of the Director.
The Board and Nomination & Remuneration Committee are in the process of assessing and implementing the Company’s
executive reward framework to ensure reward for performance is competitive and appropriate for the results delivered.
12.2.3. Performance Based Remuneration – Short-term and long-term incentive structure
The Board will review short-term and long-term incentive structures from time to time. Any incentive structure will be
aligned with shareholders' interests.
a. Short-term incentives
No short-term incentives in the form of cash bonuses were granted during the year.
b. Long-term incentives
The Company has in place an Equity Incentive Plan to provide Performance Rights, Options, or Restricted Shares to
Directors, Employees, or contractor of the Company. For the year ended 30 June 2024 other than as set out in the
Share-based Compensation – Employee Incentive Plan all executive remuneration is set at base level fixed amounts
at commensurate market rates or lower. The Equity Incentive Plan aligns shareholder and stakeholder values with
executives as the hurdles embedded in the incentive plans include target share price milestones which are typically
set at prices above the current share price at the date of issue and expire within a defined timeframe, as detailed in
note 18.2.2 on page 46.
The executive Directors will be eligible to participate in any short term and long-term incentive arrangements operated or
introduced by the Company (or any subsidiary) from time to time.
The relative proportions of executive remuneration that is fixed or at risk is outlined below:
Group KMP
Contract
Commencement /
Termination Date
Proportions of Elements of Remuneration
Not Related to Performance
(Fixed remuneration)
Proportions of Elements of Remuneration
Related to Performance
(At Risk – LTI)
2024
%
2023
%
2024
%
2023
%
Peter Malone
Appt 4.9.2015(1)
100
72
Nil
28
Filippo (Phil) Giglia
Appt 22.11.2017
100
61
Nil
39
Stuart Usher
Appt 17.01.2023
100
100
Nil
Nil
Craig Piercy
Appt 29.11.2019(1)
100
91
Nil
9
Leo Fung
Appt 18.02.2019(1)
100
88
Nil
12
(1) These appointment dates are for the ultimate holding company Skin Elements Limited. Mr Malone, Mr Piercy, and Mr Fung
were appointed as executives of wholly owned subsidiary SE Operations Pty Ltd on 1 March 2005.
12.2.4. Service agreements
Remuneration and terms of employment for other key management personnel are formalised in consultancy and
employment agreements. The major provisions relating to remuneration to existing directors are set out below.
a. Executive Agreement
(1) Peter Malone Executive Chairman
The Company has entered into a consultancy agreement with Boston Technology Management Pty Ltd (Boston
Tech.) to provide services to the Group (Boston Consultancy Agreement). Mr Malone is engaged by Boston Tech. to
act as the Executive Chairman and Chief Executive Officer of the Group. Boston Tech. is paid a consulting fee of
$26,000 (plus GST) per month for at least 100 hours of service per month and is reimbursed for reasonable expenses
incurred in the performance of its duties.
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 10
Directors’ report
12.
Remuneration report (audited)
The Boston Consultancy Agreement is on a continuing basis unless terminated by either party. The Boston
Consultancy Agreement contains standard termination provisions under which the Company must give
3 months’ written notice of termination (or shorter period in the event of a material breach) or alternatively payment
in lieu of service. At the end of the notice period the Company must pay to Boston Tech. an amount equal to the
consulting fee that would otherwise be payable to Boston Tech. over the 3-month period if the engagement had not
been terminated.
(2) Leo Fung Chief Technical Advisor
The Company has entered into a consultancy agreement with Blackridge Group Pty Ltd (Blackridge) to provide
services to the Group (Blackridge Consultancy Agreement). Mr Leo Fung is engaged by Blackridge to act as the Chief
Technical Advisor of the Group. Blackridge is paid a consulting fee of $14,690 (plus GST) per month for at least 100
hours of service per month and is reimbursed for reasonable expenses incurred in the performance of its duties.
The Blackridge Consultancy Agreement is on a continuing basis unless terminated by either party. The Blackridge
Consultancy Agreement contains standard termination provisions under which the Company must give 3 months
written notice of termination (or shorter period in the event of a material breach) or alternatively payment in lieu of
service. At the end of the notice period the Company must pay to Blackridge an amount equal to the consulting fee
that would otherwise be payable to Blackridge over the 3-month period if the engagement had not been terminated.
(3) Craig Piercy Chief Financial Officer
The Company has entered into a consultancy agreement with Boston Technology Management Pty Ltd (Boston
Tech.) to provide services to the Group (Boston Consultancy Agreement). Mr Piercy is engaged by Boston Tech. to
act as Chief Financial Officer of the Group. Boston Tech. is paid a consulting fee of $14,690 (plus GST) per month for
at least 100 hours of service per month and is reimbursed for reasonable expenses incurred in the performance of
its duties.
The Boston Consultancy Agreement is on a continuing basis unless terminated by either party. The Boston
Consultancy Agreement contains standard termination provisions under which the Company must give 3 months
written notice of termination (or shorter period in the event of a material breach) or alternatively payment in lieu of
service. At the end of the notice period the Company must pay to Boston Tech. an amount equal to the consulting
fee that would otherwise be payable to Boston Tech. over the 3-month period if the engagement had not been
terminated. These amounts have been included in the remuneration report below.
12.2.5. Engagement of Remuneration Consultants
During the financial year, the Company did not engage any remuneration consultants.
12.2.6. Relationship between Remuneration of KMP and Earnings
In considering the Group’s performance and benefits for shareholders wealth, the Board has regard to the following
indices in respect of the current financial year and the previous four financial years (where applicable). Reported below
are measures of the Group’s financial performance over the last five years as required by the Corporations Act 2001 (Cth).
However, these are not necessarily consistent with the measures used in determining the variable amounts of
remuneration to be awarded to KMPs. Consequently, there may not always be a direct correlation between the statutory
key performance measures and the variable remuneration awarded:
As at 30 June
2024
2023
2022
2021
2020
Revenue ($)
416,202
194,131
1,408,330
288,741
425,167
Loss for the year attributable to owners of
the Company ($)
(2,161,283)
(11,416,168)
(1,580,910)
(3,042,523)
(1,910,234)
Basic earnings per share (cents)
(0.39)
(2.61)
(0.40)
(0.87)
(0.85)
Dividend payments ($’000)
Nil
Nil
Nil
Nil
Nil
Share price (cents per share) 1, 2
0.30
0.80
2.60
10.00
8.00
Increase/(decrease) in share price (%)
(62.50)
(69.23)
25.00
25.00
185.71
1 FY2021: At last trade date, 14 January 2021. Company at the 30 June 2021 balance date was suspended
2 FY2020: At last trade date, 8 May 2020. Company was suspended until reinstatement on 16 October 2020.
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 11
Directors’ report
12.
Remuneration report (audited)
12.3.
Directors and KMP remuneration
The following table of benefits and payments represents the components of the current year and comparative year
remuneration expenses for each member of KMP of the Group. Such amounts have been calculated in accordance with
Australian Accounting Standards.
2024– Group
Group KMP
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Termination
benefits
Equity-settled share-
based payments
Total
Salary, fees
and leave
Profit share
and bonuses
Non-
monetary
Other
Super-
annuation
Other
Equity
Performance
Rights(5)
(net of contra
expense)
$
$
$
$
$
$
$
$
$
$
Peter Malone(1)
271,200
-
-
-
-
-
-
-
(222,870)
48,330
Filippo (Phil) Giglia(2)(7)
60,000
-
-
20,000
-
-
-
-
(44,574)
35,426
Stuart Ushe(4)
90,000
-
-
-
-
-
-
-
-
90,000
Craig Piercy(1)
176,291
-
-
-
-
-
-
-
-
176,291
Leo Fung(3)
176,291
-
-
-
-
-
-
-
-
176,291
773,782
-
-
20,000
-
-
-
-
(267,444)
526,338
2023 – Group
Group KMP
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Termination
benefits
Equity-settled share-
based payments
Total
Salary, fees
and leave
Profit share
and bonuses
Non-
monetary
Other(8)
Super-
annuation
Other
Equity
Performance
Rights(6)
(net of contra
expense)
$
$
$
$
$
$
$
$
$
$
Peter Malone(1)
240,000
-
-
261,795
-
-
-
-
192,217
694,012
Filippo (Phil) Giglia(2)
60,000
-
-
-
-
-
-
-
37,836
97,836
Stuart Usher(4)
41,129
-
-
-
-
-
-
-
-
41,129
Lee Christensen(9)
19,091
-
-
-
-
-
-
-
3,815
22,906
Craig Piercy(1)
156,000
-
-
170,167
-
-
-
-
32,857
359,024
Leo Fung(3)
156,000
-
-
170,167
-
-
-
-
32,857
359,024
672,220
-
-
602,129
-
-
-
-
299,582
1,573,931
(1) Peter Malone’s and Craig Piercy’s fees are paid to Boston Technology Management Pty Ltd.
(2) Filippo (Phil) Giglia fees paid to Colosseum Securities Pty Ltd; agreement commenced on 22 November 2017.
(3) Leo Fung’s fees are paid to Blackridge Group Pty Ltd who engage Leo Fung.
(4) Stuart Usher was appointed 17 January 2023. He received director fees and company secretary fees through two service entities. Mr
Ushers company secretary fees are mandated at $2,500 per month, on an ongoing basis.
(5) In 2024, For Messrs Malone and Giglia, the 2022 Class B rights were derecognised due to a nil probability that the performance rights
below will meet any of the vesting conditions by the milestone dates as described in note 18.2.2d of the financial statements. As a result
of this, the 2022 Class B rights related to the current financial year and amounts relating to 2022 Class B performance that are historic
(accounted for in prior periods) were derecognised through a contra-expense in share-based payments (see 18.2.2d).
(6) In 2023, Peter Malone received equity-settled share-based payments comprising $294,482 and a derecognition of rights amounting to
($102,265), resulting in a net share-based payment of $192,217.
(7) In 2024, other short-term benefits for Filippo (Phil) Giglia represent a back-pay of audit committee fees for the 2023 financial year.
(8) In 2023, other short-term benefits represent the accrual of historic annual and long service leave entitlements and superannuation
entitlements. These represent recognition of normal commercial entitlements from current and previous periods not previously
recognised.
(9) Lee Christensen was appointed 31 August 2021 and resigned on 17 January 2023.
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 12
Directors’ report
12.
Remuneration report (audited)
12.4.
Share-based compensation
12.4.1. As at 30 June 2024 the Company had the following securities on issue/lapse in connection with KMP share-based payments:
2024– Group
Group KMP
Type of
rights
Number of
rights at the
start of the
year/grant date
No.
Value of
rights at
grant date(1)
$
Number of
rights vested
during the year
No.
Value of
rights at
vesting date(1)
$
Number of
rights lapsed
during the year
No.
Value at
lapse date
$
Peter Malone
2022 Class B(2)
50,000,000
902,363
-
-
-
-
Filippo (Phil) Giglia 2022 Class B(2)
10,000,000
180,473
-
-
-
-
60,000,000
1,082,836
-
-
-
-
(1) The value at grant date was calculated in accordance with AASB2 Share-based payments of rights granted as part of remuneration. These
were valued at fair value determined using Black Scholes option pricing model. No adjustment has been made for the value of rights
which lapsed during the year.
(2) The 2022 Class B rights were derecognised due to a nil probability that the performance rights below will meet any of the vesting
conditions by the milestone dates as described in note 18.2.2d of the financial statements. As a result of this, the 2022 Class B rights
related to the current financial year and amounts relating to 2022 Class B performance that are historic (accounted for in prior periods)
were derecognised through a contra-expense in share-based payments (see 18.2.2d).
12.4.2. Employee Incentive Plan
The Company has established an Equity Incentive Plan (EIP) to assist in the motivation, retention and reward of senior
management and other employees. The EIP is designed to align the interest of senior management and other employees
with the interest of Shareholders by providing an opportunity for participants to receive an equity interest in the Company.
The Company is currently assessing the suitability of this plan to achieve the proposed objectives.
12.5.
KMP equity holdings
12.5.1. Fully paid ordinary shares of Skin Elements Limited held by each KMP
The number of ordinary shares in the Company held during the financial year by each Director of Skin Elements Limited
and any other KMP of the Company, including their personally related parties, are as follows:
2024– Group
Group KMP
Balance at start
of year or date of
appointment
No.
Received during
the year as
remuneration
No.
Received during the
year on the exercise
of options
No.
Other changes
during the year(1)
No.
Balance at end
of year or date
of resignation
No.
Peter Malone
31,743,116
-
-
-
31,743,116
Filippo (Phil) Giglia
5,069,277
-
-
-
5,069,277
Stuart Usher
-
-
-
-
-
Craig Piercy
19,538,565
-
-
(5,285,000)
14,253,565
Leo Fung
17,598,348
-
-
6,733,420
24,331,768
73,949,306
-
-
1,448,420
75,397,726
(1) Other changes included on-market acquisition or disposals of shares.
12.5.2. Options in Skin Elements Limited held by each KMP
The number of options in the Company, directly, indirectly or beneficially, by each KMP, including their personally-related
entities for the year ended 30 June 2024 is as follows:
2024 – Group
Group KMP
Balance at
start of year or
appointments
No.
Granted as
Remuneration
during the year
No.
