Microskin PLC is a UK registered listed company incorporated on 11 December 2012. The consolidated group's product, Microskin, is a simulated second skin used to visually correct skin conditions resulting from birth, accident or surgery which are permanent and disfiguring. The operating 100% owned subsidiary is Microskin Holdings Limited which is an Australian unlisted public company.
Microskin is manufactured from natural ingredients and is applied directly to the user's own skin. It competes directly against other products in the camouflage cosmetic market; however its unique properties of long wear time, water and sun resistance, and the ability for the skin to breathe naturally enables it to be used on both small and large areas of the body for several days after application.
The Microskin group of companies ("the Group") is now poised for significant growth with rapid expansion in clinic numbers and the potential for major distribution agreements with global brands.
The licensing of clinics and distribution partners will enable the Group to eliminate the cost base associated with product manufacturing in Australia, a large part of the research and development effort, sales staff and extensive premises. In addition, there are potential product development and packaging opportunities that would enable customised product to be sold via the internet. This could provide an order of magnitude upside to the current anticipated revenues.
Business Development
The business model involves the establishment of licenses to operate clinics under the Microskin brand in selected regions of North and South America, Europe, the Middle East and a number of Asian countries.
To date, besides the Group owned clinic in Brisbane, Australia, and the existing clinics in four differing continents, mentioned above, in the latter part of 2013 Microskin has secured contractual commitment for licenses in South East Asia to cover the opening of four clinics over the next three years, as well as a license in India to open 5 new clinics over the same period.
In addition the Group is currently negotiating the establishment of clinics in London, Cincinnati, Miami, Brazil, Canada and China.
The business model also involves the licensing of selected global or regional brands to manufacture and distribute product under their own, or the Microskin, brand name. This strategy will also involve the development (by licensing partners) of new products that use Microskin as the base component or delivery agent. In some cases complementary products will be sourced from licensing/sales partners that can be sold via the Microskin Group license clinic chain. Negotiations are well advanced with several potential partners in both the USA and the UK.
Product Development
In order to leverage its own research and development as well as provide a quicker path to high volume sales, the Group has commenced negotiations with a number of global pharmaceutical and skincare organisations that are keen to distribute Microskin and also create other products based on Microskin.
In addition, product development directions under investigation include the use of analysis and skin tone matching technologies that can receive photographs via email, determine precise skin tones, mix custom batches of product to the correct skin tone and despatch product via mail. This brings the product into the realms of internet sales operations and potentially opens up opportunities to work with a host of online sales partners delivering Microskin to every corner of the globe within a very short period of time.
Barry Amor
Chairman
Statement of Profit or Loss and Other Comprehensive Income
For the Period Ended 30 June 2013
| Note | Period 11 December 2012 to 30 June 2013 $ | Period 1 January 2012 to 10 December 2012 $ | |
| Revenue | 2 | 122,867 | 242,364 |
| Cost of sales | (13,561) | (78,022) | |
| Gross Profit | 109,306 | 164,342 | |
| Other income | 2 | 330,213 | 403,079 |
| Administrative expense | (390,195) | (858,079) | |
| Marketing expenses | (33,739) | (52,236) | |
| Occupancy expenses | (22,947) | (38,991) | |
| Finance costs | (28,423) | (25,191) | |
| Other expenses | - | - | |
| Loss before income tax | 3 | (35,785) | (407,076) |
| Income tax benefit | 4 | 37,555 | 80,126 |
| Profit/(Loss) from continuing operations | 1,770 | (326,950) | |
| Profit/(Loss) for the period | 1,770 | (326,950) | |
| Other comprehensive income: | |||
| Exchange differences on translating foreign controlled entities | 2,222 | (1,023) | |
| Total comprehensive income for the period | 3,992 | (327,973) |
| Basic & diluted earnings/(loss) per share (in cents) | 28 | 0.00 | (0.04) |
Statement of Financial Position
As At 30 June 2013
| Note | 30 June 2013 $ | 10 December 2012 $ | |
| ASSETS | |||
| CURRENT ASSETS | |||
| Cash and cash equivalents | 9 | 1,081 | 11,758 |
| Trade and other receivables | 10 | 357,657 | 163,603 |
| Inventories | 11 | 63,564 | 55,754 |
| Current tax receivable | 19 | 7,052 | - |
| Other assets | 16 | 14,277 | 3,760 |
| TOTAL CURRENT ASSETS | 443,631 | 234,875 | |
| NON CURRENT ASSETS | |||
| Property, plant and equipment | 14 | 86,659 | 93,718 |
| Intangible assets | 15 | 254,413 | 232,976 |
| Deferred tax assets | 13 | - | 26,580 |
| TOTAL NON CURRENT ASSETS | 341,072 | 353,274 | |
| TOTAL ASSETS | 784,703 | 588,149 | |
| LIABILITIES | |||
| CURRENT LIABILITIES | |||
| Trade and other payables | 17 | 809,782 | 593,213 |
| Borrowings | 18 | 76,491 | 115,149 |
| Provisions | 20 | 43,498 | 40,296 |
| TOTAL CURRENT LIABILITIES | 929,771 | 748,658 | |
| NON CURRENT LIABILITIES | |||
| Borrowings | 18 | 44,215 | 49,363 |
| Deferred tax liabilities | 19 | - | 3,403 |
| TOTAL NON CURRENT LIABILITIES | 44,215 | 52,766 | |
| TOTAL LIABILITIES | 973,986 | 801,424 | |
| NET ASSETS | (189,283) | (213,275) |
| EQUITY | |||
| Issued capital | 21 | 13,122,223 | 1,704,248 |
| Reserves | (11,369,942) | 25,811 | |
| Accumulated losses | (1,941,564) | (1,943,334) | |
| TOTAL EQUITY | (189,283) | (213,275) |
| Going Concern |
This report has been prepared on the going concern basis, which contemplates the continuation of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business.
As at 30 June 2013 the Group had a cash balance of $1,081, while it incurred expenses during the period then ended of $488,865.
The Group has now embarked on an aggressive rollout of clinics throughout the world with franchises opening in Saudi Arabia and Estonia in 2012. Expansion of the licensed clinic network in the coming year will see clinic revenues cover fixed overheads and then start to contribute modest profits in future years. Negotiations continue with various multinationals which can potentially result in significant revenue streams to the Group. In light of these expected future developments, the Directors are confident that the Group will generate sufficient funds through internal sales, to meet the Group's working capital requirements for the coming year.
However, the Directors also recognise that the ability of the Group to continue as a going concern and to pay its debts as and when they fall due will be dependent on the Group's future sales and success in generating further franchise arrangements. Given the current cash position, there is a material uncertainty about whether the Group can continue as a going concern.
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 from those stated in the financial report.
The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that may be necessary should the Group be unable to continue as a going concern.