Cellmid 2017 Annual Report

CEO

REPORT

In 2001 the Chairman of

Estee Lauder coined the

term Lipstick Index. He

observed that despite

the economic woes of

the tech market collapse

lipstick sales went up.

Similarly, during the 2009 ﬁnancial crises nail polish sales

went through the roof (Euromonitor). As we are entering

uncertain times again, anti-aging hair care sales are showing

double digit growth, especially in emerging markets. The

cosmetics industry, including hair care, seems to be immune

to negative economic indicators.

So, it is indeed with pleasure that I report to you on this

2017 ﬁnancial year, when Cellmid outperformed even the

fast-growing anti-aging hair care market. For the third year

in a row our consumer health subsidiary, Advangen Limited

(Advangen), experienced signiﬁcant revenue increase from

products that are leading the market in functional hair care.

But this is not all the good news for Cellmid. Underlining the

value of our intellectual property assets, midkine received

unprecedented scientiﬁc endorsement with a publication in

Nature as we closed the 2017 ﬁnancial year. A breakthrough

for midkine; an important but unknown entity in mainstream

science a few years ago. It is also great news for Lyramid and

Kinera, Cellmid’s wholly owned midkine subsidiaries as they

are likely to get better reception from potential partners as

a result.

The 2017 ﬁnancial year has been an important one for

Cellmid. Consumer product revenue increased by 50%

across the regions to reach a new record of $4,453,208.

For the second year in row our Japanese subsidiary,

Advangen Inc., was proﬁtable, while Australian consumer

health revenue increased by 81% to $1,468,303 (FY2016:

$811,935).

Japanese sales increased by 39% to $2,984,909 (FY2016:

$2,150,371). An excellent result, especially as unfavourable

currency exchange rates affected reported sales during the

period. The Australian dollar (AUD) appreciated from 75

Japanese Yen (JPY) to 88 JPY between July 2016 and June

2017. As we generate revenue and incur costs in JPY, these

movements have no real effect on our performance, only

lower reported sales.

Chinese import permit renewal for the Jo-Ju® and Lexilis®

branded products has taken almost the entire reporting

period, which has affected sales from Japan to China.

In January 2014 Advangen entered into a distribution

agreement for its Japanese Lexilis® brand with Beijing

Huana Likang Biotechnology Co Limited. After modest

sales in 2015 orders started to increase in early 2016. At

the same time import permits for Jo-Ju® and Lexilis® had