Exercised
during the year
No.
Other changes
during the year
No.
Balance at
end of year or
resignation
No.
Vested and
Exercisable
No.
Not Vested
No.
Peter Malone
5,290,520
-
-
-
5,290,520
5,290,520
-
Filippo (Phil) Giglia
844,880
-
-
-
844,880
844,880
-
Stuart Usher
-
-
-
-
-
-
-
Craig Piercy
3,256,429
-
-
-
3,256,429
3,256,429
-
Leo Fung
4,055,295
-
-
-
4,055,295
4,055,295
-
13,447,124
-
-
-
13,447,124
13,447,124
-
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 13
Directors’ report
12.
Remuneration report (audited)
12.5.3. Performance Rights of Skin Elements Limited held by each KMP
The number of performance rights in the Company, directly, indirectly or beneficially, by each KMP, including their
personally-related entities for the year ended 30 June 2024 is as follows:
2024 – Group
Group KMP
Adjusted(2)
Balance at
start of year or
appointments
No.
Granted as
Remuneration
during the year
No.
Converted
during the year
No.
Other changes
during the year
No.
Balance at
end of year or
resignation
No.
Vested and
convertible
No.
Not Vested
No.
Peter Malone(1)
50,000,000
-
-
-
50,000,000
-
50,000,000
Filippo (Phil) Giglia(1)
10,000,000
-
-
-
10,000,000
-
10,000,000
Stuart Usher
-
-
-
-
-
-
-
Craig Piercy
-
-
-
-
-
-
-
Leo Fung
-
-
-
-
-
-
-
60,000,000
-
-
-
60,000,000
-
60,000,000
(1) The 2022 Class B rights were derecognised due to a nil probability that the performance rights below will meet any of the vesting
conditions by the milestone dates as described in note 18.2.2d of the financial statements. As a result of this, the 2022 Class B rights
related to the current financial year and amounts relating to 2022 Class B performance that are historic (accounted for in prior periods)
were derecognised through a contra-expense in share-based payments (see 18.2.2d).
(2) Opening balances were adjusted for 2019 and 2022 Class A performance rights that had lapsed in a prior period, being unable to meet
their market-based vesting conditions
12.6.
Other Equity-related KMP Transactions
There have been no other transactions involving equity instruments other than those described in the tables above
relating to options, rights, and shareholdings.
12.7.
Other transactions with KMP and or their Related Parties
12.7.1. Other Transactions with Key Management Personnel
Entity
Nature of transactions
KMP
Payable Balance(1)
2024
$
2023
$
Boston Technology Management Pty Ltd Service Fees
Peter Malone
360,462
59,737
Colosseum Securities Pty Ltd
Director’s fee
Filippo (Phil) Giglia
147,472
37,472
Spitfire Corporate Advisory Pty Ltd
Director’s fee
Stuart Usher
74,161
30,161
Geneva Partners Pty Ltd
Company secretary fees Stuart Usher
24,750
15,081
Boston Technology Management Pty Ltd Service Fees
Craig Piercy
335,086
179,176
Boston Technology Management Pty Ltd R&D Consultancy(2)
Craig Piercy, Peter Malone
816,199
-
Blackridge Pty Ltd
Service Fees
Leo Fung
221,558
104,428
1,979,688
426,055
(1) Balances are classified as current on statement of financial position under note 4.4.1 of Trade and other payables.
(2) This R&D Costs provided by Boston Technology Management Pty Ltd for R&D project materials, formulations, testing and R&D
contractors and consultants. This amount was recognised as an expense in the 2024 financial year
KMP have confirmed they will not call upon balances owed until such time where the Company has the financial capacity to
repay the amounts without impacting the Company’s ability to continue as a going concern and pay its other liabilities as
and when they fall due for payment.
There have been no other transactions in addition to those described in the remuneration report or as detailed in note 15
Related party transactions.
12.8.
Voting of shareholders at last year’s annual general meeting (AGM)
The Company received 99.31% proxy votes and 99.90% poll votes of “yes” votes on its remuneration report for the 2022
financial year. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration
practices.
END OF REMUNERATION REPORT
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 14
Directors’ report
This Report of the Directors, incorporating the Remuneration Report, is signed in accordance with a resolution of directors made
pursuant to s.298(2) of the Corporations Act 2001 (Cth).
PETER MALONE
Executive Chairman
Dated this Monday, 30 September 2024
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 15
AUDITOR’S DECLARATION OF INDEPENDENCE
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 16
Consolidated statement of profit or loss and other comprehensive income
for the year ended 30 June 2024
Note
2024
$
2023
$
Continuing operations
Revenue
1.1
416,202
194,131
Cost of sales
(54,328)
(99,014)
Gross profit
361,874
95,117
Other income
1.2
1,197,149
1,183,463
Administrative and other costs
(822,228)
(1,946,879)
Research and development costs
(2,487,755)
(1,690,254)
Selling and distribution costs
(74,017)
(143,647)
Operating loss
(1,824,977)
(2,502,200)
Interest and finance costs
(81,851)
(58,252)
Impairment expense
2.5
(254,455)
(8,017,774)
Put option agreement fees expensed
2.1.2
-
(837,942)
Loss before tax
2.1
(2,161,283)
(11,416,168)
Income tax benefit
3.1
-
-
Net loss for the year
(2,161,283)
(11,416,168)
Other comprehensive income, net of income tax
-
-
Other comprehensive income for the period, net of tax
-
-
Total comprehensive income attributable to members of the parent entity
(2,161,283)
(11,416,168)
Earnings per share:
₵
₵
Basic and diluted loss per share (cents per share)
17.4
(0.39)
(2.61)
(1,818,883)
(2,096,026)
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 17
Consolidated statement of financial position
as at 30 June 2024
Note
2024
$
2023
$
Current assets
Cash and cash equivalents
4.1
115,071
358,432
Trade and other receivables
4.2
1,258,884
1,710,587
Inventories
5.1
31,908
83,845
Other current assets
4.3.1
28,680
57,207
Total current assets
1,434,543
2,210,071
Non-current assets
Right of use asset - property, plant, and equipment
8,365
14,460
Intangible assets
5.2
-
-
Total non-current assets
8,365
14,460
Total assets
1,442,908
2,224,531
Current liabilities
Trade and other payables
4.4.1
2,344,019
1,063,725
Borrowings
4.5.1
731,727
556,003
Total current liabilities
3,075,746
1,619,728
Total liabilities
3,075,746
1,619,728
Net (asset deficiency) / assets
(1,632,838)
604,803
Equity
-
-
Issued capital
6.1.1
24,444,454
24,244,454
Reserves
6.2
335,827
824,698
Accumulated losses
(26,413,119)
(24,464,349)
Total equity
(1,632,838)
604,803
(1,669,883)
533,136
(1,632,838)
604,803
The consolidated statement of financial position is to be read in conjunction with the accompanying notes.
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 18
Consolidated statement of changes in equity
for the year ended 30 June 2024
Note
Contributed
equity
Accumulated
losses
Share-based
payment
reserve
Total
equity
$
$
$
$
Balance at 1 July 2022
22,871,096
(13,048,181)
229,094
10,052,009
Loss for the year attributable to the owners of the
parent
-
(11,416,168)
-
(11,416,168)
Other comprehensive income for the year
attributable to the owners of the parent
-
-
-
-
Total comprehensive income for the year
attributable to the owners of the parent
-
(11,416,168)
-
(11,416,168)
Transaction with owners, directly in equity
Shares issued during the year (net of costs)
6.1.1
1,268,355
-
-
1,268,355
Share-based payments during the year
6.1.1
105,003
-
-
105,003
Share-based payments during the year: options
6.3.1
-
-
335,827
335,827
Share-based payments during the year: rights
6.4.1
-
-
259,777
259,777
Balance at 30 June 2023
24,244,454
(24,464,349)
824,698
604,803
Balance at 1 July 2023
24,244,454
(24,464,349)
824,698
604,803
Loss for the year attributable to the owners of the
parent
-
(2,161,283)
-
(2,161,283)
Other comprehensive loss for the year attributable
to the owners of the parent
-
-
-
-
Total comprehensive loss for the year attributable to
the owners of the parent
-
(2,161,283)
-
(2,161,283)
Transaction with owners, directly in equity
Shares issued during the year (net of costs)
6.1.1
200,000
-
-
200,000
Share-based payments during the year: rights
6.4.1
-
-
(276,358)
(276,358)
Transfers to/(from) reserves
6.4.1
212,513
(212,513)
-
Balance at 30 June 2024
24,444,454
(26,413,119)
335,827
(1,632,838)
The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 19
Consolidated statement of cash flows
for the year ended 30 June 2024
Note
2024
$
2023
$
Cash flows from operating activities
Receipts from customers
403,821
193,326
Payments to suppliers and employees
(1,734,801)
(2,955,997)
Receipt of Research and development tax incentive grant income
1,129,934
984,992
Interest paid and facility fees
(81,851)
(58,252)
Interest received
3,520
-
Net cash used in operating activities
4.1.2
(279,377)
(1,835,931)
Cash flows from investing activities
Net cash used in investing activities
-
-
Cash flows from financing activities
Proceeds from issue of shares
6.1.1
200,000
1,772,102
Share issue costs
(39,708)
(129,837)
Proceeds of borrowings
4.1.2b
983,413
638,251
Repayments of borrowings
4.1.2b
(1,107,689)
(834,203)
Net cash provided by financing activities
36,016
1,446,313
Net decrease in cash and cash equivalents held
(243,361)
(389,618)
Cash and cash equivalents at the beginning of the year
358,432
748,050
Cash and cash equivalents at the end of the year
-
-
4.1
115,071
358,432
The consolidated statement of cash flows is to be read in conjunction with the accompanying notes.
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 20
Notes to the consolidated financial statements
for the year ended 30 June 2024
In preparing the 2024 financial statements, Skin Elements Limited has grouped notes into sections under five key categories:
Section A: How the numbers are calculated ............................................................................................................................ 21
Section B: Risk.......................................................................................................................................................................... 38
Section C: Group structure ...................................................................................................................................................... 42
Section D: Unrecognised items ................................................................................................................................................ 43
Section E: Other Information ................................................................................................................................................... 44
Material accounting policies specific to each note are included within that note. Accounting policies that are determined to be
non-material are not included in the financial statements.
The financial report is presented in Australian dollars, except where otherwise stated.
Company details
The registered office of the Company is:
Street + Postal:
1242 Hay Street
West Perth WA 6005
Australia
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 21
Notes to the consolidated financial statements
for the year ended 30 June 2024
SECTION A.
HOW THE NUMBERS ARE CALCULATED
This section provides additional information about those individual line items in the financial statements that the Directors
consider most relevant in the context of the operations of the entity, including:
(a) accounting policies that are relevant for an understanding of the items recognised in the financial statements. These cover
situations where the accounting standards either allow a choice or do not deal with a particular type of transaction.
(b) analysis and sub-totals.
(c) information about estimates and judgements made in relation to particular items.
Note 1
Revenue and other income
Note
2024
$
2023
$
1.1
Revenue
Sales to customers
416,202
194,131
416,202
194,131
1.2
Other Income
Research and development tax incentive grant income
1,193,629
1,129,934
Fair value adjustment of fee options
1.2.1
-
53,000
Interest income
3,520
529
1,197,149
1,183,463
1.2.1
Fair value remeasurement of options previously granted - Movement in derivative liabilities
In April 2021, the Company entered into a Put Option Agreement (POA) with LDA Capital Limited and LDA Capital LLC
(together LDA Capital) to provide the Company with up to A$20 million in committed equity capital over 36 months. . During
the 2023 financial year, the Company issued no Capital Call Notice under the POA to LDA Capital, and upon the expiration of
the POA, the final fair value remeasurement of options previously granted was recognised in other income.
1.3
Accounting policies
1.3.1
Revenue from contracts with customers
a. Recognition
The Group generates revenue from the delivery of goods as follows:
The Group sells products to external customers using several mediums which include internet sales, employees
direct selling, and the use of wholesalers and businesses who purchase the product and are then responsible for
their own on selling processes.
The internet sales are driven by the Skin Element's website which sets out pricing for the product and delivery. Each
wholesaler and business customer order is specific to the client's requirements; however, for each category of
customer the performance obligations cease when the Group has delivered the goods to the customers. As at 30
June 2024 the Company did not have any material customer contracts at the reporting date.
b. Revenue from selling goods
Revenue for sale of sun care and skincare products, is recognised when the customers obtain control of the goods. This
usually occurs when the goods are delivered. No other products or services are bundled in such contracts. Invoices are
usually payable within 30 days and no element of financing is deemed present as the services are charged within
standard credit terms which is consistent with industry practice.
1.3.2
Government Grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be
received, and the Group will comply with all attached conditions. The Group received the following government grants:
a. Research and development tax incentive received or receivable are recognised at fair value where there is a reasonable
assurance that the amount will be received and the Group will comply with all attached conditions. The value of the
Research and development tax incentive received or receivable income is presented as part of profit or loss as other
income.
The Group did not benefit directly from any other forms of government assistance.
1.3.3
Interest income
Interest revenue is recognised in accordance with note 2.6a Finance expenses.
