A WORD FROM THE CEO

Following a record year in 2017, 2018 has presented a number of challenges, namely around the difficult trading conditions in the UK retail market, specifically those affecting the department store – House of Fraser. With 4 DestinationSkin clinics still residing within its stores, the uncertainty around the future of the department store and changes to its ownership has forced DestinationSkin to seek alternative sites for these locations to secure their position. While this work is ongoing, a relocation strategy is firmly in place going into 2019.

The widely reported weather extremes in 2018 from severe snow in Q1 to unprecedented heat in the summer months has affected trading with a downturn in sales
of c.4%.

Competition from independent providers and growth activity from national chains have caused some disruption with a record number of new openings including 2 new multisite competitors entering the UK market during 2018. There has also been a number of exits from the market with some of the value end providers divesting or exiting the UK market altogether. DestinationSkin have reacted to this throughout the year with the introduction of enhanced finance and pricing options to offer clients flexibility. The business will continually review its proposition to remain an attractive provider to its client base while continuing to deliver on its core values and the “DestinationSkin Difference”.

Alongside the clinic improvement plan which has continued throughout 2018, the relocation of some key sites has taken place; the relocation of the City clinic to an improved location through the acquisition of a competitor has been a success, and aims to deliver increased growth in 2019. Refurbishment and upgrades of existing sites have taken place in 2018 with a branded look and feel to reception and treat- ment room areas.

/Erica Collins, CEO.

IMPORTANT EVENTS IN 2018

FAIRFORD´S VIEW

DestinationSkin operates in the highly fragmented advanced skincare market where barriers to entry continue to reduce over time. The UK market is still in an early stage and a few companies are competing to become the dominant players via acquisitions or expansion. The semimedical nature of the sector brings certain challenges including extra cost to provide medically compliant facilities, suitably trained staff and adequate insurance levels. The appropriate level of regulation of the sector is still under significant debate in the UK adding uncertainty to long term planning. We will continue to support DestinationSkin to become a dominant player in the sector whilst keeping a close eye on market developments.

Erica Collins, CEO

Andrea Turner, CFO