Skin Elements shares fall despite China deal

Shares in West Perth-based Skin Elements have fallen 23.3 per cent today to trade at 3.3 cents each, following its response to two ASX queries after trade closed yesterday.

On March 12, the ASX issued a query in regards to Skin Elements’ first-half accounts, including if “[the accounts] give a true and fair view of SKN’s financial performance and position”.

On March 14, Skin Elements was placed into a trading halt after the ASX issued a price query, after shares in the skincare company rose from a low 1.7 cents to 3.3 cents, a rise of around 94 per cent, in the days prior to March 14.

The ASX said it also noted a significant increase in the volume of the company’s securities traded from March 13 to March 14.

Skin Element emerged from its ASX suspension after trade closed last night, and issued a response to the accounts query, price query, and at the same time also announced it had entered into a three-year, $20 million distribution agreement to sell its products in China.

The binding distribution agreement was signed with Henan Huatuo Health Management, and under the deal, Skin Elements will also receive $2.4 million of “strategic investment” from Henan.

In response to the accounts query, Skin Elements said its accounts were independently audited by BDO, which led the board to conclude that their accounts gave a true and fair view of the financial position.

In response to the price query, it said it was not aware of any information that could explain the increase of the volume traded in its securities, other than the China distribution agreement announcement, which was announced to the ASX 11 days after its March 14 query.