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 22
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 2
Expenses
Note
2024
$
2023
$
2.1
Expenses by nature
Administration expenses
2.2
414,222
462,142
Advertising and marketing expenses
74,017
143,647
Amortisation
5.2
6,094
406,174
Corporate expenses
2.3
181,354
230,753
Employee benefits expense
2.4
187,415
798,625
Impairment expense
2.5
254,455
8,017,774
Occupancy costs
114,994
107,437
Manufacturing, purchasing, and distribution costs
54,328
99,014
Put Option Agreement fees expensed
2.1.2
-
837,942
Research and development expenses
2,487,755
1,690,254
Total expenses by nature
3,774,634
12,793,762
2.1.1
Reconciliation to net profit or loss before tax
Total revenue and other income
1,613,351
1,377,594
Less: Total expenses by nature
(3,774,634)
(12,793,762)
Net loss before tax
(2,161,283)
(11,416,168)
-
-
2.1.2
Put Option Agreement fees expensed - LDA Capital Agreement
In April 2021, as noted in note 1.2.1, the Company entered into a POA with LDA Capital to provide the Company with up to
A$20 million in committed equity capital over 36 months. During the 2023 financial year, the Company fully expensed the
remainder of the Put Option Agreement fees.
Note 2
Expenses (cont.)
Note
2024
$
2023
$
2.2
Administration expenses
Accounting expenses
121,143
157,709
External consulting fees
30,000
81,892
Travel expenses
234
13,898
Interest expenses and finance facility costs
81,851
58,252
Other expenses
180,994
150,391
414,222
462,142
2.3
Corporate expenses
ASX fees
37,705
51,545
Audit expenses
88,362
71,376
Legal expenses
32,040
61,444
Share Registry and shareholder communications
23,247
46,388
181,354
230,753
2.4
Employee benefits expense
Directors’ fees
160,000
106,510
Executive services contracts
239,782
241,749
Wages and salaries – non-R&D
63,991
190,589
Share-based performance rights: amortisation
2.4.1
(276,358)
259,777
187,415
798,625
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 23
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 2
Expenses (cont.)
2.4.1
The Company had previously issued performance rights to KMP which would convert into fully paid shares on achieving
certain performance hurdles. These performance rights were recorded at fair value which is amortised over the vesting
period (up to four years from date of issue). In the current year the Class B rights were derecognised due to a nil probability
that the performance rights below will meet any of the vesting conditions by the milestone dates as described in note 18.2.2d.
2.4.2
Accounting policy - Employee benefits
a. Short-term benefits
Liabilities for employee benefits for wages, salaries and annual leave that are expected to be settled within 12 months
of the reporting date represent present obligations resulting from employees' services provided to the reporting date
and are calculated at undiscounted amounts based on remuneration wage and salary rates that the Group expects to
pay at the reporting date including related on-costs, such as workers compensation insurance and payroll tax.
Non-accumulating non-monetary benefits, such as medical care, housing, cars and free or subsidised goods and services,
are expensed based on the net marginal cost to the Group as the benefits are taken by the employees.
b. Other long-term benefits
The Group's obligation in respect of long-term employee benefits other than defined benefit plans, such as long service
leave, is the amount of future benefit that employees have earned in return for their service in the current and prior
periods plus related on-costs; that benefit is discounted to determine its present value, and the fair value of any related
assets is deducted. The discount rate is the Reserve Bank of Australia's cash rate at the report date that have maturity
dates approximating the terms of the Company's obligations. Any actuarial gains or losses are recognised in profit or
loss in the period in which they arise.
c. Retirement benefit obligations: Defined contribution superannuation funds
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions onto a
separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to
defined contribution superannuation funds are recognised as an expense in the income statement as incurred.
d. Equity-settled compensation
The grant by the Company of options over its equity instruments to contractors or to its employees is measured at the
fair value of contractor’s services (where the services can be valued) or at the fair value of the equity instruments
provided (which includes employee services received) during the period. The measurement date is the grant date and
the cost is recognised over the vesting period for the services received by the Company with an increase to the expense
(or asset if it directly relates to the development of an asset) with a corresponding increase to equity or reserves. The
amount recognised is adjusted to reflect the actual number of share options that vest except where forfeiture is only
due to market conditions not being met.
Note 2
Expenses (cont.)
2024
$
2023
$
2.5
Impairment expense
Impairment of intangible assets
5.2.3a
-
7,489,990
Impairment of trade receivables
4.2.3
254,455
527,784
254,455
8,017,774
2.6
Other material accounting policies related to items of profit and loss
a. Finance expenses
Financial expenses comprise interest expense on borrowings calculated using the effective interest method, unwinding
of discounts on provisions, changes in the fair value of financial assets at fair value through profit or loss and impairment
losses recognised on financial assets. All borrowing costs are recognised in profit or loss using the effective interest
method and include:
interest on the bank overdraft;
interest on short-term and long-term borrowings; and
interest on finance leases.
Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a
substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time
as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in income
in the period in which they are incurred.
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 24
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 3
Income tax
Note
2024
$
2023
$
3.1
Income tax expense
Current tax
-
-
Deferred tax
-
-
-
-
Deferred income tax expense included in income tax expense comprises:
Increase / (decrease) in deferred tax assets
3.5
-
-
(Increase) / decrease in deferred tax liabilities
-
-
-
-
3.2
Reconciliation of income tax expense to prima facie tax payable
The prima facie tax payable/(benefit) on loss from ordinary activities
before income tax is reconciled to the income tax expense as follows:
Accounting loss before tax
(2,161,283)
(11,416,168)
Prima facie tax on operating loss at 25% (2023: 25%)
(540,321)
(2,854,042)
Add / (Less) tax effect of:
Other non-deductible expenses / (non-assessable income)
566,218
2,599,457
Other temporary differences not recognised
(25,897)
254,585
Income tax expense/(benefit) attributable to operating loss
-
-
2024
%
2023
%
3.3
The applicable weighted average effective tax rates attributable to
operating profit are as follows:
Nil
Nil
3.3.1
The tax rates used in the above reconciliations is the corporate tax rate of 25% payable by the Australian corporate entity
on taxable profits under Australian tax law.
2024
$
2023
$
3.4
Balance of the parent company franking account at year end
Nil
Nil
3.5
Deferred tax assets
Tax losses
3.6
2,003,877
1,852,932
Intangible assets
1,869,952
1,869,952
3,873,829
3,722,884
Net deferred tax assets
3,873,829
3,722,884
Less deferred tax assets not recognised
(3,873,829)
(3,722,884)
Net deferred tax assets
-
-
3.6
Tax losses and deductible temporary differences
Unused tax losses and deductible temporary differences for which no
deferred tax asset has been recognised, that may be utilised to offset tax
liabilities:
Tax losses
2,003,877
1,852,932
2,003,877
1,852,932
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 25
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 3
Income tax (cont.)
3.6.1
Potential deferred tax assets attributable to tax losses have not been brought to account at 30 June 2024 because the
Directors do not believe it is appropriate to regard realisation of the deferred tax assets as probable at this point in time.
These benefits will only be obtained if:
i.
the Group derives future assessable income of a nature and of an amount sufficient to enable the benefit from the
deductions for the loss to be realised;
ii. the Group continues to comply with conditions for deductibility imposed by law; and
iii. no changes in tax legislation adversely affect the Group in realising the benefit from the deductions for the loss.
Tax balances disclosed in the financial statements and notes, are based on the best estimates of Directors. These estimates
consider both the financial performance and position of the Group as they pertain to current income taxation legislation,
and the Directors understanding thereof. No adjustment has been made for pending or future taxation legislation. The
current income tax position represents the Directors' best estimate, pending an assessment by tax authorities.
The parent company has accumulated tax losses of $8,015,508 (2023: $7,411,728) which may be available for offset against
future taxable profits of the parent company in which the losses arose. The recoupment of these losses is subject to
assessment of the Australian Taxation Office.
3.7
Accounting policy
The income tax expense or benefit for the year is the tax payable on the current period's taxable income based on the
applicable income tax rate in Australia adjusted by changes in deferred tax assets and liabilities attributable to temporary
difference and to unused tax losses.
The current income tax charge is calculated based on the tax laws enacted or substantively enacted at the end of the reporting
period in Australia, where the Company's subsidiary and generates taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate based on amounts expected to be paid to the tax authorities.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from
or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted by the balance date.
Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities (DTLs) are recognised for all taxable temporary differences except:
when the DTL arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business
combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint
ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the
temporary difference will not reverse in the foreseeable future.
Deferred income tax assets (DTAs) are recognised for all deductible temporary differences, carry-forward of unused tax assets
and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:
when the DTA relating to a deductible temporary difference arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit
nor taxable profit or loss; or
when a deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint
ventures, in which case a DTA is only recognised to the extent that it is probable that the temporary difference will reverse
in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.
The carrying amount of DTAs is reviewed at each balance date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised DTAs
are reassessed at each balance date and are recognised to the extent that it has become probable that future taxable profit
will allow the DTA to be recovered. DTAs and DTLs are measured at the tax rates that are expected to apply to the year when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted
at the balance date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. DTAs and DTLs
are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the DTAs and
DTLs relate to the same taxable entity and the same taxation authority.
Where the Group receives the Australian Government's Research and development tax incentive, the Group accounts for the
refundable tax offset under AASB 112. Funds are received as a rebate through the parent company's income tax return.
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 26
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 4
Financial assets and financial liabilities
4.1
Cash and cash equivalents
2024
$
2023
$
Cash at bank
115,071
358,432
115,071
358,432
4.1.1
The Group's exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note
7 Financial risk management.
4.1.2
Cash Flow Information
2024
$
2023
$
a. Reconciliation of cash flow from operations to loss after income tax
Loss after income tax
(2,161,283)
(11,416,168)
Cash flows excluded from loss attributable to operating activities:
-
-
Non-cash flows in (loss)/profit from ordinary activities:
Depreciation and amortisation
6,094
406,174
Share-based payments expensed
(276,358)
259,777
Share-settled payment
-
71,376
Impairment of assets
254,455
8,017,774
Changes in assets and liabilities, net of the effects of purchase and
disposal of subsidiaries:
(Increase) / decrease in receivables and other assets
(73,176)
667,710
Decrease in inventories
325,262
70,429
Increase in payables
1,630,687
87,287
Increase / (decrease) in provisions
14,942
(290)
Cash flow (used in) from operations
-
(279,377)
(1,835,931)
-
-
b. Reconciliation of liabilities arising from financing activities
2022
$
Cash flows
$
Non-cash changes
2023
$
Acquisitions
$
Foreign
Exchange
$
Other
Changes(i)
$
Other payables
300,000
-
-
-
-
300,000
Derivative liabilities
53,000
-
-
-
(53,000)
-
R&D loan facility
734,203
(195,952)
-
-
-
538,251
Total liabilities from
financing activities
1,087,203
(195,952)
-
-
(53,000)
838,251
(i) Other changes related to non-cash movements related to the recognition and reduction in derivative liabilities refer to note 4.4.3.
2023
$
Cash flows
$
Non-cash changes
2024
$
Acquisitions
$
Foreign
Exchange
$
Other
Changes
$
Other payables
300,000
(300,000)
-
-
-
-
R&D loan facility
538,251
175,727
-
-
2,802
716,780
Total liabilities from
financing activities
838,251
(124,273)
-
-
2,802
716,780
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 27
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 4
Financial assets and financial liabilities (cont.)
4.1
Cash and cash equivalents (cont.)
c. Credit and loan standby arrangement with banks
The Group has no credit standby facilities.
d. Non-cash investing and financing activities
2024
None
2023
26.10.22
1,691,556 shares issued at $0.0257 per share for LDA fees (note 18.2.2c), and 1,216,075 shares
issued at $0.06 per share for corporate communication services (note 18.2.2a).
30.06.23
6,152,981 shares issued at $0.010 per share for underwriting fees (note 18.2.2a).
4.1.3
Accounting policy
Cash comprises cash at bank and on hand. Cash equivalents are short term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are
shown within borrowings in current liabilities in the consolidated statement of financial position.
For the purposes of the consolidated statement of cash flows, cash and cash equivalents consist of cash and cash equivalents
as defined above, net of outstanding bank overdrafts.
4.2
Trade and other receivables
Note
2024
$
2023
$
4.2.1
Current
Trade receivables
31,662
1,074,847
Less: Loss allowance
4.2.3
-
(527,784)
Research and development tax incentive rebate receivable
4.2.4
1,193,629
1,129,934
Other receivables
33,593
33,590
1,258,884
1,710,587
4.2.2
The Group's exposure to credit rate risk is disclosed in note 7 Financial risk management.
4.2.3
In the previous year the Company had received an order from Pacific Health for SuprCuvr totalling $1,055,568 which was
produced and delivered into secured warehouse. Subsequently, due to the rapidly evolving market at that time and the
launch of the newly developed SuprCuvr disinfectant range, the Company has revised the terms of the order with Pacific
Health, including extended payment terms. Due to the uncertainty of the timing of payments under these new terms, as at
31 December 2023, the Company has agreed to the settlement of the debtor’s balance through the repurchase of the
SuprCuvr inventory. The Company will continue to work with Pacific Health for the launch of SuprCuvr disinfectant into scale
markets and will recognise sales revenue as product is delivered.
