SKIN ELEMENTS LIMITED — Interim / Quarterly Report 2019

Apr 30, 2019

30 April 2019

Quarterly Activity Report - Period ending 31 March 2019

Australian natural skin care company Skin Elements Limited (ASX: SKN) (Skin Elements, the Company) is pleased to present its Quarterly Activity Report for the period ending 31 March 2019.

Skin Elements enters Chinese skincare market

During the quarter, Skin Elements entered into a binding term sheet (Term Sheet) with Henan province-based health and skin care distribution group, Henan Huatuo Health Management Co, Ltd (HHHM) for a $2.4 million strategic investment and the execution of a major sales and distribution agreement for up to $20 million of its skin care product range for the Chinese skin care market.

The Company has received the first payment of $300,000, for its opening order pursuant to its Term Sheet with HHHM. A further $200,000 was also received as part of the first tranche of the proposed $2.4 million strategic investment in Skin Elements by HHHM which is subject to shareholder approval.

The Company also continues to negotiate sales into its existing online and distributor channels and new key international markets. It is also constantly reviewing its cost structures and working capital requirements to be able to deliver the increased production of its natural skincare product range to fulfil the sales growth.

Skin Elements Executive Chairman Mr Peter Malone said;

"The agreement with HHHM is our first large scale distribution transaction in our key targeted global markets, and on delivery of the key terms, it is expected will provide a strong production platform and clear opportunity to expedite other potential global opportunities."

Peter Malone Media and Investor Inquiries Executive Chairman James Moses Skin Elements Limited Mandate Corporate T: +61 439 430 770 T: +61 420 991 574 E: peter@senatural.com E: james@manadatecorporate.com.au

About Skin Elements

Skin Elements is an Australian owned and operated ASX-listed skin care company focused on the development of natural and organic skin care products, as an alternative to current chemical-based products. It has developed a portfolio of products which includes its lead product, the Soléo Organics 100% natural and organic sunscreen, PapayaActivs natural therapeutics, Complete Esscience natural skincare, and the Elizabeth Jane Natural Cosmetics brand. The Company has completed a highly successful test marketing phase in major international markets for Soléo Organics and has regulatory approval with the USA FDA, TGA and other significant regulators. Skin Elements aims to become the number one recognised national and international sunscreen brand.

Further information is available via the Company website: http://skinelementslimited.com

+Rule 4.7B

Appendix 4C

Quarterly report for entities subject to Listing Rule 4.7B

Introduced 31/03/00 Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16

Name of entity
Skin Elements Limited
ABN	Quarter ended ("current quarter")
90 608 047 794	31 March 2019

	Consolidated statement of cash flows	Current quarter$A'000	Year to date(9 months)$A'000
1.	Cash flows from operating activities
1.1	Receipts from customers	441	661
1.2	Payments for
	(a) research and development (note 4)	(41)	(705)
	(b) product manufacturing andoperating costs	(116)	(275)
	(c) advertising and marketing	(67)	(299)
	(d) leased assets	(22)	(81)
	(e) staff costs	(192)	(655)
	(f)administration costs	(12)	(130)
	(g) corporate costs	(39)	(339)
1.3	Dividends received	-	-
1.4	Interest received	-	-
1.5	Interest and other costs of finance paid	(8)	(11)
1.6	Income taxes paid	-	-
1.7	Government grants and tax incentives	-	491
1.8	Other	-	-
1.9	Net cash from / (used in) operatingactivities	(85)	(1,343)

Consolidated statement of cash flows		Current quarter$A'000	Year to date(9 months)$A'000
2.	Cash flows from investing activities
2.1	Payments to acquire:
	(a) property, plant and equipment	-	-
	(b) businesses (see note 5)	-	-
	(c) investments	-	-
	(d) intellectual property	-	-
	(e) other non-current assets	-	-
2.2	Proceeds from disposal of:
	(a) property, plant and equipment	-	-
	(b) businesses (see item 10)	-	-
	(c) investments	-	-
	(d) intellectual property	-	-
	(e) other non-current assets	-	-
2.3	Cash flows from loans to other entities	-	-
2.4	Dividends received	-	-
2.5	Other (provide details if material)	-	-
2.6	Net cash from / (used in) investingactivities	-	-