4.2.4
The Group continued its development program during the year ended 30 June 2024 resulting in a claim for research and
development tax incentive which has been included as a receivable at year end.
4.2.5
Accounting policy
Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using
the effective interest rate method, less any allowance for impairment. Trade receivables are generally due for settlement
within periods ranging from prepaid or cash on delivery to 30 days.
Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off by
reducing the carrying amount directly. An allowance account is used when there is objective evidence that the Group will
not be able to collect all amounts due according to the original contractual terms (see also note 4.6.1).
The amount of the impairment loss is recognised in the statement of profit or loss and other comprehensive income within
other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in
a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written
off are credited against other expenses in the statement of profit or loss and other comprehensive income.
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 28
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 4
Financial assets and financial liabilities (cont.)
4.3
Other assets
2024
$
2023
$
4.3.1
Current
Prepayments – Raw materials
28,680
57,207
28,680
57,207
4.4
Trade and other payables
Note
2024
$
2023
$
4.4.1
Current
Unsecured
Trade payables
307,988
233,664
Key management personnel related
15
1,979,688
428,925
Sundry payables and accrued expenses
83,051
102,218
Net Goods and Services Tax (receivable) / payable
(26,708)
(1,082)
Commitment Fee payable
4.4.3
-
300,000
2,344,019
1,063,725
4.4.2
Trade payables are non-interest bearing and usually settled within the lower of terms of trade or 60 days.
4.4.3
Movement in other payables
In April 2021, as noted in note 1.2.1, the Company entered into a POA with LDA Capital to provide the Company with up to
A$20 million in committed equity capital over 36 months. Under this agreement the Company recognised a $300,000
commitment fee payable. This was fully settled in cash during the current financial year.
4.4.4
The Group's exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in
note 7.
4.4.5
Accounting policy
a. Trade and other payables
Trade other payables are recognised initially at fair value and subsequently at amortised cost and represent liabilities for
goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group
becomes obliged to make future payments in respect of the purchase of these goods and services. Amounts are
unsecured, non-interest bearing, and usually settled within the lower of terms of trade or 60 days.
4.5
Borrowings
Note
2024
$
2023
$
4.5.1
Current
R&D Rebate Advance Facility
4.5.2
716,780
538,251
Leases – motor vehicle
14,947
17,752
731,727
556,003
4.5.2
During the year, the Group received advance funding (wholly or predominantly for working capital or research and
development expenditures) on its expected annual R&D rebate from Radium Capital. Refer key terms below:
Amounts
For 30 June 2024: 09/23: $229,000; 12/23: $238,000; 3/24: $112,200; 5/24: $137,580.
Final Maturity Date
30 November 2024.
Repayment
Skin Elements has the option to repay earlier without penalties.
Interest Rate
14% - 15% per annum, with default rate of 18% if repayment is later than 30 November 2024.
Security
Secured against the R&D refund receivable from the ATO
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 29
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 4
Financial assets and financial liabilities (cont.)
4.5
Borrowings (cont.)
4.5.3
Accounting policy
a. Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid
on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the
extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as
a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date,
the loans or borrowings are classified as non-current.
Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor to
extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in profit or loss, which is measured
as the difference between the carrying amount of the financial liability and the fair value of the equity instruments
issued.
Borrowings are removed from the statement of financial position when the obligation specified in the contract is
discharged, cancelled, or expired. The difference between the carrying amount of a financial liability that has been
extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or
liabilities assumed, is recognised in profit or loss as other income or finance costs. Borrowings are classified as current
liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the
reporting period.
4.6
Other material accounting policies related to financial assets and liabilities
4.6.1
Investments and other financial assets
a. Classification
The Group classifies its financial assets in the following measurement categories:
those to be measured subsequently at fair value (either through OCI or through profit or loss), and
those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual terms of
the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in
equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election
at the time of initial recognition to account for the equity investment at fair value through other comprehensive income
(FVOCI).
The Group reclassifies debt investments when and only when its business model for managing those assets changes.
b. Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits
to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial
assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of
ownership.
c. Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed in profit or loss. Financial assets with embedded
derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal
and interest.
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 30
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 4
Financial assets and financial liabilities (cont.)
4.6
Other material accounting policies related to financial assets and liabilities (cont.)
i. Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and
the cash flow characteristics of the asset. There are three measurement categories into which the Group classifies
its debt instruments:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent
solely payments of principal and interest are measured at amortised cost. Interest income from these financial
assets is included in finance income using the effective interest rate method. Any gain or loss arising on
derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign
exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or
loss.
FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the
assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in
the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest
income and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is
derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss
and recognised in other gains/(losses). Interest income from these financial assets is included in finance income
using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses)
and impairment expenses are presented as separate line item in the statement of profit or loss.
FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a
debt investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within
other gains/(losses) in the period in which it arises.
ii. Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected
to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair
value gains and losses to profit or loss following the derecognition of the investment. Dividends from such
investments continue to be recognised in profit or loss as other income when the Group’s right to receive payments
is established.
Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of profit
or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at
FVOCI are not reported separately from other changes in fair value.
d. Impairment
The Group assesses on a forward-looking basis, the expected credit losses associated with its debt instruments carried
at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant
increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by AASB 9, which requires expected lifetime
losses to be recognised from initial recognition of the receivables.
Note 5
Non-financial assets and financial liabilities
5.1
Inventories
2024
$
2023
$
Finished goods
31,908
83,845
31,908
83,845
5.1.1
Accounting policy
Raw materials and stores, work in progress and finished goods are stated at the lower of cost and net realisable value. Cost
comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the
latter being allocated based on normal operating capacity. Costs are assigned to individual items of inventory based on
weighted average costs. Costs of purchased inventory are determined after deducting rebates and discounts. 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 inventories are valued at the lower of cost and net realisable value.
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 31
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 5
Non-financial assets and financial liabilities (cont.)
5.2
Intangible assets
2024
$
2023
$
SE FormulaTM
9,859,296
9,859,296
Accumulated amortisation
(2,379,486)
(2,379,486)
Accumulated impairment
(7,479,810)
(7,479,810)
-
-
Website development costs
55,410
55,410
Accumulated amortisation
(45,230)
(45,230)
Accumulated impairment
(10,180)
(10,180)
-
-
Total intangibles
-
-
5.2.1
Movements in Carrying Amounts
Note
Skin Elements
formula and
technology
$
Website
development
costs
$
Total
$
Carrying amount at 1 July 2022
7,868,814
21,256
7,890,070
Impairment
5.2.3a
(7,479,810)
(10,180)
(7,489,990)
Amortisation expense
(389,004)
(11,076)
(400,080)
Carrying amount at 30 June 2023
-
-
-
-
-
-
Carrying amount at 1 July 2023
-
-
-
Amortisation expense
-
-
-
Carrying amount at 30 June 2024
-
-
-
-
-
-
5.2.2
Accounting policies
a. Intangible assets acquired separately
Intangible assets acquired separately are recorded at cost less accumulated amortisation and impairment. Amortisation
is charged on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method
is reviewed at the end of each annual reporting period, with any changes in these accounting estimates being accounted
for on a prospective basis.
i.
Formula and technology
Separately acquired formula and technology are shown at historical cost. Skin Elements formula and technology
(hereafter SE FormulaTM), comprises the following, which utilise the same propriety formula in their ingredients:
Soléo Organics formula and technology;
PapayaActivs Skincare formula and technology;
Elizabeth Jane Natural Cosmetics formula and technology;
Invisi® Shield SuprCuvr Disinfectant
Formula and technology acquired in a business combination are recognised at fair value at the acquisition date. They
have a finite useful life and are subsequently carried at cost less accumulated amortisation and impairment losses.
ii. Software
Costs associated with maintaining software programmes are recognised as an expense as incurred. Costs that are
directly attributable to the improvement of identifiable and unique software products controlled by the Group are
recognised as intangible assets when the Company meets to capitalisation criteria to recognise the asset list in
development costs above.
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 32
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 5
Non-financial assets and financial liabilities (cont.)
5.2
Intangible assets (cont.)
b. Capitalising development costs of formula and technology and software
Development costs of formula and technology and software which meet the criteria below are capitalised to the asset
to which they relate in the year the costs were incurred. Research expenditure and development expenditure that do
not meet the criteria are recognised as an expense as incurred
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from development (or from the development phase of an internal
project) is recognised if, and only if, all of the following have been 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 amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from
the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated asset
can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated
amortisation on and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
Expenditures in relation to the development of identifiable and unique products, and that will probably generate
economic benefits exceeding costs beyond one year, are recognised as intangible assets and amortised over their
estimated useful lives. Any expenditure related to research is expensed as incurred.
c. Intangible assets acquired in a business combination
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair
value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life
intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible
assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit
or loss arising from derecognition of intangible assets are measured as the difference between net disposal proceeds
and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed
annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the
amortisation method or period.
d. Subsequent measurement
The Company commences amortisation where the development process is at a stage where the products can be
produced in commercial quantities. The Company has assessed that the SE FormulaTM is at a stage where they meet this
test. The Company has assessed the effective life for these assets to be 25 years and amortised the asset carrying values
on a straight-line basis for the period. The Company has a policy to regularly review the effective life of each asset. The
following useful lives are used in the calculation of amortisation:
2024
Years
2023
Years
SE FormulaTM
25
25
Website development costs
5
5
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 33
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 5
Non-financial assets and financial liabilities (cont.)
5.2
Intangible assets (cont.)
5.2.3
Key estimates
a. Impairment
The Group assesses the impairment of intangible assets at each reporting date by evaluating conditions specific to the
intangible asset that may lead to impairment of the assets recoverable amount in accordance with AASB 136. The
assessment of impairment is based on the best estimate of future cash flows available at the time of preparing the report.
However, facts and circumstances may come to light in later periods which may change this assessment if these facts had
been known at the time.
In undertaking its impairment assessment for the current period, the Group has identified impairment indicators of:
lower-than-expected operating performance; and
decline of market capital below net assets at reporting date, for the intellectual property assets.
As a result, the Group performed an impairment test which resulted in an impairment of $7,489,990 for the period and the
recoverable value of the intangible for the current year was assessed as $nil. This is based on its value-in-use discounted
cash flow model due to limited history of sales and contracted sales to support positive cash inflows during the forecast
period (i.e., 5 years) which cannot be reliably estimated. The Group has also determined that the recoverable value based
on fair value less cost to sell cannot be determined at this point based on the same assumption.
The significant uncertainty on achieving sales and profit may be resolved at the point when the proposed commercialisation
of the IP becomes successful and positive cash inflows can be supported by contracted sales. This may result in the reversal
of impairment in the future.
b. Amortisation rates
The Group has assessed the effective life of its SE FormulaTM intangible asset (comprising Soléo Organics formula and
technology; McArthur Skincare formula and technology; Elizabeth Jane Natural Cosmetics formula and technology; and
Invisi® Shield Hand Sanitiser) taking into account sector practices, the expected product life cycle and its own internal
knowledge of the underlying markets to determine an appropriate amortisation rate. This rate is an estimate of what the
Group anticipates the intangible will be able to generate future benefits from the commercialisation formula and technology
and this may differ from the future results. The Directors will continue to assess the effective life at each reporting date
5.3
Other Significant Accounting Policies related to Non-Financial Assets and Liabilities
5.3.1
Impairment of non-financial assets
The carrying amounts of the Group's non-financial assets, other than deferred tax assets (see accounting policy at note 3.7)
are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists,
then the asset's recoverable amount is estimated.
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication
exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable
amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value-in-use and is determined
for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other
assets or groups of assets and the asset's value-in-use cannot be estimated to be close to its fair value. In such cases the
asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset
or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is
written down to its recoverable amount.
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 risks specific to the asset. Impairment losses
relating to continuing operations are recognised in those expense categories consistent with the function of the impaired
asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease).
An assessment is also made at each reporting date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated.
A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the
asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset
is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is
recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation
increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying
amount, less any residual value, on a systematic basis over its remaining useful life.
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 34
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 5
Non-financial assets and financial liabilities (cont.)
5.3
Other Significant Accounting Policies related to Non-Financial Assets and Liabilities (cont.)
5.3.2
Leases
a. Recognition and measurement
Until the 2019 financial year, leases of property, plant and equipment were classified as either finance leases or operating
leases. The Company has identified one contract that would be classified as leases under the new standard being the
lease of office premises. Due to the short term and low value nature of this lease, the Company will apply the exemption
and elected to recognise the lease payments in profit and loss on a straight-line basis instead of applying the recognition
and measurement requirements in AASB 16. From 1 July 2019, leases are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased asset is available for use by the Group.
i.
Right of Use Asset
The Group recognises a right of use asset at the commencement date of the lease. The right of use asset is initially
measured at cost. The cost of right of use assets includes the amount of lease liabilities recognised, adjusted for any
lease payments made at or before the commencement date, plus initial direct costs incurred and an estimate of
costs to dismantle, remove or restore the leased asset, less any lease incentives received.
Right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of lease liability;
any lease payments made at or before the commencement date less any lease incentives received;
any initial direct costs; and
restoration costs.
Subsequent to initial measurement, the right of use asset is depreciated on a straight-line basis over the shorter of
the lease term and the estimated useful life.
Right of use assets are subject to impairment and are adjusted for any remeasurement of lease liabilities.
ii. Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities at the present value of lease payment
to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments)
less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees. The lease payments also include the exercise price of a
purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease,
if the assessment of lease term reflects the Group exercising the option to terminate. The variable lease payments
that do not depend on an index or a rate are recognised as expense in the period on which the event or condition
that triggers the payments occurs. The present value of lease payments is discounted using the interest rate implicit
in the lease or, if the rate cannot be readily determined, the Group's incremental borrowing rate.
The lease liability is measured at amortised cost using the effective interest method. After the commencement date,
the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments
made.
The amount of lease liability is remeasured when there is a change in future lease payments arising from a change
in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual
value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or
termination option. When the lease liability is remeasured, a corresponding adjustment is made to the carrying
amount of the right of use asset, or is recognised in profit or loss if the carrying amount of the right of use asset has
been reduced to zero.
The Group has elected not to recognise right of use assets and lease liabilities for short term leases that have a lease
term of 12 months or less and do not contain a purchase option, and leases of low value assets. The Group recognises
the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 35
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 6
Equity
6.1
Issued capital
Note
2024
No.
2023
No.
2024
$
2023
$
Fully paid ordinary shares
563,986,095
543,986,095
24,444,454
24,244,454
6.1.1
Ordinary shares
2024
No.
2023
No.
2024
$
2023
$
At the beginning of the year
543,986,095
407,727,266
24,244,454
22,871,096
Shares issued during the year:
26.10.22 Consultancy fees
18.2.2c
-
1,216,075
-
71,376
26.10.22 LDA fees
18.2.2a
-
1,691,556
-
43,473
04.11.22 Placement
-
30,000,000
-
750,000
31.05.23 Entitlement issue
-
93,226,979
-
932,270
20.06.23 Shortfall placement
-
3,971,238
-
39,712
30.06.23 Underwriting fee
18.2.2a
-
6,152,981
-
61,530
Unplaced applications
-
-
-
26,120
01.11.23 Placement
20,000,000
-
200,000
-
Share issue transaction costs
-
-
-
(551,123)
At end of the year
563,986,095
543,986,095
24,444,454
24,244,454
a. Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares
present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
6.1.2
Treasury shares
Note
2024
No.
2023
No.
At beginning of the year
25,500,000
25,500,000
At end of the year
25,500,000
25,500,000
a. Treasury shares are ordinary shares issued as collateral shares for nil consideration.
6.1.3
Accounting policy
Issued and paid-up capital is recognised at the fair value of the consideration received by the Company. Incremental costs
directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any
related income tax benefit. Incremental costs directly attributable to the issue of new shares or options for the acquisition
of a new business are not included in the cost of acquisition as part of the purchase consideration. Ordinary issued capital
bears no special terms or conditions affecting income or capital entitlements of the shareholders.
6.2
Reserves
2024
$
2023
$
6.2.1
Summary of share-based payment reserve
Options
6.3
335,827
335,827
Performance rights
6.4
-
488,871
335,827
824,698
-
-
6.2.2
Share-based payment reserve
The share-based payment reserve records the value of options and performance rights issued by the Company to its
employees or consultants.
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 36
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 6
Equity (cont.)
6.3
Options
Note
2024
No.
2023
No.
2024
$
2023
$
Options on issue
191,351,198
197,351,198
335,827
335,827
6.3.1
Options movement during the year:
2024
No.
2023
No.
2024
$
2023
$
At the beginning of the year
197,351,198
26,000,000
335,827
-
04.11.22 Issued free attaching
to Placement shares
-
30,000,000
-
-
17.02.23 Lead manager fee
6.3.2a
-
28,000,000
-
277,827
31.05.23 Free attaching to
Entitlement shares
-
93,226,979
-
-
20.06.23 Free attaching to
Shortfall shares
-
3,971,238
-
-
30.06.23 Free attaching to
underwriter fee shares
18.2.2a
-
6,152,981
-
-
30.06.23 Lead manager fee
6.3.2b
-
10,000,000
-
58,000
01.11.23 Free attaching to
Placement shares
20,000,000
-
-
-
15.03.24 Expiration of LDA
options
(26,000,000)
-
-
-
At end of the year
191,351,198
197,351,198
335,827
335,827
Comprising the following options:
Unlisted
$0.12 options exp. 15.03.24
-
10,000,000
$0.15 options exp. 15.03.24
-
10,000,000
$0.18 options exp. 15.03.24
-
4,000,000
$0.22 options exp. 15.03.24
-
2,000,000
$0.05 options exp. 31.10.25
58,000,000
58,000,000
Listed
$0.025 options exp. 31.05.26
133,351,198
113,351,198
191,351,198
197,351,198
6.3.2
Options issued as transaction costs, subsequent to 31 December 2022
a. In connection with a placement, lead manager (EverBlu Capital Pty Ltd), received a 6% fee of total funds raised as well
as 28,000,000 options, valued at $277,827, granted on the following terms:
Number under Option
Date of Expiry
Consideration
Exercise Price
Vesting Terms
28,000,000
31.10.2025
Nil
$0.050
Vest immediately
b. In connection with a placement, lead manager (708 Capital Pty Ltd) received a 6% fee of total funds raised as well as
10,000,000 options, valued at $58,000, granted on the following terms:
Number under Option
Date of Expiry
Consideration
Exercise Price
Vesting Terms
10,000,000
27.06.2025
Nil
$0.025
Vest immediately
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 37
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 6
Equity (cont.)
6.4
Performance rights
2024
No.
2023
No.
2024
$
2023
$
Performance rights
62,000,000
209,000,000
-
488,871
6.4.1
Performance rights movement
during the year:
2024
No.
2023
No.
2024
$
2023
$
At the beginning of the year
209,000,000
209,000,000
488,871
229,094
Amortisation of rights
18.2.2
-
-
235,226
437,794
Derecognition of rights not
achieved (in profit and loss)
18.2.2
-
-
(511,584)
(178,017)
Historically lapsed rights
transferred within equity
(147,000,000)
(212,513)
-
At end of the year
62,000,000
209,000,000
-
488,871
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 38
Notes to the consolidated financial statements
for the year ended 30 June 2024
SECTION B.
RISK
This section of the notes discusses the Group’s exposure to various risks and shows how these could affect the Group’s financial
position and performance.
Note 7
Financial risk management
This note presents information about the Group's exposure to each of the above risks, its objectives, policies, and procedures for
measuring and managing risk, and the management of capital.
The Group's financial instruments consist mainly of deposits with banks, short-term investments, accounts payable and
receivable, borrowings (including convertible instruments), and leases. The Group does not speculate in the trading of financial
instruments or derivative instruments.
A summary of the Group's financial assets and liabilities, measured in accordance with AASB 9 Financial Instruments as detailed
in the accounting policies, is shown below:
Floating
Interest
Rate
Fixed
Interest
Rate
Non-
interest
Bearing
2024
Total
Floating
Interest
Rate
Fixed
Interest
Rate
Non-
interest
Bearing
2023
Total
$
$
$
$
$
$
$
$
Financial Assets
Cash and cash equivalents
115,071
-
-
115,071
358,432
-
-
358,432
Trade and other receivables
-
-
1,258,884
1,258,884
-
-
1,710,587
1,710,587
Total Financial Assets
115,071
-
1,258,884
1,373,955
358,432
-
1,710,587
2,069,019
Financial Liabilities
Trade and other payables
-
-
2,344,019
2,344,019
-
-
1,063,725
1,063,725
Borrowings
-
716,780
14,947
731,727
-
-
(160,777)
(160,777)
Total Financial Liabilities
-
716,780
2,358,966
3,075,746
-
-
902,948
902,948
Net Financial Assets / (Liabilities)
115,071
(716,780)
(1,100,082)
(1,701,791)
358,432
-
807,639
1,166,071
7.1
Financial Risk Management Policies
The Boards overall risk management strategy seeks to assist the Company in meeting its financial targets, while
minimising potential adverse effects on financial performance. Risk management policies are approved and reviewed by
the Board on a regular basis. These include the credit risk policies and future cash flow requirements. Senior executives
meet on a regular basis to analyse financial risk exposure in the context of the most recent economic conditions and
forecasts. The overall risk management strategy seeks to assist the Group in meeting its financial targets, while minimising
potential adverse effects on financial performance.
7.2
Specific Financial Risk Exposures and Management
The main risk the Group is exposed to through its financial instruments are credit risk, liquidity risk and market risk
consisting of interest rate and equity price risk.
The Board has overall responsibility for the establishment and oversight of the risk management framework. The Board
adopts practices designed to identify significant areas of business risk and to effectively manage those risks in accordance
with the Group's risk profile. This includes assessing, monitoring, and managing risks for the Group and setting
appropriate risk limits and controls. The Group is not of a size nor complexity to justify the establishment of a formal
system for risk management and associated controls. Instead, the Board approves all expenditure, is intimately
acquainted with all operations, and discuss all relevant issues at the Board meetings. The operational and other
compliance risk management have also been assessed and found to be operating efficiently and effectively.
7.2.1
Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract
obligations that could lead to a financial loss to the Group. The Group’s exposure to credit risk is primarily in relation to
its cash at bank, short-term deposits, and receivables. The Group does not have any other significant credit risk exposure
to a single counterparty or any group of counterparties having similar characteristics.
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 39
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 7
Financial risk management (cont.)
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient
collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company's objective in
managing credit risk is to minimise the credit losses incurred, mainly on trade and other receivables. Credit risk is
managed through maintaining procedures that ensure, to the extent possible, that clients and counterparties to
transactions are of sound credit worthiness and their financial stability is monitored and assessed on a regular basis. Such
monitoring is used in assessing receivables for impairment. Credit terms for normal sales income are generally ranging
from prepaid and payment on delivery to 60 days from the day of invoice. For sales with longer settlements, terms are
specified in the individual client contracts.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and
other receivables.
Credit risk exposures
The maximum exposure to credit risk is that to its alliance partners and that is limited to the carrying amount, net of
any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the
financial statements.
Credit risk related to balances with banks and other financial institutions is managed by the Group in accordance with
approved Board policy. Such policy requires that surplus funds are only invested with reputable financial institutions
residing in Australia, wherever possible. There are no significant concentrations of credit risk, whether through
exposure to individual customers, specific industry sectors and/or regions.
Impairment losses
Impairment losses are recorded against receivables unless the Group is satisfied that no recovery of the amount
owing is possible; at that point the amount is considered irrecoverable and is written off against the financial asset
directly. Trade and other receivables that are neither past due nor impaired are considered to be of high credit
quality. The ageing of the Group's trade and other receivables at reporting date was as follows:
Gross
2024
$
Impaired
2024
$
Net
2024
$
Past due but not
impaired
2024
$
Trade receivables
Not past due to 30 days
3,793
-
3,793
-
Past due 31 days to 90 days
5,680
-
5,680
5,680
Past due greater than 90 days
22,189
-
22,189
22,189
31,662
-
31,662
27,869
Other receivables
Not past due
1,227,222
-
1,227,222
-
Total -
1,258,884
-
1,258,884
27,869
7.2.2
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage
to the Group's reputation.
Ultimate responsibility for liquidity risk management rests with the Board, who have built an appropriate liquidity risk
management framework for the management of the Group's short, medium, and long-term funding and liquidity
management requirements. The Group manages liquidity risk by:
preparing forward looking cash flow analysis in relation to its operating, investing, and financing activities;
maintaining a reputable credit profile;
managing credit risk related to financial assets;
only investing surplus cash with major financial institutions; and
comparing the maturity profile of financial liabilities with the realisation profile of financial assets.
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 40
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 7
Financial risk management (cont.)
Typically, the Group ensures that it has sufficient cash to meet expected operational expenses for a period of 60 days,
including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot
reasonably be predicted, such as natural disasters.
The financial liabilities of the Group include trade and other payables as disclosed in the statement of financial position.
All trade and other payables are non-interest bearing and due within 60 days of the reporting date.
Contractual Maturities
The following are the contractual maturities of financial assets and liabilities of the Group:
Within 1 Year
Greater Than 1 Year
Total
2024
$
2023
$
2024
$
2023
$
2024
$
2023
$
Financial liabilities due for payment
Trade and other payables
2,344,019
1,063,725
-
-
2,344,019
1,063,725
Borrowings
731,727
556,003
-
-
731,727
556,003
Total contractual outflows
3,075,746
1,619,728
-
-
3,075,746
1,619,728
Financial assets
Cash and cash equivalents
115,071
358,432
-
-
115,071
358,432
Trade and other receivables
1,258,884
1,710,587
-
-
1,258,884
1,710,587
Total anticipated inflows
1,373,955
2,069,019
-
-
1,373,955
2,069,019
Net inflow / (outflow) on financial
instruments
(1,701,791)
449,291
-
-
(1,701,791)
449,291
Cash flows realised from financial instruments reflect management's expectation as to the timing of realisation timing
may therefore differ from that disclosed. It is not expected that the cash flows included in the maturity analysis could
occur significantly earlier or at significantly different amounts.
7.2.3
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will
affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management
is to manage and control market risk exposures within acceptable parameters, while optimising the return.