3.	Cash flows from financing activities
3.1	Proceeds from issues of shares	-	1,407
3.2	Proceeds from issue of convertiblenotes	200	200
3.3	Proceeds from exercise of shareoptions		-
3.4	Transaction costs related to issues ofshares, convertible notes or options	-	(130)
3.5	Proceeds from borrowings	-	-
3.6	Repayment of borrowings	-	-

	Consolidated statement of cash flows	Current quarter$A'000	Year to date(9 months)$A'000
3.7	Transaction costs related to loans andborrowings	-	-
3.8	Dividends paid	-	-
3.9	Other (provide details if material)	-	-
3.10	Net cash from / (used in) financingactivities	200	1,477

4.	Net increase / (decrease) in cash and cashequivalents for the period
4.1	Cash and cash equivalents at beginningof quarter/year to date	215	196
4.2	Net cash from / (used in) operatingactivities (item 1.9 above)	(85)	(1,343)
4.3	Net cash from / (used in) investingactivities (item 2.6 above)	-	-
4.4	Net cash from / (used in) financingactivities (item 3.10 above)	200	1,477
4.5	Effect of movement in exchange rateson cash held	-	-
4.6	Cash and cash equivalents at end ofquarter	330	330

5.	Reconciliation of cash and cashequivalentsat the end of the quarter (as shown inthe consolidated statement of cashflows) to the related items in theaccounts	Current quarter$A'000	Previous quarter$A'000
5.1	Bank balances	330	215
5.2	Call deposits	-	-
5.3	Bank overdrafts	-	-
5.4	Other (provide details)	-	-
5.5	Cash and cash equivalents at end ofquarter (should equal item 4.6 above)	330	215

6.	Payments to directors of the entity and their associates	Current quarter$A'000
6.1	Aggregate amount of payments to these parties included initem 1.2	(90)
6.2	Aggregate amount of cash flow from loans to these partiesincluded in item 2.3	-
6.3	Include below any explanation necessary to understand the transactions includedin items 6.1 and 6.2
	Directors remuneration (per the service agreements)	(90)

7.	Payments to related entities of the entity and their associates	Current quarter$A'000
7.1	Aggregate amount of payments to these parties included initem 1.2	-
7.2	Aggregate amount of cash flow from loans to these partiesincluded in item 2.3	-
7.3	Include below any explanation necessary to understand the transactions includedin items 7.1 and 7.2

8.	Financingfacilities availableAdd notes as necessary for anunderstanding of the position	Total facilityamount at quarterend$A'000	Amount drawn atquarter end$A'000
8.1	Loan facilities	-	-
8.2	Credit standby arrangements	-	-
8.3	Other		--
8.4	Include below a description of each facility above, including the lender, interestrate and whether it is secured or unsecured. If any additional facilities have beenentered into or are proposed to be entered into after quarter end, include detailsof those facilities as well.

9.	Estimated cash outflows for next quarter	$A'000
9.1	Research and development	(10)
9.2	Product manufacturing and operating costs	(340)
9.3	Advertising and marketing	(122)
9.4	Leased assets	(48)
9.5	Staff costs	(93)
9.6	Administration costs	(10)
9.7	Corporate and compliance costs	(83)
9.8	Total estimated cash outflows	(706)

10.	Acquisitions and disposals ofbusiness entities(items 2.1(b) and 2.2(b) above)	Acquisitions	Disposals
10.1	Name of entity	N/A	N/A
10.2	Place of incorporation orregistration	N/A	N/A
10.3	Consideration for acquisition ordisposal	N/A	N/A
10.4	Total net assets	N/A	N/A
10.5	Nature of business	N/A	N/A

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.
• 2 This statement gives a true and fair view of the matters disclosed.

Sign here: ............................................................ Date: 30 April 2019 (Company Secretary)

Print name: Craig Piercy

Notes

• 1. The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position.
• 1. This quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report with the exception of the additional detail presented in item 1.2 above.
• 1. The Group comprises parent entity Skin Elements Limited (ACN 608 047 794) and wholly owned subsidiary Skin Elements Operations Pty Ltd (ACN 110 352 424) acquired on 31 December 2016.
• 1. The Group has undertaken research and development activities as part of its on-going operations. The costs associated with the research and development process have been identified and disclosed separately from the additional cost categories such as lease, staff and administration costs.