The Group's activities minimally expose it to the financial risks of changes in foreign currency exchange rates, commodity
prices and exchange rates. The Group does not enter into derivative financial instruments including foreign exchange
forward contracts to hedge against financial risk. There has been no change to the Group's exposure to market risks or
the manner in which it manages and measures the risk from the previous period.
a. Interest rate risk
The Group is exposed to interest rate risk as the Group borrows funds at both fixed and floating interest rates. The
risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings. Group’s
exposures to interest rate in financial assets and financial liabilities are detailed in the liquidity risk management
section of this note.
b. Foreign exchange risk
The Group is not exposed to any material foreign exchange risk.
c. Price risk
Price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices. The Group does not presently hold material amounts subject to price risk. As such the Board
considers price risk as a low risk to the Group.
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 41
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 7
Financial risk management (cont.)
7.2.4
Sensitivity Analyses
The Group is not subject to material market risk sensitivities.
7.2.5
Net Fair Values
a. Fair value estimation
The fair values of financial assets and financial liabilities are presented in the table in note 7 and can be compared to
their carrying values as presented in the statement of financial position. Fair values are those amounts at which an
asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction.
The Directors consider that the carrying amount of financial assets and financial liabilities recorded in the financial
statements approximates their fair values as the carrying value less impairment provision of trade receivables and
payables are assumed to approximate their fair values due to their short-term nature.
Financial instruments whose carrying value is equivalent to fair value due to their nature include:
Cash and cash equivalents;
Trade and other receivables;
Trade and other payables; and
Derivative liabilities (recognised at fair value).
The methods and assumptions used in determining the fair values of financial instruments are disclosed in the
accounting policy notes specific to the asset or liability.
Note 8
Capital Management
8.1
Capital
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of the debt and equity balance.
The Groups objectives when managing capital are to:
a. Safeguard their ability to continuing as a going concern so that they can continue to provide returns for shareholders
and benefits for other stakeholders; and
b. Maintain an optimal capital structure to reduce the cost of capital.
The capital structure of the Group consists of debt (loans and convertible instruments), cash and cash equivalents, and
equity attributable to equity holders of the parent, comprising issued capital, reserves and accumulated losses. None of
the Group's entities are subject to externally imposed capital requirements.
Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures such as tax,
dividends and general administrative outgoings. Gearing levels are reviewed by the Board on a regular basis in line with
its target gearing ratio, the cost of capital and the risks associated with each class of capital.
8.2
Working Capital
The working capital position of the Group was as follows:
Note
2024
$
2023
$
Cash and cash equivalents
4.1
115,071
358,432
Trade and other receivables
4.2
1,258,884
1,710,587
Inventories
5.1
31,908
83,845
Other current assets (excluding prepayments)
4.3
-
-
Trade and other payables and current derivative liabilities
4.4
(2,344,019)
(1,063,725)
Borrowings
4.5
(731,727)
(556,003)
Working capital position
(1,669,883)
533,136
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 42
Notes to the consolidated financial statements
for the year ended 30 June 2024
SECTION C.
GROUP STRUCTURE
This section provides information which will help users understand how the Group structure affects the financial position and
performance of the Group as a whole. In particular, there is information about:
(a) changes to the structure that occurred during the year as a result of business combinations and the disposal of a discontinued
operation
(b) transactions with non-controlling interests, and
(c) interests in joint operations.
A list of significant subsidiaries is provided in note 9.
Note 9
Interest in subsidiaries
The subsidiaries listed below have ordinary shares which are held directly by the Group and the proportion of ownership interest
held equals the voting rights held by the Group. Investments in subsidiaries are accounted for at cost.
Entity name
Class of
Shares
Percentage owned
Country of
incorporation
2024
2023
SE Operations Pty Ltd
Ord.
100
100
Australia
Note 10
Other Significant Accounting Policies Related to Group Structure
10.1 Basis of consolidation
As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated financial
statements as well as their results for the year then ended. Where controlled entities have entered (left) the Consolidated
Group during the year, their operating results have been included (excluded) from the date control was obtained (ceased).
10.2 Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the date that control ceases.
The accounting policies of subsidiaries have been changed, when necessary, to align them with the policies adopted by the
Group.
Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as non-controlling interests.
The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries and are entitled
to a proportionate share of the subsidiary's net assets on liquidation at either fair value or at the non-controlling interests'
proportionate share of the subsidiary's net assets. Subsequent to initial recognition, non-controlling interests are attributed
their share of profit or loss and each component of other comprehensive income. Non-controlling interests are shown
separately within the equity section of the statement of financial position and statement of comprehensive income.
The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group
is treated as a capital contribution to that subsidiary undertaking. The fair value of employee services received, measured
by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary
undertakings, with a corresponding credit to equity.
Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing
so causes the non-controlling interests to have a deficit balance.
A list of controlled entities is contained in note 9 Interest in subsidiaries of the financial statements.
10.3 Loss of control
Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests
and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised
in profit or loss. If the Group retains any interest in the previous subsidiary, then such interests are measured at fair value at
the date control is lost. Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial
asset depending on the level of influence retained.
10.4 Transactions eliminated on consolidation
All intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial statements.
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 43
Notes to the consolidated financial statements
for the year ended 30 June 2024
SECTION D.
UNRECOGNISED ITEMS
This section of the notes provides information about items that are not recognised in the financial statements as they do not (yet)
satisfy the recognition criteria.
In addition to the items and transactions disclosed below, there are also unrecognised tax amounts – see note 3 Income tax.
Note 11
Commitments
11.1 Capital commitments
The Group does not have any capital commitments (2023: $nil).
Note 12
Events subsequent to reporting date
12.1 Receipt of R&D Rebate Advance Facility
In September 2024, the Company received a Research and development tax incentive rebate of $1,193,629.
There have been no other matters or circumstances that has arisen after balance date that has significantly affected, or may
significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future
financial periods.
Note 13
Contingent liabilities
There are no contingent liabilities as at 30 June 2024 (30 June 2023: Nil).
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 44
Notes to the consolidated financial statements
for the year ended 30 June 2024
SECTION E.
OTHER INFORMATION
This section of the notes includes other information that must be disclosed to comply with the accounting standards and other
pronouncements, but that is not immediately related to individual line items in the financial statements.
Note 14
Key Management Personnel compensation (KMP)
The names and positions of KMP are as follows:
Directors
Peter Malone
Executive Chairman
Filippo (Phil) Giglia
Independent Non-Executive Director
Stuart Usher
Independent Non-Executive Director
Other key management
Leo Fung
Chief Technical Advisor
Craig Piercy
Chief Financial Officer
Former KMP included in comparative information
Lee Christensen Independent Non-Executive Director (Appointed 31 August 2021, Resigned 17 January 2023)
Information regarding individual directors and executives’ compensation and some equity instruments disclosures as required
by the Corporations Regulations 2M.3.03 is provided in the Remuneration report table on page 11.
2024
$
2023
$
Short-term employee benefits
793,782
1,274,349
Share-based payments
18.2.2d
(267,444)
299,582
Total
526,338
1,573,931
Note 15
Related party transactions
The Group may enter into agreements for services rendered with individuals (or an entity that is associated with the individuals)
during the ordinary course of business.
A number of entities associated with the Directors and select technical staff have consulting agreements in place which have
resulted in transactions between the Group and those entities during the year.
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available
to other parties unless otherwise stated.
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been
eliminated on consolidation and are not disclosed in this note. Contained within trade and other payables are the follows balances
payable to related parties:
Entity
Nature of transactions
KMP
Payable Balance
2024
$
2023
$
Boston Technology Management Pty Ltd Service Fees
Peter Malone
360,462
59,737
Colosseum Securities Pty Ltd
Director’s fee
Filippo (Phil) Giglia
147,472
37,472
Spitfire Corporate Advisory Pty Ltd
Director’s fee
Stuart Usher
74,161
30,161
Geneva Partners Pty Ltd
Company secretary fees Stuart Usher
24,750
15,081
Boston Technology Management Pty Ltd Service Fees
Craig Piercy
335,086
179,176
Boston Technology Management Pty Ltd R&D Costs (see a. below) Craig Piercy, Peter Malone
816,199
-
Blackridge Pty Ltd
Service Fees
Leo Fung
221,558
104,428
Total
1,979,688
426,055
a. This R&D Costs is provided by Boston Technology Management Pty Ltd for R&D project materials, formulations,
testing, and R&D contractors and consultants. This amount was recognised as an expense in the 2024 financial year.
b. KMP have confirmed they will not call upon balances owed until such time where the Company able to do so.
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 45
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 16
Auditor's remuneration
2024
$
2023
$
Remuneration of the auditor, BDO Audit Pty Ltd, for:
Assurance services:
Auditing or reviewing the financial reports
83,747
71,386
Non-Assurance Services:
Other – Research and development tax incentive
38,628
30,385
122,375
101,771
16.1
The BDO entity performing the audit of the entity transitioned from BDO Audit (WA) Pty Ltd during the 2024 financial year.
The disclosure include amount received or due and receivable by BDO Audit (WA) Pty Ltd, BDO Audit Pty Ltd and their respective
related entities.
Note 17
Earnings per share (EPS)
Note
2024
$
2023
$
17.1 Reconciliation of loss to profit or loss
Loss for the year
(2,161,283)
(11,416,168)
Loss used in the calculation of basic and diluted EPS
(2,161,283)
(11,416,168)
2024
No.
2023
No.
17.2 Weighted average number of ordinary shares outstanding
during the year used in calculation of basic EPS
557,264,784
437,027,832
Weighted average number of dilutive equity instruments outstanding
17.5
N/A
N/A
17.3 Weighted average number of ordinary shares outstanding
during the year used in calculation of basic EPS
557,264,784
437,027,832
17.4 Earnings per share
2024
₵
2023
₵
Basic EPS (cents per share)
17.5
(0.39)
(2.61)
Diluted EPS (cents per share)
17.5
N/A
N/A
17.5
As at 30 June 2024 the Group has 191,351,198 unissued shares under options (2023: 197,351,198) and 62,000,000
performance shares on issue (2023: 209,000,000). The Group does not report diluted earnings per share on losses generated
by the Group. During the year, the Group's unissued shares under option and performance shares were anti-dilutive.
17.6 Accounting policy
Basic EPS is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity
(other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares,
adjusted for any bonus element.
Diluted EPS is calculated as net profit attributable to the Group, adjusted for costs of servicing equity (other than dividends)
and preference share dividends; the after-tax effect of dividends and interest associated with dilutive potential ordinary
shares that have been recognised as expenses; and other non-discretionary changes in revenues or expenses during the
year that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary
shares and dilutive potential ordinary shares, adjusted for any bonus element.
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 46
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 18
Share-based payments
Note
2024
$
2023
$
18.1 Share-based payments:
Net recognised in profit and loss or (derecognised) as a contra expense 18.2.2
(276,358)
259,777
Recognised in equity (transaction costs):
Shares
18.2.2a
-
105,003
Options
18.2.2b
-
335,827
Recognised in net assets (payables)
18.2.2c
-
71,376
Gross share-based payments
(276,358)
771,983
18.2 Share-based payment arrangements in effect during the year
18.2.1 Issued during the current year
The were no new issues of share-based payments during the 2024 year.
18.2.2 Issued in prior period, remaining in effect
a. Shares issued as transaction costs
i.
26 October 2022: 1,691,556 ordinary shares issued at $0.0257 per share for LDA fees.
ii. 30 June 2023:
6,152,981 ordinary shares issued at $0.010 per share for underwriting fees.
b. Options issued as transaction costs
i.
In connection with a placement, lead manager (EverBlu Capital Pty Ltd), received a 6% fee of total funds raised as
well as 28,000,000 options, granted on the following terms:
Number under Option
Date of Expiry
Consideration
Exercise Price
Vesting Terms
28,000,000
31.10.2025
Nil
$0.050
Vest immediately
The total value of the options was $277,827.
ii. In connection with a placement, lead manager (708 Capital Pty Ltd) received a 6% fee of total funds raised as well
as 10,000,000 options, granted on the following terms:
Number under Option
Date of Expiry
Consideration
Exercise Price
Vesting Terms
10,000,000
27.06.2025
Nil
$0.025
Vest immediately
The total value of the options was $58,000.
c. Shares issued to settle payables
i.
26 October 2022: 1,216,075 ordinary shares issued at $0.06 per share for corporate communication services.
d. Director and Consultants Performance Rights (2022)
At the Company's AGM held on 26 April 2022, shareholder approval was obtained to issue performance rights that
will convert into shares pursuant to the Equity Incentive Plan.
These performance rights are issued to Peter Malone, Executive Chairman, Filippo (Phil) Giglia and Lee Christensen,
non-executive directors, and key management Craig Piercy and Leo Fung and have been valued and issued on terms
as detailed below.
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 47
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 18
Share-based payments (cont.)
18.2
Share-based payment arrangements in effect during the year (cont.)
18.2.2 Issued in prior period, remaining in effect (cont.)
Class of
Performance
Right
Tranches of
Performance
Right
Performance Condition
Performance rights
No.
Milestone
Date
Expiry
Date
Performance
Condition
Satisfied
Peter
Malone
Filippo (Phil)
Giglia
Lee
Christensen
Craig Piercy
Leo Fung
B
1
The Company receiving revenue
from product sales of $25,000,000
after 1.01.22
12,500,000 2,500,000
500,000
-
-
31.12.27 3 years from
vesting date
No
B
2
The Company receiving revenue
from product sales of $50,000,000
after 1.01.22
12,500,000 2,500,000
500,000
-
-
31.12.27 3 years from
vesting date
No
B
3
The Company receiving revenue
from product sales of $75,000,000
after 1.01.22
12,500,000 2,500,000
500,000
-
-
31.12.27 3 years from
vesting date
No
B
4
The Company receiving revenue
from product sales of
$100,000,000 after 1.01.22
12,500,000 2,500,000
500,000
-
-
31.12.27 3 years from
vesting date
No
The Company determined that there is a nil probability that the performance rights above will meet any of the vesting
conditions by the milestone dates, and therefore have no value and will not achieve their proposed objectives. The
Company therefore derecognised the accounting treatment from previous periods. The total amount of the expense
in 2024 of $253,226 was derecognised as a contra-expense, and allocated as follows: Peter Malone – $189,698, Filippo
Giglia – $37,940, and a former director $7,588.
An amount of $276,358 relating to 2022 Class B performance rights that are historic and accounted for in prior periods
was also derecognised through a contra-expense in share-based payments, and allocated as follows: Peter Malone –
$228,870, Filippo Giglia – $44,574, and a former director $8,915.
18.3 Movement in Company options share-based payment arrangements during the period
A summary of the movements of all Company options issued as share-based payments is as follows:
2024
2023
Number of
Options
Weighted Average
Exercise Price
Number of
Options
Weighted Average
Exercise Price
Outstanding at the beginning of the year
38,000,000
$0.043
-
-
Granted
-
-
38,000,000
$0.043
Exercised
-
-
-
-
Expired
-
-
-
-
Outstanding at year-end
38,000,000
$0.043
38,000,000
$0.043
Exercisable at year-end
38,000,000
$0.043
38,000,000
$0.043
Reconciliation to total Company options
Non share-based payment options
outstanding at the beginning of the year
26,000,000
26,000,000
Options issued to shareholders
133,351,198
-
Total Company options on issue
197,351,198
64,000,000
a. The weighted average remaining contractual life of options outstanding at year end was 1.25 years (2023: 2.25 years).
b. The fair value of the options granted to employees is deemed to represent the value of the employee services received
over the vesting period.
18.4
Fair value of options granted in prior period, remaining in effect
The fair value of the options granted to employees is deemed to represent the value of the employee services received
over the vesting period.
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 48
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 18
Share-based payments (cont.)
18.5 Accounting policy
The Group may provide benefits to employees (including directors) and consultants of the Group in the form of share-based
payment transactions, whereby services are rendered in exchange for shares or rights over shares (equity-settled
transactions).
The cost of equity-settled transactions is measured at fair value on grant date. Fair value is independently determined using
either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option,
the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not
determine whether the Group receives the services that entitle the employees to receive payment. No account is taken of
any other vesting conditions.
The cost of equity-settled transactions is recognised as an expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate
of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in
profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in
previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the
Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period;
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the
reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market conditions
are considered to vest irrespective of whether that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value
of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as
a cancellation. If the condition is not within the control of the Group or employee and is not satisfied
during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the
award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award
is treated as if they were a modification
18.6 Key estimate
The Group measures the cost of equity-settled transactions by reference to the fair value of the equity instrument at the
date at which they are granted. The fair value of options granted is measured using the Black-Scholes option pricing model.
The model uses assumptions and estimates as inputs.
Note 19
Operating segments
19.1 Identification of reportable segments
The Group operates predominantly in the Biotechnology industry as a researcher and developer of the innovative
proprietary SE FormulaTM biotechnology.
The Group has identified its operating segments based on the internal reports that are provided to the Board of Directors
on a monthly basis and in determining the allocation of resources. Management has identified it has only one material
operating segments based activity based on the current and comparative year activity.
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 49
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 20
Parent entity disclosures
Skin Elements Limited is the ultimate Australian parent entity and ultimate parent of the Group.
Skin Elements Limited did not enter into any trading transactions with any related party during the year.
20.1 Financial Position of Skin Elements Limited
2024
$
2023
$
Current assets
147,004
468,230
Non-current assets
-
-
Total assets
147,004
468,230
Current liabilities
1,352,168
1,257,109
Non-current liabilities
-
-
Total liabilities
1,352,168
1,257,109
Net liabilities
(1,205,164)
(788,879)
Equity
Issued capital
26,179,124
24,244,454
Reserve
675,488
824,698
Accumulated losses
(28,059,776)
(25,858,031)
Total equity
(1,205,164)
(788,879)
20.2 Financial performance of Skin Elements Limited
2024
$
2023
$
Loss for the year
(156,640)
(3,709,596)
Other comprehensive loss
-
-
Total comprehensive loss
(156,640)
(3,709,596)
20.3 Guarantees
There are no guarantees entered into by Skin Elements Limited for the debts of its subsidiary as at 30 June 2024 (2023:
none).
20.4 Contractual commitments
The parent company has no capital commitments as at 30 June 2024 (2023: $nil), as disclosed in note 11.1.
20.5 Contingent liabilities
There are no contingent liabilities as 30 June 2024 (2023: none).
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 50
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 21
Statement of material accounting policies
This note provides a list of the material accounting policies adopted in the preparation of these consolidated financial statements to
the extent they have not already been disclosed in the other notes above. These policies have been consistently applied to all the
years presented, unless otherwise stated.
21.1 Basis of preparation
21.1.1 Reporting Entity
Skin Elements Limited (Skin Elements or the Company) is a listed public company limited by shares, domiciled, and
incorporated in Australia. These are the consolidated financial statements and notes of Skin Elements and controlled entities
(collectively the Group). The financial statements comprise the consolidated financial statements of the Group. For the
purposes of preparing the consolidated financial statements, the Company is a for-profit entity. The Group is a for-profit
entity and is primarily involved in businesses which deliver accredited and non-accredited vocational education and training
solutions throughout Australia and internationally.
The separate financial statements of Skin Elements, as the parent entity, have not been presented with this financial report
as permitted by the Corporations Act 2001 (Cth).
21.1.2 Basis of accounting
These financial statements are general purpose financial statements which have been prepared in accordance with
Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board (AAS Board) and
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and the
Corporations Act 2001 (Cth).
Australian Accounting Standards (AASBs) set out accounting policies that the AAS Board has concluded would result in a
financial report containing relevant and reliable information about transactions, events, and conditions to which they apply.
Compliance with AASBs ensures that the financial statements and notes also comply with IFRS as issued by the IASB.
The financial statements were authorised for issue on 30 September 2024 the Directors of the Company.
21.1.3 Going Concern
The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business
activity and the realisation of assets and the settlement of liabilities in the ordinary course of business.
The Group incurred a loss for the year of $2,161,283 (2023: $11,416,168 loss) and a net cash out-flow from operating
activities of $279,377 (2023: $1,835,931 out-flow). As at 30 June 2024, the Group a working capital deficit of $1,669,883
(2023: $533,136 working capital), as disclosed in note 8 of the Capital Management note.
The ability of the Group to continue as a going concern is dependent on the Group securing additional debt and/or equity
funding and/or generating profits from its normal course of business.
These conditions indicate the existence of a material uncertainty that may cast a significant doubt about the Group's ability
to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the
normal course of business. The Directors are confident that there will be sufficient funds for the Group to meet its obligations
and liabilities and believe it is appropriate to prepare these accounts on a going concern basis for the following reasons.
Skin Elements is eligible for R&D Rebate tax incentive grant and has received $1.13 million during the period in relation
to eligible FY2023 R&D expenditure and accrued $1.19 million as at 30 June 2024 in relation to eligible R&D expenditure
for FY2024.
Received $796K under a R&D advance facility with Radium Capital.
The Board intends, subject to shareholder approval, to issue equity securities in satisfaction of amounts owed to
Directors and Key Management of approximately $500K.
The Directors’ have confirmed they will not call upon balances owed until such time where the Company has the financial
capacity to repay the amounts without impacting the Company’s ability to continue as a going concern and pay its other
liabilities as and when they fall due for payment.
The Company has a successful track record of raising working capital when required through the issue of equity
securities, through an entitlement issue or placement.
The Directors have prepared a cash flow forecast, which indicates that the Group will have sufficient cash flows to meet all
commitments and working capital requirements for the 12-month period from the date of signing this financial report. Based
on the cash flow forecasts and other factors referred to above, the Directors are satisfied that the going concern basis of
preparation is appropriate. In particular, given the Group’s history of raising capital to date, and the LDA Capital facilities the
Directors are confident of the Group’s ability to raise additional funds as and when they are required.
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 51
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 21
Statement of material accounting policies
Should the Group be unable to continue as a going concern it may be required to realise its assets and extinguish its liabilities
other than in the normal course of business and at amounts different to those stated in the financial statements.
The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying
amounts or to the amount and classification of liabilities that might result should the Group be unable to continue as a going
concern and meet its debts as and when they fall due.
21.1.4 Comparative figures
Where required by AASBs comparative figures have been adjusted to conform to changes in presentation for the current
financial year.
Where the Group retrospectively applies an accounting policy, makes a retrospective restatement or reclassifies items in its
financial statements, an additional (third) statement of financial position as at the beginning of the preceding period in
addition to the minimum comparative financial statements is presented.
21.1.5 New and Amended Standards Adopted by the Group
The Group has applied the following standards and amendments for the first time for their annual reporting period
commencing 1 July 2023:
AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018–2020 and Other
Amendments [AASB 1, AASB 3, AASB 9, AASB 116, AASB 137 & AASB 141].
AASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising
from a Single Transaction [AASB 112]
The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to
significantly affect the current or future periods.
21.2 Goods and Services Tax (GST)
Revenues, expenses, and assets are recognised net of the amount of GST, except where the amount of GST incurred is not
recoverable from the taxation authority. In these circumstances the GST is recognised as part of the cost of acquisition of
the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown
inclusive of GST. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to,
the taxation authority.
The net amount of GST recoverable from, or payable to, the Australian Taxation Office is included as a current asset or
liability in the statement of financial position.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and
financing activities, which are disclosed as operating cash flows.
21.3 Use of estimates and judgments
The preparation of consolidated financial statements requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.
These estimates and associated assumptions are based on historical experience and various factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of
assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised and in any future periods affected.
Judgements made by management in the application of AASBs that have significant effect on the consolidated financial
statements and estimates with a significant risk of material adjustment in the next year are discussed in note 21.3.1.
21.3.1 Critical Accounting Estimates and Judgments
Management discusses with the Board the development, selection and disclosure of the Group's critical accounting policies
and estimates and the application of these policies and estimates. The estimates and judgements that have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed
below:
a. Key estimate – Taxation .................................................................. Refer note 3 Income Tax.
b. Key estimate – Impairment of intangibles ................................... Refer note 5.2 Intangible assets.
c. Key estimate – Share-based payments ........................................ Refer note 18 Share-based payments.
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 52
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 21
Statement of material accounting policies
21.4 Fair Value
21.4.1 Fair Value of Assets and Liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on
the requirements of the applicable AASB.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly
unforced transaction between independent, knowledgeable, and willing market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine
fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation
techniques. These valuation techniques maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the
market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most
advantageous market available to the entity at the end of the reporting period (i.e. the market that maximises the receipts
from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction
costs and transport costs).
For non-financial assets, the fair value measurement also considers a market participant's ability to use the asset in its highest
and best use or to sell it to another market participant that would use the asset in its highest and best use.
The fair value of liabilities and the entity's own equity instruments (excluding those related to share-based payment
arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial
instruments, by reference to observable market information where such instruments are held as assets. Where this
information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective
note to the financial statements.
21.4.2 Fair value hierarchy
AASB 13 Fair Value Measurement requires the disclosure of fair value information by level of the fair value hierarchy, which
categorises fair value measurements into one of three possible levels based on the lowest level that an input that is
significant to the measurement can be categorised into as follows:
Level 1
Level 2
Level 3
Measurements based on quoted prices
(unadjusted) in active markets for
identical assets or liabilities that the entity
can access at the measurement date.
Measurements based on inputs other
than quoted prices included in Level 1
that are observable for the asset or
liability, either directly or indirectly.
Measurements based on unobservable
inputs for the asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation
techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all significant
inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or more significant
inputs are not based on observable market data, the asset or liability is included in Level 3.
The Group would change the categorisation within the fair value hierarchy only in the following circumstances:
if a market that was previously considered active (Level 1) became inactive (Level 2 or Level 3) or vice versa; or
if significant inputs that were previously unobservable (Level 3) became observable (Level 2) or vice versa.
When a change in the categorisation occurs, the Group recognises transfers between levels of the fair value hierarchy (i.e.,
transfers into and out of each level of the fair value hierarchy) on the date the event or change in circumstances occurred.
21.4.3 Valuation techniques
The Group selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available to
measure fair value. The availability of sufficient and relevant data primarily depends on the specific characteristics of the
asset or liability being measured. The valuation techniques selected by the Group are consistent with one or more of the
following valuation approaches:
Market approach: valuation techniques that use prices and other relevant information generated by market transactions
for identical or similar assets or liabilities.
Income approach: valuation techniques that convert estimated future cash flows or income and expenses into a single
discounted present value.
Cost approach: valuation techniques that reflect the current replacement cost of an asset at its current service capacity.
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 53
Notes to the consolidated financial statements
for the year ended 30 June 2024
Note 21
Statement of material accounting policies
Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the
asset or liability, including assumptions about risks. When selecting a valuation technique, the Group gives priority to those
techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs that are
developed using market data (such as publicly available information on actual transactions) and reflect the assumptions that
buyers and sellers would generally use when pricing the asset or liability are considered observable, whereas inputs for
which market data is not available and therefore are developed using the best information available about such assumptions
are considered unobservable.
21.5 New Accounting Standards and Interpretations not yet mandatory or early adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2024
reporting periods and have not been early adopted by the Group. The Group’s assessment of the impact of these new
standards and interpretations is set out below. These standards are not expected to have a material impact on the entity in
the current or future reporting periods and on foreseeable future transactions.
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 54
Consolidated Entity Disclosure Statement
Entity name
Ownership
interest
2024
Type of Entity
Trustee, partner,
or participant in a
joint venture
Country of
incorporation
Australian
resident for tax
purposes
SE Operations Pty Ltd
100
Body corporate
N/A
Australia
Australian
The Company has not formed a tax consolidated group with its wholly-owned Australian subsidiary
Basis of preparation
This Consolidated Entity Disclosure Statement (CEDS) has been prepared in accordance with the Corporations Act 2001. It includes
certain information for each entity that was part of the consolidated entity at the end of the financial year.
Determination of Tax Residency
Section 295 (3A) of the Corporation Acts 2001 defines tax residency as having the meaning in the Income Tax Assessment Act
1997. The determination of tax residency involves judgement as there are currently several different interpretations that could
be adopted, and which could give rise to a different conclusion on residency. It should be noted that the definitions of ‘Australian
resident’ and ‘foreign resident’ in the Income Tax Assessment Act 1997 are mutually exclusive. This means that if an entity is an
‘Australian resident’ it cannot be a ‘foreign resident’ for the purposes of disclosure in the CEDS.
In determining tax residency, the consolidated entity has applied the following interpretation:
Australian tax residency
The consolidated entity has applied current legislation and judicial precedent, including having regard to the Tax Commissioner's
public guidance in Tax Ruling TR 2018/5.
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 55
PETER MALONE
Executive Chairman
Dated this Monday, 30 September 2024
Directors’ declaration
The Directors of the Company declare that in the Directors' opinion:
1. The attached financial statements and notes, as set out on pages 16 to 53, are in accordance with the Corporations Act 2001
(Cth) including:
(a) complying with Accounting Standards, the Corporations Regulations 2001, and other mandatory professional reporting
requirements; and
(b) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2024 and of its performance for the
financial year ended on that date
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.
Note 21.1.2 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
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 (Cth);
The Consolidation Entity Disclosure Statement on page 54 is true and correct as at 30 June 2024.
This declaration is signed in accordance with a resolution of the Directors made pursuant to section 295(5) of the Corporations
Act 2001.
On behalf of the Directors
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 56
Independent auditor’s report
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 57
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 58
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 59
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 60
Corporate governance statement
The Board is responsible for establishing the Company’s corporate governance framework. In establishing its corporate
governance framework, the Board has referred to the 4th edition of the ASX Corporate Governance Councils’ Corporate
Governance Principles and Recommendations.
The Corporate Governance Statement discloses the extent to which the Company follows the recommendations. The Company
will follow each recommendation where the Board has considered the recommendation to be an appropriate benchmark for its
corporate governance practices. Where the Company’s corporate governance practices will follow a recommendation, the Board
has made appropriate statements reporting on the adoption of the recommendation. In compliance with the “if not, why not”
reporting regime, where, after due consideration, the Company’s corporate governance practices will not follow a
recommendation, the Board has explained its reasons for not following the recommendation and disclosed what, if any,
alternative practices the Company will adopt instead of those in the recommendation.
The Company’s governance-related documents can be found on its website at www.skinelementslimited.com/investors.html#cg.
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 61
Additional Information for Listed Public Companies
The following additional information is required by the Australian Securities Exchange in respect of listed public companies.
1
Capital as at 11 September 2024
a. Ordinary share capital
563,986,095 ordinary fully paid shares held by 1,112 shareholders. There are an additional 25,500,000 treasury shares
held by LDA Capital (USA) as collateral shares.
b. Options over Unissued Shares
The Company has an additional 133,351,198 listed options and 58,000,000 unlisted options on issue in accordance with
section 9.1 of the Directors' Report.
ASX Security
Code
Grant
Date
Date of
Expiry
Exercise Price
$
Number under
Option
SKNOD
05.2023 & 06.2023
31.05.2026
0.025
113,351,198
SKNAS
11.2022 & 02.2023
31.10.2025
0.050
58,000,000
171,351,198
No person entitled to exercise the option has any right by virtue of the option to participate in any share issue of any
other body corporate.
c. Performance Rights over Unissued Shares
Class of
Right
Performance Condition
Rights
No.
Milestone Date Expiry Date
2022 Class B
Tranche 1
The Company receiving revenue from product sales of
$25M after 1.01.22
15,500,000
31 Dec 2027
3 years from
vesting date
2022 Class B
Tranche 2
The Company receiving revenue from product sales of
$50M after 1.01.22
15,500,000
31 Dec 2027
3 years from
vesting date
2022 Class B
Tranche 3
The Company receiving revenue from product sales of
$75M after 1.01.22
15,500,000
31 Dec 2027
3 years from
vesting date
2022 Class B
Tranche 4
The Company receiving revenue from product sales of
$100M after 1.01.22
15,500,000
31 Dec 2027
3 years from
vesting date
62,000,000
(1) The 2022 Class B rights were derecognised due to not meeting conditions as described in note 18.2.2d of the financial statements.
d. Voting Rights
The voting rights attached to each class of equity security are as follows:
Ordinary shares
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present
at a meeting or by proxy has one vote on a show of hands.
Options
Options do not entitle the holders to vote in respect of that equity instrument, nor participate in
dividends, when declared, until such time as the options are exercised or performance shares
convert and subsequently registered as ordinary shares.
Performance Rights A Performance Right does not entitle a Holder to vote on any resolutions proposed at a general
meeting of shareholders of the Company. A Performance Right does not entitle a Holder to any
dividends. A Performance Right does not entitle the Holder to participate in the surplus profits or
assets of the Company upon winding up of the Company. A Performance Right is not transferable.
e. Substantial Shareholders as at 11 September 2024
Name
Number of Ordinary
Fully Paid Shares Held
% Held of Issued Ordinary
Capital
ABC Brightred Pty Ltd
35,000,000
6.21
Sovereign Empire Pty Ltd
31,743,116
5.63
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 62
Additional Information for Listed Public Companies
f. Distribution of equity holders as at 11 September 2024
i. Ordinary shareholders
Category (size of holding)
Total Holders
Units held
% Held
1 – 1,000
34
4,479
0.00
1,001 – 5,000
42
177,566
0.03
5,001 – 10,000
213
1,842,769
0.33
10,001 – 100,000
432
18,104,940
3.22
100,001 – and over
391
543,856,341
96.41
1,112
563,986,095
99.99
ii. Listed options (ASX:SKNOD) exercisable at $0.025 on or before 31 May 2026
Category (size of holding)
Total Holders
Units held
% Held
1 – 1,000
7
5,963
0.00
1,001 – 5,000
33
85,598
0.06
5,001 – 10,000
16
130,959
0.10
10,001 – 100,000
88
3,740,263
2.80
100,001 – and over
81
129,388,415
97.02
225
133,351,198
99.98
g. Unmarketable Parcels as at 11 September 2024
There were 688 shareholders who held less than a marketable parcel of shares, holding 16,829,754 shares.
h. On-Market Buy-Back
There is no current on-market buy-back.
i. Restricted Securities
The Company has currently no restricted securities.
j. 20 Largest Shareholders — Ordinary Shares as at 11 September 2024
Rank Name
No. Held
% Held
1.
ABC Brightred Pty Ltd
35,000,000
6.21
2.
Sovereign Empire Pty Ltd
31,743,116
5.63
3.
Sharesies Australia Nominee Pty Limited
28,855,557
5.12
4.
LKS Holdings WA Pty Ltd
25,259,022
4.48
5.
Citicorp Nominees Pty Limited
24,536,782
4.35
6.
Braunii Pty Ltd
20,000,000
3.55
7.
Ozada Pty Ltd
17,598,348
3.12
8.
Mr John Eugene Slisar
16,490,000
2.92
9.
Sovereign Equities Pty Ltd
12,320,354
2.18
10. Bayroad Nominees Pty Ltd
12,000,000
2.13
11. Nabawa Pty Ltd
8,250,000
1.46
12. Mr Russell Wayne Allen
7,400,000
1.31
13. State Securities Pty Ltd
7,166,667
1.27
14. Ozada Pty Ltd
6,733,420
1.19
15. Clare Malone
6,266,668
1.11
16. Unique Choice International Pty Ltd
5,500,000
0.98
17. Mr Peter Harry Kaladis
5,300,000
0.94
18. Top Oceania International Limited
5,254,636
0.93
19. Nevile Superannuation Fund Pty Ltd
5,000,000
0.89
20. Kava Holdings Pty Ltd
5,000,000
0.89
Total
285,674,570
50.66
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 63
Additional Information for Listed Public Companies
k. 20 Largest Optionholders (SKNOD)— Listed Options as at 11 September 2024
Rank Name
No. Held
% Held
1.
ABC Brightred Pty Ltd
35,000,000
26.25
2.
708 Capital Pty Ltd
16,152,981
12.11
3.
Australian Executor Trustees Limited
5,387,963
4.04
4.
Sovereign Empire Pty Ltd
5,290,520
3.97
5.
Braunii Pty Ltd
4,710,445
3.53
6.
Bayroad Nominees Pty Ltd
4,200,000
3.15
7.
Superhero Securities Limited
3,003,144
2.25
8.
Dujon Holdings Pty Ltd
3,000,000
2.25
9.
Mgold Pty Ltd
2,933,058
2.20
10. BNP Paribas Nominees Pty Ltd
2,703,952
2.03
11. Mr Kenneth Rayward
2,700,000
2.02
12. Blue Albatross Pty Ltd
2,000,000
1.50
13. Equities Services Pty Ltd
1,863,551
1.40
14. BNP Paribas Nominees Pty Ltd
1,740,000
1.30
15. LKS Holdings WA Pty Ltd
1,600,000
1.20
16. Mr Keith William Flynn
1,509,663
1.13
17. Comnet Managements Pty Ltd
1,500,000
1.12
18. Sovereign Equities Pty Ltd
1,386,726
1.04
19. Nabawa Pty Ltd
1,375,000
1.03
20. Keith Flynn
1,255,250
0.94
Total
99,312,253
74.46
l. Unquoted Securities Holders Holding More than 20% of the Class as at 11 September 2024
Note: The 2022 Class B rights were derecognised due to not meeting conditions as described in note 18.2.2d of the financial statements.
2022 Class B Tranche 1 Performance Rights Holders
Name
No. Held
% Held
Peter Malone
12,500,000
100.00
Sub-total
12,500,000
100.00
Total 2022 Class B Tranche 1 Performance Rights
12,500,000
2022 Class B Tranche 2 Performance Rights Holders
Name
No. Held
% Held
Peter Malone
12,500,000
100.00
Sub-total
12,500,000
100.00
Total 2022 Class B Tranche 2 Performance Rights
12,500,000
2022 Class B Tranche 3 Performance Rights Holders
Name
No. Held
% Held
Peter Malone
12,500,000
100.00
Sub-total
12,500,000
100.00
Total 2022 Class B Tranche 3 Performance Rights
12,500,000
For personal use only
ANNUAL REPORT
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
30 June 2024
ABN 90 608 047 794
PAGE | 64
Additional Information for Listed Public Companies
2022 Class B Tranche 4 Performance Rights Holders
Name
No. Held
% Held
Peter Malone
12,500,000
100.00
Sub-total
12,500,000
100.00
Total 2022 Class B Tranche 4 Performance Rights
12,500,000
SKNAS Unlisted Options (Exercise price: $0.05, Expiry Date: 31.10.2025)
Name
No. Held
% Held
Everblu Capital Corporate Pty Ltd
28,000,000
48.28
Sub-total
28,000,000
48.28
Total SKNAS Unlisted Options
58,000,000
For personal use only
SKIN ELEMENTS LIMITED AND CONTROLLED ENTITIES
ANNUAL REPORT
ABN 90 608 047 794
30 June 2024
PAGE | 65
Additional Information for Listed Public Companies
2
The Company Secretary is Stuart Usher.
3
Principal registered office
As disclosed in the Corporate directory on page i of this Annual Report.
4
Registers of securities
As disclosed in the Corporate directory on page i of this Annual Report.
5
Stock exchange listing
Quotation has been granted for all the ordinary shares of the Company on all Member Exchanges of the Australian
Securities Exchange Limited, as disclosed in the Corporate directory on page i of this Annual Report.
For personal use only
For personal use only